Exhibit 10.7


 


ADVISORY SERVICES AND MONITORING AGREEMENT


 


This
Advisory Services and Monitoring Agreement (this “Agreement”)
is entered into as of November 10, 2006, by and among GPS CCMP ACQUISITION
CORP. (the “Company”), GENERAC
ACQUISITION  CORP. (“Holding”),
GENERAC POWER SYSTEMS, INC., a Wisconsin corporation (“Generac”),
CCMP CAPITAL ADVISORS, LLC (“Capital Advisors”),
and CCMP CAPITAL ASIA PTE. LTD. (“CCMP Asia Pte.”)
and CCMP CAPITAL ASIA CONSULTING COMPANY LTD. (“CCMP Asia
Consulting”, together with CCMP Asia Pte., “CCMP Asia”;
and together with CCMP Asia Pte. and Capital Advisors, “CCMP”).


 


WHEREAS, the Company and Holding acquired all of
the issued and outstanding capital stock of Generac on November 10, 2006
pursuant to an Agreement and Plan of Merger, dated September 13, 2006, by
and among the Company, Generac Power Systems, Inc., a Wisconsin
corporation (“Merger Sub”), and Generac
(the “Acquisition”);


 


WHEREAS, in connection with the Acquisition,
Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting (together with any
investment funds managed or advised by any of them, the “Funds”)
provided advice and analysis including assistance with due diligence and other
investigatory matters to the Company, Holding and Merger Sub related to Generac
and the industry in which it operates, advice with respect to senior debt
facilities and related arrangements for the debt financing of the Acquisition,
advice with respect to the syndication of equity funding with respect to the
Acquisition, and other ancillary matters in respect thereof (collectively, “Advisory Services”);


 


WHEREAS, each of Capital Advisors, CCMP Asia
Pte. and CCMP Asia Consulting has a staff specially skilled in corporate
finance, strategic corporate planning, and other management skills and advisory
and business monitoring services (the “Management Professionals”);


 


WHEREAS, each of the Company, Holding and
Generac (collectively, the “Company Group”)
will require such skills and services from Capital Advisors, CCMP Asia Pte. and
CCMP Asia Consulting in connection with their business operations and execution
of their strategic plan, and the members of the Company Group desire to engage
Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting utilize such skills
and perform such services; and


 


WHEREAS, each of Capital Advisors, CCMP Asia
Pte. and CCMP Asia Consulting is willing to and shall provide the Management
Services (as hereinafter defined) to each of the members of the Company Group,
and in connection therewith, may make available to the members of the Company
Group, the Management Professionals.


 


NOW,
THEREFORE, in
consideration of the mutual covenants contained herein, and for other good and
valuable consideration, the receipt and 


 

















 


sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:


 


1.                                      Definitions.


 


“Shareholders Agreement”
means the Shareholders Agreement, dated the date hereof, by and among the
Company, CCMP Capital Investors II, L.P., CCMP Capital Investors (Cayman),
L.P., AOF II Employee Co-Invest Fund, L.P. 
Asia Opportunity Fund II, L.P., CCMP Generac Co-Invest, L.P., the
management shareholders party thereto and the other parties from time to time
party thereto, as the same may be amended from time to time.


 


2.                                      Appointment; Management Services.


 


(a)                                  Each of the Company, Holding and Generac
hereby appoints each of Capital Advisors, CCMP Asia Pte. and CCMP Asia
Consulting, or their respective designees, as its financial advisors with
respect to the following services (the “Management Services”)
(and each of Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting agrees
to perform the Management Service, to the extent appropriate and requested by
any member of the Company Group):  (i) assisting
each of the Company, Holding and Generac in analyzing their operations and
historical performance; (ii) assisting each of the Company, Holding and
Generac in analyzing future prospects; (iii) assisting each of the
Company, Holding and Generac with respect to future proposals for tender
offers, acquisitions, sales, mergers, financings (other than with respect to
any registered public offering of any securities of the Company or Generac),
exchange offers, recapitalizations, restructurings or other similar
transactions; and (iv) providing financial and business monitoring
services, including with respect to assisting each of the Company, Holding and
Generac in preparing a strategic plan.


