SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
ALAMO GROUP, INC.
(Name of Registrant as Specified in its Charter)
_____________________________________________________________________
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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[ALAMO GROUP INC. LOGO]
ALAMO GROUP INC.
1502 E. WALNUT ST.
SEGUIN, TEXAS 78155
Dear Fellow Stockholders:
You are cordially invited to attend a Special Meeting of Stockholders of Alamo
Group Inc. to be held on Tuesday, August 31, 1999, at 8:30 a.m., on the 6th
Floor of the Bank of America Plaza, 300 Convent Street, San Antonio, Texas. We
hope that you will be able to attend the meeting. Matters on which action will
be taken at the meeting are explained in detail in the notice of meeting and
proxy statement accompanying this letter.
In addition to the specific matters to be acted upon, there will be a report on
the progress of the Company and an opportunity for questions of general interest
to the Stockholders.
Whether or not you expect to be present and regardless of the number of shares
you own, please mark, sign and mail the enclosed proxy in the envelope provided
as soon as possible. If you attend the meeting, you may revoke your proxy and
vote in person.
Thank you for your support and we hope to see you at the meeting.
Donald J. Douglass
Chairman of the Board
Dated: July 30, 1999
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ALAMO GROUP INC.
1502 E. WALNUT ST.
SEGUIN, TEXAS 78155
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD AUGUST 31, 1999
To the Stockholders of
Alamo Group Inc.
NOTICE IS HEREBY GIVEN that a Special Meeting of Stockholders of Alamo Group
Inc. (the "Company") will be held on the 6th Floor of the Bank of America Plaza,
300 Convent Street, San Antonio, Texas, on Tuesday, August 31, 1999, at 8:30
a.m., local time, for the following purposes:
(1) To approve the Company's 1999 Non-Qualified Stock Option Plan; and
(2) To approve the Company's Amended and Restated 1994 Incentive Stock Option
Plan.
In accordance with the By-Laws of the Company, the Board of Directors has fixed
the record date for the meeting at July 23, 1999. Only Stockholders of record at
the close of business on that date will be entitled to vote at the meeting or
any adjournment thereof.
Stockholders who do not expect to attend the meeting in person are urged to
complete the enclosed proxy, sign and return it promptly to the Company. A
return envelope is enclosed for that purpose.
By Order of the Board of Directors
Robert H. George
Secretary
Dated: July 30, 1999
<PAGE>
ALAMO GROUP INC.
1502 E. WALNUT ST.
SEGUIN, TEXAS 78155
PROXY STATEMENT
The accompanying Proxy is solicited by the Board of Directors of Alamo Group
Inc., a Delaware corporation (the "Company"), to be voted at the Special Meeting
of Stockholders to be held on August 31, 1999, and at any adjournments thereof.
The meeting will be held at 8:30 a.m., on the 6th Floor of the Bank of America
Plaza, 300 Convent Street, San Antonio, Texas. The Company will bear the cost of
the solicitation of proxies, which is expected to be made by mail. This Proxy
Statement and the accompanying Proxy are being mailed to Stockholders on or
about July 30, 1999.
VOTING AND PROXIES
Only holders of record of common stock of the Company at the close of business
on July 23, 1999, shall be entitled to vote at the meeting. There were 9,735,759
shares of common stock, par value $.10 per share ("Common Stock"), of the
Company issued and outstanding on the record date. Each share of Common Stock is
entitled to one vote. Any Stockholder giving a proxy has the power to revoke the
same at any time prior to its use by giving notice in person or in writing to
the Secretary of the Company.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Special Meeting of Stockholders and any adjournment thereof. Assuming the
presence of a quorum, the affirmative vote of the holders of a majority of
outstanding shares of Common Stock present at the meeting in person or by proxy,
voting together, is necessary for the approval of the 1999 Non-Qualified Stock
Option Plan and the Amended and Restated 1994 Incentive Stock Option Plan.
Votes cast by proxy or in person at the Special Meeting will be tabulated by the
inspectors of election appointed for the meeting. A quorum for the transaction
of business at the Special Meeting requires representation, in person or by
proxy, of a majority of the issued and outstanding shares. The inspectors of
election will treat abstentions and broker non-votes as shares that are present
for purposes of determining the presence of a quorum. Abstentions are present
and entitled to vote for purposes of determining the approval of any matter
submitted to the Stockholders for a vote. Abstentions will thus be the
equivalent of negative votes. If a broker indicates on a proxy that it does not
have the discretionary authority as to certain shares to vote on a particular
matter, those shares will not be considered as present and entitled to vote with
respect to that matter.
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ITEM 1: APPROVAL OF THE ALAMO GROUP INC.
