Exhibit 10.16


 


DOUGLAS DYNAMICS, INC.


 


AMENDED AND RESTATED 2004 STOCK INCENTIVE PLAN


 


Section 1.  PURPOSE OF PLAN


 


The purpose of
this Amended and Restated 2004 Stock Incentive Plan (“Plan”) of Douglas
Dynamics, Inc., a Delaware corporation (the “Company”), is to enable the
Company to attract, retain and motivate (i) its employees, non-employee
directors, independent contractors and consultants, (ii) members of the
Advisory Committee (the “Advisors”) of Aurora Capital Group (“ACG”), and (iii) employees
of ACG or Ares Management (the “ACG/Ares Employees”) by providing for or
increasing the proprietary interests of such employees, non-employee directors,
independent contractors, consultants, Advisors and ACG/Ares Employees in the
Company.


 


Section 2.  PERSONS ELIGIBLE UNDER PLAN


 


Any Advisor,
ACG/Ares Employee or employee, non-employee director, independent contractor or
consultant of the Company or any of its subsidiaries (each, a “Participant”),
shall be eligible to be considered for the grant of Awards (as hereinafter
defined) hereunder.


 


Section 3.  AWARDS


 


(a)           Subject to Section 3(b), the
Committee (as hereinafter defined), on behalf of the Company, is authorized
under this Plan to enter into any type of arrangement with a Participant that
is not inconsistent with the provisions of this Plan and that, by its terms,
involves or might involve the issuance of (i) shares of the Common Stock,
par value $0.01, of the Company (the “Common Shares”) or (ii) a Derivative
Security (as such term is defined in Rule 16a-1 promulgated under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), as such rule may
be amended from time to time) with an exercise or conversion privilege at a
price related to the Common Shares or with a value derived from the value of
the Common Shares.  The entering into of
any such arrangement is referred to herein as the “grant” of an “Award.”


 


(b)           Awards are not restricted to any
specified form or structure and may include, without limitation, sales or
bonuses of stock, restricted stock, stock options, reload stock options, stock
purchase warrants, other rights to acquire stock, securities convertible into
or redeemable for stock, stock appreciation rights, phantom stock, dividend
equivalents, performance units or performance shares, and an Award may consist
of one such security or benefit, or two or more of them in tandem or in the
alternative.


 


(c)           Awards may be issued, and Common
Shares may be issued pursuant to an Award, for any lawful consideration as
determined by the Committee, including, without limitation, services rendered
by the recipient of such Award.


 

















 


(d)           Subject to the provisions of this
Plan, the Committee, in its sole and absolute discretion, shall determine all
of the terms and conditions of each Award granted under this Plan, which terms
and conditions may include, among other things:


 


(i)            a
provision permitting the recipient of such Award, including any recipient who
is a director or officer of the Company, to pay the purchase price of the
Common Shares or other property issuable pursuant to such Award, or such
recipient’s tax withholding obligation with respect to such issuance, in whole
or in part, by any one or more of the following:


 


(A)          the
delivery of cash;


 


(B)           the
delivery of other property deemed acceptable by the Committee;


 


(C)           the
delivery of previously owned shares of capital stock of the Company (including “pyramiding”)
or other property; or


 


(D)          a
reduction in the amount of Common Shares or other property otherwise issuable
pursuant to such Award (such reduction to be valued on the basis of the
aggregate Fair Market Value, on the date of exercise, of the additional Common
Shares that would have been delivered to the Participant upon exercise of the
Award), provided that the Company is not then prohibited from purchasing or
acquiring Common Shares


 


(ii)           provisions
specifying the exercise or settlement price for any option, stock appreciation
right or similar Award, or specifying the method by which such price is
determined, provided that the exercise or settlement price of any option, stock
appreciation right or similar Award that is intended to qualify as “performance
based compensation” for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the “Code”) shall be not less than the Fair
Market Value of a Common Share on the date such Award is granted;


 


(iii)          provisions
relating to the exercisability and/or vesting of Awards, lapse and non-lapse
restrictions upon the Common Shares obtained or obtainable under Awards or
under the Plan and the termination, expiration and/or forfeiture of Awards;


 


(iv)          a
provision conditioning or accelerating the receipt of benefits pursuant to such
Award, either automatically or in the discretion of the Committee, upon the
occurrence of specified events, including, without limitation, a change of
control of the Company (as defined in the applicable award agreement), an
acquisition of a specified percentage of the voting power of the Company, the
dissolution or liquidation of the


 


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Company, the financial
performance of the Company, a sale of substantially all of the property and
assets of the Company or an event of the type described in Section 7
hereof;


 


(v)           a
provision required in order for such Award to qualify (A) as an incentive
stock option under Section 422 of the Code (an “Incentive Stock Option”), (B) as
“performance based compensation” under Section 162(m) of the Code,
and/or (C) for an exemption from Section 16 of the Exchange Act; or


 


(vi)          provisions
restricting the transferability of Awards or Common Shares issued under Awards.