 


(b)                                 None of Capital Advisors, CCMP Asia Pte.
or CCMP Asia Consulting, nor any of their respective designees, makes any
representations or warranties, express or implied, in respect of the services
to be provided by any of them or their designee hereunder.  In no event shall any of Capital Advisors,
CCMP Asia Pte. or CCMP Asia Consulting or their respective affiliates be liable
to any of the Company, Generac or any of their respective affiliates for any
act, alleged act, omission or alleged omission that does not constitute gross
negligence or willful misconduct of Capital Advisors, CCMP Asia Pte. or CCMP
Asia Consulting or their respective designee (as applicable) as determined by a
final, non-appealable determination of a court of competent jurisdiction.


 


(c)                                  Each of Capital Advisors, CCMP Asia Pte.
and CCMP Asia Consulting shall perform the Management Services, and shall
devote such time and efforts to the performance of such Management Services
contemplated hereby as it deems reasonably necessary or appropriate (including,
without limitation, by making the Management Professionals employed or engaged
by it available in connection therewith); provided, however, that no minimum number of hours shall be required
to be devoted by 


 


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any of Capital Advisors, CCMP Asia Pte. or CCMP Asia
Consulting on a weekly, monthly, annual or other basis.  The Company, Holding and Generac acknowledge
that the Management Services to be performed by any of Capital Advisors, CCMP
Asia Pte. or CCMP Asia Consulting are not exclusive to the members of the
Company Group and that any of them may render similar services to other persons
and entities.


 


3.                                      Term and Termination.


 


(a)                                  This Agreement shall continue in full
force and effect for a term of five (5) years.  Prior to the expiration of the term of this
Agreement, and provided that the members of the Company Group and CCMP shall
discuss and consider, in good faith, the renewal of this Agreement on terms
mutually acceptable to each of the parties hereto; provided,
however, that this Agreement may only be renewed by written
agreement of each of the parties hereto, and in such case, only upon the
consent or approval of a majority of Independent Directors (as defined in the
Shareholders Agreement) of the Company.


 


(b)                                 This Agreement (i) may be terminated
by Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting (acting together)
at any time prior to the consummation of an IPO (as such term is defined in the
Shareholders Agreement), (ii) shall terminate automatically upon the
consummation of an IPO, (iii) shall be terminated if, following a material
breach of this Agreement by any of Capital Advisors, CCMP Asia Pte. or CCMP
Asia Consulting, both (x) CCMP shall have failed to cure such breach
within 30 business days after receipt of written notice thereof from the
Company, and (y) during the continuation of any such breach (and prior to
any cure, waiver or satisfaction thereof), a majority of Independent Directors
(as defined in the Shareholders Agreement) of the Company shall elect to
terminate this Agreement, or (iv) shall terminate automatically on the
date that CCMP and all of the Funds cease to own at least 25% of the voting
capital stock of the Company owned by CCMP and the Funds on the date hereof.


 


(c)                                  Upon any termination of this Agreement,
Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting will be entitled to
prompt payment of all fees (including under Sections 3(b) and 4)
and reimbursement of all out-of-pocket expenses as described herein.  No termination of CCMP’s engagement hereunder
shall affect any of the Company’s or Generac’s obligations under this
Agreement, including, without limitation, each of the Company’s or Generac’s
indemnity obligations as set forth herein.


 


(d)                                 The terms and provisions of Sections 5,
6 and Annex A shall survive any termination of this Agreement.


 


4.                                      Payment of Fees.


 


(a)                                  In consideration of the Advisory Services
provided by Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting in
connection with the transactions related to the consummation of the
Acquisition, and subject to the terms of 


 


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Section 4(a)(i) and (ii) below), the Company,
Holding and Generac, jointly and severally, agree to pay to CCMP a one-time
transaction fee equal to $30,000,000, which shall be payable as follows:


 


(i)                                     an amount equal to $15,000,000
($11,250,000 of which shall be for the benefit and account of Capital Advisors,
$2,750,000 of which shall be for the benefit and account of CCMP Asia Pte and
$1,000,000 of which shall be for the benefit and account of CCMP Asia
Consulting) shall be payable to CCMP upon the consummation of the Acquisition;
and


 


(ii)                                  in the event
that, during any fifteen (15) consecutive day period after January 1,
2007, the Net Liquidity Amount is greater than $180,000,000, then the Company,
Holding and Generac, jointly and severally, shall promptly pay to CCMP an
aggregate amount equal to $15,000,000 ($11,250,000 of which shall be for the
benefit and account of Capital Advisors, $2,750,000 of which shall be for the
benefit and account of CCMP Asia Pte and $1,000,000 of which shall be for the
benefit and account of CCMP Asia Consulting). 
Upon the first payment of the amount set forth in this Section 4(a)(ii),
the provisions of this Section 4(a)(ii) shall cease to have
any further force or effect, and neither the Company nor Generac shall have any
further obligation to make any subsequent payments hereunder.