1999 NON-QUALIFIED STOCK OPTION PLAN
BACKROUND
The Board of Directors wishes to provide for additional shares of Common Stock
to be available for grant of options to key employees. Therefore, on July 7,
1999, the Board of Directors adopted, subject to stockholder approval, the Alamo
Group Inc. 1999 Non-Qualified Stock Option Plan ("1999 NQSO Plan") for
executive, managerial, professional or technical employees of the Company, and
reserved 400,000 shares of Common Stock for issuance pursuant to stock options.
Also on July 7, 1999, conditioned on the approval of the 1999 NQSO Plan by
stockholders, the Compensation Committee of the Board of Directors granted an
option to purchase up to 200,000 shares of the Company's Common Stock to Ronald
A. Robinson, President and CEO of the Company. The exercise price for these
shares is $8.9375 per share, being the closing price of the Company's Common
Stock on the Grant Date. The option was granted to Mr. Robinson as part of the
compensation package that was negotiated when Mr. Robinson accepted employment
with the Company. The balance of the shares are available for grant to key
employees at a later date.
SUMMARY OF THE 1999 NQSO PLAN FEATURE
The following summary of the 1999 NQSO Plan is qualified in its entirety by
reference to the text of the 1999 Non-Qualified Stock Option Plan which is set
forth in Exhibit A to this Proxy Statement.
(1) The purpose of the 1999 NQSO Plan is to provide an incentive to certain
employees who contribute significantly to the strategic and long term
performance objectives and growth of the Company.
(2) The 1999 NQSO Plan will be administered by the Compensation Committee. The
Committee shall have the power to select the individuals to whom options
will be granted, and will interpret the provisions of the 1999 NQSO Plan.
Presently all members of the Compensation Committee are "outside directors"
within the meaning of Section 162(m) of the Internal Revenue Code and
"nonemployee directors" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934.
(3) The number of shares of Common Stock authorized for issuance under the 1999
NQSO Plan is 400,000, subject to adjustment in the event of stock splits,
recapitalization or other similar events affecting the Common Stock. Shares
of Common Stock to be issued upon the exercise of options may be original
issue or treasury shares. Shares of Common Stock which terminate without
being exercised will again be available for option grants.
(4) The 1999 NQSO Plan will remain in effect until all shares of Common Stock
reserved for issuance have been purchased except that no options may be
granted later than 10 years after the effective date.
(5) The option price of each share purchasable under any option granted under
the 1999 NQSO shall not be less than 100% of the fair market value thereof,
at the time the option is granted. Fair market value shall be defined as:
(i) the closing price of the Company's stock on the Grant Date if the
Common Stock is listed on a national securities exchange
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(which term shall include the NASDAQ market); (ii) the average of the
highest bid and lowest ask prices at the close of business in the
over-the-counter market if the Common Stock is not listed on a national
securities exchange; or (iii) the price determined by the Compensation
Committee of the Board of Directors in good faith based on financial and
other information available if the Common Stock is neither listed on a
national securities exchange nor traded in the over-the-counter market.
(6) Options may be granted under the 1999 NQSO Plan for a period of 10 years
from the date the 1999 NQSO Plan is approved by the shareholders, which
date shall be the effective date. The term of each option will be for a
period of 10 years. The options vest over a period of 5 years -- twenty
percent (20%) per year.
(7) Each outstanding option granted under the 1999 NQSO Plan shall become
exercisable upon the occurrence of certain events: (i) the Company having
called a meeting of its shareholders to vote upon a transaction or series
of transactions resulting in a corporate merger, consolidation or sale of
substantially all of the assets of the Company; (ii) any person,
corporation or group (excluding certain persons) become the beneficial
owner of more than 50% of the votes entitled to be cast to elect Directors
of the Company; or (iii) the members of the Board of Directors of the
Company as of the effective date, or their nominees or appointees, cease to
constitute a majority of the Board of Directors.
(8) In the event the Common Stock is changed into or exchanged for a different
number or kind of shares or other securities of the Company or another
corporation by reason of merger, consolidation, exchange, reorganization,
recapitalization, reclassification, combination of shares, stock split-ups,
or stock dividends: (i) the number and kind of shares subject to
outstanding options granted under the 1999 NQSO Plan shall be adjusted as
may be appropriate; (ii) rights under outstanding options both as to number
of subject shares and option price shall be adjusted as may be appropriate;
(iii) where dissolution or liquidation of the Company is involved, each
outstanding option granted under the 1999 NQSO Plan shall terminate but the
holder of the option shall have the right prior to any such dissolution or
liquidation to exercise the option in full; and (iv) where merger,
consolidation or exchange of shares is involved, each holder of an
outstanding option granted under the 1999 NQSO Plan shall be entitled, upon
exercise of the option, to receive such shares of stock or other securities
or consideration as the holders of Common Stock received pursuant to the
terms of the merger, consolidation or exchange of shares.
