Document:

Exhibit 10.4

 

EXHIBIT A-1

 

FUNDING NOTICE

 

Reference is made
to the Credit and Guaranty Agreement, dated as of May 21, 2007 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, or otherwise renewed, refinanced or replaced from time to time (including
subsequent or successive renewals, refinancings or replacements, and pursuant
to one or more agreements or facilities), the “Credit Agreement”; the
terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Douglas Dynamics Holdings, Inc., a Delaware
corporation (“Holdings”), Douglas Dynamics, L.L.C., a Delaware limited
liability company and a direct wholly-owned Subsidiary of Holdings (the “Company”
or the “Borrower Representative”), Fisher, LLC, a Delaware limited
liability company (“Fisher”) and Douglas Dynamics Finance Company, a
Delaware corporation (“DD Finance,” and together with Fisher and the
Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Pursuant to Section[s]
[2.1(b)] [and] [2.2(b)] of the Credit Agreement, Borrower Representative
desires that Lenders make the following Credit Extension[s] to Company in
accordance with the applicable terms and conditions of the Credit Agreement on
[mm/dd/yyyy] (the “Credit Date”):

 

	
  1.

  	
  Revolving Loans

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  Base Rate Loans:

  	
  $[    ,    ,    ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  o

  	
  Eurodollar Rate Loans,
  with an Initial Interest Period of
               
  Month(s):

  	
  $[    ,    ,    ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Swing Line Loans:

  	
   

  	
  $[    ,    ,    ]

  	
   

  
							

 

Borrower Representative
(for itself and on behalf of the other Borrowers) hereby certifies that:

 

(i) the
Credit Extension[s] requested herein [comply] [complies] with the provisions of
Section[s] [2.1] [and] [2.2]; and

 

(ii) the
conditions specified in Section 3.2 have been satisfied on and as of the
Credit Date.

 

	
  Date: [mm/dd/yyyy]

  	
  DOUGLAS DYNAMICS,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-1-1

 

EXHIBIT A-2

 

CONVERSION/CONTINUATION NOTICE

 

Reference is made to the Credit and Guaranty
Agreement, dated as of May 21, 2007 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, or otherwise renewed,
refinanced or replaced from time to time (including subsequent or successive
renewals, refinancings or replacements, and pursuant to one or more agreements
or facilities), the “Credit Agreement”; the terms defined therein and
not otherwise defined herein being used herein as therein defined), by and
among Douglas Dynamics Holdings, Inc., a Delaware corporation (“Holdings”),
Douglas Dynamics, L.L.C., a Delaware limited liability company and a direct
wholly-owned Subsidiary of Holdings (the “Company” or the “Borrower
Representative”), Fisher, LLC, a Delaware limited liability company (“Fisher”)
and Douglas Dynamics Finance Company, a Delaware corporation (“DD Finance,”
and together with Fisher and the Borrower Representative, each a “Borrower”
and collectively the “Borrowers”) the banks and financial institutions
having Revolving Loan Commitments or listed on the signature pages thereof
(together with their respective successors and assigns, each individually
referred to herein as a “Lender” and collectively as “Lenders”),
Credit Suisse, Cayman Islands Branch (“Credit Suisse”), as
administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Pursuant to Section 2.8 of the Credit Agreement,
Borrower Representative (for itself and on behalf of the other Borrowers)
desires to convert or to continue the following Revolving Loans, each such
conversion and/or continuation to be effective as of [mm/dd/yyyy]:

 

	
  $[    ,    ,    ]

  	
   

  	
  Eurodollar Rate Loans
  to be continued with Interest Period of         
  month(s)

  
	
   

  	
   

  	
   

  
	
  $[    ,    ,    ]

  	
   

  	
  Base Rate Loans to be
  converted to Eurodollar Rate Loans with Interest Period of
           month(s)

  
	
   

  	
   

  	
   

  
	
  $[    ,    ,    ]

  	
   

  	
  Eurodollar Rate Loans
  to be converted to Base Rate Loans

  

 

Except
in the case of a conversion to Base Rate Loans, Borrower Representative (for
itself and on behalf of the other Borrowers) hereby certifies that as of the
date hereof, no event has occurred and is continuing or would result from the
consummation of the conversion and/or continuation contemplated hereby that
would constitute an Event of Default or a Default.

 

	
  Date: [mm/dd/yyyy]

  	
  DOUGLAS DYNAMICS,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-2-1

 

EXHIBIT A-3

 

ISSUANCE NOTICE

 

Reference is made to the Credit and Guaranty
Agreement, dated as of May 21, 2007 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, or otherwise renewed,
refinanced or replaced from time to time (including subsequent or successive
renewals, refinancings or replacements, and pursuant to one or more agreements
or facilities), the “Credit Agreement”; the terms defined therein and
not otherwise defined herein being used herein as therein defined), by and
among Douglas Dynamics Holdings, Inc., a Delaware corporation (“Holdings”‘),
Douglas Dynamics, L.L.C., a Delaware limited liability company and a direct
wholly-owned Subsidiary of Holdings (the “Company” or the “Borrower
Representative”), Fisher, LLC, a Delaware limited liability company (“Fisher”)
and Douglas Dynamics Finance Company, a Delaware corporation (“DD Finance,”
and together with Fisher and the Borrower Representative, each a “Borrower”
and collectively the “Borrowers”) the banks and financial institutions
having Revolving Loan Commitments or listed on the signature pages thereof
(together with their respective successors and assigns, each individually
referred to herein as a “Lender” and collectively as “Lenders”),
Credit Suisse, Cayman Islands Branch (“Credit Suisse”), as
administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Pursuant to Section 2.3(b) of
the Credit Agreement, Borrower Representative (for itself and on behalf of the
other Borrowers) desires a Letter of Credit to be issued in accordance with the
terms and conditions of the Credit Agreement on [mm/dd/yyyy] (the “Credit
Date”) in an aggregate face amount of $[    ,    ,    ].

 

Attached
hereto for each such Letter of Credit are the following:

 

(i) the
stated amount of such Letter of Credit;

 

(ii) the
name and address of the beneficiary;

 

(iii) the
expiration date; and

 

(iv) either (a) the verbatim text of such
proposed Letter of Credit, or (b) a description of the proposed terms and
conditions of such Letter of Credit, including a precise description of any
documents to be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of such Letter of Credit, would
require the Issuing Bank to make payment under such Letter of Credit.

 

Borrower
Representative (for itself and on behalf of the other Borrowers) hereby
certifies that:

 

(i) the
Credit Extension requested herein complies with the provisions of Section 2.3;
and

 

(ii) the
conditions specified in Section 3.2 have been satisfied on and as of the
Credit Date.

 

	
  Date: [mm/dd/yyyy]

  	
  DOUGLAS DYNAMICS,
  L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

A-3-1

 

EXHIBIT B-l

 

REVOLVING LOAN NOTE

 

	
  $[Lender’s Revolving Loan Commitment]

  	
   

  	
   

  
	
  [                 ],
  2007

  	
   

  	
  New York, New York

  

 

FOR VALUE
RECEIVED, the undersigned (individually a “Borrower” and collectively,
the “Borrowers”), promises to pay [NAME OF LENDER] (“Payee”) or
its registered assigns, on or before the Revolving Loan Commitment Termination
Date, the lesser of (a) [AMOUNT] DOLLARS ($[  ,  ,  ])
and (b) the unpaid principal amount of all advances made by Payee to the
Borrowers as Revolving Loans under the Credit and Guaranty Agreement, dated as
of May 21, 2007 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, or otherwise renewed, refinanced or
replaced from time to time (including subsequent or successive renewals,
refinancings or replacements, and pursuant to one or more agreements or
facilities), the “Credit Agreement”; the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Douglas Dynamics Holdings, Inc., a Delaware corporation, Douglas Dynamics,
L.L.C., a Delaware limited liability company, Fisher, LLC, a Delaware limited
liability company, Douglas Dynamics Finance Company, a Delaware corporation,
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

This Revolving
Loan Note (this “Note”) is one of the “Revolving Loan Notes” issued
pursuant to and entitled to the benefits of the Credit Agreement, to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Revolving Loans evidenced hereby were made and are
to be repaid.

 

All
payments of principal and interest in respect of this Note shall be made in
lawful money of the United States of America in same day funds at the Principal
Office of Administrative Agent or at such other place as shall be designated in
writing for such purpose in accordance with the terms of the Credit Agreement.
Unless and until an Assignment Agreement effecting the assignment or transfer
of the obligations evidenced hereby shall have been accepted by Administrative
Agent and recorded in the Register, the Borrowers, each Agent and Lenders shall
be entitled to deem and treat Payee as the owner and holder of this Note and
the obligations evidenced hereby. Payee hereby agrees, by its acceptance
hereof, that before disposing of this Note or any part hereof it will make a
notation hereon of all principal payments previously made hereunder and of the
date to which interest hereon has been paid; provided that the failure
to make a notation of any payment made on this Note shall not limit or
otherwise affect the obligations of the Borrowers hereunder with respect to
payments of principal of or interest on this Note.

 

This
Note is subject to mandatory prepayment and to prepayment at the option of the
Borrowers, each as provided in the Credit Agreement.

 

THIS NOTE AND THE
RIGHTS AND OBLIGATIONS OF THE BORROWERS AND PAYEE HEREUNDER SHALL BE GOVERNED
BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

Whenever
possible, each provision of this Note shall be interpreted in such manner as to
be effective and valid under applicable law, but in case any provision of or
obligation under this Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. Whenever in
this Note reference is made to Administrative Agent, Payee or the Borrowers,
such reference shall be deemed to include, as applicable, a reference to their
respective successors and assigns. The provisions of this Note shall be binding
upon the Borrowers and their successors and assigns, and shall inure to the benefit
of Payee and its successors and assigns.

 

B-1-1

 

Upon the occurrence of an Event of Default, the unpaid
balance of the principal amount of this Note, together with all accrued and
unpaid interest thereon, may become, or may be declared to be, due and payable
in the manner, upon the conditions and with the effect provided in the Credit
Agreement.

 

The terms of this
Note are subject to amendment only in the manner provided in the Credit
Agreement.

 

No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of the
Borrowers, which are absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.

 

The Borrowers
promise to pay all costs and expenses, including reasonable attorneys’ fees,
all as provided in the Credit Agreement, incurred in the collection and
enforcement of this Note. The Borrowers and any endorsers of this Note hereby
consent to renewals and extensions of time at or after the maturity hereof,
without notice, and hereby waive diligence, presentment, protest, demand notice
of every kind and, to the full extent permitted by law, the right to plead any
statute of limitations as a defense to any demand hereunder.

 

[Signature page follows]

 

B-1-2

 

IN WITNESS
WHEREOF, the Borrowers have caused this Note to be duly executed and delivered
by its officer thereunto duly authorized as of the date and at the place first
written above.

 

 

	
   

  	
  BORROWERS:

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS
  FINANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FISHER, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

B-1-3

 

TRANSACTIONS ON

REVOLVING LOAN NOTE

 

	
  Date

  	
   

  	
  Amount of Loan

  Made This Date

  	
   

  	
  Amount of Principal

  Paid This Date

  	
   

  	
  Outstanding Principal

  Balance This Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-1-4

 

EXHIBIT B-2

 

SWING LINE NOTE

 

	
  $[Lender’s Commitment]

  	
   

  	
   

  
	
  [                  ],
  2007

  	
   

  	
  New York, New York

  

 

FOR VALUE RECEIVED, the undersigned (individually a “Borrower”
and collectively, the “Borrowers”), promises to pay to [NAME OF LENDER]
as Swing Line Lender (“Payee”), on or before the Revolving Loan Commitment
Termination Date, the lesser of (a) [AMOUNT] DOLLARS ($[  ,  ,  ])
and (b) the unpaid principal amount of all advances made by Payee to the
Borrowers as Swing Line Loans under the Credit and Guaranty Agreement, dated as
of May 21,2007 (as the same may be amended, restated, supplemented or
otherwise modified from time to time, or otherwise renewed, refinanced or
replaced from time to time (including subsequent or successive renewals,
refinancings or replacements, and pursuant to one or more agreements or
facilities), the “Credit Agreement”; the terms defined therein and not
otherwise defined herein being used herein as therein defined), by and among
Douglas Dynamics Holdings, Inc., a Delaware corporation, Douglas Dynamics,
L.L.C., a Delaware limited liability company, Fisher, LLC, a Delaware limited
liability company, Douglas Dynamics Finance Company, a Delaware corporation,
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

This Swing Line Note (this “Note”) is the
“Swing Line Note” and is issued pursuant to and entitled to the benefits of the
Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Swing Line Loans
evidenced hereby were made and are to be repaid.

 

All payments of principal and interest in respect of
this Note shall be made in lawful money of the United States of America in same
day funds at the Principal Office of Swing Line Lender or at such other place
as shall be designated in writing for such purpose in accordance with the terms
of the Credit Agreement.

 

This Note is subject to mandatory prepayment and to
prepayment at the option of the Borrowers, each as provided in the Credit
Agreement.

 

THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE
BORROWERS AND PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

Upon the occurrence of an Event of Default, the unpaid
balance of the principal amount of this Note, together with all accrued and
unpaid interest thereon, may become, or may be declared to be, due and payable
in the manner, upon the conditions and with the effect provided in the Credit
Agreement.

 

The
terms of this Note are subject to amendment only in the manner provided in the
Credit Agreement.

 

No reference herein to the Credit Agreement and no
provision of this Note or the Credit Agreement shall alter or impair the
obligations of the Borrowers, which are absolute and unconditional, to pay the
principal of and interest on this Note at the place, at the respective times,
and in the currency herein prescribed.

 

The
Borrowers promise to pay all costs and expenses, including reasonable
attorneys’ fees, all as provided in the Credit Agreement, incurred in the
collection and enforcement of this Note. The Borrowers and any endorsers of
this Note hereby consent to renewals and extensions of time at or after the
maturity hereof, without notice, and hereby waive diligence, presentment,
protest, demand notice of every kind and, to the full extent permitted by law,
the right to plead any statute of limitations as a defense to any demand
hereunder.

 

[Signature page follows]

 

B-2-1

 

IN WITNESS
WHEREOF, the Borrowers have caused this Note to be duly executed and delivered
by its officer thereunto duly authorized as of the date and at the place first
written above.

