Document:

Exhibit 10.2

 

EMPLOYMENT
AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made
as of November 10, 2006 (the “Effective Date”), between GENERAC POWER
SYSTEMS, INC. (the “Company”)
and (“Executive”).

 

RECITALS:

 

WHEREAS, Executive and the Company desire to enter
into this Agreement to set forth the terms and conditions upon which Executive
will serve as the Chief Financial Officer of the Company.

 

NOW THEREFORE in consideration of the promises and
mutual covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

 

1.                                       Employment.

 

(a)                                  Executive shall
be employed by the Company and shall have the title of Chief Operating
Officer.  Executive shall report directly
to the Chief Executive Officer of the Company and shall have such authority,
duties and responsibilities as are commensurate with Executive’s position.  Executive shall devote substantially all of
his professional time to the Company in performing such duties and
responsibilities.

 

(b)                                 Executive shall
perform substantially all of his duties under this Agreement at the Company’s
Waukesha, Wisconsin office.  In addition
to the duties described in Section 1(a), Executive may be appointed an
officer or director of one or more subsidiaries of the Company.  Such additional positions shall be performed,
and appointments accepted by Executive, without additional compensation or
remuneration.

 

(c)                                  The Executive
acknowledges and agrees that he owes a fiduciary duty of loyalty to the Company
to discharge his duties and otherwise act in a manner consistent with the best
interests of the Company and its subsidiaries (if any).  During the Employment Period (as defined
hereinafter), except with the prior consent of the Board of Directors of the
Company (the “Board”) (excluding the
Executive if he should be a member of the Board at the time of such
determination), the Executive shall devote his best efforts and substantially
all of his working time, attention and energies to the performance of his
duties and responsibilities under this Agreement (except for vacations to which
he is entitled pursuant to Section 3(e) and except for illness
or incapacity).

 

2.                                       Term of Employment.  Executive’s employment by the Company shall
commence on the Effective Date and shall continue unless terminated as
hereinafter provided until the fifth anniversary of the Effective Date (the “Employment Period”).

 

3.                                       Base Salary and Benefits.

 

(a)                                  Base
Salary.  Commencing
as of the Effective Date, and thereafter during the Employment Period,
Executive’s base salary shall be $350,000 per annum, which amount may, but
shall not be required to be, increased by the Compensation Committee of the
Board (or, if no such committee exists, the Board) from time to time in
accordance with the 

 

 

compensation policies and
practices of the Company (as so adjusted from time to time, the “Base Salary”).  The Base Salary shall be payable in regular
installments in accordance with the Company’s standard payroll practices and
shall be subject to customary withholding.

 

(b)                                 Business
Expenses.  Upon
presentation of receipts or other appropriate documentation therefor, the
Company shall reimburse Executive for all reasonable expenses incurred by him during
the Employment Period in the course of performing his duties under this
Agreement, to the extent consistent with the Company’s policies in effect from
time to time with respect to travel, entertainment and other business expenses.

 

(c)                                  Employee
Benefits.  Except as
specifically set forth herein, Executive shall be entitled to participate in
any benefit plan or program of the Company established by the Company after the
Effective Date on a basis comparable to other senior executives of the Company.

 

(d)                                 Annual
Bonus.  Commencing
on the Effective Date, Executive shall be eligible, during the Employment
Period, to receive an annual bonus (the “Annual Bonus”) in such amount, if any, and
based on such criteria as is determined in accordance with the Company’s annual
incentive bonus plan.

 

(e)                                  Vacation.  Executive shall be entitled to vacation time
with compensation of twenty days per annum during the Employment Period.  Executive shall also be entitled to all paid
holidays given by the Company to its senior officers.

 

4.                                       Termination.

 

(a)                                  Termination
Rights.  Executive’s
employment hereunder may be terminated upon the occurrence of the following
events and/or for the following reasons:

 

(i)                                     Death of Executive.  Executive’s employment hereunder shall
terminate upon his death.

 

(ii)                                  Disability of Executive.  The Company shall have the right to terminate
Executive’s employment hereunder if the Executive is or becomes Disabled (as
defined below) during the Employment Period, shall be absent from his duties
with the Company on a full time basis for 180 consecutive days, and, within 30
days after delivery of Notice of Termination by the Company, the Executive
shall not have returned to the performance of his duties hereunder on a full
time basis.  For purposes of this
Agreement, “Disabled”
shall mean: (i) that Executive qualifies for benefits due to total
disability on the part of the Executive under the Company’s long-term
disability plan, as in effect from time to time; or (ii) in the event that
the Company has no such long-term disability plan in effect on any date of
determination, that Executive is unable, as a result of a medically
determinable physical or mental illness, to perform the duties and services of
his position.

 

(iii)                               Cause.  The Company shall have the right to terminate
Executive’s employment for Cause.  For
purposes of this Agreement, “Cause” shall mean:

 

(A)                              the willful and
continued failure by Executive substantially to perform his duties hereunder
(other than such failure resulting from his disability or from termination by
the Executive for Good Reason), after 

 

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a written demand for substantial performance is delivered to Executive
that specifically identifies the manner in which Executive has not
substantially performed his duties, and Executive has not remedied such failure
within a reasonable time after receipt of such written notice; for purposes of
this paragraph, no act, or failure to act, on Executive’s part will be deemed “willful”
unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company;

 

(B)                                Executive’s
gross negligence or willful misconduct in the performance of his duties as an
employee of the Company;

 

(C)                                Executive’s
commission of fraud, embezzlement, misappropriation of funds, breach of
fiduciary duty or a material act of dishonesty against the Company;

 

(D)                               the indictment
of Executive for a felony; or

 

(E)                                 the drug
addiction or habitual intoxication of Executive that adversely effects Employee’s
job performance and duties hereunder, or the reputation or best interests of
the Company.

 

(iv)                              Good Reason.  The Executive shall have the right to
terminate his employment with the Company for Good Reason.  For purposes of this Agreement, “Good Reason” shall
mean:

 

(A) a reduction in Executive’s Base Salary as in effect from time
to time;

 

(B) a material diminution in Executive’s duties or
responsibilities not cured by the Company within 20 days after written notice
to the Company delivered in accordance with Section 10; or

 

(C) a requirement by the Company that Executive be based in an
office that is located more then 50 miles from Executive’s principal place of
employment as of the Effective Date.

 

(v)                                 Without Cause or Good Reason.  The Company shall have the right to terminate
Executive’s employment hereunder without Cause and the Executive shall have the
right to terminate his employment with the Company without Good Reason.

 

(b)                                 Notice
of Termination.  Any
termination of Executive’s employment pursuant to any of Sections 4(a)(ii) —
(v) above shall be communicated by written “Notice of Termination” to the
non-terminating party delivered in accordance with Section 10 below.  For purposes of this Agreement, “Notice of Termination”
shall mean a notice by a terminating party which shall indicate the specific
termination provision hereunder pursuant to which Executive’s employment is
being terminated.

 

(c)                                  Termination
Date.  In
connection with any termination of Executive’s employment pursuant to any of
Sections 4(a)(i) — (v) above, Executive’s employment with the 

 

3

 

Company shall terminate on
the Termination Date.  For purposes of
this Agreement, “Termination
Date” shall mean (i) if Executive’s employment is
terminated by his death, the date of his death, (ii) if Executive’s
employment is terminated because Executive is or becomes Disabled, the date
specified by the Company in the related Notice of Termination (which shall, in
no event, be less than 30 days after delivery of such Notice of Termination), (iii) if
Executive terminates his employment without Good Reason, 30 days following the
date on which a Notice of Termination is given or such earlier date as is
determined by the Company, and (iv) if Executive’s employment is
terminated for any other reason, the date on which a Notice of Termination is
given or any later date (within 30 days after the giving of such notice) set
forth in the related Notice of Termination.

 

5.                                       Effect of Termination.

 

(a)                                  Death
of Executive.  Upon
termination of Executive’s employment due to the death of Executive during the
Employment Period, Executive’s surviving spouse and dependents or, if none, his
estate, shall be entitled to receive from the Company (i) any accrued but
unpaid Base Salary and vacation pay through the Termination Date, payable as
soon as practicable following such Termination Date and (ii) any earned
Annual Bonus for the fiscal year during which the Termination Date occurred
(and the Annual Bonus for the prior fiscal year, if earned but not yet paid),
payable in accordance with the Company’s usual bonus payment schedule.  In addition, Executive’s surviving spouse and
dependents shall be entitled to the continued participation in the Company’s
medical, hospitalization, dental, and life insurance programs in which
Executive participated immediately prior to the Termination Date (collectively,
“Continued Benefits”)
for a period of 18 months following such Termination Date.

