Document:

Exhibit 10.40

 

EXECUTION VERSION

 

AMENDED AND RESTATED JOINT MANAGEMENT SERVICES

AGREEMENT

 

This Amended and Restated Joint Management Services
Agreement (the “Agreement”) is made and entered into as of April 12, 2004
by and among 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”).

 

WHEREAS, the Company, Douglas and AMP are parties to
that certain Management Services Agreement dated as of March 31, 2004 (the
“Prior Agreement”) pursuant to which AMP provides financial consulting services
to the Company and Douglas;

 

WHEREAS, the Company and Douglas wish to assure
themselves of the financial consulting services of ACOF, in addition to the
services of AMP, upon the terms and conditions set forth in this Agreement, and
ACOF is willing to accept such consultancy; and

 

WHEREAS, the Company, Douglas and AMP desire to
amend and restate the Prior Agreement to provide for the joint consultancy of
AMP and ACOF to the Company and Douglas 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,

 

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“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)                                  “ACOF Entities”
means Ares Corporate Opportunities Fund, L.P., a Delaware limited partnership (“Ares”),
and its Affiliates.

 

(iii)                               “Aurora
Entities” means Holdings and its Affiliates and co-investors, including without
limitation, DDL Management Partners L.P., a Delaware limited partnership, DDL
Aurora Partners L.P., a Delaware limited liability partnership, members of the
Advisory Committee of Aurora Capital Group, and General Electric Pension Trust
and any other co-investors (such co-investors collectively referred to herein
as the “Co-Investors”).

 

(iv)                              “Common Stock”
means the Company’s common stock, par value $.01 per share.

 

(v)                                 “Holdings”
means Douglas Dynamics Holdings, LLC, a Delaware limited liability company.

 

(vi)                              “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.

 

(vii)                           “Preferred
Stock” means the Company’s Series A Redeemable Exchangeable Cumulative
Preferred Stock, the Series B Special Voting Preferred Stock, the Series C
Special Voting Preferred Stock and any other preferred stock of the Company
issued after the date hereof howsoever designated that is entitled to any
preference over the Common Stock in payment of dividends or in the distribution
of assets upon liquidation of the Company.

 

(viii)                        “Pro-Rata
Portion” means, with respect to AMP or ACOF, as the case may be, the average
(expressed as a percentage) of (a) the ratio (expressed as a percentage)
of the number of shares of Common Stock held by or issuable to the Aurora
Entities (with respect to AMP) or the Ares Entities (with respect to ACOF), as
the case may be, to the aggregate number of shares of Common Stock at the time
outstanding collectively held by or issuable to the Aurora Entities and the
Ares Entities and (b) the ratio (expressed as a percentage) of the number
of shares of Preferred Stock held by or issuable to the Aurora Entities (with
respect to AMP) or the Ares Entities (with respect to ACOF), as the case may
be, to the aggregate number of shares of Preferred Stock at the time
outstanding collectively held by or issuable to the Aurora Entities and the
Ares Entities.  Notwithstanding anything
to the contrary set forth herein, if the Company issues to the Co-Investors
after the date hereof a number of shares of Common Stock and/or Preferred
Stock, for purposes of calculating the Pro-Rata Portion, the number of shares
of Common Stock or Preferred Stock held by or issuable to the Aurora Entities
shall not include such number of shares of Common Stock or

 

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Preferred Stock held by the Co-Investors with
an aggregate purchase price of up to $10,300,000.

 

(ix)                              “Purchase
Agreement” means that certain Amended and Restated Purchase Agreement, dated as
of March 31, 2004 by and between AK Steel Corporation, Douglas Dynamics,
L.L.C. and DDL Acquisition Corp.

 

(b)                                 In consideration of the Services to be
rendered hereunder, the Company and Douglas, jointly and severally, hereby
agree to pay AMP and ACOF an aggregate management fee of $1,250,000 per annum,
to be paid in advance semi-annually on May 1 and November 1 of each
applicable year.  AMP and ACOF will share
in such fee based on their respective Pro-Rata Portion as of the date of any
such calculation.  Notwithstanding
anything to the contrary set forth herein, the management fee to be paid to
ACOF pursuant to this Section 2(b) shall commence accruing as of April 12,
2004 and the management fee to be paid to AMP pursuant to this Section 2(b) shall
commence accruing as of April 1, 2004 and any such management fee accrued
or paid to AMP from the date of the Prior Agreement to the date hereof shall
not be shared with ACOF as provided in the immediately preceding sentence.

 

(c)                                  In addition to the fees payable to AMP
and ACOF under Section 2(b) above, the Company and Douglas, jointly
and severally, shall (i) pay to AMP and ACOF a fee for services rendered
in connection with any acquisition, any sale or disposition of any division of
the Company, Douglas or any of their respective Affiliates, any sale or
disposition of all or substantially all of the assets of the Company, Douglas
or any of their respective Affiliates or any other sale or disposition of any
assets of the Company, Douglas or any of their respective Affiliates other than
in the ordinary course of business of such entities (including researching industry
information, performing financial analysis on prospective acquisition
candidates, arranging acquisition financing, and facilitating the close of the
transaction) made by or of the Company, Douglas, or any of their respective
Affiliates, in which the Company and/or Douglas has an ownership interest, such
fee to equal 2.0% of the first $75 million of the aggregate transaction consideration
(including debt assumed by the purchaser and current assets retained by the
seller) and 1.0% of the aggregate transaction consideration (including debt
assumed by the purchaser and current assets retained by the seller) in excess
of $75 million, (ii) reimburse each of AMP and ACOF for all of its
reasonable out-of-pocket costs and expenses incurred in connection with the
performance of its obligations under this Agreement, including any such costs
and expenses incurred in connection with any such acquisitions, sales or
dispositions and (iii) reimburse AMP for all of its out-of-pocket costs
and expenses related to DDL Management Partners L.P. and DDL Aurora Partners
L.P.  AMP and ACOF will share in the fee
described in clause (i) above based on their respective Pro-Rata Portion
as of the date of any such calculation.

