CONSULTING AND NONCOMPETITION AGREEMENT
THIS CONSULTING AND NONCOMPETITION AGREEMENT (the "Agreement") is made as
of the day of , 1997, by and among Xxxxx X. Xxxxxx ("DBG"),
AFFINITY GROUP, INC., a Delaware corporation ("AGI"), and CAMPING WORLD,
INC., a Kentucky corporation (the "Company").
R E C I T A L S
WHEREAS, pursuant to that certain Stock Purchase Agreement (the "Stock
Purchase Agreement") dated as of February 25, 1997, AGI is purchasing all of
the issued and outstanding shares of capital stock of the Company (AGI, the
Company and any affiliated entity to which the assets and liabilities of the
Company are subsequently transferred are hereinafter referred to individually
as a "Company Party" and collectively as the "Company Parties"). All
capitalized terms used herein and not otherwise defined herein shall have the
meanings given them in the Stock Purchase Agreement; and
WHEREAS, DBG possesses confidential information, trade secrets and
special knowledge of the Company, the Business and the Assets; and
WHEREAS, the execution by DBG of this Agreement is a condition precedent
to the obligation of AGI to consummate the transactions contemplated under
the Stock Purchase Agreement; and
WHEREAS, benefits will accrue to DBG under this Agreement as well as by
reason of the closing of the transactions contemplated under the Stock
Purchase Agreement and DBG is desirous that such transactions be consummated;
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. CONSULTING SERVICES. During the Covenant Period (as defined below),
DBG will be available at reasonable times upon reasonable notice to advise
the Company Parties and consult with senior management regarding the
Business. DBG also agrees to the use of his name and likeness in any mail
order catalogs distributed by the Company Parties during the first five years
of the Covenant Period. After the first five years of the Covenant Period,
the services of DBG hereunder shall be as mutually agreed upon between the
parties hereto, and DBG shall be entitled to reimbursement for time and
expenses as approved by the parties hereto in advance of the provision of
such services by DBG. In addition, in the event that any Company Party takes
or fails to take any action that in DBG's sole discretion might adversely
affect DBG's image and reputation, then DBG may thereafter restrict or
prohibit the use of his name and likeness by the Company Parties.
2. COVENANT NOT TO COMPETE.
(a) COVENANT PERIOD. DBG hereby covenants that, for a period of
fifteen (15) years from the date of this Agreement (the "Covenant Period"),
DBG shall not, directly or indirectly, be engaged or have an ownership
interest in any business that is in competition with or that would result in
a conflict of interest with the Company Parties or the development,
marketing, provision, installation or sale by the Company Parties of the
products or services being developed, marketed, provided, installed or sold
by the Company Parties as of the date of this Agreement, including, but not
limited to, club memberships to selected recreational affinity groups,
specialty retail recreational vehicle merchandise distributed primarily
through retail supercenters and mail order catalogs, and subscription
magazines and directories; provided, however, that ownership by DBG of less
than five percent (5%) of the issued and outstanding capital stock of any
corporation whose securities are listed on a national securities exchange or
are regularly included in the national list of over-the-counter securities
from time to time published in a newspaper or other general publication shall
not be deemed to violate the prohibitions of this paragraph; and further,
provided, that upon the expiration of the first five years of the Covenant
Period, the provisions of this Section 2(a) shall only be construed to
prohibit DBG from engaging in the activity described herein in North Dakota
and South Dakota.
(b) NO INTERFERENCE WITH EMPLOYEES. DBG agrees that during the
first five years of the Covenant Period, DBG will not offer employment to,
discuss the nature of any prospective employment opportunities with, or
otherwise solicit any employee of any Company Party (or any person who was an
employee of a Company Party within 180 days of the date hereof) on DBG's own
behalf or on behalf of any entity with which DBG is acting as a consultant or
with which DBG is then otherwise affiliated.
(c) DISCLOSURE. DBG agrees that he will not at any time disclose
to any person, partnership or other entity who or which is in competition
with the Company Parties, any confidential information or trade secrets of
the Company Parties, the contents of any customer lists of the Company
Parties or the general needs of the customers or other contracting parties
with the Company Parties, provided, however, the foregoing shall not prevent
DBG from responding to the request of a governmental agency or pursuant to
court order or as otherwise required by law nor from disclosing information
obtained by DBG from a third party without violation of this Agreement or
information otherwise in the public domain.
