Exhibit
10.18


 


DOUGLAS DYNAMICS HOLDINGS, INC.

RESTATED DEFERRED STOCK UNIT AGREEMENT


 


This Restated Deferred Stock Unit Agreement (this “Agreement”)
is made as of        , by and between
Douglas Dynamics Holdings, Inc., a Delaware corporation (the “Company”),
and                                 
(the “Executive”).


 


WHEREAS, the Company and the Executive entered into that certain
Deferred Stock Unit Agreement dated as of April 1, 2004 (the “Original Agreement”) pursuant to
which the Executive was granted Deferred Stock Units (as defined in the
Original Agreement) representing the right to receive, pursuant to the terms
and conditions of the Original Agreement, a number of shares of the Company’s
Common Stock, par value $0.01 per share, and a number of shares of Series A
Redeemable Exchangeable Cumulative Preferred Stock, par value $0.01 per share
(the “Series A Preferred Stock”);


 


WHEREAS, in connection with the partial redemption of the Series A
Preferred Stock in December 2004 (the “2004 Partial Redemption”),
pursuant to Section 6 of the Original Agreement, the Company paid a cash
payment to the Executive in an amount equal to the amount that the Executive
would have received on account of the 2004 Partial Redemption if the shares of Series A
Preferred Stock subject to the Original Agreement were issued and outstanding
at the time of the 2004 Partial Redemption (the “2004 Cash Payment”);


 


WHEREAS, in connection with the payment of the 2004 Cash Payment and in
accordance with Section 6 of the Original Agreement, the Company and the
Executive provided for an adjustment to the Deferred Preferred Stock Units
pursuant to an amendment to the Original Agreement dated as of December 14,
2004 (the “Amendment,” and collectively with the Original Agreement, the
“Amended Agreement”) providing that, upon the payment of the 2004 Cash
Payment, the number of Deferred Preferred Stock Units (as defined in the
Original Agreement) would be reduced by the number of shares of Series A
Preferred Stock that would have been redeemed as part of the 2004 Partial
Redemption if the shares of Series A Preferred Stock subject to the
Original Agreement were issued and outstanding at the time of the 2004 Partial
Redemption;


 


WHEREAS, the Company currently intends to redeem all of the remaining outstanding
shares of its Series A Preferred Stock (the “2006 Redemption”);


 


WHEREAS, in connection with the 2006 Redemption of the Series A
Preferred Stock, the Company intends to pay a cash payment to the Executive in
an amount equal to the amount that the Executive would receive on account of
the 2006 Redemption if the shares of Series A Preferred Stock subject to
the Amended Agreement were issued and outstanding at the time of the 2006
Redemption (the “2006 Cash Payment”); and


 


WHEREAS, pursuant to this Agreement, the Company and the Executive
desire to provide for an additional adjustment to the Deferred Preferred Stock
Units pursuant to Section 6 of the Amended Agreement to eliminate, upon
the payment of the 2006 Cash Payment, any references to the Deferred Preferred
Stock Units (as defined in the Amended Agreement) such that no Deferred
Preferred Stock Units shall be deemed outstanding effective as of the execution and
delivery of this Agreement.


 

















 


NOW THEREFORE, on the basis of the foregoing premises and in
consideration of the mutual covenants and agreements contained herein, the
parties hereto agree as follows:


 


1.                                       Grant
Of Deferred Stock Units.  The Company
hereby grants to the Executive an award of 1,320 deferred common stock units
(the “Deferred Stock Units”).  Each
Deferred Stock Unit represents the right to receive, pursuant to the terms and
conditions hereof, one share of the common stock, par value $0.01 per share, of
the Company (the “Common Stock”).  As of
the date hereof, the per share fair market value of the Common Stock is $100.


 


2.                                       Securityholders
Agreement.  By entering into this
Agreement and accepting the grant of the Deferred Stock Units hereunder, the
Executive is deemed to have become a party to the Amended and Restated
Securityholders Agreement, dated April 12, 2004, by and among the Company
and certain of its securityholders, as amended from time to time (the “Securityholders
Agreement”), and hereby agrees to be bound by all of the terms and
conditions of the Securityholders Agreement with respect to the Deferred Stock
Units and the shares of Common Stock to be issued hereunder.  Notwithstanding anything in the
Securityholders Agreement to the contrary, the Deferred Stock Units shall be
considered Securities (as such term is defined in the Securityholders
Agreement) for all purposes under the Securityholders Agreement.