 

(b)                                 Disability
of Executive.  In the
event of termination of Executive’s employment due to the Executive being or
becoming Disabled, Executive shall be entitled to receive from the Company (i) any
accrued but unpaid Base Salary and vacation pay through the Termination Date,
payable as soon as practicable following such Termination Date and (ii) any
earned Annual Bonus for the fiscal year during which the Termination Date
occurred (and the Annual Bonus for the prior fiscal year, if earned but not yet
paid), payable in accordance with the Company’s usual bonus payment
schedule.  In addition, Executive shall
be entitled to continue to receive installments of Executive’s then current
Base Salary and Continued Benefits from the Termination Date until the later to
occur of (A) the six (6) month anniversary thereof and (B) the
date on which Executive becomes entitled to long-term disability benefits under
the applicable plan or program of the Company, which shall be payable (in the
case of Base Salary) or provided (in the case of Continued Benefits) in
accordance with the usual payroll and benefits policies of the Company.

 

(c)                                  Termination
for Cause; Termination without Good Reason.  Upon the termination of Executive’s
employment either by the Company for Cause, or by Executive without Good
Reason, subject to Executive’s execution and the effectiveness of a release of
claims in the form attached hereto as Exhibit A (the “Release”) and
Executive’s continued compliance with the Non-Competition Agreement (as
hereinafter defined), the Company shall pay to Executive (i) any accrued
but unpaid Base Salary and vacation pay through the Termination Date, payable
as soon as practicable following such Termination Date and (ii) any earned
Annual Bonus for the fiscal year during which the Termination Date occurred
(and the Annual Bonus for the prior fiscal year, if earned but not yet paid),
payable in accordance with the Company’s usual bonus payment schedule.

 

4

 

(d)                                 Termination
without Cause; Termination for Good Reason.  Upon the termination of Executive’s
employment either by Executive with Good Reason, or by the Company without
Cause, subject to Executive’s execution and the effectiveness of the Release and
Executive’s continued compliance with the Non-Competition Agreement, Executive
shall be entitled to receive from the Company (i) any accrued but unpaid
Base Salary and vacation pay through the Termination Date, payable as soon as
practicable following such Termination Date, (ii) any earned Annual Bonus
for the fiscal year during which the Termination Date occurred (and the Annual
Bonus for the prior fiscal year, if earned but not yet paid), payable in
accordance with the Company’s usual bonus payment schedule, and (iii) for
a period of 18 months commencing on the Termination Date, 150% of Executive’s
then current Base Salary, payable in accordance with the standard payroll
practices of the Company.  Solely for
illustrative purposes, if each installment of Base Salary payable to the
Executive (in accordance with the standard payroll practices of the Company)
prior to such termination (and before giving effect to any withholding amounts)
was $1,000, then after such termination, each installment payment payable by
the Company to the Executive (in accordance with the standard payroll practices
of the Company) during the immediately following 18-month period (prior to
giving effect to any withholding amounts) shall be $1,500.  In addition, Company shall maintain the
Continued Benefits in full force and effect, for the continued benefit of
Executive, his spouse and his dependents for a period of 18 months commencing
on the Termination Date, and Executive shall be entitled to full COBRA rights
following the termination of such Continued Benefits.  If Executive elects to utilize rights under
COBRA after the Termination Date, Executive shall be responsible for all
premiums in respect thereof, as permitted by law.

 

Executive acknowledges and
agrees that the payments set forth in this Section 5 constitute liquidated
damages for termination of his employment and shall exclusively govern
Executive’s rights upon termination of employment with the Company.

 

6.                                       Confidentiality,
Non-Compete, Non-Solicit/Hire and Intellectual Property Agreement.  Simultaneously with the execution and
delivery of this Agreement, the Company and Executive shall execute and deliver
a confidentiality, non-competition agreement and intellectual property
agreement in the form attached hereto as Exhibit B, dated as the
date hereof, by and between the Company and Executive.

 

7.                                       Executive’s Representations.  Executive hereby represents and warrants to
the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, and (ii) upon
the execution and delivery of this Agreement by the parties, this Agreement
will be the valid and binding obligation of Executive, enforceable in
accordance with its terms, except to the extent the enforceability thereof may
be limited by bankruptcy laws, insolvency laws, reorganization laws or other
laws affecting creditors’ rights generally or by general equitable principles,
Executive hereby acknowledges and represents that he has had the opportunity to
consult with independent legal counsel regarding his rights and obligations
under this Agreement and that he fully understands the terms and conditions
contained herein.

 

8.                                       Indemnification.  Subject to applicable law, Executive shall be
entitled to the benefit of such indemnification rights as may from time to time
exist under the terms of the Company’s organizational documents and to such
liability insurance as the Company may purchase for its senior officers from
time to time.

 

5

 

9.                                       Notices.  Any notice provided for in this Agreement
shall be in writing and shall be deemed to have been duly given if delivered
personally (whether by overnight courier or otherwise) with receipt
acknowledged or sent by registered or certified mail or equivalent, if
available, postage prepaid, or by fax (which shall be confirmed by a writing
sent by registered or certified mail or equivalent on the same day that such
fax was sent), addressed to the parties at the following addresses or to such
other address as such party shall hereafter specify by notice to the other:

 

Notices to the Company:                                                            Generac Power
Systems, Inc.

P.O. Box 295

Waukesha, WI  53187

Attention:  Chief Executive Officer with
a copy 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 the Executive, to him at his most recent address in the Company’s records.

 

10.                                 Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this Agreement shall
be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

11.                                 Complete Agreement.  This Agreement, together with any other
agreements referred to herein (and any exhibits, schedules or other documents
referred to herein or therein) constitutes the complete agreement and
understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, whether in term sheets, presentations or otherwise, which may have
related to the subject matter hereof in any way.

 

12.                                 No Strict Construction.  The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any
party.

 

13.                                 Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

 

14.                                 Successors and Assigns.  This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
his rights or delegate his obligations hereunder without the prior written
consent of the Company.

 

6

 

15.                                 Choice of Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Wisconsin without giving effect to any choice of law or conflict of law rules or
provisions that would cause the application of the laws of any jurisdiction
other than the State of Wisconsin.

 

16.                                 Amendment and Waiver.  The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.

 

17.                                 Arbitration.  Any controversy or claim arising out of or
relating to this Agreement, the making, interpretation or the breach thereof
shall be settled by arbitration in Milwaukee in accordance with the rules and
procedures of the Employment Dispute Resolution Rules of the American
Arbitration Association then in effect.

 

18.                                 Legal Fees and Expenses.  The Company agrees to pay, as incurred, to
the full extent permitted by law, all reasonable legal fees and expenses which
Executive may reasonably incur as a result of Executive’s retention of Reinhart
Boerner Van Deuren s.c. in connection with the negotiation and documentation of
the arrangements set forth herein and in the shareholder and subscription
documents entered into on or about the date hereof.

 

19.                                 Tax Withholding.  The parties agree to treat all amounts paid
to Executive hereunder as compensation for services.  Accordingly, the Company may withhold from
any amount payable under this Agreement such federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

 

20.                                 Section 409A Compliance.  The parties intend that any severance or
other compensation under this Agreement be paid in compliance with Section 409A
of the Internal Revenue Code (including by being exempt therefrom) such that
there are no adverse tax consequences, interest, or penalties as a result of
the payments.  The parties agree to
modify this Agreement, the timing and/or the amount of the severance to the
extent necessary to comply with Section 409A; provided that neither the Company nor any of its employees
or representatives shall have any liability to Executive with respect thereto.

 

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]

 

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

 

	
   

  	
  GENERAC
  POWER SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  William Treffert

  
	
   

  	
  Name:

  	
  William
  Treffert

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Aaron Jagdfeld

  
	
   

  	
  Name: Aaron Jagdfeld

  

 

8

 

Exhibit A

 

RELEASE
OF CLAIMS

 

A
release is required as a condition for receiving the benefits described in Section 5
of the Employment Agreement between GENERAC POWER SYSTEMS, INC. (the “Company”) and Aaron
Jagdfeld (“Executive”)
dated November 10, 2006, (the “Employment Agreement”); thus, by executing
this release (“Release”),
you have advised us that you hold no claims against the Company, its
predecessors, successors or assigns, affiliates, shareholders or members and
each of their respective officers, directors, agents and employees
(collectively, the “Releasees”),
and by execution of this Release you agree to waive and release any such
claims, except relating to any compensation, severance pay and benefits
described in the Employment Agreement.

