**Exhibit 10.40**

 

**STOCK AGREEMENT**

 

**THIS AGREEMENT**, made and entered into as of the 1st day of January, 2010 by and between **Affinity Group, Inc**., a Delaware corporation (“AGI”)and **[                 ]**(“Executive”);

 

*W I T N E S S E T H*

 

**WHEREAS**, AGI proposes to employ the Executive in theoperations of the Company (as hereinafter defined) and AGI is desirous ofaffording Executive incentives, in the form of phantom stock of the Company, inconnection therewith;

 

**NOW, THEREFORE**, in consideration of the mutual covenantscontained herein and other good and valuable consideration, AGI and Executivehereby agree as follows:

 

**ARTICLE I**

 

EMPLOYMENT

 

Section l.l.   Employment.  The Company hereby employs the Executive as[                  ] of the Company toperform such duties and discharge such functions in and about the business andaffairs of AGI and/or one or more of its subsidiaries, as the board ofdirectors of the Company may from time to time determine.  Executive agrees, during the term hereof, todiligently and in good faith perform and discharge such duties and functionsand Executive shall devote all of his working time, energy and abilityexclusively to the performance of his duties hereunder.  Executive shall not directly or indirectlyengage or participate in the operations or management of, or render anyservices to, any other businesses or enterprises.

 

Section l.2.  BasicCompensation.  The Company agrees topay Executive a base annual salary and annual bonus (or such other amount asmay be from time to time determined by the board of directors of the Company)(collectively the “Basic Compensation”). Basic Compensation payable under this section shall be payable inaccordance with such practices and procedures as are generally applicable toother employees of the Company.

 

Section l.3.  FringeBenefits.  While Executive is in theemploy of the Company, the Company agrees to provide to Executive such benefitsas may be provided by the Company from time to time to its similarly situatedemployees.

 

Section 1.4.  Severance.  If the Company terminates the employment ofthe Executive without Cause or if the Executive terminates employment with theCompany for Good Reason, the Company shall (i) make a lump sum severancepayment equal to one (1) year of Basic Compensation (at the level beingpaid at the time of termination), and (ii) pay to the Executive the amountof the bonus, if any, accrued or earned to the date of such termination undersection 1.5 hereof.  Such severancepayment shall be made within 30 days after the determination of the amount ofthe accrued bonus calculated pursuant to the provisions of section 1.5hereof.  It is agreed that anytermination of employment is without prejudice to 

 

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anyother remedy to which the Company may be entitled, either by law, in equity orunder this Agreement.

 

In addition to the foregoing, if, during the period of three (3) yearsfollowing a Change of Control, the Company terminates the employment of theExecutive without Cause or if the Executive terminates employment with theCompany for Good Reason, the Company shall, at its expense, continue providingto Executive, for the period of three (3) years following a Change ofControl, the same life and health insurance benefits as provided to Executiveimmediately prior to such termination.

 

The Company has the absolute right to terminate this Agreement, and theemployment of the Executive hereunder, for Cause without any further obligationto the Executive in respect of severance payments to the Executivehereunder.  For purposes of thisAgreement, Cause includes, but is not limited to the following:

 

(i)    Executive’s breach of theterms of this Agreement or any other legal obligation to the Company; or

 

(ii)   Executive’s fraud,dishonesty, negligence, misconduct or other deliberate action which causesinjury to the Company or any of its subsidiaries or to their respectivereputations or an act of the Executive involving moral turpitude or a seriouscrime.

 

The Executive shall not be entitled to severance under this section 1.4if the employment of the Executive is terminated for any of the followingreasons:

 

(i)    the Executive terminatesthis Agreement at any time;

 

(ii)   death of the Executive;

 

(iii)  the Disability of theExecutive.

