LODGENET ENTERTAINMENT CORP
EX-10.27 EMPLOYMENT AGREEMENT - STEPHEN D. MCCARTY
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>3
<FILENAME>c75569exv10w27.htm
<DESCRIPTION>EX-10.27 EMPLOYMENT AGREEMENT - STEPHEN D. MCCARTY
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<P align="right"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
EXHIBIT 10.27
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<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS EMPLOYMENT AGREEMENT (this &#147;Agreement&#148;), dated as of March&nbsp;1,
2003 is made by and between LodgeNet Entertainment Corporation, a
Delaware corporation (the &#147;Corporation&#148;), and Stephen D. McCarty
(&#147;Executive&#148;) with reference to the following circumstances, namely:
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    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">A.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">Executive is employed by the
Corporation, as its Senior Vice President for Sales
&#038; Hotel Relations and has made, and is making, an
important contribution to the development and
operation of the Corporation&#146;s business.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD width="5%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="1%" align="left" nowrap><FONT size="2">B.</FONT></TD>
    <TD width="3%"><FONT size="2">&nbsp;</FONT></TD>
    <TD width="91%"><FONT size="2">The Corporation desires to provide for
its employment of Executive as hereinafter
provided, and Executive desires such employment,
upon the terms hereinafter provided.</FONT></TD>
</TR>
</TABLE>
<P align="left"><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW, THEREFORE, the Corporation agrees to employ Executive, and
Executive agrees to such employment, upon the following terms and
conditions:
</FONT>

