Exhibit 10.6






ALAMO GROUP INC.


 



STOCK OPTION
AWARD AGREEMENT


 


This Stock Option Award Agreement (the “Agreement”) is
made between Alamo Group Inc., a Delaware corporation (the “Company”), and
__________________________ (the “Optionee”), pursuant to the Company’s 2005 Incentive
Stock Option Plan (the “Plan”), incorporated by reference herein.  All
capitalized terms used but not defined herein shall have the meaning assigned
to them in the Plan.  To the extent there are any inconsistencies between the
terms of this option and the Plan; the terms of the Plan shall control.  The
Company and the Optionee agree as follows:  


 


1.         The Company hereby grants to the Optionee and
the Optionee accepts on the terms and conditions of this Agreement the right
and the option to purchase all or any part of shares of Common Stock (the
“Option”) described as:


 


	


Number of Shares of Common Stock
	____________
	


Grant Price per Share
	$___________
	


Grant Date
	 _______, 20__  



 


2.         The Option granted herein shall be
exercisable according to the following schedule:  twenty percent (20%) of the shares
of Stock shall vest on the first anniversary of the Grant Date and an
additional twenty percent (20%) of the shares of Stock shall vest on each
succeeding anniversary date of the Grant Date until all shares of Stock are
vested.


 


3.         The unexercised portion of any Option
shall automatically and without notice terminate and become null and void at
the time the earliest of the following occurs:


 


(a)       The expiration of ten (10) years from the
Grant Date; provided, however, that any Option granted to an individual owning,
at the time the Option is granted, more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company and any of its
subsidiaries, shall expire five (5) years from the Grant Date;


 


(b)       The expiration of thirty (30) days from the
date of termination of the Optionee’s employment with the Company or any Affiliate
either voluntarily by the Optionee or by the Company without cause; provided
that if the Optionee shall die during such thirty (30) day period, the
provisions of subparagraph (c) below shall apply;


 


(c)        The expiration of six (6) months following
the issuance of letters testamentary or letters of administration to the
executor or administrator of a deceased Optionee, if the Optionee’s death
occurs either during his or her employment with the Company or during the
thirty (30) day period following the date of termination of such employment
pursuant to subparagraph (b) above, but not later than one year after the
Optionee's death; or


 

 










 






 


 


 


 

 


(d)       The termination of the Optionee’s
employment with the Company for cause.  The term “cause” shall be defined as
including, but shall not be limited to, the following: (a) the Optionee’s
commission of an act of fraud, misappropriation, embezzlement or the like; or
(b) in the event the Optionee is indicted for, pleads guilty or no contest to,
or is convicted of a felony.


 


4.         (a)       The Optionee (or Optionee’s
executors or administrators) may exercise the Optionee’s Options as to any
vested portion of the Option at any time and from time to time prior to the
expiration of the Options as provided in Paragraph 3.  The Optionee (or
Optionee’s executors or administrators) must give written notice to the Company
of the intent to exercise and the number of shares of Stock to be purchased. 
In addition, the Optionee’s written notice shall specify a business day prior
to the expiration of the Options for the payment in full in cash or shares of
Common Stock owned by the Optionee prior to such exercise for the shares of
Stock being purchased pursuant to the Option.  The giving of such written
notice to the Company shall constitute an irrevocable election to purchase the
number of shares of Stock specified in the notice on the date specified in the
notice.  On such date, the Optionee shall deliver the required consideration to
the Company.  


 


(b)       Notwithstanding the foregoing, the
Committee, in its sole discretion, may adjust the period in which the Optionee
may exercise any Option to the extent that the Committee deems such
modification to be desirable or necessary to comply with applicable
requirements of the Code, the Securities Act of 1933 (the “1933 Act”) or the 1934
Act, including recognition of any applicable “blackout period” whereby Company
employees are precluded from buying or selling Stock.  The Committee or its
delegate shall promptly notify the Optionee of any such adjustments.  No such
notice shall be delivered so that the Optionee shall have less than thirty (30)
days to exercise his or her Options prior to expiration of such Options.  


 


(c)        The Company shall cause certificates for
any shares of Stock to be delivered to the Optionee or Optionee’s executors or
administrators within ten (10) business days after the receipt of payment
therefore.  


 


5.         Neither the Optionee nor Optionee’s
executors or administrators shall have any of the rights of a stockholder of
the Company with respect to the shares of Stock subject to this Option until a
certificate or certificates for such shares of Stock shall have been issued
upon the exercise of this Option.  


 


6.         The Option granted herein shall not be
transferable by the Optionee other than pursuant to a qualified domestic
relations order or to Optionee’s executors or administrators by will or the
laws of descent and distribution, and during the Optionee’s lifetime shall be
exercisable only by Optionee (or by the transferee under such a domestic
relations order).


 

 

 


2










 






 


 


 


 


7.         In the event of the Optionee’s death
during Optionee’s employment with the Company, or during the thirty (30) day
period following the date of termination of such employment pursuant to
paragraph 3(b) above, this Option shall thereafter be exercisable, as provided
in paragraph 3(c) above, only by Optionee’s executors or administrators.  


 


8.         In the event of any stock split, stock
dividend, reclassification, or capitalization which changes the character or
amount of the outstanding Stock while any portion of this Option is outstanding
but unexercised, the Committee shall make such adjustments in the character and
number of shares of Stock subject to such unexercised portion of this Option,
and in the Grant Price, as shall be equitable and appropriate in order to make
the Option, as nearly as may be practicable, equivalent to this Option
immediately prior to such change; provided that no adjustment shall give the
Optionee any additional benefits under this Option.


 


                        Upon
a Change of Control, the Options shall vest and be payable as provided in the
Plan.  


 


9.         The Optionee agrees that the obligation of
the Company to issue shares of Stock upon the exercise of an Option shall also
be subject as conditions precedent to compliance with applicable provisions of
the 1933 Act, the 1934 Act, state securities laws, rules and regulations under
any of the foregoing and applicable requirements of any securities exchange
upon which the Company's securities shall be listed.


 


Prior to such time as this Option may be exercised,
if the Company is registered under the 1934 Act, the Company shall register the
Stock subject to the Plan with the Securities and Exchange Commission on Form
S-8, or such other form as then applicable. 


 


10.       As used herein, the term “employment with
the Company” shall include employment with the Company or with any of its Affiliates. 
Nothing contained herein shall be deemed a promise of employment or a promise
of continued employment.  


 


11.       The Optionee represents that he or she has
a copy of the Plan and is familiar with its terms. 


 


 


[Intentionally Blank]

 

 


3

 










 






 


 


 


 


IN WITNESS WHEREOF, the parties have executed this
Agreement in duplicate on this _____ day of ________________, _____.


 


ALAMO GROUP INC.


 


 


By: __________________________________


 


 


Its: __________________________________


 


 


ACCEPTED AND AGREED TO:


 


 


_____________________________________


Optionee