<PAGE>
As filed with the Securities and Exchange Commission on April 6, 2000
Registration No. 333-75908
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
--------------------
LODGENET ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 46-0371161
- ------------------------------- ------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3900 WEST INNOVATION STREET
SIOUX FALLS, SOUTH DAKOTA 57107
(605) 988-1000
- --------------------------------------------------------------------------------
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
LODGENET ENTERTAINMENT CORPORATION
STOCK OPTION PLAN
- --------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Scott C. Petersen Gregg F. Vignos, Esq.
Chief Executive Officer Pillsbury Madison & Sutro LLP
LodgeNet Entertainment Corporation 50 Fremont Street
3900 West Innovation Street San Francisco, CA 94105
Sioux Falls, South Dakota 57107 (415) 983-1000
(605) 988-1000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================
Title of Amount To Proposed Proposed Amount of
Securities Be Registered(1) Maximum Offering Maximum Aggregate Registration Fee
to be registered Price Per Share(2) Offering Price(2)
- ---------------- ---------------- ------------------ ----------------- ----------------
<S> <C> <C> <C> <C>
Common Stock 1,550,000 $19.875 $30,806,250 $8,135
===============================================================================================
</TABLE>
(1) Calculated pursuant to General Instruction E to Form S-8.
(2) Estimated solely for the purpose of calculating the registration fee on
the basis of the average of the high and low prices as reported on the
Nasdaq National Market on April 5, 2000.
(3) Calculated pursuant to Rule 457(h) under the Securities Act of 1933.
The Registration Statement shall become effective upon filing in
accordance with Rule 462 under the Securities Act of 1933.
<PAGE>
INFORMATION REQUIRED PURSUANT TO
GENERAL INSTRUCTION E TO FORM S-8
GENERAL INSTRUCTION E INFORMATION
This Registration Statement is being filed for the purpose of
increasing the number of securities of the same class as other securities for
which a Registration Statement of the Registrant on Form S-8 relating to the
same employee benefit plan is effective.
The Registrant's Registration Statement on Form S-8 filed with the
Securities and Exchange Commission on March 1, 1994, File No. 33-75908, is
hereby incorporated by reference.
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents filed by the Registrant with the Securities
and Exchange Commission are incorporated by reference in this Registration
Statement:
(1) The Registrant's Annual Report on Form 10-K (File No. 000-22334)
for the fiscal year ended December 31, 1999, which contains, among other
things, the consolidated financial statements of Registrant and certain
supplementary data for the fiscal year ended December 31, 1999 together with
the report thereon of Arthur Andersen LLP, independent public accountants.
In addition, all documents subsequently filed by the Registrant
pursuant to Section 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such documents.
EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
5.1 Opinion of Pillsbury Madison & Sutro LLP.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see Page 4).
99.1 LodgeNet Entertainment Corporation Stock Option Plan, as amended.
</TABLE>
- 2 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Sioux Falls, State of South Dakota,
on April 5, 2000.
LODGENET ENTERTAINMENT CORPORATION
By /s/ SCOTT C. PETERSEN
-------------------------------
Scott C. Petersen
Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Scott C. Petersen and Jeffrey T.
Weisner, and each of them, his true and lawful attorneys-in-fact and agents,
each with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all
amendments, including post-effective amendments, to this Registration
Statement, and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents or his substitute or substitutes may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ SCOTT C. PETERSEN President and Chief Executive Officer April 5, 2000
- ----------------------------------------- (Principal Executive Officer) and
Scott C. Petersen Director
/s/ JEFFREY T. WEISNER Senior Vice President and Chief April 5, 2000
- ---------------------------------------- Financial Officer (Principal Financial
Jeffrey T. Weisner Officer)
/s/ RONALD W. PIERCE Vice President and Corporate Controller April 5, 2000
- ---------------------------------------
Ronald W. Pierce
/s/ TIM C. FLYNN Chairman of the Board April 5, 2000
- ----------------------------------------
Tim C. Flynn
</TABLE>
- 3 -
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
/s/ R. DOUGLAS BRADBURY Director April 5, 2000
- ----------------------------------------
R. Douglas Bradbury
/s/ LAWRENCE FLINN, JR. Director April 5, 2000
- ----------------------------------------
Lawrence Flinn, Jr.
/s/ RICHARD R. HYLLAND Director April 5, 2000
- ----------------------------------------
Richard R. Hylland
/s/ R. F. LEYENDECKER Director April 5, 2000
- ----------------------------------------
R. F. Leyendecker
</TABLE>
- 4 -
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
5.1 Opinion regarding legality of securities to be offered.
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants.
23.2 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1).
