Exhibit 10.21


 


Douglas Dynamics, LLC

Long Term Incentive Plan 

2009


 


Plan Participants


Participants
are recommended by the President of DDLLC and are subject to review and
approval by the DDLLC board of directors Compensation Committee.


 


Plan Description


The
key measurement factor for the Long Term Incentive Plan (LTIP) will be defined
cash flow (DCF).  DCF is measured as cash
flow from operations before financing costs, management fees, interest, and
income taxes and after normal capital expenditures.


 


Plant
expansions in excess of $2 million will be considered non-normal and amortized
as normal over a four (4) year period beginning with the year of
expansion.


 


Acquisitions
in excess of $2 million will be considered non-normal and amortized as normal
over a six (6) year period beginning with the year of acquisition.


 


If
the initial calculation of DCF in the current year is negative then
amortization of acquisitions or large capital expenditures will not be included
in the current year DCF calculation. 
Under these circumstances the amortization will be included in
subsequent years calculations until the amortization period is complete.


 


There
are two potential sources of input to the participants’ account:


 


1.                                       A Douglas
Dynamics, L.L.C. (DDLLC) total seed amount will be calculated each year equal
to 0.5% of DCF from current year operations, excluding the impact of plant
expansion or acquisition amortization. 
There will be no seed amount in any year where DCF is less than $20
million.


 


2.                                       A growth % will
be determined through interpolation by the following matrix:


 


	
  DCF

  	
   

  	
  $5M

  	
   

  	
  $10M

  	
   

  	
  $20M

  	
   

  	
  $30M

  	
   

  	
  $40M

  	
   

  	
  $50M

  	
   

  	
  $55M

  	
   

  	
  $60M

  	
   

  	
  $65M

  	
   

  	
  >$65M

  	
   

  
	
  Growth
  %

  	
   

  	
  -45

  	
  %

  	
  -25

  	
  %

  	
  -10

  	
  %

  	
  -5

  	
  %

  	
  5

  	
  %

  	
  15

  	
  %

  	
  20

  	
  %

  	
  25

  	
  %

  	
  30

  	
  %

  	
  30

  	
  %

  



 


Seed
money will be allocated to each participant’s account by the ratio of their
base earnings to the total of all participants’ base earnings.  The total cumulative seed money allocated to
a participant cannot exceed the participant’s current base earnings.


 

















 


The
growth % will be applied to the participant’s beginning of the year balance
adjusted for any payouts during the year. 
The amount of growth, which can be positive or negative, will be
allocated to the participants’ account.


 


All
amounts allocated to the participant’s account are vested except in the event
of voluntary separation (quit) or termination for cause.  In this case the last two years will not be
considered vested as far as positive increase in the participant’s account are
considered.  Each of the last two years
will be considered separately, but growth and seed amounts will be combined for
each year for determining if the total is positive or not for the year.


 


Participants
will be eligible to receive vested portions of the plan upon separating from
DDLLC.  The payment methods are:


 


·                  Lump sum payment for death, long term
disability, or normal retirement


·                  For all other reasons if the balance to be
paid is less than $75,000, the payment will be lump sum and for balances of
$75,000 or more, the payout will be made in five equal annual payments with
interest on the unpaid balances at US treasury one-year rates effective at the
beginning of each year.


 


Employees
who cease being a participant without separation from DDLLC will receive a
payout in five equal annual installments with interest on unpaid balances at US
treasury one-year rates effective at the beginning of each year.  If the employee voluntarily separates (quits)
or is terminated for cause, the payouts will not include any non-vested
amounts.


 


If
the total in any given participant’s account reaches two times their base
earnings, one-fifth of the account balance will be paid out by February 15th.


 


The
DDLLC board of directors Compensation Committee will review and approve all
allocations and payments of the plan. 
The Compensation Committee may modify, suspend, or terminate the plan at
any time.


 


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