Document:

Exhibit 10.41

 

SECOND AMENDMENT
 TO
 SECOND AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT
 AMONG
 DOUGLAS DYNAMICS, INC.
 (fka DOUGLAS DYNAMICS HOLDINGS, INC.)
 AND
 CERTAIN OF ITS
 STOCKHOLDERS, OPTIONHOLDERS AND WARRANTHOLDERS
 DATED AS OF MAY 4, 2010

 

 

THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SECURITYHOLDERS AGREEMENT (the “Amendment”), dated as of May 4, 2010, is being entered into by and among Douglas Dynamics, Inc. (formerly known as Douglas Dynamics Holdings, Inc.), a Delaware corporation (the “Company”), Aurora Equity Partners II L.P., a Delaware limited partnership, Aurora Overseas Equity Partners II, L.P., a Cayman Islands exempt limited partnership, Ares Corporate Opportunities Fund, L.P., a Delaware limited partnership, the holders of a majority in voting interests of the Common Stock and Preferred Stock, voting together as a single class, held by the Securityholders, and each of the Class A Securityholders listed on Exhibit A.  All capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement (as defined below).

 

R E C I T A L S

 

WHEREAS, the Company and the Securityholders are parties to that certain Second Amended and Restated Securityholders Agreement dated as of June 30, 2004, as amended by that certain First Amendment thereto dated December 27, 2004 (the “Agreement”);

 

WHEREAS, in connection with the proposed initial public offering of the Common Stock, the parties hereto desire to enter into this Amendment to amend the Agreement as set forth below; and

 

WHEREAS, pursuant to Section 13.2 of the Agreement, the Agreement may be amended, modified or supplemented by written agreement of the parties hereto.

 

A G R E E M E N T

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

A.            Amendment to the Agreement

 

1.             The first paragraph under the heading “RECITALS” is hereby amended and restated in its entirety to read as follows:

 

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WHEREAS, upon adoption of the Company’s 4th Amended and Restated Certificate of Incorporation which is anticipated to occur on or about May 10, 2010, the Company will be authorized to issue an aggregate of 205,000,000 shares of capital stock, including 200,000,000 shares of common stock, par value $.01 per share, and 5,000,000 shares of preferred stock, par value $.01 per share; and

 

2.             The definition of “Preferred Stock” set forth in Section 1.1 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

“Preferred Stock” means any preferred stock of the Company issued after the date hereof howsoever designated that is entitled to any preference over the Common Stock in the payment of dividends or in the distribution of assets upon liquidation of the Company.

 

3.             The following shall be added as a new Section 3.5 of the Agreement:

 

3.5           Additional Restriction on Transfer by Certain Class A Securityholders.  Subject to Article VI, each Class A Securityholder whose name is set forth on Exhibit A hereto (each, a “Specified Securityholder,” and collectively, the “Specified Securityholders”) agrees that, without the consent of the Aurora Entities (which consent shall not be unreasonably withheld with respect to any Transfer of Securities to a Permitted Transferee), after the occurrence of the Qualified IPO Date, such Specified Securityholder will not effectuate any Transfer or submit to any broker any sell order with respect to a proposed Transfer, of Securities at any time other than pursuant to a Tag-Along Sale by the Aurora Entities pursuant to Section 6 herein.  Notwithstanding the foregoing, upon the occurrence of a “Tax Event” the  Specified Securityholder shall be permitted to sell a number of Securities with a market value (calculated at the time of sale based on the market price at that time) equal to an amount that would provide the Specified Securityholder with after-tax proceeds from such sale equal to the Tax Amount.  “Tax Event” shall mean the recognition of ordinary compensation income by a Specified Securityholder for United States federal income tax purposes as a result of the transfer, issuance, or vesting of Securities granted by the Company or any direct or indirect Subsidiaries of the Company to the Specified Securityholder in connection with the performance of services.  The “Tax Amount” shall mean the sum of the (a) compensation income required to be included in the Specified Securityholder’s taxable income for federal and state income tax purposes multiplied by the maximum marginal federal, state and local income tax rate applicable for such period and (b) other taxes imposed on such income (including FICA, FUTA, Medicare and AMT).  The Securities that are permitted to be sold pursuant to this paragraph may be sold only within one (1) week after the applicable transfer, issuance or vesting that gives rise to the ordinary income recognition described above.  The restrictions set forth in this Section 3.5 shall terminate upon such date as the Aurora Entities cease to collectively beneficially own at least 10% of the Company’s outstanding common stock.

