Exhibit 10.21


 


DOUGLAS DYNAMICS HOLDINGS, INC.


 


2004 STOCK INCENTIVE PLAN


 


NON-QUALIFIED OPTION AGREEMENT


 


This
Non-Qualified Stock Option Agreement (“Agreement”) is made and entered into as
of                                 ,
              
(the “Date of Grant”) by and between Douglas Dynamics Holdings, Inc., a
Delaware corporation (the “Company”), and the person named below as Optionee.


 


THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER
THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THAT ACT AND UNDER APPLICABLE
STATE SECURITIES LAW OR THE COMPANY SHALL HAVE RECEIVED AN OPINION OF ITS
COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THAT ACT AND UNDER THE
PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.  THE SALE, TRANSFER OR OTHER DISPOSITION OF
THE SECURITIES IS ALSO SUBJECT TO COMPLIANCE WITH THE TERMS AND CONDITIONS OF
THAT CERTAIN SECOND AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT, DATED AS OF
JUNE 30, 2004, AS SUPPLEMENTED, MODIFIED AND AMENDED FROM TIME TO TIME,
AMONG THE COMPANY AND THE SECURITYHOLDERS SIGNATORY THERETO, A COPY OF WHICH
AGREEMENT IS AVAILABLE FOR INSPECTION DURING REGULAR BUSINESS HOURS AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.


 


WHEREAS,
Optionee is an eligible participant in the Company’s 2004 Stock Incentive Plan
(the “Plan”); and


 


WHEREAS,
pursuant to the Plan, the committee of the Board of Directors of the Company
administering the Plan (the “Committee”) has approved the grant to Optionee of
an option to purchase shares of the Company’s Common Stock, $0.01 par value per
share (the “Common Stock”), on the terms and conditions set forth herein;


 


NOW,
THEREFORE, in consideration of the foregoing recitals and the covenants set
forth herein, the parties hereto hereby agree as follows:


 


1.             Grant of Option; Certain
Terms and Conditions.  The Company
hereby grants to Optionee, and Optionee hereby accepts, as of the Date of
Grant, an option to purchase the number of shares of Common Stock indicated on
the signature page hereto (the “Option Shares”) at the Exercise Price of $          
per share, which option shall expire at 5:00 o’clock p.m., California
time, on                                   ,
           (the “Expiration
Date”) and shall be subject to 


 

















 


all of the terms and conditions set forth in this Agreement (the “Option”).  On each of the first, second, third, fourth
and fifth anniversaries of                         ,
          , the Option shall
become exercisable to purchase, and shall vest with respect to, that number of
Option Shares (rounded to the nearest whole share) equal to the total number of
Option Shares multiplied by the vesting rate of 20% per year.


 


The
Option is not intended to qualify as an incentive stock option under Section 422
of the Internal Revenue Code (an “Incentive Stock Option”).


 


2.             Acceleration and Termination
of Option.


 


(a)           Change in
Control and Other Events Causing Acceleration of Option.  All Options shall become fully exercisable
immediately prior to a Change in Control or the dissolution or liquidation of
the Company while the Optionee is a member of the Board of Directors of the
Company or any of its subsidiaries.  In
addition, the Committee, in its sole discretion, may accelerate the
exercisability of the Option at any time and for any reason.


 


(b)           Termination of
Directorship.  In the
event that Optionee shall cease to be a member of the Board of Directors of the
Company or any of its subsidiaries (such event shall be referred to herein as
Optionee’s “Termination”) for any reason, then (A) the portion of the
Option that has not vested on or prior to the date of such Termination shall
terminate as of the date of such Termination and (B) the vested portion of
the Option shall terminate as of the date that is one hundred eighty (180) days
following the date of such Termination.


 


(c)           Other Events
Causing Termination of Option.  Notwithstanding anything to the contrary in
this Agreement, the Option shall terminate (unless the terms of the transaction
giving rise to such termination provide otherwise) upon the consummation of the
dissolution or liquidation of the Company or a Change of Control, or, if later,
the thirtieth day following the first date upon which such event shall have
been approved by both the Board of Directors and the stockholders of the
Company; provided however, that no such termination shall
occur until the Company shall have provided the Optionee with reasonable notice
of such pending termination and Optionee shall have been provided reasonable
opportunity to exercise the Option, as such Option may be accelerated pursuant
to Section 2(a) hereof.