 

 

	
   

  	
  DOUGLAS DYNAMICS,
  L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS
  FINANCE COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  FISHER, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
				

 

B-2-2

 

TRANSACTIONS ON

SWING LINE NOTE

 

	
  Date

  	
   

  	
  Amount of Loan

  Made This Date

  	
   

  	
  Amount of Principal

  Paid This Date

  	
   

  	
  Outstanding Principal

  Balance This Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

B-2-3

 

EXHIBIT C 

 

COMPLIANCE CERTIFICATE

 

THE UNDERSIGNED
HEREBY CERTIFIES AS FOLLOWS:

 

1.  I am the Chief Financial Officer of
Douglas Dynamics, L.L.C. (the “Company” or the “Borrower
Representative”).

 

2.  I have reviewed the terms of that certain
Credit and Guaranty Agreement, dated as of May 21, 2007 (as the same may
be amended, restated, supplemented or otherwise modified from time to time, or
otherwise renewed, refinanced or replaced from time to time (including
subsequent or successive renewals, refinancings or replacements, and pursuant
to one or more agreements or facilities), the “Credit Agreement”; the
terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Douglas Dynamics Holdings, Inc., a Delaware
corporation (“Holdings”), the Company, Fisher, LLC, a Delaware limited
liability company (“Fisher”) and Douglas Dynamics Finance Company, a
Delaware corporation (“DD Finance,” and together with Fisher and the
Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”), and I have made, or have caused
to be made under my supervision, a review in reasonable detail of the
transactions and condition of Holdings and its Subsidiaries during the
accounting period covered by the attached financial statements.

 

3.  The examination described in paragraph 2
above did not disclose, and I have no knowledge of, the existence of any
condition or event which constitutes an Event of Default or Default during or
at the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate, except as set forth in a
separate attachment, if any, to this Certificate, describing in detail, the
nature of the condition or event, the period during which it has existed and
the action which the Company or any of its Subsidiaries has taken, is taking,
or proposes to take with respect to each such condition or event.

 

The foregoing
certifications, together with the computations set forth in the Annex A hereto
and made a part hereof and the financial statements delivered with this
Certificate in support hereof, are made and delivered [mm/dd/yyyy] pursuant to Section 5.1(d) or
5.1(i) of the Credit Agreement or in connection with the making of a
Permitted Acquisition under the Credit Agreement.

 

	
   

  	
  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

C-1

 

ANNEX A TO

COMPLIANCE CERTIFICATE

 

FOR THE FISCAL [QUARTER] [YEAR]
ENDING [mm/dd/yyyy]

 

This Annex A is attached to and made part of a
Compliance Certificate dated as of [mm/dd/yyyy] and pertains to the period
[mm/dd/yyyy] to [mm/dd/yyyy]. Subsection references herein relate to
subsections of the Credit Agreement.

 

	
  1. Consolidated Adjusted
  EBITDA:

  	
  (i) + (ii)(1) - (iii)(2)
  =

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  Consolidated Net
  Income:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  (a)

  	
   

  	
  Consolidated Interest
  Expense and non-Cash interest expense:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (b)

  	
   

  	
  provisions for taxes
  based on income:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (c)

  	
   

  	
  total depreciation
  expense:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (d)

  	
   

  	
  total amortization
  expense: (3)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (e)

  	
   

  	
  non-cash impairment
  charges:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (f)

  	
   

  	
  non-cash expenses
  resulting from the grant of stock and stock options and other compensation to
  management personnel of the Company and its Subsidiaries pursuant to a
  written incentive plan or agreement:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (g)

  	
   

  	
  other non-Cash items
  that are unusual or otherwise non-recurring items:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (h)

  	
   

  	
  expenses for fees under
  the Management Services Agreement:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (i)

  	
   

  	
  any extraordinary losses
  and non-recurring charges during any period:(4)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (j)

  	
   

  	
  restructuring charges
  or reserves:(5)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (k)

  	
   

  	
  any transaction costs
  incurred in connection with the issuance of Securities or any refinancing
  transaction, in each case whether or not such transaction is consummated:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
												

 

(1)           Without duplication to the extent deducted in the
calculation of Consolidated Net Income for such period.

 

(2)           Without duplication.

 

(3)           Including amortization of goodwill, other intangibles,
and financing fees and expenses.

 

(4)                                  Including severance, relocations costs,
one-time compensation charges and losses or charges associated with Interest
Rate Agreements.

 

(5)           Including costs related to closure of Facilities.

 

C-2

 

	
   

  	
   

  	
   

  	
   

  	
  (l)

  	
   

  	
  any fees and expenses
  related to any Permitted Acquisitions

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
   

  	
  (a)

  	
   

  	
  non-Cash items
  increasing Consolidated Net Income for such period that are unusual or
  otherwise non-recurring items:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (b)

  	
   

  	
  cash payments made
  during such period reducing reserves or liabilities for accruals made in
  prior periods but only to the extent such reserves or accruals were added
  back to “Consolidated Adjusted EBITDA” in a prior period pursuant to clauses
  (ii)(f) or (ii)(g) above:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (c)

  	
   

  	
  Restricted Payments
  made during such period to Holdings pursuant to Section 6.5(c)(i):

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2. Consolidated
  Capital Expenditures:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The aggregate of all
  expenditures of the Company and its Subsidiaries during such period
  determined on a consolidated basis that, in accordance with GAAP, are or
  should be included in “purchase of property and equipment” or similar items
  reflected in the consolidated statement of cash flows of the Company and its
  Subsidiaries. (6)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Maximum: (7)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3. Consolidated
  Fixed Charges: (i) +
  (ii) + (iii) + (iv) +
  (v) = (8)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  Consolidated Interest
  Expense:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  scheduled payments of
  principal on Consolidated Total Debt:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
   

  	
  Consolidated Capital
  Expenditures: (9)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
   

  	
  the portion of taxes
  based on income actually paid in cash during such period by the Company or
  any of its Subsidiaries whether for such period or any other period:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
   

  	
  Restricted Payments
  permitted under Section 6.5(c)(iii) of the Credit Agreement and
  which are paid in cash during such period:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6. Consolidated
  Interest Expense: (i) - (ii) =

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  

 

(6)                                 Excluding expenditures constituting the
purchase price for Permitted Acquisitions and amounts constituting Net Asset
Sale Proceeds and Net Insurance/Condemnation Proceeds which are reinvested in
the business of Company and its Subsidiaries in accordance with Section 2.13(a) or
Section 2.13(b) of the Credit Agreement, respectively, by the Company
and its Subsidiaries during such period.

 

(7)           Maximum for calendar year.

 

(8)           Without duplication.

 

(9)                                 Other than those financed with secured
Indebtedness permitted by Sections 6.1 and 6.2 of the Credit Agreement.

 

C-3

 

	
   

  	
   

  	
  (i)            total interest expense (including that portion
  attributable to Capital Leases in accordance with GAAP and capitalized
  interest) payable in cash of the Company and its Subsidiaries on a
  consolidated basis with respect to all outstanding Indebtedness of the
  Company and its Subsidiaries, including all commissions, discounts and other
  fees and charges owed with respect to letters of credit and net costs under
  Interest Rate Agreements: (10)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)           the aggregate amount of interest income of the
  Company and its Subsidiaries during such period paid in cash:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7. Consolidated Net
  Income: (i) - (ii) =

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  the net income (or
  loss) of the Company and its Subsidiaries on a consolidated basis for such
  period taken as a single accounting period determined in conformity with
  GAAP:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  (a)

  	
   

  	
  the income (or loss) of
  any Person (other than a Subsidiary of the Company) in which any other Person
  (other than the Company or any of its Subsidiaries) has a joint interest,
  except to the extent of the amount of dividends or other distributions
  actually paid to the Company or any of its Subsidiaries by such Person during
  such period:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (b)

  	
   

  	
  the income (or loss) of
  any Person accrued prior to the date it becomes a Subsidiary of the Company
  or is merged into or consolidated with the Company or any of its Subsidiaries
  or that Person’s assets are acquired by the Company or any of its
  Subsidiaries:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
   

  	
  the
  income of any Subsidiary of the Company to the extent that the declaration or
  payment of dividends or similar distributions by that Subsidiary of that
  income is not at the time permitted by operation of the terms of its charter
  or any agreement, instrument, judgment, decree, order, statute, rule or
  governmental regulation applicable to that Subsidiary:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (d)

  	
   

  	
  any after-tax gains or
  losses attributable to Asset Sales or returned surplus assets of any Pension
  Plan:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (e)

  	
   

  	
  to the extent not
  included in items (a) through (d) above, any net extraordinary
  gains or net extraordinary losses:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8. Consolidated
  Total Debt:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The aggregate stated
  balance sheet amount of all Indebtedness of the Company and its Subsidiaries
  determined on a consolidated basis

  	
   

  	
   

  	
   

  	
   

  

 

(10)                            Excluding any amounts referred to in Section 2.10(d) of
the Credit Agreement payable on or before the Closing Date and amounts with
respect to the termination of Interest Rate Agreements entered into within 90
days of the Closing Date.

 

C-4

 

	
   

  	
   

  	
  in accordance with
  GAAP; provided, that the amount of revolving Indebtedness to be included at
  the date of determination shall be equal to the average of the balances of
  such revolving Indebtedness as of the end of each of the prior four calendar
  quarters: (11)

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9. Fixed Charge
  Coverage Ratio: (12) (i)/(ii) =

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  Consolidated Adjusted
  EBITDA for the 12 months then ended:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  Consolidated Fixed
  Charges for such 12 month period:

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Actual: 

  	
   

  	
    .   :1.00
  

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Required:(13)

  	
   

  	
  1.00:1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10. Leverage Ratio:
  (14), (15)      (i)/(ii) =

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
   

  	
  Consolidated Total Debt
  less unrestricted Cash and Cash Equivalents of the Company and its
  Subsidiaries as of such day in excess of $1,000,000:

  	
   

  	
   

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
   

  	
  Consolidated Adjusted
  EBITDA for the four-Fiscal Quarter period then ended:

  	
   

  	
   

  	
   

  	
  $

  	
  [      ,      ,      ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Actual: 

  	
   

  	
    .   :1.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Required:

  	
   

  	
    .   :1.00

  	
   

  

 

(11)                           Except that with respect to the first
four calendar quarters after the Closing Date, the amount of revolving Indebtedness
to be included shall be based on the average of the quarter end balances from
the Closing Date through the date of determination.

 

(12)         Calculated as of the last day of any
month.

 

(13)         If a Liquidity Event then exists.

 

(14)         Calculated as of the last day of any 12
month period.

 

(15)         For purposes of determining the unsecured
debt basket pursuant to Section 6.1(k).

 

C-5

 

EXHIBIT D

 

OPINION OF COUNSEL FOR CREDIT PARTIES

 

D-1

 

EXHIBIT E

 

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This Assignment and Assumption Agreement (this “Assignment”)
is dated as of the Effective Date set forth below and is entered into by and
between [NAME OF ASSIGNOR] (the “Assignor”‘) and [NAME OF ASSIGNEE] (the
“Assignee”). Capitalized terms used but not defined herein shall have
the meanings given to them in the Credit Agreement identified below (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, or otherwise renewed, refinanced or replaced from time to time (including
subsequent or successive renewals, refinancings or replacements, and pursuant
to one or more agreements or facilities), the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee. The Standard
Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed are
hereby agreed to and incorporated herein by reference and made a part of this
Assignment as if set forth herein in full.

 

For an agreed consideration, the Assignor hereby
irrevocably sells and assigns to the Assignee, and the Assignee hereby
irrevocably purchases and assumes from the Assignor, subject to and in
accordance with the Standard Terms and Conditions and the Credit Agreement, as
of the Effective Date inserted by Administrative Agent as contemplated below,
the interest in and to all of the Assignor’s rights and obligations under the
Credit Agreement and any other documents or instruments delivered pursuant
thereto that represents the amount and percentage interest identified below of
all of the Assignor’s outstanding rights and obligations under the respective
facilities identified below (including to the extent included in any such Loans
and Letters of Credit) (the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and the Credit Agreement, without representation or
warranty by the Assignor.

 

	
  1.

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Assignee:

  	
   

  	
                                [and
  is an Affiliate/Related Fund/Sponsor/Fund affiliated with Sponsor(1)]

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Borrower(s):

  	
   

  	
  Douglas Dynamics,
  L.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Administrative Agent:

  	
   

  	
  Credit Suisse, acting
  through its Cayman Islands Branch, as the administrative agent under the
  Credit Agreement

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Credit Agreement:

  	
   

  	
  The Credit and Guaranty
  Agreement, dated as of May 21, 2007, by and among Douglas Dynamics
  Holdings, Inc., a Delaware corporation (“Holdings”), Douglas
  Dynamics, L.L.C, a Delaware limited liability company and a direct wholly-owned
  Subsidiary of Holdings (the “Company” or the “Borrower
  Representative”), Fisher, LLC, a Delaware limited liability company (“Fisher”)
  and Douglas Dynamics Finance Company, a Delaware corporation (“DD Finance,”
  and together with Fisher and the Borrower Representative, each a “Borrower”
  and collectively the “Borrowers”) the banks and financial institutions
  having Revolving Loan Commitments or listed on the signature
  pages thereof (together with their respective successors and assigns,
  each individually referred to herein as a “Lender” and collectively as
  “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit Suisse”),
  as administrative agent for the Lenders (in such capacity, “Administrative
  Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the
  Lenders (in such capacity, “Collateral Agent”)

  

 

(1)                                  Select as applicable.

 

E-1

 

6.                                       Assigned Revolving Loan Commitment:

 

	
  Aggregate
  Amount of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage Assigned

  of

  Commitment/Loans(2)

  	
   

  
	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  

 

Effective Date:                       ,
20   [TO BE
INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF
RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

7.                                       Notice and Wire Instructions:

 

 

	
  [NAME
  OF ASSIGNOR]

  	
   

  	
  [NAME
  OF ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
  Notices:

  	
   

  	
  Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  	
  Attention:

  
	
   

  	
  Telecopier:

  	
   

  	
   

  	
  Telecopier:

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  	
  Attention:

  
	
   

  	
  Telecopier:

  	
   

  	
   

  	
  Telecopier:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Wire Instructions:

  	
   

  	
  Wire Instructions:

  

 

(2)                                  Set forth, to at least 9 decimal places,
as a percentage of the Commitment/Loans of all Lenders thereunder.

 

E-2

 

The
terms set forth in this Assignment are hereby agreed to:

 

 

	
   

  	
  ASSIGNOR:

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE:

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  [Consented to
  and](3) Accepted:

  	
   

  
	
   

  	
   

  
	
  CREDIT SUISSE,

  	
   

  
	
  acting through its
  Cayman Islands Branch,

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  [Consented to by
  Borrower Representative:](4)

  	
   

  
	
   

  	
   

  
	
  DOUGLAS DYNAMICS,
  L.L.C.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  

 

(3)                                  If required pursuant to Section 10.6(c) of
the Credit Agreement.

 

(4)                                  If required pursuant to Section 10.6(c) of
the Credit Agreement.