 

You
understand and agree that this Release will extend to all claims, demands,
liabilities and causes of action of every kind, nature and description
whatsoever, whether known, unknown or suspected to exist, which you ever had or
may now have against the Releasees in your capacity as an employee of the
Company, including, without limitation, any claims, demands, liabilities and
causes of action arising from your employment with the Releasees and the
termination of that employment, including any claims for severance or vacation
pay, business expenses, and/or pursuant to any federal, state, county, or local
employment laws, regulations, executive orders, or other requirements,
including, but not limited to, Title VII of the 1964 Civil Rights Act, the 1866
Civil Rights Act, the Age Discrimination in Employment Act as amended by the
Older Workers Benefit Protection Act, the Americans with Disabilities Act, the
Civil Rights Act of 1991, the Workers Adjustment and Retraining Notification
Act and any other local, state or federal fair employment laws, and any
contract or tort claims.

 

It
is further understood and agreed that you are waiving any right to initiate an
action in state or federal court by you or on your behalf alleging
discrimination on the basis of race, sex, religion, national origin, age,
disability, marital status, or any other protected status or involving any
contract or tort claims based on your termination from the Company.  It is also acknowledged that your termination
is not in any way related to any work-related injury.

 

Based
on executing this Release, it is further understood and agreed that you
covenant not to sue to challenge the enforceability of this Release.  It also is understood and agreed that the
remedy at law for breach of the Employment Agreement and/or this Release shall
be inadequate, and the Company shall be entitled to injunctive relief in
respect thereof.

 

Your
ability to receive payments and benefits under the terms of the Employment
Agreement will remain open for a 21-day period after your Termination Date to
give you an opportunity to consider the effect of this Release.  At your option, you may elect to execute this
Release on an earlier date. 
Additionally, you have seven days after the date you execute this
Release to revoke it.  As a result, this
Release will not be effective until eight days after you execute it.  We also want to advise you of your right to
consult with legal counsel prior to executing a copy of this Release.

 

Finally,
this is to expressly acknowledge:

 

·                  You understand that you are
not waiving any claims or rights that may arise after the date you execute this
Release.

 

 

·                  You understand and agree
that the compensation and benefits described in the Employment Agreement offer
you consideration greater than that to which you would otherwise be entitled.

 

I
hereby state that I have carefully read this Release and that I am signing this
Release knowingly and voluntarily with the full intent of releasing the
Releases from any and all claims, except as set forth herein.  Further, if signed prior to the completion
of the 21 day review period, this is to acknowledge that I knowingly and
voluntarily signed this Release on an earlier date.

 

 

	
   

  	
   

  	
   

  
	
  Date

  	
  [EXECUTIVE]

  

 

2

 

CONFIDENTIALITY, NON-COMPETITION
AND INTELLECTUAL PROPERTY AGREEMENT (this “Non-Competition Agreement”), dated as of November 10, 2006 (the “Effective Date”), by and between GENERAC
POWER SYSTEMS, INC. (together with its successors, assigns and affiliates, the “Company”) and Aaron
Jagdfeld (“Executive”).

 

WHEREAS, Executive has
entered into an employment agreement dated as of the date hereof with the
Company (the “Employment
Agreement”).  In
connection with his performance of his duties and obligations under the
Employment Agreement, Executive has and will receive specific confidential
information relating to the business of the Company, which confidential
information is necessary to enable Executive to perform Executive’s
duties.  Executive will play a significant
role in the development and management of the businesses of the Company and has
and will be entrusted with the Company’s confidential information relating to
the Company, the Company’s customers, suppliers, subcontractors, employees and
others.

 

WHEREAS,  it is a
condition to the execution of the Employment Agreement, dated as of the date
hereof, by and between Executive and the Company, that Executive execute and
deliver this Non-Competition Agreement simultaneously with the execution and
delivery of that agreement.

 

WHEREAS,  it is a
condition to the execution of the Restricted Stock Agreement, dated as of the
date hereof, by and between Executive and the Company, that Executive execute
and deliver this Non-Competition Agreement simultaneously with the execution
and delivery of that agreement.

 

WHEREAS,  it is a
condition to the execution of the Management Subscription and Stock Purchase
Agreement, dated as of the date hereof, by and between Executive and the
Company, that Executive execute and deliver this Non-Competition Agreement
simultaneously with the execution and delivery of that agreement.

 

WHEREAS, in partial consideration of the payments received
by Executive under that certain Agreement and Plan of Merger, dated September 13,
2006, by and among the Executive, the Company and the other parties thereto,
the Executive has agreed to execute and deliver to the Company this
Non-Competition Agreement.

 

NOW, THEREFORE, it is
mutually agreed as follows:

 

21.                                 Confidentiality.

 

(a)                                  Confidential Information.  In addition to all duties of loyalty imposed
on Executive by law, during the term of Executive’s employment with the
Company, and for 18 moths following the termination of such employment for any
reason, Executive shall maintain Confidential Information in confidence and
secrecy and shall not disclose Confidential Information or use it for the
benefit of any person or organization (including Executive) other than the
Company without the prior written consent of an authorized officer of the
Company (except for disclosures to persons acting on the Company’s behalf with
a need to know such information), under any circumstances where any
Confidential Information so disclosed or used is reasonably likely to be used
anywhere on behalf of any Competitive Business.

 

3

 

(b)                                 Trade Secrets.  During his employment with the Company,
Executive shall preserve and protect Trade Secrets of the Company from
unauthorized use or disclosure; and after termination of such employment,
Executive shall not use or disclose any Trade Secret of the Company for so long
as that Trade Secret remains a Trade Secret.

 

(c)                                  Procedures.  In the event that Executive is requested or
required (by deposition, interrogatories, requests for information or documents
in legal proceedings, subpoenas, civil demand or similar process) to disclose
any Confidential Information or Trade Secrets, Executive will give the Company
prompt written notice of such request or requirement so that the Company may seek
an appropriate protective order or other remedy and/or waive compliance with
the provisions of this Non-Competition Agreement, and Executive will cooperate
with the Company’s efforts to obtain such protective order.  In the event that such protective order or
other remedy is not obtained or the Company waives compliance with the relevant
provisions of this Non-Competition Agreement, Executive is permitted to furnish
that Confidential Information or Trade Secrets which is legally required to be
disclosed and will use his reasonable efforts to obtain assurances that
confidential treatment will be accorded to such information.

 

As used in this Non-Competition Agreement, all
capitalized terms used without definition shall have the meanings ascribed to
them in the Employment Agreement.  In
addition, the following terms have the meanings set forth below:

 

“Competitive
Business” means any corporation, partnership, association, or
other person or entity, including but not limited to Executive, (i) which
competes directly, or is planning to compete directly, with the Company with
respect to the design, development, manufacture, remanufacture, assembly,
marketing, sales, or service of standby power products, or any other business
of the Company, that was within Executive’s management, operational, marketing,
purchasing or sales responsibility, including the responsibility of personnel
reporting directly to Executive, or about which Executive received any
Confidential Information or Trade Secrets at any time within eighteen (18)
months prior to termination of Executive’s employment with the Company, and (ii) which
engages or plans to engage in such competition in any state of the United
States in which the Company sold or distributed, or actively attempted to sell
or to distribute, such products within eighteen (18) months prior to
termination of Executive’s employment with the Company.

 

“Confidential Information” shall mean information related
to the Company’s business, not generally known in the trade or industry, which
Executive learns or creates during the period of Executive’s employment with
the Company, which may include but is not limited to product specifications,
manufacturing procedures, methods, equipment, compositions, technology,
formulas, know-how, research and development programs, sales methods, customer
lists, customer usages and requirements, computer programs and other
confidential technical or business information and data.  Confidential Information shall not include
any information that (A) is or becomes generally available to the public
other than as a result of a disclosure by Executive in violation of this
Non-Competition Agreement or (B) becomes available to Executive on a
non-confidential basis from a source other than the Company or its affiliates
which is not prohibited from disclosing such information to Executive by a
legal, contractual or fiduciary obligation to the Company or any other person.

