Document:

Exhibit 10.6

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”) is entered into as of March 30, 2004
by and between James L. Janik, an individual (“Executive”),
and Douglas Dynamics Holdings, Inc., a Delaware corporation (the “Company”).

 

1.             Employment by the Company and Term.

 

(a)           Full Time and Best Efforts. 
Subject to the terms set forth herein, the Company and Douglas Dynamics,
L.L.C., a Delaware limited liability company and wholly-owned subsidiary of the
Company (“Douglas”),
respectively, agree to employ Executive as their Chief Executive Officer and
President and in such other executive capacities as may be reasonably requested
from time to time by the Company’s Board of Directors (the “Board”) or a duly authorized
committee thereof, and Executive hereby accepts such employment.  Executive shall render such other services
for each of the Company, Douglas and corporations controlled by or controlling
the Company or Douglas, as the case may be, and to successor entities and
assignees of the Company or Douglas, as the case may be (the “Affiliates”) as the Company or
Douglas, as the case may be, may from time to time reasonably request and shall
be consistent with the duties Executive is to perform for the Company and
Douglas and with Executive’s experience. 
During the term of his employment with the Company and Douglas,
Executive will devote his full business time and use his best efforts to
advance the business and welfare of the Company and Douglas, and will not
engage in any other employment or business activities for any direct or
indirect remuneration that would be directly harmful or detrimental to, or that
may compete with, the business and affairs of the Company or Douglas, or that
would interfere with his duties hereunder. 
Notwithstanding the foregoing, subject to any conflict of interest
policies of the Company and/or Douglas and so long as the following do not
interfere with the performance of Executive’s duties hereunder in any material
respect, Executive may serve on the board of directors of other companies.

 

(b)           Duties.  Executive
shall serve in an executive capacity and shall perform such duties as are
customarily associated with his position, consistent with the Bylaws of the
Company or the Operating Agreement of Douglas, as the case may be, and as
reasonably required by the Board.

 

(c)           Company Policies. 
The employment relationship between the parties shall be governed by the
general employment policies and practices of the Company, including but not
limited to those relating to protection of confidential information and
assignment of inventions, except that when the terms of this Agreement differ
from or are in conflict with the Company’s general employment policies or
practices, this Agreement shall control.

 

(d)           Term.  The initial
term of employment of Executive under this Agreement shall begin immediately
following the effective date of the closing of the purchase of all of the
outstanding membership interests of New DD, LLC (the predecessor of Douglas) by
DDL Acquisition Corp., a wholly-owned subsidiary of the Company, in accordance
with that certain Amended and Restated Purchase Agreement dated as of March 31,
2004 by and between DDL Acquisition Corp., Douglas Dynamics, L.L.C. and AK
Steel Corporation (the “Effective Date”)

 

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for an initial term ending on March 30, 2007
(such period, the “Initial Term”),
subject to the provisions for termination set forth herein and renewal as
provided in Section 1(e) below.

 

(e)           Renewal.  Unless either
party shall have given the other notice that this Agreement shall not be
renewed at least ninety (90) days prior to the end of the Initial Term, the
term of this Agreement shall be automatically extended for a period of one
year, such procedure to be followed in each such successive period.  Each extended term shall continue to be
subject to the provisions for termination set forth herein.

 

2.             Compensation and Benefits.

 

(a)           Base Salary. 
Executive shall receive for services to be rendered hereunder a salary
at the rate of $22,500 per month payable at least as frequently as monthly and
subject to payroll deductions as may be necessary or customary in respect of
the Company’s and Douglas’ salaried employees (the “Base Salary”). 
The Base Salary will be reviewed by and shall be subject to increase
(but not decrease) at the sole discretion of the Board each year during the
term of this Agreement.

 

(b)           Participation in Benefit Plans; Vacation. 
During the term hereof, Executive shall be entitled to participate in
any group insurance, hospitalization, medical, dental, health, accident,
disability or similar plan or program of the Company now existing or
established hereafter to the extent that he is eligible under the general
provisions thereof.  The Company may, in
its sole discretion and from time to time, amend, eliminate or establish
additional benefit programs as it deems appropriate.  Executive shall also participate in all
fringe benefits, including without limitation annual vacation time, offered by
the Company or Douglas to any of its executives at such Executive’s level.

 

3.             Bonus.

 

(a)           Performance-Based Bonus. 
Executive shall be eligible for performance-based bonuses awarded on an
annual calendar year basis provided the Company achieves financial objectives
established by the Company’s management and approved by the Board for such
calendar year.  For calendar
years 2005 and following, such approval by the Board shall occur (i) on or
before December 31 of the prior calendar year provided that the Company’s
management has furnished the Board with the proposed annual budget by November of
such prior calendar year or (ii) if the Company’s management has not
furnished the Board with the proposed annual budget by November, as soon as
reasonably practicable after the Company’s management has furnished the Board
with the proposed annual budget.  Subject to
the preceding sentence, Executive shall be provided the opportunity to earn up
to an additional 100% of Executive’s annual Base Salary then in effect in
performance-based bonus compensation. 
Subject to the immediately following sentence, performance-based bonuses
that are earned with respect to any calendar year will be payable no later than
the end of the first calendar quarter of the following calendar year.  Notwithstanding
anything herein to the contrary, in the event the Company does not achieve the
financial objectives approved by the Board for any calendar year, Executive
will only be entitled to receive a performance-based bonus pursuant to this Section 3(a) for
such calendar year if the Board, in its sole and absolute discretion, elects to
pay such a bonus to Executive. 
For calendar year 2004, the Company, 

 

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Douglas and the Executive shall negotiate in good
faith with respect to the determination of a performance-based bonus award for
such calendar year.

 

(b)           If Executive
resigns before the last day of a calendar year (other than for a Material
Breach (as hereinafter defined)) or is discharged by the Company for Cause
before the last day of such calendar year, Executive will not be entitled to
receive a performance-based bonus pursuant to Section 3(a) for such
calendar year.  If Executive’s employment
terminates prior to the last day of a calendar year for any other reason,
Executive shall be entitled to receive a pro
rata part of the performance-based bonus for such calendar year
pursuant to Section 3(a).  Such pro rata part shall equal the total
performance-based bonus that would have been payable had Executive remained
employed for all of such calendar year multiplied by a fraction, the numerator
of which is the number of days elapsing in such calendar year through the date
Executive’s employment terminates and the denominator of which is 365.

 

4.             Options.  The Company
shall reserve up to ten percent (10%) of the fully-diluted shares of the
Company’s common stock as of the Effective Date (the “Option Pool”) for incentive stock options available
for grant to the Executive and other members of the Company’s executive
management under the Company’s stock option plan or equity incentive plan with
an exercise price (in the case of options granted at or shortly after
the Effective Date) equal to the initial price per share paid by Douglas
Dynamics Holdings, LLC for the Company’s common stock immediately prior to the
Effective Date.  The Company shall grant Executive from the
Option Pool incentive stock options to purchase a percent of the Option Pool
(the “Executive Options”)
the terms of which shall be set forth in an option agreement approved by the
Board and to be entered into between the Company and Executive, which option
agreement shall provide, among other things, that the Executive shall have the
right to pay the exercise price of the Executive Options by a full recourse
promissory note, with the shares of common stock issued upon such exercise
pledged as security for payment of such note. 
The Executive Options shall have a five (5) year vesting schedule
with one fifth (1/5) of the options vesting at the end of each of the first
five years following the Effective Date. 
Unvested Executive Options scheduled to vest at the end of a year in
which Executive’s employment is terminated by the Company without Cause
pursuant to Section 6(d) below or by Executive pursuant to Section 6(b)(i) below
shall vest pro-rata according to
the number of months Executive was employed in such year of termination.  Upon a change of control of the Company (as
defined in the Company’s stock option plan or equity incentive plan) while the
Executive is employed by the Company, the vesting schedule of the Executive
Options shall accelerate and thereafter all Executive Options shall be
exercisable in full in accordance with the provisions of the Company’s stock
option plan or equity incentive plan and the relevant option agreement between
the Company and Executive.  In accordance
with the stock option agreement to be entered into by the Company and
Executive, the vested portion of Executive Options will expire on the
earlier to occur of ten (10) years after date of grant or one hundred
eighty (180) days after the termination of employment of Executive for any
reason (other than for Cause).