 

E-3

 

ANNEX 1

 

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION AGREEMENT

 

1.                                       Representations and Warranties.

 

1.1                   Assignor. The Assignor (a) represents and warrants that (i) it
is the legal and beneficial owner of the Assigned Interest, (ii) the
Assigned Interest is free and clear of any lien, encumbrance or other adverse
claim and (iii) it has full power and authority, and has taken all action
necessary, to execute and deliver this Assignment and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with
respect to (i) any statements, warranties or representations made in or in
connection with any Credit Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement or
any other instrument or document delivered pursuant thereto, other than this
Assignment (herein collectively the “Credit Documents”), or any
collateral thereunder, (iii) the financial condition of Holdings, the Company,
any of its Subsidiaries or Affiliates or any other Person obligated in respect
of any Credit Document or (iv) the performance or observance by Holdings,
the Company, any of its Subsidiaries or Affiliates or any other Person of any
of their respective obligations under any Credit Document.

 

1.2                   Assignee. The Assignee (a) represents and warrants that (i) it
has full power and authority, and has taken all action necessary, to execute
and deliver this Assignment and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) it meets
all requirements of an Eligible Assignee under the Credit Agreement, (iii) from
and after the Effective Date, it shall be bound by the provisions of the Credit
Agreement and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the
Credit Agreement and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and to purchase the Assigned Interest on the basis of which it has
made such analysis and decision, and (v) if it is a Non-US Lender,
attached to the Assignment is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and
without reliance on Administrative Agent, the Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at that
time, continue to make its own credit decisions in taking or not taking action
under the Credit Documents, and (ii) it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Documents
are required to be performed by it as a Lender.

 

2.                                       Payments. From and after the Effective Date, Administrative
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees and other amounts) to the Assignee
whether such amounts have accrued prior to or on or after the Effective Date.
The Assignor and the Assignee shall make all appropriate adjustments in
payments by Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.

 

3.                                       Post-Default. After the occurrence and during the
continuation of an Event of Default, the Company may identify, by written to
notice to the Administrative Agent (and the Administrative Agent shall promptly
notify the Lenders), up to two banks, financial institutions or other entities
who shall not be permitted to be an Eligible Assignee during the continuation
of such Event of Default.

 

4.                                       General Provisions. This Assignment shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns. This Assignment may be executed in any number of counterparts,
which together shall constitute one instrument. Delivery of an executed
counterpart of a signature page of this Assignment by telecopy shall be
effective as delivery of a manually executed

 

E-4

 

counterpart of
this Assignment. This Assignment shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to conflict
of laws principles thereof.

 

E-5

 

EXHIBIT F

 

CERTIFICATE RE: NON-BANK STATUS

 

Reference is made
to the Credit and Guaranty Agreement, dated as of May 21, 2007 (as the
same may be amended, restated, supplemented or otherwise modified from time to
time, or otherwise renewed, refinanced or replaced from time to time (including
subsequent or successive renewals, refinancings or replacements, and pursuant
to one or more agreements or facilities), the “Credit Agreement”; the
terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Douglas Dynamics Holdings, Inc., a Delaware
corporation (“Holdings”), Douglas Dynamics, L.L.C., a Delaware limited
liability company and a direct wholly-owned Subsidiary of Holdings (the “Company”
or the “Borrower Representative”), Fisher, LLC, a Delaware limited
liability company (“Fisher”) and Douglas Dynamics Finance Company, a
Delaware corporation (“DD Finance,” and together with Fisher and the
Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Pursuant to Section 2.19(c) of
the Credit Agreement, the undersigned hereby certifies that it is not a “bank”
or other Person described in Section 881(c)(3) of the Internal
Revenue Code of 1986, as amended. Attached hereto are two original copies of
Internal Revenue Service Form W-8 (or its successor form) properly
completed and duly executed.

 

 

	
   

  	
  [NAME OF LENDER]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

F-1

 

EXHIBIT G

SOLVENCY CERTIFICATE

 

THE
UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

 

1.  I am the Chief Financial Officer of Douglas Dynamics
Holdings, Inc., a Delaware corporation (“Holdings”) and Douglas
Dynamics, L.L.C., a Delaware limited liability company (the “Company” or
the “Borrower Representative”).

 

2.  Reference is made to the Credit and Guaranty Agreement,
dated as of May 21, 2007 (as the same may be amended, restated,
supplemented or otherwise modified from time to time, or otherwise renewed,
refinanced or replaced from time to time (including subsequent or successive
renewals, refinancings or replacements, and pursuant to one or more agreements
or facilities), the “Credit Agreement”; the terms defined therein and
not otherwise defined herein being used herein as therein defined), by and
among Holdings, the Company, Fisher, LLC, a Delaware limited liability company
(“Fisher”) and Douglas Dynamics Finance Company, a Delaware corporation
(“DD Finance,” and together with Fisher and the Borrower Representative,
each a “Borrower” and collectively the “Borrowers”) the banks and
financial institutions having Revolving Loan Commitments or listed on the
signature pages thereof (together with their respective successors and
assigns, each individually referred to herein as a “Lender” and
collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

3.  I have reviewed the terms of Sections 3 and 4 of the
Credit Agreement and the definitions and provisions contained in the Credit
Agreement relating thereto, and, in my opinion, have made, or have caused to be
made under my supervision, such examination or investigation as is necessary to
enable me to express an informed opinion as to the matters referred to herein.

 

4.  Based upon my review and examination described in
paragraph 3 above, I certify, solely in my capacity as the chief financial officer
of Holdings and Company, that, as of the date hereof, after giving effect to
the incurrence of the Obligations under the Credit Documents, the borrowings
under the Term Loan Facility and the other transactions contemplated by the
Credit Documents, (a) Holdings and its Subsidiaries (on a consolidated
basis) are and will be Solvent and (b) each Borrower is and will be
Solvent.

 

The foregoing certifications are made and delivered as of [   ],
2007.

 

 

	
   

  	
  DOUGLAS DYNAMICS
  HOLDINGS, INC.

  DOUGLAS DYNAMICS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: Chief Financial
  Officer

  

 

G-1

 

EXHIBIT H

 

COUNTERPART AGREEMENT

 

This COUNTERPART AGREEMENT,
dated [mm/dd/yyyy] (this “Counterpart Agreement”), is delivered pursuant
to that certain Credit and Guaranty Agreement, dated as of May 21, 2007
(as the same may be amended, restated, supplemented or otherwise modified from
time to time, or otherwise renewed, refinanced or replaced from time to time
(including subsequent or successive renewals, refinancings or replacements, and
pursuant to one or more agreements or facilities), the “Credit Agreement”;
the terms defined therein and not otherwise defined herein being used herein as
therein defined), by and among Douglas Dynamics Holdings, Inc., a Delaware
corporation (“Holdings”), Douglas Dynamics, L.L.C., a Delaware limited
liability company and a direct wholly-owned Subsidiary of Holdings (the “Company”
or the “Borrower Representative”), Fisher, LLC, a Delaware limited
liability company (“Fisher”) and Douglas Dynamics Finance Company, a
Delaware corporation (“DD Finance,” and together with Fisher and the
Borrower Representative, each a “Borrower” and collectively the “Borrowers”)
the banks and financial institutions having Revolving Loan Commitments or
listed on the signature pages thereof (together with their respective
successors and assigns, each individually referred to herein as a “Lender”
and collectively as “Lenders”), Credit Suisse, Cayman Islands Branch (“Credit
Suisse”), as administrative agent for the Lenders (in such capacity, “Administrative
Agent”) and JPMorgan Chase Bank, N.A., as collateral agent for the Lenders
(in such capacity, “Collateral Agent”).

 

Section 1.
Pursuant to Section 5.10 of the Credit Agreement, the undersigned hereby:

 

(a)                                  agrees that this Counterpart Agreement
may be attached to the Credit Agreement and that by the execution and delivery
hereof, the undersigned becomes a Guarantor under the Credit Agreement and
agrees to be bound by all of the terms thereof;

 

(b)                                 represents and warrants that each of the
representations and warranties set forth in the Credit Agreement and each other
Credit Document and applicable to the undersigned is true and correct both
before and after giving effect to this Counterpart Agreement, except to the
extent that any such representation and warranty relates solely to any earlier
date, in which case such representation and warranty is true and correct as of
such earlier date;

 

(c)                                  no event has occurred or is continuing as
of the date hereof, or will result from the transactions contemplated hereby on
the date hereof, that would constitute an Event of Default or a Default;

 

(d)                                 irrevocably and unconditionally
guarantees the due and punctual payment in full of all Obligations when the
same shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under Section 362(a) of
the Bankruptcy Code, 11 U.S.C. § 362(a)) and in accordance with Section 7
of the Credit Agreement; and

 

(e)                                  (i) agrees that this Counterpart
Agreement may be attached to the Pledge and Security Agreement, (ii) agrees
that the undersigned will comply with all the terms and conditions of the
Pledge and Security Agreement as if it were an original signatory thereto, (iii) grants
to Secured Parties (as such term is defined in the Pledge and Security
Agreement) a security interest in all of the undersigned’s right, title and
interest in, to and under all personal property, subject to the limited
exclusions set forth in Section 2.3 of the Pledge and Security Agreement,
of the undersigned including, but not limited to the following, in each case
whether now owned or existing or hereafter acquired or arising and wherever
located (as each of the following is defined in the Pledge and Security
Agreement and all of which being hereinafter collectively referred to as the
“Collateral”): Accounts; Chattel Paper; Documents; General Intangibles; Goods;
Instruments; Insurance; Intellectual Property; Investment Related Property;
Letter of Credit Rights; Money; Receivables and Receivable Records; Commercial
Tort Claims; to the extent not otherwise included in the foregoing, all
Collateral Records, Collateral Support and Supporting Obligations relating to
any of the foregoing; and to the extent not otherwise included in the
foregoing, all Proceeds, products, accessions, rents and profits of or in
respect of any of the foregoing, and (iv) delivers to Collateral Agent
supplements to all schedules attached to the Pledge and Security Agreement. All
such Collateral shall be deemed to be

 

H-1

 

part
of the “Collateral” and hereafter subject to each of the terms and conditions
of the Pledge and Security Agreement.

 

Section 2. The undersigned agrees from time to
time, upon request of Administrative Agent, to take such additional actions and
to execute and deliver such additional documents and instruments as Administrative
Agent may request to effect the transactions contemplated by, and to carry out
the intent of, this Counterpart Agreement. Neither this Counterpart Agreement
nor any term hereof may be changed, waived, discharged or terminated, except by
an instrument in writing signed by the party (including, if applicable, any
party required to evidence its consent to or acceptance of this Counterpart
Agreement) against whom enforcement of such change, waiver, discharge or
termination is sought. Any notice or other communication herein required or
permitted to be given shall be given pursuant to Section 10.1 of the
Credit Agreement, and all for purposes thereof, the notice address of the
undersigned shall be the address as set forth on the signature page hereof.
In case any provision in or obligation under this Counterpart Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

 

THIS
COUNTERPART AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

[Signature page follows]

 

H-2

 

IN WITNESS WHEREOF, the undersigned has caused this
Counterpart Agreement to be duly executed and delivered by its duly authorized
officer as of the date above first written.

 

	
   

  	
  [NAME OF SUBSIDIARY]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
  Address for Notices:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telecopier

  	
   

  
	
   

  	
   

  
	
  with a copy to:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telecopier

  	
   

  
	
   

  	
   

  	
   

  
	
  ACKNOWLEDGED AND
  ACCEPTED,

  	
   

  
	
  as of the date above
  first written:

  	
   

  
	
   

  	
   

  
	
  CREDIT SUISSE,

  	
   

  
	
  acting through its
  Cayman Islands Branch,

  	
   

  
	
  as Administrative Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
	
   

  	
   

  
	
  JPMorgan Chase Bank,
  N.A.,

  	
   

  
	
  as Collateral Agent

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
  Name: 

  	
   

  
	
  Title:

  	
   

  
					

 

H-3

 

EXHIBIT I

 

PLEDGE AND SECURITY AGREEMENT

 

I-1

 

EXHIBIT J

 

MORTGAGE

 

J-1

 

EXHIBIT K

 

RESTRICTED PAYMENT CERTIFICATE

 

All calculations
under this certificate shall be for the period commencing on the first day of
the first full Fiscal Quarter after the Closing Date through and including the
last full Fiscal Quarter (taken as one accounting period) preceding the date of
determination.

 

	
  I.

  	
   

  	
  Restricted
  Payment EBITDA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Consolidated Adjusted
  EBITDA

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  to the extent deducted
  in the calculation of Consolidated Net Income for such period, all losses
  which are non-recurring:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  to the extent deducted
  in the calculation of Consolidated Net Income for such period, interest
  attributable to Attributable Indebtedness:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  to the extent deducted
  in the calculation of Consolidated Net Income for such period, the amount of
  all dividends accrued or payable (whether or not in cash) by the Company or
  any of its Subsidiaries in respect of preferred stock (other than (A)
  dividends on Capital Stock (other than Disqualified Capital Stock) of the
  Company or such Subsidiary payable solely in Capital Stock (other than
  Disqualified Capital Stock) of the Company or such Subsidiary, as applicable,
  and (B) by Subsidiaries of the Company to the Company or its wholly-owned
  Subsidiaries):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Sum of Items
  (i) thru (iii) above:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Aggregate amount of
  interest income of the Company and its Subsidiaries during such period paid
  in cash to the extent reducing Consolidated Adjusted EBITDA:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  All gains which are
  non-recurring (including any gain from the issuance or sale of any Capital
  Stock) to the extent included in the calculation of Consolidated Net Income
  for such period, without duplication:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Sum of Items, without
  duplication, (a), (b) and (c):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Restricted Payment
  EBITDA (Item (e) minus Item (d)):

  	
   

  	
  $

  

 

K-1

 

	
  II.

  	
   

  	
  Cumulative
  Interest Expense

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Interest expensed or
  capitalized, paid, accrued, or scheduled to be paid or accrued (including, in
  accordance with the following sentence, interest attributable to Capital
  Leases and Attributable Indebtedness) of the Company and its Subsidiaries,
  including (I) amortization of debt issuance costs, original issue
  discount, debt discounts or premium and other financing fees and expenses and
  non-cash interest payments or accruals on any Indebtedness, (II) the
  interest portion of all deferred payment obligations of the Company and its
  Subsidiaries, and (III) all commissions, discounts and other fees and
  charges owed by the Company and its Subsidiaries with respect to bankers’
  acceptances and letters of credit financings and Hedge Agreements:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  All cash dividends paid
  by the Company or any of its Subsidiaries in respect of preferred stock
  (other than by Subsidiaries of the Company to the Company or its wholly owned
  Subsidiaries):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cumulative
  Interest Expense (the aggregate amount (without duplication and determined in
  each case in accordance with GAAP) of Items (a) and (b)):

  	
   

  	
  $

  

 

K-2

 

	
  III.