 

4.             Section 6.1 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

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6.1           “Tag-Along” Sales.  If either or both of the Aurora Entities (for purposes of this Section 6, collectively the “Proposed Transferor”) at any time or from time to time, in one transaction or in a series of related transactions, desire to enter into an agreement (whether oral or written) to Transfer (for purposes of this Section 6, a “Tag-Along Sale”) shares of Common Stock to any Person, then each of the Specified Securityholders shall have the right, but not the obligation, to elect that the Proposed Transferor be obligated to require, as a condition to such Tag-Along Sale, that the proposed purchaser purchase from each such electing Specified Securityholder up to the number of shares of Common Stock derived by multiplying the total number of shares of Common Stock owned by or issuable to such electing Specified Securityholder by a fraction, the numerator of which is equal to the number of shares of Common Stock then owned by or issuable to the Proposed Transferor that are to be purchased by the proposed purchaser (without giving effect to any reduction in such number of shares by reason of any Specified Securityholder’s election to exercise the “tag-along” rights provided in this Section 6 in connection with such transaction) and the denominator of which is the total number of shares of Common Stock owned by or issuable to the Proposed Transferor prior to such sale; provided,  however, that if any Specified Securityholder chooses not to sell any or all Securities which such Specified Securityholder may be entitled to sell under this Section 6.1, the Proposed Transferor may sell, in the same transaction, additional shares of Common Stock equal to the difference between the number of shares of Common Stock which such Specified Securityholder is entitled to sell and the number of shares of Common Stock such Specified Securityholder chooses to sell, if any.  Any such sales by any Specified Securityholder shall be on the same terms and conditions as the proposed Tag-Along Sale by the Proposed Transferor.  Each Specified Securityholder whose Securities are sold in a Tag-Along Sale shall be required to bear a proportionate share of the expenses of the transaction, including, without limitation, legal, accounting and investment banking fees and expenses.

 

5.             Section 6.2 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

6.2           Notice of Tag-Along Opportunity.  The Proposed Transferor shall promptly (and in no event less than fifteen (15) Business Days prior to the consummation thereof) provide the Company with notice (for purposes of this Section 6, the “Proposed Transferor Notice”) of the proposed Tag-Along Sale (which the Company shall transmit to each Specified Securityholder within two (2) Business Days after its receipt thereof) containing the following:

 

(a)           the name and address of the proposed transferee of the Common Stock in the Tag-Along Sale;

 

(b)           the number of shares of Common Stock proposed to be Transferred by the Proposed Transferor in the event none of the Specified Securityholders elects to participate;

 

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(c)           the proposed amount and form of consideration to be paid for such Common Stock and the terms and conditions of payment offered by the proposed transferee;

 

(d)           the aggregate number of shares of Common Stock held of record by the Proposed Transferor as of the date of the notice (for purposes of this Section 6, “Notice Date”) from the Proposed Transferor to the Company;

 

(e)           the aggregate number of shares of Common Stock held of record as of the Notice Date by all Specified Securityholders as a group;

 

(f)            the maximum number of shares of Common Stock each such Specified Securityholder is entitled to include in the Tag-Along Sale (as computed in accordance with the equations set forth in Section 6.1); and

 

(g)           that the proposed transferee has been informed of the “tag-along” rights provided for in Section 6.1.

 

6.             Section 6.3 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

6.3           Notice and Terms of Acceptance of Tag-Along Opportunity.

 

(a)           If a Specified Securityholder desires to participate in such Tag-Along Sale, such Specified Securityholder shall provide written notice (the “Tag-Along Notice”) to the Proposed Transferor not later than five (5) Business Days after the Notice Date setting forth the number of shares of Common Stock, if any, such Specified Securityholder elects to include in the Tag-Along Sale.