 

5.             Reasonable Business Expenses and Support. 
Executive shall be reimbursed for documented and reasonable business
expenses in connection with the performance of his duties hereunder, including
appropriate professional fees and dues. 
Executive shall be furnished reasonable office space, assistance,
including an administrative assistant and facilities.

 

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6.             Termination of Employment. 
The date on which Executive’s employment by the Company and Douglas
ceases, under any of the following circumstances, shall be defined herein as
the “Termination Date.”

 

(a)           Termination for Cause.

 

(i)            Termination; Payment of Accrued Salary
and Vacation.  The Board may terminate Executive’s
employment with the Company and Douglas at any time for Cause, immediately upon
notice to Executive of the circumstances leading to such termination for
Cause.  In the event that Executive’s
employment is terminated for Cause, Executive shall receive payment for all
accrued salary and vacation time through the Termination Date, which in this
event shall be the date upon which notice of termination is given.  The Company and Douglas shall have no further
obligation to pay severance of any kind whether under this Agreement or
otherwise.

 

(ii)           Definition of Cause.  “Cause” means the occurrence or existence of any of the
following with respect to Executive, as determined in good faith by a majority
of the disinterested directors of the Board: 
(a) a material breach by Executive of any of his material
obligations hereunder which remains uncured after the lapse of 30 days
following the date that the Company and/or Douglas has given Executive written
notice thereof; (b) a material breach by the Executive of his duty not to
engage in any transaction that represents, directly or indirectly, self-dealing
with the Company, Douglas or any of their respective Affiliates which has not
been approved by a majority of the disinterested directors of the Board, if in
any such case such material breach remains uncured after the lapse of 30 days
following the date that the Company and/or Douglas has given the Executive
written notice thereof; (c) the repeated material breach by the Executive
of any material duty referred to in clause (a) or (b) above
as to which at least two (2) written notices have been given pursuant to
such clause (a) or (b); (d) any act of misappropriation, embezzlement,
intentional fraud or similar conduct involving the Company, Douglas or any of
their respective Affiliates; (e) the conviction or the plea of nolo  contendere or
the equivalent in respect of a felony involving moral turpitude; (f) intentional
infliction of any damage of a material nature to any property of the Company,
Douglas or any of their respective Affiliates; or (g) the repeated
non-prescription abuse of any controlled substance or the repeated abuse of
alcohol or any other non-controlled substance which, in any case described in
this clause, the Board reasonably determines renders the Executive unfit to
serve in his capacity as an officer or employee of the Company, Douglas or any
of their respective Affiliates.

 

(b)           Termination by Executive.

 

(i)            Executive shall have the right, at his
election, to terminate his employment with the Company and Douglas by written
notice to the Company and Douglas to that effect if (A) the Company and/or
Douglas shall have failed to perform a material condition or covenant of this
Agreement (“Material Breach”);
provided, however, that termination for Material Breach will not be effective
until Executive shall have given written notice specifying the claimed breach
and, provided such breach is curable, Company and/or Douglas fails to correct
the claimed breach within thirty (30) days after the receipt of the applicable
notice (but within ten (10) days if the failure to perform is a failure to
pay monies when due under the terms of this Agreement), (B) the Company
and/or Douglas repeatedly commit a Material Breach as to

 

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which at least two (2) written notices have been
given pursuant to this Section 6(b)(i) or (C) the Company and/or
Douglas relocates Executive’s principal place of performance to outside the
Milwaukee, Wisconsin metropolitan area without his prior written consent.  If the Executive terminates his employment
with the Company and Douglas pursuant to this Section 6(b)(i), then the Executive
shall be entitled to receive the benefits provided in Section 6(d)(i) or
(ii) hereof.

 

(ii)           Executive shall have the right, at his
election, to terminate his employment with the Company and Douglas for reason
other than a Material Breach by 60 days’ prior written notice to that
effect.  In the event of termination by
Executive pursuant to this Section 6(b)(ii), the Company and Douglas shall
have no termination payment requirements except that Executive shall receive
the accrued portion of any salary and vacation hereunder through the
Termination Date, less requisite withholdings for tax and social security
purposes.

 

(c)           Termination Upon Disability. 
The Company and/or Douglas may terminate Executive’s employment in the
event Executive suffers a disability that renders Executive unable to perform
the essential functions of his position, even with reasonable accommodation,
for sixty (60) consecutive days or for ninety (90) days within any one hundred
eighty (180) day period.  After the
Termination Date, which in this event shall be the date upon which notice of
termination is given, no further compensation will be payable under this
Agreement except that (1) Executive shall receive the accrued portion of
any salary and vacation hereunder through the Termination Date, less requisite
withholdings for tax and social security purposes and (2) Executive shall
be entitled to exercise all vested Executive Options in accordance with their
terms for a period of one hundred eighty (180) days after such Termination
Date.

 

(d)           Termination by Company and/or Douglas
Without Cause; Termination by Executive Pursuant to Section 6(b)(i). 
The Company and/or Douglas may terminate Executive’s employment at any
time for other than Cause or disability, pursuant to the following termination
payment requirements and upon not less than sixty (60) days’ prior written
notice to that effect.

 

(i)            Termination Payments during the Initial
Term.  In the event that Executive’s employment is
terminated by the Company and/or Douglas without Cause or by Executive pursuant
to Section 6(b)(i) hereof during the Initial Term, Executive shall be
entitled to (1) exercise all vested Executive Options in accordance with
their terms for a period of one hundred eighty (180) days after such
Termination Date and (2) receive all of the benefits the Executive is
entitled to receive under this Agreement during the Initial Term.  Such remuneration shall be paid, less
requisite withholdings for tax and social security purposes, (A) in the
case of Base Salary, over such term in monthly pro rata
payments commencing as of the Termination Date and (B) in the case of the
accrued portion of any vacation, promptly after such Termination Date in
conformity with applicable law.

 

(ii)           Termination Payments After the Initial
Term.  In the event that the term of this Agreement
is extended pursuant to Section 1(e) hereof (an “Extension Period”), and, at any
time thereafter, Executive’s employment is terminated by the Company and/or
Douglas without Cause or by Executive pursuant to Section 6(b)(i) hereof,
(1) Executive shall be entitled to exercise all vested Executive Options
in accordance with their terms for a period of one hundred eighty (180) days
after such Termination Date and (2) the Company shall pay

 

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Executive as severance an amount equal to twenty-four
(24) months of his then Base Salary. 
Such remuneration shall be paid, less requisite withholdings for tax and
social security purposes, (A) in the case of Base Salary, over such term
in monthly pro rata payments commencing as of
the Termination Date and (B) in the case of the accrued portion of any
vacation, promptly after such Termination Date in conformity with applicable
law.

 

(iii)          Non-renewal
upon end of the Initial Term.  In the event
that the parties hereto do not renew the Initial Term for an additional term of
one year pursuant to Section 1(e) hereof, (1) Executive shall be
entitled to exercise all vested Executive Options in accordance with their
terms for a period of one hundred eighty (180) days after such Termination Date
and (2) the Company shall pay Executive as severance an amount equal to
twenty-four (24) months of his then Base Salary, less requisite withholdings
for tax and social security purposes, payable over such term in monthly pro rata payments commencing as of the Termination
Date, plus the accrued portion of any vacation through the Termination Date,
less requisite withholdings for tax and social security purposes.

 

(iv)          The Company shall not be obligated to pay
any termination payments under Sections 6(d)(i), (ii) or (iii) above
if Executive breaches in any material way the provisions of Sections 7, 8,
9 or 10 below.

 

(e)           Benefits Upon Termination. 
All benefits provided under Section 2(b) shall be extended, at
Executive’s election and cost (such cost to Executive to be in the same amount
as the cost for providing such benefits to existing employees), to the extent
permitted by the Company’s insurance policies and benefit plans, for one year
after Executive’s Termination Date, except (a) as required by law (e.g.,
COBRA health insurance continuation election) or (b) in the event of a
termination described in Section 6(a).

