Exhibit 10.12


 


SUBSCRIPTION AND STOCK PURCHASE
AGREEMENT


 


This SUBSCRIPTION AND STOCK PURCHASE AGREEMENT is made as of September 2,
2009 (the “Agreement”),
by and between GPS CCMP Acquisition Corp., a Delaware corporation
(the “Company”), and
Allen D. Gillette (the “Purchaser”).


 


W I T N E S S E T H :


 


WHEREAS, reference is made to that certain Exchange Agreement, dated as
of and after November 25, 2008 (the “Exchange Agreement”),  by and among
CCMP Capital Investors II., L.P. and CCMP Capital Investors (Cayman) II, L.P.
(collectively, the “CCMP Capital Investors”)  and
the Company, pursuant to which from time to time between December 2, 2008
and July 17, 2009 the Company issued an aggregate of 7,760.8845 shares of Series A
Preferred Stock (“Series A
Preferred Stock”), par value $0.01 per share, to CCMP
Capital Investors II., L.P. and CCMP Capital Investors (Cayman) II, L.P.
(collectively, the “CCMP Capital Investors”)  in
a series of exchanges for certain First Lien Term Loans and Second Lien Term
Loans (as such terms are defined in that certain Credit Agreement, dated as of November 10,
2006, by and among Generac Power Systems, Inc., as borrower, and the other
parties thereto) in an aggregate principal amount equal to $154,814,528
(collectively, the “Exchange”);


 


WHEREAS, the CCMP Capital Investors also purchased 1,550 shares of the
Company’s Series A Preferred Stock in an equity investment of $15,500,000
(together with the Exchange, the “CCMP Transactions”);


 


WHEREAS, pursuant to the Certificate of Designations Establishing the
Voting Powers, Designations, Preferences, Limitations, Restrictions and
Relative Rights of Series A Preferred Stock (as amended, modified or
supplemented from time to time, the “Certificate of Designations”),  among
other things, the Series A Preferred Paid-in Capital (as defined in the
Certificate of Designations) of shares of the Company’s Series A Preferred
Stock obtained by the CCMP Capital Investors from time to time in connection
with the CCMP Transactions (the “CCMP Shares”)  was
initially the amount paid for each CCMP Share when it was issued (i.e., $10,000
per share) and such amount for each CCMP Share has increased from the date of
issuance of each CCMP Share at a rate of 14% per annum (calculated quarterly
and compounded on the basis of a 360 day year of 12 months);


 


WHEREAS, the board of directors of the Company authorized the issuance
of an additional 2,000 shares (the “Newly Issued Shares”) of Series A Preferred Stock (the “New Issuance” and,
together with the CCMP Transactions, the “Transactions”),  resulting in
the total number of securities issued or to be issued by the Company pursuant
to the Transactions being equal to 11,310.8845 shares of Series A
Preferred Stock (the “Securities”);


 

















 


WHEREAS, in accordance with Section 4.04
of that certain Shareholders’ Agreement, dated as of November 10, 2006 (as
modified by that certain Waiver Agreement, dated November 25, 2008, the “Shareholders’
Agreement”),  by and among the Company and the
other parties thereto, in connection with the Transactions and pursuant to that
certain Offer Notice, dated July 23, 2009 (the “Offer Notice”),  by
the Company to the Purchaser, the CCMP Capital Investors and the Company
offered the Purchaser, and certain other investors in the Company, the
opportunity to purchase a number of Securities equal to the Purchaser’s pro
rata share of the Securities;


 


WHEREAS, for purposes of administrative convenience, the Purchaser is
purchasing all of the Purchased Shares (as defined below) directly from the
Company rather than purchasing the Purchaser’s applicable pro rata share of the
CCMP Shares from the CCMP Capital Investors and separately purchasing the
Purchaser’s applicable pro rata share of the Newly Issued Shares from the
Company;


 


WHEREAS, the parties hereto desire the Series A Preferred
Unreturned Paid-in Capital (as defined in the Certificate of Designations) in
respect of all of the Securities, including the shares to be purchased
hereunder, to be a weighted average that includes all of the increases to the Series A
Preferred Paid-In Capital on all of the Securities since the date of issuance
thereof under the terms of the Certificate of Designations, the methodology for
which is set for on Schedule I attached hereto;


 


