Document:

Exhibit 10.63

 

Generac Holdings Inc.

 

Annual Performance Bonus
Plan

 

Article 1.                                            Establishment &
Purpose

 

1.1                               Establishment.  Generac Holdings Inc., a Delaware corporation (“Generac” and in
combination with its subsidiaries, the “Company”),
hereby establishes the Annual Performance Bonus Plan (the “Plan”)
as set forth herein.

 

1.2                               Purpose
of Plan.  The purpose of this Plan is to
motivate and reward employees of the Company by providing for annual incentive
bonuses if pre-established annual performance goals are achieved.  The Plan is also intended to qualify as a
performance-based compensation plan under Section 162(m) of the
Internal Revenue Code of 1986, as amended (the “Code”).

 

Article 2.                                            Administration

 

The
Plan shall be administered by a compensation committee (the “Committee”) comprised exclusively of members of the board of
directors of Generac (the “Board”) who are
“outside directors” within the meaning of Code Section 162(m) and
Treasury Regulation § 1.162-27(c)(4). 
The Committee shall have the authority, subject to the provisions
herein, (a) to select the employees to participate in the Plan; (b) to
establish and administer the Performance Goals (as defined herein) and the
bonus opportunities applicable to each participant and certify whether the goals
have been attained; (c) to construe and interpret the Plan and any
agreement or instrument entered into under or in connection with the Plan; and (d) to
make all other determinations that may be necessary or advisable for the
administration of the Plan.  Any
determination by the Committee pursuant to the Plan shall be final and binding
upon the participants, the Company, and all other interested individuals.

 

Article 3.                                            Eligibility

 

Eligibility
shall be limited to employees of the Company who may be a “covered employee”
within the meaning of Code Section 162(m)(4) and Treasury Regulation § 1.162-27(c)(2) and
such other employees, as determined by the Committee in its discretion.  The Committee, in its discretion, shall
designate in writing those eligible employees of the Company who shall
participate in the Plan (each, a “Covered Employee”)
for any fiscal year or other accounting period selected by the Committee no
later than the applicable deadline (the “Determination Date”)
for the establishment of Performance Goals permitting the compensation payable
to each such Covered Employee for such fiscal year or period to qualify as “qualified
performance-based compensation” under Treasury Regulation § 1.162-27(e).  Designation as a Covered Employee shall be conclusive
for the fiscal year or period to which the designation applies whether or not
such employee is deemed a “covered employee” (within the meaning of Code Section 162(m))
at the end of such period.  Designation
as a Covered Employee for any fiscal year or period shall not entitle an
employee to participate in the Plan for any other fiscal year or period.

 

Article 4.                                            Performance
Goals

 

4.1                               Establishment
of Performance Goals.  A Covered
Employee’s bonus shall be determined based on the attainment of written
performance goals (the “Performance Goals”)

 

 

established by the Committee as of the beginning of
each of the Company’s fiscal years or other accounting periods selected by the
Committee (“Performance Periods”).  The Performance Goals shall be established (a) while
the outcome for the Performance Period is substantially uncertain and (b) no
later than ninety (90) days after the commencement of the Performance Period to
which the Performance Goal relates (or, if the Performance Period is less than
one (1) year, no later than the number of days which is equal to
twenty-five percent (25%) of such Performance Period).  The Performance Goals need not be the same
for all Covered Employees.

 

