Document:

exv10w17

 

Exhibit 10.17

Execution Copy

SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”), dated as of January
29, 2008, and effective as of January 1, 2008 (the “Effective Date”), is made by and between
LodgeNet Entertainment Corporation, a Delaware corporation (the “Corporation”), and Scott C.
Petersen (“Executive”) with reference to the following circumstances, namely:

RECITALS

	A.	 	Executive is employed by Corporation as its Chairman of the Board, President and Chief
Executive Officer, and as such is, and will be, making an important contribution to the
development and operation of Corporation’s business.

	B.	 	On July 22, 1998, Executive and the Corporation entered into an Employment Agreement, which
was 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 Employment
Agreement.

AGREEMENT

     NOW, THEREFORE, in consideration of the provisions of this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
Corporation agrees to continue to employ Executive, and Executive agrees to continue such
employment, upon the following terms and conditions:

     1. PERIOD OF EMPLOYMENT. The employment of Executive by the Corporation pursuant to this
Agreement 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 6
herein, 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 an
additional year (to result thereafter in a rolling two-year term of employment hereunder) unless
sixty (60) days prior thereto either party hereto has given written notice to the other that such
party 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 or
offices to which he shall be elected by the Board of Directors of the Corporation (“Board”) with
his approval, performing the duties of such office or offices held at the time and such other
duties not inconsistent with his position as such an officer or director as are assigned to him by
the Board or committees of the Board. During the period of employment, Executive shall devote his
full-time attention to the business of the Corporation and the discharge of the aforementioned
duties, except for permitted vacations, absences due to illness, and reasonable time for attention
to personal affairs and charitable activities.

 

 

     3. OFFICE FACILITIES. During the period of employment, Executive shall have his office where
Corporation’s principal offices are located from time to time, which currently are at 3900 West
Innovation Street, Sioux Falls, South Dakota, and the Corporation shall furnish Executive with
office facilities reasonably suitable to his position at such location.

     4. COMPENSATION. As compensation for his services performed hereunder, the Corporation shall
pay or provide to Executive the following:

     (a) Base Salary. The Corporation shall pay Executive a base salary (the “Base
Salary”), 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 and
from time to time in its discretion), payable monthly, semi-monthly or weekly according to
the Corporation’s general practice for its executives, for the period of employment under
this Agreement. Executive’s Base Salary shall be reviewed by the Board and shall be subject
to increase each year by an amount determined by the Board. Such Base Salary, including any
such annual increases (which shall be considered part of the Base Salary), shall not be
reduced during the period of employment hereunder.

     (b) Bonus. For each of the years in the period of employment, Executive shall
be eligible to receive in cash an annual performance bonus (the “Bonus”). The Board shall
develop the Bonus formula, targets and criteria for determining achievement of such targets
in consultation with Executive; provided, however, that any such formula, target and
criteria shall provide Executive with the opportunity to earn at least 70% of Base Salary
upon the achievement of 100% of target. The Bonus targets and criteria for determining
achievement 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 compensation
programs in accordance with their terms as the Corporation may have in effect from time to
time for its executive personnel, other than any annual cash bonus plan (which is dealt with
in Section 4(b) hereof), and all compensation and other entitlements earned thereunder shall
be in addition to, and shall not in any way reduce, the amount payable as Base Salary and
Bonus.

     (d) Health, Welfare and Retirement Plans; Vacation. During the period of
employment, 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 are
maintained in effect from time to time by the Corporation for its executive
employees;

     (ii) participate in other non-duplicative benefit programs which the
Corporation may from time to time offer generally to executive personnel of the
Corporation;

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     (iii) cash payments in addition to Base Salary, Bonus, or any other benefits
hereunder, in an amount to be set by the Board for each year during the period of
employment, and which shall be $36,000 for 2008, to enable the Executive to purchase
such other benefits as Executive deems necessary or advisable; such amount shall be
paid annually in twelve equal monthly installments on or about the 20th day of each
month, 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 the
Corporation’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 or
milestones, if any, and exercise price, if appropriate, to be determined by the Board. In
making such determination, the Board shall take into account Executive’s individual
performance and performance of the Corporation as a whole, including Executive’s performance
against the then applicable Bonus Plan targets.

     (f) Car Allowance. During the period of employment, the Corporation shall
provide Executive with a monetary allowance in an amount acceptable to Executive which is
approved 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 expenses
incurred in connection with the performance of his duties hereunder consistent with the
Company’s policy regarding reimbursement of such expenses. In addition, Executive shall be
reimbursed by the Corporation for Executive’s reasonable and documented legal and accounting
fees incurred in connection with entering into this Agreement. With respect to any benefits
or payments received or owed to Executive hereunder, Executive shall cooperate in good faith
with the Corporation to structure such benefits or payments in the most tax efficient manner
to the Corporation; provided, that Executive shall have no obligation to take any action
that is reasonably determined by Executive to be adverse to Executive, including without
limitation 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 the
services required of him by this Agreement during any period in which he is disabled or his health
is impaired to an extent which would render his performance of such services hazardous to his
health or life, and relief from such obligation shall not in any way affect his rights hereunder
except to the extent that such disability may result in termination of his employment by the
Corporation pursuant to Section 6 herein.

     6. TERMINATION OF EMPLOYMENT. The employment of Executive by the Corporation pursuant to this
Agreement 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 the
period of employment hereunder, such employment shall terminate on the date of death.

     (b) Permanent Disability. Such employment may be terminated by the Corporation
prior to the expiration of the period of employment hereunder due to Executive’s physical or
mental disability which prevents the effective performance by Executive of his duties
hereunder on a full-time basis, with such termination to occur on or after (i) the date on
which Executive becomes entitled to disability compensation benefits under Executive’s
long-term disability benefit policy then in effect, or (ii) in the event that no such policy
is in effect, the date of the determination of an impartial physician in the manner set
forth in the next sentence that Executive is permanently disabled. Any dispute as to
Executive’s physical or mental disability shall be settled by the opinion of an impartial
physician selected by the parties or their representatives or, in the event of failure to
make a joint selection after request therefor by either party to the other, a physician
selected by the Corporation, with the fees and expenses of any such physician to be borne by
the Corporation.

     (c) Cause. The Corporation, by giving written notice of termination to
Executive, may terminate Executive’s employment at any time prior to the expiration of the
Term for Cause, with Cause to be determined by the Board after reasonable written notice to
Executive and an opportunity for Executive to be heard at a meeting of the Board and with
reasonable opportunity (of not less than 30 days) in the case of willful neglect of material
duties to cease such neglect. For purposes of this Section 6(c), no act or failure to act
on the Executive’s part shall be considered “willful” unless done or omitted to be done by
Executive not in good faith and without reasonable belief that his action or omission was in
the best interest of the Corporation.

     (d) Cause means that such termination must be due to (1) acts committed during the Term
of 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 to
result in any demonstrable and material financial or economic harm to the Corporation, or
which materially damages the Corporation’s reputation; or (3) willful breach of this
Agreement, 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’s
Code of Business Conduct and Ethics or (y) the Corporation’s Employee Handbook (as amended
from time to time) which results in or is reasonably likely to result in any demonstrable
and material financial or economic harm to the Corporation or material damage to the
Corporation’s reputation.

     (e) Without Cause. The Corporation may terminate such employment at any time
prior to said date without Cause (which shall be for any reason not covered by preceding
subsections (a) through (c)) upon 60 days prior written notice to Executive.

     (f) By Executive. Executive may terminate such employment at any time for an
applicable Good Reason (subject to Section 6(g)) or otherwise upon written notice thereof to
the Corporation.

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     (g) Notice of Good Reason. If Executive believes that he is entitled to
terminate his employment with the Corporation for an applicable Good Reason, he may apply in
writing to the Corporation for confirmation of such entitlement prior to the Executive’s
actual separation from employment, by following the claims procedure set forth in Section 11
hereof. The submission of such a request by an Executive shall not constitute “Cause” for
the Corporation to terminate Executive under Section 6(c) hereof; and Executive shall
continue to receive all compensation and benefits he was receiving at the time of such
submission throughout the resolution of the matter pursuant to the procedures set forth in
Section 11 hereof. If the Executive’s request for a termination of employment for Good
Reason 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 arbitration
pursuant to Section 11(c) and use their best efforts to conclude the arbitration within
ninety (90) days after the claim is submitted.

     (h) Notice of Termination. Any termination of the Executive’s employment by
the 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. For
purposes of this Agreement, a “Notice of Termination shall mean a notice which shall
indicate the specific termination provision in this Agreement relied upon and shall set
forth in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated. For purposes of
this Agreement, no purported termination shall be effective without the delivery of such
Notice of Termination.