WHEREAS, in connection with the Offer Notice and on the terms and
subject to the conditions set forth herein, the Purchaser desires to subscribe
for and purchase, and the Company desires to sell to the Purchaser that number
of shares of Offered Securities set forth on Schedule II attached hereto
opposite the Purchaser’s name (each share, a “Purchased Share” and, collectively, the “Purchased Shares”),  which
Purchased Shares shall have a Series A Preferred Unreturned Paid-in
Capital as set forth on Schedule II opposite the Purchaser’s name;


 


WHEREAS, the sale of the Purchased Shares shall be in full satisfaction
of the obligations of the Company under Section 4.04 of the Shareholders’
Agreement and any other rights that the Purchaser has or may have had with
respect to the Transactions pursuant to the Shareholders’ Agreement, including,
without limitation, under any of the other sections of Article 4 thereof; and


 


NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:


 

















 


ARTICLE I


 


PURCHASE
AND SALE OF SHARES


 


1.1           Sale
and Issuance of Shares.
Subject to the terms and conditions of this Agreement, the Purchaser does
hereby subscribe for and agree to purchase, and the Company does hereby agree
to sell to the Purchaser, the number of Purchased Shares set forth in the
column “Number of Series A Preferred Shares” on Schedule II hereto
opposite the Purchaser’s name for the aggregate purchase price set forth in the
column “Total Cost” on Schedule II opposite the Purchaser’s name.


 


1.2           Series A
Preferred Unreturned Paid-In Capital of Purchased Shares. For purposes of clarity and notwithstanding
anything to the contrary herein or otherwise, the parties hereto hereby agree,
acknowledge and confirm in all respects that the Series A Unreturned
Preferred Paid-in Capital in respect to each Purchased Share will be as set
forth on Schedule II opposite the Purchaser’s name and the same shall be
reflected on the books and records of the Company. The Series A Preferred
Unreturned Paid-in Capital of each Purchased Share shall continue to increase
or decrease pursuant to the terms of the Certificate of Designations.


 


ARTICLE II


 


REPRESENTATIONS
AND WARRANTIES OF THE COMPANY


 


The Company hereby represents and warrants to the Purchaser as follows:


 


2.1           Organization
and Standing. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to carry on its business as now conducted and as proposed to be
conducted.


 


2.2           Authorization. The Company has full corporate power and
authority to execute and deliver this Agreement and all other agreements and
instruments contemplated hereby to which the Company is a party and to perform
its obligations hereunder and thereunder. All corporate action on the part of
the Company necessary for the authorization, execution, delivery and
performance of this Agreement by the Company, and for the authorization,
issuance and delivery of the Purchased Shares being sold under this Agreement,
has been taken. This Agreement, when executed and delivered by all parties
hereto, shall constitute the valid and legally binding obligation of the
Company, except to the extent the enforceability thereof may be limited by
bankruptcy laws, insolvency laws, reorganization laws, moratorium laws or other
laws affecting creditors’ rights generally or by general equitable principles.


 


2.3           Validity
of Shares. The Purchased
Shares, when issued, sold and delivered in accordance with the terms of this
Agreement, shall be duly and validly issued, and fully paid and nonassessable,
free and clear of all liens and encumbrances (other than those created by the
Purchaser).


 


2.4           Securities
Act. The sale of Purchased
Shares in accordance with the terms of this Agreement (assuming the accuracy of
the representations and warranties


 

















 


of
the Purchaser contained in Article III hereof) is exempt from the
registration requirements of the Securities Act of 1933, as amended (the “1933 Act”).


 


ARTICLE III


 


REPRESENTATIONS,
WARRANTIES


AND
AGREEMENTS OF THE PURCHASER


 


3.1           The
Purchaser hereby represents and warrants to the Company that:


 


(a)            Authorization. The Purchaser is authorized and qualified
and has full right and power to execute and deliver this Agreement and all
other agreements and instruments contemplated hereby to which the Purchaser is
a party, and to perform its obligations hereunder and thereunder. This
Agreement and all other agreements and instruments contemplated hereby to which
the Purchaser is a party have been duly authorized, executed and delivered by
or on behalf of the Purchaser. Assuming the due authorization, execution,
delivery and performance of this Agreement and all other agreements and
instruments contemplated hereby by the other parties hereof and thereof, this
Agreement and all other agreements and instruments contemplated hereby to which
the Purchaser is a party are legal, valid and binding agreements, enforceable
against the Purchaser in accordance with their terms.