 


3.                                       Exercise
Of Deferred Stock Units.


 


(a)                                  Liquidity Event.  In connection with and immediately prior to
consummation of a Liquidity Event (as hereinafter defined), the Company shall
issue to the Executive, in respect of each unexercised Deferred Stock Unit, one
share of Common Stock; provided, however, that such issuance shall be
contingent upon (i) the consummation of the Liquidity Event and (ii) the
satisfaction of any required tax withholding obligations as set
forth in Section 5 hereof.


 


For the purposes of this Agreement, a “Liquidity
Event” means the first to occur of (i) a Change of Control (as hereinafter defined) and (ii) the
later of (x) the Qualified IPO Date (as such term is defined in the
Securityholders Agreement) and (y) the expiration of an lock-up agreement
the Executive is or would be required to enter into in connection with the
Qualified IPO (as such term is defined in the Securityholders Agreement).


 


For purposes of this Agreement, a “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 entitled
(without regard to the occurrence of any contingency) to vote for the election
of members of the Board of Directors (or similar governing body) of the Company
(the “Board”), 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 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
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; (iii) the Company shall cease to


 


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beneficially own and control 100% on a fully diluted basis of the
economic and voting interests in the capital stock (or similar ownership
interests) of Douglas Dynamics, L.L.C.; or (iv) the majority of the seats
(other than vacant seats) on the Board cease to be occupied by Persons who
either (a) were members of the Board on the Initial Date or (b) were
nominated for election by the Board, 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.


 


For purposes of this Agreement, the term “Aurora
Purchasers” means Douglas Dynamics Holdings, LLC and its affiliates and
co-investors.


 


For purposes of this Agreement, the term “Ares
Purchasers” means Ares Corporate Opportunities Fund, L.P. and its
affiliates.


 


For purposes of this Agreement, the term “Capital
Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of the Company, 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.


 


For purposes of this Agreement, the term “Person”
means a natural person, a company, a corporation, a joint venture, a limited
liability company, a partnership, a trust, an unincorporated association or
organization or other legal entity, or a government or an agency or political
subdivision thereof.


 


(b)                                 Tag-Along Sale.  In connection with and immediately prior to
consummation of a Tag-Along Sale (as such term is defined in the
Securityholders Agreement), the Company shall issue to the Executive, in
respect of his then unexercised Deferred Stock Units, a number of shares of
Common Stock equal to that proportion of the shares subject to the unexercised
Deferred Stock Units that the Executive would be entitled to sell in connection
with the such Tag-Along Sale as determined pursuant to Section 6.1 of the
Securityholders Agreement; provided, however, that such issuance shall be contingent upon (i) the consummation
of the Tag-Along Sale and (ii) the satisfaction of any required tax
withholding obligations as set forth in Section 5 hereof.


 


(c)                                  Effect of Share
Issuances.  Upon the issuance of the
Common Stock underlying a Deferred Stock Unit, such Deferred Stock Unit shall
be deemed to have been exercised, all of the Executive’s rights under such
Deferred Stock Unit shall be deemed to have been satisfied and such Deferred
Stock Unit shall terminate.


 


(d)                                 No Other Rights to
Capital Stock.  The Executive shall
have no right to receive or otherwise acquire beneficial ownership of any of
the shares of Common Stock subject to the Deferred Stock Units granted
hereunder, except (i) in connection with the occurrence of a Liquidity
Event or a Tag-Along Sale as provided for in this Section 3 or (ii) in
connection with the Executive’s termination of employment with the Company as provided
for in Section 4.


 


(e)                                  No Fractional
Shares.  No fractional shares of
Common Stock shall be issued pursuant to this Agreement.  In the event a fractional share would
otherwise be required to be issued hereunder, the Company shall, in its
discretion, adjust the award so that the fractional share shall be included in
the next issuance of such shares such that only whole shares are issued.


