**Exhibit 10.17**Execution Copy**SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT**     **THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT**(this “Agreement”), dated as of January29, 2008, and effective as of January 1, 2008 (the “Effective Date”), is made by and betweenLodgeNet Entertainment Corporation, a Delaware corporation (the “Corporation”), and Scott C.Petersen (“Executive”) with reference to the following circumstances, namely:RECITALSA. Executive is employed by Corporation as its Chairman of the Board, President and ChiefExecutive Officer, and as such is, and will be, making an important contribution to thedevelopment and operation of Corporation’s business.B. On July 22, 1998, Executive and the Corporation entered into an Employment Agreement, whichwas amended and restated by an Amended and Restated Employment Agreement, effective January 1,2002 (the “Original Employment Agreement”).C. The Corporation and Executive desire to further amend and restate the Original EmploymentAgreement.AGREEMENT     **NOW, THEREFORE**, in consideration of the provisions of this Agreement, and other good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, theCorporation agrees to continue to employ Executive, and Executive agrees to continue suchemployment, upon the following terms and conditions:     1. PERIOD OF EMPLOYMENT. The employment of Executive by the Corporation pursuant to thisAgreement shall be for a period (sometimes referred to herein as the “period of employment”)beginning on the Effective Date and continuing, unless sooner terminated as provided in Section 6herein, through December 31, 2010; provided, however, that on each succeeding December 31,commencing December 31, 2009, such period of employment shall automatically be extended for anadditional year (to result thereafter in a rolling two-year term of employment hereunder) unlesssixty (60) days prior thereto either party hereto has given written notice to the other that suchparty does not wish to extend the period of employment.     2. DUTIES. During the period of employment, Executive shall serve as Chairman of the Board,President and Chief Executive Officer of the Corporation, and in such other additional office oroffices to which he shall be elected by the Board of Directors of the Corporation (“Board”) withhis approval, performing the duties of such office or offices held at the time and such otherduties not inconsistent with his position as such an officer or director as are assigned to him bythe Board or committees of the Board. During the period of employment, Executive shall devote hisfull-time attention to the business of the Corporation and the discharge of the aforementionedduties, except for permitted vacations, absences due to illness, and reasonable time for attentionto personal affairs and charitable activities.
 

 
     3. OFFICE FACILITIES. During the period of employment, Executive shall have his office whereCorporation’s principal offices are located from time to time, which currently are at 3900 WestInnovation Street, Sioux Falls, South Dakota, and the Corporation shall furnish Executive withoffice facilities reasonably suitable to his position at such location.     4. COMPENSATION. As compensation for his services performed hereunder, the Corporation shallpay or provide to Executive the following:     (a) Base Salary. The Corporation shall pay Executive a base salary (the “BaseSalary”), calculated at the rate of Five Hundred Eighty-Five Thousand Dollars ($585,000.00)per annum (which Base Salary may be increased, but not reduced, by the Board at any time andfrom time to time in its discretion), payable monthly, semi-monthly or weekly according tothe Corporation’s general practice for its executives, for the period of employment underthis Agreement. Executive’s Base Salary shall be reviewed by the Board and shall be subjectto increase each year by an amount determined by the Board. Such Base Salary, including anysuch annual increases (which shall be considered part of the Base Salary), shall not bereduced during the period of employment hereunder.     (b) Bonus**.**For each of the years in the period of employment, Executive shallbe eligible to receive in cash an annual performance bonus (the “Bonus”). The Board shalldevelop the Bonus formula, targets and criteria for determining achievement of such targetsin consultation with Executive; provided, however, that any such formula, target andcriteria shall provide Executive with the opportunity to earn at least 70% of Base Salaryupon the achievement of 100% of target. The Bonus targets and criteria for determiningachievement of such targets shall be referred to herein as the “Bonus Plan.”     (c) Other Bonus and Incentive Plans. During the period of employment,Executive shall be allowed to participate in such bonus and other incentive compensationprograms in accordance with their terms as the Corporation may have in effect from time totime for its executive personnel, other than any annual cash bonus plan (which is dealt within Section 4(b) hereof), and all compensation and other entitlements earned thereunder shallbe in addition to, and shall not in any way reduce, the amount payable as Base Salary andBonus.     (d) Health, Welfare and Retirement Plans; Vacation. During the period ofemployment, Executive shall be entitled to:     (i) participate in such retirement, deferred compensation, investment, health(medical, hospital and/or dental) insurance, life insurance, disability insurance,flexible benefits arrangements and accident insurance plans and programs as aremaintained in effect from time to time by the Corporation for its executiveemployees;     (ii) participate in other non-duplicative benefit programs which theCorporation may from time to time offer generally to executive personnel of theCorporation;