 

4

 

“Trade Secret(s)”
means information, including a formula, pattern, compilation, program, device,
method, technique or process, that derives independent economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and that is the subject of efforts to maintain its
secrecy that are reasonable under the circumstances.

 

(d)                                 Executive
further agrees to take all reasonable measures to prevent unauthorized persons
or entities from obtaining or using Confidential Information.  Promptly upon termination of his employment
with the Company, Executive agrees to deliver to the Company all property and
materials within Executive’s possession or control which belong to the Company
or which contain Confidential Information.

 

22.                                 Non-Competition;
Non-Solicitation.

 

(a)                                  Noncompetition.  During the term of Executive’s employment
with the Company and for eighteen (18) months following the termination of such
employment for any reason, Executive shall not, directly or indirectly,
participate in, consult with, be employed by, or assist with the organization,
planning, ownership, financing, management, operation or control of any
Competitive Business in any capacity in which, in the absence of this
Agreement, Confidential Information, Trade Secrets or Goodwill of the Company
would reasonably be considered useful.

 

“Goodwill”
means any tendency of customers, distributors, representatives, employees, or
federal, state, local or foreign governmental entities to continue or renew any
valuable business relationship with the Company or any Competitive Business
with which Executive may be associated, based in whole or in part on past
successful relationships with the Company or the lawful efforts of the Company
to foster such relationships, and in which Executive, or any personnel
reporting directly to Executive, actively participated at any time within
eighteen (18) months prior to termination of Executive’s employment with the
Company.

 

(b)                                 Nonsolicitation.   During the term of Executive’s employment
with the Company and for eighteen (18) months following the termination of such
employment for any reason, Executive shall not, directly or indirectly, on
behalf of any Competitive Business, either by himself or by providing
substantial assistance to others, solicit to terminate employment with the
Company, or to accept or begin employment with or service to any Competitive
Business, any employee of the Company whom Executive supervised or about whom
Executive gained Confidential Information at any time during the last eighteen
(18) months of Executive’s employment with the Company.

 

23.                                 No Right to
Continued Employment.  Nothing in
this Non-Competition Agreement shall confer upon Executive any right to continue
in the employ of the Company or shall interfere with or restrict in any way the
rights of the Company, which, subject to the terms of the Employment Agreement,
are hereby reserved, to discharge Executive at any time for any reason
whatsoever, with or without cause.

 

24.                                 No Conflicting
Agreements.  Executive
warrants that Executive is not bound by the terms of a confidentiality
agreement, non-competition or other agreement with a third party that would
conflict with Executive’s obligations hereunder.

 

5

 

25.                                 Remedies.

 

(a)                                  In the event of
breach or threatened breach by Executive of any provision hereof, the Company
shall be entitled to seek temporary or preliminary injunctive relief or other
equitable relief to which either of them may be entitled, without the posting
of any bond or other security.

 

(b)                                 The period of
time during which the restrictions set forth in Section 2(a) hereof
will be in effect will be extended by the length of time during which Executive
is in breach of the terms of those provisions as finally determined by an
arbitrator or any court of competent jurisdiction.

 

26.                                 Successors and
Assigns.  This Non-Competition Agreement
shall be binding upon Executive and Executive’s heirs, assigns and
representatives and inure to the benefit of the Company and its successors and
assigns, including without limitation any entity to which substantially all of
the assets or the business of either of the Company are sold or transferred.  The obligations of Executive are personal to
Executive and shall not be assigned by Executive.

 

27.                                 Severability.  It is expressly agreed that if any
restrictions set forth in this Non-Competition Agreement are found by any court
having jurisdiction to be unreasonable because they are too broad in any
respect, then and in each such case, the remaining provisions herein contained
shall, to the greatest extent permissible under applicable law, nevertheless,
remain effective, and this Non-Competition Agreement, or any portion hereof,
shall, to the extent permitted by applicable law, be considered to be amended,
so as to be considered reasonable and enforceable by such court, and the court
shall specifically have the right to restrict the time period or the business
or geographical scope of such restrictions to any portion of the time period,
business or geographic areas to the extent the court deems such restriction to
be necessary to cause the covenants to be enforceable and, in such event, the
covenants shall be enforced to the extent so permitted and the remaining
provisions shall be unaffected thereby. 
In such event, the parties hereto agree to execute all documents
necessary to evidence such amendment so as to eliminate or modify any such
unreasonable provision in order to carry out the intent of this Non-Competition
Agreement insofar as possible and to render this Non-Competition Agreement
enforceable in all respects as so modified. 
The covenants contained in this Section 7 shall be construed to
extend to separate jurisdictions or sub-jurisdictions of the United States in
which the Company, during the term of Executive’s employment, have been or are
engaged in business, and to the extent that any such covenant shall be illegal
and/or unenforceable with respect to any jurisdiction, said covenant shall not
be affected thereby with respect to each other jurisdiction, such covenants
with respect to each jurisdiction being construed as severable and
independent.  The restrictive covenant provisions
of this Non-Competition Agreement shall govern to the extent there is any
conflict between their terms and the terms of any other agreement or
understanding with the Company.

 

28.                                 Notices.  Any notice required or permitted to be given
under this Non-Competition Agreement shall be in writing and be deemed given
when delivered by hand or received by registered or certified mail, postage
prepaid, or by nationally reorganized overnight courier service addressed to
the party to receive such notice at the following address or any other address
substituted therefor by notice pursuant to these provisions:

 

6

 

If
to the Company:

 

Generac
Power Systems, Inc.

P.O. Box 295

Waukesha, WI  53187

Attention:  Chief Executive Officer

 

with a copy to:

 

GPS CCMP Acquisition Corp.

c/o CCMP Capital Advisors, LLC

245 Park Avenue, 16th floor 

New York, New York  10167

Attn:  Stephen Murray

If
to the Executive, to him at his most recent address in the Company’s records.

 

29.                                 Amendment.  No provision of this Non-Competition
Agreement may be modified, amended, waived or discharged in any manner except
by a written instrument executed by the Company and Executive.

 

30.                                 Entire
Agreement.  This
Non-Competition Agreement constitute the entire agreement of the parties hereto
with respect to the subject matter hereof, and supersedes all prior agreements
and understandings of the parties hereto, oral or written, with respect to the
subject matter hereof, however, if any portion of this Non-Competition
Agreement is determined to be unenforceable by a court of law, then solely the
appropriate conflicting provisions of any other agreement binding upon
Executive shall control.

 

31.                                 Waiver, etc.  The failure of the Company to enforce at any
time any of the provisions of this Non-Competition Agreement shall not be
deemed or construed to be a waiver of any such provision, nor in any way affect
the validity of this Non-Competition Agreement or any provision hereof or the
right of the Company to enforce thereafter each and every provision of this
Non-Competition Agreement.  No waiver of
any breach of any of the provisions of this Non-Competition Agreement by the
Company shall be effective unless set forth in a written instrument executed by
the Company, and no waiver of any such breach shall be construed or deemed to
be a waiver of any other or subsequent breach.

 

32.                                 Applicable Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Non-Competition
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Wisconsin without giving effect to any choice of law or conflict
of law rules or provisions (whether of the State of Wisconsin or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Wisconsin.

 

33.                                 Enforcement.  If any party shall institute legal action to
enforce or interpret the terms and conditions of this Non-Competition Agreement
or to collect any monies hereunder, venue for any such action shall be the
State Wisconsin.  Each party irrevocably
consents to the jurisdiction of the courts located in the State of Wisconsin
for all suits or actions arising out of this Non-Competition Agreement.  Each party hereto waives to the fullest
extent possible, the defense of an inconvenient forum, and each agrees that a
final judgment in any action shall be 

 

7

 

conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law.

 

[Signature Page Follows]

 

8

 

IN WITNESS WHEREOF, the parties
have caused this Non-Competition Agreement to be executed as of the day written
above.

 

	
   

  	
  GENERAC
  POWER SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  William Treffert

  
	
   

  	
  Name:

  	
  William
  Treffert

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/
  Aaron Jagdfeld

  
	
   

  	
  Name: Aaron Jagdfeld

  

 

9Exhibit 10.3

 

EMPLOYMENT AGREEMENT

 

THIS EMPLOYMENT AGREEMENT (the “Agreement”) is made
as of November 10, 2006 (the “Effective Date”), between GENERAC POWER
SYSTEMS, INC. (the “Company”)
and (“Executive”).