  	
   

  	
  Restricted
  Payment Amount

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Restricted Payment
  EBITDA:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  product of 2.0
  multiplied by Cumulative Interest Expense:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Item (a) minus
  Item (b):(20) 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d) 

  	
   

  	
  100% of the aggregate
  net cash proceeds received by the Company from a capital contribution or sale
  of Capital Stock to Holdings after the Closing Date: 

  	
   

  	
  $ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  An amount equal to the
  net amounts received in respect of Investments made under
  Section 6.7(1) or 6.7(m) of the Credit Agreement in any Person
  resulting from cash distributions on or cash repayments of any Investments,
  including payments of interest on Indebtedness, dividends, repayments of
  loans or advances, or other distributions or other transfers of assets, in
  each case to Company, DD Finance, Fisher or any of their respective
  Subsidiaries or from the net cash proceeds from the sale of any such
  Investment, not to exceed, in each case, the amount of Investments previously
  made by Company, DD Finance, Fisher or any of their respective Subsidiaries
  in such Person, less the cost of disposition (and excluding Investments in Subsidiaries):(21)
  

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  Sum of Items
  (c) through (e) above: 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (g) 

  	
   

  	
  Aggregate amount of
  Restricted Payments made pursuant to Sections 6.5(a)(ii) and
  6.5(c)(iv) of the Credit Agreement: 

  	
   

  	
  $ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (h)

  	
   

  	
  Amounts required to be
  applied to prepay Loans pursuant to Section 2.13(c) of the Credit
  Agreement:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i)

  	
   

  	
  (without duplication)
  amounts applied or utilized pursuant to Section 6.5(d), Section 6.5(f),
  Section 6.7(1), Section 6.7(m) or Section 6.16(c) of
  the Credit Agreement: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (j)

  	
   

  	
  Sum of Items
  (g) through (i): 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Restricted
  Payment Amount (Item (f) minus Item (j)):(22)

  	
   

  	
  $

  

 

(20)         Not to be less than
zero.

(21)                           Except in each case, in order to avoid
duplication, to the extent any such payment or proceeds have been included in
the calculation of Restricted Payment EBITDA.

(22)                           For purposes of this definition, (i) the
amount of any payment or Investment made or returned hereunder, if other than
in cash, shall be the fair market value thereof, as determined in the good
faith reasonable judgment of the board of directors of the Company (or similar
governing body) for such payments or Investments with a value in excess of $1.0
million, and otherwise by an executive officer of the Company at the time made
or returned, as applicable, (ii) interest with respect to Capital Leases
shall be deemed to accrue at an interest rate reasonably determined in good
faith by the Company to be the rate of interest implicit in such Capital Lease
in accordance with GAAP and (iii) interest expense attributable to any Indebtedness
represented by the guarantee by the Company or any of its Subsidiaries of an
obligation of another Person shall be deemed to be the interest expense
attributable to the Indebtedness guaranteed.

 

K-3

 

EXHIBIT L

BORROWING BASE CERTIFICATE

 

L-1

 

 

EXHIBIT M

 

FORM OF COLLATERAL ACCESS
AGREEMENT

 

LANDLORD’S LIEN WAIVER, COLLATERAL ACCESS AGREEMENT AND CONSENT

 

THIS LANDLORD’S
LIEN WAIVER, COLLATERAL ACCESS AGREEMENT AND CONSENT (the “Agreement”)
is made and entered into as of                              2007
by and among (i)                                     ,
having an office at
                                             
(“Landlord”), (ii) Credit Suisse, Cayman Islands Branch, having an
office at Eleven Madison Avenue, OMA-2, New York, New York 10010, as collateral
agent (in such capacity, the “Term Collateral Agent”) pursuant to that
certain Credit and Guaranty Agreement dated as of May 21, 2007 (the “Term
Credit Agreement”), and (iii) JPMorgan Chase Bank, N.A., having an
office at 111 East Wisconsin Ave., Floor 15, Milwaukee, WI 53202-4815, as
collateral agent (in such capacity the “ABL Collateral Agent” and
together with the Term Collateral Agent, hereinafter the “Collateral Agents”)
pursuant to that certain Credit and Guaranty Agreement dated as of May 21,
2007 (the “ABL Credit Agreement,” and together with the Term Credit
Agreement, hereinafter the “Credit Agreements”), for the benefit of the
Secured Parties under the Credit Agreements. Capitalized terms used and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreements.

 

R E C I T A L S:

 

A.            Landlord is the record title holder
and owner of the real property located at
                                                
(the “Real Property”).

 

B.             Landlord
has leased all or a portion of the Real Property (the “Leased Premises”)
to [                          ]
(“Lessee”) pursuant to a certain lease agreement or agreements described
in  Schedule A
attached hereto (collectively, and as amended, amended and restated,
supplemented or otherwise modified from time to time, the “Lease”).

 

C.             Lessee, a [                                     ]
[                      ],
the Collateral Agents, and the other Secured Parties party thereto, among
others, [are entering] [have entered] into the Credit Agreements, pursuant to
which the Lenders have agreed to make certain loans to, among others, the
Lessee (collectively, the “Loans”). As security for the payment and
performance of Lessee’s Obligations under the Credit Agreements and the other
documents evidencing and securing the Loans (collectively, the “Loan
Documents”), the Collateral Agents (for its benefit and the benefit of the
Secured Parties) have or will acquire a security interest in and lien upon all
of Lessee’s personal property, inventory, accounts, goods, machinery,
equipment, furniture and fixtures (together with all additions, substitutions,
replacements and improvements to, and proceeds of, the foregoing, collectively,
the “Personal Property”).

 

D.            Collateral
Agents have requested that Landlord execute this Agreement as a condition
precedent [to the making of the Loans under the Credit Agreements] [to the
continued effectiveness of the Credit Agreements].

 

AGREEMENT:

 

NOW,
THEREFORE, for and in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Landlord hereby represents, warrants and agrees in favor of Collateral Agents,
as follows:

 

1.                             Landlord
hereby waives and releases unto Collateral Agents (i) any contractual
landlord’s lien and any other landlord’s lien which it may be entitled to at
law or in equity against any Personal Property, (ii)

 

M-1

 

any and all rights
granted by or under any present or future laws to levy or distrain for rent or
any other charges which may be due to the Landlord against the Personal
Property and (iii) any and all claims, liens and demands of every kind
which it has or may hereafter have against the Personal Property (including,
without limitation, any right to include the Personal Property in any secured
financing Landlord may become party to). Landlord acknowledges that the
Personal Property is and will remain personal property and not fixtures even though
it may be affixed to or placed on the Real Property.

 

2.                             Landlord
certifies that (i) the Lease is in full force and effect, (ii) no
notice of de- fault has been given under or in connection with the Lease which
has not been cured, and Landlord has no knowledge of any occurrence of any
other default under or in connection with the Lease, and (iii) Lessee is
in possession of the Leased Premises.

 

3.                             Landlord
agrees that Collateral Agents have the right to remove the Personal Property
from the Leased Premises at any time prior to the occurrence of a default under
the Lease and, after the occurrence of such a default, the Collateral Agents
shall give prior notice to Landlord and shall thereafter have a reasonable
period of time, not to exceed one hundred twenty (120) days, in which to
repossess and/or dispose of the Collateral from the Leased Premises; provided,
however, that such 120-day period will be tolled during any period in
which the Collateral Agents have been stayed from taking action to remove the Collateral
in any bankruptcy, insolvency or similar proceeding, and the Collateral Agents
shall have an additional period of time thereafter, not to exceed 120 days in
the aggregate, in which to repossess and/or dispose of the Collateral from the
Leased Premises; provided further that, at Landlord’s
option, Collateral Agents, at their expense, shall repair any damage arising
from such removal or reimburse to the Landlord the cost of repairing such
damage. Landlord agrees that it will (i) cooperate with the Collateral
Agents in gaining access to the Leased Premises for the purpose of repossessing
said Collateral and/or assembling and storing the Collateral and (ii) permit
the Collateral Agents, any such other person (including the Lessee) or their
respective agents or nominees, to sell, lease, dispose of or liquidate any such
Collateral on the Leased Premises in a manner reasonably designed to minimize
any interference with any other of Landlord’s tenants; provided, however, that
Collateral Agents shall pay rent on a per diem basis for the period of time the
Collateral Agents remain on the Leased Premises, in an amount equal to the
monthly base rent set forth in the Lease (excluding any late fees, charges,
assessments or similar sums). Landlord further agrees that, during the
foregoing period Landlord will not (x) remove any of the Personal Property
from the Leased Premises or (y) hinder Collateral Agents’ actions in
removing Personal Property from the Leased Premises or Collateral Agents’
actions in otherwise enforcing its security interest in the Personal Property.
Collateral Agents shall not be liable for any diminution in value of the Leased
Premises caused by the absence of Personal Property actually removed or by the
need to replace the Personal Property after such removal. Landlord acknowledges
that Collateral Agents shall have no obligation to remove the Personal Property
from the Leased Premises.

 

4.                             Landlord
acknowledges and agrees that Lessee’s granting of a security interest in the
Personal Property in favor of the Collateral Agents (for its benefit and the
benefit of the Secured Parties) shall not constitute a default under the Lease
nor permit Landlord to terminate the Lease or re-enter or repossess the Leased
Premises or otherwise be the basis for the exercise of any remedy by Landlord
and Landlord hereby expressly consents to the granting of such security
interest.

 

5.                             Notwithstanding
anything to the contrary contained in this Agreement or the Lease, in the event
of a default by Lessee under the Lease, Landlord agrees that (i) it shall
provide to Collateral Agents, at the address set forth in the introductory
paragraph hereof, a copy of any notice of default delivered to Lessee under the
Lease and, if Collateral Agents so elect, an opportunity to cure such default
of the lease, and (ii) it shall not exercise any of its remedies against
Lessee provided in favor of Landlord under the Lease or at law or in equity
until, in the case of a monetary default, the date which is 30 days after the
date the Landlord delivers written notice of such monetary default to
Collateral Agents, and in the case of a non-monetary default, the date which is
45 days after the date the Landlord delivers written notice of such
non-monetary default to Lessee; provided, however, if such non-monetary
default by its nature cannot reasonably be cured by Collateral Agents within
such 45-day period, the Collateral Agents shall have such additional period of
time as may be reasonably necessary to cure such non-monetary default, so long
as Lender commences such curative measures within such 45-day period and
thereafter proceeds diligently to complete such curative measures. If
Collateral Agents or Lessee or any other Person cures any such default, then
Landlord shall rescind the notice of default.

 

M-2

 

6.                             The
terms and provisions of this Agreement shall inure to the benefit of and be
binding upon the successors and assigns of Landlord (including, without
limitation, any successor owner of the Real Property) and Collateral Agents.
Landlord will disclose the terms and conditions of this Agreement to any
purchaser or successor to Landlord’s interest in the Leased Premises.

 

7.                             All
notices to any party hereto under this Agreement shall be in writing and sent
to such party at its respective address set forth above (or at such other
address as shall be designated by such party in a written notice to the other
party complying as to delivery with the terms of this Section 9) by
certified mail, postage prepaid, return receipt requested or by overnight
delivery service.

 

8.                             The
provisions of this Agreement shall continue in effect until Landlord shall have
received Collateral Agents’ written certification that the Loans have been paid
in full and all of Borrowers’ other Obligations under the Credit Agreements and
the other Loan Documents have been satisfied.

 

9.                             THE
INTERPRETATION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

 

IN
WITNESS WHEREOF, Landlord and Collateral Agents have caused this Agreement to
be duly executed and delivered by their duly authorized officers as of the date
first above written.

 

	
   

  	
   

  	
  ,

  	
   

  
	
   

  	
  as Landlord

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE,  

  
	
   

  	
  as Term Collateral
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  JPMorgan Chase Bank,
  N.A., 

  
	
   

  	
  as ABL Collateral Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: 

  
	
   

  	
   

  	
   

  	
  Title:

  
						

 

M-3

 

Schedule A

 

Description of Leases

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Location/Property

  	
   

  
	
  Lessor

  	
   

  	
  Lessee

  	
   

  	
  Dated

  	
   

  	
  Modification

  	
   

  	
  Address

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

M-4

 

EXHIBIT N

 

INTERCREDITOR AGREEMENT

 

N-1

 

EXHIBIT O

 

FIXED CHARGE COVERAGE COMPLIANCE
CERTIFICATE

 

All calculations
under this certificate shall be for the 12 month period preceding the date of
determination, which shall be the last day of any month.

 

	
  I.

  	
   

  	
  Consolidated
  Interest Expense

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  total interest expense
  (including that portion attributable to Capital Leases in accordance with
  GAAP and capitalized interest) payable in cash of the Company and its
  Subsidiaries on a consolidated basis with respect to all outstanding
  Indebtedness of the Company and its Subsidiaries, including all commissions,
  discounts and other fees and charges owed with respect to letters of credit
  and net costs under Interest Rate Agreements: (1)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  the aggregate amount of
  interest income of the Company and its Subsidiaries during such period paid
  in cash

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated
  Interest Expense (Item (a) minus Item (b))

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  II.

  	
   

  	
  Consolidated
  Adjusted EBITDA

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Consolidated Net Income:

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  Consolidated Interest
  Expense and non-Cash interest expense 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  provisions for taxes
  based on income 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii) 

  	
  total depreciation
  expense 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iv)

  	
  total amortization
  expense (2) 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (v)

  	
  non-cash impairment
  charges

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vi)

  	
  non-cash expenses
  resulting from the grant of stock and stock options and other compensation to
  management personnel of the Company and its Subsidiaries pursuant to a
  written incentive plan or agreement

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (vii)

  	
  other non-Cash items
  that are unusual or otherwise non-recurring items

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (viii)

  	
  expenses for fees under
  the Management Services Agreement 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ix) 

  	
  any extraordinary
  losses and non-recurring charges during any period(3)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (x)

  	
  restructuring charges
  or reserves (4)

  	
   

  	
  $

  
								

 

(1)                                  Excluding any amounts referred to in Section 2.10(d) of
the Credit Agreement payable on or before the Closing Date and amounts with
respect to the termination of Interest Rate Agreements entered into within 90
days of the Closing Date.

 

(2)                                  Including amortization of goodwill, other
intangibles, and financing fees and expenses.

 

(3)                                  Including severance, relocation costs,
one-time compensation charges and losses or charges associated with Interest
Rate Agreements.

 

(4)                                  Including costs related to closure of
Facilities.