THE BOARD HAS UNANIMOUSLY APPROVED ITEM 1
AND RECOMMENDS ITS APPROVAL BY THE STOCKHOLDERS
ITEM 2: APPROVAL OF THE ALAMO GROUP INC.
AMENDED AND RESTATED 1994 INCENTIVE
STOCK OPTION PLAN
BACKROUND
In order to conform applicable provisions to the 1999 NQSO Plan and to clarify
ambiguities which may have existed in and with the 1994 Incentive Stock Option
Plan ("1994 ISO Plan"), the Board of Directors on July 7, 1999, adopted, subject
to stockholder approval, the Alamo Group Inc. Amended and Restated 1994
Incentive Stock Option Plan ("Amended 1994 ISO Plan"). The 1994 ISO Plan was
approved by the stockholders on April 28, 1994. To the extent there may be
<PAGE>
ambiguities, the amendments to the 1994 ISO Plan are for purposes of
clarification. The clarifying amendments fairly state and represent the manner
in which the 1994 ISO Plan has been interpreted and administered by the
Compensation Committee of the Board of Directors since its approval in 1994.
On July 7, 1999, conditioned on the approval of the Amended 1994 ISO Plan by
stockholders, the Compensation Committee of the Board of Directors granted an
option to purchase up to 50,000 shares of the Company's Common Stock to Ronald
A. Robinson, President and CEO of the Company. The exercise price for these
shares is $8.9375 per share, being the closing price of the Company's Common
Stock on the Grant Date. The option was granted to Mr. Robinson as part of the
compensation package negotiated when Mr. Robinson accepted employment with the
Company.
SUMMARY OF AMENDMENTS TO 1994 ISO PLAN
The following summary of the material amendments to the 1994 ISO Plan is
qualified in its entirety by reference to the text of the Alamo Group Inc.
Amended and Restated 1994 Incentive Stock Option Plan which is set forth in
Exhibit B to this Proxy Statement.
(1) Fair market value, for purposes of determining option price, shall be
defined as: (i) the closing price of the Company's stock on the Grant Date
if the Common Stock is listed on a national securities exchange (which
term shall include the NASDAQ market); (ii) the average of the highest bid
and lowest ask prices at the close of business in the over-the-counter
market if the Common Stock is not listed on a national securities
exchange; or (iii) the price determined by the Compensation Committee of
the Board of Directors in good faith based on financial and other
information available if the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market.
(2) An Optionee forfeits the right to exercise his or her option (with respect
to any shares representing vested options that are not exercised) where
after the first year the Optionee does not annually exercise options and
purchase a number of shares equal to at least five percent (5%) of the
number of shares granted previously under the option (as may be adjusted
after the first year).
(3) The Exercise Period applicable to each option shall commence on the
anniversary of the Grant Date and end at the close of business on a date
thirty (30) days thereafter for each year.
(4) Each outstanding option granted under the Amended 1994 ISO Plan shall
become exercisable upon the occurrence of certain events: (i) the Company
having called a meeting of its shareholders to vote upon a transaction or
series of transactions resulting in a corporate merger, consolidation or
sale of substantially all of the assets of the Company; (ii) any person,
corporation or group (excluding certain persons) become the beneficial
owner of more than 50% of the votes entitled to be cast to elect Directors
of the Company; or (iii) the members of the Board of Directors of the
Company as of the effective date, or their nominees or appointees, cease
to constitute a majority of the Board of Directors.
(5) In the event the Common Stock is changed into or exchanged for a different
number or kind of shares or other securities of the Company or another
corporation by reason of merger, consolidation, exchange, reorganization,
recapitalization, reclassification, combination of shares, stock
split-ups, or stock dividends: (i) the number and kind of
<PAGE>
shares subject to outstanding options granted under the Amended 1994 ISO
Plan shall be adjusted as may be appropriate; (ii) rights under
outstanding options both as to number of subject shares and option price
shall be adjusted as may be appropriate; (iii) where dissolution or
liquidation of the Company is involved, each outstanding option granted
under the Amended 1994 ISO Plan shall terminate but the holder of the
option shall have the right prior to any such dissolution or liquidation
to exercise the option in full; and (iv) where merger, consolidation or
exchange of shares is involved, each holder of an outstanding option
granted under the Amended 1994 ISO Plan shall be entitled, upon exercise
of the option, to receive such shares of stock or other securities or
consideration as the holders of Common Stock received pursuant to the
terms of the merger, consolidation or exchange of shares.