 

(f)            Termination Upon Death. 
If Executive dies prior to the expiration of the term of this Agreement,
the Company shall (i) continue coverage of Executive’s dependents (if any)
under all benefit plans or programs of the type listed above in Section 2(b) herein
for a period of six (6) months, (ii) pay to Executive’s estate the
accrued portion of any salary and vacation through the Termination Date, less
requisite withholdings for tax and social security purposes and (iii) provide
Executive’s estate with the right to exercise all vested Executive Options in
accordance with their terms for a period of one hundred eighty (180) days after
Executive’s death.

 

(g)           Termination Upon Retirement. 
Executive shall provide notice to the Company and Douglas of his
retirement prior to the term of this Agreement not less than one hundred and
twenty (120) days prior to the effective date of Executive’s retirement as set
forth in such notice (the “Retirement
Notice”).  In the event
that Executive’s employment is terminated by Executive’s retirement prior to
the term of this Agreement, the Termination Date shall be the effective date of
Executive’s retirement as set forth in the Retirement Notice.  After the Termination Date, no further
compensation will be payable under this Agreement except that (1) Executive
shall receive the accrued portion of any salary and vacation hereunder through
the Termination Date, less requisite withholdings for tax and social security
purposes and (2) Executive shall be entitled to exercise all vested
Executive Options in accordance with their terms for a period of one hundred
eighty (180) days after such Termination Date.

 

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(h)           Duty to Mitigate; Termination of
Severance Benefits.  Executive agrees that upon any termination
pursuant to either of Section 6(b) or 6(d) hereof, Executive
shall have a duty to mitigate his damages hereunder.  The Company and Executive further agree that
if, at any time following such a termination but prior to the expiration of the
period during which monthly severance benefits are to be paid by the Company
with respect to such termination, Executive secures employment, such monthly
severance benefits shall not be reduced by the amount of monthly compensation
Executive is to receive from such new employment as long as Executive does not
breach in any material way the provisions of Sections 7, 8, 9 or 10 of this
Agreement; provided, however, that if Executive breaches in any
material way the provisions of Sections 7, 8, 9 or 10 of this Agreement, the
Company shall not be obligated to pay any such severance benefits in accordance
with Section 6(d)(iv) above.

 

7.             Proprietary Information Obligations. 
During the term of employment under this Agreement, Executive will have
access to and become acquainted with the Company’s, Douglas’ and any of their
respective Affiliates’ confidential and proprietary information, including, but
not limited to, information or plans regarding the Company’s, Douglas’ and any
of their respective Affiliates’ customer relationships, personnel, or sales,
marketing, and financial operations and methods; trade secrets; formulas;
devices; secret inventions; processes; and other compilations of information,
records, and specifications (collectively “Proprietary
Information”).  Executive
shall not disclose any of the Company’s, Douglas’ or any of their respective
Affiliates’ Proprietary Information directly or indirectly, or use it in any
way, either during the term of this Agreement or at any time thereafter, except
as required in the course of his employment for the Company or Douglas or as
authorized in writing by the Company. 
All files, records, documents, computer-recorded information, drawings,
specifications, equipment and similar items relating to the business of the
Company, Douglas or any of their respective Affiliates, whether prepared by
Executive or otherwise coming into his possession, shall remain the exclusive
property of the Company, Douglas or any of their Affiliates, as the case may
be, and shall not be removed from the premises of the Company or Douglas under
any circumstances whatsoever without the prior written consent of the Company,
except when (and only for the period) necessary to carry out Executive’s duties
hereunder, and if removed shall be immediately returned to the Company or
Douglas, as the case may be, upon any termination of his employment; provided,
however, that Executive may retain copies of documents reasonably
related to his interest as a shareholder and any documents that were personally
owned by Executive, which copies and the information contained therein
Executive agrees not to use for any business purpose.  Notwithstanding the foregoing, Proprietary
Information shall not include (i) information which is or becomes
generally public knowledge or public except through disclosure by the Executive
in violation of this Agreement and (ii) information that may be required
to be disclosed by applicable law.

 

8.             Sole Property of Company.

 

(a)           Executive acknowledges and agrees that
all the now and hereafter existing literary material, inventions, ideas,
service marks, products, trademarks, copyrights, trade names, service names,
designs, patents, programs, documents, data, methods, analyses, reports,
discoveries, improvements, trade secrets, techniques, processes, know-how and
any other intellectual property rights, whether or not subject to patent,
trademark, copyright or trade secret protection and whether or not reduced to
practice or reduced to writing, which was created either 

 

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alone or jointly with others (the “Intellectual Property”) during the
course of Executive’s employment with the Company, Douglas or any of their
respective Affiliates (the “Company
Intellectual Property”) shall be the sole property of the
Company, Douglas or other entity designated by either the Company or Douglas,
as the case may be, and Executive hereby assigns to the Company or Douglas, as
the case may be, his entire right and interest in and to all the now and
hereafter existing Company Intellectual Property.  The Company, Douglas or any other entity
designated by either the Company or Douglas, as the case may be, shall be the
sole owner of all domestic and foreign rights pertaining to the now and
hereafter existing Company Intellectual Property.

 

(b)           Notwithstanding any provision in this
Agreement to the contrary, Section 8(a) shall not apply to any
Intellectual Property which was developed entirely on the Executive’s own time
without using the Company’s or Douglas’ equipment, supplies, facilities or
trade secret information except for Intellectual Property that either (i) relates
directly at the time of conception or reduction to practice to the Company’s or
Douglas’ business or actual or demonstrably anticipated research or
development, or (ii)  results directly from any work performed by the
Executive for the Company, Douglas or any of their respective Affiliates within
the twelve month period immediately preceding the time of conception or
reduction to practice of such Intellectual Property.

 

9.             Noninterference. 
While employed by the Company and for a period of three (3) years
after termination of this Agreement, Executive agrees not to interfere with the
business of the Company, Douglas or any of their respective Affiliates by
directly or indirectly soliciting, attempting to solicit, inducing, or
otherwise causing any employee of the Company, Douglas or any of their
respective Affiliates to terminate his or her employment in order to become an
employee, consultant or independent contractor to or for any other employer.

 

10.           Noncompetition. 
Executive agrees that during the term of this Agreement and for a period
of three (3) years after the termination hereof, he will not, without the
prior consent of the Company, directly or indirectly, have an interest in, be
employed by, or be connected with, as an employee, consultant, officer,
director, partner, stockholder or joint venturer, in any person or entity
owning, managing, controlling, operating or otherwise participating or
assisting in any business which is in competition with the business of the
Company, Douglas or any of their respective Affiliates (i) during the term
of this Agreement, in any location, and (ii) for the three year period
following the termination of this Agreement, in any county in which the
Company, Douglas or any of their respective Affiliates was conducting business
at the date of termination of Executive’s employment and continues to do so
thereafter; provided, however, that the foregoing shall not
prevent the Executive from being a stockholder of less than 1% of the issued
and outstanding securities of any class of a corporation listed on a national
securities exchange or designated as national market system securities on an
interdealer quotation system by the National Association of Securities Dealers, Inc.

 

11.           Miscellaneous.

 

(a)           Notices.  Any notices
provided hereunder must be in writing and shall be deemed effective upon the
earlier of two days following personal delivery (including personal 

 

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delivery by telecopy or telex), or the fourth day
after mailing by first class mail to the recipient at the address indicated
below:

 

To the
Company:

 

Douglas Dynamics Holdings, Inc.

c/o Aurora Capital Group

10877 Wilshire Boulevard

Suite 2100

Los Angeles, California  90024

Attention:  Richard K. Roeder

Telecopier:  (310) 824-2791

 

To Douglas:

 

Douglas Dynamics, L.L.C.

