Exhibit 10.1





 


 


 


 


 


 


ALAMO GROUP INC.


 


SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN


 


 


Section 1.  Background and
Purpose of the Plan.


 


            (a)         Background.    The
name of this plan is the Alamo Group Inc. Supplemental Executive Retirement
Plan (the “Plan”).  The Board of Alamo Group Inc., a Delaware corporation (the
“Company”) has adopted the Plan as of January 3, 2011 (the “Effective Date”).    


 


            (b)        Purpose. 
The purpose of the Plan is to provide the executive management team of the
Company and its Subsidiaries with a supplemental retirement benefit through the
use of a defined benefit non-qualified supplemental executive retirement plan. 
The Plan is not intended to constitute either a qualified plan under the
provisions of Section 401 of the Code or a funded plan subject to ERISA.  The obligation
of the Company to make payments under the Plan constitutes solely an unsecured,
but legally enforceable, promise of the Company to make such payments, and no
person, including any Employee, shall have any lien, prior claim, or other
security interest in any property of the Company as a result of the Plan. 
Rather, any employee participating in the Plan shall have the status of a
general unsecured creditor of the Company.  


 


Section 2.  Definitions. 


 


            For purposes
of the Plan, in addition to terms defined elsewhere in the Plan, the following
terms shall be defined as set forth below:


 


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


 


            (b)        “Cause”
means, unless a Participant is party to a written employment agreement with the
Company or a Subsidiary which contains a definition of “cause”, “termination
for cause,” or any other similar term or phrase, in which case “Cause” shall
have the meaning set forth in such agreement, conduct involving one or more of
the following: (i) the substantial and continuing failure of the Participant to
render services to the Company or any Subsidiary in accordance with the
Participant’s obligations and position with the Company or Subsidiary, provided
the Company or any Subsidiary provides the Participant with adequate notice of
such failure and, if such failure is capable of cure, the Participant fails to
cure such failure within thirty (30) days of the notice; (ii) dishonesty, gross
negligence, or breach of fiduciary duty; (iii) the Participant’s conviction of,
or no contest plea to, an act of theft, fraud, or embezzlement; (iv) the
commission of a felony; or (v) a material breach of the terms of an agreement
between the Participant, on the one hand, and the Company or any Subsidiary on
the other hand, or a material breach of any material company policy.


 


            (c)        “Change in
Control” means the first to occur of any one of the events set forth in the
following paragraphs:

 


 




	
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 (i)
a change in the ownership of the Company which occurs on the date that any one
person, or more than one person acting as a group (as such terms are defined in
Section 13(d)(3) of the Exchange Act), becomes the “beneficial owner” (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of Shares
representing more than fifty percent (50%) of the total voting power of
the issued and outstanding stock of the Company entitled to vote in the
election of directors of the Company (“Voting Stock”) and such person or group
has the power and authority to vote such Shares; 


 


(ii)
a change in the effective control of the Company which occurs on the date that
a majority of members of the Board is replaced during any twelve
(12) month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the date of the
appointment or election; or 


 


(iii)
any sale, lease, exchange, or other disposition (in one transaction or a series
of related transactions) of all or substantially all of the assets of the
Company (together with the assets of the Company’s direct and indirect
subsidiaries) to any person or  more than one person acting as a group (as such
terms are defined in Section 13(d)(3) of the Exchange Act); provided, however,
that for purposes of this subsection (iii), a transfer of assets by the Company
to an entity that is controlled by the Company’s stockholders immediately after
the transfer will not be considered a Change in Control;  or


 


(iv)
the consummation of a merger or consolidation of the Company with another
entity in which immediately following the consummation of the transaction,
those stockholders of the Company immediately before the consummation of the
transaction cease to own collectively at least fifty percent (50%) of the Voting
Stock of the Company, so long as such merger or consolidation constitutes a
“change in control” as defined in Treasury Regulation Section 1.409A-3(i)(5)(v)
and the stock in the Company remains outstanding after the transaction.  


 


            (d)        “Code”
means the Internal Revenue Code of 1986, as amended from time to time, or any
successor thereto.


 


            (e)        “Committee”
means the Compensation Committee of the Board, as appointed from time to time
by at least a majority of the whole Board.  