 


(b)            Investment
Representations.


 


(i)            The Purchased Shares to be received by the
Purchaser will be acquired by it for its own account (or in the case of a
custodian, for the account of its affiliated funds), not as a nominee or agent,
and not with a view to the sale or distribution of any part thereof in
violation of applicable federal and state securities laws, and it has no
current intention of selling, granting a participation in or otherwise
distributing the same, in each case, in violation of applicable federal and
state securities laws. By executing this Agreement, the Purchaser further
represents that it does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant a participation to such
person, or to any third person, with respect to any of the Purchased Shares to
be received by the Purchaser, in each case, in violation of applicable federal
and state securities laws.


 


(ii)           The Purchaser has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of its investment.
The Purchaser further represents that it has had, during the course of the
transactions contemplated hereby and prior to its purchase of the Purchased
Shares, the opportunity to ask questions of, and receive answers from the
Company concerning the terms and conditions of the offering and to obtain
additional information necessary to verify the accuracy of any information
furnished to it or to which it had


 

















 


access. The Purchaser understands that no federal or state agency has
passed upon this investment or upon the Company, nor has any such agency made
any finding or determination as to this investment.


 


(iii)          The Purchaser understands that the Purchased Shares to be received may
not be sold, transferred or otherwise disposed of without registration under
the 1933 Act or an exemption therefrom, and that in the absence of an effective
registration statement covering such Purchased Shares or an available exemption
from registration under the 1933 Act, such Purchased Shares must be held
indefinitely. The Purchaser is prepared to bear the economic risk of this
investment for an indefinite period of time. In particular, the Purchaser
acknowledges that it is aware that such Purchased Shares may not be sold
pursuant to Rule 144 promulgated under the 1933 Act unless all of the
conditions of that Rule are met. Among the current conditions for use of Rule 144
by certain holders is the availability to the public of current information
about the Company. Such information is not now available, and the Company has
no current plans to make such information available. The Purchaser represents
that, in the absence of an effective registration statement covering such
Purchased Shares, it will sell, transfer or otherwise dispose of such Purchased
Shares only in a manner consistent with its representations set forth herein
and then only in accordance with the Shareholders’ Agreement.


 


(iv)          The Purchaser acknowledges that this investment is not recommended for
investors who have any need for a current return on this investment or who
cannot bear the risk of losing their entire investment. The Purchaser
acknowledges that: (i) it has adequate means of providing for its current
needs and possible personal contingencies and has no need for liquidity in this
investment; (ii) its commitment to investments which are not readily
marketable is not disproportionate to its net worth; and (iii) its
investment in the Purchased Shares will not cause its overall financial
commitments to become excessive.


 


3.2           Legends;
Stop Transfer.


 


(a)           The
Purchaser acknowledges that all certificates evidencing the Purchased Shares
shall bear the following legend:


 


“THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT
AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN
A FORM SATISFACTORY TO THE COMPANY THAT SUCH


 

















 


REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”


 


3.3           The
certificates evidencing the Purchased Shares shall also bear any legend
required by any applicable state securities law.


 


ARTICLE IV


 


MISCELLANEOUS


 


4.1            No Waiver; Modifications in Writing. 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. 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. 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 the
Purchaser.


 


4.2            Execution
of Counterparts. This
Agreement may be executed in any number of counterparts and by different
parties hereto on separate counterparts, each of which counterparts, when so
executed and delivered, shall be deemed to be an original and all of which
counterparts, taken together, shall constitute but one and the same Agreement.


 


4.3            Binding
Effect; Assignment. The
rights and obligations of each party under this Agreement may not be assigned
to any other person; provided that the Purchaser 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 the Purchaser and their
respective successors and permitted assigns.


 


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


 


4.5            Severability
of Provisions. Any provision
of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.


 


4.6            Survival
of Agreements, Representations and Warranties. All agreements, representations and warranties contained herein or
made in writing by or on behalf the Company or the Purchaser, as the case may
be, in connection with the


 

















 


transactions
contemplated by this Agreement shall survive the execution and delivery of this
Agreement and the sale and purchase of the Purchased Shares and payment
therefor.


 


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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:   
  President

  
	
   

  	
   

  
	
   

  	
  ALLEN D. GILLETTE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ [ILLEGIBLE]

  



 


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