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     (iii) cash payments in addition to Base Salary, Bonus, or any other benefitshereunder, in an amount to be set by the Board for each year during the period ofemployment, and which shall be $36,000 for 2008, to enable the Executive to purchasesuch other benefits as Executive deems necessary or advisable; such amount shall bepaid annually in twelve equal monthly installments on or about the 20th day of eachmonth, and to the extent permitted by law shall be paid on a pre-tax basis; and     (iv) take vacations and be entitled to sick leave in accordance with theCorporation’s policy for executive personnel of the Corporation.     (e) Equity Incentive Awards. Executive shall receive annual equity awards,which may consist of time-vested restricted stock; performance-vested restricted stock;options; or other types of equity-based grants, with the type, number, vesting schedule ormilestones, if any, and exercise price, if appropriate, to be determined by the Board. Inmaking such determination, the Board shall take into account Executive’s individualperformance and performance of the Corporation as a whole, including Executive’s performanceagainst the then applicable Bonus Plan targets.     (f) Car Allowance. During the period of employment, the Corporation shallprovide Executive with a monetary allowance in an amount acceptable to Executive which isapproved by the Board for the lease of a suitable automobile and insurance therefore;provided, that such amount shall not be less than $1,100 per month.     (g) Expenses. Executive shall be reimbursed for reasonable business expensesincurred in connection with the performance of his duties hereunder consistent with theCompany’s policy regarding reimbursement of such expenses. In addition, Executive shall bereimbursed by the Corporation for Executive’s reasonable and documented legal and accountingfees incurred in connection with entering into this Agreement. With respect to any benefitsor payments received or owed to Executive hereunder, Executive shall cooperate in good faithwith the Corporation to structure such benefits or payments in the most tax efficient mannerto the Corporation; provided, that Executive shall have no obligation to take any actionthat is reasonably determined by Executive to be adverse to Executive, including withoutlimitation agreeing to alter Executive’s rights under Section 7(b) (iv) hereof.     5. EFFECT OF DISABILITY AND CERTAIN HAZARDS. Executive shall not be obligated to perform theservices required of him by this Agreement during any period in which he is disabled or his healthis impaired to an extent which would render his performance of such services hazardous to hishealth or life, and relief from such obligation shall not in any way affect his rights hereunderexcept to the extent that such disability may result in termination of his employment by theCorporation pursuant to Section 6 herein.     6. TERMINATION OF EMPLOYMENT. The employment of Executive by the Corporation pursuant to thisAgreement may be terminated by the Corporation or the Executive at any time, as follows:
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     (a) Death. In the event of Executive’s death prior to the expiration of theperiod of employment hereunder, such employment shall terminate on the date of death.     (b) Permanent Disability. Such employment may be terminated by the Corporationprior to the expiration of the period of employment hereunder due to Executive’s physical ormental disability which prevents the effective performance by Executive of his dutieshereunder on a full-time basis, with such termination to occur on or after (i) the date onwhich Executive becomes entitled to disability compensation benefits under Executive’slong-term disability benefit policy then in effect, or (ii) in the event that no such policyis in effect, the date of the determination of an impartial physician in the manner setforth in the next sentence that Executive is permanently disabled. Any dispute as toExecutive’s physical or mental disability shall be settled by the opinion of an impartialphysician selected by the parties or their representatives or, in the event of failure tomake a joint selection after request therefor by either party to the other, a physicianselected by the Corporation, with the fees and expenses of any such physician to be borne bythe Corporation.     (c) Cause. The Corporation, by giving written notice of termination toExecutive, may terminate Executive’s employment at any time prior to the expiration of theTerm for Cause, with Cause to be determined by the Board after reasonable written notice toExecutive and an opportunity for Executive to be heard at a meeting of the Board and withreasonable opportunity (of not less than 30 days) in the case of willful neglect of materialduties to cease such neglect. For purposes of this Section 6(c), no act or failure to acton the Executive’s part shall be considered “willful” unless done or omitted to be done byExecutive not in good faith and without reasonable belief that his action or omission was inthe best interest of the Corporation.     (d) Cause means that such termination must be due to (1) acts committed during the Termof this Agreement resulting in a felony conviction under any federal or state statute; (2)willfully engaging in dishonest or fraudulent action or omission resulting or intended toresult in any demonstrable and material financial or economic harm to the Corporation, orwhich materially damages the Corporation’s reputation; or (3) willful breach of thisAgreement, willful neglect of the material duties of the Executive under this Agreement,gross and willful misconduct, or willful and material violation of (x) the Corporation’sCode of Business Conduct and Ethics or (y) the Corporation’s Employee Handbook (as amendedfrom time to time) which results in or is reasonably likely to result in any demonstrableand material financial or economic harm to the Corporation or material damage to theCorporation’s reputation.     (e) Without Cause. The Corporation may terminate such employment at any timeprior to said date without Cause (which shall be for any reason not covered by precedingsubsections (a) through (c)) upon 60 days prior written notice to Executive.     (f) By Executive. Executive may terminate such employment at any time for anapplicable Good Reason (subject to Section 6(g)) or otherwise upon written notice thereof tothe Corporation.