4.2                               Performance
Measures.  Performance
Goals shall be based on any of the following business criteria, either alone or
in any combination, on either a consolidated or business unit or divisional
level, as the Committee may determine: (a) sales or revenue; (b) earnings
per share; (c) measurable achievement in quality, operation and compliance
initiatives; (d) objectively determinable measure of non-financial
operating and management performance objectives; (e) net earnings (either
before or after interest, taxes, depreciation and amortization); (f) economic
value-added (as determined by the Committee); (g) net income (either
before or after taxes); (h) operating earnings; (i) cash flow
(including, but not limited to, operating cash flow and free cash flow); (j) cash
flow return on capital; (k) return on net assets; (l) return on
stockholders’ equity; (m) return on assets; (n) return on capital; (o) stockholder
returns, dividends and/or other distributions; (p) return on sales; (q) gross
or net profit margin; (r) productivity; (s) expenses; (t) margins;
(u) operating efficiency; (v) customer satisfaction; (w) measurable
achievement in quality and compliance initiatives; (x) working capital; (y) debt;
(z) debt reduction; (aa) price per share of stock; (bb) market share; (cc)
completion of acquisitions; (dd) business expansion; (ee) product
diversification; and (ff) new or expanded market penetration.  The foregoing criteria shall have any
reasonable definitions that the Committee may specify, which may include or
exclude any or all of the following items, as the Committee may specify: (pp)
extraordinary, unusual or non-recurring items; (qq) effects of changes in tax
law, accounting principles or other such laws or provisions affecting reported
results; (rr) effects of currency fluctuations; (ss) effects of financing
activities (e.g., effect on earnings per share of issuing convertible debt
securities); (tt) expenses for restructuring, productivity initiatives or new
business initiatives; (uu) impairment of tangible or intangible assets; (vv)
litigation or claim judgments or settlements; (ww) non-operating items;
(xx) acquisition expenses; (yy) discontinued operations; and (zz) effects
of assets sales or divestitures.  Any
such business criterion or combination of such criteria may apply to the
Covered Employee’s bonus opportunity in its entirety or to any designed portion
or portions of the bonus opportunity, as the Committee may specify.

 

Article 5.                                            Bonus
Opportunity

 

No
later than the Determination Date for each Performance Period, the Committee
shall establish, in writing, the method for computing the amount of
compensation that will be payable under the Plan to each Covered Employee if
the Performance Goals established by the Committee for such Performance Period
are attained in whole or in part.  Such
method shall be stated in terms of an objective formula that precludes
discretion to increase the amount of the bonus that would otherwise be payable hereunder.
 The method need not be the same for all
Covered Employees.  Notwithstanding
anything to the contrary contained herein, the Committee may exercise negative
discretion (within the meaning of Treasury Regulation § 1.162-27(e)(2)(iii)(A))
with respect to any bonus payable hereunder to reduce any amount that would
otherwise be payable hereunder.

 

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Article 6.                                            Maximum
Bonus

 

The
maximum amount of compensation that may be paid under the Plan to any Covered
Employee for any fiscal year shall be $3,000,000.

 

Article 7.                                            Certification
of Performance Goals and Payment of Bonus

 

7.1                               Certification
by Committee.  As soon as
practicable after the close of the Performance Period and prior to the payment
of any bonus, the Committee shall review the Company’s performance and certify
in writing the extent to which the applicable Performance Goals have been
achieved.

 

7.2                               Payment
of Bonus After Certification.  Each bonus, to the extent earned, shall be
paid in a single lump sum cash payment, less applicable withholding taxes, as
soon as practicable following the Committee’s certification described in the
preceding sentence.  Payments under this
Plan are intended to qualify as short-term deferrals under Code Section 409A
and shall be made no later than the date two and one-half (2 1⁄2) months
following the close of the fiscal year in which such bonus was earned; provided, however,
that any payment that is delayed due to an event described in Treasury
Regulation § 1.409A-1(b)(4)(ii), shall be paid as soon as
practicable.  Except as otherwise
determined by the Committee, in its sole discretion, a Covered Employee shall
not be entitled to payment of a bonus otherwise earned under the Plan if such
Covered Employee is not employed by the Company on the payment date for such
bonus.

 

Article 8.                                            Funding

 

The
Plan shall be unfunded.  The Company
shall not be required to segregate any assets to ensure payment of any bonus
under the Plan.

 

Article 9.                                            Amendment
and Termination

 

The
Company may amend or terminate the Plan at any time; provided,
however, that no amendment shall cause any performance-based bonus
payable under the Plan not to qualify under Code Section 162(m).

 

Article 10.                                     Stockholder
Approval

 

Payment
of any bonus under this Plan shall be contingent upon approval of this Plan by
a majority of the stockholders of Generac, including the applicable Performance
Goals relating thereto.  Unless and until
such stockholder approval is obtained, no bonus shall be paid pursuant to this
Plan.  To the extent necessary for
purposes of Code Section 162(m), this Plan shall be resubmitted to stockholders
for their reapproval with respect to bonuses payable for the taxable years of Generac
commencing on or after the fifth (5th) anniversary of the initial stockholder approval, or at such earlier time required by Code Section 162(m).