THE BOARD HAS UNANIMOUSLY APPROVED ITEM 2
AND RECOMMENDS ITS APPROVAL BY THE STOCKHOLDERS
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. Proxies may be
solicited through the mail and through telephonic or telegraphic communications
to, or meetings with, stockholders or their representatives by directors,
officers and other employees of the Company who will receive no additional
compensation therefore.
The Company requests persons such as brokers, nominees and fiduciaries holding
stock in their names for others, or holding stock for others who have the right
to give voting instructions, to forward proxy material to their principals and
to request authority for the execution of the proxy, and the Company will
reimburse such persons for their reasonable expenses.
OTHER MATTERS
No business other than the matters set forth in this Proxy Statement is expected
to come before the meeting, but should any other matters requiring a vote of
Stockholders arise, including a question of adjourning the meeting, the persons
named in the accompanying Proxy will vote thereon according to their best
judgment in the interests of the Company.
By Order of the Board of Directors
Robert H. George
Secretary
Dated: July 30, 1999
<PAGE>
EXHIBIT A
ALAMO GROUP INC.
1999 NON-QUALIFIED STOCK OPTION PLAN
ALAMO GROUP INC., a Delaware corporation (the "Company"), hereby
formulates and adopts the following 1999 Non-Qualified Stock Option Plan (the
"Plan") for employees of the Company and its direct and indirect subsidiaries.
1. PURPOSE. The purpose of this Plan is to secure for the Company the
benefits of the additional incentive inherent in the ownership of its Common
Stock by selected key employees of the Company and its direct and indirect
subsidiaries who are important to the success and the growth of the business of
the Company and its direct and indirect subsidiaries, and to help the Company
and its direct and indirect subsidiaries secure and retain the services of such
key employees.
2. ADMINISTRATION OF PLAN.
(a) The Plan shall be administered by the Compensation Committee
(the "Committee") of the Board of Directors of the Company, as appointed from
time to time by at least a majority of the whole Board of Directors. The
Committee shall consist of two or more directors, each of whom is a
"disinterested person" within the meaning of Rule 16b-3 of the Securities
Exchange Act of 1934. The appointment or service of any member of the Committee
shall immediately and automatically terminate in the event such member is not or
ceases to be a disinterested person.
(b) The Committee shall have the authority: (i) to exercise all of
the powers granted to it under the Plan, (ii) to construe, interpret and
implement the Plan and any Plan Agreements executed pursuant to paragraph 14,
(iii) to prescribe, amend and rescind rules and regulations relating to the
Plan, including rules governing its own operations, (iv) to make all
determinations necessary or advisable in administering the Plan, (v) to correct
any defect, supply any omission and reconcile any inconsistency in the Plan, and
(vi) to amend the Plan to reflect changes in applicable law.
(c) Actions of the Committee shall be taken by the vote of a
majority of its members. Any action may be taken by a written instrument signed
by a majority of the Committee members, and any action so taken shall be fully
as effective as if it had been taken by a vote at a meeting.
(d) The determination of the Committee on all matters relating to
the Plan or any Plan Agreement shall be conclusive and binding.
(e) No member of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any award
thereunder.
3. GRANT OF OPTIONS. The Committee shall have the authority and
responsibility, within the limitations of this Plan, to determine the key
employees to whom options are to be granted and
<PAGE>
the terms thereof. In determining the key employees to whom options shall be
granted and the terms thereof, the Committee shall take into consideration the
employee's present and potential contribution to the success of the Company
and its direct and indirect subsidiaries and such other factors as the Committee
may deem proper and relevant.
4. EMPLOYEES ELIGIBLE. Options may be granted under this Plan to any key
employee or prospective key employee (conditioned and effective upon his
becoming an employee) of the Company or its direct and indirect subsidiaries.
Employees who are also officers or directors of the Company or its direct and
indirect subsidiaries shall not by reason of such offices be ineligible to
receive options under this Plan. An employee receiving any option under this
Plan is hereinafter referred to as an "Optionee." Any reference herein to the
employment of an Optionee with the Company shall include his employment with the
Company or any of its direct and indirect subsidiaries.
5. STOCK SUBJECT TO OPTIONS. Subject to the provisions of paragraph 13,
the number of shares of the Company's Common Stock subject at any one time to
options, plus the number of such shares then outstanding pursuant to exercises
of options granted under this Plan, shall not exceed 400,000. If and to the
extent that options granted under this Plan terminate or expire without having
been exercised, new options may be granted with respect to the shares covered by
such terminated or expired options; provided that the granting and terms of such
new options shall in all respects comply with the provisions of this Plan.