 

O-1

 

	
   

  	
   

  	
  (xi)

  	
  any transaction costs
  incurred in connection with the issuance of Securities or any refinancing
  transaction, in each case whether or not such transaction is consummated

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (xii)

  	
  any fees and expenses
  related to any Permitted Acquisitions

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (xiii)

  	
  the Financial
  Performance Covenant Cure Amount

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Sum of Items
  (i) thru (xiii)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (i)

  	
  non-Cash items
  increasing Consolidated Net Income for such period that are unusual or
  otherwise non-recurring items

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (ii)

  	
  cash payments made
  during such period reducing reserves or liabilities for accruals made in
  prior periods but only to the extent such reserves or accruals were added
  back to “Consolidated Adjusted EBITDA” in a prior period pursuant to clauses
  (vi) or (vii) above

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (iii)

  	
  Restricted Payments
  made during such period to Holdings pursuant to Section 6.5(c)(i)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Sum of Items
  (i) thru (iii)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  Sum of Item (a) and (b)(5)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated
  Adjusted EBITDA (Item (d) minus Item (c)(6)):

  	
   

  	
  $

  
	
   

  	
   

  	
   

  
	
  III.

  	
   

  	
  Consolidated
  Fixed Charges

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Consolidated Interest
  Expense

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  scheduled payments of
  principal on Consolidated Total Debt

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  Consolidated Capital
  Expenditures(7)

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  the portion of taxes
  based on income actually paid in cash during such period by the Company or
  any of its Subsidiaries whether for such period or any other period

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Restricted Payments permitted
  under Section  6.5(c)(iii)  of the Credit Agreement and which are
  paid in cash during such period 

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Consolidated
  Fixed Charges (Sum of Items (a)-(e)(8))

  	
   

  	
  $

  
							

 

(5)                                  Without duplication to the extent
deducted in the calculation of Consolidated Net Income for such period.

 

(6)                                  Without duplication.

 

(7)                                  The aggregate of all expenditures of the
Company and its Subsidiaries during such period determined on a consolidated
basis that, in accordance with GAAP, are or should be included in “purchase of
property and equipment” or similar items reflected in the consolidated
statement of cash flows of the Company and its Subsidiaries (other than those
financed with secured Indebtedness permitted by Section 6.1 of the Credit Agreement
or made or incurred pursuant to Section 6.8(b)(ii) of the Credit
Agreement).

 

(8)                                  Without duplication.

 

O-2

 

	
  IV.

  	
   

  	
  Fixed
  Charge Coverage Ratio

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Consolidated Adjusted
  EBITDA

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  Consolidated Fixed
  Charges

  	
   

  	
  $

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fixed
  Charge Coverage Ratio (Item (a) divided by Item (b))

  	
   

  	
  .   :1.00

  

 

O-3

 

Schedule
4.1

(Organization and Capital Structure)

 

	
   

  	
   

  	
  Type of

  	
   

  	
  Jurisdiction of

  	
   

  	
   

  
	
  Full Legal Name

  	
   

  	
  Organization

  	
   

  	
  Organization

  	
   

  	
  Capital Structure

  
	
  Douglas
  Dynamics  Holdings, Inc.

  	
   

  	
  corporation

  	
   

  	
  Delaware

  	
   

  	
  1,000,000
  shares of Common Stock

   

  1
  share is designated Series B Preferred Stock and 1 share is designated
  Series C Preferred Stock

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics,  L.L.C.

  	
   

  	
  limited
  liability company

  	
   

  	
  Delaware

  	
   

  	
  Percentage
  Interest of limited liability company units

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics  Finance
  Company

  	
   

  	
  corporation

  	
   

  	
  Delaware

  	
   

  	
  1,000
  shares of Common Stock

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fisher,
  LLC 

  	
   

  	
  limited
  liability company

  	
   

  	
  Delaware

  	
   

  	
  Percentage
  Interest of limited liability company units

  

 

 

Schedule 4.2

(Capital Stock and Ownership)

[as of May   ,  2007]

 

	
  Entity

  	
   

  	
  Capital Structure

  	
   

  	
  Ownership

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics Holdings, Inc.

  	
   

  	
  1,000,000
  shares of Common Stock; 606,656 shares issued and outstanding

  	
   

  	
  Douglas
  Dynamics Holdings, LLC (50.19%)  

   

  Ares
  Corporate Opportunities Fund, L.P. (32.97%)

   

  General
  Electric Pension Trust (15.25%)

   

  The
  remaining stockholders own 1.58% in the aggregate (with each owning less than
  0.40% individually).

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1
  share is designated Series B Preferred Stock; 1 share of Series B
  Preferred Stock issued and outstanding

  	
   

  	
  Douglas
  Dynamics Holdings, LLC (100%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1
  share is designated Series C Preferred Stock; 1 share of Series C
  Preferred Stock issued and outstanding

  	
   

  	
  Ares
  Corporate Opportunities Fund, L.P. (100%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
  Percentage
  Interest of limited liability company units

  	
   

  	
  Douglas
  Dynamics Holdings, Inc. (100%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Douglas
  Dynamics Finance Company

  	
   

  	
  1,000
  shares of Common Stock

  	
   

  	
  Douglas
  Dynamics, L.L.C. (100%)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fisher,
  LLC

  	
   

  	
  Percentage
  Interest of limited liability company units

  	
   

  	
  Douglas
  Dynamics, L.L.C. (100%)

  

 

 

Existence of existing option, warrant, call, right,
commitment or other like agreement:

 

Douglas Dynamics Holdings, Inc.

 

	
  Grantees (as a group)

  	
   

  	
  Number of Awards Granted

  
	
   

  	
   

  	
   

  
	
  Douglas
  Management

  	
   

  	
  58,215
  options to acquire common stock

   

  8,070
  deferred stock units

  
	
   

  	
   

  	
   

  
	
  Douglas
  Independent Directors

  	
   

  	
  4,124
  options to acquire common stock

  
	
   

  	
   

  	
   

  
	
  Aurora
  Advisors

  	
   

  	
  1,500
  options to acquire common stock

  
	
   

  	
   

  	
   

  
	
  Ares
  Advisors

  	
   

  	
  857
  options to acquire common stock

  

 

*Note:
Approximately 7,800 options to acquire common stock have been reserved for
members of Douglas management, but have not been allocated/issued.

 

Douglas Dynamics, L.L.C.

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule 4.9

(Material Adverse Changes)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule
4.11

(Adverse Proceedings)

 

Douglas Dynamics
Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

The inclusion of these items on this schedule is not
an admission by the Borrower that these items represent a Material Adverse
Effect or that such disclosure was required to be set forth as an exception to
this representation.

 

Bjork, David (Case number
MICV2005-01131, filed in Massachusetts Superior Court)

 

·                 This is a personal injury
case with a date of loss of December 16, 2002. Amount of damages is
unspecified, and the Company has not reserved any amount with respect to this
matter.

 

D’Angelo, Amy (Case number 98-3281, filed in New
York)

·                 This is a personal injury
case with a date of loss of February 4, 1998. Plaintiff is seeking
$10,000,000 in damages, and the Company has reserved $25,000 with respect to
this matter.

 

Employment and labor-related claims are listed in Schedule 4.18.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None

 

 

Schedule
4.13

(Real
Estate Assets)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

4.13(i)

 

915 Riverview Drive

Johnson City, TN

 

7777 N. 73rd Street

Milwaukee, WI

 

50 Gordon Drive

Rockland, ME

 

4.13(ii)

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule 4.14

(Environmental Matters)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule 4.18

(Employee Matters)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

None.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule
4.19

(Employee
Benefit Plans)

 

Douglas Dynamics Holdings, Inc.

 

None.

 

Douglas Dynamics, L.L.C.

 

Retired/Former Employee Benefit Plans

 

Douglas Dynamics L.L.C. Insurance Coverage Policy for Retirees, as
revised December 31, 2003.

 

Funding of Pension Plans

 

As of December 31, 2006, the present value of the aggregate
benefit liabilities under the Douglas Dynamics LLC Salaried Pension Plan and
the Douglas Dynamics LLC Pension Plan for Hourly Employees exceeded the
aggregate current value of the assets under such plans by approximately $5.1
million.

 

Douglas Dynamics Finance Company

 

None.

 

Fisher, LLC

 

None.

 

 

Schedule 4.22

(Certain Existing Liens)

 

See
Schedule 6.2.

 

 

Schedule 4.24

(Deposit Accounts)

 

 

	
  Description

  	
   

  	
  Bank Account

  Number

  	
   

  	
  Loan Party

  	
   

  	
  Depository Institution/

  Contact Information

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Main  Operating  Account,  Concentration Account for
  all  Controlled  Disbursement  Accounts,  Sweep  Account for  Fisher and  Western  Lockbox

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Accounts  Payable Controlled
  Disbursement account for all DD locations

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Flex
  Spending  Claims
  Controlled Disbursement account for all DD locations

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics,  L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Medical  Claims Controlled
  Disbursement account for all DD locations

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dental
  Claims  Controlled
  Disbursement account for all DD locations

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics,  L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  40l(k) account

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payroll  Clearing-WI

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  general  account

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics Holdings Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  general  account

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics Finance Company

  	
   

  	
   

  

 

 

	
  Description

  	
   

  	
  Bank Account

  Number

  	
   

  	
  Loan Party

  	
   

  	
  Depository Institution/

  Contact Information

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payroll
  Clearing-ME

  	
   

  	
   

  	
   

  	
  Fisher,
  LLC

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Payroll
  Clearing- TN

  	
   

  	
   

  	
   

  	
  Douglas
  Dynamics, L.L.C.

  	
   

  	
   

  

 

 

Schedule 6.1(f)

(Certain Indebtedness)

 

None.

 

 

Schedule
6.2

(Permitted
Liens)

 

Delaware Secretary of State searched on 04/24/07. Secured Party: Hyster
Credit Company, P.O. Box 27248, Tempe, AZ 85285-7248. File no. 2197519,
07/23/2002. One Hyster Model S30XM, One Hyster Model H40XM Lift Truck together
with all attachments and accessories.

 

Delaware Secretary of State searched on 04/24/07. Secured Party: Hyster
Credit Company, P.O. Box 4366, Portland, OR 97208. File no. 2200036,
07/29/2002. One Hyster Model S30XM, One Hyster Model H40XM Lift Truck together
with all attachments and accessories.

 

Delaware
Secretary of State searched on 04/24/07. Secured Party: Bystronic Inc., 185
Commerce Drive, Hauppauge, NY, 11788. File no. 6046680, 01/27/2006. One BYSTAR
4020-2 (4400 Watt) Job No. 1803.

 

 

Schedule 6.7

(Certain Investments)

 

None.

 

 

Schedule
6.12

(Certain
Affiliate Transactions)

 

All transactions, including payments, in respect of the Amended and
Restated Joint Management Services Agreement dated as of April 12, 2004.Exhibit
10.32

 

DOUGLAS DYNAMICS, INC.

2010 STOCK INCENTIVE PLAN

 

1.             Purpose

 

The
purpose of the Douglas Dynamics, Inc. 2010 Stock Incentive Plan (the “Plan”)
is to advance the interests of Douglas Dynamics, Inc. (the “Company”) by
stimulating the efforts of employees, officers, non-employee directors and
other service providers, in each case who are selected to be participants, by
heightening the desire of such persons to continue working toward and
contributing to the success and progress of the Company.  The Plan provides for the potential grant of
Incentive and Nonqualified Stock Options, Stock Appreciation Rights, Restricted
Stock and Restricted Stock Units, any of which may be performance-based, and
for Incentive Bonuses, which may be paid in cash or stock or a combination
thereof, as determined by the Administrator. 
Following the adoption of the Plan, no additional awards shall be
granted under the Company’s Amended and Restated 2004 Stock Incentive Plan.

 

2.             Definitions

 

As
used in the Plan, the following terms shall have the meanings set forth below:

 

(a)           “Administrator” means the
Administrator of the Plan in accordance with Section 18.

 

(b)           “Affiliates” shall have the
meaning ascribed in Rule 12b-2 promulgated under the Exchange Act.

 

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

 

(d)           “Aurora Entities” means
Aurora Equity Partners II L.P., a Delaware limited partnership and Aurora
Overseas Equity Partners II, L.P., a Cayman Islands exempt limited partnership

 

(e)           “Award” means an Incentive
Stock Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted
Stock, Restricted Stock Unit or Incentive Bonus granted to a Participant
pursuant to the provisions of the Plan, any of which the Administrator may
structure to qualify in whole or in part as a Performance Award.

 

(f)            “Award Agreement” means a
written agreement or other instrument as may be approved from time to time by
the Administrator implementing the grant of each Award.  An Agreement may be in the form of an
agreement to be executed by both the Participant and the Company (or an
authorized representative of the Company) or certificates, notices or similar
instruments as approved by the Administrator.

 

(g)           “Beneficial Owner,” “Beneficial
Ownership” and “Beneficially Owned” shall have the meaning ascribed in Rule 13d-3
under the Exchange Act.

 

 

(h)           “Board” means the Board of
Directors of the Company.

 

(i)            “Cause” means (unless
otherwise expressly provided in the Award Agreement or another contract,
including an employment agreement):

 

(1)           conviction or indictment of
an individual or the entering of a plea of nolo contendere by the individual
with respect to any felony, crime involving fraud or misrepresentation, or any
other crime (whether or not such felony or crime is connected with his or her
employment or service) the effect of which in the judgment of the Board is
likely to affect, materially and adversely, the Company and/or any Company
Affiliate;

 

(2)           gross misconduct in
connection with the performance of the individual’s duties;

 

(3)           demonstration of habitual
negligence in the performance of the individual’s duties; or

 

(4)           fraud or dishonesty in
connection with an individual’s employment or service, or theft,
misappropriation or embezzlement of the Company’s and/or any Company Affiliate’s
funds or other property.

 

(j)            “Change of Control” means
(unless otherwise expressly provided in the Award Agreement or another
contract, including an employment agreement) the occurrence of one or more of the
following, whether accomplished directly or indirectly, or in one or a series
of related transactions:

 

(1)           Any Person, other than the
Aurora Entities, Ares and their respective Affiliates, becomes the Beneficial
Owner, directly or indirectly, of voting securities of the Company representing
50% or more of the combined voting power of the Company’s then outstanding
voting securities;

 

(2)           During any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board and any new director (other than a director whose initial assumption
of office occurs as a result of either an actual or threatened election contest
or other actual or threatened tender offer, solicitation of proxies or consents
by or on behalf of a Person other than the Board) whose appointment, election,
or nomination for election was approved by a vote of a majority of the
directors then still in office who either were directors at the beginning of
the period or whose appointment, election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
Board;

 

(3)           A reorganization, merger,
consolidation, recapitalization, tender offer, exchange offer or other
extraordinary transaction involving the Company (a “Fundamental Transaction”)
becomes effective or is consummated, unless at least 50% of the outstanding
voting securities of the surviving or resulting entity (including, without
limitation, an entity (“Parent”) which as a result of such transaction owns the
Company or all or substantially all of the Company’s assets either directly or
through one or more subsidiaries) (“Resulting Entity”) are, or are to be,
Beneficially Owned, directly or 

 

2

 

indirectly, by all or substantially all of the Persons who were the
Beneficial Owners of the outstanding voting securities of the Company
immediately prior to such Fundamental Transaction in substantially the same
proportions as their Beneficial Ownership, immediately prior to such
Fundamental Transaction, of the outstanding voting securities of the Company;

 

(4)           A sale, transfer or any
other disposition (including, without limitation, by way of spin-off,
distribution, complete liquidation or dissolution) of all or substantially all
of the Company’s business and/or assets (an “Asset Sale”) to an unrelated third party (the “Transferee Entity”) is consummated.