24.1 Power of Attorney (see Page 4).
99.1 LodgeNet Entertainment Corporation Stock Option Plan.
</TABLE>
<PAGE>
EXHIBIT 5.1
PILLSBURY MADISON & SUTRO LLP
50 Fremont Street
San Francisco, CA 94105
Tel: (415) 983-1000
April 3, 2000
LodgeNet Entertainment Corporation
3900 West Innovation Street
Sioux Fall, South Dakota 57107
Re: Registration Statement on Form S-8
Gentlemen:
With reference to the Registration Statement on Form S-8 to be filed
by LodgeNet Entertainment Corporation, a Delaware corporation (the
"Company"), with the Securities and Exchange Commission under the Securities
Act of 1933, relating to 1,550,000 shares of the Company's Common Stock
issuable pursuant to the Company's Stock Option Plan (the "Stock Plan"), it
is our opinion that such shares of the Common Stock of the Company, when
issued and sold in accordance with the Stock Plan, will be legally issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as Exhibit 5.1 to the Registration Statement.
Very truly yours,
PILLSBURY MADISON & SUTRO LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated February 11,
2000, included in LodgeNet's Form 10-K for the year ended December 31, 1999
and to all references to our firm included in this Registration Statement.
Minneapolis, Minnesota,
April 5, 2000
ARTHUR ANDERSEN LLP
<PAGE>
LODGENET ENTERTAINMENT CORPORATION
STOCK OPTION PLAN
(As Amended and Restated
Effective May 13, 1998)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
1. Purpose........................................................................1
2. Administration.................................................................1
3. Eligibility....................................................................2
4. Common Stock...................................................................2
5. Grants to Non-Employee Directors...............................................2
(a) Grants.........................................................................2
(b) NSOs...........................................................................3
(c) Termination of Service.........................................................3
(d) Payment of Director's Fees in Securities.......................................3
6. Options........................................................................3
7. Required Terms and Conditions of ISOs..........................................4
(a) Exercise Price.................................................................4
(b) Maximum Term...................................................................4
(c) Time of Exercise...............................................................5
(d) Value of Shares................................................................5
(e) Conversion.....................................................................5
8. Required Terms and Conditions of NSOs..........................................5
9. Expiration of Options Granted to Key Employees; Termination of Employment,
Disability, Death, Retirement, or Occurrence of Specified Events......................5
(a) General Rule...................................................................5
(b) Expiration Upon Termination of Employment......................................6
(c) Expiration Upon Disability or Death............................................6
(d) Expiration Upon Retirement.....................................................6
(e) Expiration Upon Occurrence of Specified Events.................................7
10. Method of Exercise of Options..................................................8
</TABLE>
-i-
<PAGE>
<TABLE>
<S> <C> <C>
11. Adjustments....................................................................9
12. Terms and Conditions of Options...............................................10
13. Non-Transferability...........................................................11
14. Indemnification of the Committee..............................................11
15. No Contract of Employment.....................................................12
16. Termination and Amendment of the Plan.........................................12
17. Withholding Taxes.............................................................12
18. Leaves of Absence.............................................................13
19. Governing Law.................................................................13
20. Fair Market Value.............................................................13
21. Successors....................................................................13
22. Notices.......................................................................13
</TABLE>
-ii-
<PAGE>
LODGENET ENTERTAINMENT CORPORATION
STOCK OPTION PLAN
(As Amended and Restated
Effective May 13, 1998)
1. Purpose
LodgeNet Entertainment Corporation, a Delaware corporation (the
"Corporation"), adopted the LodgeNet Entertainment Corporation Stock
Option Plan, effective as of August 16, 1993.
The purpose of the LodgeNet Entertainment Corporation Stock Option Plan
(the "Plan") is to enable the Corporation and its subsidiaries to
attract, retain, and reward key managerial employees ("Key Employees")
and certain non-employee members of the board of directors ("Board") of
the Corporation ("Non-Employee Director") by offering them an
opportunity to have a greater proprietary interest in and closer
identity with the Corporation and with its financial success. An option
granted under the Plan to a Key Employee to purchase shares of the
Corporation's common stock, $0.01 par value ("Common Stock"), may be an
incentive stock option ("ISO") as defined in Section 422 of the
Internal Revenue Code of 1986 as heretofore or hereafter amended
("Code") or a nonqualified stock option ("NSO") (collectively referred
to as "Options"). An Option that is not an ISO shall be an NSO.
Proceeds received by the Corporation from the sale of shares of Common
Stock pursuant to Options granted under the Plan shall be used for
general corporate purposes. This amendment and restatement of the Plan
incorporates amendments adopted in 1995 and 1996 as well as amendments
that bring the Plan into compliance with Rule 16b-3 and permit
Non-Employee Directors to elect to receive their fees in NSOs and/or
shares of Common Stock.
2. Administration
The Plan shall be administered by the Compensation Committee of the
Board ("Committee") that shall satisfy the requirements of Rule 16b-3
with respect to grants to executive officers and members of the Board.