7777 North 73rd Street

P.O. Box 245038

Milwaukee, Wisconsin

Attention:  Chief Financial Officer

Telecopier:  (414) 354-8448

 

With copies
to:

 

Aurora Capital Group

10877 Wilshire Boulevard

Suite 2100

Los Angeles, California  90024

Attention:  Richard K. Roeder

Telecopier:  (310) 824-2791

 

Gibson, Dunn & Crutcher LLP

333 South Grand Avenue

Los Angeles, California 90071-3197

Attention:  Bruce D. Meyer, Esq.

Telecopier:  (213) 229-7520

 

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To Executive:

 

James L.
Janik

949 E. Circle
Drive

Whitefish
Bay, Wisconsin 53217

Telecopier:  (      )
      -

 

With a copy
to:

 

Foley &
Lardner LLP

7777 E. Wisconsin Avenue, Suite #3800

Milwaukee, Wisconsin 53202

Attention:  Luke E. Sims, Esq.

Telecopier:  (414) 297-4900

 

or to such other address or to the attention of such
other person as the recipient party will have specified by prior written notice
to the sending party.

 

(b)           Severability. 
Any provision of this Agreement which is deemed invalid, illegal or
unenforceable in any jurisdiction shall, as to that jurisdiction and subject to
this paragraph be ineffective to the extent of such invalidity, illegality or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provisions of this
Agreement invalid, illegal, or unenforceable in any other jurisdiction.  If any covenant should be deemed invalid,
illegal or unenforceable because its scope is considered excessive, such
covenant shall be modified so that the scope of the covenant is reduced only to
the minimum extent necessary to render the modified covenant valid, legal and
enforceable.

 

(c)           Entire Agreement. 
This document constitutes the final, complete, and exclusive embodiment
of the entire agreement and understanding between the parties related to the
subject matter hereof and supersedes and preempts any prior or contemporaneous
understandings, agreements, or representations by or between the parties,
written or oral.

 

(d)           Counterparts. 
This Agreement may be executed on separate counterparts, any one of
which need not contain signatures of more than one party, but all of which
taken together will constitute one and the same agreement.

 

(e)           Successors and Assigns. 
This Agreement is intended to bind and inure to the benefit of and be
enforceable by Executive, the Company and Douglas, and their respective
successors and assigns, except that Executive may not assign any of his duties
hereunder and he may not assign any of his rights hereunder without the prior
written consent of the Company.

 

(f)            Amendments.  No amendments
or other modifications to this Agreement may be made except by a writing signed
by all parties.  No amendment or waiver
of this Agreement requires the consent of any individual, partnership,
corporation or other entity not a party to this Agreement.  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.

 

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(g)           Choice of Law. 
All questions concerning the construction, validity and interpretation
of this Agreement will be governed by the laws of the State of Delaware without
giving effect to principles of conflicts of law.

 

(h)           Survivorship.  The provisions of this Agreement necessary to
carry out the intention of the parties as expressed herein shall survive the
termination or expiration of this Agreement.

 

(i)            Waiver.  Except as provided herein, the waiver by
either party of the other party’s prompt and complete performance, or breach or
violation, of any provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation, and the failure by
any party hereto to exercise any right or remedy which it may possess hereunder
shall not operate nor be construed as a bar to the exercise of such right or
remedy by such party upon the occurrence of any subsequent breach or violation.

 

(j)            Captions.  The captions of this Agreement are for
convenience and reference only and in no way define, describe, extend or limit
the scope or intent of this Agreement or the intent of any provision hereof.

 

(k)           Construction.  The parties acknowledge that this Agreement
is the result of arm’s-length negotiations between sophisticated parties each
afforded representation by legal counsel. 
Each and every provision of this Agreement shall be construed as though
both parties participated equally in the drafting of the same, and any rule of
construction that a document shall be construed against the drafting party
shall not be applicable to this Agreement.

 

12.           Arbitration.

 

(a)           Any disputes or claims arising out of or
concerning the Executive’s employment or termination by the Company and/or
Douglas, whether arising under theories of liability or damages based upon
contract, tort or statute, shall be determined exclusively by arbitration
before a single arbitrator in accordance with the employment arbitration rules of
the American Arbitration Association (“AAA”), except as modified by this
Agreement.  The arbitrator’s decision
shall be final and binding on all parties. 
Judgment upon the award rendered by the arbitrator may be entered in any
court of competent jurisdiction.  In
recognition of the fact that resolution of any disputes or claims in the courts
is rarely timely or cost effective for either party, the Company, Douglas and
Executive enter this mutual agreement to arbitrate in order to gain the
benefits of a speedy, impartial and cost-effective dispute resolution
procedure.

 

(b)           Any arbitration shall be held in the
Executive’s place of employment with the Company.  The arbitrator shall be an attorney with
substantial experience in employment matters, selected by the parties
alternately striking names from a list of five such persons provided by the AAA
office located nearest to the place of employment, following a request by the
party seeking arbitration for a list of five such attorneys with substantial
professional experience in employment matters. 
If either party fails to strike names from the list, the arbitrator
shall be selected from the list by the other party.

 

11

 

(c)           Each party shall have the right to take
the depositions of a maximum of three individuals, as deemed appropriate by such
party.  Each party shall also have the
right to propound requests for production of documents to any party and the
right to subpoena documents and witnesses for the arbitration.  Additional discovery may be made only where
the arbitrator selected so orders upon a showing of substantial need.  The arbitrator shall have the authority to
entertain a motion to dismiss and/or a motion for summary judgment by any party
and shall apply the standards governing such motions under the Federal Rules of
Civil Procedure.

 

(d)           The Company, Douglas and Executive agree
that they will attempt, and they intend that they and the arbitrator should use
their best efforts in that attempt, to conclude the arbitration proceeding and
have a final decision from the arbitrator within one hundred twenty (120) days
from the date of selection of the arbitrator; provided, however,
that the arbitrator shall be entitled to extend such 120-day period for a total
of two one hundred twenty (120) day periods. 
The arbitrator shall immediately deliver a written award with respect to
the dispute to each of the parties, who shall promptly act in accordance
therewith.

 

(e)           The Company and/or Douglas shall pay the
fees and expenses of the arbitrator. 
Each party shall pay its own attorney fees and costs including, without
limitation, fees and costs of any experts. 
However, attorney fees and costs incurred by the party that prevails in
any such arbitration commenced pursuant to this Section 12 or any judicial
action or proceeding seeking to enforce the agreement to arbitrate disputes as
set forth in this Section 12 or seeking to enforce any order or award of
any arbitration commenced pursuant to this Section 12 may be assessed
against the party or parties that do not prevail in such arbitration in such
manner as the arbitrator or the court in such judicial action, as the case may
be, may determine to be appropriate under the circumstances.  Any controversy over whether a dispute is an
arbitrable dispute or as to the interpretation or enforceability of this
paragraph with respect to such arbitration shall be determined by the
arbitrator.

 

(f)            In a contractual claim under this
Agreement, the arbitrator shall have no authority to add, delete or modify any
term of this Agreement.

 

(g)           In the event that more than one dispute
is submitted to arbitration by the Company, Douglas or Executive pursuant to
any agreement between the Company and/or Douglas and Executive, including under
this Agreement, and one or more additional agreements to which the Company and/or
Douglas and Executive are parties, all such matters shall be consolidated into
a single arbitration proceeding so as to avoid, to the extent possible, more
than one simultaneous arbitration proceeding between the Company and/or Douglas
and Executive.

 

13.           Accrued Obligations Under Long-Term
Incentive Plan.  The Company acknowledges the outstanding
accrued obligations owed to Executive by Douglas under that certain Douglas
Dynamics, L.L.C. Long Term Incentive Plan, as revised January 1, 2003 (the
“Long-Term Incentive Plan”)
as reflect on Douglas’ balance sheet as of February 28, 2004.  Neither the provisions of
this Agreement nor any payments to be made to Executive in accordance with this
Agreement shall reduce such
outstanding accrued obligations owed to Executive.  The parties have agreed to rollover this
accrued obligation, which is fully vested, for the benefit of Executive, on a
tax-free basis, into phantom stock or a comparable equity-type investment in
which the appreciation is measured by reference to a share of Company common 

 

12

 

stock, valuing a share of
Company common stock at the initial price per share paid by Douglas Dynamics
Holdings, LLC for such share of common stock at the Effective Date.