 


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4.                                       Termination
Of Employment.  In the event that
during the Call Period (as such term is defined in the Securityholders
Agreement), the Executive’s employment with the Company is either terminated by
the Company for Cause (as such term is defined in the Securityholders
Agreement) or voluntarily terminated by the Executive, the Aurora Entities (as
such term is defined in the Securityholders Agreement), Ares Corporate
Opportunities Fund, L.P. and the Company shall each have the right to purchase
from the Executive, on the terms and conditions set forth in Section 8 of
the Securityholders Agreement, all or a portion of the then unexercised
Deferred Stock Units in accordance procedures set forth in Section 8 of
the Securityholders Agreement treating, for the purposes of Section 8 of
the Securityholders Agreement, the unexercised Deferred Stock Units as the
equivalent of the shares of Common Stock underlying such Deferred Stock Units;
provided, however, that the consummation of any such purchase shall be
contingent upon the satisfaction of any required tax withholding obligations as
set forth in Section 5 hereof.


 


5.                                       Taxes.  If the Company is obligated to withhold an
amount on account of any tax imposed in connection with the issuance of shares
of Common Stock hereunder or the payment of any amounts to the Executive in
respect of the Deferred Stock Units granted hereunder or the shares of Common
Stock underlying such Deferred Stock Units, 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 the Executive 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 Executive fails to make such payment, the Company is
authorized by the Executive to withhold from any payments then or thereafter
payable to the Executive, 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
Company may, in its sole discretion, allow the Executive 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 pursuant to
the Deferred Stock Units.  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.


 


6.                                       Adjustments.  In the event that the Common Stock or the
outstanding securities of any class subject to the Deferred Stock Units 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 cash dividend), redemption 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 such event is a Liquidity Event, the Company 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 received in
respect of the unexercised Deferred Stock Units.


 


7.                                       Entire
Agreement.  This Agreement
constitutes the entire agreement between the Executive and the Company relating
to this subject matter.  No other prior
or contemporaneous agreements, promises, representations, covenants,
warranties, or any other undertaking whatsoever respecting such matters shall
be deemed in any way to exist or to bind any of the parties.  The Executive


 


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acknowledges and agrees that he has not executed this Agreement in
reliance on any such other agreement, promise, representation, covenant,
warranty, or undertaking.  This Agreement
may not be orally modified.  All
modifications must be agreed to in writing and signed by both parties.


 


8.                                       Cancellation
of Bonus Awards.  In consideration of
the Company’s entering into this Agreement and the granting of the Deferred
Stock Units hereunder, the Executive hereby waives any and all rights to
incentive compensation that the Executive may have pursuant to that certain
Douglas Dynamics, LLC Long Term Incentive Plan, originally effective as of July 2,
1991 and as amended on September 23, 1997, January 1, 2000, January,
1 2001, January 1 2002, and January 1, 2003 (the “Bonus Plan”)
and agrees that as of the date hereof the Bonus Plan is terminated and shall no
longer have any force or effect.


 


9.                                       Nontransferability.  Neither the Deferred Stock Units nor any
interest therein may be Transferred in any manner other than by will or the
laws of descent and distribution.  Any
Person who becomes to whom the Deferred Stock Units are Transferred pursuant to
the preceding sentence shall be bound by all of the terms and conditions of
this Agreement and the Securityholders Agreement.  For the purposes of this Agreement, the term “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.


 


10.                                 Compliance
with Legal Requirements.


 


(a)                                  Notwithstanding
anything herein to the contrary, no shares of Common Stock 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 shares of Common Stock 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 such 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 the shares to be issued pursuant to this Agreement.


 


(b)                                 The Executive
understands that the Company intends for the offering and sale of the Deferred
Stock Units and the shares of Common Stock underlying the Deferred Stock Units
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 shares issued in respect of the Deferred Stock Units,
subject to the terms and conditions of the Securityholders Agreement.  In connection with any such issuance or
transfer, the person acquiring such 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.