3. CONSIDERATION. In consideration of the covenants and agreements of
DBG contained herein, the Company Parties shall pay to DBG the following
amounts, all of which shall be paid by wire transfer of immediately available
funds to an account specified by DBG:
(a) $3,500,000, payable upon execution of this Agreement;
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(b) $6,500,000, on the fifth anniversary of the date of this
Agreement; and
(c) Interest on the outstanding balance of the amount payable
pursuant to subsection (b) above at the rate of 10% per annum, such interest
to be paid annually on each anniversary of the date of this Agreement until
such amount has been paid in full.
(d) The amount payable hereunder may be prepaid in whole or in part
at any time by the Company Parties in their sole discretion. In the event of
any prepayment of the entire balance due hereunder, the amount due and
payable by the Company Parties shall be as follows:
(i) If the full prepayment occurs on or before the date that is
30 days after the date hereof, the full prepayment amount shall be
$6,000,000, plus accrued interest pursuant to subsection (c) above.
(ii) If the full prepayment occurs on a date that is more than 30
days after the date hereof, the amount due and payable thereafter
shall increase by $8,333.33 for each month (pro rated for any part
thereof) after the date that is 30 days after the date hereof until
the amount due hereunder is paid in full.
4. OFFSET RIGHTS. Any payments due and not yet paid hereunder shall be
subject to setoff for claims of AGI for breaches by the Sellers of their
covenants, representations or warranties contained in the Stock Purchase
Agreement. In the event of any claim by AGI for indemnity under the terms of
the Stock Purchase Agreement, payments due under this Agreement shall be
reduced by the amount of such claim (as finally determined by litigation or
otherwise), effective as of the date on which such claim was made.
5. HEALTH CARE BENEFITS. During the first year of the Covenant Period,
DBG shall be entitled to participate in the Company's health insurance plan
on the same terms as the employees of the Company.
6. DEFAULT. In the event that the Company Parties should default in
the payment of any amount due under Section 3, then the amount due shall
bear interest from the date of default at the rate per annum of 10% in excess
of the rate identified from time to time in the WALL STREET JOURNAL as the
prime rate of interest, but not to exceed the highest maximum rate allowable
under applicable law.
7. MISCELLANEOUS.
(a) The invalidity or unenforceability of any provision of this
Agreement or the application thereof to any person or circumstance shall not
affect or impair the validity or enforceability of any other provision or the
application of the first provision to any other person or circumstances. Any
provision of this Agreement that might otherwise be invalid or
unenforceable because of contravention of any applicable law, statute or
governmental regulation shall be deemed to be amended to the extent necessary to
remove the cause of such invalidation or unenforceability and such provision as
so amended shall remain in full force and effect as a part hereof.
(b) This Agreement shall be governed by the laws of the State of
Delaware, without regard to its conflict of laws rules.
(c) This Agreement may not be assigned by DBG or the Company
Parties without the prior written consent of the other parties. This
Agreement and the rights and the obligations hereunder shall be binding upon
and inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
(d) The Company Parties acknowledge that the benefits to be derived
from DBG's covenants under this Agreement will be realized for all periods
during which payments are due hereunder notwithstanding the death, disability
or incapacity of DBG, and therefore, the obligation of the Company Parties to
make payments hereunder shall continue regardless of the death, disability or
incapacity of DBG. In such event, any payments due hereunder shall be made
to DBG's legal representative.
(e) This Agreement, together with the Stock Agreement and the
agreements, documents and instruments delivered in connection therewith
embodies the entire agreement of the parties hereto relating to the subject
matter hereof. No amendment or modification of this Agreement shall be valid
or binding upon any party hereto unless made in writing and signed by such
party.
(f) This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
/s/ Xxxxx X. Xxxxxx
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XXXXX X. XXXXXX
AFFINITY GROUP, INC.
By: [illegible]
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Its: [illegible]
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CAMPING WORLD, INC.
By: [illegible]
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Its: [illegible]
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