            


            (f)         “Company”
means Alamo Group Inc., a Delaware corporation.


 


            (g)        “Credited Service”
means a Participant’s continuing and uninterrupted period of employment with
the Company and/or Subsidiary commencing on the first day for which such
Participant is paid, or entitled to payment (including for periods prior to
implementation of this Plan), for the performance of duties with the Company
and/or Subsidiary and terminating with the Participant’s cessation of
participation in the Plan.  “Credited Service” shall also include partial
periods of interrupted employment, as determined by the Committee.  

 


 




	
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            (h)        “Disability”
means (i) that a Participant cannot engage in any substantial gainful activity
by reason of a medically determinable physical or mental impairment, and (ii)
that a physician has determined that the Participant’s condition described in
(i) has lasted or can be expected to last continuously for at least twelve (12)
months or can lead to death.  


 


            (i)         “Effective
Date” means January 3, 2011.


 


            (j)         “Employee”
means an employee of the Company or any of its Subsidiaries.       


 


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


            


            (l)         “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.


 


            (m)       “Final Cash
Compensation” means the three-year average of the annualized base salary
compensation payable to a Participant in cash by the Company or a Subsidiary
for the calendar year as of the last date in the Participant’s final year of
Credited Service and the two preceding calendar years: (i) before any requisite
tax withholding and payroll deductions, (ii) including base pay, other regular
earnings, any amounts deferred under a salary reduction agreement pursuant to
the Company’s 401(k) plan, a Subsidiary’s 401(k) plan, or under a “cafeteria
plan” (within the meaning of Section 125 of the Code) maintained by the Company
or a Subsidiary, and (iii) excluding cash bonuses, severance pay, expense
reimbursements, any expenses of Participant paid by the Company or a Subsidiary
on behalf of Participant, taxable fringe benefits, group term life insurance,
expatriate compensation, exercised stock options or other equity compensation,
and short and long-term disability paid by a third party.  For example, if a
Participant has an annual base salary of $100,000 on January 1st,
receives a raise on April 30th such that Participant’s new annual
base salary is $120,000 going forward for a particular year, the Participant’s
annualized base salary for that year used to calculate Final Cash Compensation
is $120,000 for purposes of this Plan.  


 


            (n)        “Normal
Retirement Age” means age 65.  


 


            (o)        “Participant”
means an Employee who is eligible and has been selected to participate in the
Plan pursuant to Section 3.       


                        


            (p)        “Plan”
means the Alamo Group Inc. Supplemental Executive Retirement Plan, as set forth
herein and as amended from time to time.  


 


            (q)        “Retirement
Benefit” means, as of any given date of determination, the vested portion only
of the retirement benefit calculated under Sections 4 and 5 hereof.  


 


            (r)        “Separation
from Service” shall mean a separation from service as defined in Code Section
409A and the Treasury Regulations and rulings issued thereunder.

 


 




	
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            (s)        “Subsidiary”
means a direct or indirect subsidiary of the Company, provided that the Company
(or an entity defined as a Subsidiary herein) owns fifty percent (50%) or more
of the combined voting power of all classes of such Subsidiary’s stock entitled
to vote, and the Company (or an entity defined as a Subsidiary herein) owns
fifty percent (50%) or more of the total value of shares of all classes of such
Subsidiary’s stock outstanding.      


 


Section 3.  Eligible Employees
and Notification.    


 


            An Employee is
eligible to become a Participant in the Plan if such Employee is a member of a
select group of key management or other highly compensated employees of the
Company and/or a Subsidiary, as determined by the Board.  An eligible Employee
shall become a Participant in the Plan as of the date he or she is selected by
the Board for inclusion as a Participant in the Plan.  Following the Board’s
selection of a Participant for inclusion as a Participant, the Committee shall
notify each Participant of his or her participation in the Plan.  Ongoing
eligibility and participation of Participants shall be determined by the Board
in its sole discretion, and no Employee shall have a right to initial or
ongoing participation in this Plan.    Exhibit A attached hereto lists those
Employees who are Participants as of the Effective Date, and will be updated by
the Committee to reflect those Employees who become Participants after the
Effective Date.  