Subject to the express provisions of the Plan, the Committee may
interpret the Plan, prescribe, amend and rescind rules and regulations
relating to it, determine the terms and provisions of the respective
Option Agreements (which need not be identical) and make such other
determinations as it deems necessary or advisable for the
administration of the Plan. The Committee may delegate decisions with
respect to Options to Key Employees who are not executive officers or
members of the Board to such executive officer or officers of the
Corporation as the Committee determines. The decisions of the Committee
and its delegatee(s) under the Plan shall be conclusive and binding. No
member of the Board or the Committee or any of its delegatee(s) shall
be liable for any action taken or determination made in good faith.
-1-
<PAGE>
3. Eligibility
Key Employees who have been selected by the Committee to receive an
Option shall participate in the Plan. Certain Non-Employee Directors
shall participate in the Plan through grants of NSOs and shares of
Common Stock pursuant to Section 5 hereof and discretionary grants of
NSOs pursuant to Section 8 hereof. (Key Employees and Non-Employee
Directors who participate in the Plan shall be collectively referred to
as "Participants"). The Committee shall determine, within the limits of
the express provisions of the Plan, those Participants to whom, and the
time or times at which, Options shall be granted. The Committee shall
also determine, with respect to Options to Participants, the number of
shares of Common Stock to be subject to each such Option: the type of
Options (ISO or NSO); the duration of each Option; the exercise price
under each Option; the time or times within which (during the term of
the Option) all or portions of each Option may be exercised; whether
cash. Common Stock Options or other property may be accepted in full or
partial payment upon exercise of an Option; and any other terms and
conditions of such Options. In making such determinations, the
Committee may take into account the nature of the services rendered by
the Participant, his present and potential contributions to the
Corporation's success and such other factors as the Committee in its
discretion shall deem relevant.
4. Common Stock
The total number of shares of Common Stock that may be subject to
Options (including ISOs) under the Plan shall be 1,800,000 shares. Such
total number of shares shall be adjusted in accordance with the
provisions of Section 11 hereof, and a share of Common Stock subject to
an Option shall only be counted once. Such shares may be either
authorized but unissued shares or reacquired shares. In the event that
any Option granted under the Plan expires unexercised or is terminated,
surrendered or cancelled without being exercised in whole or in part,
for any reason, then the number of shares of Common Stock theretofore
subject to such Option, or the unexercised, terminated, surrendered, or
canceled portion thereof, shall be added to the remaining number of
shares of Common Stock that may be made subject to Options under the
Plan.
5. Grants to Non-Employee Directors
(a) Grants
Each individual who becomes a Non-Employee Director of the
Company shall automatically be granted an Option on the date
of his or her initial election or appointment to the Board of
Directors consisting of an NSO to purchase 6,000 shares of
Common Stock, and an automatic grant of an NSO to purchase an
additional 6,000 shares of Common Stock on each anniversary of
such election or appointment during the term of service.
-2-
<PAGE>
(b) NSOs
The per share exercise price of each NSO granted to a
Non-Employee Director shall be 100 percent of the Fair Market
Value (hereinafter defined) of a share of Common Stock on the
date of grant. Subject to the provisions of subsection (c) of
this Section, if applicable, each such NSO may be exercised in
whole or in part not earlier than six months after the date of
grant and shall expire on the date ten years after the date of
grant. Payment of the exercise price of each such NSO shall be
made (i) in cash or (ii) in Common Stock valued at its Fair
Market Value on the date of exercise or by a combination of
(i) and (ii), as determined by the Non-Employee Director to
whom the NSO is granted at the time of exercise.
(c) Termination of Service
If the service of a Non-Employee Director as a member of the
Board terminates for any reason other than (i) due to
disability (as determined by the Committee), retirement on or
after age sixty-five, or death, or (ii) following an event
described in subsection 11(b), all unexercised NSOs granted to
him at any time prior to such termination shall expire ninety
days after the date of such termination.
(d) Payment of Director's Fees in Securities
Effective May 8, 1996, a Non-Employee Director may elect to
receive his or her annual retainer payments and meeting fees
from the Corporation in the form of cash, NSOs, shares of
Common Stock, or a combination thereof. Such NSOs and shares
of Common Stock shall be issued under the Plan. An election
under this Section 5(d) shall be filed with the Corporation in
the prescribed manner and by the deadline established by the
Committee. The election shall apply only to annual retainers
and meeting fees payable after such form has been received by
the Corporation.
The number of NSOs and/or shares of Common Stock to be granted to
Outside Directors in lieu of annual retainers and meeting fees that
would otherwise be paid in cash shall be calculated in a manner
determined by the Board. The terms of such NSOs shall also be
determined by the Board.
6. Options
The following provisions shall apply to each Option granted to a Key
Employee:
(a) Options may be granted to Key Employees at any time and from
time to time as shall be determined by the Committee. The
Committee shall have complete discretion in determining the
number of shares of Common Stock subject to Options granted to
each Key Employee. The Committee may grant any type of Option
to purchase Common Stock that is permitted by law at the time
of the grant, including ISOs.