 

Section 1.5.  Bonus.  The Company adopts, from time to time, formalwritten bonus programs for certain of its executives.  Such written bonus programs, if adopted andif extended to the Executive, shall be in addition to the Basic Compensationpayable under section 1.2 hereof.  Theamount of the bonus will be determined on mutually agreed-upon objectives.  The Company reserves the absolute right toamend, replace or terminate, from time to time, any such written bonus programand to determine the extent of its application, all without any liability tothe Executive.  The bonus, if any,payable under this section 1.5 shall be paid in accordance with the terms ofthe formal written bonus program adopted by the Company.

 

Section l.6.  Term.  The term of this Agreement shall commence on January 1,2010 and continue through December 31, 2012; provided, however, thatExecutive shall have the continuing option to immediately terminate theemployment provided by section l.l hereof by giving two weeks’ notice thereofto the Company and the Company shall have the continuing option to immediatelyterminate the employment provided by section l.l hereof by giving writtennotice thereof to Executive which notice may be effective immediately.  Upon any such termination, all of the rightsand obligations set forth in this Article I shall terminate provided,only, that the Company shall pay to Executive the severance, if any, payableunder section 1.4 hereof.

 

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**ARTICLE II**

 

PHANTOM STOCK INTEREST

 

Section 2.l.  Award ofPhantom Stock Interest.  The Companyhereby awards the Phantom Stock Interest to the Executive.

 

Section 2.2. Payment ofPhantom Stock Interest.  The Companyshall pay, and Executive shall be entitled to receive, the cash value of thePhantom Stock Interest, which shall be paid as follows:

 

(i)     one-third thereof within30 days of the determination of such cash value in accordance with theprovisions of section 4.3 hereof, and

 

(ii)    one-third thereof on thefirst anniversary of the Determination Date, and

 

(iii)   one-third thereof on thesecond anniversary of the Determination Date.

 

Section 2.3.  Beneficiary.  Executive may designate (by filing with theCompany a written beneficiary designation form in form reasonably acceptable tothe Company) one or more primary beneficiaries or contingent beneficiaries toreceive all or a specified part of the cash value of the Phantom Stock Interestwhich, at the time of Executive’s death, may remain unpaid under this Agreementand Executive may change or revoke any such designation from time to time. Nosuch designation, change or revocation shall be effective unless executed byExecutive and accepted by the Company during Executive’s lifetime.  Each such designation, change or revocationshall be effective under this Agreement until changed or revoked in the mannerspecified herein.  No such change orrevocation shall require the consent of any beneficiary theretofore designatedby Executive.  If Executive fails todesignate a beneficiary, or designates a beneficiary and thereafter revokessuch designation without naming another beneficiary, or designates one or morebeneficiaries and all such beneficiaries so designated fail to surviveExecutive, then the beneficiary of the Phantom Stock Interest, or the partthereof as to which Executive’s designation fails, as the case may be, shall bethe representative of Executive’s estate. Unless Executive has otherwise specified in the beneficiary designation,the beneficiary or beneficiaries designated by Executive shall become fixed asof Executive’s death so that, if a beneficiary survives Executive but diesbefore the receipt of all payments due such beneficiary, such remainingpayments shall be payable to the representative of such beneficiary’s estate.

 

Section 2.4.   Benefits Not Transferable.  Neither Executive nor any beneficiaryhereunder shall have any transferable interest in the payments due hereundernor any right to anticipate, alienate, dispose of, pledge or encumber the sameprior to actual receipt thereof, nor shall the same be subject to attachment,garnishment, execution following judgment or other legal process instituted bycreditors of Executive or any such beneficiary provided that the unpaid cashvalue of Executive’s Phantom Stock Interest and any payments due hereundershall at all times be subject to set-off for debts owed by the Executive to theCompany or its affiliates.