Shares sold or distributed upon the exercise of any option granted under this
Plan may be shares of the Company's authorized and unissued Common Stock, shares
of the Company's issued Common Stock held in the Company's treasury, or both.
There shall be reserved at all times for sale or distribution under this Plan a
number of shares of Common Stock (either authorized and unissued shares or
shares held in the Company's treasury, or both) equal to the maximum number of
shares which may be purchased or distributed upon the exercise of options
granted or that may be granted under this Plan. 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.
6. OPTION PRICE. The option price of each share of Common Stock
purchasable under any option granted under this Plan shall be determined by the
Committee and shall be set forth in the Plan Agreement. In no event shall the
option price be less than 100% of the fair market value of the Common Stock at
the time the option is granted. The fair market value shall be (i) if the Common
Stock is listed on a national securities exchange (which term shall include the
Nasdaq Stock Market), the last reported sales price of the Common Stock on such
exchange on the date on which the option is granted (or if there shall be no
trading on such date, then on the next previous date on which there shall have
been trading of the Common Stock); (ii) if the Common Stock is not listed on a
national securities exchange, the average of the highest bid and the lowest ask
prices at the close of business in the over-the-counter market on the date on
which the option is granted; or (iii) if the Common Stock is neither listed on a
national securities exchange nor traded in the over-the-counter market, as
determined by the Committee in good faith on the basis of financial information
and information regarding recent sales of Common Stock available to it, using
any reasonable valuation method. The Committee's determination of the fair
market value shall be
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<PAGE>
conclusive and the purchase price of shares of Common Stock under each option
shall be set forth in the minutes of the meeting of the Committee.
7. EXPIRATION AND TERMINATION OF THE PLAN. Options may be granted under
this Plan at any time and from time to time prior to July 6, 2009, on which date
this Plan will expire, except as to options then outstanding under this Plan.
Such options shall remain in effect until they have been exercised or have
expired. This Plan may be terminated or modified at any time by the Committee,
except with respect to any options then outstanding under this Plan. No
modification, extension, renewal or other change in any option granted under
this Plan shall be made after the grant of such option unless the same is
consistent with the provisions of this Plan.
8. EXERCISABILITY AND DURATION OF OPTIONS.
(a) Except as otherwise determined by the Committee, in its
discretion, any option granted under this Plan shall become exercisable as
follows. After the expiration of one year following the date on which any such
option is granted, such option may be exercised as to up to twenty percent (20%)
of the total number of shares covered thereby. An additional twenty percent
(20%) of the shares subject to such option shall become exercisable on each
anniversary date of the grant of said option until all of the shares subject to
the option have become exercisable.
(b) As to any employee who is granted an option hereunder, the
unexercised portion of any option granted under this Plan shall automatically
and without notice terminate and become null and void at the time of the
earliest to occur of the following:
(1) The expiration of ten (10) years from the date on which
such option was granted;
(2) 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 employment with the Company or during the 30-day period
following the date of termination of such employment, but not later than
one year after the Optionee's death;
(3) 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.
(4) The expiration of such period of time or the occurrence of
such event as the Committee, in its discretion, may provide upon the
granting thereof.
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<PAGE>
9. EXERCISE OF OPTIONS. The option granted herein shall be exercised by
the Optionee (or by his executors or administrators, as provided in paragraph
8(b)(2)) as to all or part of the shares covered by the Option, by giving
written notice of the exercise thereof 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 less than five (5) days nor more than
fifteen (15) days from the date such notice is given, for the payment of the
purchase price against delivery of the shares being pur chased. The giving of
such written notice to the Company shall constitute an irrevocable election to
purchase the number of shares specified in the notice on the date specified in
the notice.
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.
An amount equal to the income taxes required to be withheld by the
Company from the Optionee with respect to such exercise must be paid to the
Company on the date of such delivery.
10. NONTRANSFERABILITY OF OPTIONS. No option granted under this Plan or
any right evidenced thereby shall be transferable by the Optionee other than to
the Optionee's 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 lifetime of
an Optionee, he alone may exercise his options.
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, his options shall thereafter be exercisable, as provided in
paragraph 8(b)(2), only by his executors or administrators.
11. 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 an option granted under this Plan until
certificates for such shares shall have been issued upon the exercise of such
option.
12. RIGHT TO TERMINATE EMPLOYMENT. Nothing in this Plan or in any option
granted under this Plan shall confer upon any Optionee the right to continue in
the employment of the Company or affect the right of the Company or any of its
direct and indirect subsidiaries to terminate the Optionee's employment at any
time, subject, however, to the provisions of any agreement of employment between
the Company or any of its direct and indirect subsidiaries and the Optionee.