 


For
purposes of this Section 4(a):


 


“Net Liquidity Amount “ means, at any
time, an amount equal to the sum of: (a) the positive difference (if any)
between (i) the maximum aggregate principal amount that may be borrowed
under any revolving credit or other similar credit facility under the First
Lien Facility, and (ii) the
aggregate principal amount of loans outstanding under such revolving credit or
other similar credit facility, plus
(b) the aggregate amount of cash and cash equivalents (determined in
accordance with United States generally accepted accounting principles) held,
at such time, by the Company, Holding and Generac (determined on a consolidated
basis), plus (c) the
aggregate amount of principal payments made by Holding or Generac under or in
respect of any term loan or other similar credit facility under the First Lien
Credit Facility or the Second Lien Credit Facility, from and after the date
hereof.


 


“First Lien Facility” means the Credit
Agreement, dated as of November 10, 2006, among Generac (as successor by
merger to Merger Sub), Holding, the lenders party thereto from time to time,
Goldman Sachs Credit Partners L.P., as administrative agent, and the other
agents named therein (as the same may be amended, modified, restated or
refinanced from time to time).


 


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“Second Lien Facility” means the Credit
Agreement, dated as of November 10, 2006, among Generac (as successor by
merger to Merger Sub), Holding, the lenders party thereto from time to time,
JPMorgan Chase Bank, N.A., as administrative agent, and the other agents named
therein (as the same may be amended, modified, restated or refinanced from time
to time).


 


(b)                                 In consideration of Capital Advisors’,
CCMP Asia Pte.’s and CCMP Asia Consulting’s performance of the Management
Services and agreements to make the Management Professionals available in
connection therewith, the Company, Holding and Generac, jointly and severally,
agree to pay to CCMP, a quarterly advisory fee in an amount equal to $125,000
($93,750 of which shall be for the benefit and account of Capital Advisors,
$22,917 of which shall be for the benefit and account of CCMP Asia Pte and
$8,333 of which shall be for the benefit and account of CCMP Asia Consulting)
(the “Quarterly Fee”), payable on the
first business day of each calendar quarter (January 1, April 1, July 1
and September 1), and upon the termination of this Agreement, the final
installment shall be paid on the effective date of such termination and
prorated for any final period consisting of less than ninety (90) days; provided, that the first Quarterly Fee shall be paid on January 1,
2006, in a pro-rated amount to reflect the period from November 10, 2006,
through December 31, 2006, and shall be divided among Capital Investors,
CCMP Asia Pte. and CCMP Asia Consulting in the same proportion as the other
Quarterly Fees shall be divided between such persons in accordance with the
terms and provisions above.


 


(c)                                  All payments and reimbursements made
pursuant to Sections 3, 4 and 5 will be paid by wire
transfer of immediately available U.S. Dollars to the accounts specified by
Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting in writing to the
Company, Holding and Generac.


 


(d)                                 Any payments required to be made to any
of Capital Advisors, CCMP Asia Pte. or CCMP Asia Consulting shall, upon the
written request of such person to Company, Holding and Generac, be made to such
person’s designee, as set forth in such notice.


 


5.                                      Expenses; Indemnification.


 


(a)                                  Expenses. 
In addition to the compensation to be paid pursuant to Sections 3(b),
4(a), (b) and (c) above, promptly upon request
by any of Capital Advisors, CCMP Asia Pte. or CCMP Asia Consulting from time to
time, the Company, Holding and Generac agree, jointly and severally, to
reimburse Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting (as
applicable) for (i) all reasonable out-of-pocket expenses incurred by each
director appointed to the board of directors of any member of the Company Group
in connection with attending regular and special meetings of such board of
directors and any committee thereof and (ii) all reasonable out-of-pocket
expenses incurred in connection with the provision of services hereunder to any
member of the Company Group, including, without limitation, the reasonable fees
and disbursements of 


 


5

















 


their legal counsel, if any, and of any other advisors
retained by any of Capital Advisors, CCMP Asia Pte. or CCMP Asia Consulting, in
connection with the enforcement, preservation or analysis of rights or taking
of actions under this Agreement or otherwise resulting from or arising out of
this engagement.