 


(e)           For purposes of any Award under this
Plan, unless provided otherwise in the grant of such Award, the “Fair Market
Value” of a Common Share or other security on any date (the “Determination Date”)
shall be equal to the closing price per Common Share or unit of such other
security on the business day immediately preceding the Determination Date, as
reported in The Wall Street Journal, or, if no closing price was so reported
for such immediately preceding business day, the closing price for the next
preceding business day for which a closing price was so reported, or, if no
closing price was so reported for any of the 30 business days immediately
preceding the Determination Date, the average of the high bid and low asked
prices per Common Share or unit of such other security on the business day
immediately preceding the Determination Date in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc. Automated
Quotations System or such other system then in use, or, if the Common Shares or
such other security were not quoted by any such organization on such
immediately preceding business day, the average of the closing bid and asked
prices on such day as furnished by a professional market maker making a market
in the Common Shares or such other security selected by the Board of Directors
of the Company (the “Board”), or, if no such market was made in the Common
Shares or such other security, the value of a Common Share or such other
security as determined by the Board in its sole discretion.  The Fair Market Value of a Common Share as of
the effective date of this Plan as provided in Section 9 hereof is
$100.00.


 


Section 4.  STOCK SUBJECT TO PLAN


 


(a)           The aggregate number of Common Shares
that may be issued pursuant to all Incentive Stock Options granted under this
Plan shall not exceed 68,345, subject to adjustment as provided in Section 7
hereof.


 


(b)           At any time, the aggregate number of
Common Shares issued and issuable pursuant to all Awards (including all
Incentive Stock Options) granted under this Plan shall not exceed 68,345,
subject to adjustment as provided in Section 7 hereof.


 


(c)           For purposes of Section 4(b) hereof,
the aggregate number of Common Shares issued and issuable pursuant to Awards
granted under this Plan shall at any time be deemed to be equal to the sum of
the following:


 


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(i)            the
number of Common Shares that were issued prior to such time pursuant to Awards
granted under this Plan, other than Common Shares that were subsequently
reacquired by the Company pursuant to the terms and conditions of such Awards
and with respect to which the holder thereof received no benefits of ownership
such as dividends; plus


 


(ii)           the
number of Common Shares that were otherwise issuable prior to such time
pursuant to Awards granted under this Plan, but that were withheld by the
Company as payment of the purchase price of the Common Shares issued pursuant
to such Awards or as payment of the recipient’s tax withholding obligation with
respect to such issuance; plus


 


(iii)          the
maximum number of Common Shares that are or may be issuable at or after such
time pursuant to Awards granted under this Plan prior to such time.


 


Section 5.  DURATION OF PLAN


 


No Awards shall be
made under this Plan after March 31, 2014. 
Although Common Shares may be issued after March 31, 2014 pursuant
to Awards made prior to such date, no Common Shares shall be issued under this
Plan after March 31, 2024.


 


Section 6.  ADMINISTRATION OF PLAN


 


(a)           This Plan shall be administered by the
Compensation Committee of the Board (the “Committee”) or, in the absence of the
Committee, the Board itself.  Any power
of the Committee may also be exercised by the Board, except to the extent that
the grant or exercise of such authority would cause any Award or transaction to
become subject to (or lose an exemption under) the short-swing profit recovery
provisions of Section 16 of the Exchange Act or cause an Award designated
as a performance-based Award not to qualify for treatment as performance-based
compensation under Section 162(m) of the Code.  The Committee may delegate any or all aspects
of the day-to-day administration of the Plan to one or more officers or
employees of the Company or any Subsidiary, and/or to one or more agents.


 


(b)           Subject to the provisions of this
Plan, the Committee shall be authorized and empowered to do all things
necessary or desirable in connection with the administration of this Plan,
including, without limitation, the following:


 


(i)            adopt,
amend and rescind rules and regulations relating to this Plan;


 


(ii)           determine
which persons are eligible to participate in the Plan and to which of such
persons, if any, Awards shall be granted hereunder;


 


(iii)          grant
Awards to Participants and determine the terms and conditions thereof,
including the number of Common Shares issuable pursuant thereto;


 


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(iv)          determine
whether, and the extent to which adjustments are required pursuant to Section 7
hereof; and


 


(v)           interpret
and construe this Plan and the terms and conditions of any Award granted
hereunder.


 


Section 7.  ADJUSTMENTS


 


If the outstanding
securities of the class then subject to this Plan are increased, decreased or
exchanged for or converted into cash, property or a different number or kind of
securities, or if cash, property or securities are distributed in respect of
such outstanding securities, in either case as a result of a reorganization,
merger, consolidation, recapitalization, restructuring, reclassification,
dividend (other than a regular, quarterly cash dividend) or other distribution,
stock split, reverse stock split or the like, or if substantially all of the
property and assets of the Company are sold, then the Committee shall make
appropriate and proportionate adjustments in (a) the number and type of
shares or other securities or cash or other property that may be acquired
pursuant to Incentive Stock Options and other Awards theretofore granted under
this Plan, (b) the maximum number and type of shares or other securities
that may be issued pursuant to Incentive Stock Options and other Awards
thereafter granted under this Plan, and (c) the minimum option exercise
price set forth in Section 3(d)(ii).


 


Section 8.  AMENDMENT AND TERMINATION OF PLAN


 


The Board may
amend or terminate this Plan at any time and in any manner, provided, however, that no such amendment or termination
shall deprive the recipient of any Award theretofore granted under this Plan,
without the consent of such recipient, of any of his or her rights thereunder
or with respect thereto.


 


Section 9.  EFFECTIVE DATE OF PLAN


 


This Plan shall be
effective as of June 21, 2004, the date as of which it was approved by the
Board; provided, however, that no Common Shares
may be issued under this Plan until it has been approved, directly or
indirectly, by the affirmative votes of the holders of a majority of the
securities of the Company present, or represented, and entitled to vote by
unanimous written consent or at a meeting duly held in accordance with the laws
of the State of Delaware.


 


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