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     (g) Notice of Good Reason. If Executive believes that he is entitled toterminate his employment with the Corporation for an applicable Good Reason, he may apply inwriting to the Corporation for confirmation of such entitlement prior to the Executive’sactual separation from employment, by following the claims procedure set forth in Section 11hereof. The submission of such a request by an Executive shall not constitute “Cause” forthe Corporation to terminate Executive under Section 6(c) hereof; and Executive shallcontinue to receive all compensation and benefits he was receiving at the time of suchsubmission throughout the resolution of the matter pursuant to the procedures set forth inSection 11 hereof. If the Executive’s request for a termination of employment for GoodReason is denied under both the request and appeal procedures set forth in Sections 11(a)and (b) hereof, then the parties shall promptly submit the claim to binding arbitrationpursuant to Section 11(c) and use their best efforts to conclude the arbitration withinninety (90) days after the claim is submitted.     (h) Notice of Termination. Any termination of the Executive’s employment bythe Corporation or by the Executive (other than termination based on the Executive’s death)shall be communicated by a written Notice of Termination to the other party hereto. Forpurposes of this Agreement, a “Notice of Termination shall mean a notice which shallindicate the specific termination provision in this Agreement relied upon and shall setforth in reasonable detail the facts and circumstances claimed to provide a basis fortermination of the Executive’s employment under the provision so indicated. For purposes ofthis Agreement, no purported termination shall be effective without the delivery of suchNotice of Termination.     (i) Date of Termination. The date of termination of Executive’s employmentshall mean (i) if the Executive is terminated by his death, the date of his death, (ii) ifthe Executive’s employment is terminated due to a permanent disability, thirty (30) daysafter the Notice of Termination is given (provided that the Executive shall not havereturned to the performance of his duties on a full-time basis during such period), (iii) ifthe Executive’s employment is terminated pursuant to a termination for Cause, the datespecified in the Notice of Termination, and (iv) if the Executive’s employment is terminatedfor any other reason, the date of termination shall be the later of thirty (30) days aftertermination as provided by the Notice of Termination or the date of the final resolution ofthe arbitration and claims procedures set forth in Section 11 hereof, unless otherwiseagreed by the Executive and Corporation or otherwise provided in this Agreement.     7. PAYMENTS UPON TERMINATION.     (a) Except as otherwise provided in subsection (b) of this Section 7, upon terminationof Executive’s employment by the Corporation, all compensation due Executive under thisAgreement and under each plan or program of the Corporation in which he may be participatingat the time shall cease to accrue as of the date of such termination (except, in the case ofany such plan or program, if and to the extent otherwise provided in the terms of such planor program or by applicable law), and all such compensation accrued as of the date of suchtermination but not previously paid shall be paid to Executive at the time such paymentotherwise would be due, and in any
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event no later than the Last Payment Date. If the termination of Executive’semployment is by the Corporation not for Cause, or by the Executive for Good Reason,Executive shall be entitled to a payment equal to the greater of (i) Executive’s actualbonus for the preceding year, pro rata based on the portion of the year ended on the date ofthe termination, or (ii) the amount which would have been earned by Executive under his thencurrent Bonus Plan, pro rata based on the portion of the year ended on the date oftermination, and computed based on actual results for such year. Any such payment shall bepaid to the Executive within ten (10) days of the date of termination and in any event nolater than the Last Payment Date.     (b) If Executive’s employment pursuant to this Agreement is terminated pursuant tosubsection (d) of Section 6 herein, the Corporation elects at any time not to renew orextend this Agreement pursuant to Section 1 or Executive terminates this Agreement for GoodReason, then, in addition to the payments required by subsection (a) of this Section 7,Executive shall be entitled to and shall receive:     (i) Severance Payment. Executive shall receive a lump sum cash payment(the “Severance Payment”) from the Corporation. The amount of the Severance Paymentshall be an amount equal to the sum of Executive’s annual Base Salary and Bonus,multiplied by the Applicable Multiplier (as hereinafter defined). For purposes ofthis Section 7(b),     (A) Executive’s Base Salary shall be the higher of Executive’s annualBase Salary in effect immediately prior to such termination or Executive’sannual Base Salary determined pursuant to Section 4(a), and     (B) Executive’s Bonus shall be an amount equal to the greater of (1)Executive’s bonus for the preceding year or (2) an amount (i) for years2008, 2009 and 2010, determined assuming that 87.5% of the target for suchBonus has been met, and (ii) for year 2011 and subsequent years, determinedusing a formula that results in a Bonus that is equal to the same percentageof annual Base Salary determined pursuant to Section 7(b)(i)(B)(2)(i) foryear 2010The Severance Payment shall be due and payable within ten (10) days after the dateof termination of employment, but no later than the Last Payment Date. TheSeverance Payment is subject to required withholding.     (ii) Acceleration of Vesting. All options to purchase theCorporation’s common stock held by Executive at the time of such termination butstill subject to vesting, shall be fully and immediately vested and shall beexercisable until the first to occur of (x) the expiration date of the applicableoption or (y) four (4) years following the date of termination. All grants ofrestricted stock or other rights related to shares of the Corporation’s common stockshall be immediately vested (or the risk of forfeiture, as appropriate, shallterminate and all restrictions or conditions to the receipt of such shares shall bewaived, for 100% of the “target” shares that were to have been delivered to theExecutive under any