 

(k)           “Code” means the Internal
Revenue Code of 1986, as amended from time to time, and the rulings and
regulations issues thereunder.

 

(l)            “Common Stock” means the
Company’s common stock, par value $.01, subject to adjustment as provided in Section 12.

 

(m)          “Company” means Douglas
Dynamics, Inc., a Delaware corporation, and its successors.  For purposes of this definition of
Corporation, after the consummation of a Fundamental Transaction or an Asset
Sale, the term “successor” shall include, without limitation, the Resulting
Entity or Transferee Entity, respectively.

 

(n)           “Company Affiliate” means
any person or entity that is a subsidiary of, or controlled directly or
indirectly by, Douglas Dynamics, Inc. 
For the purposes of this definition, “control” means the power to direct
the management and policies of a person or entity, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise.

 

(o)           “Disability,” unless
otherwise defined in a Participant’s employment agreement with the Company (if
any), means an individual’s absence from, or material inability to perform his
or her usual duties or any comparable duties for, the Company on a full-time
basis for 90 consecutive business days or 120 business days in any period of
180 business days as a result of mental or physical illness or injury that is
total and permanent, as reasonably determined by the Administrator and that is
not susceptible to reasonable accommodation.

 

(p)           “Exchange Act” means the
Securities Exchange Act of 1934, as amended from time to time.

 

(q)           “Fair Market Value”  means, as of any given date, the closing sales price on
such date during normal trading hours (or, if there are no reported sales on
such date, on the last date prior to such date on which there were sales) of
the Shares on the New York Stock Exchange Composite Tape or, if not listed on
such exchange, on any other national securities exchange on which the Shares
are listed or on NASDAQ, in any case, as reported in such source as the
Administrator shall select.  If there is
no regular public trading market for such Common Shares, the Fair Market Value
of the Shares shall be determined by the Administrator in good faith and in
compliance with Section 409A of the Code.

 

3

 

(r)            “Incentive Bonus” means a
bonus opportunity awarded under Section 9 pursuant to which a Participant
may become entitled to receive an amount based on satisfaction of such
performance criteria as are specified in the Award Agreement.

 

(s)           “Incentive Stock Option”
means a stock option that is intended to qualify as an “incentive stock option”
within the meaning of Section 422 of the Code.

 

(t)            “Nonemployee Director” means
each person who is, or is elected to be, a member of the Board and who is not
an employee of the Company or any Subsidiary.

 

(u)           “Nonqualified Stock Option”
means a stock option that is not intended to qualify as an “incentive stock
option” within the meaning of Section 422 of the Code.

 

(v)           “Option” means an Incentive
Stock Option and/or a Nonqualified Stock Option granted pursuant to Section 6
of the Plan.

 

(w)          “Participant” means any
individual described in Section 3 to whom Awards have been granted from
time to time by the Administrator and any authorized transferee of such
individual.

 

(x)            “Performance Award” means an
Award, the grant, issuance, retention, vesting or settlement of which is
subject to satisfaction of one or more performance criteria established
pursuant to Section 13.

 

(y)           “Person” means an
association, a corporation, an individual, a partnership, a trust or any other
entity or organization, including a governmental entity and a “person” as that
term is used under Section 13(d) or 14 (d) of the Exchange Act.

 

(z)            “Plan” means the Douglas
Dynamics, Inc. 2010 Stock Incentive Plan as set forth herein and as
amended from time to time.

 

(aa)         “Restricted Stock” means Shares
granted pursuant to Section 8 of the Plan.

 

(bb)         “Restricted Stock Unit”
means an Award granted to a Participant pursuant to Section 8 pursuant to
which Shares or cash in lieu thereof may be issued in the future.

 

(cc)         “Share” means a share of the
Common Stock, subject to adjustment as provided in Section 12.

 

(dd)         “Stock Appreciation Right”
means a right granted pursuant to Section 7 of the Plan that entitles the
Participant to receive, in cash or Shares or a combination thereof, as
determined by the Administrator, value equal to or otherwise based on the
excess of (i) the Fair Market Value of a specified number of Shares at the
time of exercise over (ii) the exercise price of the right, as established
by the Administrator on the date of grant.

 

(ee)         “Subsidiary” means any
entity (other than the Company) in an unbroken chain of entities beginning with
the Company where each of the entities in the unbroken chain other than the
last entity owns stock or other equity possessing at least 50 percent or more of
the total 

 

4

 

combined voting power of all classes of stock or other equity in one of
the other entities in the chain, and if specifically determined by the
Administrator in the context other than with respect to Incentive Stock
Options, may include an entity in which the Company has a significant ownership
interest or that is directly or indirectly controlled by the Company.

 

(ff)           “Termination of Employment”
means ceasing to serve as an employee of the Company or any Subsidiary or, with
respect to a Nonemployee Director or other service provider, ceasing to serve
as such for the Company or any Subsidiary, except that with respect to all or
any Awards held by a Participant (i) the Administrator may determine,
subject to Section 6(c), that an approved leave of absence or approved
employment on a less than full-time basis shall be considered a Termination of
Employment, (ii) the Administrator may determine that a transition of
employment to service with a partnership, joint venture or corporation not
meeting the requirements of a Subsidiary in which the Company or a Subsidiary
is a party is not considered a Termination of Employment, (iii) service as
a member of the Board or other service provider shall constitute continued
employment with respect to Awards granted to a Participant while he or she
served as an employee and (iv) service as an employee of the Company or a
Subsidiary shall constitute continued employment with respect to Awards granted
to a Participant while he or she served as a member of the Board or other
service provider.  The Administrator
shall determine whether any corporate transaction, such as a sale or spin-off
of a division or subsidiary that employs a Participant, shall be deemed to
result in a Termination of Employment with the Company or any Subsidiary for
purposes of any affected Participant’s Awards, and the Administrator’s decision
shall be final and binding.

 

3.             Eligibility

 

Any
person who is a current or prospective officer or employee of the Company or of
any Subsidiary shall be eligible for selection by the Administrator for the
grant of Awards hereunder.  In addition,
Nonemployee Directors and any other service providers who have been retained to
provide consulting, advisory or other services to the Company or to any
Subsidiary shall be eligible for the grant of Awards hereunder as determined by
the Administrator.  Options intending to
qualify as Incentive Stock Options may only be granted to employees of the
Company or any corporate Subsidiary within the meaning of the Code, as selected
by the Administrator.

 

4.             Effective
Date and Termination of Plan

 

This
Plan was adopted by the Board and approved by the Company’s stockholders on April     ,
2010.  The Plan shall remain available for
the grant of Awards until the tenth (10th) anniversary of the Effective
Date.  Notwithstanding the foregoing, the
Plan may be terminated at such earlier time as the Board may determine.  Termination of the Plan will not affect the
rights and obligations of the Participants and the Company arising under Awards
theretofore granted and then in effect.

 

5.             Shares
Subject to the Plan and to Awards

 

(a)           Aggregate
Limits.  The aggregate number of Shares
issuable pursuant to all Awards shall not exceed
                        .  The aggregate number of Shares that may be
issued 

 

5

 

pursuant to the exercise of Incentive Stock Options granted under this
Plan shall not exceed
                              ,
which number shall be calculated and adjusted pursuant to Section 12 only
to the extent that such calculation or adjustment will not affect the status of
any option intended to qualify as an Incentive Stock Option under Section 422
of the Code.

 

(b)           Adjustment.  The aggregate number of Shares available for
grant under this Plan and the number of Shares subject to outstanding Awards
shall be subject to adjustment as provided in Section 12.  The Shares issued pursuant to Awards granted
under this Plan may be shares that are authorized and unissued or shares that
were reacquired by the Company, including shares purchased in the open market.

 

(c)           Issuance
of Shares.  For
purposes of Section 5(a), the aggregate number of Shares issued under this
Plan at any time shall equal only the number of Shares actually issued upon
exercise or settlement of an Award.  The
aggregate number of Shares available for Awards under this Plan at any time
shall not be reduced by (i) Shares subject to Awards that have been
terminated, expired unexercised, forfeited or settled in cash, (ii) Shares
subject to Awards that have been retained or withheld by the Company in payment
or satisfaction of the exercise price, purchase price or tax withholding
obligation of an Award, or (iii) Shares subject to Awards that otherwise
do not result in the issuance of Shares in connection with payment or
settlement thereof.  In addition, Shares
that have been delivered (either actually or by attestation) to the Company in
payment or satisfaction of the exercise price, purchase price or tax
withholding obligation of an Award shall be available for Awards under this
Plan.

 

6.             Options

 

(a)           Option
Awards.  Options may be granted at any
time and from time to time prior to the termination of the Plan to Participants
as determined by the Administrator.  No
Participant shall have any rights as a stockholder with respect to any Shares
subject to an Option hereunder until said Shares have been issued.  Each Option shall be evidenced by an Award
Agreement.  Options granted pursuant to
the Plan need not be identical but each Option must contain and be subject to
the terms and conditions set forth below.

 

(b)           Price.  The Administrator will establish the exercise
price per Share under each Option, which, in no event will be less than the
Fair Market Value of the Shares on the date of grant; provided, however, that
the exercise price per Share with respect to an Option that is granted in
connection with a merger or other acquisition as a substitute or replacement
award for options held by optionees of the acquired entity may be less than
100% of the Fair Market Value of the Shares on the date such Option is granted
if such exercise price is based on a formula set forth in the terms of the
options held by such optionees or in the terms of the agreement providing for
such merger or other acquisition.  The
exercise price of any Option may be paid in Shares, cash or a combination
thereof, as determined by the Administrator, including an irrevocable commitment
by a broker to pay over such amount from a sale of the Shares issuable under an
Option, the delivery of previously owned Shares and withholding of Shares
deliverable upon exercise.

 

(c)           Provisions
Applicable to Options.  The
date on which Options become exercisable shall be determined at the sole
discretion of the Administrator and set forth in an Award 

 

6

 

Agreement.  Unless provided
otherwise in the applicable Award Agreement, to the extent that the
Administrator determines that an approved leave of absence is not a Termination
of Employment, the vesting period and/or exercisability of an Option shall be
adjusted by the Administrator during or to reflect the effects of any period
during which the Participant is on an approved leave of absence or is employed
on a less than full-time basis.  The
Administrator shall establish the term of each Option, which in no case shall
exceed a period of ten (10) years from the date of grant.

 

(d)           Incentive
Stock Options. 
Notwithstanding anything to the contrary in this Section 6, in the
case of the grant of an Option intending to qualify as an Incentive Stock
Option: (i) if the Participant owns stock possessing more than 10% of the
combined voting power of all classes of stock of the Company (a “10% Stockholder”),
the exercise price of such Option must be at least 110% of the Fair Market
Value of the Shares on the date of grant and the Option must expire within a
period of not more than five (5) years from the date of grant, and (ii) Termination
of Employment will occur when the person to whom an Award was granted ceases to
be an employee (as determined in accordance with Section 3401(c) of
the Code and the regulations promulgated thereunder) of the Company or any
Subsidiary.  Notwithstanding anything in
this Section 6 to the contrary, Options designated as Incentive Stock
Options shall not be eligible for treatment under the Code as Incentive Stock
Options (and will be deemed to be Nonqualified Stock Options) to the extent
that either (1) the aggregate Fair Market Value of Shares (determined as
of the time of grant) with respect to which such Options are exercisable for
the first time by the Participant during any calendar year (under all plans of
the Company and any Subsidiary) exceeds $100,000, taking Options into account
in the order in which they were granted, or (2) such Options otherwise
remain exercisable but are not exercised within three (3) months of
Termination of Employment (or such other period of time provided in Section 422
of the Code).  If the requirements for an
Option to qualify for incentive stock option tax treatment are changed, this Section 6(d) shall
be deemed to be automatically amended to reflect such requirements.

 

(e)           Effect of
Termination of Employment. 
Unless an Option earlier expires upon the expiration date established
pursuant to Section 6(c), upon a Termination of Employment (i) any
portion of the Option that is not exercisable at the time of such Termination
of Employment shall be forfeited and canceled as of the date of such
Termination of Employment and (ii) a Participant’s (or his or her
Beneficiary’s) rights to exercise any portion of the Option that is exercisable
at the time of such Termination of Employment shall be only as follows, in each
case, unless otherwise expressly provided in the Award Agreement or another
contract, including an employment agreement:

 

(1)           Death.  If a Participant incurs a Termination of
Employment by reason of death, any Option held by such Participant, to the
extent then exercisable, may thereafter be exercised by the Participant’s
Beneficiary for a period of one hundred eighty days from the date of such death
or until the expiration of the stated term of such Option, whichever period is
the shorter.

 

(2)           Disability.  If a Participant incurs a Termination of
Employment by reason of Disability, any Option held by such Participant, to the
extent then exercisable, may thereafter be exercised by the Participant for a
period of one hundred eighty days from 

 

7

 

the date of such Termination of Employment or until the expiration of
the stated term of such Option, whichever period is the shorter.

 

(3)           Cause.  If a Participant incurs a Termination of
Employment by reason of a termination by the Company for Cause, the entire
Option, whether or not then exercisable, shall be immediately forfeited and
canceled as of the date of such Termination of Employment.

 

(f)            Termination for Reasons other
than Death, Disability or Cause.  If a Participant incurs a Termination of
Employment for any reason other than death, Disability or for Cause, any Option
held by such Participant, to the extent then exercisable, may thereafter be
exercised by the Participant for a period of ninety days from the date of such
Termination of Employment or until the expiration of the stated term of such
Option, whichever period is the shorter.

 

7.             Stock
Appreciation Rights

 

Stock
Appreciation Rights may be granted to Participants from time to time either in
tandem with or as a component of other Awards granted under the Plan (“tandem
SARs”) or not in conjunction with other Awards (“freestanding SARs”) and may,
but need not, relate to a specific Option granted under Section 6.  The provisions of Stock Appreciation Rights
need not be the same with respect to each grant or each recipient.  Any Stock Appreciation Right granted in
tandem with an Award may be granted at the same time such Award is granted or
at any time thereafter before exercise or expiration of such Award.  All freestanding SARs shall be granted
subject to the same terms and conditions applicable to Options as set forth in Section 6
and all tandem SARs shall have the same exercise price, vesting,
exercisability, forfeiture and termination provisions as the Award to which
they relate.  Subject to the provisions
of Section 6 and the immediately preceding sentence, the Administrator may
impose such other conditions or restrictions on any Stock Appreciation Right as
it shall deem appropriate.  Stock
Appreciation Rights may be settled in Shares, cash or a combination thereof, as
determined by the Administrator and set forth in the applicable Award
Agreement.