     (i) Date of Termination. The date of termination of Executive’s employment
shall mean (i) if the Executive is terminated by his death, the date of his death, (ii) if
the Executive’s employment is terminated due to a permanent disability, thirty (30) days
after the Notice of Termination is given (provided that the Executive shall not have
returned to the performance of his duties on a full-time basis during such period), (iii) if
the Executive’s employment is terminated pursuant to a termination for Cause, the date
specified in the Notice of Termination, and (iv) if the Executive’s employment is terminated
for any other reason, the date of termination shall be the later of thirty (30) days after
termination as provided by the Notice of Termination or the date of the final resolution of
the arbitration and claims procedures set forth in Section 11 hereof, unless otherwise
agreed 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 termination
of Executive’s employment by the Corporation, all compensation due Executive under this
Agreement and under each plan or program of the Corporation in which he may be participating
at the time shall cease to accrue as of the date of such termination (except, in the case of
any such plan or program, if and to the extent otherwise provided in the terms of such plan
or program or by applicable law), and all such compensation accrued as of the date of such
termination but not previously paid shall be paid to Executive at the time such payment
otherwise would be due, and in any

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event no later than the Last Payment Date. If the termination of Executive’s
employment 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 actual
bonus for the preceding year, pro rata based on the portion of the year ended on the date of
the termination, or (ii) the amount which would have been earned by Executive under his then
current Bonus Plan, pro rata based on the portion of the year ended on the date of
termination, and computed based on actual results for such year. Any such payment shall be
paid to the Executive within ten (10) days of the date of termination and in any event no
later than the Last Payment Date.

     (b) If Executive’s employment pursuant to this Agreement is terminated pursuant to
subsection (d) of Section 6 herein, the Corporation elects at any time not to renew or
extend this Agreement pursuant to Section 1 or Executive terminates this Agreement for Good
Reason, 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 Payment
shall 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 of
this Section 7(b),

     (A) Executive’s Base Salary shall be the higher of Executive’s annual
Base Salary in effect immediately prior to such termination or Executive’s
annual 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 years
2008, 2009 and 2010, determined assuming that 87.5% of the target for such
Bonus has been met, and (ii) for year 2011 and subsequent years, determined
using a formula that results in a Bonus that is equal to the same percentage
of annual Base Salary determined pursuant to Section 7(b)(i)(B)(2)(i) for
year 2010

The Severance Payment shall be due and payable within ten (10) days after the date
of termination of employment, but no later than the Last Payment Date. The
Severance Payment is subject to required withholding.

     (ii) Acceleration of Vesting. All options to purchase the
Corporation’s common stock held by Executive at the time of such termination but
still subject to vesting, shall be fully and immediately vested and shall be
exercisable until the first to occur of (x) the expiration date of the applicable
option or (y) four (4) years following the date of termination. All grants of
restricted stock or other rights related to shares of the Corporation’s common stock
shall be immediately vested (or the risk of forfeiture, as appropriate, shall
terminate and all restrictions or conditions to the receipt of such shares shall be
waived, for 100% of the “target” shares that were to have been delivered to the
Executive under any

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performance-based plan and 100% of the shares subject to a time-based vesting
plan) 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 in
any of the Corporation’s plans or arrangements which are subject to vesting shall be
fully and immediately vested.

     (iii) Benefits. During the Severance Period, Executive shall be
entitled to the continuation of the same or equivalent life, health,
hospitalization, dental and disability insurance coverage and other employee
insurance or welfare benefits that he had received (including equivalent coverage
for his spouse and dependent children) immediately prior to termination of
employment, 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 to
continue to be so covered, the Corporation shall provide the Executive with
substantially equivalent coverage through other sources or will provide Executive
with a lump-sum payment equal to the cost of obtaining such coverage for the
Severance Period. If Executive was receiving any cash-in-lieu payments designed to
enable Executive to obtain insurance coverage of his choosing, the Corporation
shall, in addition to any other benefits to be provided under this Section, provide
Executive with a lump-sum payment equal to the amount of such in-lieu payments that
Executive would have been entitled to receive over the Severance Period, no later
than the Last Payment Date. Following the Severance Period, Executive shall be
entitled to receive continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, treating the end of the Severance Period as
a termination of the Executive’s employment.

     (iv) Tax Gross-Up. If any payments received by Executive pursuant to
this Agreement will be subject to the excise tax (the “Excise Tax”) imposed by
Section 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 shall
pay to the Executive additional compensation such that the net amount received by
the Executive after deduction of any Excise Tax (and taking into account any
federal, state and local income taxes payable by the Executive as a result of the
receipt of such gross-up compensation), shall be equal to the total payments he
would have received had no such Excise Tax (or any interest or penalties thereon)
been paid or incurred. The Corporation shall pay such additional compensation no
later than the Last Payment Date. The calculation of the tax gross-up payment shall
be approved by the Corporation’s independent certified public accounting firm and
the Executive’s designated financial advisor.

     (c) Additional Requirement for Severance Compensation. The amounts payable
pursuant to this Section 7 shall be paid only upon an Executive’s execution and delivery to
the Corporation of an agreement and general release, in such form as is acceptable to the
Corporation, in its sole discretion, under which, among other things, the Executive shall
release and discharge the Corporation and related persons from all claims and liabilities
relating to the Executive’s employment with the Corporation and/or the termination of the
Executive’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 to
this Section 7 will be paid only after the Release Effective Date and expiration of all
periods of permitted rescission under federal or state

     8. CONFIDENTIAL INFORMATION. Executive shall not at any time during the period of employment
and thereafter disclose to others or use any trade secrets or any other confidential information
belonging to the Corporation or any of its subsidiaries, including, without limitation, drawings,
plans, programs, specifications and non-public information relating to customers of the Corporation
or its subsidiaries except as may be required to perform his duties hereunder. The provisions of
this 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, the
restrictions contained in this Section 8 shall not apply to any such trade secret or confidential
information which becomes generally known in the trade.

     9. PATENTS AND OTHER INTELLECTUAL PROPERTY. The Corporation shall be entitled to any and all
ideas, know-how and inventions, whether patentable or not, which Executive shall conceive, make or
develop during the period of his employment with the Corporation, relating to the business of the
Corporation or any of his subsidiaries. Executive shall, from time to time, at the request of the
Corporation, execute and deliver such instruments or documents, and shall perform or do such acts
or things, as reasonably may be requested in order that the Corporation may have the benefit of
such ideas, know-how and inventions and, in particular, so that patent applications may be prepared
and 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, including
appropriate assignments vesting in the Corporation or any of its subsidiaries (or any successor to
the Corporation or any of its subsidiaries) full title to any and all such ideas, inventions and
applications.

     Further Executive will cooperate and assist the Corporation in the prosecution of any such
applications 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 benefits
due him under Section 7 herein, by seeking employment with others, or otherwise, nor shall
the amount of such benefits be reduced or offset in any way by any income or benefits earned
by Executive from another employer or other source.

     (b) For a period of twenty-four (24) months after Executive’s termination of employment
hereunder, Executive shall not enter into endeavors that involve a Competing Business (as
defined below), and shall not own an interest in, manage, operate, join, control, lend money
or render financial or other assistance to or participate in or be connected with, as an
officer, employee, director, partner, stockholder (except for passive investments of not
more than a one-percent interest in the securities of a publicly-held corporation regularly
traded on a national securities exchange or in an over-the-counter securities market),
consultant or otherwise, any individual, partnership, firm, corporation or other business
organization 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 or
healthcare facilities in the United States (a “Competing Business”). For these purposes, an
entity involved in the cable, satellite or other pay television business generally shall not
be deemed to be a Competing Business if (i) the provision of video or broadband services to
lodging or healthcare facilities comprises less than twenty percent (20%) of the revenues of
such entity and (ii) Executive’s principal duties do not involve operation or oversight of
that portion of the enterprise involved in the provision of video or broadband services to
lodging or healthcare facilities). In the event that Executive violates the provisions of
this subparagraph (b), the Corporation shall have the right, in addition to such other
remedies as the Corporation may have available to it, to recover that portion of the amounts
paid to Executive pursuant to the provisions of Section 7 hereof which relate to the period
of 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 employment
hereunder, 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 her
employment relationship with the Corporation; provided, however, that it shall not be a
breach of this Section 10(c) if Executive or Executive’s employer hires persons that are at
the time employees of the Corporation as a result of (i) Executive or Executive’s employer
conducting generalized solicitations by way of advertisements, engaging firms to conduct
searches 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 by
employees 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 related
proceedings to enforce, construe or determine the validity of the provisions for termination
benefits in Section 7 herein; provided, however, that if any arbitration or litigation
results in a finding in favor of the Executive, then Executive will be reimbursed for all
reasonable legal and related costs regardless of the limitation set forth above; and further
provided that in no event will Executive be held liable for the legal and related costs of
the Corporation in any event of a finding in favor of the Corporation. Executive
acknowledges that any breach of Sections 8, 9, or 10(b) or (c) would damage the Corporation
irreparably and consequently, the Corporation, in addition to any other remedies available
to it, shall be entitled to preliminary and permanent injunctions, without having to post
any bond or other security.