 


(b)                                 Indemnification. 
As Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting will be
acting on behalf of each of the Company, Holding and Generac in connection with
its engagement hereunder, and as further consideration for such CCMP’s services
hereunder, each of the Company, Generac, Capital Advisors, CCMP Asia Pte. and
CCMP Asia Consulting agree to the indemnity provisions and other matters set
forth in Annex A hereto, which Annex A is incorporated herein by
reference and made an integral part hereof.


 


6.                                      No Exclusive Duty to the Company
Group.  In recognition that (i) each of Capital
Advisors, CCMP Asia Pte. and CCMP Asia Consulting currently has, and will in
the future have or will consider acquiring, investments in numerous companies
with respect to which Capital Advisors, CCMP Asia Pte. or CCMP Asia Consulting
(as applicable) may serve as an advisor, consultant or in some other capacity, (ii) each
of Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting may have a myriad
of duties to various investors and partners, (iii) each of Capital
Advisors, CCMP Asia Pte. and CCMP Asia Consulting (or one or more affiliates,
associated investment funds or portfolio companies) may engage in the same or
similar activities or lines of business as the Company or Generac and may have
an interest in the same areas of corporate opportunities, (iv) the
Company, Holding and Generac will derive certain benefits hereunder and (v) each
of Capital Advisors, CCMP Asia Pte. and CCMP Asia Consulting, in connection
with its endeavors to fully to satisfy its duties, may confront difficulties in
determining the full scope of such duties in any particular situation, the
provisions of this Section 6 are set forth to regulate, define and
guide the conduct of certain affairs of the Company, Holding and Generac as
they may involve each of Capital Advisors, CCMP Asia Pte. and CCMP Asia
Consulting.


 


(a)                                  Each of Capital Advisors, CCMP Asia Pte.
and CCMP Asia Consulting shall have the right:


 


(i)                                     to directly or indirectly engage in any
business (including, without limitation, any business activities or lines of
business that are the same as or similar to those pursued by, or competitive
with, the Company, Generac or their subsidiaries or affiliates),


 


(ii)                                  to directly or indirectly do business
with any client or customer of the Company, Generac or their subsidiaries or
affiliates,


 


(iii)                               to take any other action that it believes
in good faith is necessary or appropriate to fulfill its duties and
obligations, and


 


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(iv)                              not to communicate or present potential
transactions, matters or business opportunities to the Company, Generac or
their subsidiaries or affiliates, and to pursue, directly or indirectly, any
such opportunity for itself, and to direct any such opportunity to another
person.


 


(b)                                 None of Capital Advisors, CCMP Asia Pte.
or CCMP Asia Consulting nor any of its affiliates shall have any duty
(contractual or otherwise) to communicate or present any corporate
opportunities to the Company, Generac or any of their affiliates or to refrain
from any actions specified in Section 6(a), and the Company, Holding and
Generac, on their own behalf and on behalf of their affiliates, hereby renounce
and waive any right to require any of Capital Advisors, CCMP Asia Pte. or CCMP
Asia Consulting or any of its affiliates to act in a manner inconsistent with
the provisions of Section 6(a).


 


(c)                                  None of Capital Advisors, CCMP Asia Pte.
or CCMP Asia Consulting nor any of its affiliates shall be liable to the
Company, Generac or any of their affiliates for breach of any duty (contractual
or otherwise) by reason of any activities or omissions of the types referred to
in Section 6(a) or its or its affiliates’ participation
therein.


 


7.                                      Amendments and Waivers. 
No amendment or waiver of any term, provision or condition of this
Agreement shall be effective, unless in writing and executed by each of the
parties hereto.  No waiver on any one
occasion shall extend to or effect or be construed as a waiver of any right or
remedy on any future occasion.  No course
of dealing of any person nor any delay or omission in exercising any right or
remedy shall constitute an amendment of this Agreement or a waiver of any right
or remedy of any party hereto.


 


8.                                      Miscellaneous.


 


(a)                                  Choice of Law. 
This Agreement shall be governed by and construed in accordance with the
domestic substantive laws of the State of New York without giving effect to any
choice or conflict of law provision or rule that would cause the
application of the domestic substantive laws of any other jurisdiction.