 

RECITALS:

 

WHEREAS, Executive and the Company desire to enter
into this Agreement to set forth the terms and conditions upon which Executive
will serve as the Chief Operating Officer of the Company.

 

NOW THEREFORE in consideration of the promises and
mutual covenants herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

 

1.             Employment.

 

(a)           Executive shall be employed
by the Company and shall have the title of Chief Operating Officer.  Executive shall report directly to the Chief
Executive Officer of the Company and shall have such authority, duties and
responsibilities as are commensurate with Executive’s position.  Executive shall devote substantially all of
her professional time to the Company in performing such duties and
responsibilities.

 

(b)           Executive shall perform
substantially all of her duties under this Agreement at the Company’s Waukesha,
Wisconsin office.  In addition to the
duties described in Section 1(a), Executive may be appointed an officer or
director of one or more subsidiaries of the Company.  Such additional positions shall be performed,
and appointments accepted by Executive, without additional compensation or
remuneration.

 

(c)           The Executive acknowledges
and agrees that  she owes a fiduciary
duty of loyalty to the Company to discharge her duties and otherwise act in a
manner consistent with the best interests of the Company and its subsidiaries
(if any).  During the Employment Period
(as defined hereinafter), except with the prior consent of the Board of
Directors of the Company (the “Board”)
(excluding the Executive if she should be a member of the Board at the time of
such determination), the Executive shall devote her best efforts and
substantially all of her working time, attention and energies to the
performance of her duties and responsibilities under this Agreement (except for
vacations to which she is entitled pursuant to Section 3(e) and
except for illness or incapacity).

 

2.             Term of Employment.  Executive’s employment by the Company shall
commence on the Effective Date and shall continue unless terminated as
hereinafter provided until the fifth anniversary of the Effective Date (the “Employment Period”).

 

3.             Base Salary and Benefits.

 

(a)           Base
Salary.  Commencing as
of the Effective Date, and thereafter during the Employment Period, Executive’s
base salary shall be $450,000 per annum, which amount may, but shall not be
required to be, increased by the Compensation Committee of the Board (or, if no
such committee exists, the Board) from time to time in accordance with the

 

 

compensation policies and
practices of the Company (as so adjusted from time to time, the “Base Salary”).  The Base Salary shall be payable in regular
installments in accordance with the Company’s standard payroll practices and
shall be subject to customary withholding.

 

(b)           Business
Expenses.  Upon
presentation of receipts or other appropriate documentation therefor, the
Company shall reimburse Executive for all reasonable expenses incurred by him
during the Employment Period in the course of performing her duties under this
Agreement, to the extent consistent with the Company’s policies in effect from
time to time with respect to travel, entertainment and other business expenses.

 

(c)           Employee Benefits.  Except as specifically set forth herein,
Executive shall be entitled to participate in any benefit plan or program of
the Company established by the Company after the Effective Date on a basis
comparable to other senior executives of the Company.

 

(d)           Annual
Bonus.  Commencing
on the Effective Date, Executive shall be eligible, during the Employment
Period, to receive an annual bonus (the “Annual Bonus”) in such amount, if any, and
based on such criteria as is determined in accordance with the Company’s annual
incentive bonus plan.

 

(e)           Vacation.  Executive shall be entitled to vacation time
with compensation of twenty days per annum during the Employment Period.  Executive shall also be entitled to all paid
holidays given by the Company to its senior officers.

 

4.             Termination.

 

(a)           Termination
Rights.  Executive’s
employment hereunder may be terminated upon the occurrence of the following
events and/or for the following reasons:

 

(i)            Death of Executive.  Executive’s employment hereunder shall terminate
upon her death.

 

(ii)           Disability of Executive.  The Company shall have the right to terminate
Executive’s employment hereunder if the Executive is or becomes Disabled (as
defined below) during the Employment Period, shall be absent from her duties
with the Company on a full time basis for 180 consecutive days, and, within 30
days after delivery of Notice of Termination by the Company, the Executive
shall not have returned to the performance of her duties hereunder on a full
time basis.  For purposes of this
Agreement, “Disabled”
shall mean: (i) that Executive qualifies for benefits due to total
disability on the part of the Executive under the Company’s long-term
disability plan, as in effect from time to time; or (ii) in the event that
the Company has no such long-term disability plan in effect on any date of
determination, that Executive is unable, as a result of a medically
determinable physical or mental illness, to perform the duties and services of
her position.

 

(iii)          Cause.  The Company shall have the right to terminate
Executive’s employment for Cause.  For
purposes of this Agreement, “Cause” shall mean:

 

(A)          the willful and continued
failure by Executive substantially to perform her duties hereunder (other than
such failure resulting

 

2

 

from her disability or from termination by the Executive for Good
Reason), after a written demand for substantial performance is delivered to
Executive that specifically identifies the manner in which Executive has not
substantially performed his duties, and Executive has not remedied such failure
within a reasonable time after receipt of such written notice; for purposes of
this paragraph, no act, or failure to act, on Executive’s part will be deemed “willful”
unless done, or omitted to be done, by Executive not in good faith and without
reasonable belief that his action or omission was in the best interest of the
Company;

 

(B)           Executive’s gross negligence
or willful misconduct in the performance of her duties as an employee of the
Company;

 

(C)           Executive’s commission of
fraud, embezzlement, misappropriation of funds, breach of fiduciary duty or a
material act of dishonesty against the Company;

 

(D)          the indictment of Executive
for a felony; or

 

(E)           the drug addiction or
habitual intoxication of Executive that adversely effects Employee’s job
performance and duties hereunder, or the reputation or best interests of the
Company.

 

(iv)          Good Reason.  The Executive shall have the right to
terminate her employment with the Company for Good Reason.  For purposes of this Agreement, “Good Reason” shall
mean:

 

(A) a reduction in
Executive’s Base Salary as in effect from time to time;

 

(B) a material
diminution in Executive’s duties or responsibilities not cured by the Company within
20 days after written notice to the Company delivered in accordance with Section 10;
or

 

(C) a requirement by
the Company that Executive be based in an office that is located more then 50
miles from Executive’s principal place of employment as of the Effective Date.

 

(v)           Without Cause or Good Reason.  The Company shall have the right to terminate
Executive’s employment hereunder without Cause and the Executive shall have the
right to terminate her employment with the Company without Good Reason.

 

(b)           Notice of
Termination.  Any
termination of Executive’s employment pursuant to any of Sections 4(a)(ii) —
(v) above shall be communicated by written “Notice of Termination” to the
non-terminating party delivered in accordance with Section 10 below.  For purposes of this Agreement, “Notice of Termination”
shall mean a notice by a terminating party which shall indicate the specific
termination provision hereunder pursuant to which Executive’s employment is
being terminated.

 

3

 

(c)           Termination
Date.  In
connection with any termination of Executive’s employment pursuant to any of
Sections 4(a)(i) — (v) above, Executive’s employment with the Company
shall terminate on the Termination Date. 
For purposes of this Agreement, “Termination Date” shall mean (i) if
Executive’s employment is terminated by her death, the date of her death, (ii) if
Executive’s employment is terminated because Executive is or becomes Disabled,
the date specified by the Company in the related Notice of Termination (which
shall, in no event, be less than 30 days after delivery of such Notice of
Termination), (iii) if Executive terminates her employment without Good
Reason, 30 days following the date on which a Notice of Termination is given or
such earlier date as is determined by the Company, and (iv) if Executive’s
employment is terminated for any other reason, the date on which a Notice of
Termination is given or any later date (within 30 days after the giving of such
notice) set forth in the related Notice of Termination.

 

5.             Effect of Termination.

 

(a)           Death of
Executive.  Upon
termination of Executive’s employment due to the death of Executive during the
Employment Period, Executive’s surviving spouse and dependents or, if none, her
estate, shall be entitled to receive from the Company (i) any accrued but
unpaid Base Salary and vacation pay through the Termination Date, payable as
soon as practicable following such Termination Date and (ii) any earned
Annual Bonus for the fiscal year during which the Termination Date occurred
(and the Annual Bonus for the prior fiscal year, if earned but not yet paid),
payable in accordance with the Company’s usual bonus payment schedule.  In addition, Executive’s surviving spouse and
dependents shall be entitled to the continued participation in the Company’s
medical, hospitalization, dental, and life insurance programs in which
Executive participated immediately prior to the Termination Date (collectively,
“Continued Benefits”)
for a period of 18 months following such Termination Date.