 

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Section 2.5.  Nature of theCompany’s Obligation.  The Companyshall maintain a record of the Phantom Stock Interest but the Company shall notbe required to segregate any funds or other assets to be used for the paymentof benefits under this Agreement and no such record shall be considered asevidence of the creation of a trust fund, an escrow or any other segregation ofassets for the benefit of Executive or any beneficiary of Executive.  The obligation of the Company to make thepayments described in this Agreement is an unsecured contractual obligation ofthe Company only, and neither Executive nor any beneficiary of Executive shallhave any beneficial or preferred interest by way of trust, escrow, lien orotherwise in and to any specific assets or funds.  Executive specifically acknowledges that thePhantom Stock Interest to be awarded pursuant to the terms of this Agreementare not securities in the Company and do not create any right in the equity orcapital of the Company or any of its affiliates.  Executive and each beneficiary of Executiveshall look solely to the general credit of the Company for satisfaction of anyobligations due or to become due under this Agreement, it being expresslyacknowledged by the Executive that the obligations of the Company hereunder arejunior and subordinate in right of payment to the obligations of the Company toits or the Company’s lenders.  If theCompany should, in its sole discretion, earmark or set aside any funds or otherassets to pay benefits hereunder, the same shall, nevertheless, remain and beregarded as part of the general assets of the Company subject to the claims ofits general creditors (and shall not be considered to be held in a fiduciarycapacity for the benefit of Executive or any beneficiary hereunder), andneither Executive nor any beneficiary of Executive shall have any legal,beneficial, security or other property interest therein.  Upon delivery by the Company to Executive ofthe consideration as provided in section 2.2, the rights and obligations of theCompany and Executive under this Article II shall terminate and Executiveshall have no other or further rights under this Article or in respecthereof.

 

**ARTICLE III**

 

COVENANT NOT TO COMPETE

 

Section 3.l.  CovenantNot to Compete.  Executive herebycovenants that, for a period of eighteen months next following theDetermination Date (or such shorter period for which the Company continues tobe owned or operated by the Parent or its affiliates), Executive shall not beengaged or interested in any business which competes, directly or indirectly,with the publication or membership businesses of the Company or any subsidiaryof the Company (whether as a proprietor, partner with another, shareholder,agent or consultant of, employee of or lender to, another) in the recreationalvehicle, camping, outdoor living or other markets then served by the Company orsuch subsidiary, except as a proprietor, partner, shareholder, employee orconsultant in or to the Company or any entity controlled by, controlling orunder common control with the Company, provided that if the employment ofExecutive is terminated by the Company without Cause, the foregoing covenantshall not apply (without affecting the obligations hereinafter contained inthis section 3.l in respect of disclosures or solicitations by Executive)unless the Executive shall have been paid severance pursuant to section 1.4hereof.  Executive agrees that he willnot at any time disclose to any person or other entity who or which is, orreasonably may be expected to be, in competition with the Company or itsaffiliates, any confidential information or trade secrets of the Company, anysubsidiary of the Company or any of their respective affiliates, the contentsof any customer lists of the Company, any subsidiary of the Company or any oftheir respective affiliates or the general needs of the customers or othercontracting parties with the Company, any subsidiary of the Company or any oftheir respective affiliates, provided, however, the 

 

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foregoing shall not prevent Executive from responding to the request ofa governmental agency or pursuant to a court order or as otherwise required bylaw.  For a period of one year followingthe Determination Date, Executive agrees not to offer employment to, not todiscuss the nature of any prospective employment opportunities with, and not tootherwise solicit any employee of the Company or such subsidiary (or any personwho was an employee of the Company or such subsidiary within 180 days of theDetermination Date) on his own behalf, on behalf of any employer of theExecutive, on behalf of any entity with which the Executive is acting as aconsultant or with which the Executive is then otherwise affiliated.