 


(b)                                 Consent to Jurisdiction. 
Each of the parties agrees that all actions, suits or proceedings
arising out of or based upon this Agreement or the subject matter hereof shall
be brought and maintained exclusively in the federal and state courts of the
State of New York.  Each of the parties
hereto by execution hereof (i) hereby irrevocably submits to the
jurisdiction of the federal and state courts in the State of New York for the
purpose of any action, suit or proceeding arising out of or based upon this
Agreement or the subject matter hereof and (ii) hereby waives to the
extent not prohibited by applicable law, and agrees not to assert, by way of
motion, as a defense or otherwise, in any such action, suit or proceeding, any
claim that it is not subject personally to the jurisdiction of the above-named
courts, that it is immune from extraterritorial injunctive relief or other
injunctive relief, that its property is exempt or immune from attachment or
execution, that 


 


7

















 


any such action, suit or proceeding may not be brought
or maintained in one of the above-named courts, that any such action, suit or
proceeding brought or maintained in one of the above-named courts should be
dismissed on grounds of forum  non conveniens, should be transferred to any court other
than one of the above-named courts, should be stayed by virtue of the pendency
of any other action, suit or proceeding in any court other than one of the
above-named courts, or that this Agreement or the subject matter hereof may not
be enforced in or by any of the above-named courts.  Each of the parties hereto hereby consents to
service of process in any such suit, action or proceeding in any manner
permitted by the laws of the State of New York, agrees that service of process
by registered or certified mail, return receipt requested, at the address
specified in or pursuant to Section 13 is reasonably calculated to
give actual notice and waives and agrees not to assert by way of motion, as a
defense or otherwise, in any such action, suit or proceeding any claim that
service of process made in accordance with Section 13 does not
constitute good and sufficient service of process.  The provisions of this Section 8(b) shall
not restrict the ability of any party to enforce in any court any judgment
obtained in a federal or state court of the State of New York.


 


(c)                                  Waiver of Jury Trial. 
TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED,
EACH OF THE PARTIES HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT, OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN
ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, CAUSE OF ACTION, ACTION, SUIT
OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT
HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN
CONTRACT OR TORT OR OTHERWISE.  Each of
the parties hereto acknowledges that it has been informed by each other party
that the provisions of this Section 8(c) constitute a material
inducement upon which such party is relying and will rely in entering into this
Agreement and the transactions contemplated hereby.  Any of the parties hereto may file an
original counterpart or a copy of this Agreement with any court as written
evidence of the consent of each of the parties hereto to the waiver of its
right to trial by jury.


 


(d)                                 Authority to Enter Agreement. 
Each party to this Agreement represents and warrants to the other
parties hereto that it has all requisite power and authority to enter into this
Agreement and the transactions contemplated hereby, that this Agreement has
been duly and validly authorized by all necessary action on the part of such party
and that when duly executed and delivered by such party, this Agreement shall
constitute a legal, valid and binding agreement of such party, enforceable
against it in accordance with its terms.


 


9.                                      Independent Contractor. 
The parties agree and understand that each of Capital Advisors, CCMP
Asia Pte. and CCMP Asia Consulting is and shall act as an independent
contractor of each of the Company, Holding and Generac in the performance of
its duties hereunder.  None of Capital
Advisors, CCMP Asia Pte. or CCMP Asia Consulting is, and in the performance of
their respective duties hereunder 


 


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will not hold themselves out as, employees, agents or
partners of any of the Company or Generac.


 


10.                               Information. 
Each of the Company, Holding and Generac shall furnish and make
available to CCMP all financial and other information as CCMP deems appropriate
in connection with the performance of the services contemplated by this
engagement and, in connection therewith, will provide CCMP with reasonable
access to its officers, directors, employees, agents, accountants, counsel and
other representatives.  Each of the
Company, Holding and Generac acknowledges and confirms that CCMP (i) will
rely solely on such information and information that is available from public
sources in the performance of the services contemplated by this Agreement
without assuming any responsibility for independent investigation or
verification thereof, (ii) assume no responsibility for the accuracy or
completeness of such information or any other information regarding the Company
or Generac and (iii) will not make any appraisal of any assets of the
Company or Generac.