 

(b)           Disability
of Executive.  In the
event of termination of Executive’s employment due to the Executive being or
becoming Disabled, Executive shall be entitled to receive from the Company (i) any
accrued but unpaid Base Salary and vacation pay through the Termination Date,
payable as soon as practicable following such Termination Date and (ii) any
earned Annual Bonus for the fiscal year during which the Termination Date
occurred (and the Annual Bonus for the prior fiscal year, if earned but not yet
paid), payable in accordance with the Company’s usual bonus payment
schedule.  In addition, Executive shall
be entitled to continue to receive installments of Executive’s then current
Base Salary and Continued Benefits from the Termination Date until the later to
occur of (A) the six (6) month anniversary thereof and (B) the
date on which Executive becomes entitled to long-term disability benefits under
the applicable plan or program of the Company, which shall be payable (in the
case of Base Salary) or provided (in the case of Continued Benefits) in
accordance with the usual payroll and benefits policies of the Company.

 

(c)           Termination
for Cause; Termination without Good Reason.  Upon the termination of Executive’s
employment either by the Company for Cause, or by Executive without Good
Reason, subject to Executive’s execution and the effectiveness of a release of
claims in the form attached hereto as Exhibit A (the “Release”) and
Executive’s continued compliance with the Non-Competition Agreement (as
hereinafter defined), the Company shall pay to Executive (i) any accrued
but unpaid Base Salary and vacation pay through the Termination Date, payable
as soon as practicable following such Termination Date and (ii) any earned
Annual Bonus for the fiscal year during which the Termination Date occurred
(and the Annual Bonus for the prior fiscal year, if earned but not yet paid),
payable in accordance with the Company’s usual bonus payment schedule.

 

4

 

(d)           Termination
without Cause; Termination for Good Reason.  Upon the termination of Executive’s
employment either by Executive with Good Reason, or by the Company without
Cause, subject to Executive’s execution and the effectiveness of the Release and
Executive’s continued compliance with the Non-Competition Agreement, Executive
shall be entitled to receive from the Company (i) any accrued but unpaid
Base Salary and vacation pay through the Termination Date, payable as soon as
practicable following such Termination Date, (ii) any earned Annual Bonus
for the fiscal year during which the Termination Date occurred (and the Annual
Bonus for the prior fiscal year, if earned but not yet paid), payable in
accordance with the Company’s usual bonus payment schedule, and (iii) for
a period of 18 months commencing on the Termination Date, 150% of Executive’s
then current Base Salary, payable in accordance with the standard payroll
practices of the Company.  Solely for
illustrative purposes, if each installment of Base Salary payable to the
Executive (in accordance with the standard payroll practices of the Company)
prior to such termination (and before giving effect to any withholding amounts)
was $1,000, then after such termination, each installment payment payable by
the Company to the Executive (in accordance with the standard payroll practices
of the Company) during the immediately following 18-month period (prior to
giving effect to any withholding amounts) shall be $1,500.  In addition, Company shall maintain the
Continued Benefits in full force and effect, for the continued benefit of
Executive, her spouse and her dependents for a period of 18 months commencing
on the Termination Date, and Executive shall be entitled to full COBRA rights
following the termination of such Continued Benefits.  If Executive elects to utilize rights under
COBRA after the Termination Date, Executive shall be responsible for all
premiums in respect thereof, as permitted by law.

 

Executive acknowledges and
agrees that the payments set forth in this Section 5 constitute liquidated
damages for termination of her employment and shall exclusively govern
Executive’s rights upon termination of employment with the Company.

 

6.             Confidentiality,
Non-Compete, Non-Solicit/Hire and Intellectual Property Agreement.  Simultaneously with the execution and
delivery of this Agreement, the Company and Executive shall execute and deliver
a confidentiality, non-competition agreement and intellectual property
agreement in the form attached hereto as Exhibit B, dated as the
date hereof, by and between the Company and Executive.

 

7.             Executive’s Representations.  Executive hereby represents and warrants to
the Company that (i) the execution, delivery and performance of this
Agreement by Executive do not and will not conflict with, breach, violate or
cause a default under any contract, agreement, instrument, order, judgment or
decree to which Executive is a party or by which he is bound, and (ii) upon
the execution and delivery of this Agreement by the parties, this Agreement
will be the valid and binding obligation of Executive, enforceable in
accordance with its terms, except to the extent the enforceability thereof may
be limited by bankruptcy laws, insolvency laws, reorganization laws or other
laws affecting creditors’ rights generally or by general equitable principles,
Executive hereby acknowledges and represents that he has had the opportunity to
consult with independent legal counsel regarding her rights and obligations
under this Agreement and that he fully understands the terms and conditions
contained herein.

 

8.             Indemnification.  Subject to applicable law, Executive shall be
entitled to the benefit of such indemnification rights as may from time to time
exist under the terms of the Company’s organizational documents and to such
liability insurance as the Company may purchase for its senior officers from
time to time.

 

5

 

9.             Notices.  Any notice provided for in this Agreement
shall be in writing and shall be deemed to have been duly given if delivered
personally (whether by overnight courier or otherwise) with receipt
acknowledged or sent by registered or certified mail or equivalent, if
available, postage prepaid, or by fax (which shall be confirmed by a writing
sent by registered or certified mail or equivalent on the same day that such
fax was sent), addressed to the parties at the following addresses or to such
other address as such party shall hereafter specify by notice to the other:

 

	
  Notices to the Company:

  	
  Generac
  Power Systems, Inc.

  
	
   

  	
  P.O. Box
  295

  
	
   

  	
  Waukesha,
  WI 53187

  
	
   

  	
  Attention:
  Chief Executive Officer with a copy 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 the Executive, to her at her most recent address in the Company’s records.

 

10.           Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this Agreement shall
be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

11.           Complete Agreement.  This Agreement, together with any other
agreements referred to herein (and any exhibits, schedules or other documents
referred to herein or therein) constitutes the complete agreement and
understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, whether in term sheets, presentations or otherwise, which may have
related to the subject matter hereof in any way.

 

12.           No Strict Construction.  The language used in this Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any
party.

 

13.           Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.

 

14.           Successors and Assigns.  This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive, the Company and their
respective heirs, successors and assigns, except that Executive may not assign
her rights or delegate her obligations hereunder without the prior written
consent of the Company.

 

6

 

15.           Choice of Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
Wisconsin without giving effect to any choice of law or conflict of law rules or
provisions that would cause the application of the laws of any jurisdiction
other than the State of Wisconsin.

 

16.           Amendment and Waiver.  The provisions of this Agreement may be
amended or waived only with the prior written consent of the Company and
Executive, and no course of conduct or failure or delay in enforcing the
provisions of this Agreement shall affect the validity, binding effect or
enforceability of this Agreement.

 

17.           Arbitration.  Any controversy or claim arising out of or
relating to this Agreement, the making, interpretation or the breach thereof
shall be settled by arbitration in Milwaukee in accordance with the rules and
procedures of the Employment Dispute Resolution Rules of the American
Arbitration Association then in effect.

 

18.           Legal Fees and Expenses.  The Company agrees to pay, as incurred, to
the full extent permitted by law, all reasonable legal fees and expenses which
Executive may reasonably incur as a result of Executive’s retention of Reinhart
Boerner Van Deuren s.c. in connection with the negotiation and documentation of
the arrangements set forth herein and in the shareholder and subscription
documents entered into on or about the date hereof.

 

19.           Tax Withholding.  The parties agree to treat all amounts paid
to Executive hereunder as compensation for services.  Accordingly, the Company may withhold from
any amount payable under this Agreement such federal, state or local taxes as
shall be required to be withheld pursuant to any applicable law or regulation.

 

20.           Section 409A Compliance.  The parties intend that any severance or
other compensation under this Agreement be paid in compliance with Section 409A
of the Internal Revenue Code (including by being exempt therefrom) such that
there are no adverse tax consequences, interest, or penalties as a result of
the payments.  The parties agree to
modify this Agreement, the timing and/or the amount of the severance to the
extent necessary to comply with Section 409A; provided that neither the Company nor any of its employees
or representatives shall have any liability to Executive with respect thereto.