     11. ADMINISTRATOR AND CLAIMS PROCEDURE

     (a) The Executive, or other person claiming through the Executive, must file a written
claim with the Board as a prerequisite to the payment of any such claim under this
Agreement. The Board shall make all determinations as to the right of any person to receive
payment of claims under subsections (a) and (b) of this Section 11. Any denial by the Board
of a claim by the Executive, his heir or personal representative (“the claimant”) shall be
stated in writing by the Board and delivered or mailed to the claimant within 10 days after
receipt 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, written
notice of the extension shall be furnished to the claimant prior to the termination of the
initial 10-day period. In no event shall such extension exceed a period of 10 days from the
end of the initial period. Any notice of denial shall set forth the specific reasons for
the denial, specific reference to pertinent provisions of this Agreement upon which the
denial is based, a description of any additional material or information necessary for the
claimant to perfect his claim, with an explanation of why such material or information is
necessary, and any explanation of claim review procedures, written to the best of the
Board’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 may
request, within 10 days following the date of such denial, in a writing addressed to the
Board, a review of such denial. The claimant shall be entitled to submit such issues or
comments in writing or otherwise as he shall consider relevant to a determination of his
claim, and he may include a request for a hearing in person before the Board. Prior to
submitting his request, the claimant shall be entitled to review such documents as the Board
shall agree are pertinent to his claim. The claimant may, at all stages of review, be
represented 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 is
successful, 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 to
any such review shall be set forth in writing and shall be mailed to the claimant not later
than 10 days following the receipt by the Board of the claimant’s request unless special
circumstances, such as the need to hold a hearing, require an extension of time for
processing, in which case the Board’s decision shall be so mailed not later than 20 days
after receipt of such request.

     (c) A claimant who has followed the procedure in subsections (a) and (b) of this
section, but who has not obtained full relief on his claim, may submit such claim for
expedited and binding arbitration of his claim before an arbitrator in Minnehaha County,
South Dakota, in accordance with the commercial arbitration rules of the American
Arbitration Association, as then in effect, or pursuant to such other form of alternative
dispute resolution as the parties may agree (collectively, the “arbitration”). The
Corporation shall advance the filing fees, arbitrator fees and other costs required to
conduct 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 shall
reimburse all of Executive’s remaining reasonable fees and expenses if Executive prevails in
his claim, as determined by such arbitrator. The arbitrator’s sole authority shall be to
interpret and apply the provisions of this Agreement; the arbitrator shall not change, add
to, or subtract from, any of its provisions. The arbitrator shall be appointed by mutual
agreement of the Corporation and the claimant pursuant to the applicable commercial
arbitration rules. The arbitrator shall be a professional person with a national reputation
for expertise in employee benefit matters and who is unrelated to the claimant and any
employees of the Corporation. All decisions of the arbitrator shall be final and binding on
the claimant and the Corporation.

     12. MISCELLANEOUS.

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     (a) This Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Corporation, including any party with which the Corporation
may merge or consolidate or to which it may transfer substantially all of its assets and the
Corporation shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise), by agreement in form and substance reasonably satisfactory to
Executive, to expressly assume and agree to perform the obligations of the corporation under
this Agreement in the same manner and to the same extent that the Corporation would be
required to perform this Agreement if no such succession had taken place. Failure of the
Corporation to obtain such agreement prior to the effective date of any such succession
shall be a breach of this Agreement and shall entitle the Executive to compensation from the
Corporation in the same amount and on the same terms as he would be entitled to receive
hereunder if he terminated his employment for Good Reason, except that for purposes of
implementing the foregoing, the date on which any such succession becomes effective shall be
deemed the date of termination. As used in this Agreement, “Corporation” shall mean the
Corporation as hereinbefore defined and any successor to its business and/or assets as
aforesaid, which successor executes and delivers the agreement provided for in this Section
12(a) or which otherwise becomes bound by the terms and provisions of this Agreement by
operation of law.

     (b) The rights and obligations of Executive under this Agreement are expressly declared
and agreed to be personal, nonassignable and nontransferable during his life, but upon his
death, this Agreement shall inure to the benefit of his heirs, legatees and legal
representatives of his estate.

     (c) The waiver by either party hereto of its rights with respect to a breach of any
provision of this Agreement by the other shall not operate or be construed as a waiver of
any 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 executed
by the Corporation and Executive.

     (e) This Agreement may be executed in any number of counterparts, each of which shall
be deemed an original, but all of which together will constitute but one and the same
agreement.

     (f) This Agreement shall be governed by and construed in accordance with the laws of
the 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 unenforceable
under any applicable statute or rule of law, it is to that extent to be deemed omitted and
it shall not affect the validity or enforceability of any other provision.

11

 

     (h) Any notice required or permitted to be given under this Agreement shall be in
writing, and shall be deemed given when sent by registered or certified mail, postage
prepaid, 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 Counsel

or mailed to such other person and/or address as the party to be notified may
hereafter 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 is
terminated by the Corporation, or by Executive for Good Reason, within
twenty-four months of a Change in Control, in which case “Applicable
Multiplier” shall mean 2.5.

“Change in Control” of the Corporation shall mean the occurrence of any of
the following:

     (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) in effect on the
Effective Date) or group of other persons acting in concert (other than Corporation
or any subsidiary thereof or any employee benefit plan of Corporation or any
subsidiary thereof, or any underwriter in connection with a firm commitment public
offering of Corporations’ capital stock) becomes the “beneficial owner” (as such
term is defined in Rule 13d-3 of the Exchange Act, except that a person shall also
be deemed the beneficial owner of all securities which such person may have a right
to acquire, whether or not such right is presently exercisable), directly or
indirectly, of securities of Corporation representing thirty percent (30%) or more
of the combined voting power of Corporation’s then outstanding securities ordinarily
having the right to vote in the election of directors (“voting stock”); or

(ii) during any period subsequent to the Effective Date, a majority of the
members of the Board shall for any reason not be (i) the individuals who at
the beginning of such period constitute the Board or (ii) those persons who
are nominated as new directors by a majority of the current directors or
their successors who have been so nominated; or

(iii) there shall be consummated any merger, consolidation (including a
series of mergers or consolidations), or any sale, lease, exchange or other

12

 

transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of Corporation (meaning assets representing
thirty percent (30%) or more of the net tangible assets of Corporation or
generating thirty percent (30%) or more of Corporation’s operating cash
flow, in each case measured over Corporation’s last four full fiscal
quarters), or any other similar business combination or transaction, but
excluding any business combination or transaction which: (i) would result
in the voting stock of Corporation immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
stock of the surviving entity) more than 70% of the combined voting power of
the voting stock of the Corporation (or such surviving entity) outstanding
immediately after giving effect to such business combination or transaction;
or (ii) would be effected to implement a recapitalization (or similar
transaction) of Corporation in which no “person” (as defined in subsection 1
hereof) or group of persons acting in concert becomes the beneficial owner
(as defined in subsection 1 hereof) of thirty percent (30%) or more of the
combined voting power of the then outstanding voting stock of Corporation;
or

     (iv) the adoption of any plan or proposal for the liquidation or dissolution of
Corporation; or

     (v) the occurrence of any other event that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A of the Exchange Act in
effect on the Effective Date.

     “Good Reason”, in the event of a Change in Control, shall mean the occurrence
of any of the following:

     (i) the assignment to Executive of any duties inconsistent with Executive’s
positions, duties, responsibilities and status with the Corporation immediately
prior to a Change in Control, or a significant adverse alteration in the nature of
Executive’s reporting responsibilities, titles, or offices as in effect immediately
prior to a Change in Control, or any removal of Executive from, or any failure to
reelect Executive to, any such positions, except in connection with a termination of
the employment of Executive for Cause, permanent disability, or as a result of
Executive’s death or by Executive other than for Good Reason;

     (ii) a reduction by Corporation in Executive’s Base Salary in effect
immediately 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 a
substantially equivalent plan) any compensation plan, bonus or incentive plan, stock
purchase plan, stock option plan, life insurance plan, health plan, disability

13

 

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’s
participation in or materially reduce Executive’s benefits under any of such plans;

     (v) Executive is excluded (without substitution of a substantially equivalent
plan) from participation in any benefit, incentive, compensation, stock option,
health, dental, insurance, or pension plan generally made available to senior
executives of the Corporation;

     (vi) without Executive’s express written consent, the requirement by the
Corporation that Executive’s principal place of employment be relocated more than
fifty (50) miles from Sioux Falls, South Dakota, or travel on the Corporation’s
business to an extent materially greater than Executive’s customary business travel
obligations;

     (vii) the Corporation’s failure to obtain a satisfactory agreement from any
successor to assume and agree to perform the Corporation’s obligations under this
Agreement; or

     (viii) Executive determines in good faith that a change in circumstances has
occurred following a Change in Control which has rendered Executive substantially
unable to carry out, has substantially hindered Executive’s performance of, or has
caused Executive to suffer a substantial reduction in, any of the authorities,
positions, duties, responsibilities or status attached to the position held by
Executive immediately prior to the Change in Control, excluding the reasonable
sharing of authority with a Chief Operating Officer.