 

(d)                                 Upon the consummation of the Closing (as
defined in the Purchase Agreement), the Company and Douglas, jointly and
severally, shall have paid to AMP on the date of such Closing an aggregate
transaction fee of $2,210,091.

 

(e)                                  Upon the consummation of the Closing (as
defined in the Purchase Agreement), the Company and Douglas, jointly and
severally, shall have paid on date of such

 

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Closing all of the reasonable out-of-pocket
expenses incurred by AMP (or any of its Affiliates) in connection with the
transactions contemplated by the Purchase Agreement and the related
transactions.

 

(f)                                   If the closing of Ares’ investment in the
Company through the purchase of shares of Common Stock and Preferred Stock held
by Douglas Dynamics Holdings, LLC (the “Ares Investment”) is consummated, the
Company and Douglas, jointly and severally, shall pay to Ares on the date of
such closing an aggregate transaction fee of $1,262,909.

 

(g)                                  If the closing of the Ares Investment is
consummated, the Company and Douglas, jointly and severally, shall pay on the
date of such closing all of the reasonable out-of-pocket expenses incurred by
Ares (or any of its Affiliates) as of the date of the closing of such Ares
Investment in connection with the transactions contemplated by such investment.

 

(h)                                 Notwithstanding anything to the contrary
set forth herein, provided, however, that no fee or expense payable hereunder
shall be made by the Company and/or Douglas or accepted by AMP and/or ACOF if (i) a
default in respect of the payment of principal of, premium or interest on, any
indebtedness outstanding under or in respect of the Company’s senior bank
credit facilities has occurred and is continuing or would result from the
making of such payment or (ii) there has occurred and is continuing an
insolvency event that has resulted in an event of default under the Company’s
senior bank credit facilities.

 

3.                                      Term.  Unless
earlier terminated as provided in Section 4 below, the term of this
Agreement shall commence on the date hereof and shall terminate automatically
on the earlier to occur of (i) the sale of all of the outstanding capital
stock of the Company, (ii) the sale of all or substantially all of the
assets of the Company, (iii) the merger of the Company or sale in one or a
series of related transactions of the outstanding capital stock of the Company after
which the holders of a majority of the voting power of the Company immediately
prior to such merger or stock sale do not, immediately after such merger or
stock sale, hold a majority of the voting power of the surviving corporation or
the Company, as the case may be, (iv) the closing date of an underwritten
initial public offering of the shares of Common Stock pursuant to a
registration statement filed with the Securities and Exchange Commission, or (v) the
tenth anniversary of the date first set forth above.  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 5, 6, 7, 8, 9, 10,
11 and 12 shall survive the expiration of the term of this Agreement or any
termination of this Agreement.

 

4.                                      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 for justifiable cause, which shall mean any
of the following events:  (a) misappropriation
by

 

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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 fmal 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)                                 (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 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.

 

5.                                      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 5 by AMP’s officers, directors, employees and
advisors.  ACOF shall be responsible for
any breaches of this Section 5 by ACOF’s officers, directors, employees
and advisors.

 

6.                                      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 Holdings, 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

  

 

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  If to AMP:

  	
  Aurora Management Partners
  LLC 

  10877 Wilshire Boulevard

  Suite 2100

  Los Angeles, CA 90024 

  Telecopier No:  (310) 227-5591 

  Attn:  Richard K. Roeder

  
	
   

  	
   

  
	
  If to ACOF:

  	
  ACOF Management, L.P. 

  1999 Avenue of the Stars 

  19th 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.

 

7.                                      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.

 

8.                                      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.

 

9.                                      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

 

6

 

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.

 

10.                               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 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, directors, officers or employees.

 

11.                               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 9 and 10
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 9
shall only operate prospectively as to

 

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any Indemnitee provided therein unless such
Indemnitee shall have agreed in writing to such amendment.

 

12.                               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.

 

8

 

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

 

	
   

  	
  DOUGLAS DYNAMICS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James L. Janik

  
	
   

  	
  Name:

  	
  James L. Janik

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DOUGLAS DYNAMICS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James L. Janik

  
	
   

  	
  Name:

  	
  James L. Janik

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AURORA MANAGEMENT PARTNERS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard K. Roeder

  
	
   

  	
  Name:

  	
  Richard K. Roeder

  
	
   

  	
  Title:

  	
  Vice President and Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ARES CORPORATE OPPORTUNITIES FUND, L.P.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ACOF Management, L.P., its general partner

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  ACOF Operating Manager, L.P., its general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Ares Management, Inc., its general partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jeff Serota

  
	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  Jeff Serota

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
  Partner

  
							

 

9Exhibit
10.41

 

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 [·], 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, on-line 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.

 

2

 

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) April [    ],
2015, (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.

 

3

 

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.

 

4

 

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:

  	
   

  
	
   

  	
  Name:
  James L. Janik

  
	
   

  	
  Title:
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DOUGLAS
  DYNAMICS, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:
  James L. Janik

  
	
   

  	
  Title:
  President and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AURORA
  MANAGEMENT PARTNERS LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  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:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

7

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