-3-
<PAGE>
(b) Each Option shall be evidenced by a written agreement
specifying the type of Option granted, the Option exercise
price, the terms for payment of the exercise price, the
duration of the Option and the number of shares of Common
Stock to which the Option pertains (the "Option Agreement").
An Option Agreement may also contain a vesting schedule, a
non-competition agreement, a confidentiality provision,
provisions for forfeiture in the event of termination of the
Key Employee's employment by the Corporation for Cause
(hereinafter defined) or termination of the Key Employee's
employment by the Key Employee without Good Reason
(hereinafter defined), and such restrictions and conditions
and other terms as the Committee shall determine. Option
Agreements need not be identical.
(c) The Committee, in its discretion, shall have the power to
accelerate the dates for exercise of any or all Options, or
any part thereof, granted to a Key Employee under the Plan.
7. Required Terms and Conditions of ISOs
The provisions of each ISO granted to a Key Employee under this Section
7 shall be interpreted in a manner consistent with Section 422 of the
Code and with all regulations issued thereunder. Each ISO granted to a
Key Employee shall be in such form and subject to such restrictions and
conditions and other terms as the Committee may determine at the time
of grant, subject to the general provisions of the Plan, Section 422 of
the Code, the applicable Option Agreement and the following specific
rules:
(a) Exercise Price
Except as otherwise provided, the per share exercise price of
each ISO shall be at least 100 percent of the Fair Market
Value of the Common Stock at the time such ISO is granted,
provided that in the case of an ISO granted to a Key Employee
who at the time of grant owns (as defined in Section 424(d) of
the Code) stock of the Corporation or its parent or
subsidiaries possessing more than 10 percent of the total
combined voting power of all classes of stock of any such
corporation, the exercise price shall be at least 110 percent
of the Fair Market Value of the Common Stock subject to the
ISO at the time such ISO is granted and the ISO by its terms
shall not be exercisable after the expiration of five years
from the date the ISO is granted. In no event may the exercise
price be less than the par value of the Common Stock subject
to such ISO.
(b) Maximum Term
Subject to earlier termination as provided in Section 9, each
ISO shall expire on the date determined in the applicable
Option Agreement at the time the ISO is granted, provided that
no ISO shall be exercisable after the expiration of ten years
from the date it is granted, except as otherwise provided in
subsection (a) next above.
-4-
<PAGE>
(c) Time of Exercise
The Committee shall specify in the Option Agreement at the
time each ISO is granted, the duration of each ISO and the
time or times within which (during the term of the ISO) all or
portions of each ISO may be exercised, except to the extent
that other terms of exercise are specifically provided by
other provisions of the Plan.
(d) Value of Shares
The aggregate Fair Market Value (determined at the time of
grant) of Common Stock with respect to which ISOs are
exercisable for the first time by a Key Employee during any
calendar year (under all option plans of the Corporation or of
a corporation which, at the time such ISO was granted, is a
parent or subsidiary of the Corporation, or is a predecessor
corporation of any such corporation) shall not exceed
$100,000. If the aggregate Fair Market Value (determined at
the time of grant) of the stock subject to an Option, which
first becomes exercisable in any calendar year exceeds the
limitation of this subsection, so much of the Option that does
not exceed the applicable dollar limit shall be an ISO and the
remainder shall be an NSO; but in all other respects, the
original Option Agreement shall remain in full force and
effect.
(e) Conversion
The Committee may, in its sole discretion, cause the
Corporation to convert an ISO to an NSO upon such terms and
conditions and in such manner as the Committee deems
equitable.
8. Required Terms and Conditions of NSOs
Notwithstanding anything to the contrary in the Plan, the terms and
conditions applicable to NSOs granted to Participant's (including
Non-Employee Directors, other than grants pursuant to Section 5(a))
pursuant to the Plan (which need not be identical) and the Option
Agreements relating thereto shall be determined by the Committee and
the Committee shall make such other determinations as it deems
necessary or advisable for the administration of NSOs granted under the
Plan, including prescribing, amending and rescinding rules and
regulations relating to NSOs and converting NSOs granted outside the
Plan into NSOs under the Plan with the consent of the holder of any
such Option.
9. Expiration of Options Granted to Key Employees; Termination of
Employment, Disability, Death, Retirement, or Occurrence of Specified
Events
(a) General Rule
Except with respect to Options expiring pursuant to subsection
9(b), (c) or (d) below, each Option granted to a Key Employee
shall, unless sooner
-5-
<PAGE>
expired pursuant to subsection 9(e) below, expire on the
expiration date or dates set forth in the applicable Option
Agreement. Each Option expiring pursuant to subsection 9(b),
(c) or (d) below shall expire on the date set forth in
subsection 9(b), (c) or (d) notwithstanding any restrictions
and conditions that may be contained in a Key Employee's
Option Agreement.