     “Good Reason,” in the absence of a Change of Control, shall only mean
subsections (i), (ii), (iii), (iv), (v), (vi) and (vii) of the immediately preceding
definition; provided, however, that with respect to such subsection (iv), a
termination or adverse change in a plan is not Good Reason in the absence of a
Change in Control if such termination or adverse change is applied generally to all
executive officers of the Corporation.

     “Last Payment Date” means the date that is two and one-half months after the
close of the taxable year in which executive incurs a separation from service (as
defined in Section 409A of the Code).

     “Severance Period” means twenty-four (24) months, unless Executive’s employment
is terminated by the Corporation, or by Executive for Good Reason, within
twenty-four months of a Change of Control in which case “Severance Period” shall
mean 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 binding
arbitration in the manner set forth in Section 11(c).

14

 

     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 employment
agreements, severance agreements, and change-in-control agreements. In addition, the provisions
related to acceleration of options, time to exercise options, termination of risk of forfeiture of
restricted stock, and the like, as well as the definitions of “Cause,” “Good Reason” and “Change in
Control” contained herein supersede and replace any conflicting provisions in any option grant
agreement or any restricted stock agreement between the Executive and the Corporation (in any such
case, an “Equity Agreement”) and the Executive, by executing this Agreement, hereby agrees that all
his or her existing Equity Agreements, and all Equity Agreements to which he or she may become
subject or party to during the Term, are and shall be hereby amended to supersede and replace such
provisions.

     14. NO INTERRUPTION OF BENEFITS. This Agreement constitutes an amendment and restatement of
the Employment Agreement, and nothing in this Agreement shall be deemed an interruption of
Executive’s years of service for vesting of the Corporation’s benefit plans, vesting of options to
purchase the Corporation’s common stock, or otherwise.

     15. INDEMNIFICATION. The Corporation shall indemnify, defend, and hold Executive harmless, to
the 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, or
agent 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. The
Corporation also agrees to maintain adequate directors and officers’ liability insurance for the
benefit 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 such
directors and officers liability insurance if the Board determines in good faith that the premiums
for such coverage are prohibitively expensive.

     16. Compliance with Section 409A of the Code. The provisions of this Agreement regarding
amounts that are determined to be subject to Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) shall be interpreted and administered in accordance with Section 409A of the
code and the regulations and guidance issued thereunder. Notwithstanding anything to the contrary
contained herein, no payment of an amount subject to Section 409A of the Code on account of the
Executive’s “separation from service” (as defined in Section 409A of the Code, including the
regulations and guidance issued thereunder) shall be made to the Executive if the Executive is
determined to be a “specified employee” within the meaning of Section 409A of the Code at the time
of the Executive’s separation from service. Any such amounts to which the Executive would
otherwise be entitled under this Agreement during the first six months following a separation from
service shall be accumulated and paid on the first day of the seventh month following the
Executive’s separation from service.

[SIGNATURES ON NEXT PAGE]

15

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the date and
year 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	 	 

16exv10w18

 

Exhibit 10.18

LODGENET ENTERTAINMENT CORPORATION

EXECUTIVE EMPLOYMENT AGREEMENT

     AGREEMENT, dated as of January 29, 2008 by and between LodgeNet Entertainment Corporation, a
Delaware corporation located at 3900 West Innovation Street, Sioux Falls, South Dakota 57107
(“Corporation”), and David M. Bankers (“Executive”).

     WHEREAS, the Executive is presently employed by the Corporation in the capacity and with the
title set forth on Appendix A hereto:

     WHEREAS, the Board of Directors (“Board”) has determined that it would be in the best interest
of the Corporation and its shareholders to provide for the employment of Executive on the terms set
forth herein in order to secure the attention and dedication of the Executive as a member of the
Corporation’s management team.;

     WHEREAS, the Board has determined that entering into agreements from time to time with members
of senior management in the form hereof will enhance the ability of the Corporation to attract and
retain capable senior executives; and

     WHEREAS, the Executive is willing to continue serving the Corporation in accordance with the
provisions of this Agreement.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants and
obligations hereinafter set forth, the parties hereto hereby agree as follows:

     1. Definitions. Capitalized terms used herein shall have the meanings set forth in
Appendix B, which is attached hereto and incorporated herein by reference.

     2. Term of Employment. The employment of Executive by the Corporation pursuant to
this Agreement shall be for a period (the “Term”) beginning on the date hereof and continuing,
unless sooner terminated as provided in Section 7 herein, through December 31, 2008; provided,
however, that on each December 31, commencing with December 31, 2008, such period of employment
shall automatically be extended for an additional year, (in which case the Term shall be deemed to
have been extended through December 31 of the next succeeding year), unless sixty (60) days prior
to the expiration of the then-current Term either party hereto has given written notice to the
other that such party does not wish to extend the period of employment.

     3. Duties. During the Term, Executive shall serve as in the capacities and with the
title(s) set forth in Appendix A, or in such other office or offices to which he shall be elected
by the Board of Directors of the Corporation (“Board”) with Executive’s approval, performing the
duties of such office or offices as are assigned to Executive by the Board or committees of the
Board or the Chief Executive Officer of the Corporation. During the Term, Executive shall devote
his full time and attention to the business of the

 

 

Corporation and the discharge of the aforementioned duties, except for permitted vacations,
absences due to illness, and reasonable time for attention to personal affairs.

     4. Work Location. During the Term, Executive shall have an office at the facility
specified on Appendix A.

     5. Compensation. As compensation for the services performed hereunder, the
Corporation shall pay or provide to Executive the following:

	 	(a)	 	The Corporation shall pay Executive a salary (the “Base Salary”), calculated
at the rate per annum set forth on Appendix A (which Base Salary may be increased by
the Corporation at any time and from time to time in its discretion). The Base Salary
shall be payable monthly, semi-monthly or weekly according to the Corporation’s
general practice for its executives, for the Term under this Agreement.
	 
	 	(b)	 	During the Term, Executive shall be allowed to participate in such bonus and
other incentive compensation programs in accordance with their terms as the
Corporation may have in effect from time to time for its executive personnel, and all
compensation and other entitlements earned pursuant to such programs shall be in
addition to, and shall not in any way reduce, the amount payable as Base Salary.
	 
	 	(c)	 	During the Term, Executive shall be entitled to:

	 	(i)	 	participate in such retirement, investment, health (medical,
hospital and/or dental) insurance, life insurance, disability insurance and
accident insurance plans and programs as are maintained in effect from time to
time by the Corporation for its salaried employees;
	 
	 	(ii)	 	participate in other non-duplicative benefit programs which
the Corporation may from time to time offer generally to executive personnel
of the Corporation; and
	 
	 	(iii)	 	accrue vacation time, sick leave, or other forms of paid
time off in accordance with the Corporation’s policy for executive personnel.

	 	(d)	 	During the Term, the Board from time to time in its discretion may grant to
Executive stock options, restricted stock and other rights related to shares of the
Corporation’s common stock, and may designate the terms on which such rights vest.

     6. Effect of Disability and Certain Hazards. Executive shall not be obligated to
perform the services set forth in this Agreement during any period of Disability, and relief from
such obligation shall not in any way affect his rights hereunder except to the

 

 

extent that such Disability may result in termination of his employment by the Corporation pursuant
to Section 7 herein.

     7. Termination of Employment. The employment of Executive by the Corporation
pursuant to this Agreement may be terminated on or prior to the expiration of the then current Term
as follows:

	 	(a)	 	Termination in the Event of Death. In the event of Executive’s death
prior to the expiration of the Term, such employment shall automatically terminate on
the date of Executive’s death.
	 
	 	(b)	 	Termination in the Event of Disability. The Corporation may
terminate this Agreement due to Executive’s Disability prior to the expiration of the
Term on not less than thirty (30) days prior written notice, unless prior to the
expiration of said 30 day period, Executive shall have returned to the effective
performance of Executive’s duties on a full-time basis. Any dispute as to the
existence of a Disability shall be settled by the opinion of an impartial physician
selected by the parties or their representatives or, in the event of failure to make a
joint selection after request therefore by either party to the other, a physician
selected by the Corporation, with the fees and expenses of any such physician to be
borne in equal shares by the Corporation and Executive.
	 
	 	(c)	 	Termination for Cause. The Corporation, by giving written notice of
termination to Executive, may terminate Executive’s employment at any time prior to
the expiration of the Term for Cause, with Cause to be determined by the Board after
reasonable written notice to Executive and an opportunity for Executive to be heard at
a meeting of the Board and with reasonable opportunity (of not less than 30 days) in
the case of willful neglect of material duties to cease such neglect. For purposes of
this Section 7(c), no act or failure to act on the Executive’s part shall be
considered “willful” unless done or omitted to be done by Executive not in good faith
and without reasonable belief that his action or omission was in the best interest of
the Corporation.
	 
	 	(d)	 	Termination Without Cause. The Corporation may terminate such
employment at any time prior to the expiration of the Term without Cause upon 60 days
prior written notice to Executive.
	 
