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Exhibit 10.1 LODGENET ENTERTAINMENT CORPORATION
EXECUTIVE EMPLOYMENT AGREEMENT
AGREEMENT, dated as of
August 27, 2008 by and between LodgeNet Entertainment
Corporation, a Delaware corporation located at 3900 West Innovation
Street, Sioux Falls, South Dakota 57107 ("Corporation"), and Scott
E. Young ("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:
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(a)
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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.
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(b)
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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.
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(c)
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During the Term, Executive shall be entitled to:
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(i)
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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;
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(ii)
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participate in other non-duplicative benefit programs which the
Corporation may from time to time offer generally to executive
personnel of the Corporation; and
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(iii)
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accrue vacation time, sick leave, or other forms of paid time
off in accordance with the Corporation’s policy for executive
personnel.
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(d)
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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.
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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:
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(a)
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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.
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(b)
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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.
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(c)
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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.
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(d)
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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.
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(e)
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Termination by Executive Absent a Change In Control .
Executive may terminate this Agreement by written notice to the
Corporation in the following circumstances:
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(i)
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a significant adverse alteration in the nature of the
Executive’s reporting responsibilities, titles, or offices as
in effect as set forth in Appendix A hereto which is not
acceptable to Executive; provided, however, that the
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appointment of a Chief Marketing Officer shall not be grounds
for termination of this Agreement by Executive pursuant to this
Section 7(e) so long as Executive continues to serve as President
of the Hospitality Division, reporting to the CEO, and that any
such Chief Marketing Officer shall be subordinate to and report to
Executive.
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(ii)
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a material reduction by the Corporation in the Executive’s
base salary;
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(iii)
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a material breach by the Corporation of any provision of this
Agreement, which breach is not cured within ten days following
written notice to Corporation specifying the nature of such breach;
and
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(iv)
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exclusion of the Executive (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.
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(f)
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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:
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(i)
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if this Agreement is terminated by death, the effective date of
shall be the date of Executive’s death,
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(ii)
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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),
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(iii)
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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
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(iv)
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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.
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8. Payments Upon
Termination.
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(a)
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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.
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(b)
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If Executive’s employment pursuant to this Agreement is
terminated (i) by the Corporation without Cause pursuant to
Section 7(d) above, or (ii) if the Corporation elects at any
time not to renew or extend this Agreement at the expiration of the
then current Term or (iii) Executive terminates this Agreement
in accordance with the terms set forth in Section 7(e) above, 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).
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(c)
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Termination Following Change in Control .
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(i)
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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.
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(ii)
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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:
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(a)
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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.
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(b)
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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.
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(c)
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Acceleration of Equity Grants. Any non-vested stock
options, restricted stock or other equity award granted to the
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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.
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(d)
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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.
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(e)
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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
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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.
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(iii)
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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).
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(iv)
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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.
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(d)
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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).
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(e)
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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,
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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.
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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,
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