Exhibit 10.38


 


EXCHANGE
AGREEMENT


 


This EXCHANGE AGREEMENT is made as of November 25, 2008 (the “Agreement”),
by and among CCMP Capital Investors II, L.P. (“CCMP”), CCMP Capital
Investors (Cayman) II, L.P. (“Cayman”, and together with CCMP, the “Investors”)
and GPS CCMP Acquisition Corp., a Delaware corporation (the “Company”).


 


RECITALS


 


WHEREAS, Generac Acquisition Corp., a
wholly-owned subsidiary of the Company, and Generac Power Systems, Inc.
(the “Borrower”), are each a party to that certain Credit Agreement
dated as of November 10, 2006 (the “First Lien Credit Agreement”),
by and among JPMorgan Chase Bank, N.A., Barclays Bank PLC, Goldman Sachs Credit
Partners L.P. and the other lenders party thereto (the “First Lien Lenders”),
and that certain Credit Agreement, dated as of November 10, 2006 (the “Second
Lien Credit Agreement”, and together with the First Lien Credit Agreement,
the “Credit Agreements”), by and among JPMorgan Chase Bank, N.A.,
Wilmington Trust Company, J.P. Morgan Securities Inc., Barclays Bank PLC,
Goldman Sachs Credit Partners L.P. and the other lenders party thereto (the “Second
Lien Lenders”, and together with the First Lien Lenders, the “Lenders”),
pursuant to which the Lenders made certain term and revolving loans (the “First
Lien Term Loans” and the “Second Lien Term Loans,” respectively) to
the Borrower upon the terms and conditions set forth therein;


 


WHEREAS, the Borrower is an indirect,
wholly-owned subsidiary of the Company;


 


WHEREAS, as of November 1, 2008,
the Investors and their affiliates own, in the aggregate, 69,152 shares of the
Company’s Class B Voting Common Stock, representing 87.4% of the voting
power of all the Company’s stockholders;


 


WHEREAS, the Investors have purchased
(i) certain First Lien Term Loans in an aggregate principal amount of
$10,000,000 at an aggregate cost to the Investors of $6,730,250, and (ii) certain
Second Lien Term Loans in an aggregate principal amount of $144,916,667 at an
aggregate cost to the Investors of $72,148,458 (collectively, the “Purchased
Loans”) and, as a result thereof, have become Lenders under the First Lien
Credit Agreement and the Second Lien Credit Agreement;


 


WHEREAS, the Investors desire to
transfer such Purchased Loans to the Company (the “Exchange”) in
exchange for that number of shares of Series A Preferred Stock of the
Company (the “Preferred Shares”), as set forth opposite each such
Investor’s name on Exhibit A hereto, which Preferred Shares shall
have an aggregate Series A Preferred Paid-in Capital (as defined in that certain
Certificate of Designation dated November     , 2008) equal
to the aggregate cost incurred by the Investors to purchase the Purchased
Loans;


 

















 


NOW, THEREFORE, in
consideration of the mutual covenants herein contained and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the
parties hereto, intending to be legally bound, agree as follows:


 


1.            Exchange. The parties hereby agree
that effective immediately upon the execution and delivery of this Agreement,
each Investor is transferring to the Company, and the Company is accepting and
receiving, the Purchased Loans in exchange for the number of Preferred Shares
set forth opposite such Investor’s name on Exhibit A hereto. The
parties further agree that upon the Exchange and the delivery of the Preferred
Shares in exchange therefor, (i) the Investors and the Company will
execute and deliver the Assignment and Acceptance Agreements required to be
executed and delivered under each of the First Lien Credit Agreement and the
Second Lien Credit Agreement in connection with the Exchange, (ii) neither
Investor shall have any further obligations in respect of any of the Purchased
Loans, and (iii) the Preferred Shares, when issued, shall be fully paid
and non-assessable.


 


2.            Investor Representation and
Warranties. In connection with the consummation of the
transactions contemplated hereby, each Investor represents and warrants to the
Company as follows:


 


(a)           Authority. Such Investor has full power and
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. Such Investor has taken all action required by law or
otherwise to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and this Agreement is a
valid and binding agreement of such Investor enforceable in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’
rights generally and by general principles of equity.


 


(b)          Accredited Investor. Such Investor is an “Accredited
Investor” as such term is defined in Regulation D under the Securities Act of
1933, as amended, and has business or financial experience from which it could
be reasonably assumed that the Investor has the capacity to protect its own
interest in connection with the transaction.


 


3.            Company Representation and
Warranties. In connection with the consummation of the
transactions contemplated hereby, the Company represents and warrants to each
Investor as follows:


 


(a)            Authority.
The Company has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company have been duly authorized by
all company action on the part of the Company. This Agreement has been duly
executed and delivered by the Company and, assuming the due execution and
delivery by the Investor, constitutes the valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.


 


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(b)            Authorization
of Preferred Shares. The Preferred Shares have been duly authorized.


 


4.           Miscellaneous.


 


(a)           Counterparts.
This Agreement may be executed in any number of counterparts and by the parties
hereto in separate counterparts, each of which when so executed shall be deemed
to be an original and all of which taken together shall constitute one and the
same agreement. This Agreement may be executed by facsimile signature and a
facsimile signature shall constitute an original for all purposes.


 


(b)           Governing
Law. This Agreement shall be governed by the laws of the State of New York
as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.


 


(c)           Entire
Agreement. This Agreement is intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement sets forth the entire understanding of
the parties, and supersedes all prior agreements, arrangements and
communications, whether oral or written, with respect to the specific subject
matter hereof. There are no restrictions, promises, warranties or undertakings
with respect to the subject matter hereof other than those set forth or
referred to herein. All exhibits hereto shall be deemed a part of this
Agreement.


 


(d)           No
Waiver; Amendments in Writing. No waiver of or consent to any departure
from any provision of this Agreement shall be effective unless signed in
writing by the party entitled to the benefit thereof, provided that notice of
any such waiver shall be given to each party hereto as set forth below. Except
as otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by or
on behalf of the Company and each Investor.


 


(e)           Binding
Effect; Assignment. The rights and obligations of each party under this
Agreement may not be assigned to any other person; provided that each Investor
shall have the right to assign its rights and obligations hereunder to any of
its affiliated investment funds. Except as expressly provided in this
Agreement, this Agreement shall not be construed so as to confer any right or
benefit upon any person other than the parties to this Agreement, and their
respective successors and assigns. This Agreement shall be binding upon the
Company and each Investor and their respective successors and assigns.


 


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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the date first written above.


 


	
   

  	
  GPS CCMP ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Aaron P. Jagdfeld

  
	
   

  	
   

  	
  Name:
  Aaron P. Jagdfeld

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  CCMP CAPITAL INVESTORS 

  (CAYMAN) II, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  CCMP
  Capital Associates, L.P., 

  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CCMP
  Capital Associates, GP, LLC,

  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
  CCMP CAPITAL INVESTORS II, L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CCMP
  Capital Associates, L.P., 

  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  CCMP
  Capital Associates, GP, LLC,

  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


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