(b) Expiration Upon Termination of Employment
An Option granted to a Key Employee shall expire on the first
to occur of (i) the applicable date or dates determined
pursuant to subsection 9(a) or (ii) the date that the
employment of the Key Employee with the Corporation or its
subsidiaries terminates for any reason other than death or
disability pursuant to subsection 9(c), retirement pursuant to
subsection 9(d), or pursuant to subsection 9(e).
Notwithstanding the preceding provisions of this subsection
9(b), the Committee, in its sole discretion, may permit a Key
Employee (i) to exercise an Option that is exercisable
immediately prior to the termination of employment,
notwithstanding any restrictions and conditions that may be
contained in his Option Agreement, during a period not to
exceed ninety days following his termination of employment,
and/or (ii) to exercise an Option that becomes exercisable
after termination of employment and prior to the termination
of such ninety-day period, during such period. In no event,
however, may the Committee permit such Key Employee to
exercise all Option under this subsection 9(b) after the
expiration date or dates set forth in the applicable Option
Agreement.
(c) Expiration Upon Disability or Death
If the employment of a Key Employee with the Corporation and
its subsidiaries terminates by reason of disability (as
determined by the Committee) or death, his unexpired Options
or portions thereof, if any, held on the date of disability or
death that would expire pursuant to the terms of his Option
Agreement during the twelve month period commencing on the
date of disability or death, shall expire on the last day of
such twelve-month period. During such twelve-month period, any
such Option or portion thereof referred to in the preceding
sentence may be exercised by such Key Employee, or the person
specified in Section 10, with respect to the same number of
shares and in the same manner and to the same extent as if the
Key Employee had continued as a full-time employee of the
Corporation or its subsidiaries during such twelve-month
period. Any unexpired Option or portion thereof held by the
Key Employee on the date of disability or death, that would
expire pursuant to the terms of his Option Agreement on a date
more than twelve months after the date of disability or death,
shall expire unexercised on the date of disability on the date
of disability or death.
(d) Expiration Upon Retirement
If the employment of a Key Employee with the Corporation and
its subsidiaries terminates due to retirement under any
qualified retirement plan maintained
-6-
<PAGE>
by the Corporation and/or any of its subsidiaries, his Option
shall expire on the earlier to occur of (i) the applicable
expiration date or dates set forth in the applicable Option
Agreement(s) or (ii) the third anniversary of the date of such
termination of employment. It a Key Employee who has so
retired dies prior to exercising in full an Option that has
not expired pursuant to the preceding sentence, then
notwithstanding the preceding sentence, such Option shall
expire on the first anniversary of the date of the Key
Employee's death. During the period commencing on the date of
retirement or death, as the case may be, and ending on the
applicable later expiration date, the Options may be exercised
by such Key Employee, or the person specified in Section 10,
with respect to the same number of shares and in the same
manner and to the same extent as if the Key Employee had
continued as a full-time employee of the Corporation or its
subsidiaries during such period.
(e) Expiration Upon Occurrence of Specified Events
If, within two years after the occurrence of any event
described in subsection 11(b), the employment of a Key
Employee with the Corporation and its subsidiaries terminates
voluntarily for Good Reason, or involuntarily for any reason
other than for Cause, or due to the death, disability (as
determined by the Committee) or retirement (as defined in
subsection (d)) of a Key Employee, and if such event described
in subsection 11(b) does not have the prior written approval
of a majority of the Continuing Directors, the dates upon
which his outstanding Options may be exercised shall be
advanced to the date of termination. In such event, not later
than ninety days following the date of his termination, the
Key Employee may elect to exercise in whole or in part any or
all of his Options in accordance with the terms of Section 10,
notwithstanding any restrictions and conditions that may be
contained in his Option Agreement. For purposes of the
preceding sentence an event described in subsection 11(b)
shall not have the prior written approval of a majority of the
Continuing Directors unless, in the case of an event described
in subsection 11(b)(i) or (iii), such approval occurs before
the time of such event, and, in the case of an event described
in subsection 11(b)(ii), such approval occurs before the time
that any person (including any Affiliate or Associate)
directly or indirectly acquires or becomes entitled to vote 20
percent or more of the Voting Power of the Corporation.