 

[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]

 

7

 

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

 

	
   

  	
  GENERAC
  POWER SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
  /s/
  William Treferrt

  
	
   

  	
  Name:

  	
  William
  Treffert

  
	
   

  	
  Title:

  	
  Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/
  Dawn Tabat

  
	
   

  	
  Name:
  Dawn Tabat

  

 

8

 

Exhibit A

 

RELEASE OF CLAIMS

 

A release is required as a
condition for receiving the benefits described in Section 5 of the
Employment Agreement between GENERAC POWER SYSTEMS, INC. (the “Company”) and Dawn
Tabat (“Executive”)
dated November 10, 2006, (the “Employment Agreement”); thus, by executing
this release (“Release”),
you have advised us that you hold no claims against the Company, its
predecessors, successors or assigns, affiliates, shareholders or members and
each of their respective officers, directors, agents and employees
(collectively, the “Releasees”),
and by execution of this Release you agree to waive and release any such
claims, except relating to any compensation, severance pay and benefits
described in the Employment Agreement.

 

You understand and agree
that this Release will extend to all claims, demands, liabilities and causes of
action of every kind, nature and description whatsoever, whether known, unknown
or suspected to exist, which you ever had or may now have against the Releasees
in your capacity as an employee of the Company, including, without limitation,
any claims, demands, liabilities and causes of action arising from your
employment with the Releasees and the termination of that employment, including
any claims for severance or vacation pay, business expenses, and/or pursuant to
any federal, state, county, or local employment laws, regulations, executive
orders, or other requirements, including, but not limited to, Title VII of the
1964 Civil Rights Act, the 1866 Civil Rights Act, the Age Discrimination in
Employment Act as amended by the Older Workers Benefit Protection Act, the
Americans with Disabilities Act, the Civil Rights Act of 1991, the Workers
Adjustment and Retraining Notification Act and any other local, state or federal
fair employment laws, and any contract or tort claims.

 

It is further understood and
agreed that you are waiving any right to initiate an action in state or federal
court by you or on your behalf alleging discrimination on the basis of race,
sex, religion, national origin, age, disability, marital status, or any other
protected status or involving any contract or tort claims based on your
termination from the Company.  It is also
acknowledged that your termination is not in any way related to any work-related
injury.

 

Based on executing this
Release, it is further understood and agreed that you covenant not to sue to
challenge the enforceability of this Release. 
It also is understood and agreed that the remedy at law for breach of
the Employment Agreement and/or this Release shall be inadequate, and the
Company shall be entitled to injunctive relief in respect thereof.

 

Your ability to receive
payments and benefits under the terms of the Employment Agreement will remain
open for a 21-day period after your Termination Date to give you an opportunity
to consider the effect of this Release. 
At your option, you may elect to execute this Release on an earlier
date.  Additionally, you have seven days
after the date you execute this Release to revoke it.  As a result, this Release will not be
effective until eight days after you execute it.  We also want to advise you of your right to
consult with legal counsel prior to executing a copy of this Release.

 

Finally, this is to
expressly acknowledge:

 

·                  You understand that you are
not waiving any claims or rights that may arise after the date you execute this
Release.

 

 

·                  You understand and agree
that the compensation and benefits described in the Employment Agreement offer
you consideration greater than that to which you would otherwise be entitled.

 

I hereby state that I have carefully read this Release and that I am
signing this Release knowingly and voluntarily with the full intent of
releasing the Releases from any and all claims, except as set forth
herein.  Further, if signed prior to
the completion of the 21 day review period, this is to acknowledge that I
knowingly and voluntarily signed this Release on an earlier date.

 

 

	
   

  	
   

  	
   

  
	
  Date

  	
   

  	
  [EXECUTIVE]

  

 

2

 

CONFIDENTIALITY, NON-COMPETITION AND INTELLECTUAL
PROPERTY AGREEMENT (this “Non-Competition Agreement”), dated as of November 10, 2006 (the “Effective Date”), by and between GENERAC
POWER SYSTEMS, INC. (together with its successors, assigns and affiliates, the “Company”) and Dawn
Tabat (“Executive”).

 

WHEREAS, Executive has entered into
an employment agreement dated as of the date hereof with the Company (the “Employment Agreement”).  In connection with her performance of her
duties and obligations under the Employment Agreement, Executive has and will
receive specific confidential information relating to the business of the
Company, which confidential information is necessary to enable Executive to
perform Executive’s duties.  Executive
will play a significant role in the development and management of the
businesses of the Company and has and will be entrusted with the Company’s
confidential information relating to the Company, the Company’s customers,
suppliers, subcontractors, employees and others.

 

WHEREAS,  it is a condition to the
execution of the Employment Agreement, dated as of the date hereof, by and
between Executive and the Company, that Executive execute and deliver this
Non-Competition Agreement simultaneously with the execution and delivery of
that agreement.

 

WHEREAS,  it is a condition to the
execution of the Restricted Stock Agreement, dated as of the date hereof, by
and between Executive and the Company, that Executive execute and deliver this
Non-Competition Agreement simultaneously with the execution and delivery of
that agreement.

 

WHEREAS,  it is a condition to the
execution of the Management Subscription and Stock Purchase Agreement, dated as
of the date hereof, by and between Executive and the Company, that Executive
execute and deliver this Non-Competition Agreement simultaneously with the
execution and delivery of that agreement.

 

WHEREAS, in partial consideration of the payments received
by Executive under that certain Agreement and Plan of Merger, dated September 13,
2006, by and among the Executive, the Company and the other parties thereto,
the Executive has agreed to execute and deliver to the Company this
Non-Competition Agreement.

 

NOW, THEREFORE, it is mutually agreed as
follows:

 

21.           Confidentiality.

 

(a)           Confidential
Information.  In addition
to all duties of loyalty imposed on Executive by law, during the term of
Executive’s employment with the Company, and for 18 moths following the
termination of such employment for any reason, Executive shall maintain
Confidential Information in confidence and secrecy and shall not disclose
Confidential Information or use it for the benefit of any person or
organization (including Executive) other than the Company without the prior
written consent of an authorized officer of the Company (except for disclosures
to persons acting on the Company’s behalf with a need to know such
information), under any circumstances where any Confidential Information so
disclosed or used is reasonably likely to be used anywhere on behalf of any
Competitive Business.

 

3

 

(b)           Trade Secrets.  During his or her employment with the
Company, Executive shall preserve and protect Trade Secrets of the Company from
unauthorized use or disclosure; and after termination of such employment,
Executive shall not use or disclose any Trade Secret of the Company for so long
as that Trade Secret remains a Trade Secret.

 

(c)           Procedures.  In the event that Executive is requested or
required (by deposition, interrogatories, requests for information or documents
in legal proceedings, subpoenas, civil demand or similar process) to disclose
any Confidential Information or Trade Secrets, Executive will give the Company
prompt written notice of such request or requirement so that the Company may
seek an appropriate protective order or other remedy and/or waive compliance
with the provisions of this Non-Competition Agreement, and Executive will
cooperate with the Company’s efforts to obtain such protective order.  In the event that such protective order or other
remedy is not obtained or the Company waives compliance with the relevant
provisions of this Non-Competition Agreement, Executive is permitted to furnish
that Confidential Information or Trade Secrets which is legally required to be
disclosed and will use her reasonable efforts to obtain assurances that
confidential treatment will be accorded to such information.

 

As used in this Non-Competition Agreement, all capitalized terms used
without definition shall have the meanings ascribed to them in the Employment
Agreement.  In addition, the following
terms have the meanings set forth below:

 

“Competitive Business”
means any corporation, partnership, association, or other person or entity,
including but not limited to Executive, (i) which competes directly, or is
planning to compete directly, with the Company with respect to the design,
development, manufacture, remanufacture, assembly, marketing, sales, or service
of standby power products, or any other business of the Company, that was
within Executive’s management, operational, marketing, purchasing or sales
responsibility, including the responsibility of personnel reporting directly to
Executive, or about which Executive received any Confidential Information or
Trade Secrets at any time within eighteen (18) months prior to termination of
Executive’s employment with the Company, and (ii) which engages or plans
to engage in such competition in any state of the United States in which the
Company sold or distributed, or actively attempted to sell or to distribute,
such products within eighteen (18) months prior to termination of Executive’s
employment with the Company.

 

“Confidential
Information” shall mean information related to the Company’s
business, not generally known in the trade or industry, which Executive learns
or creates during the period of Executive’s employment with the Company, which
may include but is not limited to product specifications, manufacturing
procedures, methods, equipment, compositions, technology, formulas, know-how,
research and development programs, sales methods, customer lists, customer
usages and requirements, computer programs and other confidential technical or
business information and data. 
Confidential Information shall not include any information that (A) is
or becomes generally available to the public other than as a result of a
disclosure by Executive in violation of this Non-Competition Agreement or (B) becomes
available to Executive on a non-confidential basis from a source other than the
Company or its affiliates which is not prohibited from disclosing such
information to Executive by a legal, contractual or fiduciary obligation to the
Company or any other person.