 

Article 11.                                     Effective
Date

 

The
Plan shall be effective on the date that it is adopted by the Board, contingent
on approval of the Plan by Generac’s shareholders as set forth in Article 10
above.

 

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Article 12.                                     Interpretation
and Construction

 

Any
provision of this Plan to the contrary notwithstanding, (a) bonuses under
this Plan are intended to qualify as “qualified performance-based compensation”
under Treasury Regulation § 1.162-27(e) and (b) any provision of
the Plan that would prevent any bonus under the Plan from so qualifying shall
be administered, interpreted and construed to carry out such intention and any
provision that cannot be so administered, interpreted and construed shall be
disregarded.  No provision of the Plan,
nor the selection of any Covered Employee to participate in the Plan, shall
constitute an employment agreement or affect the duration of any Covered
Employee’s employment, which shall remain “employment at will” unless an
employment agreement between the Company and the Covered Employee provides
otherwise.  All references in the Plan to sections of the Code or to
Treasury Regulations shall be interpreted to include any amendment or successor
provisions thereto.

 

Article 13.                                     Governing
Law

 

The
terms of this Plan shall be governed by the laws of the State of Delaware
without giving effect to the conflict of law principles thereof.

 

*                                         *                                         *

 

This Plan was duly adopted and approved by the Board
of Directors of Generac by resolution at a meeting held on the 14th day of January,
2010.

 

4Exhibit
10.64

 

CHANGE IN CONTROL SEVERANCE
AGREEMENT

 

THIS CHANGE IN CONTROL
SEVERANCE AGREEMENT (the “Agreement”)
is dated as of January 14, 2010 (the “Effective Date”),
by and among Generac Power Systems, Inc. (the “Company”)
and                           
(the “Executive”).

 

The parties agree as follows:

 

1.                                       Definitions.  For purposes of this
Agreement, the following terms shall have the following meanings:

 

(a)                                  “Affiliate” shall mean any
entity that is directly or indirectly controlled by, in control of, or under
common control with, the Company.

 

(b)                                 “Board” shall mean the Board
of Directors of Holdings or a similar governing body of Holdings.

 

(c)                                  “Cause” shall mean (i) a
material breach by the Participant of any of the Participant’s obligations
under any written agreement with the Company or any of its Affiliates, (ii) a
material violation by the Participant of any of the Company’s policies,
procedures, rules and regulations applicable to employees generally or to
similarly situated employees, in each case, as they may be amended from time to
time in the Company’s sole discretion, (iii) the failure by the
Participant to reasonably and substantially perform his or her duties to the
Company or its Affiliates (other than as a result of physical or mental illness
or injury), (iv) the Participant’s willful misconduct or gross negligence
that has caused or is reasonably expected to result in material injury to the
business, reputation or prospects of the Company or any of its Affiliates, (v) the
Participant’s fraud or misappropriation of funds, or (vi) the commission
by the Participant of a felony or other serious crime involving moral
turpitude; provided, that, if the Participant is a party to
an employment agreement with the Company or any Affiliate at the time of his or
her termination of employment and such employment agreement contains a
different definition of “cause” (or any derivation thereof), the definition in
such employment agreement will control for purposes of this Agreement.

 

(d)                                 “CCMP” shall mean CCMP Capital Investors II, L.P.

 

(e)                                  “CCMP Affiliate” shall mean any Person who, directly or indirectly, controls
any CCMP Person or is controlled by any CCMP Person or is under common control
with any CCMP Person, where “control” means the power and ability to direct,
directly or indirectly, or share equally in or cause the direction of, the
management and/or policies of a CCMP Person, whether through ownership of
voting shares or other equivalent interests of the controlled CCMP Person, by
contract (including proxy) or otherwise.

 

(f)                                    “CCMP Cayman” shall mean CCMP Capital Investors (Cayman), L.P.

 

(g)                                 “CCMP-Co-Invest” shall mean CCMP Generac Co-Invest, L.P.

 

(h)                                 “CCMP Entity” shall mean, collectively, CCMP, CCMP Cayman, CCMP Co-Invest
and any CCMP Affiliate.

 

 

(i)                                     “CCMP Person” shall mean any of CCMP, CCMP Cayman and CCMP Co-Invest.