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performance-based plan and 100% of the shares subject to a time-based vestingplan) and shall be delivered to Executive free of all restrictions within ten (10)days of the date of termination. All other benefits or interests of Executive inany of the Corporation’s plans or arrangements which are subject to vesting shall befully and immediately vested.     (iii) Benefits. During the Severance Period, Executive shall beentitled to the continuation of the same or equivalent life, health,hospitalization, dental and disability insurance coverage and other employeeinsurance or welfare benefits that he had received (including equivalent coveragefor his spouse and dependent children) immediately prior to termination ofemployment, as if he had continued to be an executive employee of the Corporation.In the event that Executive is ineligible under the terms of such insurance tocontinue to be so covered, the Corporation shall provide the Executive withsubstantially equivalent coverage through other sources or will provide Executivewith a lump-sum payment equal to the cost of obtaining such coverage for theSeverance Period. If Executive was receiving any cash-in-lieu payments designed toenable Executive to obtain insurance coverage of his choosing, the Corporationshall, in addition to any other benefits to be provided under this Section, provideExecutive with a lump-sum payment equal to the amount of such in-lieu payments thatExecutive would have been entitled to receive over the Severance Period, no laterthan the Last Payment Date. Following the Severance Period, Executive shall beentitled to receive continuation coverage under the Consolidated Omnibus BudgetReconciliation Act of 1985, as amended, treating the end of the Severance Period asa termination of the Executive’s employment.     (iv) Tax Gross-Up. If any payments received by Executive pursuant tothis Agreement will be subject to the excise tax (the “Excise Tax”) imposed bySection 4999 or Section 409A of the Internal Revenue Code of 1986, as amended (the“Code”), or any successor or similar provision of the Code, the Corporation shallpay to the Executive additional compensation such that the net amount received bythe Executive after deduction of any Excise Tax (and taking into account anyfederal, state and local income taxes payable by the Executive as a result of thereceipt of such gross-up compensation), shall be equal to the total payments hewould have received had no such Excise Tax (or any interest or penalties thereon)been paid or incurred. The Corporation shall pay such additional compensation nolater than the Last Payment Date. The calculation of the tax gross-up payment shallbe approved by the Corporation’s independent certified public accounting firm andthe Executive’s designated financial advisor.     (c) Additional Requirement for Severance Compensation. The amounts payablepursuant to this Section 7 shall be paid only upon an Executive’s execution and delivery tothe Corporation of an agreement and general release, in such form as is acceptable to theCorporation, in its sole discretion, under which, among other things, the Executive shallrelease and discharge the Corporation and related persons from all claims and liabilitiesrelating to the Executive’s employment with the Corporation and/or the termination of theExecutive’s employment, including without limitation, claims under
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the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act,where applicable. Subject to Section 16 hereof, payment of the amounts payable pursuant tothis Section 7 will be paid only after the Release Effective Date and expiration of allperiods of permitted rescission under federal or state     8. CONFIDENTIAL INFORMATION. Executive shall not at any time during the period of employmentand thereafter disclose to others or use any trade secrets or any other confidential informationbelonging to the Corporation or any of its subsidiaries, including, without limitation, drawings,plans, programs, specifications and non-public information relating to customers of the Corporationor its subsidiaries except as may be required to perform his duties hereunder. The provisions ofthis Section 8 shall survive the termination of Executive’s employment with the Corporation,provided that after the termination of Executive’s employment with the Corporation, therestrictions contained in this Section 8 shall not apply to any such trade secret or confidentialinformation which becomes generally known in the trade.     9. PATENTS AND OTHER INTELLECTUAL PROPERTY. The Corporation shall be entitled to any and allideas, know-how and inventions, whether patentable or not, which Executive shall conceive, make ordevelop during the period of his employment with the Corporation, relating to the business of theCorporation or any of his subsidiaries. Executive shall, from time to time, at the request of theCorporation, execute and deliver such instruments or documents, and shall perform or do such actsor things, as reasonably may be requested in order that the Corporation may have the benefit ofsuch ideas, know-how and inventions and, in particular, so that patent applications may be preparedand filed in the United States Patent Office, or in appropriate places in foreign countries,covering any of the patentable ideas on inventions covered by this Agreement aforesaid, includingappropriate assignments vesting in the Corporation or any of its subsidiaries (or any successor tothe Corporation or any of its subsidiaries) full title to any and all such ideas, inventions andapplications.     