 

(b)           The Tag-Along Notice given by any Specified Securityholder shall constitute such Specified Securityholder’s binding agreement to sell such Common Stock as are included therein on the terms and conditions applicable to such sale (including the requirements of this Section 6), in which case the number of shares of Common Stock to be Transferred by the Proposed Transferor shall be correspondingly reduced.  In the event that the proposed transferee does not purchase the Securities of the Proposed Transferor, then the proposed Tag-Along Sale by the Specified Securityholders to such proposed transferee shall not take place.  If the Tag-Along Notice from any Specified Securityholder is not received by the Proposed Transferor within the five (5) Business Day period specified above in this Section 6.3, the Proposed Transferor shall have the right to transfer the Securities of Common Stock to the proposed transferee without any participation by such Specified Securityholder, but only on the terms and conditions stated in the notice to such Specified Securityholders or on terms and conditions no more favorable to the Proposed Transferor and only if a definitive and binding agreement to sell or otherwise transfer such Common Stock is entered into not later than forty-five (45) days after the end of such five (5) Business Day period specified above in this Section 6.3.

 

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7.             Section 6.4 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

6.4           Application of Tag-Along Provisions.  The provisions of this Section 6 shall not apply to:

 

(a)           any Transfer to a Permitted Transferee; or

 

(b)           any one transaction or series of related transactions involving the Transfer (other than to a Permitted Transferee) by the Proposed Transferor of less than 1% of the issued and outstanding shares of Common Stock.

 

8.             Section 6.5 of the Agreement is hereby amended and restated in its entirety to read as follows:

 

6.5           Termination of Tag-Along Rights.

 

(a)           Notwithstanding anything herein to the contrary, the rights and obligations provided for in this Section 6 shall terminate with respect to all Securities held by each Other Securityholder (other than any Specified Securityholder, the rights of whom will be set forth in Section 6.5(b)), upon the occurrence of the Qualified IPO Date.

 

(b)           Following the occurrence of the Qualified IPO Date, each Specified Securityholder shall be entitled to the rights and obligations provided for in this Section 6 solely with respect to any Transfer by the Aurora Entities.

 

B.            Miscellaneous

 

1.             Except as amended as set forth above, the Agreement shall continue in full force and effect.

 

2.             This Amendment may be signed in one or more counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed one and the same document.

 

[Signature Pages follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this First Amendment to Second Amended and Restated Securityholders Agreement as of the date first written above.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
DOUGLAS DYNAMICS, INC.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James L. Janik
    
	
 
    	
Name:  James L. Janik
    
	
 
    	
Title:  President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SECURITYHOLDERS:
    
	
 
    	
 
    
	
 
    	
AURORA EQUITY PARTNERS II L.P.
    
	
 
    	
 
    
	
 
    	
By: Aurora Capital Partners II L.P., its general partner
    
	
 
    	
 
    
	
 
    	
By: Aurora Advisors II LLC, its general partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Timothy J. Hart
    
	
 
    	
Name:  Timothy J. Hart
    
	
 
    	
Title:  Vice President, Secretary and General   Counsel
    
	
 
    	
 
    
	
 
    	
AURORA OVERSEAS EQUITY PARTNERS II, L.P.
    
	
 
    	
 
    
	
 
    	
By: Aurora Overseas Capital Partners II L.P., its   general partner
    
	
 
    	
 
    
	
 
    	
By: Aurora Overseas Advisors II LDC, its general   partner
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Timothy J. Hart
    
	
 
    	
Name:  Timothy J. Hart
    
	
 
    	
Title:  Vice President, Secretary and General   Counsel
    

 

 

	
 
    	
ARES CORPORATE   OPPORTUNITIES FUND, L.P.
    
	
 
    	
 
    
	
 
    	
By:   ACOF Operating Manager,   L.P., its manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael D. Weiner
    
	
 
    	
Name:  Michael D. Weiner
    
	
 
    	
Title:  Authorized Signatory
    
	
 
    	
 
    
	
 
    	
DOUGLAS DYNAMICS EQUITY   PARTNERS L.P.
    