 

(j)                                     “Change in Control” shall mean
an event or series of events that results in any of the following:

 

(i)                                     Change in Ownership of Holdings.  A change in the
ownership of Holdings occurs on the date that any one Person or more than one
Person acting as a group (as determined under Treas. Reg. Section 1.409A-3(i)(5)(v)(B)),
other than a Subsidiary or one or more CCMP Entities or a “group” (as such term
is used in Section 13(d) of the Exchange Act) in which a CCMP Entity
is a member, acquires ownership of stock of Holdings that, together with stock
held by such Person or group, constitutes more than fifty percent (50%) of the
total fair market value or total voting power of stock of Holdings;

 

(ii)                                  Change in Board of Directors of Holdings.  A change in the
effective control of Holdings occurs on the date individuals who, as of the
Effective Date, constitute the Board (the “Incumbent Board”)
cease for any reason to constitute at least a majority of the Board during any
twelve (12) month period, provided, however, that if the election, or
nomination for election by Holding’s stockholders, of any new director was
approved by a vote of at least a majority of the Incumbent Board, such new
director shall be considered a member of the Incumbent Board, and provided
further that any reductions in the size of the Board that are instituted
voluntarily by the Incumbent Board shall not constitute a “Change in Control”,
and after any such reduction the “Incumbent Board” shall mean the Board as so
reduced; or

 

(iii)                               Change in Ownership of a Substantial Portion
of Holding’s Assets.  A change in the ownership of a substantial
portion of Holding’s assets occurs on the date that any one Person, or more
than one Person acting as a group (as determined under Treas. Reg. Section 1.409A-3(i)(5)(v)(B)),
other than a Subsidiary or one or more CCMP Entities or a “group” (as such term
is used in Section 13(d) of the Exchange Act) in which a CCMP Entity
is a member, acquires (or has acquired during the twelve (12) month period
ending on the date of the most recent acquisition by such Person or Persons)
assets from Holdings that have a total gross fair market value of more than
fifty percent (50%) of the total gross fair market value of all of the assets
of Holdings immediately prior to such acquisition or acquisitions.  For this purpose, gross fair market value
means the value of the assets of Holdings, or the value of the assets being
disposed of, determined in good faith by the Board without regard to any
liabilities associated with such assets.

 

(k)                                  “Disability” shall mean the
failure or inability of the Executive to perform duties with the Company or any
Affiliate for a period of at least 180 consecutive days (or 180 days during any
twelve (12) month period) by reason of any physical or mental condition, as
determined reasonably and in good faith by the Board; provided, that,
if the Company’s long term disability plan contains a definition of “disability,”
the definition in such plan will control for purposes of this Agreement.

 

(l)                                     “Good Reason” shall mean the
occurrence of either of the following:  (i) a
material and adverse reduction in the nature or scope of the authority or title
held by the Executive, or duties assigned to the Executive, or (ii) the
relocation of Executive’s principal place of 

 

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employment more than fifty (50) miles from its
location within one year of the effective date of the Change in Control; provided, that,
if the Participant is a party to an employment agreement with the Company or
any Affiliate at the time of his or her termination of employment and such
employment agreement contains a different definition of “cause” (or any derivation
thereof), the definition in such employment agreement will control for purposes
of this Agreement.

 

Notwithstanding anything in the foregoing to the contrary,
Executive may terminate his or her employment for Good Reason only if:  (A) the Executive provides written
notice to Company specifying the event(s) purported to constitute Good Reason
in reasonable detail, within sixty (60) days following the occurrence of such
event(s) (the “Notice”), (B) the Notice
specifies a date for the Executive’s termination of employment that is at least
thirty (30) days after the Executive provides the Notice to Company, and (C) Company
has not remedied the event(s) alleged to constitute Good Reason by the
Executive within such thirty (30) day period.

 

(m)                               “Holdings” shall mean Generac
Holdings Inc., a Delaware corporation.

 

(n)                                 “Person” shall mean any
natural person, sole proprietorship, general partnership, limited partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, governmental authority, or any other organization,
irrespective of whether it is a legal entity and includes any successor (by
merger or otherwise) of such entity.