13. CHANGE IN CONTROL; ANTIDILUTION.
(a) Notwithstanding any provision of the Plan to the contrary, each
outstanding Option granted hereunder shall become and remain exercisable in full
for its term,
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<PAGE>
(1) on the date 10 days prior to the record date for a meeting
of shareholders of the Company called for the purpose of voting upon any
transaction or series of transactions (other than a transaction to which
only the Company and one or more of its subsidiaries are parties) pursuant
to which the Company would become a subsidiary of another corporation or
merged or consolidated with or into another corporation, or would engage
in an exchange of shares with another corporation, or substantially all of
the assets of the Company would be sold to or acquired by another person,
corporation or group of associated persons acting in concert; or
(2) on the date upon which any person, corporation or group of
associated persons acting in concert, excluding any persons who have then
been owners of 10% or more of the Common Stock of the Company for a
continuous period of at least ten (10) years, becomes a direct or indirect
beneficial owner of shares of stock of the Company representing an
aggregate of more than 50% of the votes then entitled to be cast at a
meeting for the purpose of electing Directors of the Company; or
(3) on the date upon which the persons who are members of the
Board of Directors of the Company as of the effective date of the Plan
(the "Original Directors"), cease to constitute a majority of the Board of
Directors; provided, however, that any new Director whose nomination or
selection has been approved by the affirmative vote of at least three of
the Original Directors then in office shall also be deemed an Original
Director for all purposes of this paragraph 13(a)(3).
The Company shall use its best efforts to notify each holder of an option of his
rights under this paragraph 13(a) within a reasonable period of time prior to
the date or effective date of any transaction or event described above.
(b) In the event that the Common Stock of the Company subject to
options granted hereunder is hereafter changed into or exchanged for a different
number or kind of shares or other securities of the Company or of another
corporation by reason of merger, consolidation, exchange of shares, other
reorganization, recapitalization, reclassification, combination of shares, stock
split-ups or stock dividends,
(1) the aggregate number and kind of shares subject to
outstanding options granted hereunder shall be adjusted appropriately;
(2) rights under outstanding options granted hereunder, both
as to the number of subject shares and with respect to options, the option
price, shall be adjusted appropriately;
(3) where dissolution or liquidation of the Company is
involved, each outstanding option granted hereunder shall terminate, but
the holder of an option shall have the right, immediately prior to such
dissolution or liquidation to exercise his option in full, notwithstanding
the provisions of paragraph 8 (but subject to the other terms and
conditions
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of this Plan) and the Company shall notify each holder of an option of
such right within a reasonable period of time prior to any such
dissolution or liquidation; and
(4) where any merger, consolidation or exchange of shares is
involved from and after the effective time of such merger, consolidation
or exchange of shares, each holder of an option shall be entitled, upon
exercise of his option in accordance with all of the terms and conditions
of this Plan, to receive in lieu of Common Stock of the Company, shares of
such stock or other securities or consideration as the holders of Common
Stock of the Company received pursuant to the terms of the merger,
consolidation or exchange of shares.
The adjustments contained in clauses (1), (2), (3) and (4) of this subsection
(b) and the manner of application of such provisions shall be determined solely
by the Committee and any such adjustment may provide for the elimination of
fractional share interests.
14. FORM OF AGREEMENTS WITH OPTIONEES. Each option granted under this Plan
shall be evidenced by an agreement (the "Plan Agreement") substantially in the
form annexed hereto as Exhibit "A" with such modifications or additions, not
inconsistent with the provisions of this Plan as the Committee shall provide.
15. PURCHASE FOR INVESTMENT AND LEGALITY. The Optionee, by his acceptance
of any option granted under this Plan, shall represent and warrant to the
Company that his purchase or receipt of shares of Common Stock upon the exercise
thereof shall be for investment and not with a view to distribution, provided
that such 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 is without such representation and warranty exempt from
registration under such Act.
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 (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.
The Company may endorse an appropriate legend referring to the
foregoing restrictions upon the certificate or certificates representing any
shares issued or transferred to the Optionee upon the exercise of any option
granted under this Plan.
Notwithstanding the foregoing, prior to such time as an option
granted under this Plan may be exercised, if the Company is registered under the
1934 Act, the Company shall register the Common Stock subject to the Plan with
the Securities and Exchange Commission on Form S-8, or on such form as then
applicable.
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16. EFFECTIVE DATE OF PLAN. This Plan shall become effective upon its
adoption by the Board of Directors and the approval thereof by the stockholders
of the Company. No option granted hereunder may be exercised prior to approval
of the Plan by the stockholders of the Company.
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ALAMO GROUP INC.