	
 
    	
By:
    	
AURORA ADVISORS II LLC,
    
	
 
    	
 
    	
its general partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Timothy J. Hart
    
	
 
    	
Name:  Timothy J. Hart
    
	
 
    	
Title:  Vice President, Secretary and General   Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
GENERAL ELECTRIC   PENSION TRUST
    
	
 
    	
 
    
	
 
    	
By:
    	
GE ASSET MANAGEMENT INCORPORATED,
    
	
 
    	
 
    	
its investment manager
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael M. Pastore 
    
	
 
    	
Name: Michael M. Pastore 
    
	
 
    	
Title: Senior Vice   President 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AURORA CAPITAL GROUP   401(k) PLAN
    
	
 
    	
fbo Gerald L. Parsky
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John F. F. Billings
    
	
 
    	
Name:  John F. F. Billings
    
	
 
    	
Title:  Trustee Assistant Vice President &   Trust Officer
    
				

 

 

	
 
    	
AURORA CAPITAL GROUP   401(k) PLAN
    
	
 
    	
fbo Richard K. Roeder
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John F. F. Billings
    
	
 
    	
Name:  John F. F. Billings
    
	
 
    	
Title:  Trustee Assistant Vice President &   Trust Officer
    
	
 
    	
 
    
	
 
    	
AURORA CAPITAL   GROUP 401(k) PLAN
    
	
 
    	
fbo John T.   Mapes
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John F. F. Billings
    
	
 
    	
Name:  John F. F. Billings
    
	
 
    	
Title:  Trustee Assistant Vice President &   Trust Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
JAMES D. AND MARIA D. HODGSON INTERVIVOS PERSONAL   TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Hodgson
    
	
 
    	
Name:  James Hodgson
    
	
 
    	
Title:  Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DALE FREY FAMILY   LIMITED PARTNERSHIP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Kyle Frey
    
	
 
    	
Name:  Kyle Frey
    
	
 
    	
Title:  General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard K. Roeder
    
	
 
    	
Name:  Richard K. Roeder
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard R. Crowell
    
	
 
    	
Name:  Richard R. Crowell
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Lawrence A. Bossidy
    
	
 
    	
Name:  Lawrence A. Bossidy
    

 

 

	
 
    	
DIANE ANDERSON REVOCABLE TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Diane Anderson
    
	
 
    	
Name: 
    
	
 
    	
Title:  Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ROBERT ANDERSON, JR. REVOCABLE TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Anderson
    
	
 
    	
Name: Robert Anderson
    
	
 
    	
Title:  Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ROBERT ANDERSON LIVING TRUST
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Anderson
    
	
 
    	
Name: Robert Anderson
    
	
 
    	
Title:  Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James R. Roethle
    
	
 
    	
Name:  James R. Roethle
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Flemming H. Smitsdorff
    
	
 
    	
Name:  Flemming H. Smitsdorff
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Raymond S. Littlefield
    
	
 
    	
Name:  Raymond S. Littlefield
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Ralph R. Gould
    
	
 
    	
Name:  Ralph R. Gould
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James L. Janik
    
	
 
    	
Name:  James L. Janik
    

 

 

	
 
    	
By:
    	
/s/ Robert McCormick
    
	
 
    	
Name:  Robert McCormick
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Mark Adamson
    
	
 
    	
Name:  Mark Adamson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Jack O. Peiffer
    
	
 
    	
Name:  Jack O. Peiffer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Michael Wickham
    
	
 
    	
Name:  Michael Wickham
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Anderson
    
	
 
    	
Name:  John Anderson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Robert Anderson
    
	
 
    	
Name:  Robert Anderson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Simon Ramo
    
	
 
    	
Name:  Simon Ramo
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Hodgson
    
	
 
    	
Name:  James Hodgson
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Dale Frey
    
	
 
    	
Name:  Dale Frey
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Keith Hagelin
    
	
 
    	
Name:  Keith Hagelin
    
				

 

 

	
 
    	
By:
    	
/s/ Robert Young
    
	
 
    	
Name:  Robert Young
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Murphy
    
	
 
    	
Name:  John Murphy
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ James Klotz
    
	
 
    	
Name:  James Klotz
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Linda Evans
    
	
 
    	
Name:  Linda Evans
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Steven Klug
    
	
 
    	
Name:  Steven Klug
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Paul Stolzman
    
	
 
    	
Name:  Paul Stolzman
    

 

 

EXHIBIT A

 

	
1.
    	