 

8.             Restricted
Stock and Restricted Stock Units

 

(a)           Restricted
Stock and Restricted Stock Unit Awards.  Restricted Stock and Restricted Stock Units
may be granted at any time and from time to time prior to the termination of
the Plan to Participants as determined by the Administrator.  Restricted Stock is an award or issuance of
Shares the grant, issuance, retention, vesting and/or transferability of which
is subject during specified periods of time to such conditions (including
continued employment or performance conditions) and terms as the Administrator
deems appropriate.  Restricted Stock Units
are Awards denominated in units of Shares under which the issuance of Shares is
subject to such conditions (including continued employment or performance
conditions) and terms as the Administrator deems appropriate.  Each grant of Restricted Stock and Restricted
Stock Units shall be evidenced by an Award Agreement.  Unless determined otherwise by the
Administrator, each Restricted Stock Unit will be equal to one Share and will
entitle a Participant to either the issuance of Shares or payment of an amount of
cash determined with reference to the value of Shares.  To the extent determined by the
Administrator, Restricted Stock and Restricted Stock Units may be satisfied or
settled in Shares, cash or a combination thereof.  Restricted Stock and 

 

8

 

Restricted Stock Units granted pursuant to the Plan need not be
identical but each grant of Restricted Stock and Restricted Stock Units must
contain and be subject to the terms and conditions set forth below.

 

(b)           Contents
of Agreement.  Each Award
Agreement shall contain provisions regarding (i) the number of Shares or
Restricted Stock Units subject to such Award or a formula for determining such
number, (ii) the purchase price of the Shares, if any, and the means of
payment, (iii) the performance criteria, if any, and level of achievement
versus these criteria that shall determine the number of Shares or Restricted
Stock Units granted, issued, retainable and/or vested, (iv) such terms and
conditions on the grant, issuance, vesting and/or forfeiture of the Shares or
Restricted Stock Units as may be determined from time to time by the
Administrator, (v) the term of the performance period, if any, as to which
performance will be measured for determining the number of such Shares or
Restricted Stock Units, and (vi) restrictions on the transferability of
the Shares or Restricted Stock Units. 
Shares issued under a Restricted Stock Award may be issued in the name
of the Participant and held by the Participant or held by the Company, in each
case as the Administrator may provide.

 

(c)           Vesting
and Performance Criteria.  The
grant, issuance, retention, vesting and/or settlement of shares of Restricted
Stock and Restricted Stock Units will occur when and in such installments as
the Administrator determines or under criteria the Administrator establishes,
which may include performance criteria.

 

(d)           Discretionary
Adjustments and Limits. 
Notwithstanding the satisfaction of any performance goals, the number of
Shares granted, issued, retainable and/or vested under an Award of Restricted
Stock or Restricted Stock Units on account of either financial performance or
personal performance evaluations may, to the extent specified in the Award
Agreement, be reduced, but not increased, by the Administrator on the basis of
such further considerations as the Administrator shall determine.

 

(e)           Voting
Rights.  Unless otherwise determined by
the Administrator, Participants holding shares of Restricted Stock granted
hereunder may exercise full voting rights with respect to those shares during
the period of restriction.  Participants
shall have no voting rights with respect to Shares underlying Restricted Stock
Units unless and until such Shares are reflected as issued and outstanding
shares on the Company’s stock ledger.

 

(f)            Dividends
and Distributions. 
Participants in whose name Restricted Stock is granted shall be entitled
to receive all dividends and other distributions paid with respect to those
Shares, unless determined otherwise by the Administrator.  The Administrator will determine whether any
such dividends or distributions will be automatically reinvested in additional
shares of Restricted Stock and subject to the same restrictions on
transferability as the Restricted Stock with respect to which they were
distributed or whether such dividends or distributions will be paid in
cash.  Shares underlying Restricted Stock
Units shall be entitled to dividends or dividend equivalents only to the extent
provided by the Administrator.

 

(g)           Effect of
Termination of Employment.  Upon
a Participant’s Termination of Employment for any reason (including by reason
of death or Disability), any then unvested Restricted Stock or Restricted Stock
Units held by the Participant shall be forfeited and canceled 

 

9

 

as of the date of such Termination of Employment, unless otherwise
expressly provided in the Award Agreement or another contract, including an
employment agreement.

 

9.             Incentive
Bonuses

 

(a)           General.  Each Incentive Bonus Award will confer upon the
Participant the opportunity to earn a future payment tied to the level of
achievement with respect to one or more performance criteria established for a
performance period established by the Administrator.

 

(b)           Incentive
Bonus Document.  The terms
of any Incentive Bonus will be set forth in an Award Agreement.  Each Award Agreement evidencing an Incentive
Bonus shall contain provisions regarding (i) the target and maximum amount
payable to the Participant as an Incentive Bonus, (ii) the performance
criteria and level of achievement versus these criteria that shall determine
the amount of such payment, (iii) the term of the performance period as to
which performance shall be measured for determining the amount of any payment, (iv) the
timing of any payment earned by virtue of performance, (v) restrictions on
the alienation or transfer of the Incentive Bonus prior to actual payment, (vi) forfeiture
provisions and (vii) such further terms and conditions, in each case not
inconsistent with this Plan as may be determined from time to time by the
Administrator.

 

(c)           Performance
Criteria.  The
Administrator shall establish the performance criteria and level of achievement
versus these criteria that shall determine the target and maximum amount
payable under an Incentive Bonus, which criteria may be based on financial
performance and/or personal performance evaluations.

 

(d)           Timing and
Form of Payment.  The
Administrator shall determine the timing of payment of any Incentive
Bonus.  Payment of the amount due under an
Incentive Bonus may be made in cash or in Shares, as determined by the
Administrator.  The Administrator may
provide for or, subject to such terms and conditions as the Administrator may
specify, may permit a Participant to elect for the payment of any Incentive
Bonus to be deferred to a specified date or event.

 

(e)           Discretionary
Adjustments. 
Notwithstanding satisfaction of any performance goals, the amount paid
under an Incentive Bonus on account of either financial performance or personal
performance evaluations may, to the extent specified in the Award Agreement, be
reduced, but not increased, by the Administrator on the basis of such further
considerations as the Administrator shall determine.

 

(f)            Subplans.  Incentive Bonuses payable hereunder may be
pursuant to one or more subplans.

 

(g)           Effect of
Termination of Employment.  Upon
a Participant’s Termination of Employment for any reason (including by reason
of death or Disability), the Participant shall receive payment in respect of
any Incentive Bonuses only to the extent specified by the Administrator, unless
otherwise expressly provided in the Award Agreement or another contract,
including an employment agreement. 
Payments in respect of any such Incentive Bonuses shall be made at the
time specified by the Administrator and set forth in the Award Agreement.

 

10

 

10.                               Deferral of Gains

 

The
Administrator may, in an Award Agreement or otherwise, provide for the deferred
delivery of Shares upon settlement, vesting or other events with respect to
Restricted Stock or Restricted Stock Units, or in payment or satisfaction of an
Incentive Bonus.  Notwithstanding
anything herein to the contrary, in no event will any deferral of the delivery
of Shares or any other payment with respect to any Award be allowed if the
Administrator determines, in its sole discretion, that the deferral would
result in the imposition of the additional tax under Section 409A(a)(1)(B) of
the Code.  No award shall provide for
deferral of compensation that does not comply with Section 409A of the
Code, unless the Board, at the time of grant, specifically provides that the
Award is not intended to comply with Section 409A of the Code.  The Company shall have no liability to a
Participant, or any other party, if an Award that is intended to be exempt
from, or compliant with, Section 409A of the Code is not so exempt or
compliant or for any action taken by the Board.

 

11.                               Conditions and Restrictions Upon Securities Subject to
Awards

 

The
Administrator may provide that the Shares issued upon exercise of an Option or
Stock Appreciation Right or otherwise subject to or issued under an Award shall
be subject to such further agreements, restrictions, conditions or limitations
as the Administrator in its discretion may specify prior to the exercise of
such Option or Stock Appreciation Right or the grant, vesting or settlement of
such Award, including without limitation, conditions on vesting or
transferability, forfeiture or repurchase provisions and method of payment for
the Shares issued upon exercise, vesting or settlement of such Award (including
the actual or constructive surrender of Shares already owned by the
Participant) or payment of taxes arising in connection with an Award.  Without limiting the foregoing, such
restrictions may address the timing and manner of any resales by the
Participant or other subsequent transfers by the Participant of any Shares
issued under an Award, including without limitation (i) restrictions under
an insider trading policy or pursuant to applicable law, (ii) restrictions
designed to delay and/or coordinate the timing and manner of sales by
Participant and holders of other Company equity compensation arrangements, (iii) restrictions
as to the use of a specified brokerage firm for such resales or other transfers
and (iv) provisions requiring Shares to be sold on the open market or to
the Company in order to satisfy tax withholding or other obligations.

 

12.                               Adjustment of and Changes in the Stock; Certain
Transactions

 

(a)                                  In the event
that any dividend or other distribution (whether in the form of cash, Shares,
other securities or other property, but excluding regular, quarterly and other
periodic cash dividends), stock split or a combination or consolidation of the
outstanding Shares into a lesser number of shares, is declared with respect to
the Shares, the authorization limits under Section 5(a) shall be
increased or decreased proportionately, and the Shares then subject to each
Award shall be increased or decreased proportionately without any change in the
aggregate purchase price therefore.  In
the event the Shares shall be changed into or exchanged for a different number
or class of shares of stock or securities of the Company or of another
corporation, whether through recapitalization, reorganization,
reclassification, merger, consolidation, split-up, spin-off, combination, repurchase
or exchange of Shares or other securities of the Company, issuance of warrants
or other rights to purchase Shares or other 

 

11

 

securities of the Company, or any other similar corporate transaction
or event affects the Shares such that an equitable adjustment would be required
in order to prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Plan, then the authorization
limits under Section 5(a) shall be adjusted proportionately, and an
equitable adjustment shall be made to each Share subject to an Award such that
no dilution or enlargement of the benefits or potential benefits occurs.  Each such Share then subject to each Award
shall be adjusted to the number and class of shares into which each outstanding
Share shall be so exchanged such that no dilution or enlargement of the
benefits occurs, all without change in the aggregate purchase price for the
Shares then subject to each Award.  Action
by the Administrator pursuant to this Section 12(a) may include
adjustment to any or all of: (i) the number and type of Shares (or other
securities or other property) that thereafter may be made the subject of Awards
or be delivered under the Plan; (ii) the number and type of Shares (or
other securities or other property) subject to outstanding Awards; (iii) the
purchase price or exercise price of a Share under any outstanding Award or the
measure to be used to determine the amount of the benefit payable on an Award;
and (iv) any other adjustments the Administrator determines to be
equitable.  No right to purchase
fractional shares shall result from any adjustment in Awards pursuant to this Section 12.  In case of any such adjustment, the Shares
subject to the Award shall be rounded down to the nearest whole share.  The Company shall notify Participants holding
Awards subject to any adjustments pursuant to this Section 12(a) of
such adjustment, but (whether or not notice is given) such adjustment shall be effective
and binding for all purposes of the Plan.

 

(b)                                 Unless
otherwise expressly provided in the Award Agreement or another contract,
including an employment agreement, or under the terms of a transaction
constituting a Change of Control, the Administrator may provide for the
acceleration of the vesting and, if applicable, exercisability of any
outstanding Award, or portion thereof, or the lapsing of any conditions of
restrictions on or the time for payment in respect of any outstanding Award, or
portion thereof upon termination of the Participant’s employment following a
Change of Control.  In addition, unless
otherwise expressly provided in the Award Agreement or another contract,
including an employment agreement, or under the terms of a transaction constituting
a Change of Control, the Administrator may provide that any or all of the
following shall occur in connection with a Change of Control: (i) the
substitution for the Shares subject to any outstanding Award, or portion
thereof, stock or other securities of the surviving corporation or any
successor corporation to the Company, or a parent or subsidiary thereof, in
which event the aggregate purchase or exercise price, if any, of such Award, or
portion thereof, shall remain the same, (ii) the conversion of any
outstanding Award, or portion thereof, into a right to receive cash or other
property upon or following the consummation of the Change of Control in an
amount equal to the value of the consideration to be received by holders of
Common Shares in connection with such transaction for one Share, less the per
share purchase or exercise price of such Award, if any, multiplied by the
number of Shares subject to such Award, or a portion thereof, (iii) acceleration
of the vesting (and, as applicable, the exercisability) of any and/or all
outstanding Awards, and/or (iv) the cancellation of any outstanding and
unexercised Awards upon or following the consummation of the Change of
Control.  Any actions or determinations
of the Administrator pursuant to this Section 12(b) may, but need not
be uniform as to all outstanding Awards, and the Administrator may, but need
not treat all holders of outstanding Awards identically.

 

12

 

13.                               Performance-Based Compensation

 

The
Administrator may establish performance criteria and level of achievement
versus such criteria that shall determine the number of Shares to be granted,
retained, vested, issued or issuable under or in settlement of or the amount
payable pursuant to an Award. 
Notwithstanding satisfaction of any performance goals, the number of
Shares issued under or the amount paid under an award may, to the extent
specified in the Award Agreement, be reduced, but not increased, by the
Administrator on the basis of such further considerations as the Administrator
in its sole discretion shall determine.

 

14.                               Transferability

 

No
Award may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated by a Participant other than by will or the laws of descent and
distribution, and each Option or Stock Appreciation Right shall be exercisable
only by the Participant during his or her lifetime.  Notwithstanding the foregoing, to the extent
permitted by the Administrator, the person to whom an Award is initially granted
(the “Grantee”) may transfer an Award to any “family member” of the Grantee (as
such term is defined in Section 1(a)(5) of the General Instructions
to Form S-8 under the Securities Act of 1933, as amended (“Form S-8”)),
to trusts solely for the benefit of such family members and to partnerships in
which such family members and/or trusts are the only partners; provided that, (i) as
a condition thereof, the transferor and the transferee must execute a written
agreement containing such terms as specified by the Administrator, and (ii) the
transfer is pursuant to a gift or a domestic relations order to the extent
permitted under the General Instructions to Form S-8.  Except to the extent specified otherwise in
the agreement the Administrator provides for the Grantee and transferee to
execute, all vesting, exercisability and forfeiture provisions that are
conditioned on the Grantee’s continued employment, performance or service shall
continue to be determined with reference to the Grantee’s employment, performance
or service (and not to the status of the transferee) after any transfer of an
Award pursuant to this Section 14, and the responsibility to pay any taxes
in connection with an Award shall remain with the Grantee notwithstanding any
transfer other than by will or intestate succession.  Any attempted sale, transfer, pledge,
assignment, alienation or hypothecation of an Award by a Participant in
violation of this Section 14 shall result in forfeiture of such Award.