 

(o)                                 “Subsidiary” shall mean any
corporation (other than Holdings) in an unbroken chain of corporations
beginning with Holdings (or any parent of Holdings) if each of the
corporations, other than the last corporation in each unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of
all classes of stock in one of the other corporations in such chain.

 

2.                                       Effectiveness of Agreement; Term.  The term of this
Agreement shall commence on the Effective Date, and shall end on the first (1st) anniversary of a Change in Control.

 

3.                                       Severance Benefits.

 

(a)                                  In the event Company terminates the Executive without Cause,
or the Executive terminates his or her employment for Good Reason during the
period commencing as of the Change in Control and ending twelve (12) months
following such Change in Control, subject to Executive delivering to the
Company a fully enforceable general release of all claims related to Executive’s
employment by Company within sixty (60) days following such termination of
employment, which release shall be substantially in the form attached hereto as
Exhibit A, and subject to Executive abiding in all material
respects with his or her obligations under this Agreement and the Nondisclosure
Agreement (as defined below), the Company shall provide Executive with the
following payments:

 

(i)                                     A cash amount equal to any accrued but unpaid base salary and
vacation pay through the date of Executive’s termination of employment, payable
within thirty (30) days following date of Executive’s termination of
employment.

 

(ii)                                  A cash amount equal to  twelve (12)  months  of Executive’s
base salary as of the date of Executive’s termination of employment, less taxes
and withholdings, 

 

3

 

which shall be payable over the twelve (12) month
period following the date of Executive’s termination of employment in
accordance with the usual payroll policies of the Company; provided that the
first payment shall be made on the sixtieth (60th) day after the Executive’s termination of employment and
shall include payment of any amounts that would otherwise be due prior thereto
(unless an earlier payment is permitted pursuant to Section 409A of the
Code) (the “Salary Continuation”).

 

(iii)                               A cash amount equal to one times Executive’s base salary
multiplied by Executive’s target annual bonus level for the fiscal year during
which Executive’s termination of employment occurs, less taxes and
withholdings, which shall be payable over the twelve (12) month period
following the date of Executive’s termination of employment in accordance with
the usual payroll policies of the Company; provided that the first payment
shall be made on the sixtieth (60th)
day after the Executive’s termination of employment and shall include payment
of any amounts that would otherwise be due prior thereto (unless an earlier
payment is permitted pursuant to Section 409A of the Code) (the “Target Bonus”).

 

(iv)                              Reimbursement (or direct payment to the carrier) for twelve
(12) months  following the Executive’s
termination of employment (the “Continuation Period”)
for the premium costs incurred by Executive (and his or her spouse and
dependents, where applicable) to obtain COBRA coverage pursuant to one of the
group health plans sponsored by Company or any Affiliate (the “Health Care Continuation”).

 

Notwithstanding anything in the foregoing to the contrary, (A) Executive
shall be entitled to receive the Health Care Continuation only if Executive is
participating in a group health plan sponsored by Company (or any Affiliate) as
of the date on which Executive incurs a termination of employment, (B) Executive
timely elects COBRA coverage and (C) the Executive shall be responsible,
during the Continuation Period, for premium costs for COBRA coverage in excess
of the Health Care Continuation, and the Executive shall be responsible, after
the Continuation Period, for all premium costs for COBRA coverage, if the
Executive continues to elect such COBRA coverage.

 

4.                                       Timing of Payments; Early Termination of
Obligations.

 

(a)                                  Notwithstanding the foregoing:  (i) any portion of the Salary
Continuation, Target Bonus or the Health Care Continuation which would
otherwise have been paid to the Executive or reimbursed before the first normal
payroll payment date falling on or before the sixtieth (60th) day following the
date of Executive’s termination of employment (the “First
Payment Date”) shall be made on the First Payment Date; (ii) the
Executive shall not be entitled to any benefits pursuant to Section 3
hereof unless the Executive’s termination of employment constitutes a “separation
from service” within the meaning of Treasury Regulation Section 1.409A-1(h);
and (iii) each payment of Salary Continuation is intended to constitute a
separate payment from each other payment of Salary Continuation for purposes of
Treasury Regulation Section 1.409A-2(b)(2).