 


Section 4.  Vesting.


 


            A Participant shall
have a nonforfeitable (vested) right to Participant’s Retirement Benefit upon
the earliest of the following to occur: (i) Participant achieves ten (10) or
more years of Credited Service, or (ii) a Change in Control occurs.    


 


Notwithstanding
the foregoing, if a Participant is terminated as an Employee by the Company or
a Subsidiary for Cause, then the Participant’s Retirement Benefit shall be
immediately forfeited, whether or not such Retirement Benefit is then vested.  


 


Section 5.  Calculation of Retirement
Benefit.


 



(a)         Ten (10) or More Years of Credited Service.  A Participant who
has achieved ten (10) or more years of Credited Service shall have a Retirement
Benefit equal to: (i) twenty percent (20%) of the Participant’s Final Cash
Compensation, (ii) multiplied by fifteen (15).  


 


            (b)        Change
in Control.  If a Change in Control occurs after a Participant has achieved
ten (10) or more years of Credited Service, then, consistent with (a) above, such
Participant’s Retirement Benefit shall equal twenty percent (20%) of the
Participant’s Final Cash Compensation, multiplied by fifteen (15).  However, if
a Change in Control occurs before a Participant has achieved ten (10) or more
years of Credited Service, then such Participant’s Retirement Benefit shall
equal: (i) twenty percent (20%) of the Participant’s Final Cash Compensation,
(ii) multiplied by fifteen (15), (iii) multiplied by, the number of years of
Credited Service the Participant has achieved as of the date of the Change in
Control divided by ten (10).  For example, if a Participant had eight (8) years
of Credited Service when a Change in Control occurred, and Participant’s Final
Cash Compensation was $150,000, the Participant’s Retirement Benefit would
equal $360,000 ($150,000 x 20% = $30,000; $30,000 x 15 = $450,000; $450,000 x
8/10 = $360,000). 

 


 




	
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Section 6.  Payment of
Retirement Benefit.


 


            The terms of payment of a Retirement Benefit shall be
determined by the first to occur of the following payment events listed in
subsections (a) – (d) below.  The occurrence of a subsequent payment event
shall not alter the method by which the Retirement Benefit is paid.  By way of
example, if a Participant dies during the annuity period following his or her Separation
from Service, his or her Retirement Benefit shall continue to be payable in
accordance with the installment terms determined under Section 6(a) below.  To
the extent a Participant has a vested right to such Participant’s Retirement
Benefit pursuant to Section 4 hereof, the Company shall pay the Retirement
Benefit to Participant (or Participant’s estate, as applicable), upon the first
of the following events to occur in accordance with the following:  


 


            (a)        Separation
from Service.  In connection with a Participant’s Separation from Service
(including Participant’s retirement from the Company on or after his or her Normal
Retirement Age), the Company shall pay the vested Retirement Benefit to
Participant in monthly installments over a period of fifteen (15) years, the
amount of each such installment to equal the vested Retirement Benefit divided
by one hundred eighty (180).  If the Participant has reached his or her Normal
Retirement Age when the Separation from Service occurs, then the first such monthly
installment shall be due and payable on the first day of the seventh month
following the Participant’s Separation from Service (and not earlier than such
date), and each subsequent installment shall be made monthly thereafter on the
first day of the month following the prior installment payment; otherwise, if
the Participant has not reached his or her Normal Retirement Age when the
Separation from Service occurs, then the first such monthly installment shall
be due and payable on the first day of the month immediately following the
Participant’s attainment of his or her Normal Retirement Age (and not earlier
than such date), and each subsequent installment shall be made monthly thereafter
on the first day of the month following the prior installment payment.


 



(b)        Death.  Following a Participant’s death, the Company shall pay
the vested Retirement Benefit to the Participant’s estate in a single lump sum
cash payment no later than ninety (90) days after the Participant’s death.    