 

14.           Legal Fees and Expenses.  The Company and/or Douglas shall pay or
reimburse Executive for his reasonable legal fees and expenses up to $5,000 in
connection with the negotiation and execution of this Agreement and the
ancillary agreements and documents referred to herein.

 

15.           Investment in the Company.  Executive shall have the opportunity to
invest in the Company through Douglas Equity Partners, L.P., a Delaware limited
partnership, within a reasonable amount of time following the Effective Date,
but in any event, no later than ninety (90) days after the Effective Date.

 

13

 

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

 

 

	
   

  	
  /s/ James L. Janik

  
	
   

  	
  Name:

  	
  James L. Janik

  
	
   

  	
  Date:

  	
  March 30,
  2004

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS
  HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard K. Roeder

  
	
   

  	
  By:

  	
  Richard K. Roeder

  
	
   

  	
  Its:

  	
  Vice President and
  Secretary

  
	
   

  	
  Date:

  	
  March 30, 2004

  

 

14Exhibit
10.7

 

EMPLOYMENT AGREEMENT

 

This Employment Agreement (“Agreement”)
is entered into as of August 27, 2007 by and between Mark Adamson, an
individual (“Executive”), and Douglas
Dynamics Holdings, Inc., a Delaware corporation (the “Company”).

 

1.                                       Employment
by the Company and Term.

 

(a)                                  Full
Time and Best Efforts.  Subject to
the terms set forth herein, the Company and Douglas Dynamics, L.L.C., a
Delaware limited liability company and wholly-owned subsidiary of the Company (“Douglas”), respectively, agree to
employ Executive as their Vice President Sales & Marketing and in such
other executive capacities as may be requested from time to time by the Company’s
Board of Directors (the “Board”) or
a duly authorized committee thereof, and Executive hereby accepts such
employment.  Executive shall render such
other services for each of the Company, Douglas and corporations controlled by
or controlling the Company or Douglas, as the case may be, and to successor
entities and assignees of the Company or Douglas, as the case may be (the “Affiliates”) as the Company or
Douglas, as the case may be, may from time to time reasonably request and shall
be consistent with the duties Executive is to perform for the Company and
Douglas and with Executive’s experience. 
During the term of his employment with the Company and Douglas,
Executive will devote his full business time and use his best efforts to
advance the business and welfare of the Company and Douglas, and will not
engage in any other employment or business activities for any direct or
indirect remuneration that would be directly harmful or detrimental to, or that
may compete with, the business and affairs of the Company or Douglas, or that
would interfere with his duties hereunder.

 

(b)                                 Duties.  Executive shall serve in an executive
capacity and shall perform such duties as are customarily associated with his
position, consistent with the Bylaws of the Company or the Operating Agreement
of Douglas, as the case may be, and as reasonably required by the Board.

 

(c)                                  Company
Policies.  The employment
relationship between the parties shall be governed by the general employment
policies and practices of the Company, including but not limited to those
relating to protection of confidential information and assignment of inventions,
except that when the terms of this Agreement differ from or are in conflict
with the Company’s general employment policies or practices, this Agreement
shall control.

 

(d)                                 Term.  The initial term of employment of Executive
under this Agreement shall begin on August 27, 2007 (the “Effective Date”)
for an initial term ending on August 27, 2010 (such period, the “Initial
Term”), subject to the provisions for termination set forth herein and renewal
as provided in Section 1(e) below.

 

(e)                                  Renewal.  Unless either party shall have given the
other notice that this Agreement shall not be renewed at least ninety (90) days
prior to the end of the Initial Term, the term of this Agreement shall be
automatically extended for a period of one year, such procedure

 

 

to be followed in each such successive period.  Each extended term shall continue to be
subject to the provisions for termination set forth herein.

 

2.                                       Compensation
and Benefits.

 

(a)                                  Base
Salary.  Executive shall receive for
services to be rendered hereunder a salary at the rate of $17,083.33 per month
payable at least as frequently as monthly and subject to payroll deductions as
may be necessary or customary in respect of the Company’s and Douglas’ salaried
employees (the “Base Salary”).  The Base Salary will be reviewed by and shall
be the sole discretion of the Board each year during the term of this
Agreement.

 

(b)                                 Participation
in Benefit Plans; Vacation.  During
the term hereof, Executive shall be entitled to participate in any group
insurance, hospitalization, medical, dental, health, accident, pension,
disability or similar plan or program of the Company now existing or
established hereafter to the extent that he is eligible under the general
provisions thereof.  The Company may, in
its sole discretion and from time to time, amend, eliminate or establish
additional benefit programs as it deems appropriate.  Executive shall also participate in all
fringe benefits, including without limitation annual vacation time, offered by
the Company or Douglas to any of its executives at such Executive’s level.

 

3.                                       Bonus.

 

(a)                                  Performance-Based
Bonus.  Executive shall be eligible
for performance-based bonuses awarded on an annual calendar year basis provided
the Company achieves financial objectives established by the Company’s
management and approved by the Board for such calendar year.  For calendar years 2005 and following, such
approval by the Board shall occur (i) on or before December 31 of the
prior calendar year provided that the Company’s management has furnished the
Board with the proposed annual budget by November of such prior calendar
year or (ii) if the Company’s management has not furnished the Board with
the proposed annual budget by November, as soon as reasonably practicable after
the Company’s management has furnished the Board with the proposed annual
budget.  Subject to the preceding
sentence, Executive shall be provided the opportunity to earn up to an
additional 100% of Executive’s annual Base Salary then in effect in
performance-based bonus compensation. 
Subject to the immediately following sentence, performance-based bonuses
that are earned with respect to any calendar year will be payable no later than
the end of the first calendar quarter of the following calendar year.  Notwithstanding anything
herein to the contrary, in the event the Company does not achieve the financial
objectives approved by the Board for any calendar year, Executive will only be
entitled to receive a performance-based bonus pursuant to this Section 3(a) for
such calendar year if the Board, in its sole and absolute discretion, elects to
pay such a bonus to Executive.

 

(b)                                 If
Executive resigns before the last day of a calendar year (other than for a
Material Breach (as hereinafter defined)) or is discharged by the Company for
Cause before the last day of such calendar year, Executive will not be entitled
to receive a performance-based bonus pursuant to Section 3(a) for
such calendar year.  If Executive’s
employment terminates prior to the last day of a calendar year for any other
reason, Executive shall be entitled to receive a pro rata part of the
performance-based bonus for such calendar year pursuant to Section 3(a)

 

2

 

only if the Board, in its sole and absolute discretion, elects to pay a
pro rata part of the performance-based bonus to Executive.

 

4.                                       Options.  The Company shall reserve a percent of the
fully-diluted shares of the Company’s common stock as of the Effective Date
(the “Option Pool”) for incentive stock
options available for grant to the Executive and other members of the Company’s
executive management under the Company’s stock option plan or equity incentive
plan with an exercise price (in the case of options granted at or shortly after
the Effective Date) equal to the initial price per share paid by Aurora
Industrial Holdings LLC (formerly known as Douglas Dynamics Holdings, LLC) for
the Company’s common stock prior to the Effective Date.  The Company shall grant Executive from the
Option Pool incentive stock options to purchase a percent of the Option Pool
(the “Executive Options”) the terms of
which shall be set forth in an option agreement approved by the Board and to be
entered into between the Company and Executive, which option agreement shall
provide, among other things, that the Executive shall have the right to pay the
exercise price of the Executive Options by a full recourse promissory note,
with the shares of common stock issued upon such exercise pledged as security
for payment of such note.  The Executive
Options shall have a five (5) year vesting schedule with one fifth (1/5)
of the options vesting at the end of each of the first five years following the
Effective Date.  Unvested Executive
Options scheduled to vest at the end of a year in which Executive’s employment
is terminated by the Company without Cause pursuant to Section 6(d) below
or by Executive pursuant to Section 6(b)(i) below shall vest pro-rata according to the number of months Executive was
employed in such year of termination. 
Upon a change of control of the Company (as defined in the Company’s
stock option plan or equity incentive plan) while the Executive is employed by
the Company, the vesting schedule of the Executive Options shall accelerate and
thereafter all Executive Options shall be exercisable in full in accordance
with the provisions of the Company’s stock option plan or equity incentive plan
and the relevant option agreement between the Company and Executive.  In accordance with the stock option agreement
to be entered into by the Company and Executive, the vested portion of
Executive Options will expire on the earlier to occur of ten (10) years
after date of grant or one hundred eighty (180) days after the termination of
employment of Executive for any reason (other than for Cause).