	 	(e)	 	Date of Termination. Unless otherwise agreed by the Executive and
Corporation or otherwise provided in this Agreement, the effective date of termination
shall be determined as follows:

	 	(i)	 	if this Agreement is terminated by death, the effective date
of shall be the date of Executive’s death,

 

 

	 	(ii)	 	if the Executive’s employment is terminated due to a
Disability, the effective date of termination shall be thirty (30) days after
the Notice of Termination is given (provided that the Executive shall not have
returned to the effective performance of his duties on a full-time basis
during such period),
	 
	 	(iii)	 	if the Executive’s employment is terminated for Cause, the
effective date of termination shall be the date specified in the Notice of
Termination, and
	 
	 	(iv)	 	if the Executive’s employment is terminated for any other
reason, the effective date of termination shall be sixty (60) days after the
Notice of Termination.

     8. Payments Upon Termination. 

	 	(a)	 	Except as otherwise provided in subsections (b) or (c) of this Section 8,
upon termination of Executive’s employment by the Corporation, all compensation due
Executive under this Agreement and under each plan or program of the Corporation in
which Executive may be participating at the time shall cease to accrue as of the date
of such termination (except, in the case of any such plan or program, if and to the
extent otherwise provided in the terms of such plan or program), and all such
compensation accrued as of the date of such termination but not previously paid shall
be paid to Executive at the time such payment otherwise would be due, and in any event
no later than the Last Payment Date. Unless otherwise expressly provided in the terms
of the bonus plan or program of the Corporation in which the Executive is a
participant at the time of his termination, if the termination of Executive’s
employment is for any reason other than a termination for Cause in accordance with
Section 7(c) above, then a pro rata portion of the “target” full year’s bonus shall be
deemed to have accrued for the Executive under such bonus plan or program for the
portion of the year ended on the date of the termination, which shall be paid to the
Executive within 10 days of the date of termination and no later than the Last Payment
Date.
	 
	 	(b)	 	If Executive’s employment pursuant to this Agreement is terminated by the
Corporation without Cause pursuant to Section 7(d) above, or if the Corporation elects
at any time not to renew or extend this Agreement at the expiration of the then
current Term, and provided that subsection (c) below does not apply, then, in addition
to the payments required by subsection (a) of this Section 7, (i) all stock options
previously granted but still subject to vesting shall be immediately vested and shall
be exercisable until the first to occur of (y) the expiration date of the applicable
option or (z) two (2) years following the date of termination and (ii) all grants of
restricted stock or other rights related to shares of the Corporation’s common stock
shall be immediately vested (or the risk of forfeiture, as appropriate, shall
terminate)

 

 

	 	 	 	and shall be delivered to Executive at the same time and subject to the same
performance conditions as if the Executive had remained employed by the Corporation.
The Executive shall also receive, subject to the mitigation provisions of subsection
(d) below, in a single sum payable at the time of termination, and no later than the
Last Payment Date, a cash severance payment (the “Severance Payment”) from the
Corporation. The amount of the Severance Payment shall be equal to the Executive’s
then monthly Base Salary increased by a factor of twenty percent (20%) to account for
the Executive’s loss of benefits, multiplied by the number of months in the Severance
Period as set forth in Appendix A hereof. Executive shall have the right to purchase
health and dental coverage under the Company’s group policies then in effect for the
Severance Period. The Severance Payment is subject to required withholding. The
Executive shall not be entitled to Severance Payments in any event if he is terminated
for Cause as permitted by Section 7(c).
	 
	 	(c)	 	Termination Following Change in Control.

	 	(i)	 	If a Change in Control of the Corporation occurs during the Term
of this Agreement, or if Executive’s employment with the Corporation is
terminated by the Corporation without Cause prior to but in connection with a
Change in Control (meaning that at the time of such termination the Company had
entered into an agreement, the consummation of which would result in a Change in
Control, or any person had publicly announced its intent to take or consider
actions that would constitute a Change in Control, or the Board adopts a
resolution to the effect that a potential Change in Control for purposes of this
Agreement has occurred), then the Executive shall be entitled to the
compensation provided in Section 8(c)(ii) below upon the termination of the
Executive’s employment by the Corporation or by the Executive, unless
the Corporation elects to terminate this Agreement pursuant to the provisions of
Section 7 (a), (b) or (c) above or because the Executive terminates this
Agreement other than for Good Reason.
	 
	 	(ii)	 	If the Executive shall be terminated from employment with the
Corporation following the occurrence of a Change of Control such that Executive
is entitled to the compensation set forth in this Section 8(c)(ii), then the
Executive shall be entitled to receive the following severance benefits in lieu
of any other benefits the Executive would otherwise be entitled to pursuant to
this Agreement:

	 	(a)	 	Severance Payment. The Corporation
shall pay as severance pay to the Executive an amount equal to the
Base Salary that Executive would have received for a thirty (30)
month period (the “Payment Period”) at an annualized rate equal to
the higher of the rate in effect immediately prior to the Change in

 

 

	 	 	 	Control or the rate in effect on the date of the Notice of
Termination. Such cash payment shall be payable in a single sum,
within 10 days following the Executive’s Date of Termination, and no
later than the Last Payment Date.
	 
	 	(b)	 	Incentive Awards. The Executive
shall receive a cash payment in a single sum, within 10 days
following the Executive’s Date of Termination, and no later than the
Last Payment Date, in the amount equal a pro rata portion of the
“target” full year’s bonus for the Executive under such bonus plan or
program for the portion of the year ending on the date of the
termination, with a partial month counted as a completed month.
	 
	 	(c)	 	Acceleration of Equity Grants. Any
non-vested stock options, restricted stock or other equity award
granted to the Executive by the Corporation shall become 100% vested
and all restrictions or conditions to the receipt of such securities,
included but not limited to any applicable performance criteria,
shall be waived, up to 100% of the “target” shares that were to have
been delivered to the executive under any performance-based plan, or
100% of the total shares under a time-based vesting plan. In
addition, (i) any stock options shall be exercisable until the first
to occur of (y) the expiration date of the applicable option or (z)
four (4) years following the date of termination and (ii) shares of
restricted stock or other equity awards shall be delivered free of
all restrictions within 10 days of the date of termination. If any
plan pursuant to which stock options, restricted stock or other
equity awards have been issued is not assumed by the successor
entity, all such rights will immediately accelerate and be
exercisable on the date of the Change of Control.
	 
	 	(d)	 	Insurance and Welfare Benefits.
During the shorter of (i) the Payment Period or (ii) 18 months
following the date of termination (the “Coverage Period”) the
Executive shall be entitled to the continuation of the same or
equivalent life, health, hospitalization, dental and disability
insurance coverage and other employee insurance or welfare benefits
that he had received (including equivalent coverage for his spouse
and dependent children) immediately prior to the Change in Control.
In the event that Executive is ineligible under the terms of such
insurance to continue to be so covered, the Corporation shall provide
the Executive with substantially equivalent coverage through other
sources. If the Executive prior to a Change in Control was receiving
any cash-in-lieu payments designed to enable the Executive to obtain
insurance

 

 

	 	 	 	coverage of his choosing, the Corporation shall, in addition to any
other benefits to be provided under this Section 8(c)(ii)(d), provide
Executive with a lump-sum payment equal to the amount of such in-lieu
payments that the Executive would have been entitled to receive over
the Coverage Period, no later than the Last Payment Date. The
benefits to be provided under this Section 8(c)(ii)(d) shall be
reduced to the extent of the receipt of substantially equivalent
coverage by the Executive from any successor employer.
	 
	 	(e)	 	Tax Gross-Up. If any payments
received by Executive pursuant to this Agreement will be subject to
the excise tax (the “Excise Tax”) imposed by Section 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
shall pay to the Executive additional compensation such that the net
amount received by the Executive after deduction of any Excise Tax
(and taking into account any federal, state and local income taxes
payable by the Executive as a result of the receipt of such gross-up
compensation), shall be equal to the total payments he would have
received had no such Excise Tax (or any interest or penalties
thereon) been paid or incurred. The Corporation shall pay such
additional compensation no later than the Last Payment Date. The
calculation of the tax gross-up payment shall be approved by the
Corporation’s independent certified public accounting firm and the
Executive’s designated financial adviser.

	 	(iii)	 	Notice of Good Reason. If Executive believes that
Executive is entitled to terminate employment with the Corporation for Good
Reason, the Executive may apply in writing to the Corporation for confirmation
of such entitlement prior to the Executive’s actual separation from
employment, by following the claims procedure set forth in Section 14 hereof.
The submission of such a request by Executive shall not constitute Cause for
the Corporation to terminate an Executive, and Executive shall continue to
receive all compensation and benefits otherwise payable pursuant to this
Agreement at the time of such submission throughout the resolution of the
matter pursuant to the procedures set forth in Section 14 hereof. If the
Executive’s request for a termination of employment for Good Reason is denied
under both the request and appeal procedures set forth in Section 14(b) and
(c) hereof, then the parties shall use their best efforts to resolve the claim
within ninety (90) days after the claim is submitted to binding arbitration
pursuant to Section 14(d).