 

Section 3.2.  Remedies.  Recognizing that a breach of the covenantcontained in section 3.1 would cause the Company irreparable injury and thedamages at law would be difficult to ascertain, Executive consents to thegranting of equitable relief by way of a restraining order or temporary or permanentinjunction by any court of competent jurisdiction to prohibit the breach orenforce the performance of the covenants contained in section 3.l.  The invalidity or unenforceability of anyprovision of this Article or the application thereof to any person orcircumstance shall not affect or impair the validity or enforceability of anyother provision or the application of the first provision to any other personor circumstance.  Any provision of this Article thatmight otherwise be invalid or unenforceable because of contravention of anyapplicable law, statute or governmental regulation shall be deemed to beamended to the extent necessary to remove the cause of such invalidation orunenforceability and such provision as so amended shall remain in full forceand effect as a part hereof.

 

**ARTICLE IV.**

 

DEFINITIONS AND GENERALPROVISIONS

 

Section 4.l.  Definitions.  As used in this Agreement, the followingterms shall have the respective meanings set forth below:

 

Accounting Period:  If the Determination Date falls on December 15ththrough December 31st, inclusive, the Fiscal Year of the Company in whichthe Determination Date falls; if the Determination Date falls on January 1stthrough June 14th, inclusive, the Fiscal Year of the Company endingimmediately prior to the date on which the Determination Date falls; if theDetermination Date falls on June 15th through December 14th,inclusive, the Rolling Four Fiscal Quarters ending immediately prior to thedate on which the Determination Date falls.

 

Acquisition:  The purchase by the Company an existingbusiness operation as a going concern.

 

Base Cost:  $[              ] (US dollars) plus (i) thepurchase price (or other consideration therefore determined in accordance withgenerally accepted accounting principles) for any Acquisition made after thedate hereof less (ii) the sales price (or other consideration therefordetermined in accordance with generally accepted accounting principles) anyDisposition made after the date hereof.

 

Company:  Collectively, AGI and each subsidiary of AGIthat is an “S corporation” or a substantially similar pass-through entity(including limited liability companies and partnerships) for federal income taxpurposes.

 

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Company Value:  With respect to any Accounting Period, theexcess, if any, of (x) the Formula Value for such Accounting Period over (y) theBase Cost.

 

Change of Control:  A “Change of Control” will be deemed to haveoccurred at such time as (a) the Existing Holders, individually or in theaggregate, shall cease to beneficially own (as defined under Rule 13(d)(3) orany successor rule or regulation promulgated under the Securities ExchangeAct of 1934), directly or indirectly, 50.1% or more of the voting equity interestsof the Company, (b) there shall be consummated any consolidation or mergerof the Company or the Parent in which the Company or the Parent, as the casemay be, is not the continuing or surviving corporation or pursuant to which thevoting equity interests of the Company or the Parent would be converted intocash, securities or other property, other than a merger or consolidation of theCompany or the Parent in which the holders of the voting equity interests ofthe Company or the Parent, as the case may be, outstanding immediately prior tothe consolidation or merger hold, directly or indirectly, at least a majorityof the voting equity interests of the surviving corporation immediately aftersuch consolidation or merger, (c) there is a sale, lease or transfer ofall or substantially all of the assets of the Company or the Parent to anyperson or group (as such term is defined in Section 13(d)(3) of theSecurities Exchange Act of 1934), or (d) the shareholders of the Companyor the Parent shall approve any plan or proposal for the liquidation ordissolution of the Company or the Parent, as the case may be.

 

Determination Date:  The date of any of the following events: (i) terminationof the Executive’s employment, whether by death or otherwise, (ii) a Sale,or (iii) December 31, 2012.

 

Disability:  The physical or mental incapacity ofExecutive for a period of more than 60 consecutive days, the determination ofwhich by the board of directors of the Company shall be conclusive on theparties hereto.

 

Disposition:  The sale by the Company an existing businessoperation as a going concern.

 

Existing Holders:  Stephen Adams, his spouse and linealdescendants and trusts for the exclusive benefit of any of the foregoingpersons and any affiliate of Stephen Adams.

 

Fiscal Quarter:  The fiscal quarter of the Company ending onthe last day of the calendar quarter.