 

5.                                       Reasonable
Business Expenses and Support. 
Executive shall be reimbursed for documented and reasonable business
expenses in connection with the performance of his duties hereunder, including
appropriate professional fees and dues. 
Executive shall be furnished reasonable office space, assistance,
including an administrative assistant and facilities.

 

6.                                       Termination
of Employment.  The date on which
Executive’s employment by the Company and Douglas ceases, under any of the
following circumstances, shall be defined herein as the “Termination
Date.”

 

(a)                                  Termination
for Cause.

 

(i)                                     Termination;
Payment of Accrued Salary and Vacation. 
The Board may terminate Executive’s employment with the Company and
Douglas at any time for Cause, immediately upon notice to Executive of the
circumstances leading to such termination for Cause.  In the event that Executive’s employment is
terminated for Cause, Executive shall receive payment for all accrued salary
and vacation time through the Termination Date, which in

 

3

 

this event shall be the date upon which notice of termination is
given.  The Company and Douglas shall
have no further obligation to pay severance of any kind whether under this
Agreement or otherwise.

 

(ii)                                  Definition
of Cause.  “Cause”
means the occurrence or existence of any of the following with respect to
Executive, as determined in good faith by a majority of the disinterested
directors of the Board: (a) a material breach by Executive of any of his
material obligations hereunder which remains uncured after the lapse of 30 days
following the date that the Company and/or Douglas has given Executive written
notice thereof; (b) a material breach by the Executive of his duty not to
engage in any transaction that represents, directly or indirectly, self-dealing
with the Company, Douglas or any of their respective Affiliates which has not
been approved by a majority of the disinterested directors of the Board, if in
any such case such material breach remains uncured after the lapse of 30 days
following the date that the Company and/or Douglas has given the Executive
written notice thereof; (c) the repeated material breach by the Executive
of any material duty referred to in clause (a) or (b) above as to
which at least two (2) written notices have been given pursuant to such
clause (a) or (b); (d) any act of misappropriation, embezzlement,
intentional fraud or similar conduct involving the Company, Douglas or any of
their respective Affiliates; (e) the conviction or the plea of nolo contendere or the equivalent in respect of a felony
involving moral turpitude; (f) intentional infliction of any damage of a
material nature to any property of the Company, Douglas or any of their
respective Affiliates; or (g) the repeated non-prescription abuse of any
controlled substance or the repeated abuse of alcohol or any other
non-controlled substance which, in any case described in this clause, the Board
reasonably determines renders the Executive unfit to serve in his capacity as
an officer or employee of the Company, Douglas or any of their respective
Affiliates.

 

(b)                                 Termination
by Executive.

 

(i)                                     Executive
shall have the right, at his election, to terminate his employment with the
Company and Douglas by written notice to the Company and Douglas to that effect
if (A) the Company and/or Douglas shall have failed to perform a material
condition or covenant of this Agreement (“Material Breach”);
provided, however, that termination for Material Breach will not be effective
until Executive shall have given written notice specifying the claimed breach
and, provided such breach is curable, Company and/or Douglas fails to correct
the claimed breach within thirty (30) days after the receipt of the applicable
notice (but within ten (10) days if the failure to perform is a failure to
pay monies when due under the terms of this Agreement), or (B) the Company
and/or Douglas repeatedly commit a Material Breach as to which at least two (2) written
notices have been given pursuant to this Section 6(b)(i).  If the Executive terminates his employment
with the Company and Douglas pursuant to this Section 6(b)(i), then the
Executive shall be entitled to receive the benefits provided in Section 6(d)(i) or
(ii) hereof.

 

(ii)                                  Executive
shall have the right, at his election, to terminate his employment with the
Company and Douglas for reason other than a Material Breach by 60 days’ prior
written notice to that effect.  In the
event of termination by Executive pursuant to this Section 6(b)(ii), the
Company and Douglas shall have no termination payment requirements

 

4

 

except that Executive shall receive the accrued portion of any salary
and vacation hereunder through the Termination Date, less requisite
withholdings for tax and social security purposes.

 

(c)                                  Termination
Upon Disability.  The Company and/or
Douglas may terminate Executive’s employment in the event Executive suffers a
disability that renders Executive unable to perform the essential functions of
his position, even with reasonable accommodation, for sixty (60) consecutive
days or for ninety (90) days within any one hundred eighty (180) day
period.  After the Termination Date,
which in this event shall be the date upon which notice of termination is
given, no further compensation will be payable under this Agreement except that
(1) Executive shall receive the accrued portion of any salary and vacation
hereunder through the Termination Date, less requisite withholdings for tax and
social security purposes and (2) Executive shall be entitled to exercise
all vested Executive Options in accordance with their terms for a period of one
hundred eighty (180) days after such Termination Date.

 

(d)                                 Termination
by Company and/or Douglas Without Cause; Termination by Executive Pursuant to Section 6(b)(i).  The Company and/or Douglas may terminate
Executive’s employment at any time for other than Cause or disability, pursuant
to the following termination payment requirements and upon not less than sixty
(60) days’ prior written notice to that effect.

 

(i)                                     Termination
Payments during the Initial Term.  In
the event that Executive’s employment is terminated by the Company and/or
Douglas without Cause or by Executive pursuant to Section 6(b)(i) hereof,
(1) Executive shall be entitled to exercise all vested Executive Options
in accordance with their terms for a period of one hundred eighty (180) days
after such Termination Date and (2) the Company shall pay Executive as
severance an amount equal to twelve (12) months of his then Base Salary.  Such remuneration shall be paid, less
requisite withholdings for tax and social security purposes, (A) in the
case of Base Salary, over such term in monthly pro rata payments commencing as
of the Termination Date and (B) in the case of the accrued portion of any
vacation, promptly after such Termination Date in conformity with applicable
law.

 

(ii)                                  Termination
Payments After the Initial Term.  In
the event that the term of this Agreement is extended pursuant to Section 1(e) hereof
(an “Extension Period”), and, at any
time thereafter, Executive’s employment is terminated by the Company and/or
Douglas without Cause or by Executive pursuant to Section 6(b)(i) hereof,
(1) Executive shall be entitled to exercise all vested Executive Options
in accordance with their terms for a period of one hundred eighty (180) days
after such Termination Date and (2) the Company shall pay Executive as
severance an amount equal to twelve (12) months of his then Base Salary.  Such remuneration shall be paid, less
requisite withholdings for tax and social security purposes, (A) in the
case of Base Salary, over such term in monthly pro rata payments commencing as
of the Termination Date and (B) in the case of the accrued portion of any
vacation, promptly after such Termination Date in conformity with applicable
law.

 

(iii)                               Non-renewal
upon end of the Initial Term.  In the
event that the parties hereto do not renew the Initial Term for an additional
term of one year pursuant to Section 1(e) hereof, (1) Executive
shall be entitled to exercise all vested Executive Options in accordance with
their terms for a period of one hundred eighty (180) days after such
Termination

 

5

 

Date and (2) the Company shall pay Executive as severance an
amount equal to twelve (12) months of his then Base Salary, less requisite
withholdings for tax and social security purposes, payable over such term in
monthly pro rata payments commencing as of the Termination Date, plus the accrued
portion of any vacation through the Termination Date, less requisite
withholdings for tax and social security purposes.