 

(b)                                 Notwithstanding the foregoing, if the Executive accepts an
offer of employment at any time during the Continuation Period, which
acceptance would not be in violation of the 

 

4

 

obligations of the Executive under this Agreement or
the Nondisclosure Agreement, Company shall no longer be obligated to pay the
Health Care Continuation, should the Executive become eligible to participate
in any other group health plan as a result of his or her acceptance of such
offer of employment.  For the purposes of
this Section 4(b), the Executive shall notify Company of his or her
acceptance of an offer of employment, and the terms and conditions of such
offer, on the day of such acceptance.  If
the Executive does not so notify Company, then Company may recover from the
Executive any Health Care Continuation paid after the date that the Executive
accepted such an offer of employment. 
For the avoidance of doubt, if the Executive would violate his or her
obligations under this Agreement or the Nondisclosure Agreement by accepting
such an offer of employment, or by performing any services pursuant to such an
acceptance, then Company will no longer be subject to any obligation to pay the
Salary Continuation, Target Bonus or the Health Care Continuation.

 

5.                                       Other Terminations.  The parties agree that Executive will not be
entitled to Salary Continuation, Target Bonus or Health Care Continuation if,
during the period commencing as of the Change in Control and ending twelve (12)
months following the Change in Control: (a) the Company terminates his or
her employment for Cause; (b) Executive resigns without Good Reason; or (c) Executive’s
employment terminates by reason of death or Disability.

 

6.                                       Exclusive Remedy.  The parties agree that, except (a) as
set forth in Section 3 hereof, (b) as determined by the terms
of any employee benefit plan in which the Executive was participating as of his
or her termination of employment, or (c) as otherwise required by law,
Executive will not be entitled to receive any compensation or benefits after
termination of his or her employment with Company.

 

7.                                       Best Pay Provision.  Notwithstanding the other provisions of this
Agreement, in the event that the amount of payments payable to the Executive
under this Agreement, together with any payments or benefits payable under any
other plan, program, arrangement or agreement maintained by (or on behalf of)
Company, would constitute an “excess parachute payment” (within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the “Code”)),
the payments under this Agreement shall be reduced (by the minimum possible
amounts) until no amount payable to the Executive under this Agreement
constitutes an “excess parachute payment” (within the meaning of Section 280G
of the Code); provided, however, that no such reduction
shall be made if the net after-tax payment (after taking into account Federal,
state, local, or other income and excise taxes) to which the Executive would
otherwise be entitled without such reduction would be greater than the net
after-tax payment (after taking into account Federal, state, local or other
income and excise taxes) to the Executive resulting from the receipt of such
payments with such reduction.  If, as a
result of subsequent events or conditions (including a subsequent payment or
absence of a subsequent payment under this Agreement or other plans, programs,
arrangements or agreements maintained by (or on behalf of) Company), it is
determined that payments under this Agreement have been reduced by more than
the minimum amount required to prevent any such payments from constituting an “excess
parachute payment,” then an additional payment shall be promptly made to the
Executive in an amount equal to the additional amount that can be paid without
causing any payment to constitute an “excess parachute payment.”  All determinations required to be made under
this Section 7, including whether a payment would result in an “excess
parachute payment” and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized accounting firm
selected by Company.  All determinations
made by such accounting firm under this Section 7 shall be final
and binding upon Company and the Executive.

 

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8.                                       Nondisclosure and Noncompete Agreement.  Executive and the
Company have previously entered into a Nondisclosure and Noncompete Agreement
(the “Nondisclosure Agreement”).  Executive hereby reaffirms his or her
obligations under the Nondisclosure Agreement and nothing contained in this
Agreement shall cancel, change or modify Executive’s obligations thereunder.

 

9.                                       Non-Disparagement.  The Executive, while he or she is employed by
the Company and thereafter, shall not make any oral or written communication to
any person or entity that disparages, or has the effect of damaging the
reputation of, the Company, the Affiliates or their respective directors,
officers, agents, employees, former employees, representatives or stockholders;
provided, that, nothing in the foregoing shall preclude the
Executive from disclosing any information to Executive’s attorney or in
response to a lawful subpoena or court order requiring disclosure of information.