STOCK OPTION
KNOW ALL MEN BY THESE PRESENTS: That ALAMO GROUP INC. (the "Company")
having adopted a 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.
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 less than
five (5) days nor more than fifteen (15) 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
<PAGE>
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, 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.
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 pursuant to paragraph 6(b), this option shall thereafter be
exercisable, as provided in paragraph 6(b), only by his executors or
administrators.
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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 state ment 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.
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
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ANNEX 1:
ADDITIONAL CONDITIONS.
4
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EXHIBIT B
ALAMO GROUP INC.
AMENDED AND RESTATED
1994 INCENTIVE STOCK OPTION PLAN
Previously ALAMO GROUP INC., a Delaware corporation (the "Company"),
formulated and adopted its 1994 Incentive Stock Option Plan for employees of the
Company and its subsidiaries. Such plan is hereby amended and restated as
follows (the "Plan"):
1. PURPOSE. The purpose of this Plan is to secure for the Company the
benefits of the additional incentive inherent in the ownership of its Common
Stock by selected key employees of the Company and its subsidiaries who are
important to the success and the growth of the business of the Company and its
subsidiaries, and to help the Company and its subsidiaries secure and retain the
services of such key employees. The Plan shall be administered so as to qualify
the options as "incentive stock options" under ss.422 of the Internal Revenue
Code, as amended.
2. COMPENSATION COMMITTEE. Subject to the provisions of paragraph 4, this
Plan shall be administered by the Compensation Committee (the "Committee") of
the Board of Directors of the Company, as appointed from time to time by at
least a majority of the whole Board of Directors. The Committee shall consist of
two or more directors, each of whom is a "disinterested person" within the
meaning of Rule 16b-3 of the Securities Exchange Act of 1934. The appointment or
service of any member of the Committee shall immediately and automatically
terminate in the event such member is not or ceases to be a disinterested
person.
3. GRANT OF OPTIONS. The Committee shall have the authority and
responsibility, within the limitations of this Plan, to determine the key
employees to whom options are to be granted, and the number of shares that may
be purchased under each option and the option price. The Committee shall also
have the authority to determine the effective date of the grant ("Grant Date").
In determining the key employees to whom options shall be granted and the
number of shares to be covered by each such option, the Committee shall take
into consideration the employee's present and potential contribution to the
success of the Company and its subsidiaries and such other factors as the
Committee may deem proper and relevant.
4. EMPLOYEES ELIGIBLE. Options may be granted under this Plan to any key
employee or prospective key employee (conditioned and effective upon his
becoming an employee) of the Company or its subsidiaries. Employees who are also
officers or directors of the Company or its subsidiaries shall not, by reason of
such offices, be ineligible to receive options under this Plan; provided,
however, that no member of the Committee shall be eligible to receive options
under this Plan.
An Employee receiving any option under this Plan is hereinafter
referred to as an "Optionee." Any reference herein to the employment of an
Optionee with the Company shall include his employment with the Company or any
of its subsidiaries.
<PAGE>
5. STOCK SUBJECT TO OPTIONS. Subject to the provisions of paragraph 13,
the number of shares of the Company's Common Stock subject at any one time to
options, plus the number of such shares then outstanding pursuant to exercises
of options granted under this Plan, shall not exceed 300,000. If, and to the
extent that options granted under this Plan terminate or expire without having
been exercised, including the shares forfeited as a result of an adjustment or
forfeiture under paragraph 8, new options may be granted with respect to the
shares covered by such terminated or expired options; provided that the granting
and terms of such new options shall in all respects comply with the provisions
of this Plan.
Shares sold or distributed upon the exercise of any option granted under
this Plan may be shares of the Company's authorized and unissued Common Stock,
shares of the Company's issued Common Stock held in the Company's treasury, or
both.
There shall be reserved at all times for sale or distribution under this
Plan a number of shares of Common Stock (either authorized and unissued shares
or shares held in the Company's treasury, or both) equal to the maximum number
of shares which may be purchased or distributed upon the exercise of options
granted or that may be granted under this Plan.