Further Executive will cooperate and assist the Corporation in the prosecution of any suchapplications in order that patents may issue thereon.     10. NON-COMPETITION; NON-MITIGATION; LITIGATION EXPENSES.     (a) Executive shall not be required to mitigate the amount of any termination benefitsdue him under Section 7 herein, by seeking employment with others, or otherwise, nor shallthe amount of such benefits be reduced or offset in any way by any income or benefits earnedby Executive from another employer or other source.     (b) For a period of twenty-four (24) months after Executive’s termination of employmenthereunder, Executive shall not enter into endeavors that involve a Competing Business (asdefined below), and shall not own an interest in, manage, operate, join, control, lend moneyor render financial or other assistance to or participate in or be connected with, as anofficer, employee, director, partner, stockholder (except for passive investments of notmore than a one-percent interest in the securities of a publicly-held corporation regularlytraded on a national securities exchange or in an over-the-counter securities market),consultant or otherwise, any individual, partnership, firm, corporation or other businessorganization or entity that engages in a business which is
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involved principally in the provision of video or broadband services to lodging orhealthcare facilities in the United States (a “Competing Business”). For these purposes, anentity involved in the cable, satellite or other pay television business generally shall notbe deemed to be a Competing Business if (i) the provision of video or broadband services tolodging or healthcare facilities comprises less than twenty percent (20%) of the revenues ofsuch entity and (ii) Executive’s principal duties do not involve operation or oversight ofthat portion of the enterprise involved in the provision of video or broadband services tolodging or healthcare facilities). In the event that Executive violates the provisions ofthis subparagraph (b), the Corporation shall have the right, in addition to such otherremedies as the Corporation may have available to it, to recover that portion of the amountspaid to Executive pursuant to the provisions of Section 7 hereof which relate to the periodof time Executive is found to have been in violation of the terms of this subparagraph.     (c) For a period of twenty-four (24) months after Executive’s termination of employmenthereunder, Executive shall not hire or attempt to hire any employee of the Corporation,assist in such hiring by any person or encourage any employee to terminate his or heremployment relationship with the Corporation; provided, however, that it shall not be abreach of this Section 10(c) if Executive or Executive’s employer hires persons that are atthe time employees of the Corporation as a result of (i) Executive or Executive’s employerconducting generalized solicitations by way of advertisements, engaging firms to conductsearches or by other means that are not focused on employees of the Corporation, or (ii)Executive or Executive’s employer responding to unsolicited requests or contacts byemployees of the Corporation.     (d) The Corporation shall pay Executive’s out-of-pocket expenses, including attorneys’fees, but not to exceed a total of $25,000 for any proceeding or group of relatedproceedings to enforce, construe or determine the validity of the provisions for terminationbenefits in Section 7 herein; provided, however, that if any arbitration or litigationresults in a finding in favor of the Executive, then Executive will be reimbursed for allreasonable legal and related costs regardless of the limitation set forth above; and furtherprovided that in no event will Executive be held liable for the legal and related costs ofthe Corporation in any event of a finding in favor of the Corporation. Executiveacknowledges that any breach of Sections 8, 9, or 10(b) or (c) would damage the Corporationirreparably and consequently, the Corporation, in addition to any other remedies availableto it, shall be entitled to preliminary and permanent injunctions, without having to postany bond or other security.     11. ADMINISTRATOR AND CLAIMS PROCEDURE     (a) The Executive, or other person claiming through the Executive, must file a writtenclaim with the Board as a prerequisite to the payment of any such claim under thisAgreement. The Board shall make all determinations as to the right of any person to receivepayment of claims under subsections (a) and (b) of this Section 11. Any denial by the Boardof a claim by the Executive, his heir or personal representative (“the claimant”) shall bestated in writing by the Board and delivered or mailed to the claimant within 10 days afterreceipt of the claim, unless special circumstances require an