 

15.                               Suspension or Termination of Awards

 

Except
as otherwise provided by the Administrator, if at any time (including after a
notice of exercise has been delivered or an award has vested) the Chief
Executive Officer or any other person designated by the Administrator (each
such person, an “Authorized Officer”) reasonably believes that a Participant
may have committed any act constituting Cause for termination of employment, or
a violation of any non-competition covenant, the Authorized Officer,
Administrator or the Board may suspend the Participant’s rights to exercise any
Option, to vest in an Award, and/or to receive payment for or receive Shares in
settlement of an Award pending a determination of whether such an act has been
committed.

 

If
the Administrator or an Authorized Officer determines a Participant has
committed any act constituting Cause for termination of employment or a
violation of any non-competition covenant, then except as otherwise provided by
the Administrator, (a) neither the Participant nor 

 

13

 

his or her estate nor transferee shall be entitled to exercise any
Option or Stock Appreciation Right whatsoever, vest in or have the restrictions
on an Award lapse, or otherwise receive payment of an Award, (b) the
Participant will forfeit all outstanding Awards and (c) the Participant
may be required, at the Administrator’s sole discretion, to return and/or repay
to the Company any then unvested Shares previously issued under the Plan.  In making such determination, the
Administrator or an Authorized Officer shall give the Participant an
opportunity to appear and present evidence on his or her behalf at a hearing
before the Administrator or its designee or an opportunity to submit written
comments, documents, information and arguments to be considered by the
Administrator.

 

16.                               Compliance with Laws and Regulations

 

This
Plan, the grant, issuance, vesting, exercise and settlement of Awards
thereunder, and the obligation of the Company to sell, issue or deliver Shares
under such Awards, shall be subject to all applicable foreign, federal, state
and local laws, rules and regulations, stock exchange rules and
regulations, and to such approvals by any governmental or regulatory agency as
may be required.  The Company shall not
be required to register in a Participant’s name or deliver any Shares prior to
the completion of any registration or qualification of such shares under any
foreign, federal, state or local law or any ruling or regulation of any
government body which the Administrator shall determine to be necessary or
advisable.  To the extent the Company is
unable to or the Administrator deems it infeasible to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares
hereunder, the Company and its Subsidiaries shall be relieved of any liability
with respect to the failure to issue or sell such Shares as to which such
requisite authority shall not have been obtained.  No Option shall be exercisable and no Shares
shall be issued and/or transferable under any other Award unless a registration
statement with respect to the Shares underlying such Award is effective and
current or the Company has determined that such registration is unnecessary.

 

In
the event an Award is granted to or held by a Participant who is employed or
providing services outside the United States, the Administrator may, in its
sole discretion, modify the provisions of the Plan or of such Award as they
pertain to such individual to comply with applicable foreign law or to
recognize differences in local law, currency or tax policy.  The Administrator may also impose conditions
on the grant, issuance, exercise, vesting, settlement or retention of Awards in
order to comply with such foreign law and/or to minimize the Company’s
obligations with respect to tax equalization for Participants employed outside
their home country.

 

17.                               Withholding

 

To
the extent required by applicable federal, state, local or foreign law, a
Participant shall be required to satisfy, in a manner satisfactory to the
Company, any withholding tax obligations that arise by reason of an Option
exercise, disposition of Shares issued under an Incentive Stock Option, the
vesting of or settlement of an Award, an election pursuant to Section 83(b) of
the Code or otherwise with respect to an Award. 
To the extent a Participant makes an election under Section 83(b) of
the Code, within ten days of filing such election with the Internal Revenue
Service, the Participant must notify the Company in writing of such
election.  The Company and 

 

14

 

its Subsidiaries shall not be required to issue Shares, make any
payment or to recognize the transfer or disposition of Shares until all such
obligations are satisfied.  The
Administrator may provide for or permit these obligations to be satisfied
through the mandatory or elective sale of Shares and/or by having the Company
withhold a portion of the Shares that otherwise would be issued to him or her
upon exercise of the Option or the vesting or settlement of an Award, or by
tendering Shares previously acquired.

 

18.                               Administration of the Plan

 

(a)                                  Administrator
of the Plan.  The Plan
shall be administered by the Administrator who shall be the Compensation
Committee of the Board or, in the absence of a Compensation Committee, the
Board itself.  Any power of the
Administrator 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 Securities Exchange Act of 1934 or cause
an Award designated as a Performance Award not to qualify for treatment as
performance-based compensation under Section 162(m) of the Code.  To the extent that any permitted action taken
by the Board conflicts with action taken by the Administrator, the Board action
shall control.  The Compensation Committee
may by resolution authorize one or more officers of the Company to perform any
or all things that the Administrator is authorized and empowered to do or
perform under the Plan, and for all purposes under this Plan, such officer or
officers shall be treated as the Administrator; provided, however, that the
resolution so authorizing such officer or officers shall specify the total
number of Awards (if any) such officer or officers may award pursuant to such
delegated authority, and any such Award shall be subject to the form of Award
Agreement theretofore approved by the Compensation Committee.  No such officer shall designate himself or
herself as a recipient of any Awards granted under authority delegated to such
officer.  The Compensation Committee
hereby designates the Secretary of the Company and the head of the Company’s
human resource function to assist the Administrator in the administration of
the Plan and execute agreements evidencing Awards made under this Plan or other
documents entered into under this Plan on behalf of the Administrator or the
Company.  In addition, the Compensation
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)                                 Powers
of Administrator.  Subject to
the express provisions of this Plan, the Administrator shall be authorized and
empowered to do all things that it determines to be necessary or appropriate in
connection with the administration of this Plan, including, without limitation:
(i) to prescribe, amend and rescind rules and regulations relating to
this Plan and to define terms not otherwise defined herein; (ii) to
determine which persons are Participants, to which of such Participants, if
any, Awards shall be granted hereunder and the timing of any such Awards; (iii) to
grant Awards to Participants and determine the terms and conditions thereof,
including the number of Shares subject to Awards and the exercise or purchase
price of such Shares and the circumstances under which Awards become
exercisable or vested or are forfeited or expire, which terms may but need not
be conditioned upon the passage of time, continued employment, the satisfaction
of performance criteria, the occurrence of certain events (including a Change
of Control), or other factors; (iv) to establish and verify the extent of
satisfaction of any performance goals or other conditions applicable to the
grant, issuance, exercisability, vesting and/or ability to retain any Award; (v) to
prescribe and amend the terms of the agreements or 

 

15

 

other documents evidencing Awards made under this Plan (which need not
be identical) and the terms of or form of any document or notice required to be
delivered to the Company by Participants under this Plan; (vi) to
determine the extent to which adjustments are required pursuant to Section 12;
(vii) to interpret and construe this Plan, any rules and regulations
under this Plan and the terms and conditions of any Award granted hereunder,
and to make exceptions to any such provisions if the Administrator, in good
faith, determines that it is necessary to do so in light of extraordinary
circumstances and for the benefit of the Company; (viii) to approve
corrections in the documentation or administration of any Award; (ix) subject
to any stockholder approval required in accordance with Section 19, to
reduce the exercise price of any Option or Stock Appreciation Right to the Fair
Market Value of the Shares at the time of the reduction if the Fair Market
Value of the Shares covered by that Option or Stock Appreciation Right has
declined since the date it was granted, either directly or through cancellation
and regrant of the Option or Stock Appreciation Right; (x) subject to any
stockholder approval required in accordance with Section 19, to exchange
Options and Stock Appreciation Rights for other Awards; (xi) to cause the
Company to purchase outstanding Options and Stock Appreciation Rights for cash
or other consideration; (xii) to require or permit Participant elections
and/or consents under this Plan to be made by means of such electronic media as
the Administrator may prescribe; and (xiii) to make all other determinations
deemed necessary or advisable for the administration of this Plan.  The Administrator may, in its sole and
absolute discretion, without amendment to the Plan, waive or amend the
operation of Plan provisions respecting exercise after termination of employment
or service to the Company or a Company Affiliate and, except as otherwise
provided herein, adjust any of the terms of any Award.  The Administrator may also (A) accelerate
the date on which any Award granted under the Plan becomes exercisable or (B) accelerate
the vesting date or waive or adjust any condition imposed hereunder with
respect to the vesting or exercisability of an Award, provided that the
Administrator, in good faith, determines that such acceleration, waiver or
other adjustment is necessary or desirable in light of extraordinary
circumstances.

 

(c)                                  Determinations
by the Administrator.  All
decisions, determinations and interpretations by the Administrator regarding
the Plan, any rules and regulations under the Plan and the terms and
conditions of or operation of any Award granted hereunder, shall be final and
binding on all Participants, beneficiaries, heirs, assigns or other persons
holding or claiming rights under the Plan or any Award.  The Administrator shall consider such factors
as it deems relevant, in its sole and absolute discretion, to making such
decisions, determinations and interpretations including, without limitation,
the recommendations or advice of any officer or other employee of the Company
and such attorneys, consultants and accountants as it may select.

 

(d)                                 Subsidiary
Awards.  In the case of a grant of an
Award to any Participant employed by a Subsidiary, such grant may, if the
Administrator so directs, be implemented by the Company issuing any subject
Shares to the Subsidiary, for such lawful consideration as the Administrator
may determine, upon the condition or understanding that the Subsidiary will
transfer the Shares to the Participant in accordance with the terms of the
Award specified by the Administrator pursuant to the provisions of the Plan.  Notwithstanding any other provision hereof,
such Award may be issued by and in the name of the Subsidiary and shall be
deemed granted on such date as the Administrator shall determine.

 

16

 

19.                               Amendment of the Plan or Awards

 

The
Board may amend, alter or discontinue this Plan and the Administrator may amend
or alter any agreement or other document evidencing an Award made under this
Plan but, except as provided pursuant to the provisions of Section 12, no
such amendment shall, without the approval of the stockholders of the Company:

 

(a)                                  increase the
maximum number of Shares for which Awards may be granted under this Plan;

 

(b)                                 reduce the
price at which Options may be granted below the price provided for in Section 6(b);

 

(c)                                  change the
class of persons eligible to be Participants; or

 

(d)                                 otherwise amend
the Plan in any manner requiring stockholder approval by law or under stock
exchange listing requirements.

 

No
amendment or alteration to the Plan or an Award or Award Agreement shall be
made which would impair the rights of the holder of an Award, without such
holder’s consent, provided that no such consent shall be required if the
Administrator determines in its sole discretion and prior to the date of any
Change of Control that such amendment or alteration either is required or
advisable in order for the Company, the Plan or the Award to satisfy any law or
regulation or to meet the requirements of or avoid adverse financial accounting
consequences under any accounting standard.

 

20.                               No Liability of Company

 

The
Company and any Subsidiary or affiliate which is in existence or hereafter
comes into existence shall not be liable to a Participant or any other person
as to: (i) the non-issuance or sale of Shares as to which the Company has
been unable to obtain from any regulatory body having jurisdiction the
authority deemed by the Company’s counsel to be necessary to the lawful
issuance and sale of any Shares hereunder; and (ii) any tax consequence
expected, but not realized, by any Participant or other person due to the
receipt, exercise or settlement of any Award granted hereunder.

 

21.                               Non-Exclusivity of Plan

 

Neither
the adoption of this Plan by the Board nor the submission of this Plan to the
stockholders of the Company for approval shall be construed as creating any
limitations on the power of the Board or the Administrator to adopt such other
incentive arrangements as either may deem desirable, including without
limitation, the granting of restricted stock or stock options otherwise than
under this Plan or an arrangement not intended to qualify under Code Section 162(m),
and such arrangements may be either generally applicable or applicable only in
specific cases.

 

17

 

22.                               No Right to Employment, Reelection or Continued
Service

 

Nothing
in this Plan or an Award Agreement shall interfere with or limit in any way the
right of the Company, its Subsidiaries and/or its affiliates to terminate any
Participant’s employment, service on the Board or service for the Company at
any time or for any reason not prohibited by law, nor shall this Plan or an
Award itself confer upon any Participant any right to continue his or her
employment or service for any specified period of time.  Neither an Award nor any benefits arising
under this Plan shall constitute an employment contract with the Company, any
Subsidiary and/or its affiliates. 
Subject to Sections 4 and 19, this Plan and the benefits hereunder
may be terminated at any time in the sole and exclusive discretion of the Board
without giving rise to any liability on the part of the Company, its
Subsidiaries and/or its affiliates.

 

23.                               Unfunded Plan

 

The
Plan is intended to be an unfunded plan. 
Participants are and shall at all times be general creditors of the
Company with respect to their Awards.  If
the Administrator or the Company chooses to set aside funds in a trust or
otherwise for the payment of Awards under the Plan, such funds shall at all
times be subject to the claims of the creditors of the Company in the event of
its bankruptcy or insolvency.

 

24.                               Section 409A
of the Code

 

It
is intended that any Incentive and Nonqualified Stock Options, Stock
Appreciation Rights, and Restricted Stock issued pursuant to this Plan and any
Award Agreement shall not constitute “Deferrals of Compensation” within the
meaning of Section 409A of the Code and, as a result, shall not be subject
to the requirements of Section 409A of the Code. It is further intended
that any Restricted Stock Units and Incentive Bonuses issued pursuant to this
Plan and any Award Agreement (which may or may not constitute “deferrals of
compensation,” depending on the terms of each Award) shall avoid any “plan
failures” within the meaning of Section 409A(a)(1) of the Code. The
Plan is to be interpreted and administered in a manner consistent with these
intentions. However, no guarantee or commitment is made that the Plan or any
Award Agreement shall be administered in accordance with the requirements of Section 409A
of the Code, with respect to amounts that are subject to such requirements, or
that the Plan or any Award Agreement shall be administered in a manner that
avoids the application of Section 409A of the Code, with respect to
amounts that are not subject to such requirements.

 

25.                               Required
Delay in Payment on Account of a Separation from Service

 

Notwithstanding
any other provision in this Plan or any Award Agreement, if any Award recipient
is a “specified employee,” as defined in Treasury Regulations section 1.409A-1(i),
as of the date of his or her “Separation from Service” (as defined in
authoritative IRS guidance under Section 409A of the Code), then, to the
extent required by Treasury Regulations section 1.409A-3(i)(2), any payment
made to the Award recipient on account of his or her Separation from Service
shall not be made before a date that is six months after the date of his or her
Separation from Service. The Administrator may elect any of the methods of
applying this rule that are permitted under Treasury Regulations section
1.409A-3(i)(2)(ii).

 

18

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