 



(c)        Disability.  A Participant seeking payment of his or her vested Retirement
Benefit hereunder by reason of Disability shall notify the Committee of the
Participant’s Disability, together with such documentation necessary for the
Committee to determine whether the Participant is Disabled within the meaning
of this Plan.  Commencing with the Committee’s determination that a Participant
has a “Disability” under the terms of this Plan, the Company shall pay the vested
Retirement Benefit in monthly installments over a period of fifteen (15) years,
the amount of each such installment to equal the vested Retirement Benefit
divided by one hundred eighty (180).  The first such monthly installment shall
be due and payable on the first day of the month following the Committee’s
determination that a Participant has a “Disability” under the terms of this
Plan, and each subsequent installment shall be made monthly thereafter on the
first day of the month following the prior installment payment.  

 


 




	
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(d)        Change in Control.  Following a Change in Control, the Company
shall pay the vested Retirement Benefit to the Participant in a single lump sum
cash payment no later than ninety (90) days after the Change in Control.  


 


Section 7.        Claims Procedures.


            


            (a)        Application
for Benefits.  The Committee may require any person claiming a Retirement
Benefit under the Plan to submit a written application, together with such
documents, evidence, and information as it considers necessary to process the claim.


            


            (b)        Action
on Application.  Within ninety (90) days after receipt of an
application and all necessary documents and information, the Committee shall
furnish the claimant with a written notice of its decision.  If the Committee
denies the claim in whole or in part, the notice will set forth
(1) specific reasons for the denial, with specific reference to Plan
provisions upon which the denial is based; (2) a description of any
additional information or material necessary to process the application with an
explanation why such material or information is necessary; and (3) an
explanation of the Plan’s claim review procedure.


 


                If special circumstances
require an extension of time for processing the claim, the Committee shall
furnish the claimant written notice of the extension before the end of the
initial ninety (90) day period.  In no event shall the extension exceed a
period of ninety (90) days from the end of the initial period.  The notice
shall explain the circumstances requiring an extension of time and the date by
which the Committee expects to render a decision.


 


                (c)        
Claim Review.  The claimant who does not agree with the decision
rendered on his or her application may request that the Committee review the
decision.  The request must be made within sixty (60) days after the
claimant receives the decision, or if the application has neither been approved
nor denied within the ninety (90) day period specified in subsection (b) of
this Section 7, then the request must be made within sixty (60) days after
expiration of the ninety (90) day period.


 


            Each
request for review must be in writing and addressed to the Committee. 
Concurrently with filing the request for review, or within the sixty (60) days
request period, the claimant may submit in writing to the Committee a statement
of the issues raised by his or her appeal and supporting arguments and
comments.


 


            During the pendency
of his appeal, the claimant may inspect all documents which are reasonably
pertinent to his case, upon reasonable notice to the Committee.  However,
under no circumstance shall the Committee be required to disclose to any
claimant information concerning any person other than the Participant whose
benefit is being claimed, to the extent such information is normally treated as
confidential.

 


 




	
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            Where the Committee
believes that the issues raised by the claimant’s appeal may be more
efficiently or fairly processed by taking testimony of the claimant or others,
it shall set the matter for oral hearing and give the claimant reasonable
notice of the time and place.  Whether or not an oral hearing is
scheduled, the Committee shall proceed promptly to resolve all issues raised by
the claimant’s appeal and shall render a written decision on the merits, with a
statement of the reasons and references to the pertinent supporting provisions
of the Plan, within sixty (60) days following receipt of the claimant’s request
for review.


 


            If special
circumstances require an extension of time, the Committee shall render a
decision as soon as possible, but not later than one hundred and twenty (120)
days after receipt of the request for review.  If an extension is
required, the Committee shall furnish to the claimant written notice of the
extension, including an explanation of the circumstances requiring the
extension, before the extension period begins.


            


Section 8.  Administration of
the Plan.  


 


            (a)        The
Plan shall be administered by the Committee.    


 


            (b)        The
Committee shall have the responsibility for the general administration of the Plan
according to the terms of this Plan and shall have all powers necessary in its
discretion to accomplish those purposes, including but not limited to the
following:


 


(i)         to adopt, alter, and rescind rules and regulations relating
to the Plan as it shall from time to time deem advisable; 


 


(ii)        to construe and interpret the terms of the Plan and Retirement
Benefits granted pursuant to the Plan, and to otherwise supervise the administration
of the Plan;


 


(iii)       to correct any defect, supply any omission, or reconcile any
inconsistency that may appear in this Plan; and 


 


(iv)       to determine all controversies relating to the administration
of the Plan, including but not limited to: (1) differences in opinion arising
between the Company and/or Subsidiary and a Participant, and (2) any questions
it deems advisable to determine in order to promote the uniform administration
of this plan for the benefit of all interested parties.