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extension of time for processing the claim. If such an extension is required, writtennotice of the extension shall be furnished to the claimant prior to the termination of theinitial 10-day period. In no event shall such extension exceed a period of 10 days from theend of the initial period. Any notice of denial shall set forth the specific reasons forthe denial, specific reference to pertinent provisions of this Agreement upon which thedenial is based, a description of any additional material or information necessary for theclaimant to perfect his claim, with an explanation of why such material or information isnecessary, and any explanation of claim review procedures, written to the best of theBoard’s ability in a manner that may be understood without legal or actuarial counsel.     (b) A claimant whose claim has been wholly or partially denied by the Board mayrequest, within 10 days following the date of such denial, in a writing addressed to theBoard, a review of such denial. The claimant shall be entitled to submit such issues orcomments in writing or otherwise as he shall consider relevant to a determination of hisclaim, and he may include a request for a hearing in person before the Board. Prior tosubmitting his request, the claimant shall be entitled to review such documents as the Boardshall agree are pertinent to his claim. The claimant may, at all stages of review, berepresented by counsel, legal or otherwise, of his choice, provided that only the first$25,000 of such fees and expenses shall be borne by the Corporation, unless the claimant issuccessful, in which case, all such fees and expenses shall be borne by the Corporation.All requests for review shall be promptly resolved. The Board’s decision with respect toany such review shall be set forth in writing and shall be mailed to the claimant not laterthan 10 days following the receipt by the Board of the claimant’s request unless specialcircumstances, such as the need to hold a hearing, require an extension of time forprocessing, in which case the Board’s decision shall be so mailed not later than 20 daysafter receipt of such request.     (c) A claimant who has followed the procedure in subsections (a) and (b) of thissection, but who has not obtained full relief on his claim, may submit such claim forexpedited and binding arbitration of his claim before an arbitrator in Minnehaha County,South Dakota, in accordance with the commercial arbitration rules of the AmericanArbitration Association, as then in effect, or pursuant to such other form of alternativedispute resolution as the parties may agree (collectively, the “arbitration”). TheCorporation shall advance the filing fees, arbitrator fees and other costs required toconduct the arbitration, as well as up to $25,000 for Executive’s initial attorney fees(which fees and costs shall not be recoverable by the Corporation). The Corporation shallreimburse all of Executive’s remaining reasonable fees and expenses if Executive prevails inhis claim, as determined by such arbitrator. The arbitrator’s sole authority shall be tointerpret and apply the provisions of this Agreement; the arbitrator shall not change, addto, or subtract from, any of its provisions. The arbitrator shall be appointed by mutualagreement of the Corporation and the claimant pursuant to the applicable commercialarbitration rules. The arbitrator shall be a professional person with a national reputationfor expertise in employee benefit matters and who is unrelated to the claimant and anyemployees of the Corporation. All decisions of the arbitrator shall be final and binding onthe claimant and the Corporation.     12. MISCELLANEOUS.
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     (a) This Agreement shall inure to the benefit of and shall be binding upon thesuccessors and assigns of the Corporation, including any party with which the Corporationmay merge or consolidate or to which it may transfer substantially all of its assets and theCorporation shall require any successor (whether direct or indirect, by purchase, merger,consolidation or otherwise), by agreement in form and substance reasonably satisfactory toExecutive, to expressly assume and agree to perform the obligations of the corporation underthis Agreement in the same manner and to the same extent that the Corporation would berequired to perform this Agreement if no such succession had taken place. Failure of theCorporation to obtain such agreement prior to the effective date of any such successionshall be a breach of this Agreement and shall entitle the Executive to compensation from theCorporation in the same amount and on the same terms as he would be entitled to receivehereunder if he terminated his employment for Good Reason, except that for purposes ofimplementing the foregoing, the date on which any such succession becomes effective shall bedeemed the date of termination. As used in this Agreement, “Corporation” shall mean theCorporation as hereinbefore defined and any successor to its business and/or assets asaforesaid, which successor executes and delivers the agreement provided for in this Section12(a) or which otherwise becomes bound by the terms and provisions of this Agreement byoperation of law.     (b) The rights and obligations of Executive under this Agreement are expressly declaredand agreed to be personal, nonassignable and nontransferable during his life, but upon hisdeath, this Agreement shall inure to the benefit of his heirs, legatees and legalrepresentatives of his estate.     (c) The waiver by either party hereto of its rights with respect to a breach of anyprovision of this Agreement by the other shall not operate or be construed as a waiver ofany rights with respect to any subsequent breach.     (d) No modification, amendment, addition, alteration or waiver of any of the terms,covenants or conditions hereof shall be effective unless made in writing and duly executedby the Corporation and Executive.     (e) This Agreement may be executed in any number of counterparts, each of which shallbe deemed an original, but all of which together will constitute but one and the sameagreement.     (f) This Agreement shall be governed by and construed in accordance with the laws ofthe State of South Dakota, without regard to the conflicts of law principles thereof.     (g) If any provision of this Agreement is determined to be invalid or unenforceableunder any applicable statute or rule of law, it is to that extent to be deemed omitted andit shall not affect the validity or enforceability of any other provision.