<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 &#147;period of employment&#148;) beginning on the date
hereof and continuing, unless sooner terminated as provided in Section&nbsp;6
herein, through December&nbsp;31, 2003; provided, however, that on each
December&nbsp;31, commencing with December&nbsp;31, 2003, such period of employment
shall automatically be extended for an additional year unless ninety (90)
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.
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Duties<I>. </I>During the period of employment, Executive shall serve
as Senior Vice President for Sales and Hotel Relations of the
Corporation, or in such other office or offices to which he shall be
elected by the Board of Directors of the Corporation (&#147;Board&#148;) with his
approval, performing the duties of such office or offices as are assigned
to him by the Board or committees of the Board. During the period of
employment, 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.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Office Facilities. During the period of employment, Executive
shall have his office where the Corporation&#146;s principal executive 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.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation. As compensation for his services performed
hereunder, the Corporation shall pay or provide to Executive the
following:
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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a.) The Corporation shall pay Executive a salary (the &#147;Base
Salary&#148;), calculated at the rate of $237,500.00 per annum (which
Base Salary may be increased by the Corporation at any time and from
time to time in its discretion), payable monthly, semi-monthly or
weekly according to the Corporation&#146;s general practice for its
executives, for the period of employment under this Agreement.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b.) 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</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">2</FONT>
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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">personnel, and all compensation and other entitlements earner
thereunder shall be in addition to, and shall not in any way reduce,
the amount payable as Base Salary.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c.) During the period of employment, Executive shall be entitled
to:</FONT></TD>
</TR>
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    <TD width="6%"></TD>
    <TD width="94%"></TD>
</TR>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;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;</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;participate in other non-duplicative
benefit programs which the Corporation may from time
to time offer generally to executive personnel of the
Corporation; and</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;take vacations and be entitled to sick
leave in accordance with the Corporation&#146;s policy for
executive personnel of the Corporation.</FONT></TD>
</TR>
</TABLE>
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<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d.) During the period of employment, the Board from
time to time in its discretion may grant to Executive stock
options, and other rights related to shares of the
Corporation&#146;s common stock.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e.) In addition to the foregoing Executive shall be
entitled to relocation and moving expenses in the amount of
$22,000 in the event Executive elects to return to Dallas,
Texas at the conclusion of this contract period, said amount
being payable at the conclusion of this contract period.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">3</FONT>
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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&nbsp;6 herein.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Termination of Employment. The employment of Executive by the
Corporation pursuant to this Agreement may be terminated on or prior to
December&nbsp;31, 2003, or any subsequent December&nbsp;31 to which the end of the
period of employment may have been extended under Section&nbsp;1, as follows:
</FONT>
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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;In the event of Executive&#146;s death prior to said date, such
employment shall terminate on the date of death.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Such employment may be terminated prior to said date due to
Executive&#146;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 the time
which Executive becomes entitled to disability compensation benefits
under the Corporation&#146;s disability benefit program then in effect.
Any dispute as to Executive&#146;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 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.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">4</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Corporation, by giving written notice of termination to
Executive, may terminate such employment at any time prior to said
date for Cause, which means that such termination must be due to (1)
acts during the term of this Agreement (A)&nbsp;resulting in a felony
conviction under any Federal or state statute or (B)&nbsp;substantial
non-performance of Executive of his employment duties required by
this Agreement or (2)&nbsp;Executive willfully engaging in dishonesty or
gross misconduct injurious to the Corporation during the term of
this Agreement, with &#147;Cause&#148; to be determined in any case 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&nbsp;days) in the case
of clause (1)(B) to cease substantial non-performance.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;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)&nbsp;through (c)) upon 60&nbsp;days prior
written notice to Executive.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;In the event that a Termination Event (as that term is
defined in the Executive Severance Agreement, dated March&nbsp;1, 2003)
has occurred, then the Executive may terminate such employment
according to the terms and conditions set forth in said Executive
Severance Agreement, and shall then be exclusively entitled to any
and all payments and benefits provided under said Executive
Severance Agreement to the exclusion of any provisions contained
herein.</FONT></TD>
</TR>
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments Upon Termination.
</FONT>
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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;Except as otherwise provided in subsection (b)&nbsp;of this
Section&nbsp;7, upon termination of Executive&#146;s employment by the
Corporation, all compensation due </FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">5</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">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), 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. 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&#146;s employment is not
for Cause, then a pro rata portion of the &#147;target&#148; full year&#146;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 at the time bonus
payment otherwise would be due.</FONT></TD>
</TR>
</TABLE>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;If Executive&#146;s employment pursuant to this Agreement is
terminated without Cause pursuant to subsection (d)&nbsp;of Section&nbsp;6
herein, then, in addition to the payments required by subsection (a)
of this Section&nbsp;7, Executive shall be entitled to the vesting of all
options previously granted but still subject to vesting, and shall
receive, subject to the mitigation provisions of Section&nbsp;11(a)
below, for a period of twelvemonths (the &#147;Severance Period&#148;) cash
severance payments (the Severance Payment&#148;) from the Corporation.
The amount of the Severance Payment shall be equal to the
Executive&#146;s then monthly Base Salary increased by a factor of twenty
percent (20%) to account for the Executive&#146;s loss of benefits.
Executive shall have the right to purchase health and dental
coverage under the Company&#146;s group policies then in effect for the
Severance Period. </FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">6</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="4%"></TD>
    <TD width="96%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">The Severance Payment shall be due and payable on
the 20th day of each month and is subject to required withholding.
The Executive shall also be entitled to the benefits under this
Section in the event the Corporation elects at any time not to renew
or extend this Agreement pursuant to Section&nbsp;1. The Executive shall
not be entitled to a Severance Payment in any event if he is
terminated for Cause as permitted by Section&nbsp;6.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 Corporation or its
subsidiaries, except as may be required to perform his duties hereunder.
The provisions of this Section&nbsp;8 shall survive the termination of
Executive&#146;s employment with the Corporation, provided that after the
termination of Executive&#146;s employment with the Corporation, the
restrictions contained in this Section&nbsp;8 shall not apply to any such
trade secret or confidential information which becomes generally known in
the trade.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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 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
</FONT>
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<P><FONT size="2">prepared and filed in the United States
Patent Office, or in appropriate places in foreign countries, covering
any of the patentable ideas on intentions 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.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;10.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-Competition: Non-Mitigation: Litigation Expenses.
</FONT>
<P>
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    <TD width="3%"></TD>
    <TD width="97%"></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;For the first nine months following termination of his
employment with the Corporation, Executive shall not be required
to mitigate the amount of termination benefits due him under
Section&nbsp;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 during said period;
thereafter, said termination benefits shall be reduced by
one-half of the amount Executive may earn from any full time
employment position or occupation. However, if Executive
becomes employed, as a full or part time employee, or as a
consultant or advisor, to any enterprise engaged in competition
with the business then being conducted by the Corporation, any
obligation which the Corporation otherwise would have had under
Section&nbsp;7 shall thereupon terminate and cease to be of any
further force and effect other than to the extent theretofore
performed by the Corporation.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;Until the period of employment expires (which for these
purposes shall be calculated without giving effect to early
termination pursuant to Section&nbsp;6), </FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">8</FONT>
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<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">Executive shall not enter
into endeavors that are competitive with the business or
operations of the Corporation in the lodging pay-per-view/guest
services market, 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 (expect 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 competes with the Company
in the lodging pay-per-view/guest services market. For these
purposes, employment with a vendor of cable television services
shall not be treated as competitive with the business or
operations of the Corporation in the lodging per-view/guest
services market.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;The Corporation shall pay Executive&#146;s out-of-pocket
expenses, including attorneys&#146; fees, but not to exceed a total of
$10,000 for any proceeding or group of related proceedings to
enforce, construe or determine the validity of the provisions for
termination benefits in Section&nbsp;7 herein, 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</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">9</FONT>
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<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Arbitration. Any dispute or controversy arising under or in
connection with the Agreement shall be settled exclusively by
arbitration in the city where the principal executive offices of the
Corporation are then located, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be
entered on the arbitrator&#146;s award in any court having jurisdiction.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Miscellaneous.
</FONT>
<P>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0">
<TR>
    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;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.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;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.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;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.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;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.</FONT></TD>
</TR>
</TABLE>
<P align="center"><FONT size="2">10</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>