 


11.                               Confidentiality. 
No advice rendered by CCMP, whether formal or informal, may be
disclosed, in whole or in part, or summarized, excerpted from or otherwise
referred to without CCMP’s prior written consent.  To the extent consistent with legal
requirements, all information given to one party of this Agreement (the “Recipient Party”) by another party
(the “Providing Party”), including,
without limitation, this Agreement, unless publicly available or otherwise
available to the Recipient Party without restriction or breach of any
confidentiality agreement, will be held by the Recipient Party in confidence
and will not, without the Providing Party’s prior approval, be disclosed to
anyone other than the Recipient’s agents and advisors who require such
information to perform services for the Providing Party as contemplated by this
Agreement (and who agree to use such information only in connection with such
services) or used by such person for any purpose other than those contemplated
by this Agreement.  Each party hereto
shall be responsible for violations of its respective agents and advisors of
the obligations set forth in this Section 11.  Notwithstanding anything to the contrary set
forth herein or in any other agreement to which the parties hereto are parties
or by which they are bound, the obligations of confidentiality contained herein
and therein, as they relate to the services to be provided hereunder, shall not
apply to the tax structure or tax treatment of the transactions subject to the
services to be provided hereunder, and each party hereto (and any employee,
representative, or agent of any party hereto) may disclose to any and all
persons, without limitation of any kind, the tax structure and tax treatment of
the transaction subject to the services to be provided hereunder and all
materials of any kind (including opinions or other tax analysis) that are
provided to such party relating to such tax treatment and tax structure; provided, however, that
such disclosure shall not include the name (or other identifying information
not relevant to the tax structure or tax treatment) of any person and shall not
include information for which nondisclosure is reasonably necessary in order to
comply with applicable securities laws.


 


12.                               Merger/Entire Agreement. 
This Agreement and the other agreements referred to herein (including,
without limitation, the Shareholders 


 


9

















 


Agreement), contain the entire understanding of the
parties with respect to the specific subject matter hereof and supersede any
prior communication or agreement with respect thereto.


 


13.                               Notice. 
All notices, requests, consents and other communications hereunder to
any party shall be deemed to be sufficient if contained in a written instrument
delivered in person or sent by telecopy, nationally-recognized overnight
courier or first class registered or certified mail, return receipt requested,
postage prepaid, addressed to such party at the address set forth below or such
other address as may hereafter be designated in writing by such party to the
other parties:


 


If to
any of the Company or Generac, to:


 


GPS
CCMP Acquisition Corp.


c/o
CCMP Capital Advisors, LLC


245
Park Avenue, 16th Floor


New
York, NY  10167


Attention:  Stephen Murray


 


If to
CCMP, to:


 


CCMP Capital Advisors, LLC


245 Park Avenue


16th Floor


New York, New York 10167


Attn:  Stephen Murray


Facsimile:  (917) 464-9200


 


All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or
delivery by telecopy, on the date of such delivery, (b) in the case of
dispatch by nationally-recognized overnight courier, on the next business day
following such dispatch and (c) in the case of mailing, on the third
business day after the posting thereof.


 


14.                               Severability. 
If in any judicial or arbitral proceedings a court or arbitrator shall
refuse to enforce any provision of this Agreement, then such unenforceable
provision shall be deemed eliminated from this Agreement for the purpose of
such proceedings to the extent necessary to permit the remaining provisions to
be enforced.  To the full extent,
however, that the provisions of any applicable law may be waived, they are
hereby waived to the end that this Agreement be deemed to be a valid and
binding agreement enforceable in accordance with its terms, and in the event
that any provision hereof shall be found to be invalid or unenforceable, such
provision shall be construed by limiting it so as to be valid and enforceable
to the maximum extent consistent with and possible under applicable law.


 


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15.          Counterparts. 
This Agreement may be executed in any number of counterparts and by each
of the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which together shall constitute
one and the same agreement.


 


16.          Descriptive
Headings.  All descriptive headings in this Agreement
are inserted for convenience only and shall be disregarded in construing or
applying any provision of this Agreement.


 


17.          Prevailing
Party.  If any legal action or other proceedings is
brought for a breach of this Agreement, the prevailing party shall be entitled
to recover its reasonable attorneys’ fees and other costs incurred in bringing
such action or proceeding, in addition to any other relief to which such party
may be entitled.


 


18.          Non-Recourse. 
No past, present or future director, officer, employee, incorporator,
member, partner, stockholder, affiliate, agent, attorney or representative of
any of Capital Advisors, CCMP Asia Pte. or CCMP Asia Consulting, any member of
the Company Group or any of their respective affiliates shall have any
liability for any obligations or liabilities of Capital Advisors, CCMP Asia
Pte. or CCMP Asia Consulting, any member of the Company Group or any of their
respective affiliates under this Agreement or for any claim based on, in
respect of, or by reason of, the transactions or other matters contemplated
hereby.