 

 

	 	(iv)	 	All rights of the Employee pursuant to this Section 8(c)
shall terminate on the second anniversary following the occurrence of a Change
in Control.

	 	(d)	 	No Mitigation. The Executive shall not be required to mitigate the
amount of any payments provided for by this Agreement by seeking employment or
otherwise, nor shall the amount of any cash payments or benefit provided under this
Agreement be reduced by any compensation or benefit earned by the Executive after his
Date of Termination (except as provided in Section 8(c)(ii)(d) above).
	 
	 	(e)	 	Additional Requirement for Severance Compensation. The amounts
payable pursuant to this Section 8 shall be paid only upon an Executive’s execution
and delivery to the Corporation of an agreement and general release, in such form as
is acceptable to the Corporation, in its sole discretion, under which, among other
things, the Executive shall release and discharge the Corporation and related persons
from all claims and liabilities relating to the Executive’s employment with the
Corporation and/or the termination of the Executive’s employment, including without
limitation, claims under the Age Discrimination in Employment Act and the Older
Workers Benefit Protection Act, where applicable. Subject to Section 21 hereof,
payment of the amounts payable pursuant to this Section 8 will be paid only after the
Release Effective Date and expiration of all periods of permitted rescission under
federal or state law for such releases.

     9. Confidential Information. Executive shall not at any time during the period of
employment and thereafter disclose to others or use any trade secrets or any other confidential
information belonging to the Corporation or any of its subsidiaries, including, without limitation,
drawings, plans, programs, specifications, code, algorithms, methods, techniques, systems,
processes, designs and diagrams and non-public information relating to (i) customers of the
Corporation or its subsidiaries, (ii) the Corporation’s business plans and budgets, and (iii) the
Corporation’s financial information, including projections, plans and budgets, except as may be
required to perform his duties hereunder. The provisions of this Section 9 shall survive the
termination of Executive’s employment with the Corporation, provided that after the termination of
Executive’s employment with the Corporation, the restrictions contained in this Section 9 shall not
apply to any such trade secret or confidential information which becomes generally known in the
trade from a source other than Executive.

     10. Patents, Etc. The Corporation shall be entitled to any and all ideas, know-how
and inventions, whether patentable or not, which Executive shall conceive, make or develop during
the Executive’s period of employment with the Corporation, which relates to the business of the
Corporation or any of it’s subsidiaries. Executive shall, from time to time, at the request of the
Corporation, execute and deliver such instruments or documents, and shall perform or do such acts
or things, as reasonably may be requested in order that the Corporation may have the benefit of
such ideas, know-how and

 

 

inventions and, in particular, so that patent applications may be prepared and filed in the
United States Patent Office, or in appropriate places in foreign countries, covering any of the
patentable ideas or inventions covered by this Agreement as aforesaid, including appropriate
assignments vesting in the Corporation or any of its subsidiaries (or any successor to the
Corporation or any of its subsidiaries) full title to any and all such ideas, inventions and
applications. Further, Executive will cooperate and assist the Corporation in the prosecution of
any such applications in order that patents may issue thereon.

     11. Non-Competition.

	 	(a)	 	If Executive receives severance compensation pursuant to Section 8 above,
or if Executive is terminated for Cause, Executive agrees that Executive will not,
without the prior written consent of the Corporation, directly or indirectly, during
the six (6) month period following the Date of Termination, engage in any business or
employment or provide any consulting service to any person or organization, or to a
division or operating unit of any organization which is involved principally in the
provision of video or broadband services to lodging or healthcare facilities in the
United States (a “Competing Business”); provided, however, that the parties
acknowledge and agree that an entity involved in the cable, satellite or other pay
television business generally shall not be deemed to be a Competing Business if (i)
the provision of video or broadband services to lodging or healthcare facilities
comprises less than twenty (20%) percent of the revenues of such business and (ii)
Executive’s principal duties do not involve operation or oversight of that portion of
the enterprise involved in the provision of video or broadband services to lodging or
healthcare facilities). In the event that Executive violates the provisions of this
subparagraph (a), the Corporation shall have the right, in addition to such other
remedies as the Corporation may have available to it, to recover that portion of the
amounts payable to Executive pursuant to the provisions of Sections 8(b) or 8(c)(ii)
of this Agreement which relate to the period of time Executive is found to have been
in violation of the terms of this subparagraph.
	 
	 	(b)	 	During the Term, Executive shall not enter into endeavors that are
competitive with the business or operations of the Corporation and shall not own an
interest in, manage, operate, join, control, lend money or render financial or other
assistance to or participate in or be connected with, as an officer, employee,
director, partner, stockholder, member, venturer, advisor, consultant or otherwise
(except for passive investments of not more than a one percent interest in the
securities of a publicly held corporation regularly traded on a national securities
exchange or in an over-the-counter securities market) any Competing Business.

     12. Successors.

	 	(a)	 	The Corporation shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the

 

 

	 	 	 	business and/or assets of the Corporation, by agreement in form and substance
reasonably satisfactory to the Executive, to expressly assume and agree to perform the
obligations of the Corporation under this Agreement in the same manner and to the same
extent that the Corporation would be required to perform this Agreement if no such
succession had taken place. Failure of the Corporation to obtain such agreement prior
to the effective date of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Corporation in the same amount and
on the same terms as he would be entitled to receive hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the foregoing, the
date on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, “Corporation” shall mean the Corporation as
hereinbefore defined and any successor to its business and/or assets as aforesaid,
which successor executes and delivers the agreement provided for in this Section 12(a)
or which otherwise becomes bound by the terms and provisions of this Agreement by
operation of law.
	 
	 	(b)	 	This Agreement and all rights of the Executive hereunder shall inure to the
benefit of and be enforceable by the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees. If
the Executive should die after his termination while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive’s devisee, legatee, or other designee or, if there be no
such designee, to the Executive’s estate.

     13. Notices. Any notice required or permitted by this Agreement shall be in
writing, sent by registered or certified mail, return receipt requested, or by recognized courier
service (regularly providing proof of delivery), addressed to the Board and the Corporation at the
Corporation’s then principal office, or to the Executive at the address set forth under the
Executive’s signature below, as the case may be, or to such other address or addresses as any party
hereto may from time to time specify in writing for the purpose in a notice given to the other
parties in compliance with this Section 13. Notices shall be deemed given when received.

     14. Administrator and Claims Procedure.

	 	(a)	 	In the event the Executive believes he/she has been wrongfully denied the
payment of benefits, the Executive shall follow the procedures set forth in this
Section 14. If the Executive is claiming benefits as a result of a termination of
employment pursuant to Section 7(c), the Executive shall disregard subsections (b) and
(c) hereof and shall proceed directly to arbitration pursuant to subsection (d)
hereof. The Administrator for purposes of this Agreement shall be the Corporation.
The Corporation shall have the right to designate one or more Corporation employees as
the Administrator at any

 

 

	 	 	 	time. The Corporation shall give the Executive written notice of any change in the
Administrator, or in the address or telephone number of the same.
	 
	 	(b)	 	The Executive, or other person claiming through the Executive, must file a
written claim for benefits with the Administrator as a prerequisite to the payment of
benefits under this Agreement. The Administrator shall make all determinations as to
the right of any person to receive benefits under subsections (b) and (c) of this
Section 14. Any denial by the Administrator of a claim for benefits by the Executive,
his heirs or personal representative (“the claimant”) shall be stated in writing by
the Administrator and delivered or mailed to the claimant within 30 days after receipt
of the claim, unless special circumstances require an extension of time for processing
the claim. If such an extension is required, written notice of the extension shall be
furnished to the claimant prior to the termination of the initial 30-day period. In
no event shall such extension exceed a period of 30 days from the end of the initial
period. Any notice of denial shall set forth the specific reasons for the denial,
specific reference to pertinent provisions of this Agreement upon which the denial is
based, a description of any additional material or information necessary for the
claimant to perfect his claim, with an explanation of why such material or information
is necessary, and any explanation of claim review procedures, written to the best of
the Administrator’s ability in a manner that may be understood without legal or
actuarial counsel.
	 
	 	(c)	 	A claimant whose claim for benefits has been wholly or partially denied by
the Administrator may request, within 30 days following the date of such denial, in a
writing addressed to the Administrator, a review of such denial. The claimant shall
be entitled to submit such issues or comments in writing or otherwise as he shall
consider relevant to a determination of his claim, and he may include a request for a
hearing in person before the Administrator. Prior to submitting his request, the
claimant shall be entitled to review such documents as the Administrator shall agree
are pertinent to his claim. The claimant may, at all stages of review, be represented
by counsel, legal or otherwise, of his choice, provided that the fees and expenses of
such counsel shall be borne by the claimant, unless the claimant is successful, in
which case, such costs shall be borne by the Corporation. All requests for review
shall be promptly resolved. The Administrator’s decision with respect to any such
review shall be set forth in writing and shall be mailed to the claimant not later
than 30 days following receipt by the Administrator of the claimant’s request unless
special circumstances, such as the need to hold a hearing, require an extension of
time for processing, in which case the Administrator’s decision shall be so mailed not
later than 60 days after receipt of such request.
	 