 

(iv)                              The
Company shall not be obligated to pay any termination payments under Sections
6(d)(i), (ii) or (iii) above if Executive breaches in any material
way the provisions of Sections 7, 8, 9 or 10 below.

 

(e)                                  Benefits
Upon Termination.  All benefits
provided under Section 2(b) shall be extended, at Executive’s
election and cost (such cost to Executive to be in the same amount as the cost
for providing such benefits to existing employees), to the extent permitted by
the Company’s insurance policies and benefit plans, for one year after
Executive’s Termination Date, except (a) as required by law (e.g., COBRA
health insurance continuation election) or (b) in the event of a
termination described in Section 6(a).

 

(f)                                    Termination
Upon Death.  If Executive dies prior
to the expiration of the term of this Agreement, the Company shall (i) continue
coverage of Executive’s dependents (if any) under all benefit plans or programs
of the type listed above in Section 2(b) herein for a period of six (6) months,
(ii) pay to Executive’s estate the accrued portion of any salary and
vacation through the Termination Date, less requisite withholdings for tax and
social security purposes and (iii) provide Executive’s estate with the
right to exercise all vested Executive Options in accordance with their terms
for a period of one hundred eighty (180) days after Executive’s death.

 

(g)                                 Termination
Upon Retirement.  Executive shall
provide notice to the Company and Douglas of his retirement prior to the term
of this Agreement not less than one hundred twenty (120) days prior to the
effective date of Executive’s retirement as set forth in such notice (the “Retirement Notice”).  In the event that Executive’s employment is
terminated by Executive’s retirement prior to the term of this Agreement, the
Termination Date shall be the effective date of Executive’s retirement as set
forth in the Retirement Notice.  After
the Termination Date, no further compensation will be payable under this
Agreement except that (1) Executive shall receive the accrued portion of
any salary and vacation hereunder through the Termination Date, less requisite
withholdings for tax and social security purposes and (2) Executive shall
be entitled to exercise all vested Executive Options in accordance with their
terms for a period of one hundred eighty (180) days after such Termination
Date.

 

(h)                                 Duty
to Mitigate; Termination of Severance Benefits.  Executive agrees that upon any termination
pursuant to either of Section 6(b) or 6(d) hereof, Executive
shall have a duty to mitigate his damages hereunder.  The Company and Executive further agree that
if, at any time following such a termination but prior to the expiration of the
period during which monthly severance benefits are to be paid by the Company
with respect to such termination, Executive secures employment, such monthly
severance benefits shall not be reduced by the amount of monthly compensation
Executive is to receive from such new employment as long as Executive does not
breach in any material way the provisions of Sections 7, 8, 9 or 10 of this
Agreement; provided, however,
that if Executive breaches in any material way the provisions of

 

6

 

Sections 7, 8, 9 or 10 of this Agreement, the Company shall not be
obligated to pay any such severance benefits in accordance with Section 6(d)(iv) above.

 

7.                                       Proprietary
Information Obligations.  During the
term of employment under this Agreement, Executive will have access to and
become acquainted with the Company’s, Douglas’ and any of their respective
Affiliates’ confidential and proprietary information, including, but not
limited to, information or plans regarding the Company’s, Douglas’ and any of
their respective Affiliates’ customer relationships, personnel, or sales,
marketing, and financial operations and methods; trade secrets; formulas;
devices; secret inventions; processes; and other compilations of information,
records, and specifications (collectively “Proprietary Information”).  Executive shall not disclose any of the
Company’s, Douglas’ or any of their respective Affiliates’ Proprietary
Information directly or indirectly, or use it in any way, either during the
term of this Agreement or at any time thereafter, except as required in the
course of his employment for the Company or Douglas or as authorized in writing
by the Company.  All files, records,
documents, computer-recorded information, drawings, specifications, equipment
and similar items relating to the business of the Company, Douglas or any of
their respective Affiliates, whether prepared by Executive or otherwise coming
into his possession, shall remain the exclusive property of the Company,
Douglas or any of their Affiliates, as the case may be, and shall not be
removed from the premises of the Company or Douglas under any circumstances
whatsoever without the prior written consent of the Company, except when (and
only for the period) necessary to carry out Executive’s duties hereunder, and
if removed shall be immediately returned to the Company or Douglas, as the case
may be, upon any termination of his employment; provided,
however, that Executive may retain
copies of documents reasonably related to his interest as a shareholder and any
documents that were personally owned by Executive, which copies and the
information contained therein Executive agrees not to use for any business
purpose.  Notwithstanding the foregoing,
Proprietary Information shall not include (i) information which is or
becomes generally public knowledge or public except through disclosure by the
Executive in violation of this Agreement and (ii) information that may be
required to be disclosed by applicable law.

 

8.                                       Sole
Property of Company.

 

(a)                                  Executive
acknowledges and agrees that all the now and hereafter existing literary
material, inventions, ideas, service marks, products, trademarks, copyrights,
trade names, service names, designs, patents, programs, documents, data,
methods, analyses, reports, discoveries, improvements, trade secrets,
techniques, processes, know-how and any other intellectual property rights,
whether or not subject to patent, trademark, copyright or trade secret
protection and whether or not reduced to practice or reduced to writing, which
was created either alone or jointly with others (the “Intellectual
Property”) during the course of Executive’s employment with the
Company, Douglas or any of their respective Affiliates (the “Company Intellectual Property”)
shall be the sole property of the Company, Douglas or other entity designated
by either the Company or Douglas, as the case may be, and Executive hereby
assigns to the Company or Douglas, as the case may be, his entire right and
interest in and to all the now and hereafter existing Company Intellectual
Property.  The Company, Douglas or any
other entity designated by either the Company or Douglas, as the case may be,
shall be the sole owner of all domestic and foreign rights pertaining to the
now and hereafter existing Company Intellectual Property.

 

7

 

(b)                                 Notwithstanding
any provision in this Agreement to the contrary, Section 8(a) shall
not apply to any Intellectual Property which was developed entirely on the
Executive’s own time without using the Company’s or Douglas’ equipment,
supplies, facilities or trade secret information except for Intellectual
Property that either (i) relates directly at the time of conception or
reduction to practice to the Company’s or Douglas’ business or actual or
demonstrably anticipated research or development, or (ii) results directly
from any work performed by the Executive for the Company, Douglas or any of
their respective Affiliates within the twelve month period immediately
preceding the time of conception or reduction to practice of such Intellectual
Property.

 

9.                                       Noninterference.  While employed by the Company and for a
period of three (3) years after termination of this Agreement, Executive
agrees not to interfere with the business of the Company, Douglas or any of
their respective Affiliates by directly or indirectly soliciting, attempting to
solicit, inducing, or otherwise causing any employee of the Company, Douglas or
any of their respective Affiliates to terminate his or her employment in order
to become an employee, consultant or independent contractor to or for any other
employer.

 

10.                                 Noncompetition.  Executive agrees that during the term of this
Agreement and for a period of three (3) years after the termination
hereof, he will not, without the prior consent of the Company, directly or
indirectly, have an interest in, be employed by, or be connected with, as an
employee, consultant, officer, director, partner, stockholder or joint
venturer, in any person or entity owning, managing, controlling, operating or
otherwise participating or assisting in any business which is in competition
with the business of the Company, Douglas or any of their respective Affiliates
(i) during the term of this Agreement, in any location, and (ii) for
the three year period following the termination of this Agreement, in any
county in which the Company, Douglas or any of their respective Affiliates was
conducting business at the date of termination of Executive’s employment and
continues to do so thereafter; provided, however, that the foregoing shall not prevent the Executive
from being a stockholder of less than 1% of the issued and outstanding
securities of any class of a corporation listed on a national securities
exchange or designated as national market system securities on an interdealer
quotation system by the National Association of Securities Dealers, Inc.

 

11.                                 Miscellaneous.

 

(a)                                  Notices.  Any notices provided hereunder must be in
writing and shall be deemed effective upon the earlier of two days following
personal delivery (including personal delivery by telecopy or telex), or the
fourth day after mailing by first class mail to the recipient at the address
indicated below:

 

8

 

To the Company:

 

Douglas Dynamics Holdings, Inc

c/o Aurora Capital Group

10877 Wilshire Boulevard 

Suite 2100 

Los Angeles, California 90024 

Attention: Richard K. Roeder 

Telecopier: (310) 824-2791

 

To Douglas:

 

Douglas Dynamics, L.L.C. 

