Document:

Exhibit 10.5

 

 

 

 

 

 

ALAMO GROUP INC.

Stock Option

 

            KNOW
ALL MEN BY THESE PRESENTS:  That ALAMO GROUP INC. (the “Company”) having
adopted a First Amended and Restated 1999 Non-Qualified Stock Option Plan (the
“Plan”), hereby grants to ___________________ (the “Optionee”) the right and
option to purchase ________________ shares of the Common Stock of the Company
on the following terms and conditions:

 

1.         Exercise of Option. 
This option shall become exercisable as follows.  After the expiration of one
year following the date on which this option is granted, this option may be
exercised as to up to twenty percent (20%) of the total number of shares
covered hereby.  An additional twenty percent (20%) of the shares subject to
this option shall become exercisable on each anniversary date of the grant
hereof until all of the shares subject hereto have become exercisable. 
Further, subject to the terms of paragraph 6, all of the shares covered hereby
shall vest upon a Qualifying Event (as herein defined).  “Qualifying Event”
means such date as Optionee is (i) age 62 or older, and (ii) has been employed
by the Company or any of its affiliates for at least five (5) years.  (For
purposes of this paragraph 1, Optionee shall be credited with time and service
with any predecessor of such affiliate, if the predecessor or substantially all
of its business was acquired by the Company or its affiliate.)  

 

                        The
option shall be exercised by the Optionee as to all or part of the shares
covered hereby, by the giving of written notice of such exercise to the Company
at its principal business office, specifying the number of shares to be
purchased, and specifying a business day, (the “exercise date”) not more than
five (5) days from the date such notice is given, for the payment of the purchase
price against delivery of the shares being purchased.  The giving of such
written notice to the Company shall constitute an irrevocable election to
purchase the number of shares specified in the notice and to exercise the right
on the date specified in the notice.

 

2.         Option
Price.  The purchase price of the shares which may be purchased pursuant to
the option granted herein shall be $______ per share.

 

3.         Rights
of Optionee.  Neither the Optionee nor his executors or administrators
shall have any of the rights of a stockholder of the Company with respect to
the shares subject to this option until a certificate or certificates for such
shares shall have been issued upon the exercise of this option.

 

4.         Nontransferability
of Option.  The option granted herein shall not be transferable by the
Optionee other than to his executors or administrators by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined by the Internal Revenue Code of 1986, as amended, or Title I of the
Employer Retirement Income Security Act, or the rules thereunder.  During the
Optionee's lifetime, this option shall be exercisable only by Optionee.

 

 

 

 

 

 

 

 

 

5.         Adjustments
to Option Upon Change in Control, Changes in Capitalization, Etc.  In the
event of any stock split, stock dividend, reclassification, or capitalization
which changes the character or amount of the Company's outstanding Common Stock
while any portion of this option is outstanding but unexercised, the Committee
appointed under the Plan shall make such adjustments in the character and
number of shares subject to such unexercised portion of this option, and in
the option 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.  In no event shall any key employee
receiving stock options under this Plan receive options for more than 400,000
shares of the Company’s Common Stock during the period of the Plan set forth in
paragraph 7 below.  

 

                        If
the Company participates in any transaction resulting in a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation, the Committee appointed under the Plan or the Board of Directors
of the Company or any surviving or acquiring corporation: (i) shall take such
action as is equitable and appropriate to substitute a new option for this option,
or to assume this option, in order to make the new option, as nearly as may be
practicable, equivalent to this option, or (ii) shall require that the option
be exercised.  Notwithstanding the foregoing, upon the occurrence of a change
of control of the Company as provided in paragraph 13(a) of the Plan, the terms
of paragraph 13 of the Plan shall apply to this Option.  

 

6.         Termination of Option. 
The unexercised portion of the option granted herein shall automatically and
without notice terminate and become null and void at the time of the earliest
of the following to occur:

 

(a)        the
expiration of ten (10) years from the date on which this option is granted; 

 

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

 

(c)        the
expiration of thirty (30) days from the date of the termination of the Optionee's employment with the Company; provided, however, that in the event of
the termination of the Optionee's employment with the Company for cause, this
option shall automatically terminate.  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 or convicted of a felony;

 

(d)        the
occurrence of the event or the expiration of the period set forth in Annex 1
hereto.  

 

2

 

 

 

 

 

In
the event of the Optionee's death during his employment with the Company or
during the 30-day period following the date of termination of such employment
with the Company pursuant to paragraph 6(b), this option shall thereafter be
exercisable, as provided in paragraph 6(b), only by his executors or administrators.

 

                        The
Company shall cause certificates for any shares to be delivered to the Optionee
or his executors or administrators at its principal business office within ten
(10) business days after the exercise date.

 

7.         Securities
Laws Representations and Restrictions.  The Optionee, by his acceptance
hereof, represents and warrants to the Company that his purchase of shares of
Common Stock upon the exercise hereof shall be for investment and not with a
view to distribution, provided that this representation and warranty shall be
inoperative if, in the opinion of counsel to the Company, a proposed sale or
distribution of such shares is pursuant to an applicable effective registration
statement under the Securities Act of 1933 or without such representation and
warranty is exempt from registration under such Act.

 

                        The
Optionee agrees that the obligation of the Company to issue shares upon the
exercise of an option shall also be subject as conditions precedent to
compliance with applicable provisions of the Securities Act of 1933, the
Securities Exchange Act of 1934, 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.

 

                        The
Company may endorse an appropriate legend referring to the foregoing
restriction upon the certificate or certificates representing any shares issued
or transferred to the Optionee upon the exercise of this option.

 

8.         Employment with the
Company.  As used herein, the term “employment with the Company” shall
include employment with the Company or with any of its direct and indirect
subsidiaries or serving as a director of the Company or with any of its direct
or indirect subsidiaries.

 

            IN
WITNESS WHEREOF, the Company has caused these presents to be signed by its
officer duly authorized thereto this _____ day of ________________, _____.

 

                                                                        

	 	

ALAMO GROUP INC.

		
	 	

 

		
	 	

By:
__________________________________

		
	 	

 

		
	 	

_____________________,
President

		
	ATTEST:	

 

		
	 	

 

		
	_________________________	

 

		
	            Secretary	

 

		
	 	

ACCEPTED
AND AGREED TO:

		
	 	

 

		
	 	

________________________________

		
	 	

                  OPTIONEE

		

                                                                                               

 

3

 

 

 

 

 

 

Annex 1: 

 

            Additional
Conditions.

 

 

 

 

 

 

 

 

 

4Exhibit 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

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