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    <TD width="3%"></TD>
    <TD width="97%"></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;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.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;This Agreement shall be construed according to the laws
of the State of South Dakota.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
<TR valign="top">
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;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.</FONT></TD>
</TR>
<TR>
    <TD><FONT size="2">&nbsp;</FONT></TD>
</TR>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;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:</FONT></TD>
</TR>
</TABLE>
<CENTER>
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    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="41%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="56%">&nbsp;</TD>
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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
If to Executive:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Stephen D. McCarty</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">1621 South Second Avenue<BR>
Sioux Falls, SD 57105</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
If to the Corporation:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">LodgeNet Entertainment Corporation</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">3900 West Innovation Street<BR>
Sioux Falls, SD 57107<BR>
Attn: General Counsel</FONT></TD>
</TR>
</TABLE>
</CENTER>
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    <TD width="97%"></TD>
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    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">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.</FONT></TD>
</TR>
</TABLE>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;14.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior Agreements Superseded. This agreement supersedes all
prior agreements, if any, between the parties hereto with respect to the
subject matter hereof including
</FONT>
<P align="center"><FONT size="2">11</FONT>
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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<P><FONT size="2">any prior employment agreements, provided
however, that the Executive Severance Agreement, dated March&nbsp;1, 2003,
shall remain in full force and effect and shall exclusively govern any
payments and benefits in the event that a Termination Event (as that term
is defined in said Agreement) has occurred.
</FONT>
<P><FONT size="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the date and year first above written.
</FONT>
<CENTER>
<TABLE cellspacing="0" border="0" cellpadding="0" width="75%">
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD colspan="3" align="left" valign="top"><FONT size="2">LodgeNet Entertainment Corporation</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">
By:
</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/ Scott C. Petersen</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">President and Chief Executive Officer</FONT></TD>
</TR>

<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
</TR>

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    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">/s/</FONT></TD>
</TR>
<TR>
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><HR size="1" noshade></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">&nbsp;</FONT></TD>
    <TD><FONT size="2">&nbsp;</FONT></TD>
    <TD align="left" valign="top"><FONT size="2">Stephen D. McCarty</FONT></TD>
</TR>
</TABLE>
</CENTER>

<P align="center"><FONT size="2">12</FONT>



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