Notwithstanding any of the provisions of this subsection 9(e),
if the employment of a Key Employee with the Corporation or
its subsidiaries terminates under conditions which meet the
requirements of either subsection 9(c) (as to death or
disability) or (d) (as to retirement) and this subsection
9(e), then such Key Employee, or the person specified in
Section 10, within thirty days following the date of his
termination, may elect, by giving written notice to the
Secretary of the Corporation, to have the provisions of either
subsection 9(c) (as to death or disability) or (d) (as to
retirement) or this subsection (e) apply to his Options. For
purposes of the Plan: (i) termination for "Cause" shall mean
termination of his employment by the Corporation or any
subsidiary because of (A) the Key Employee's dishonesty,
-7-
<PAGE>
fraud or breach of trust or substantial nonperformance of, his
duties, (B) any act or omission by the Key Employee that is a
substantial cause for a regulatory body with jurisdiction over
the Corporation or any of its subsidiaries to request or
recommend the suspension or removal of the Key Employee or to
impose sanctions upon the Corporation or the Key Employee, or
(C) a material breach by the Key Employee of any applicable
employment agreement between him and the Corporation or any of
its subsidiaries, (ii) termination with "Good Reason" shall
mean termination of his employment by a Key Employee because,
without his express written consent, (A) the Corporation or
any subsidiary materially breaches any of the terms of an
employment agreement between the Corporation or any of its
subsidiaries and the Key Employee, (B) the Key Employee is
assigned duties materially inconsistent with his position,
duties, and status as of the date immediately preceding the
date of termination, or (C) the Corporation or any subsidiary
substantially reduces the Key Employee's fixed annual salary
or his benefits under the Corporation's or a subsidiary's
qualified retirement or welfare plans so that, when considered
m the aggregate and with any substitute plan or plans, his
aggregate compensation is at a lower level than at the
commencement of the term of employment, and (iii) "Continuing
Director" shall mean a person who was a member of the Board
elected by the stockholders prior to the occurrence of any
event described in subsection 11(b).
10. Method of Exercise of Options
Any Option granted under the Plan may be exercised by the Participant,
by a legatee or legatees of such Option under the Participant's last
will, by his executors, personal representatives or distributees, or by
his assignee or assignees as provided in Section 13 below, by
delivering to the Secretary of the Corporation written notice of the
number of shares of Common Stock with respect to which the Option is
being exercised, accompanied by full payment to the Corporation of the
exercise price of the shares being purchased under the Option, and by
satisfying, all other conditions provided for in the Plan Except as
otherwise provided in the Plan or in any Option Agreement, the exercise
price of Common Stock upon exercise of any Option by a Key Employee
shall be paid in full (i) in cash, (ii) in Common Stock valued at its
Fair Market Value on the date of exercise, (iii) in cash by a
broker-dealer to whom the holder of the Option has submitted an
exercise notice consisting of a fully endorsed Option, (iv) by agreeing
to surrender Options then exercisable by him valued at the excess of
the aggregate Fair Market Value of the Common Stock subject to such
Options on the date of exercise over the aggregate option price of such
Common Stock, (v) by directing the Corporation to withhold such number
of shares of Common Stock otherwise issuable upon exercise of such
Option having an aggregate Fair Market Value on the date of exercise
equal to the exercise price of the Option or (vi) by such other medium
of payment as the Committee, in its discretion, shall authorize or by
any combination of (i), (ii), (iii), (iv) and (v), at the discretion of
the Committee or in any manner provided in the Option Agreement. The
Corporation shall issue, in the name of the Participant (or, if
applicable, the legatee(s), executor(s), personal representative(s), or
distributee(s) of a deceased Participant, or the
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assignee(s) as provided in Section 13), stock certificates representing
the total number of shares of Common Stock issuable pursuant to the
exercise of any Option as soon as reasonably practicable after such
exercise, provided that any Common Stock purchased by a Key Employee
through a broker-dealer pursuant to clause (iii) above shall be
delivered to such broker-dealer in accordance with 12 C.F R. Sec.
220.3(e)(4).
11. Adjustments
(a) Appropriate adjustment in the maximum number of shares of
Common Stock issuable pursuant to the Plan, the number of
shares subject to Options under the Plan and the exercise
price with respect to Options shall be made to give effect to
any increase or decrease in the number of shares of issued
Common Stock resulting from a subdivision or consolidation of
shares whether through reorganization, recapitalization, stock
split, reverse stock split, spin-off, split-off, spin-out, or
other distribution of assets to stockholders, stock
distributions or combination of shares, assumption and
conversion of outstanding Options due to an acquisition by the
Corporation of the stock or assets of any other corporation,
payment of stock dividends, other increase or decrease in the
number of such shares outstanding effected, without receipt of
consideration by the Corporation, or any other occurrence for
which the Committee determines an adjustment is appropriate;
provided, however, that no adjustment in the number of shares
with respect to which Options may be granted under the Plan,
or in the number of shares subject to outstanding Options
shall be made except in the event, and then only to the extent
that such adjustment together with all respective prior
adjustments which were not made as a result of this provision,
involve a net change of more then ten percent (i) from the
number of shares of Common Stock with respect to which Options
may be granted under the Plan, or (ii) with respect to each
outstanding Option, from the respective number of shares of
Common Stock subject thereto on the date of grant thereof. The
decision of the Committee as to the amount and timing of any
such adjustments shall be conclusive.