 


3.             Adjustments.  In the event that the outstanding securities
of the class then subject to the Option are increased, decreased or exchanged
for or converted into cash, property and/or a different number or kind of
securities, or cash, property and/or securities are distributed in respect of
such outstanding securities, in either case as a result of a reorganization,
merger, consolidation, recapitalization, reclassification, dividend (other than
a regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless (i) such event shall
cause the Option to terminate pursuant to Section 2(c) hereof, or (ii) the
terms of such transaction provide otherwise, the Committee shall make
appropriate and proportionate adjustments in the number and type of shares or
other securities or cash or other property that may thereafter be acquired upon
the exercise of the Option; provided, however, that any such
adjustments in the Option shall be made without changing the aggregate Exercise
Price of the then unexercised portion of the Option.


 


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4.             Exercise.  The Option shall be exercisable during
Optionee’s lifetime only by Optionee or by his or her guardian or legal
representative, and after Optionee’s death only by the person or entity
entitled to do so under Optionee’s last will and testament or applicable
intestate law.  The Option may only be
exercised by the delivery to the Company of a written notice of such exercise,
which notice shall specify the number of Option Shares to be purchased (the “Purchased
Shares”) and the aggregate Exercise Price for such shares, together with
payment in full of such aggregate Exercise Price in cash or by check payable to
the Company; provided, however, that payment of such
aggregate Exercise Price may instead be made, in whole or in part, by (i) the
delivery to the Company of a certificate or certificates representing shares of
Common Stock, duly endorsed or accompanied by a duly executed stock powers,
which delivery effectively transfers to the Company good and valid title to
such shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair Market
Value (as defined in the Plan) thereof on the date of such exercise), or (ii) by
a reduction in the amount of Purchased Shares or other property otherwise
issuable pursuant to such Option (such reduction to be valued on the basis of
the aggregate Fair Market Value, on the date of exercise, of the additional
Purchased Shares that would have been delivered to the Optionee upon exercise
of the Option), provided that the Company is not then prohibited from
purchasing or acquiring such shares of Common Stock.


 


5.             Securityholders Agreement.  As of the Date of Grant, the Optionee shall
execute and agree to be bound by the terms of that certain Second Amended and
Restated Securityholders Agreement among the Company and certain of its
securityholders, dated as of June 30, 2004, as amended from time to time
(the “Securityholders Agreement”).


 


6.             Payment of Withholding Taxes.  If the Company becomes obligated to withhold
an amount on account of any tax imposed as a result of the exercise of the
Option, including, without limitation, any federal, state, local or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax, then Optionee shall, on the first day upon which the Company becomes
obligated to pay such amount to the appropriate taxing authority, pay such
amount to the Company in cash or by check or other property acceptable to the
Secretary of the Company in his sole discretion; and, if the Optionee fails to
make such payment, the Company is authorized by the Optionee to withhold from
any payments then or thereafter payable to the Optionee, any such amounts or
the Company may otherwise refuse to issue or transfer any shares otherwise
required to be issued or transferred pursuant to the terms hereof.  The Committee may, in its sole discretion,
allow the Optionee to pay any such amounts through the surrender of whole
shares of Common Stock or by having the Company withhold whole shares of Common
Stock otherwise issuable upon the exercise of this Option.  Any such shares surrendered or withheld shall
be valued at their market value, determined by such method as the Secretary of
the Company in his sole discretion shall determine, equal to the sums required
to be withheld as of the date on which the amount of tax to be withheld is
determined.


 


7.             Notices.  All notices and other communications required
or permitted to be given pursuant to this Agreement shall be in writing and
shall be deemed given if delivered personally or five days after mailing by
certified or registered mail, postage prepaid, return receipt requested, to the
Company c/o Gibson, Dunn & Crutcher LLP, 333 South Grand Avenue, Los
Angeles, California 90071-3197, Attention: Bruce D. Meyer, Esq., or to
Optionee at the address 


 


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set forth beneath his or her signature on the signature page hereto,
or at such other addresses as they may designate by written notice in the
manner aforesaid.