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     (h) Any notice required or permitted to be given under this Agreement shall be inwriting, and shall be deemed given when sent by registered or certified mail, postageprepaid, addressed as follows:       If to Executive: Scott C. Petersen    26 Riverview Heights    Sioux Falls, SD 57105       If to the Corporation: LodgeNet Entertainment Corporation    3900 West Innovation Street    Sioux Falls, SD 57107-7002    Attn: General Counselor mailed to such other person and/or address as the party to be notified mayhereafter have designated by notice given to the other party in a similar manner.(i) As used in this Agreement, the following terms have the meanings given:**“Applicable Multiplier”**shall mean 2, unless Executive’s employment isterminated by the Corporation, or by Executive for Good Reason, withintwenty-four months of a Change in Control, in which case “ApplicableMultiplier” shall mean 2.5.**“Change in Control”**of the Corporation shall mean the occurrence of any ofthe following:     (i) any “person” (as such term is used in Sections 13(d) and 14(d) of theSecurities Exchange Act of 1934, as amended (the “Exchange Act”) in effect on theEffective Date) or group of other persons acting in concert (other than Corporationor any subsidiary thereof or any employee benefit plan of Corporation or anysubsidiary thereof, or any underwriter in connection with a firm commitment publicoffering of Corporations’ capital stock) becomes the “beneficial owner” (as suchterm is defined in Rule 13d-3 of the Exchange Act, except that a person shall alsobe deemed the beneficial owner of all securities which such person may have a rightto acquire, whether or not such right is presently exercisable), directly orindirectly, of securities of Corporation representing thirty percent (30%) or moreof the combined voting power of Corporation’s then outstanding securities ordinarilyhaving the right to vote in the election of directors (“voting stock”); or(ii) during any period subsequent to the Effective Date, a majority of themembers of the Board shall for any reason not be (i) the individuals who atthe beginning of such period constitute the Board or (ii) those persons whoare nominated as new directors by a majority of the current directors ortheir successors who have been so nominated; or(iii) there shall be consummated any merger, consolidation (including aseries of mergers or consolidations), or any sale, lease, exchange or other
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transfer (in one transaction or a series of related transactions) of all, orsubstantially all, of the assets of Corporation (meaning assets representingthirty percent (30%) or more of the net tangible assets of Corporation orgenerating thirty percent (30%) or more of Corporation’s operating cashflow, in each case measured over Corporation’s last four full fiscalquarters), or any other similar business combination or transaction, butexcluding any business combination or transaction which: (i) would resultin the voting stock of Corporation immediately prior thereto continuing torepresent (either by remaining outstanding or by being converted into votingstock of the surviving entity) more than 70% of the combined voting power ofthe voting stock of the Corporation (or such surviving entity) outstandingimmediately after giving effect to such business combination or transaction;or (ii) would be effected to implement a recapitalization (or similartransaction) of Corporation in which no “person” (as defined in subsection 1hereof) or group of persons acting in concert becomes the beneficial owner(as defined in subsection 1 hereof) of thirty percent (30%) or more of thecombined voting power of the then outstanding voting stock of Corporation;or     (iv) the adoption of any plan or proposal for the liquidation or dissolution ofCorporation; or     (v) the occurrence of any other event that would be required to be reported inresponse to Item 6(e) of Schedule 14A of Regulation 14A of the Exchange Act ineffect on the Effective Date.     “**Good Reason**”, in the event of a Change in Control, shall mean the occurrenceof any of the following:     (i) the assignment to Executive of any duties inconsistent with Executive’spositions, duties, responsibilities and status with the Corporation immediatelyprior to a Change in Control, or a significant adverse alteration in the nature ofExecutive’s reporting responsibilities, titles, or offices as in effect immediatelyprior to a Change in Control, or any removal of Executive from, or any failure toreelect Executive to, any such positions, except in connection with a termination ofthe employment of Executive for Cause, permanent disability, or as a result ofExecutive’s death or by Executive other than for Good Reason;     (ii) a reduction by Corporation in Executive’s Base Salary in effectimmediately prior to a Change in Control;     (iii) any material breach by Corporation of any provisions of this Agreement;     (iv) failure by Corporation to continue in effect (without substitution of asubstantially equivalent plan) any compensation plan, bonus or incentive plan, stockpurchase plan, stock option plan, life insurance plan, health plan, disability