 

Fiscal Year:  The fiscal year of the Company as the casemay be, ending on the last day of the calendar year.

 

Formula Value:  For any Accounting Period, the product ofeight (8) and Operating Profit of the Company for such Accounting Period.

 

Good Reason:  The occurrence of one or more of thefollowing events, without Executive’s written consent, within three (3) yearsfollowing a Change in Control (or before the Change in Control if theoccurrence is directly connected to the Change in Control and the Change inControl occurs):  (a) the Executiveis assigned any duties inconsistent with Executive’s position (includingstatus, offices, titles and reporting requirements), authorities, duties or anyother responsibilities as in effect immediately prior to the announcement ofthe 

 

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Change in Control, (b) a reduction in base compensation or in anybonus plan from the amounts in effect immediately prior to the announcement ofthe Change in Control, or (c) Executive is required to be located outsidethe same metropolitan area as Executive’s office location immediately prior tothe announcement of the Change in Control.

 

Operating Profit:  With respect to any Accounting Period (i) thenet income of the Company derived from the ongoing business operations of suchentity or entities for such period plus (ii) interest, federal and stateincome taxes or any provision for such taxes, depreciation, amortization,financing costs, management fees and 90 % of aircraft expenses.  Operating Profit shall be determined on theaccrual method of accounting and in accordance with generally acceptedaccounting principles consistently applied, provided that (i) in no eventshall tradeout or barter transactions or extraordinary items of revenue orexpense (including revenue or expense from non-operating investments, revenueor expense from the sale or purchase of assets not considered an Acquisition orDisposition or revenue or expense not derived from business operations) bereflected in net income and (ii) amounts paid or received in settlement of(or payment of judgments in respect of) litigation which did not arise in theordinary course of the business operations of such entity or entities or any oftheir respective subsidiaries, shall not be reflected in net income (it beingunderstood that subsidiaries of the Company do have litigation which shall beconsidered litigation in the “ordinary course” of business operations).  If there has occurred a Disposition withinthe Accounting Period and the net proceeds of such Disposition have beenreceived by the Company prior to the date on which Company Value is to becalculated as herein provided, the net income relating to the subject of suchDisposition shall be deleted from the calculation of Operating Profit.  If there has occurred an Acquisition withinthe Accounting Period, the income from which is reflected in the AccountingPeriod only partially, the Operating Profit with respect to the subject of suchAcquisition shall be adjusted, on a historical pro forma basis, to reflectOperating Profit for the complete Accounting Period.

 

Parent:  Affinity Group Holding, Inc., a Delawarecorporation, or such other entity which holds in excess of 80 % of the issuedand outstanding equity securities of the Parent.

 

Phantom Stock Interest:  The cash equivalent of [                ] (      %) of Company Value.

 

Rolling Four Fiscal Quarters:  Four consecutive Fiscal Quarters.

 

Section 4.2.  WithholdingTaxes.  The Company may withhold fromany payment to be made under this Agreement (and transmit to the proper taxingauthority) such amount as it may be required to withhold under any federal,state or other law.

 

Section 4.3.  Administration.  The Company and its executive officers shallhave full power to interpret, construe and administer this Agreement, includingauthority to determine any dispute or claim with respect thereto.  The determination of the Company in anymatter, made in good faith, shall be binding and conclusive upon Executive andall other persons having any right or benefit hereunder.  Unless Executive shall give notice to theCompany objecting to the Company’s calculation of Base Cost, Company Value,Formula Value or Operating Profit for any period (or any other calculation tobe determined for the purposes of this Agreement) within thirty days afternotice of the determination thereof by the Company, such calculation shallconclusively be deemed to have been accepted by the parties hereto.  The cash value of the Phantom Stock Interestshall be set forth in a certificate of the chief 

 