 


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IN
WITNESS WHEREOF,
each of the parties has caused this Agreement to be executed on its behalf by
its duly authorized officer or representative as of the date first above
written.


 


	
   

  	
   

  	
  GPS CCMP ACQUISITION CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark McFadden

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mark McFadden

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GENERAC ACQUISITION CORP.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Mark McFadden

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mark McFadden

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Assistant Secretary

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  GENERAC POWER SYSTEMS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ William Treffert

  
	
   

  	
   

  	
   

  	
  Name:

  	
  William Treffert

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CCMP CAPITAL ADVISORS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CCMP CAPITAL ASIA PTE. LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Stephen King

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Stephen King

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CCMP CAPITAL ASIA CONSULTING
  COMPANY LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Simon Bell

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Simon Bell

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Director

  



 


A-1

















 


ANNEX
A


 


This Annex A is a part of and is incorporated into that certain
Advisory Services and Monitoring Agreement (the “Agreement”)
dated November 10, 2006, by and among GPS CCMP ACQUISITION CORP. (“Parent”), GENERAC ACQUISITION  CORP. (“Holding”),
GENERAC POWER SYSTEMS, INC. (together with Holding and Parent, the “Companies”), CCMP Capital Advisors,
LLC (“Capital Advisors”) and CCMP CAPITAL ASIA
PTE. LTD. and CCMP CAPITAL ASIA CONSULTING COMPANY LTD. (collectively, “CCMP Asia”, and together with
Capital Advisors, the “Sponsors”).


 


In further consideration of the engagement by each of the Companies of
the Sponsors to act in the capacities set forth in the Agreement, in the event
that Sponsors or any affiliates, the directors, officers, partners, agents or
employees of any Sponsor, or any of their respective affiliates, or any other
person controlling any Sponsor or any of their respective affiliates
(collectively, “Indemnified Persons”)
becomes involved in any capacity in any action, claim, suit, investigation or
proceeding, actual or threatened, brought by or against any person, including
stockholders of such Company or any other member of the Company Group, in
connection with or as a result of the Agreement or any matter referred to in
the Agreement, the Companies will reimburse such Indemnified Person for its
reasonable legal and other expenses (including, without limitation, the costs
and expenses incurred in connection with investigating, preparing for and
responding to third party subpoenas or enforcing this Annex or the Agreement)
incurred in connection therewith as such expenses are incurred.  The Companies shall also, jointly and
severally, indemnify and hold harmless any Indemnified Person from and against,
and the Companies agree that no Indemnified Person shall have any liability to
any such Company or its owners, parents, affiliates, security holders or
creditors for, any losses, claims, damages or liabilities (including actions or
proceedings in respect thereof) (collectively, “Losses”)
related to or arising out of the Agreement or the Sponsors’ performance
thereof, except that this provision shall not apply to any Losses that are finally
determined by a court or arbitral tribunal to have resulted primarily from the
bad faith or gross negligence of the Sponsors.


 


If such indemnification is for any reason not available or insufficient
to hold an Indemnified Person harmless, the Companies agree to contribute to
the Losses involved in such proportion as is appropriate to reflect the
relative benefits received (or anticipated to be received) by the Companies, on
the one hand, and by the Sponsors, on the other hand, with respect to the Agreement
or, if such allocation is determined by a court or arbitral tribunal to be
unavailable, in such proportion as is appropriate to reflect other equitable
considerations such as the relative fault of the Companies, on the one hand,
and the Sponsors, on the other hand; provided, however, that, to the extent permitted by applicable law,
the Indemnified Persons shall not be responsible for amounts which in the
aggregate are in excess of the amount of all fees actually received by the
Sponsors from each of the Companies in connection with the Agreement.  Relative benefits to the Companies, on the
one hand, and to the Sponsors, on the other hand, with respect to the Agreement
shall be deemed to be in the same proportion as (i) the total value
received or proposed to be received by each of the Companies in connection with
the transactions 


 


A-2

















 


contemplated by this Agreement, whether or not consummated, bears to (ii) all
fees actually received by the Sponsors in connection with the Agreement.  Relative fault shall be determined, in the
case of Losses arising out of or based on any untrue statement or any alleged
untrue statement of a material fact or omission or alleged omission to state a
material fact, by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Companies to
the Sponsors and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission.  No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act of 1933, as amended) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.