 

4

 

“Trade Secret(s)” means
information, including a formula, pattern, compilation, program, device,
method, technique or process, that derives independent economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and that is the subject of efforts to maintain its
secrecy that are reasonable under the circumstances.

 

(d)           Executive further agrees to
take all reasonable measures to prevent unauthorized persons or entities from obtaining
or using Confidential Information. 
Promptly upon termination of her employment with the Company, Executive
agrees to deliver to the Company all property and materials within Executive’s
possession or control which belong to the Company or which contain Confidential
Information.

 

22.           Non-Competition; Non-Solicitation.

 

(a)           Noncompetition.  During the term of Executive’s employment
with the Company and for eighteen (18) months following the termination of such
employment for any reason, Executive shall not, directly or indirectly,
participate in, consult with, be employed by, or assist with the organization,
planning, ownership, financing, management, operation or control of any
Competitive Business in any capacity in which, in the absence of this Agreement,
Confidential Information, Trade Secrets or Goodwill of the Company would
reasonably be considered useful.

 

“Goodwill” means any tendency
of customers, distributors, representatives, employees, or federal, state,
local or foreign governmental entities to continue or renew any valuable
business relationship with the Company or any Competitive Business with which
Executive may be associated, based in whole or in part on past successful
relationships with the Company or the lawful efforts of the Company to foster
such relationships, and in which Executive, or any personnel reporting directly
to Executive, actively participated at any time within eighteen (18) months
prior to termination of Executive’s employment with the Company.

 

(b)           Nonsolicitation.   During
the term of Executive’s employment with the Company and for eighteen (18)
months following the termination of such employment for any reason, Executive
shall not, directly or indirectly, on behalf of any Competitive Business,
either by himself or by providing substantial assistance to others, solicit to
terminate employment with the Company, or to accept or begin employment with or
service to any Competitive Business, any employee of the Company whom Executive
supervised or about whom Executive gained Confidential Information at any time
during the last eighteen (18) months of Executive’s employment with the
Company.

 

23.           No Right to Continued Employment.  Nothing in this Non-Competition Agreement
shall confer upon Executive any right to continue in the employ of the Company
or shall interfere with or restrict in any way the rights of the Company,
which, subject to the terms of the Employment Agreement, are hereby reserved,
to discharge Executive at any time for any reason whatsoever, with or without cause.

 

24.           No Conflicting Agreements.  Executive warrants that Executive is not
bound by the terms of a confidentiality agreement, non-competition or other
agreement with a third party that would conflict with Executive’s obligations
hereunder.

 

5

 

25.           Remedies.

 

(a)           In the event of breach or
threatened breach by Executive of any provision hereof, the Company shall be
entitled to seek temporary or preliminary injunctive relief or other equitable
relief to which either of them may be entitled, without the posting of any bond
or other security.

 

(b)           The period of time during
which the restrictions set forth in Section 2(a) hereof will be in
effect will be extended by the length of time during which Executive is in
breach of the terms of those provisions as finally determined by an arbitrator
or any court of competent jurisdiction.

 

26.           Successors and Assigns.  This Non-Competition Agreement shall be
binding upon Executive and Executive’s heirs, assigns and representatives and
inure to the benefit of the Company and its successors and assigns, including
without limitation any entity to which substantially all of the assets or the
business of either of the Company are sold or transferred.  The obligations of Executive are personal to
Executive and shall not be assigned by Executive.

 

27.           Severability.  It is expressly agreed that if any
restrictions set forth in this Non-Competition Agreement are found by any court
having jurisdiction to be unreasonable because they are too broad in any
respect, then and in each such case, the remaining provisions herein contained
shall, to the greatest extent permissible under applicable law, nevertheless,
remain effective, and this Non-Competition Agreement, or any portion hereof, shall,
to the extent permitted by applicable law, be considered to be amended, so as
to be considered reasonable and enforceable by such court, and the court shall
specifically have the right to restrict the time period or the business or
geographical scope of such restrictions to any portion of the time period,
business or geographic areas to the extent the court deems such restriction to
be necessary to cause the covenants to be enforceable and, in such event, the
covenants shall be enforced to the extent so permitted and the remaining
provisions shall be unaffected thereby. 
In such event, the parties hereto agree to execute all documents
necessary to evidence such amendment so as to eliminate or modify any such unreasonable
provision in order to carry out the intent of this Non-Competition Agreement
insofar as possible and to render this Non-Competition Agreement enforceable in
all respects as so modified.  The
covenants contained in this Section 7 shall be construed to extend to
separate jurisdictions or sub-jurisdictions of the United States in which the
Company, during the term of Executive’s employment, have been or are engaged in
business, and to the extent that any such covenant shall be illegal and/or
unenforceable with respect to any jurisdiction, said covenant shall not be
affected thereby with respect to each other jurisdiction, such covenants with
respect to each jurisdiction being construed as severable and independent.  The restrictive covenant provisions of this
Non-Competition Agreement shall govern to the extent there is any conflict
between their terms and the terms of any other agreement or understanding with
the Company.

 

28.           Notices.  Any notice required or permitted to be given
under this Non-Competition Agreement shall be in writing and be deemed given
when delivered by hand or received by registered or certified mail, postage
prepaid, or by nationally reorganized overnight courier service addressed to
the party to receive such notice at the following address or any other address
substituted therefor by notice pursuant to these provisions:

 

If to the Company:

 

6

 

Generac Power Systems, Inc.

P.O. Box 295

Waukesha, WI  53187

Attention:  Chief Executive
Officer

 

with a
copy to:

 

GPS
CCMP Acquisition Corp.

c/o
CCMP Capital Advisors, LLC

245 Park Avenue, 16th floor

New
York, New York  10167

Attn:  Stephen Murray

 

If to the Executive, to her
at her most recent address in the Company’s records.

 

29.                           Amendment.  No provision of this Non-Competition Agreement
may be modified, amended, waived or discharged in any manner except by a
written instrument executed by the Company and Executive.

 

30.           Entire Agreement.  This Non-Competition Agreement constitute the
entire agreement of the parties hereto with respect to the subject matter
hereof, and supersedes all prior agreements and understandings of the parties
hereto, oral or written, with respect to the subject matter hereof, however, if
any portion of this Non-Competition Agreement is determined to be unenforceable
by a court of law, then solely the appropriate conflicting provisions of any
other agreement binding upon Executive shall control.

 

31.           Waiver, etc.  The failure of the Company to enforce at any
time any of the provisions of this Non-Competition Agreement shall not be
deemed or construed to be a waiver of any such provision, nor in any way affect
the validity of this Non-Competition Agreement or any provision hereof or the
right of the Company to enforce thereafter each and every provision of this
Non-Competition Agreement.  No waiver of
any breach of any of the provisions of this Non-Competition Agreement by the
Company shall be effective unless set forth in a written instrument executed by
the Company, and no waiver of any such breach shall be construed or deemed to
be a waiver of any other or subsequent breach.

 

32.           Applicable Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Non-Competition
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Wisconsin without giving effect to any choice of law or conflict
of law rules or provisions (whether of the State of Wisconsin or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of Wisconsin.

 

33.           Enforcement.  If any party shall institute legal action to
enforce or interpret the terms and conditions of this Non-Competition Agreement
or to collect any monies hereunder, venue for any such action shall be the
State Wisconsin.  Each party irrevocably
consents to the jurisdiction of the courts located in the State of Wisconsin
for all suits or actions arising out of this Non-Competition Agreement.  Each party hereto waives to the fullest
extent possible, the defense of an inconvenient forum, and each agrees that a
final judgment in any action shall be 

 

7

 

conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

 

[Signature Page Follows]

 

8

 

IN WITNESS WHEREOF, the parties have caused
this Non-Competition Agreement to be executed as of the day written above.

 

	
   

  	
  GENERAC POWER SYSTEMS,
  INC.

  
	
   

  	
   

  
	
   

  	
  /s/ William Treferrt

  
	
   

  	
  Name:

  	
  William Treffert

  
	
   

  	
  Title:

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
  /s/ Dawn Tabat

  
	
   

  	
  Name:
  Dawn Tabat

  

 

9

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