(b) In the event that:
(i) any person (as such term is used in Section 13 of the
Securities Exchange Act of 1934 and the rules and
regulations thereunder and including any Affiliate or
Associate of such person, as defined in Rule 12b-2
under said Act, and any person acting in concert with
such person) directly or indirectly acquires or
otherwise becomes entitled to vote more than 50
percent of the voting power entitled to be cast at
elections for directors ("Voting Power") of the
Corporation; or
(ii) there occurs any merger or consolidation of the
Corporation, or any sale, lease or exchange of all or
any substantial part of the consolidated assets of
the Corporation and its subsidiaries to any other
person and (A) in the case of a merger or
consolidation, the holders of outstanding stock of
the
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Corporation entitled to vote in elections of
directors immediately before such merger or
consolidation (excluding for this purpose any person
(including any Affiliate or Associate) that directly
or indirectly owns or is entitled to vote 20 percent
or more of the Voting Power of the Corporation) hold
less than 80 percent of the Voting Power of the
survivor of such merger or consolidation or its
parent; or (B) in the case of any such sale, lease or
exchange, the Corporation does not own at least 50
percent of the Voting Power of the other person; or
(iii) one or more new directors of the Corporation are
elected and at such time five or more directors (or,
if less, a majority of the directors) then holding
office were not nominated as candidates by a majority
of the Continuing Directors;
the Committee may, in its discretion, revise, alter, amend or
modify any Option Agreement with a Key Employee and any then
outstanding and unexercised Option granted to a Key Employee
in any manner that it deems appropriate, including, but not
limited to, any of the following respects:
(A) the Option may be deemed to pertain to and
apply to the securities to which a holder of
the number of shares of Common Stock subject
to the unexercised portion of the Option
would be entitled if he actually owned such
shares immediately prior to the record date
or other time any such event became
effective; and
(B) subject to subsection 7(d), the dates upon
which outstanding and unexercised Options
may be exercised may be advanced (without
regard to installment exercise limitations,
if any).
If the Committee believes that any such event is reasonably
likely to occur, the Committee may so revise, alter, amend or
modify as set forth above at any time before and contingent
upon the consummation of such an event.
(c) In the case of dissolution of the Corporation, every Option
granted to a Key Employee outstanding hereunder shall
terminate notwithstanding any restrictions and conditions that
may be contained in his Option Agreement Each such Option
holder shall have thirty days prior written notice of such
event, during which time he shall have a right, subject to
subsection 7(d), to exercise his partly or wholly unexercised
Option (without regard to installment exercise limitations, if
any).
(d) On the basis of information known to the Corporation, the
Committee shall make all determinations relating to the
applicability and interpretation of this Section 11, and all
such determinations shall be conclusive and binding.
12. Terms and Conditions of Options
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(a) Each Key Employee shall agree to such restrictions and
conditions and other terms in connection with the exercise of
an Option, including restrictions and conditions on the
disposition of the Common Stock acquired upon the exercise
thereof, as the Committee may deem appropriate. The
certificates delivered to a Participant evidencing the shares
of Common Stock acquired upon exercise of an Option may bear a
legend referring to the restrictions and conditions and other
terms contained in the respective Option Agreement and the
Plan, and the Corporation may place a stop transfer order with
its transfer agent against the transfer of such shares. If
requested to do so by the Committee at the time of exercise of
an Option, each Participant shall execute a written instrument
stating that he is purchasing the Common Stock for investment
and not with any present intention to sell the same.
(b) The obligation of the Corporation to sell and deliver Common
Stock under the Plan shall be subject to all applicable laws,
regulations, rules and approvals, including, but not by way of
limitation, the effectiveness of a registration statement
under the Securities Act of 1933, if deemed necessary or
appropriate by the Committee, of the Common Stock, Options,
and other securities reserved for issuance or that may be
offered under the Plan. A Participant shall have no rights as
a stockholder with respect to any shares covered by an Option
granted to, or exercised by, him until the date of delivery of
a stock certificate to him for such shares. No adjustment
other than pursuant to Section 11(a) hereof shall be made for
dividends or other rights for which the record date is prior
to the date such stock certificate is delivered.
13. Non-Transferability
Except as provided in the applicable Option Agreement, Options granted
under the Plan and any rights and privileges pertaining thereto, may
not be transferred assigned, pledged or hypothecated in any manner, by
operation of law or otherwise, other than by will or by the laws of
descent and distribution and shall not be subject to execution,
attachment or similar process. The granting of an Option shall impose
no obligation upon the applicable Participant to exercise such Option.
14. Indemnification of the Committee
In addition to such other rights of indemnification as they may have as
members of the Board, or as members of the Committee, or as its
delegatees, the members of the Committee and its delegatees shall be
indemnified by the Corporation against (a) the reasonable expenses (as
such expenses are incurred), including attorney' fees actually and
necessarily incurred in connection with the defense of any action, suit
or proceeding (or in connection with any appeal therein), to which they
or any of them may be a party by reason of any action taken or failure
to act under or in connection with the Plan or any Option granted
hereunder; and (b) against all amounts paid by them in settlement
thereof (provided such settlement is approved by independent legal
counsel selected by the
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Corporation) or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, except in relation to matters as to which
it shall be adjudged in such action, suit or proceeding that such
Committee member or delegatee is liable for gross negligence or
misconduct in the performance of his duties; provided that within sixty
days after institution of any such action suit or proceeding a
Committee member or delegatee shall in writing offer the Corporation
the opportunity, at its own expense, to handle and defend the same.