James Janik
    
	
 
    	
 
    
	
2.
    	
Robert McCormick
    
	
 
    	
 
    
	
3.
    	
Mark Adamson
    
	
 
    	
 
    
	
4.
    	
Keith Hagelin
    
	
 
    	
 
    
	
5.
    	
Ralph Gould
    
	
 
    	
 
    
	
6.
    	
Flemming Smitsdorff
    
	
 
    	
 
    
	
7.
    	
Raymond Littlefield
    
	
 
    	
 
    
	
8.
    	
James RoethleExhibit 10.43

 

SECOND AMENDED AND RESTATED
 JOINT MANAGEMENT SERVICES AGREEMENT

 

This Second Amended and Restated Joint Management Services Agreement (the “Agreement”) is made and entered into as of May 10, 2010 by and among Douglas Dynamics, Inc. (formerly known as Douglas Dynamics Holdings, Inc.), a Delaware corporation (the “Company”), Douglas Dynamics, L.L.C., a Delaware limited liability company (“Douglas”), Aurora Management Partners LLC, a Delaware limited liability company (“AMP”), and ACOF Management, L.P., a Delaware limited partnership (“ACOF”), and shall become effective immediately following the closing of the Company’s initial public offering of its common stock (the “Effective Time”).

 

WHEREAS, the Company, Douglas, AMP and ACOF are parties to that certain Amended and Restated Joint Management Services Agreement dated as of April 12, 2004 (the “Prior Agreement”) pursuant to which the Company and Douglas received financial consulting services from AMP and ACOF upon the terms and conditions set forth in the Prior Agreement, which the Company and Douglas believe have been beneficial to them and their respective subsidiaries; and

 

WHEREAS, the Company and Douglas desire to continue to receive from AMP and ACOF the Services (as defined below) and therefore wish to extend the term for which AMP and ACOF will provide the Services upon the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties agree as follows:

 

1.             Scope of Services.  AMP and ACOF, through their respective employees, Affiliates and employees of Affiliates, shall provide the Company and Douglas with consultation and advice in such fields as financial services, accounting, general business management, acquisitions, dispositions, banking and other matters (the “Services”).  AMP and ACOF shall, in their respective reasonable discretion, determine the amount of time to be expended by their respective Affiliates and employees in performing such Services.  AMP and ACOF shall perform their respective duties hereunder at such times and places as are reasonable, in the reasonable discretion of AMP or ACOF, as the case may be, in light of the tasks involved.  Neither AMP nor ACOF shall be required to comply with any established work schedule and neither AMP nor ACOF shall have regularly scheduled duties assigned to it by the Company and/or Douglas.  The Company and/or Douglas shall, in soliciting AMP’s or ACOF’s advice and requesting AMP’s or ACOF’s performance of its duties hereunder, give AMP or ACOF, as the case may be, reasonable advance notice of the same in consideration of AMP’s and ACOF’s other business obligations.

 

2.             Compensation.

 

(a)           As used herein, the following terms are defined as follows:

 

(i)            “Affiliate” of a specified Person means a Person that controls, is controlled by, or is under common control with, the specified Person, and in this context, 

 

 

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

 

(ii)           “Person” means  a natural person, a company, a corporation, a joint venture, a limited liability company, a partnership, a trust, an unincorporated association or organization or other legal entity, or a government or an agency or political subdivision thereof.

 

(iii)          “Pro-Rata Portion” means 63.6% with respect to AMP and 36.4% with respect to ACOF.

 

(b)           In consideration of the Services to be rendered hereunder, the Company and Douglas, jointly and severally, hereby agree to pay AMP and ACOF a lump sum one-time fee of $5,800,000.00, which payment shall be made promptly following the Effective Time by wire transfer in same-day funds to the bank accounts designated by AMP and ACOF and shall not be refundable under any circumstances.  AMP and ACOF will share in such fee based on their respective Pro-Rata Portion.

