Contract
Exhibit 10.1
THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated as of June 26, 2006 is made
by and between LodgeNet Entertainment Corporation, a Delaware corporation (the
“Corporation”), and Xxxxx X. Xxxx (“Executive”) with reference to the following
circumstances, namely:
| A. | Executive is employed by the Corporation, as its Senior Vice President and General Counsel and has made, and is making, an important contribution to the development and operation of the Corporation’s business. | |||
| B. | The Corporation desires to provide for its employment of Executive as hereinafter provided, and Executive desires such employment, upon the terms hereinafter provided. | |||
| NOW, THEREFORE, the Corporation agrees to employ Executive, and Executive agrees to 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 date hereof and continuing, unless sooner
terminated as provided in Section 6 herein, through December 31, 2006; provided, however,
that on each December 31, commencing with December 31, 2006, 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.
2. Duties. During the period of employment, Executive shall serve as Senior
Vice President and General Counsel of the Corporation, or in such other 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 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.
3. Office Facilities. During the period of employment, Executive shall have
his office where the Corporation’s principal executive offices are located from time to
time, which currently are at 0000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxx Xxxxxx, 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.) The Corporation shall pay Executive a salary (the “Base Salary”),
calculated at the rate of $ 260,000.00 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’s general practice for
its executives, for the period of employment under this Agreement.
(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
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.
(c.) During the period of employment, 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
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(iii) take vacations and be entitled to sick leave in
accordance with the Corporation’s policy for executive personnel
of the Corporation.
(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’s common stock.
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 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 on or prior to December 31, 2006, or on or
prior to any subsequent December 31 to which the end of the period of employment may have
been extended under Section 1, as follows:
(a) In the event of Executive’s death prior to said date, such employment shall
terminate on the date of death.
(b) Such employment may be terminated prior to said date 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 the time which Executive becomes entitled to disability compensation benefits
under the Corporation’s disability benefit program then in effect. 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 in equal shares by the Corporation and Executive.
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(c) 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
resulting in a felony conviction under any Federal or state statute, (2) substantial
non-performance of Executive of his employment duties required by this Agreement or
(3) Executive willfully engaging in dishonesty or gross misconduct injurious to the
Corporation during the term of this Agreement, with “Cause” 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 days) in the case of clause (2) to cease substantial
non-performance.
(d) 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.
(e) In the event that a Termination Event (as that term is defined in the
Executive Severance Agreement, dated June 12, 2006) 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.
7. Payments Upon Termination.
(a) Except as otherwise provided in Section 6(e) and 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), 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.
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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 not for Cause, 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 at the time such bonus payment otherwise would
be due.
(b) If Executive’s employment pursuant to this Agreement is terminated without
Cause pursuant to subsection (d) of Section 6 herein, then, in addition to the
payments required by subsection (a) of this Section 7, Executive shall be entitled
(i) to the vesting of all options previously granted but still subject to vesting
and (ii) to the extent set forth in any agreement regarding the grant of rights
related to shares of the Corporation’s common stock, the vesting (or termination of
risk of forfeiture, as appropriate) of rights or shares previously granted but still
subject to vesting. The Executive shall also receive, subject to the mitigation
provisions of Section 11(a) below, for a period of eighteen months (the “Severance
Period”) cash severance payments (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. 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 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 1. The Executive shall
not be entitled to a Severance Payment in any event if he is terminated for Cause as
permitted by Section 6(c).
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,
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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 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 from a
source other than Executive.
9. 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 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.
10. Non-Competition: Non-Mitigation: Litigation Expenses.
(a) 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 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
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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
in the lodging pay-per-view/guest services market, any obligation which the
Corporation otherwise would have had under Section 7, regardless of whether such
nine-month period has expired, shall thereupon terminate and cease to be of any
further force and effect other than to the extent theretofore performed by the
Corporation.
(b) Until the period of employment expires (which for these purposes shall
be calculated without giving effect to early termination pursuant to Section 6
but shall include any extension or renewal of the period of employment),
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, 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 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.
(c) The Corporation shall pay Executive’s out-of-pocket expenses, including
attorneys’ 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
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termination benefits in Section 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.
11. 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’s award in any court having jurisdiction.
Notwithstanding the foregoing, the Corporation shall be entitled to seek equitable
remedies, including injunction and constructive trust, with respect to a breach or
threatened breach of Sections 8, 9 and 10 hereof, without the requirement to post any
bond or other security.
12. Miscellaneous.
(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.
(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, but only to the
extent of any remaining financial obligations of the Corporation.
(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.
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(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 construed according to the laws of the State of
South Dakota.
(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: | Xxxxx X. Xxxx 0 Xxxx Xxxx Xxxx Xxx. Xxxxx Xxxxx, XX 00000 |
| If to the Corporation: | LodgeNet Entertainment Corporation 0000 Xxxx Xxxxxxxxxx Xxxxxx Xxxxx Xxxxx, XX 00000 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.
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, provided however, that the Executive Severance
Agreement, dated June 26, 2006, 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.
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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/ Xxxx X. Xxxxxxxxx | |||
| Senior Vice President and Chief Financial Officer | ||||
| /s/ Xxxxx X. Xxxx | ||||
| Xxxxx X. Xxxx | ||||
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