 


Upon receipt by an Indemnified Person of actual notice of any pending
or threatened action claim, suit, investigation or proceeding (an “Action”) against such Indemnified Person
with respect to which indemnity may be sought under this Agreement, such
Indemnified Person shall promptly notify the Companies in writing; provided that failure to so notify the Companies shall not
relieve the Companies from any liability which the Companies may have on
account of this indemnity or otherwise, except to the extent the Companies
shall have been materially prejudiced by such failure.  The Companies shall, if requested by a
Sponsor, assume the defense of any such Action including the employment of
counsel reasonably satisfactory to such Sponsor.  Any Indemnified Person shall have the right
to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person, unless:  (i) one
of the Companies has failed promptly to assume the defense and employ counsel
or (ii) the named parties to any such Action (including any impleaded
parties) include such Indemnified Person and the Companies, and such
Indemnified Person shall have been advised by counsel that there may be one or
more legal defenses available to it which are different from or in addition to
those available to the Companies.  No
Company will, without the prior written consent of the Sponsors, settle,
compromise, or consent to the entry of any judgment in or otherwise seek to
terminate any Action in respect of which indemnification may be sought
hereunder (whether or not any Indemnified Person is a party therein) unless the
Companies have given the Sponsors reasonable prior written notice thereof and
such settlement, compromise, consent or termination includes an unconditional
release of each Indemnified Person from any liabilities arising out of such
Action.  No Company will permit any such
settlement, compromise, consent or termination to include a statement as to, or
an admission of, fault, culpability or a failure to act by or on behalf of an
Indemnified Person, without such Indemnified Person’s prior written
consent.  No Indemnified Person seeking
indemnification, reimbursement or contribution under this agreement will,
without the Companies’ prior written consent, settle, compromise, consent to
the entry of any judgment in or otherwise seek to terminate any Action referred
to herein.


 


Prior to entering into any agreement or arrangement with respect to, or
effecting, any merger, statutory exchange or other business combination or
proposed sale or exchange, 


 


A-3

















 


dividend or other distribution or liquidation of all or a significant
portion of its assets in one or a series of transactions or any significant
recapitalization or reclassification of its outstanding securities that does
not directly or indirectly provide for the assumption of the obligations of the
Companies set forth herein, the Companies will promptly notify the Sponsors in
writing thereof and, if requested by the Sponsors, shall arrange in connection
therewith alternative means of providing for the obligations of the Companies
set forth herein, including the assumption of such obligations by another
party, insurance, surety bonds or the creation of an escrow, in each case in an
amount and on terms and conditions satisfactory to the Sponsors.


 


Each of the Companies’ obligations hereunder shall be in addition to
any rights that any Indemnified Person may have at common law or
otherwise.  Each of the Companies
acknowledges that in connection with the Agreement, the Sponsors are acting as
independent contractors and not in any other capacity with duties owing solely
to the Companies.  This Annex and any
other agreements relating to the Agreement shall be governed by and construed
in accordance with the laws of the State of New York, applicable to contracts
made and to be performed therein and, in connection therewith, the parties
hereto consent to the exclusive jurisdiction of the Supreme Court of the State
of New York sitting in New York County or the United States District Court for
the Southern District of New York and the respective appellate courts
thereof.  Notwithstanding the foregoing,
solely for the purpose of enforcing each of the Companies’ obligations
hereunder, each of the Companies consents to personal jurisdiction, service and
venue in any court proceeding in which any claim subject to this agreement is
brought by or against any Indemnified Person. 
THE SPONSORS HEREBY AGREES, AND EACH OF THE COMPANIES HEREBY AGREES ON
ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS
SECURITY HOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF THE ENGAGEMENT, THE SPONSORS’
PERFORMANCE THEREOF OR THIS AGREEMENT.


 


The provisions of this agreement shall apply to the services provided
to each of the Companies by the Sponsors (including related activities prior to
the date hereof) and any modification thereof and shall remain in full force
and effect regardless of the completion or termination of the Agreement.  If any term, provision, covenant or restriction
herein is held by a court of competent jurisdiction to be invalid, void or
unenforceable or against public policy, the remainder of the terms, provisions
and restrictions contained herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated.


 


A-4