 

3.             Reimbursements.  Subject to obtaining the approval of the Boards of Directors of the Company and Douglas (or any committees thereof) that may be required (if any) from time to time under applicable law or stock exchange policy, in addition to the fees payable pursuant to this Agreement, the Company and/or Douglas will pay, or cause to be paid, directly, or reimburse AMP, ACOF and each of their respective Affiliates for, their respective Out-of-Pocket Expenses (as defined below).  For the purposes of this Agreement, the term “Out-of-Pocket Expenses” means the reasonable out-of-pocket costs and expenses incurred by AMP, ACOF and their respective Affiliates (i) in connection with the Services provided under the Prior Agreement and any services provided under this Agreement (including prior to the Effective Time or the date of the Prior Agreement) and (ii) in order to make Securities and Exchange Commission and other legally required filings relating to the ownership of capital stock of the Company or its successor by AMP and ACOF or their respective Affiliates, or otherwise incurred by AMP and ACOF or their respective Affiliates from time to time in the future in connection with the ownership or subsequent sale or transfer by AMP and ACOF or their respective Affiliates of capital stock of the Company or its successor, including, without limitation, (a) fees and disbursements of any independent professionals and organizations, including independent accountants, outside legal counsel or consultants, retained by AMP and ACOF or any of their respective Affiliates, (b) costs of any outside services or independent contractors such as couriers, business publications, online financial services or similar services, retained or used by AMP and ACOF or any of their respective Affiliates and (c) transportation, per diem costs, word processing expenses or any similar expense not associated with AMP’s, ACOF’s or their respective Affiliates’ ordinary operations.  All payments or reimbursements for Out-of-Pocket Expenses will be made by wire transfer in same-day funds promptly upon or as soon as practicable following request for payment or reimbursement in accordance with this Agreement, to the bank account indicated to the Company and/or Douglas by the relevant payee.

 

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4.             Term.  Unless earlier terminated as provided in Section 5 below, the term of this Agreement and the obligations of AMP and ACOF hereunder shall commence on the Effective Time and shall terminate automatically on the earlier to occur of (i) fifth anniversary of the Effective Time (ii) the date on which AMP and ACOF and their respective Affiliates (in the aggregate) collectively own less than 5% of the common stock of the Company then outstanding and (iii) such earlier date as the parties hereto mutually agree in writing.   The expiration of the term of this Agreement shall not adversely affect AMP’s or ACOF’s right, as the case may be, to receive any compensation accrued prior to the date of such termination or any rights to receive reimbursement of any out-of-pocket expenses incurred by AMP or ACOF, as the case may be, prior to the date of such termination.  The provisions of Sections 6, 7, 8, 9, 10, 11, 12 and 13 shall survive the expiration of the term of this Agreement or any termination of this Agreement.

 

5.             Termination for Cause.

 

(a)           The Company, by written notice to AMP authorized by a majority of the directors (other than those affiliated with AMP), may terminate this Agreement with respect to AMP for justifiable cause, which shall mean any of the following events:  (a) misappropriation by AMP of funds or property of the Company and/or Douglas; (b) gross neglect or willful misconduct by AMP in the fulfillment of its obligations hereunder; or (c) the conviction of AMP or any person who is then a member of AMP of a felony involving moral turpitude that has become final and not subject to further appeal.  The termination of this Agreement with respect to AMP shall not adversely affect any of ACOF’s rights under this Agreement.

 

(b)           The Company, by written notice to ACOF authorized by a majority of the directors (other than those affiliated with ACOF), may terminate this Agreement with respect to ACOF for justifiable cause, which shall mean any of the following events:  (a) misappropriation by ACOF of funds or property of the Company and/or Douglas; (b) gross neglect or willful misconduct by ACOF in the fulfillment of its obligations hereunder; or (c) the conviction of ACOF or any person who is then a member of ACOF of a felony involving moral turpitude that has become final and not subject to further appeal.  The termination of this Agreement with respect to ACOF shall not adversely affect any of AMP’s rights under this Agreement.