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plan or other benefit plan or arrangement in which Executive is participating,or the taking of any action by Corporation which would adversely affect Executive’sparticipation in or materially reduce Executive’s benefits under any of such plans;     (v) Executive is excluded (without substitution of a substantially equivalentplan) from participation in any benefit, incentive, compensation, stock option,health, dental, insurance, or pension plan generally made available to seniorexecutives of the Corporation;     (vi) without Executive’s express written consent, the requirement by theCorporation that Executive’s principal place of employment be relocated more thanfifty (50) miles from Sioux Falls, South Dakota, or travel on the Corporation’sbusiness to an extent materially greater than Executive’s customary business travelobligations;     (vii) the Corporation’s failure to obtain a satisfactory agreement from anysuccessor to assume and agree to perform the Corporation’s obligations under thisAgreement; or     (viii) Executive determines in good faith that a change in circumstances hasoccurred following a Change in Control which has rendered Executive substantiallyunable to carry out, has substantially hindered Executive’s performance of, or hascaused Executive to suffer a substantial reduction in, any of the authorities,positions, duties, responsibilities or status attached to the position held byExecutive immediately prior to the Change in Control, excluding the reasonablesharing of authority with a Chief Operating Officer.     “**Good Reason**,” in the absence of a Change of Control, shall only meansubsections (i), (ii), (iii), (iv), (v), (vi) and (vii) of the immediately precedingdefinition; provided, however, that with respect to such subsection (iv), atermination or adverse change in a plan is not Good Reason in the absence of aChange in Control if such termination or adverse change is applied generally to allexecutive officers of the Corporation.     **“Last Payment Date”**means the date that is two and one-half months after theclose of the taxable year in which executive incurs a separation from service (asdefined in Section 409A of the Code).     “**Severance Period**” means twenty-four (24) months, unless Executive’s employmentis terminated by the Corporation, or by Executive for Good Reason, withintwenty-four months of a Change of Control in which case “Severance Period” shallmean thirty (30) months.     (j) Any dispute or controversy arising under or in connection with this Agreement,other than claims administered under Section 11, shall be settled exclusively by bindingarbitration in the manner set forth in Section 11(c).
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     13. PRIOR AGREEMENTS SUPERSEDED. This Agreement supersedes all prior agreements, if any,between the parties hereto with respect to the subject matter hereof including any prior employmentagreements, severance agreements, and change-in-control agreements. In addition, the provisionsrelated to acceleration of options, time to exercise options, termination of risk of forfeiture ofrestricted stock, and the like, as well as the definitions of “Cause,” “Good Reason” and “Change inControl” contained herein supersede and replace any conflicting provisions in any option grantagreement or any restricted stock agreement between the Executive and the Corporation (in any suchcase, an “Equity Agreement”) and the Executive, by executing this Agreement, hereby agrees that allhis or her existing Equity Agreements, and all Equity Agreements to which he or she may becomesubject or party to during the Term, are and shall be hereby amended to supersede and replace suchprovisions.     14. NO INTERRUPTION OF BENEFITS. This Agreement constitutes an amendment and restatement ofthe Employment Agreement, and nothing in this Agreement shall be deemed an interruption ofExecutive’s years of service for vesting of the Corporation’s benefit plans, vesting of options topurchase the Corporation’s common stock, or otherwise.     15. INDEMNIFICATION. The Corporation shall indemnify, defend, and hold Executive harmless, tothe fullest extent allowed by law, from and against any liability, damages, costs, or expenses(including attorneys’ fees) in connection with any claim, cause of action, investigation,litigation, or proceeding involving him by reason of having been an officer, director, employee, oragent of the Corporation or its affiliates, unless it is judicially determined, in a final,nonappealable order that Executive was guilty of gross negligence or willful misconduct. TheCorporation also agrees to maintain adequate directors and officers’ liability insurance for thebenefit of Executive for the term of this Agreement and for at least three years thereafter.Notwithstanding the foregoing, the Corporation shall not have an obligation to purchase suchdirectors and officers liability insurance if the Board determines in good faith that the premiumsfor such coverage are prohibitively expensive.     16. Compliance with Section 409A of the Code. The provisions of this Agreement regardingamounts that are determined to be subject to Section 409A of the Internal Revenue Code of 1986, asamended (the “Code”) shall be interpreted and administered in accordance with Section 409A of thecode and the regulations and guidance issued thereunder. Notwithstanding anything to the contrarycontained herein, no payment of an amount subject to Section 409A of the Code on account of theExecutive’s “separation from service” (as defined in Section 409A of the Code, including theregulations and guidance issued thereunder) shall be made to the Executive if the Executive isdetermined to be a “specified employee” within the meaning of Section 409A of the Code at the timeof the Executive’s separation from service. Any such amounts to which the Executive wouldotherwise be entitled under this Agreement during the first six months following a separation fromservice shall be accumulated and paid on the first day of the seventh month following theExecutive’s separation from service.*[SIGNATURES ON NEXT PAGE]*
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date andyear first above written.         **LODGENET ENTERTAINMENT CORPORATION**           By: */s/*James G. Naro             Name: James G. Naro      Title: Senior VP, General Counsel           **EXECUTIVE:**           */s/*Scott C. Petersen         Scott C. Petersen  
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