 


8.             Compliance with Legal
Requirements.


 


(a)           No Option Shares shall be issued or transferred pursuant
to this Agreement unless and until all legal requirements applicable to such
issuance or transfer have, in the opinion of counsel to the Company, been
satisfied.  Such requirements may
include, but are not limited to, registering or qualifying such Option Shares
under any state or federal law, satisfying any applicable law relating to the
transfer of unregistered securities or demonstrating the availability of an
exemption from applicable laws, placing a legend on the Option Shares to the
effect that they were issued in reliance upon an exemption from registration
under the Securities Act of 1933, as amended (the “Act”), and may not be
transferred other than in reliance upon Rule 144 or Rule 701
promulgated under the Act, if available, or upon another exemption from the
Act, or obtaining the consent or approval of any governmental regulatory
body.  The Company shall use its best
efforts to comply with all legal requirements applicable to the issuance or
transfer of Option Shares.


 


(b)           The Optionee understands that the Company intends for
the offering and sale of Option Shares to be effected in reliance upon Rule 701
or another available exemption from registration under the Act, and that the
Company is under no obligation to register for resale the Option Shares issued
upon exercise of the Option, subject to the Securityholders Agreement.  In connection with any such issuance or
transfer, the person acquiring the Option Shares shall, if requested by the
Company, provide information and assurances satisfactory to counsel to the
Company with respect to such matters as the Company reasonably may deem
desirable to assure compliance with all applicable legal requirements.


 


9.             Nontransferability.  Neither the Option nor any interest therein
may be Transferred in any manner other than by will or the laws of descent and
distribution.


 


10.           Plan.  The Option is granted pursuant to the Plan,
as in effect on the Date of Grant, and is subject to all the terms and
conditions of the Plan, as the same may be amended from time to time; provided, however,
that no such amendment shall deprive Optionee, without his or her consent, of
the Option or of any of Optionee’s rights under this Agreement.  The interpretation and construction by the
Committee of the Plan, this Agreement, the Option and such rules and
regulations as may be adopted by the Committee for the purpose of administering
the Plan shall be final and binding upon Optionee.  Until the Option shall expire, terminate or
be exercised in full, the Company shall, upon written request therefor, send a
copy of the Plan, in its then-current form, to Optionee or any other person or
entity then entitled to exercise the Option.


 


11.           Stockholder Rights.  No person or entity shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of any Option
Shares until the Option shall have been duly exercised to purchase such Option
Shares in accordance with the provisions of this Agreement.


 


12.           Employment Rights.  No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon Optionee any right to be or
continue, as the case may be, in the 


 


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employ of the Company or any of its subsidiaries, (b) affect the
right of the Company and each of its subsidiaries to terminate the employment
of Optionee, with or without cause, or (c) confer upon Optionee any right
to participate in any employee welfare or benefit plan or other program of the
Company or any of its subsidiaries other than the Plan.  Optionee hereby
acknowledges and agrees that the Company and each of its subsidiaries may
terminate the employment of Optionee at any time and for any reason, or for no
reason, unless Optionee and the Company or such subsidiary are parties to a
written employment agreement that expressly provides otherwise.


 


13.           Governing Law.  This Agreement and the Option granted
hereunder shall be governed by and construed and enforced in accordance with
the laws of the State of Delaware without reference to choice or conflict of
law principles.


 


14.           Definitions.


 


An
“Affiliate” of a specified Person means a Person that controls, is
controlled by, or is under common control with, the specified Person, and in
this context, “control”, “controls” and “controlled” mean
the direct or indirect power to direct the management and policies or affairs
of a Person through the ownership of voting securities or by contract or
otherwise and, in the case of a limited partnership, shall include, but shall
not be limited to, all of the limited partnership’s general partners and their
respective Affiliates.


 


“Ares”
means Ares Corporate Opportunities Fund, L.P., a Delaware limited partnership.


 


“Ares
Purchasers” means Ares and its Affiliates.