 

6.             Confidential Information.  During the term of this Agreement, AMP and ACOF will have access to and become acquainted with confidential information of the Company and/or Douglas, including among other things customer relationships, processes, and compilations of information, records and specifications, which are owned by the Company and/or Douglas.  AMP and ACOF shall not use or disclose any of the Company’s and/or Douglas’ confidential information in any way that is detrimental to the interests of the Company and/or Douglas, directly or indirectly, either during or within three (3) years after the term of this Agreement, except as required in the course of this Agreement.  AMP shall be responsible for any breaches of this Section 6 by AMP’s officers, directors, employees and advisors.  ACOF shall be responsible for any breaches of this Section 6 by ACOF’s officers, directors, employees and advisors.

 

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7.             Notices.  All notices, demands and requests required under this Agreement shall be in writing and shall be deemed to have been given if served personally or sent by registered or certified mail, postage prepaid, or by telegraph or telex addressed to the addressee set forth or such other addresses as either party may designate by notice to the other:

 

	
If   to the Company:
    	
Douglas   Dynamics, Inc.

7777   North 73rd Street

P.O. Box   2345038

Milwaukee,   Wisconsin

Telecopier:   (414) 354-8448

Attn:   Chief Executive Officer
    
	
 
    	
 
    
	
If   to Douglas:
    	
Douglas   Dynamics, L.L.C.

7777   North 73rd Street

P.O. Box   2345038

Milwaukee,   Wisconsin

Telecopier:   (414) 354-8448

Attn:   Chief Executive Officer
    
	
 
    	
 
    
	
If   to AMP:
    	
Aurora   Management Partners LLC

10877   Wilshire Boulevard

Suite 2100

Los   Angeles, CA 90024

Telecopier   No: (310) 227-5591

Attn:   Timothy J. Hart
    
	
 
    	
 
    
	
If   to ACOF:
    	
ACOF   Management, L.P.

2000   Avenue of the Stars

12th   Floor

Los   Angeles, California 90067

Telecopier:   (310) 201-4157

Attn:   Jeffrey Serota
    

 

Notices delivered in person shall be effective when so delivered.  Notices delivered by courier shall be effective three (3) business days after delivery by the sender to an air courier of national reputation who guarantees delivery within such three (3) business day period.  Telecopied notices shall be effective when receipt is acknowledged telephonically by the addressee or its agent or employee.  Notices sent by mail shall be effective five (5) business days after the sender’s deposit of such notice in the United States mails, first class postage prepaid.

 

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8.             Assigns and Successors.  The rights and obligations of the Company and Douglas under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of the Company and Douglas, respectively.  The rights and obligations of AMP under this Agreement may be assigned by AMP in its sole discretion to an Affiliate of AMP.  The rights and obligations of ACOF under this Agreement may be assigned by ACOF in its sole discretion to an Affiliate of ACOF.

 

9.             Attorneys’ Fees.  If any legal proceeding is necessary to enforce or interpret the terms of this Agreement, or to recover damages for breach thereof, the prevailing party shall be entitled to reasonable attorneys’ fees, as well as costs and disbursements, in addition to any other relief to which he or she is entitled.

 