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financial officer of the Company, the determination of which shall bemade within 150 days of the Determination Date and shall be conclusive andbinding upon the Executive provided that, if the Executive shall disagree withthe amount of the Base Cost, Company Value, Formula Value or Operating Profitas determined by the chief financial officer of the Company (written notice ofwhich shall be given by the Executive within 30 days of the receipt of suchdetermination by the chief financial officer), Base Cost, Company Value,Formula Value or Operating Profit shall be determined by the independentcertified public accountants of the Company or, if the Company has not thenengaged a firm of independent certified public accountants, any “big six” firmof public accountants selected by the Company (the “Independent Accountant”).  The Independent Accountant shall determinethe Base Cost, Company Value, Formula Value or Operating Profit of the Companywithin 30 days after its appointment and shall be instructed to deliver to theCompany and the Executive a written report of its determination of the amountof such Base Cost, Company Value, Formula Value or Operating Profit.

 

The cost of the accounting services performed by the IndependentAccountant shall be borne by the Company unless the amount of the Base Cost,Company Value, Formula Value or Operating Profit as determined by theIndependent Accountant is the same as the amount determined by the Company’schief financial officer (or is an amount which results in a lower value for theExecutive of the Phantom Stock Interest or the bonus payable under section1.5), in which event the entire cost of the services of the IndependentAccountant shall be borne by the Executive and shall be deducted by the Companyfrom the Phantom Stock payment to be made pursuant to section 2.2 hereof or thebonus payable under section 1.5, as the case may be.

 

Any of the obligations of the Company hereunder may be performed by anaffiliate of the Company and such performance by an affiliate shall be deemedto satisfy any such obligation of the Company hereunder.

 

Section 4.4.  Notices.  All notices, requests and othercommunications from any of the parties hereto to the other shall be in writingand shall be considered to have been duly given or served when personallydelivered to any individual party, an executive officer of any corporate party,or on the first day after the date of deposit with Federal Express for next daydelivery, postage prepaid, or on the third day after deposit in the UnitedStates mail, certified or registered, return receipt requested, postageprepaid, or on the date of telecopy, fax or similar telephonic transmissionduring normal business hours, provided that the recipient has specificallyacknowledged by telephone receipt of such telecopy, fax or telephonic transmission;addressed, in all cases, to the party at his or its address set forth below, orto such other address as such party may hereafter designate by written noticeto the other party:

 

(i)  If to the Company to:

 

2575 Vista Del Mar Drive

Ventura, CA  93001

Attn:  Stephen Adams

 

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(ii)  If to Executiveto:

 

 

 

 

Section 4.5.  BindingEffect.  The provisions of thisAgreement shall not give Executive any rights to continue to be employed orotherwise retained by the Company or any affiliate thereof.  Except as so provided, this Agreement shallbe binding upon and inure to the benefit of the parties hereto, the respectivesuccessors and assigns of the Company and the beneficiaries, personalrepresentatives and heirs of Executive.

 

Section 4.6.  ControllingLaw.  This Agreement shall beconstrued, and the legal relations between the parties determined, inaccordance with the laws of the state of incorporation of the Company.

 

Section 4.7.  Counterparts.  This Agreement may be executed in one or morecounterparts, each of which shall be deemed to be an original without theproduction of the others, but all of which together shall constitute one andthe same instrument.

 

Section 4.8.  EntireAgreement.  This Agreement containsthe entire understanding of the parties with respect to the subject matterhereof and may not be varied, modified or amended except by a writing signed bythe parties to be charged.  The making,execution and delivery of this Agreement by the parties hereto have beeninduced by no representations, statements, warranties or agreements of theother except those herein expressed.

 

Section 4.9.  Headings.  The division of this Agreement into sectionsand paragraphs and the titles assigned thereto is only a matter of conveniencefor reference and shall not define or limit any of the terms or provisionsthereof.

 

**IN WITNESS WHEREOF**, the individual party hashereunto set his hand and the corporate party has caused these presents to beexecuted by a proper officer thereunto duly authorized all as of the day andyear first above written.

 
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