 


“Aurora
Purchasers” means Aurora Equity Partners II L.P., a Delaware limited
partnership, Aurora Overseas Equity Partners II, L.P., a Cayman Islands limited
partnership, and their respective Affiliates and co-investors.


 


“Beneficial
Owner” has the meaning attributed to it in Rules 13d-3 and 13d-5 of
the rules and regulations promulgated by the Securities and Exchange
Commission (the “Commission”) under the Securities Exchange Act of 1934
(as in effect on the date hereof), whether or not applicable, except that a
Person shall be deemed to have “beneficial ownership” of any securities that
such Person has the right to acquire, whether or not such right is exercisable
immediately or within 60 days after the date as of which such determination is
being made.  “Beneficially Owned”
and “Beneficial Ownership” shall have correlative meanings to the term “Beneficial
Owner.”


 


“Capital
Stock” means any and all shares, interests, participations or other
equivalents  (however designated) of
capital stock of a corporation, any and all equivalent ownership interests in a
Person (other than a corporation), including, without limitation, partnership
interests and membership interests, and any and all warrants, rights or options
to purchase or other arrangements or rights to acquire any of the foregoing


 


“Change
of Control” means, at any time, (i) the Aurora Purchasers and Ares
Purchasers shall cease to collectively beneficially own and control at least
51%, on a fully diluted basis, of the outstanding Capital Stock of the Company
entitled (without regard to the occurrence of any 


 


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contingency) to vote for the election of members of the Board (or
similar governing body) of the Company, unless the Aurora Purchasers and Ares
Purchasers collectively beneficially own and control (a) at least 35%, on
a fully diluted basis, of the outstanding Capital Stock of the Company entitled
(without regard to the occurrence of any contingency) to vote for the election
of members of the Board (or similar governing body) of the Company and (b) on
a fully diluted basis, more of the outstanding Capital Stock of the Company
entitled (without regard to the occurrence of any contingency) to vote for the
election of members of the Board (or similar governing body) of the Company
than any other Person or “group” (within the meaning of Rules 13d-3 and
13d-5 under the Exchange Act); (ii) any Person or “group” (within the
meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the
Aurora Purchasers and Ares Purchasers collectively shall have obtained the
power (whether or not exercised) to elect a majority of the members of the
Board (or similar governing body) of the Company; (iii) the Company shall
cease to beneficially own and control 100% on a fully diluted basis of the
economic and voting interests in the Capital Stock of Douglas Dynamics, L.L.C.;
or (iv) the majority of the seats (other than vacant seats) on the Board
(or similar governing body) of the Company cease to be occupied by Persons who
either (a) were members of the Board of the Company on the Initial Date or
(b) were nominated for election by the Board of the Company, a majority of
whom were directors on the Initial Date or whose election or nomination for
election was previously approved by a majority of such directors.


 


“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time, and any successor statute.


 


“Initial
Date” means the date of the filing of the Second Amended and Restated
Certificate of Incorporation of the Company with the Secretary of State of the
State of Delaware


 


“Option”
means any options now or hereafter issued by the Company to purchase Common
Stock.


 


“Person”
means a company, a corporation, an association, a partnership, a limited
liability company, an organization, a joint venture, a trust or other legal
entity, an individual, a government or political subdivision thereof or a
governmental agency.


 


“Transfer”
means any sale, exchange, assignment, transfer, pledge, mortgage,
hypothecation, gift, grant, encumbrance or other disposition of any kind,
whether voluntary, involuntary or by operation of law and whether direct or
indirect by transfer of any interest in the subject property or otherwise.


 


15.           Optionee Address.  Optionee represents that the address set
forth on the signature page hereto is Optionee’s true and correct address,
and acknowledges that the Company is relying upon such representations for
securities law purposes.


 


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IN
WITNESS WHEREOF, the Company and Optionee have duly executed this Agreement as
of the Date of Grant.


 


	
   

  	
  DOUGLAS
  DYNAMICS HOLDINGS, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OPTIONEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name
  of Optionee]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Street
  Address

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  City,
  State and Zip Code

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Social
  Security Number

  
	
   

  	
   

  
	
   

  	
   

  
	
  Number
  of Shares Subject to Option:          

  	
   

  



 


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