	 	(d)	 	A claimant who has followed the procedure in subsections (b) and (c) of this
section, or who has been terminated pursuant to Section 7(c) after having been given
the opportunity to be heard by the Board, and who has not obtained full relief on his
claim for benefits, may, within 60 days following his receipt of

 

 

	 	 	 	the Administrator’s written decision on review, or the Board’s decision, as the case
may be, apply in writing to the Administrator for expedited and binding arbitration of
his claim before an arbitrator in Minnehaha County, South Dakota, in accordance with
the commercial arbitration rules of the American Arbitration Association, as then in
effect, or pursuant to such other form of alternative dispute resolution as the parties
may agree (collectively, the “arbitration”). The Corporation shall advance filing fees
and other costs required to initiate the arbitration, as well as up to $2,500 for
Executive’s initial attorney fees (which fees and costs shall not be recoverable by the
Corporation). The arbitrator’s sole authority shall be to interpret and apply the
provisions of this Agreement; he shall not change, add to, or subtract from, any of its
provisions. The arbitrator shall have the authority to award compensatory damages, but
shall not have the authority to award punitive, consequential or exemplary damages. The
arbitrator shall have the power to compel attendance of witnesses at the hearing. Any
court having jurisdiction may enter a judgment based upon such arbitration. The
arbitrator shall be appointed by mutual agreement of the Corporation and the claimant
pursuant to the applicable commercial arbitration rules. The arbitrator shall be a
professional person with a reputation in the community for expertise in employee
benefit matters and who is unrelated to the claimant and any employees of the
Corporation. All decisions of the arbitrator shall be final and binding on the
claimant and the Corporation.

     15. Legal Fees and Expense. The Corporation shall pay Executive’s out-of-pocket expenses,
including attorneys’ fees, but not to exceed a total of $15,000 for any proceeding or group of
related proceedings to enforce, construe or determine the validity of the provisions for
termination benefits in accordance with this Agreement, provided, however, that if any arbitration
or litigation results in a finding in favor of Executive contrary to the position of the
Corporation, then Executive will be reimbursed for all reasonable legal and related costs
regardless of the limitation set forth above; and further provided that in no event will Executive
be held liable for the legal and related costs of the Corporation in an event of a finding in favor
of the Corporation. Amounts, if any, paid to the Executive pursuant to this Section 15 shall be in
addition to all other amounts due to executive pursuant to this Agreement.

     16. Non-Alienation of Benefits. Except in so far as this provision may be contrary
to applicable law, no sale, transfer, alienation, assignment, pledge, collateralization or
attachment of any benefits under this Agreement shall be valid or recognized by the Corporation.

     17. Miscellaneous.

	 	(a)	 	This Agreement contains the entire agreement of the parties relating to the
subject matter hereof and supersedes any prior written or oral agreements or
understandings relating to the subject matter hereof. No modification or amendment of
this Agreement shall be valid unless in writing and signed by

 

 

	 	 	 	or on behalf of the parties hereto. A waiver of the breach of any term or condition of
this Agreement shall not be deemed to constitute a waiver of any subsequent breach of
the same or any other term or condition. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws, ordinances,
rules and regulations. If any provisions of this Agreement, or the application thereof
to any person or circumstance, shall, for any reason and to any extent, be held invalid
or unenforceable, such invalidity and unenforceability shall not affect the remaining
provisions hereof and the application of such provisions to other persons or
circumstances, all of which shall be enforced to the greatest extent permitted by law.
Subject to the provisions of Section 8(c)(ii)(e), the compensation provided to the
Executive pursuant to this Agreement shall be subject to any withholdings and
deductions required by any applicable tax laws. Any amounts payable to the Executive
hereunder after the death of the Executive shall be paid to the Executive’s estate or
legal representative. The headings in this Agreement are inserted for convenience of
reference only and shall not be a part of or control or affect the meaning of any
provision hereof. For purposes hereof, the masculine gender shall be deemed to include
the feminine gender, as appropriate. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed an original but all counterparts
together shall constitute one instrument.
	 
	 	(b)	 	This Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Corporation, including any party with which the
Corporation may merge or consolidate or to which it may transfer substantially all of
its assets.
	 
	 	(c)	 	The rights and obligations of Executive under this Agreement are expressly
declared and agreed to be personal, nonassignable and nontransferable during his life,
but upon his death this Agreement shall inure to the benefit of his heirs, legatees
and legal representatives of his estate, but only to the extent of any remaining
financial obligations of the Corporation.
	 
	 	(d)	 	The waiver by either party hereto of its rights with respect to a breach of
any provision of this Agreement by the other shall not operate or be construed as a
waiver of any rights with respect to any subsequent breach.
	 
	 	(e)	 	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 executed by the Corporation and Executive.
	 
	 	(f)	 	This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, but all of which together will constitute but one and the
same agreement.

 

 

	 	(g)	 	If any provision of this Agreement is determined to be invalid or
unenforceable under any applicable statute or rule of law, it is to that extent to be
deemed omitted and it shall not affect the validity or enforceability of any other
provision.
	 
	 	(h)	 	Any notice required or permitted to be given under this Agreement shall be in
	 
	 	 	 	writing, and shall be deemed given when sent by registered or certified mail, postage
prepaid, addressed as follows:

	 	 	 	 	 
	 

	 	If to Executive:
	 	to the address set forth on
	 

	 	 	 	Appendix B hereto
	 
	 	 	 	 
	 

	 	If to the Corporation:
	 	LodgeNet Entertainment Corporation
	 

	 	 	 	3900 West Innovation Street
	 

	 	 	 	Sioux Falls, SD 57107
	 

	 	 	 	Attn: President

or mailed to such other person and/or address as the party to be notified may hereafter
have designated by notice given to the other party in a similar manner.

     18. 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
employment agreements, severance agreements, and change-in-control agreements. In addition, the
provisions related to acceleration of options, time to exercise options, termination of risk of
forfeiture of restricted stock, and the like, as well as the definitions of “Cause,” “Good Reason”
and “Change in Control” contained herein supersede and replace any conflicting provisions in any
option grant agreement or any restricted stock agreement between the Executive and the Corporation
(in any such case, an “Equity Agreement”) and the Executive, by executing this Agreement, hereby
agrees that all his or her existing Equity Agreements, and all Equity Agreements to which he or she
may become subject or party to during the Term, are and shall be hereby amended to supersede and
replace such provisions.

     19. Survival of Certain Provisions. The provisions of sections 9, 10 and 11(a) of
this Agreement shall survive the termination of this Agreement, provided that any claims pursuant
to such sections must be brought within one year of the date of the termination of this agreement.

     20. Governing Law. This Agreement shall be governed and construed in accordance with
the internal laws of the State of South Dakota. The parties agree that any suit or proceeding
arising out of this Agreement shall be brought and maintained exclusively in the federal or state
courts located in such state, and each of the parties hereby irrevocably submits to the exclusive
jurisdiction and venue of such courts.

     21. Compliance with Section 409A of the Code. The provisions of this Agreement
regarding amounts that are determined to be subject to Section 409A of the

 

 

Internal Revenue Code of 1986, as amended (the “Code”) shall be interpreted and administered in
accordance with Section 409A of the code and the regulations and guidance issued thereunder.
Notwithstanding anything to the contrary contained herein, no payment of an amount subject to
Section 409A of the Code on account of the Executive’s “separation from service” (as defined in
Section 409A of the Code, including the regulations and guidance issued thereunder) shall be made
to the Executive if the Executive is determined to be a “specified employee” within the meaning of
Section 409A of the Code at the time of the Executive’s separation from service. Any such amounts
to which the Executive would otherwise be entitled under this Agreement during the first six months
following a separation from service shall be accumulated and paid on the first day of the seventh
month following the Executive’s separation from service.

     IN WITNESS WHEREOF, the parties have duly executed and delivered this Agreement as of the day
and year first above written.

	 	 	 	 	 	 	 
	EXECUTIVE:	 	LODGENET ENTERTAINMENT CORPORATION:
	 
	 	 	 	 	 	 
	/s/ David M. Bankers

	 	By:
	 	/s/ Scott C. Petersen	 	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Title: President — CEO	 	 
	 
	 	 	 	 	 	 
	Address: 2634 Regency Court
	 	 	 	 	 	 
	                Sioux Falls SD 57103
	 	 	 	 	 	 

 

 

Appendix A

	 	 	 
	Employee Name:

	 	David M. Bankers
	 
	 	 
	Employee Address:

	 	2634 Regency Court, Sioux Falls SD 57103
	 
	 	 
	Position/Title:

	 	Senior Vice President, Product & Technology Development
	 
	 	 
	Work Location

	 	3900 West Innovation Street, Sioux Falls, SD
	 
	 	 
	Base Salary:

	 	$280,000.00 per annum
	 
	 	 
	 
	 	 
	Benefits Stipend:

	 	$18,000.00 per annum, payable monthly
	 
	 	 
	Bonus Parameters:

	 	Percentage of Base Salary at Target: 45%
	 
	 	 
	Severance Period:

	 	24 months from date of termination

 

 

Appendix B

DEFINITIONS

For the purpose of this Agreement, the following terms have the meanings indicated:

“Cause” means one or more of the following:

(a) acts committed during the Term of this Agreement resulting in a felony
conviction under any federal or state statute;

(b) willfully engaging in dishonest or fraudulent action or omission resulting or
intended to result in any demonstrable and material financial or economic harm to
the Corporation, or which materially damages the Corporation’s reputation; or

(c) willful breach of this Agreement, 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’s Code of Business Conduct and Ethics or
(y) the Corporation’s Employee Handbook (as amended from time to time) which
results in or is reasonably likely to result in any demonstrable and material
financial or economic harm to the Corporation or material damage to the
Corporation’s reputation.