7777 North 73rd Street 

P.O. Box 245038 

Milwaukee, Wisconsin 

Attention: Chief Executive Officer 

Telecopier: (414) 354-8448

 

With copies to:

 

Aurora Capital Group

10877 Wilshire Boulevard 

Suite 2100 

Los Angeles, California 90024 

Attention: Richard K. Roeder 

Telecopier: (310) 824-2791

 

Gibson, Dunn & Crutcher LLP 

333 South Grand Avenue 

Los Angeles, California 90071-3197 

Attention: Bruce D. Meyer, Esq. 

Telecopier: (213) 229-7520

 

9

 

To Executive:

 

Mark Adamson 

N110 W16502 Kings Way 

Germantown, WI 53022

 

or to such other address or to the attention of such other person as
the recipient party will have specified by prior written notice to the sending
party.

 

(b)                                 Severability.  Any provision of this Agreement which is
deemed invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction.  If any covenant should be
deemed invalid, illegal or unenforceable because its scope is considered
excessive, such covenant shall be modified so that the scope of the covenant is
reduced only to the minimum extent necessary to render the modified covenant
valid, legal and enforceable.

 

(c)                                  Entire
Agreement.  This document constitutes
the final, complete, and exclusive embodiment of the entire agreement and
understanding between the parties related to the subject matter hereof and
supersedes and preempts any prior or contemporaneous understandings,
agreements, or representations by or between the parties, written or oral.

 

(d)                                 Counterparts.  This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.

 

(e)                                  Successors
and Assigns.  This Agreement is
intended to bind and inure to the benefit of and be enforceable by Executive,
the Company and Douglas, and their respective successors and assigns, except
that Executive may not assign any of his duties hereunder and he may not assign
any of his rights hereunder without the prior written consent of the Company.

 

(f)                                    Amendments.
 No amendments or other modifications to
this Agreement may be made except by a writing signed by all parties.  No amendment or waiver of this Agreement
requires the consent of any individual, partnership, corporation or other
entity not a party to this Agreement. 
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.

 

(g)                                 Choice
of Law.  All questions concerning the
construction, validity and interpretation of this Agreement will be governed by
the laws of the State of Delaware without giving effect to principles of
conflicts of law.

 

(h)                                 Survivorship.  The provisions of this Agreement necessary to
carry out the intention of the parties as expressed herein shall survive the
termination or expiration of this Agreement.

 

10

 

(i)                                     Waiver.  Except as provided herein, the waiver by
either party of the other party’s prompt and complete performance, or breach or
violation, of any provision of this Agreement shall not operate nor be
construed as a waiver of any subsequent breach or violation, and the failure by
any party hereto to exercise any right or remedy which it may possess hereunder
shall not operate nor be construed as a bar to the exercise of such right or
remedy by such party upon the occurrence of any subsequent breach or violation.

 

(j)                                     Captions.  The captions of this Agreement are for
convenience and reference only and in no way define, describe, extend or limit the
scope or intent of this Agreement or the intent of any provision hereof.

 

(k)                                  Construction.  The parties acknowledge that this Agreement
is the result of arm’s-length negotiations between sophisticated parties each
afforded representation by legal counsel. 
Each and every provision of this Agreement shall be construed as though
both parties participated equally in the drafting of the same, and any rule of
construction that a document shall be construed against the drafting party
shall not be applicable to this Agreement.

 

12.                                 Arbitration.

 

(a)                                  Any
disputes or claims arising out of or concerning the Executive’s employment or
termination by the Company and/or Douglas, whether arising under theories of
liability or damages based upon contract, tort or statute, shall be determined
exclusively by arbitration before a single arbitrator in accordance with the
employment arbitration rules of the American Arbitration Association (“AAA”), except as modified by this
Agreement.  The arbitrator’s decision
shall be final and binding on all parties. 
Judgment upon the award rendered by the arbitrator may be entered in any
court of competent jurisdiction.  In
recognition of the fact that resolution of any disputes or claims in the courts
is rarely timely or cost effective for either party, the Company, Douglas and
Executive enter this mutual agreement to arbitrate in order to gain the
benefits of a speedy, impartial and cost-effective dispute resolution
procedure.

 

(b)                                 Any
arbitration shall be held in the Executive’s place of employment with the
Company.  The arbitrator shall be an
attorney with substantial experience in employment matters, selected by the
parties alternately striking names from a list of five such persons provided by
the AAA office located nearest to the place of employment, following a request
by the party seeking arbitration for a list of five such attorneys with
substantial professional experience in employment matters.  If either party fails to strike names from the
list, the arbitrator shall be selected from the list by the other party.

 

(c)                                  Each
party shall have the right to take the depositions of a maximum of three
individuals, as deemed appropriate by such party.  Each party shall also have the right to
propound requests for production of documents to any party and the right to
subpoena documents and witnesses for the arbitration.  Additional discovery may be made only where
the arbitrator selected so orders upon a showing of substantial need.  The arbitrator shall have the authority to
entertain a motion to dismiss and/or a motion for summary judgment by any party
and shall apply the standards governing such motions under the Federal Rules of
Civil Procedure.

 

11

 

(d)                                 The
Company, Douglas and Executive agree that they will attempt, and they intend
that they and the arbitrator should use their best efforts in that attempt, to
conclude the arbitration proceeding and have a final decision from the
arbitrator within one hundred twenty (120) days from the date of selection of
the arbitrator; provided, however,
that the arbitrator shall be entitled to extend such 120-day period for a total
of two one hundred twenty (120) day periods. 
The arbitrator shall immediately deliver a written award with respect to
the dispute to each of the parties, who shall promptly act in accordance
therewith.

 

(e)                                  The
Company and/or Douglas shall pay the fees and expenses of the arbitrator.  Each party shall pay its own attorney fees
and costs including, without limitation, fees and costs of any experts.  However, attorney fees and costs incurred by
the party that prevails in any such arbitration commenced pursuant to this Section 12
or any judicial action or proceeding seeking to enforce the agreement to
arbitrate disputes as set forth in this Section 12 or seeking to enforce
any order or award of any arbitration commenced pursuant to this Section 12
may be assessed against the party or parties that do not prevail in such
arbitration in such manner as the arbitrator or the court in such judicial
action, as the case may be, may determine to be appropriate under the
circumstances.  Any controversy over
whether a dispute is an arbitrable dispute or as to the interpretation or
enforceability of this paragraph with respect to such arbitration shall be
determined by the arbitrator.

 

(f)                                    In
a contractual claim under this Agreement, the arbitrator shall have no
authority to add, delete or modify any term of this Agreement.

 

(g)                                 In
the event that more than one dispute is submitted to arbitration by the
Company, Douglas or Executive pursuant to any agreement between the Company
and/or Douglas and Executive, including under this Agreement, and one or more
additional agreements to which the Company and/or Douglas and Executive are
parties, all such matters shall be consolidated into a single arbitration
proceeding so as to avoid, to the extent possible, more than one simultaneous
arbitration proceeding between the Company and/or Douglas and Executive.

 

13.                                 Investment
in the Company.  Executive shall have
the opportunity to invest in the Company through Douglas Equity Partners, L.P.,
a Delaware limited partnership, within a reasonable amount of time following
the Effective Date, but in any event, no later than ninety (90) days after the
Effective Date.

 

12

 

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

 

	
   

  	
  /s/ Mark Adamson

  
	
   

  	
  Name:
  Mark Adamson

  
	
   

  	
  Date:
  27 August 2007

  
	
   

  	
   

  
	
   

  	
  DOUGLAS
  DYNAMICS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
  /s/ Robert McCormick

  
	
   

  	
  By:
  Robert
  McCormick

  
	
   

  	
  Its:
  VP-CFO

  
	
   

  	
  Date:
  8/30/07

  

 

13

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