 


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11.                                 Stockholder
Rights.  Except specifically provided
for in this Agreement, the Executive (or any other holder of the Deferred Stock
Units granted hereunder) shall have no rights as a stockholder with respect to
the Deferred Stock Units granted hereunder or the shares of Common Stock
underlying such Deferred Stock Units, unless and until shares of Common Stock
are issued in respect of the Deferred Stock Units, and then only to the extent
of such issued shares.  Notwithstanding
the preceding sentence, prior to the issuance of shares of Common Stock hereunder,
the Executive (or any other holder of the Deferred Stock Units granted
hereunder) shall be entitled to receive all dividends and other distributions
paid with respect to the shares of Common Stock underlying the Deferred Stock
Units, subject to the satisfaction of any required tax withholding obligations
as set forth in Section 5 hereof. 
Any additional shares of Common Stock received pursuant to this Section 11
shall be subject to the terms and conditions of the Securityholders Agreement.


 


12.                                 Employment
Rights.  No provision of this
Agreement or of the Deferred Stock Units granted hereunder shall (a) confer
upon the Executive any right to be or continue, as the case may be, in the
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 the
Executive, with or without cause, or (c) confer upon the Executive any
right to participate in any employee welfare or benefit plan or other program
of the Company or any of its subsidiaries other than this Agreement.  The
Executive hereby acknowledges and agrees that the Company and each of its
subsidiaries may terminate the employment of the Executive at any time and for
any reason, or for no reason, unless the Executive and the Company or such
subsidiary are parties to a written employment agreement that expressly
provides otherwise.


 


13.                                 Governing
Law.  This Agreement and the Deferred
Stock Units 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.                                 Legend.


 


THE SECURITIES REPRESENTED BY THIS DEFERRED STOCK UNIT AGREEMENT 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 LAWS OR DOUGLAS DYNAMICS HOLDINGS, INC. (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 AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT,
DATED AS OF APRIL 12, 2004, AS SUPPLEMENTED, MODIFIED AND AMENDED FROM TIME TO
TIME, AMONG THE COMPANY AND THE STOCKHOLDERS, OPTIONHOLDERS AND WARRANTHOLDERS
SIGNATORY THERETO, A COPY OF WHICH AGREEMENT IS AVAILABLE FOR INSPECTION DURING
REGULAR BUSINESS HOURS AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY.


 


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15.                                 ERISA
Status.  This Agreement comprises a
portion of a plan is intended to be an unfunded plan that is maintained primarily
to provide deferred stock awards to a select group of “management or highly
compensated employees” within the meaning of Sections 201, 301, and 401 of
ERISA, and therefore to be exempt from the provisions of Parts 2, 3, and 4 of
Title I of ERISA.  Accordingly, the
Company may terminate this Agreement and issue to the Executive all of the
Common Stock underlying all unexercised Deferred Stock Units if it is
determined by the United States Department of Labor or a court of competent
jurisdiction that this Agreement or the plan of which it is a part is an
employee pension plan within the meaning of Section 3(2) of ERISA
which is not so exempt.


 


16.                                 Claims
Procedure.


 


(a)                                  Disposition of
Claim.  The Company shall furnish
written notice of disposition of a claim under this Agreement to the claimant
within sixty (60) days after the claimant has filed application therefor.  In the event that the Company denies such
claim, it shall specifically set forth in writing the reasons for the denial,
cite the pertinent provisions of this Agreement, and, where appropriate,
provide an explanation as to how the claimant can perfect such claim.


 


(b)                                 Appeals.  Any claimant who has been denied a benefit
shall be entitled, upon request to the Company, to appeal the denial of his
claim.  The claimant must provide a
written statement of his position to the Company not later than 60 days after
receipt of the notification of denial of claim as set forth in subsection (a) of
this Section 16.  The Company,
within 60 days after receipt of an appeal notice, shall communicate to the
claimant its decision in writing.  Any
claims for benefits under this Agreement brought in a court of law must be
filed in such court before the earlier of 90 days after any appeal pursuant to
this subsection (b) of this Section 16 or one (1) year from the
date the claim arose.


 


17.                                 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 S. Grand Avenue, Los
Angeles, California 90071, Attention: Bruce D. Meyer, Esq., or to the
Executive at the address on file with the Company on the date hereof, or at
such other addresses as the Executive may designate by written notice in the manner
aforesaid.


 


[signatures on next page]


 


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IN WITNESS WHEREOF, the Company and the Executive have duly executed
this Agreement as of the date
first above written.


 


	
   

  	
  DOUGLAS
  DYNAMICS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  EXECUTIVE:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  



 


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