 


In exercising
such discretion pursuant to this Section 4(b), the Committee shall ensure that
a grant of Retirement Benefits is structured so as to comply with the
requirements of Code Section 409A and the Treasury Regulations thereunder, and
the Committee shall not take any action that would cause an impermissible
acceleration of payment or impermissible additional deferral of compensation
for purposes of Code Section 409A and the Treasury Regulations thereunder.


 




	
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            (c)        The
Committee’s decisions, determinations, and interpretations will be final,
conclusive, and binding on all persons, including the Company, Subsidiaries, and
the Participants.  No member of the Committee, nor any officer or employee of
the Company acting on behalf of the Committee, shall be personally liable for
any action, determination, or interpretation taken or made in good faith with
respect to the Plan, and all members of the Committee and each and any officer
or employee of the Company and/or Subsidiary acting on their behalf shall, to
the extent permitted by law, be fully indemnified and protected by the Company
in respect of any such action, determination, or interpretation.  


 


Section 9.        Tax Withholding.


 


Prior to the
delivery of any Retirement Benefit (or installment thereof), the Company will
have the power and the right to deduct or withhold, or require a Participant to
remit to the Company, an amount sufficient to satisfy federal, state, local,
foreign or other taxes (including the Participant’s FICA obligation) required
to be withheld with respect to such Retirement Benefit.


 


Section 10.      No Effect on
Employment or Service.


 


            Neither the Plan nor
any Retirement Benefit will confer upon a Participant any right with respect to
continuing the Participant’s relationship as an Employee with the Company or a Subsidiary,
nor will they interfere in any way with the Participant’s right or the
Company’s right (or the right of a Subsidiary) to terminate such relationship
at any time, with or without Cause, to the extent permitted by applicable laws. 



 


Section 11.      Limitation of
Rights.


 


            Nothing in this Plan
will be construed to give a Participant or any other person claiming through a
Participant any interest or right under this Plan other than that of any
general unsecured creditor of the Company.


 


Section 12.      Term of Plan;
Amendment; Termination.


 


            The Plan will become
effective upon its adoption by the Board.  Unless terminated earlier by the
Board, the Plan will continue indefinitely from the Effective Date (the “Plan
Term”).  No Retirement Benefit shall be granted pursuant to the Plan after the
end of the Plan Term, but Retirement Benefits theretofore granted may extend
beyond the Plan Term.  The Board may at any time amend, alter, suspend or
terminate the Plan.  The Board reserves the right, in its sole discretion and
for whatever reason it deems appropriate, to amend the Plan from time to time,
or to terminate the Plan at any time; provided, however that no amendment or
termination of the Plan may impair the rights of a Participant with a vested
Retirement Benefit under Section 4 hereof without the written consent of such Participant. 



 


Section 13.      General
Provisions.


 


            (a)        No
right or benefit, including the Retirement Benefit, provided in this Plan will
be transferable by the Participant, except upon his or her death to the
Participant’s estate.  No right or benefit under this Plan will be subject to
alienation, sale, assignment, pledge, encumbrance, or charge, and any attempt
to alienate, sell, assign, pledge, encumber, or charge the same will be void.

 

 


 




	
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            (b)        If any
provision of the Plan is held to be invalid or unenforceable, the other
provisions of the Plan shall not be affected but shall be applied as if the
invalid or unenforceable provision had not been included in the Plan. 


            


            (c)        The
Plan and all Retirement Benefits shall be governed by the laws of the State of Delaware without regard to its principles of conflict of laws.         

 

 

 

 

 

 

 

 

  

 

 

 




	
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Exhibit A


 


Participants in
the Plan as of the Effective Date


 


 

Donald C. Duncan


Robert H. George


Dan E. Malone


Richard D. Pummell


Ronald A. Robinson


Richard J. Wehrle

 

 

 

 

 

 

 

 

 

 

 

 

  

 




	
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