 

10.                                 Effectiveness of Agreement.  The effectiveness of
this Agreement is conditioned upon the consummation of the proposed initial
public offering of shares of common stock of the Company as contemplated by the Company’s Registration
Statement on Form S-1 (Reg. No. 333-162590) (the “IPO”).  If the IPO is not consummated, then this
Agreement shall be null and void ab initio and
the Executive shall have no right to receive the benefits provided for herein.

 

11.                                 General Provisions.

 

(a)                                  Interaction
with Other Agreements. 
Nothing in this Agreement is intended to, or should be construed as,
contradicting, superseding or modifying any written agreement the Executive may
have with the Company or any Affiliate, except that this Agreement, to the
extent that it is in effect, and not any other such written agreement, shall
govern if the Executive incurs a qualifying termination pursuant to Section 3
hereof.

 

(b)                                 Notices.  All notices and other communications required
or permitted hereunder shall be in writing and shall be deemed given when (i) delivered
personally, (ii) delivered by certified or registered mail, postage
prepaid, return receipt requested, or (iii) delivered by overnight courier
(provided that a written acknowledgment of receipt is obtained by the overnight
courier) to the party concerned at the address indicated below or to such
changed address as such party may subsequently give such notice of:

 

If to Company:

 

Generac Power Systems, Inc.

P.O. Box 295 

Waukesha, WI 53187 

Attention: 
Chief Executive Officer

 

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

 

(c)                                  Successors and Binding Agreement.

 

(i)                                     This Agreement shall be binding upon and inure to the benefit
of the Company and any successor of or to the Company, including, without
limitation, any purchaser of all or substantially all of the assets of the
Company.

 

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(ii)                                  The Company will require any successor to expressly assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would have been required to perform it if no such succession
had taken place.

 

(iii)                               For purposes of this Agreement “Company” shall mean both the
Company, as defined in the recitals, and any successor of or to the Company.

 

(iv)                              This Agreement shall inure to the benefit of and be
enforceable by Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, and/or legatees.  Executive agrees that his or her obligations
under this Agreement are personal in nature and, without the consent of the
Company, he may not assign, transfer, or delegate this Agreement or any rights
or obligations hereunder, provided,
that upon Executive’s death, Executive may assign his or her rights hereunder
to Executive’s estate or heirs.

 

(d)                                 Construction / Counsel.  This Agreement shall be deemed drafted
equally by both the parties.  Its
language shall be construed as a whole and according to its fair meaning, with
no presumption that any language shall be construed against any party.  Headings used herein are for convenience and
are not part of this Agreement and shall not be used in construing it.  Executive acknowledges that he has had
adequate opportunity to consult with legal or other counsel of his or her
choosing prior to execution of this Agreement.

 

(e)                                  Governing Law.  Any dispute, controversy, or claim of
whatever nature arising out of or relating to this Agreement or breach thereof
shall be governed by and interpreted under the laws of the States of Wisconsin,
without regard to conflict of law or choice of law principles.

 

(f)                                    Validity.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall nevertheless remain in full
force and effect.  Further, the parties
agree that any invalid, illegal or unenforceable provision or restriction shall
be deemed modified so that it shall be enforced to the greatest extent
permissible under law.

 

(g)                                 Survival of Provisions.  Notwithstanding any other provision of this
Agreement, the parties’ post-termination obligations and the parties’ other
respective rights, including, without limitation, the provisions of Section 9
hereof shall survive any termination or expiration of this Agreement or the
termination of Executive’s employment for any reason whatsoever.

 

(h)                                 Waiver.  No provision of this Agreement may be
modified, waived, or discharged unless such modification, waiver, or discharge
is agreed to in writing signed by Executive and Company.  No waiver by either party hereto at any time
of any breach by the other party hereto or compliance with any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time.

 

(i)                                     Mediation and Arbitration.  Any dispute that may arise between Company
and Executive in reference to this Agreement, or the interpretation,
application or construction thereof, and any matter, without limitation,
arising out of Executive’s employment with Company, shall be submitted to mediation
using a mediator or mediators and procedures 

 