15. No Contract of Employment
Neither the adoption of the Plan nor the grant of any Option shall BC
deemed to obligate the Corporation or any subsidiary to continue the
employment of any Key Employee for any particular period, nor shall the
granting of an Option Constitute a request or consent to postpone the
retirement date of any Key Employee.
16. Termination and Amendment of the Plan
(a) No ISOs shall be granted under the Plan more than ten years
after the first to occur of (i) the date the Plan was adopted
by the Board or (ii) the date the Plan was approved by the
stockholders of the Corporation. The Board may at any time
terminate, suspend or modify the Plan without the
authorization of stockholders to the extent allowed by
applicable law, regulation or rule.
(b) No termination, suspension or modification of the Plan shall
adversely affect any right acquired by any Participant under
an Option granted before the date of such termination,
suspension or modification, unless such Participant shall
consent; but it shall be conclusively presumed that any
adjustment for changes in capitalization as provided for
herein does not adversely affect any such right. Any member of
the Board who is an officer or employee of the Corporation
shall be without vote on any proposed amendment to the Plan,
or on any other matter which might affect that member's
individual interest under the Plan.
17. Withholding Taxes
Whenever the Corporation proposes or is required to issue or transfer
shares of Common Stock to a Participant under the Plan, the Corporation
shall have the right to require the Participant to remit to the
Corporation an amount sufficient to satisfy all federal, state and
local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares. If such certificates have
been delivered prior to the time a withholding obligation arises, the
Corporation shall have the right to require the Participant to remit to
the Corporation an amount sufficient to satisfy all federal, state or
local withholding tax requirements at the time such obligation arises
and to withhold from other amounts payable to the Participant, as
compensation or otherwise, as necessary. A Participant may elect to
satisfy his tax withholding obligation incurred with respect to the
Taxable Date of an Option by (a) directing the Corporation to withhold
a portion of the shares of Common Stock otherwise distributable to the
Participant, or (b) by transferring to the Corporation a
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certain number of shares of previously owned Common Stock, such shares
being valued at the Fair Market Value thereof on the Taxable Date.
18. Leaves of Absence
The Committee shall be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan regarding any
leave of absence taken by a Key Employee who is the recipient of any
Option. Without limiting the generality of the foregoing, the Committee
shall be entitled to determine (a) whether or not any such leave of
absence shall constitute a termination of employment within the meaning
of the Plan, and (b) the impact, if any, of any such leave of absence
on Options under the Plan theretofore made to any Key Employee who
takes such leave of absence.
19. Governing Law
The Plan, and all agreements hereunder, shall be construed in
accordance with and governed by the laws of the State of Delaware and,
in the case of ISOs, Section 422 of the Code and regulations issued
thereunder.
20. Fair Market Value
"Fair Market Value" as of a given date for all purposes of the Plan and
any Option Agreement means (a) if the Common Stock is listed on a
national security exchange, the average of the closing prices of the
Common Stock on the Composite Tape for the ten consecutive trading days
immediately preceding such given date; (b) if the Common Stock is
traded on an exchange or market in which prices are reported on a bid
and asked price, the average of the mean between the bid and the asked
price for the Common Stock at the close of trading for the ten
consecutive trading days immediately preceding such given date; and (c)
if the Common Stock is not listed on a national securities exchange nor
traded on the over-the-counter market, such value as the Committee, in
good faith, shall determine. Notwithstanding any provision of the Plan
to the contrary, no determination made with respect to the Fair Market
Value of Common Stock subject to an ISO shall be inconsistent with
Section 422 of the Code or regulations issued thereunder
21. Successors
In the event of a sale of substantially all of the assets of the
Corporation, or a merger, consolidation or share exchange involving the
Corporation, all obligations of the Corporation under the Plan with
respect to Options granted hereunder shall be binding on the successor
to the transaction. Employment of a Key Employee with such a successor
shall be considered employment of the Key Employee with the Corporation
for purposes of the Plan.
22. Notices
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Notices given pursuant to the Plan shall be in writing and shall be
deemed received when personally delivered or five days after mailed by
United States registered or certified mail, return receipt requested,
addressee only, postage prepaid. Notice to the Corporation shall be
directed to:
Corporate Secretary
LodgeNet Entertainment Corporation
3900 West Innovation Street
Sioux Falls, SD 57107-7002
Notices to or with respect to a Participant shall be directed to the
Participant, or the executors, personal representatives or distributees
of a deceased Participant, at the Participant's home address on the
records of the Corporation.
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