“Change in Control” means the occurrence of any of the following:

	 	(a)	 	any “person” (as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”) in
effect on the date hereof) or group of persons acting in concert, other than
the Corporation or any subsidiary thereof or any employee benefit plan of the
Corporation or any subsidiary thereof, becomes the “beneficial owner” (as
such term is defined in Rule 13d-3 of the Exchange Act except that a person
shall also be deemed the beneficial owner of all securities which such person
may have a right to acquire, whether or not such right is presently
exercisable), directly or indirectly, of securities of the Corporation
representing thirty percent (30%) or more of the combined voting power of the
Corporation’s then outstanding securities ordinarily having the right to vote
in the election of directors (“voting stock”); or
	 
	 	(b)	 	during any period subsequent to the date of this Agreement, a
majority of the members of the Board shall not for any reason be the
individuals

 

 

	 	 	 	who at the beginning of such period constitute the Board or those persons who
are nominated as new directors by a majority of the current directors or their
successors who have been so nominated; or
	 
	 	(c)	 	there shall be consummated any merger, consolidation (including a
series of mergers or consolidations), or any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Corporation (meaning assets
representing thirty percent (30%) or more of the net tangible assets of the
Corporation or generating thirty percent (30%) or more of the Corporation’s
operating cash flow), or any other similar business combination or
transaction, but excluding any business combination or transaction
which: (i) would result in the voting stock of the Corporation immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting stock of the surviving entity) more than 70% of
the combined voting power of the voting stock of the Corporation (or such
surviving entity) outstanding immediately after giving effect to such
business combination or transaction; or (ii) would be effected to implement a
recapitalization (or similar transaction) of the Corporation in which no
“person” (as defined in subsection 3(a) hereof) or group of persons acting in
concert becomes the beneficial owner (as defined in subsection 3(a) hereof)
of thirty percent (30%) or more of the combined voting power of the then
outstanding voting stock of the Corporation; or
	 
	 	(d)	 	the adoption of any plan or proposal for the liquidation or
dissolution of the Corporation; or
	 
	 	(e)	 	the occurrence of any other event that would be required to be
reported in response to Item 6(e) of Schedule 14A of Regulation 14A of the
Exchange Act in effect on the date hereof.

“Disability” means any physical or mental condition which prevents the effective performance on a
full time basis by Executive of the duties set forth in this Agreement or otherwise assigned to
Executive as contemplated by this Agreement for a period of more than 180 days.

“Good Reason” means any of the following which occur following a Change of Control:

	 	(a)	 	the assignment to the Executive of any duties materially
inconsistent with the Executive’s positions, duties, responsibilities and
status with the Corporation immediately prior to a Change in Control, or a
significant adverse alteration in the nature of the Executive’s reporting
responsibilities, titles, or offices as in effect immediately prior to a
Change in Control, or any removal of the Executive from, or any

 

 

	 	 	 	failure to reelect the Executive to, any such positions, except in connection
with a termination of the employment of the Executive for Cause, Permanent
Disability, or as a result of the Executive’s death or by the Executive other
than for Good Reason;
	 
	 	(b)	 	a material reduction by the Corporation in the Executive’s base
salary in effect immediately prior to a Change in Control;
	 
	 	(c)	 	any material breach by the Corporation of any provision of this Agreement;
	 
	 	(d)	 	following a Change in Control, the Executive is excluded (without
substitution of a substantially equivalent plan) from participation in any
benefit, incentive, stock option, health, dental, insurance or pension plan
generally made available to persons at Executive’s level of responsibility in
the Corporation;
	 
	 	(e)	 	without the Executive’s express written consent, the requirement by
the Corporation that the Executive’s principal place of employment be
relocated more than fifty (50) miles from his place of employment prior to
the Change in Control, or travel on the Corporation’s business to an extent
materially greater than the Executive’s customary business travel
obligations;
	 
	 	(f)	 	the Corporation’s failure to obtain a satisfactory agreement from
any successor to assume and agree to perform the Corporation’s obligations
under this Agreement, as contemplated in Section 7(a) hereof.

     “Last Payment Date” means the date that is two and one-half months after
the close of the taxable year in which the Executive incurs a separation from
service.

 

 

GENERAL RELEASE OF ALL CLAIMS

     This General Release of All Claims (“Agreement”) is entered into by and between the
undersigned,                      (“Employee”) LODGENET ENTERTAINMENT CORPORATION (the “Company”). Employee
and the Company are collectively referred to as “Parties.”

     In exchange for the payments made pursuant to the severance provisions of the Employment
Agreement between Employee and the Company, Employee hereby acknowledges full and complete
satisfaction and hereby releases and forever discharges the Company and each of its affiliates,
subsidiaries, agents, directors, officers, shareholders, employees, attorneys, successors, and
assigns, from any and all claims arising from or connected with Employee’s employment by, or
separation from the Company, including but not limited to, any actions brought in tort or for
breach of contract, or claims arising under Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act (“ADEA”), the Older Worker Benefits Protection Act (“OWBPA”), the
Fair Labor Standards Act, the Equal Pay Act, the Employee Retirement Income Security Act of 1974,
and any other federal or state statute, law or regulation relating to employment.

     In order to conform this release agreement with the rights provided by the Older Workers
Benefit Protection Act of 1990, Employee is aware of the following with respect to release of any
claims under the ADEA:

	 	(1)	 	the right to consult with an attorney before
signing this Release.
	 
	 	(2)	 	Forty-five (45) days, in which to consider
this Release and any ADEA claim; and
	 
	 	(3)	 	Seven (7) days after signing this Release to
revoke this release to any ADEA claim.

This Agreement shall not be effective until the expiration of seven (7) days following its
execution by Employee. In addition, Employee acknowledges that the Company has provided Employee
with a list of all employees eligible for and offered benefits under the ETA Plan, with their ages
and job titles in compliance with the OWBPA. Employee acknowledges that the names could change as
the Plan is implemented and that a current list will be available upon request at the Human
Resource office of the Company.

     Employee agrees not to use any confidential information or trade secrets acquired during
employment with the Company for any other business or employment without the prior written consent
of the Company. Employee hereby assigns to the Company all rights to any invention(s) developed or
will develop relating at the time of conception or reduction to practice to the Company’s business,
or resulting from work performed for the Company.

 

 

     Employee further agrees that this Agreement, the terms and conditions of this Agreement, and
any and all actions by the Parties in accordance therewith, are strictly confidential and Employee
agrees not to disclose, discuss or reveal said information to any other persons, entities or
organizations, except that Employee may disclose this information to immediate family members,
counsel, personal tax advisor, or as may be required by applicable law. However, a violation of
this confidentiality agreement by any third party referenced-above will constitute a breach of this
Agreement.

     The Parties hereby agree to submit any and all disputes regarding any aspect of this Agreement
or any act that allegedly has or would violate any provision of this Agreement, to final and
binding and confidential arbitration by a single neutral arbitrator as the exclusive remedy for
such claim or dispute. Subject to the terms of this paragraph, the arbitration proceedings shall
be conducted and administered by the American Arbitration Association (“AAA”) under its National
Rules for the Resolution of Employment Disputes then in effect. The arbitrator shall be
experienced in labor and employment matters and shall be appointed by agreement of the Parties
hereto or, if no agreement can be reached, pursuant to the AAA Rules. In addition, should any
party to this Agreement hereafter institute any legal action or administrative proceeding against
the other with respect to any claim waived by this Agreement or pursue any arbitrable dispute by
any method other than said arbitration, the prevailing party shall be entitled to recover from the
other party all damages, costs, expenses, and attorney’s fees incurred as a result of such action.

     This Agreement represents and contains the entire agreement between Employee and the Company
relating to the matters described herein, and supersedes all prior discussions and agreements,
whether oral or written.

     Employee affirms and represents that he is entering into this Agreement freely and
voluntarily, and that Employee is acting under no other inducement, or under any coercion, threat
or duress. Employee acknowledges that the contents of this document have been explained to Employee
and Employee understands the meaning and legal effect of this Agreement.

	 	 	 	 	 	 	 	 	 	 	 
	Dated:
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Employee Signature	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Dated:

	 	 	 	 	 	By:

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