10.           Indemnity.  To the same extent as the Company or Douglas provides indemnification (whether through contract or the Company’s Certificate of Incorporation or Bylaws or Douglas’ Operating Agreement) to its directors and officers, the Company and Douglas, jointly and severally, shall indemnify and hold each of AMP, ACOF and their respective partners, members, officers, employees, agents and Affiliates and the stockholders, partners, members, Affiliates, directors, officers and employees of any of the foregoing (and representatives and agents of any of the foregoing designated by AMP or ACOF, as the case may be, from time to time whether before or after the occurrence of the event giving rise to the claim for indemnity) (each such person entitled to indemnity hereunder being referred to as an “Indemnitee”) harmless from any and all losses, costs, liabilities and damages (including reasonable attorneys’ fees) arising out of or connected with, or claimed to arise out of or to be connected with, any act performed or omitted to be performed under this Agreement or otherwise relating to the business or affairs of the Company or its respective Affiliates, provided such act or omission was taken in good faith by such Indemnitee and did not constitute gross negligence or willful misconduct on the part of the relevant Indemnitee, and provided further only in the event of criminal proceedings, that the Indemnitee had no reasonable cause to believe the conduct of the Indemnitee was unlawful.  An adverse judgment or plea of nolo contendere shall not, of itself, create a presumption that the Indemnitee did not act in good faith or that the Indemnitee had reasonable cause to believe the conduct of the Indemnitee was unlawful.  Expenses incurred in defending any civil or criminal action arising out of or relating to any event or circumstance to which this indemnity shall apply shall be paid by the Company and/or Douglas, as the case may be, upon receipt of an undertaking by or on behalf of the Indemnitee to repay such amount if it be later shown that such Indemnitee was not entitled to indemnification.  No Indemnitee shall be liable to the Company, Douglas or any of their respective Affiliates, stockholders, partners, members, directors, officers or employees or any Affiliates, stockholders, partners, members, directors, officers, employees, representatives or agents of any of the foregoing or any other person claiming through any of the foregoing for any act or omission by AMP or ACOF, as the case may be, in the performance of their respective duties hereunder or otherwise in relation hereto which was taken or omitted to be taken in good faith by such Indemnitee and which did not constitute gross negligence or willful misconduct on the part of such Indemnitee.

 

11.           Outside Activities of AMP and ACOF.  Each of AMP and ACOF shall be entitled to and may have business interests and engage in business activities in addition to the 

 

5

 

activities contemplated by this Agreement.  Neither of AMP, ACOF, any partner, member, officer, employee or Affiliate of AMP or ACOF nor any stockholder, partner, members, director, officer or employee of any of the foregoing shall have any obligation or duty to offer any investment or business opportunity (other than an opportunity directly involving the snow and ice control equipment industry) of any kind to the Company and/or Douglas or any of their respective stockholders, directors, officers or employees (under any doctrine of “corporate opportunity” or otherwise), it being expressly understood that AMP, ACOF, and their respective partners, members, officers, employees and Affiliates and the stockholders, partners, members, directors, officers and employees of any of the foregoing may make investments in, acquire, or provide management, advisory or consulting services to, entities engaged in businesses similar to the business of the Company and/or Douglas without any duty, obligation or liability to the Company and/or Douglas or their respective stockholders, partners, members, directors, officers or employees.

 

12.           Amendment; Waiver.  This Agreement may be amended, and any right or claim hereunder waived, only by a written instrument signed by AMP, ACOF, the Company and Douglas.  Except as provided in Sections 10 and 11 hereof, nothing in this Agreement, express or implied, is intended to confer upon any third person any rights or remedies under or by reason of this Agreement.  No amendment or waiver of this Agreement requires the consent of any individual, partnership, corporation or other entity not a party to this Agreement, except that any amendment of Section 10 shall only operate prospectively as to any Indemnitee provided therein unless such Indemnitee shall have agreed in writing to such amendment.

 

13.           Construction, Etc.  This Agreement shall be construed under and governed by the internal laws of the State of Delaware.  Section headings are for convenience only and shall not be considered a part of the terms and provisions of this Agreement.  This Agreement may be executed in any number of counterparts, each of which when executed and delivered shall be deemed an original and all of which when taken together shall constitute one and the same instrument.

 

[signature page follows]

 

6

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

 

 

	
 
    	
DOUGLAS   DYNAMICS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James L. Janik
    
	
 
    	
Name:   James L. Janik
    
	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
DOUGLAS   DYNAMICS, L.L.C.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James L. Janik
    
	
 
    	
Name:   James L. Janik
    
	
 
    	
Title:   President and Chief Executive Officer
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
AURORA   MANAGEMENT PARTNERS LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Timothy J. Hart
    
	
 
    	
Name:   Timothy J. Hart
    
	
 
    	
Title:   Vice President, Secretary and General Counsel
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ACOF   MANAGEMENT, L.P.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    	
By:   ACOF Operating Manager, L.P., its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
/s/   Jeff Serota
    
	
 
    	
 
    	
Name:   Jeff Serota
    
	
 
    	
 
    	
Title:   Vice President
    
					

 

7

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