7

 

that are mutually acceptable to Executive and
Company.  If mediation is not successful,
the dispute shall be submitted to arbitration, conducted before an arbitrator
in Milwaukee, Wisconsin in accordance with the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association then
in effect.  Judgment may be entered on
the arbitration award in any court having jurisdiction; provided, however, that
Company shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation of any violation of
the provisions of the Nondisclosure Agreement, and Executive hereby consents
that such restraining order or injunction may be granted without requiring
Company to post a bond.  Only individuals
who are on the AAA register of arbitrators may be selected as an arbitrator.  Within twenty (20) days of the conclusion of
the arbitration hearing, the arbitrator(s) shall prepare written findings
of fact and conclusions of law.  It is
mutually agreed that the written decision of the arbitrator(s) shall be
valid, binding, final and non-appealable; provided, however,
that the parties agree that the arbitrator shall not be empowered to award
punitive damages against any party.  If
for any reason this mediation and arbitration clause becomes not applicable,
then each party, to the fullest extent permitted by applicable law, hereby
irrevocably waives all right to a trial by jury as to any issue relating hereto
in any action, proceeding, or counterclaim arising out of or relating to this
Agreement or any other matter involving the parties hereto.

 

(j)                                     Section 409A.

 

(i)                                     Notwithstanding anything to the contrary in this Agreement,
if at the time of Executive’s termination of employment with Company, Executive
is a “specified employee” as defined in Section 409A of the Code, as
determined by Company in accordance with Section 409A of the Code, and the
deferral of the commencement of any payments or benefits otherwise payable
hereunder as a result of such termination of employment is necessary in order
to prevent any accelerated or additional tax under Section 409A of the
Code, then Company will defer the commencement of the payment of any such
payments or benefits hereunder (without any reduction in the payments or
benefits ultimately paid or provided to Executive) until the date that is at
least six (6) months following Executive’s termination of employment with
Company (or the earliest date permitted under Section 409A of the Code),
whereupon Company will pay Executive a lump-sum amount equal to the cumulative
amounts that would have otherwise been previously paid to Executive under this
Agreement during the period in which such payments or benefits were
deferred.  Thereafter, payments will
resume in accordance with this Agreement.

 

(ii)                                  Additionally, in the event that following the date hereof,
Company or the Executive reasonably determines that any payments or benefits
payable under this Agreement may be subject to Section 409A of the Code,
Company and the Executive shall work together to adopt such amendments to this
Agreement or adopt other policies or procedures (including amendments, policies
and procedures with retroactive effect), or take any other commercially
reasonable actions necessary or appropriate to (A) exempt the payments and
benefits payable under this Agreement from Section 409A of the Code and/or
preserve the intended tax treatment of the payments and benefits provided with
respect to this Agreement or (B) comply with the requirements of Section 409A
of the Code.

 

8

 

(iii)                               All reimbursements for costs and expenses under this Agreement
shall be paid in no event later than the end of the calendar year following the
calendar year in which the Executive incurs such expense.  With regard to any provision herein that
provides for reimbursement of costs and expenses or in-kind benefits, except as
permitted by Section 409A of the Code, (A) the right to reimbursement
or in-kind benefits shall not be subject to liquidation or exchange for another
benefit, and (B) the amount of expenses eligible for reimbursements or
in-kind benefits provided during any taxable year shall not affect the expenses
eligible for reimbursement or in-kind benefits to be provided in any other
taxable year, provided, however, that the foregoing clause (C) shall not
be violated with regard to expenses reimbursed under any arrangement covered by
Section 105(b) of the Code solely because such expenses are subject
to a limit related to the period the arrangement is in effect.

 

*       *       *

 

9

 

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

 

	
   

  	
   

  
	
   

  	
  GENERAC
  POWER SYSTEMS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:
  Aaron Jagdfeld

  
	
   

  	
  Title:
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  

 

SIGNATURE PAGE to 

form change in control agreement

 

 

Exhibit A

 

RELEASE OF CLAIMS

 

A release is required as a
condition for receiving the benefits described in Section  3 of the
Change in Control Severance Agreement between GENERAC POWER SYSTEMS, INC. (the “Company”) and
                    
(“Executive”)
dated January 14, 2009, (the “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 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.

 

You understand and agree that this Release is
intended to include all claims 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.

 

It also is understood and agreed that the remedy at
law for breach of the Agreement, the Nondisclosure and Noncompete Agreement
between you and the Company, 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 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 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:

  	
   

  	
   

  	
  Name:

  	
   

  

 

SIGNATURE
PAGE TO

RELEASE
AGREEMENT

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