6. OPTION PRICE. The option price of each share of Common Stock
purchasable under any option granted under this Plan shall not be less than the
fair market value thereof at the time the option is granted and shall be set
forth in the stock option agreement; PROVIDED, HOWEVER, that the option price
for any share of Common Stock purchasable under an 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
or its subsidiary corporations, shall be one hundred ten percent (110%) of the
fair market value at the time the option is granted. In no event shall the
option price be less than 100% of the fair market value of the Common Stock at
the time the option is granted. The fair market value shall be (i) if the Common
Stock is listed on a national securities exchange (which term shall include the
Nasdaq Stock Market), the last reported sales price of the Common Stock on such
exchange on the date on which the option is granted (or if there shall be no
trading on such date, then on the next previous date on which there shall have
been trading of the Common Stock); (ii) if the Common Stock is not listed on a
national securities exchange, the average of the highest bid and the lowest ask
prices at the close of business in the over-the-counter market on the date on
which the option is granted; or (iii) if the Common Stock is neither listed on a
national securities exchange nor traded in the over-the-counter market, as
determined by the Committee in good faith on the basis of financial information
and information regarding recent sales of Common Stock available to it, using
any reasonable valuation method. The Committee's determination of the fair
market value shall be conclusive and the purchase price of shares of Common
Stock under each option shall be set forth in the minutes of the meeting of the
Committee.
7. EXPIRATION AND TERMINATION OF THE PLAN. Options may be granted under
this Plan at any time and from time to time, prior to ten years from the
effective date of this Plan, on which date this Plan will expire, except as to
options then outstanding under this Plan. Such options shall remain in effect
until they have been exercised or forfeited or have expired. This Plan may be
terminated or modified at any time prior to ten (10) years from the effective
date of this Plan by the
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<PAGE>
Board of Directors, except to the extent restricted by ss.422 of the Internal
Revenue Code, as amended, and the regulations promulgated thereunder, or Rule
16b-3 of the Securities Exchange Act of 1934, each of which require shareholder
approval of certain amendments.
No modification, extension, renewal or other change in any option granted
under this Plan shall be made after the grant of such option unless the same is
consistent with the provisions of this Plan.
8. EXERCISABILITY AND DURATION OF OPTIONS.
(a) After the expiration of one (1) year following the Grant Date,
the Optionee shall have the right to exercise up to twenty percent (20%) of the
total shares granted under the option; provided, however, that any exercise of
less than five percent (5%) of the total shares covered under any said option
must be for a number of shares equal to either one percent (1%), two percent
(2%), three percent (3%), or four percent (4%) of the total number of shares
granted under such option.
(b) After the expiration of one (1) year following the Grant Date,
should an Optionee exercise an option for a number of shares equal to less than
five percent (5%) of the total number of shares granted under such option, then
the option shall be retroactively adjusted downward to an amount of shares equal
to the total number of shares covered thereby on such Grant Date multiplied by
the percent exercised divided by five percent (5%). For instance, if an Optionee
elects to exercise only four percent (4%) of the Optionee's original grant of
10,000 shares in the Exercise Period as defined in paragraph 9(a) immediately
after the first year, the Optionee's original grant is reduced to 8,000 shares
(10,000 x 4%/5%). After the expiration of each year following the expiration of
one (1) year from the Grant Date, an annual exercise during the Exercise Period
as defined in Section 9(a) of a number of shares equal to less than five percent
(5%) of the number of shares granted under the option as adjusted pursuant to
this paragraph shall result in a forfeiture of the right to exercise the option
with respect to any shares representing vested options that are not exercised.
(c) Any option, which may be adjusted pursuant to paragraphs 8(b)
or 13, granted under this Plan shall become exercisable as follows (or after the
lapse of such additional period or periods of time or the occurrence of such
event or events as the Committee, in its discretion, may provide upon the
granting thereof):
YEARS FOLLOWING GRANT DATE PERCENTAGE OF OPTION EXERCISABLE
- -------------------------- ----------------------------------
one 20%
two 40%
three 60%
four 80%
five 100%
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<PAGE>
(d) 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:
(1) 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;
(2) The expiration of thirty (30) days from the date of
termination of the Optionee's employment with the Company or any
subsidiary 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 (3) below shall apply;
(3) 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 employment with the Company or during the thirty (30)
day period following the date of termination of such employment, but not
later than one year after the Optionee's death;
(4) 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) the
event the Optionee is indicted or convicted of a felony.
(5) The expiration of such period of time or the occurrence of
such event as the Committee, in its discretion, may provide upon the
granting thereof.
9. EXERCISE OF OPTIONS.
(a) Except as provided in subparagraph (b) below, the annual
exercise period applicable to each option (the "Exercise Period") in any given
year shall commence on the anniversary date of the Grant Date and end at the
close of business on a date thirty (30) days thereafter for each year prior to
the expiration of the option. After receiving notice from the Company of the
beginning and ending dates of the Exercise Period, the Optionee (or Optionee's
executors or administrators, as provided in paragraph 10) must give written
notice to the Company of the intent to exercise and the number of shares to be
purchased. In addition, the Optionee's written notice shall specify a business
day during the Exercise Period for the payment in full in cash or shares of the
Company's Common Stock for the shares 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 specified in the notice on the date
specified in the notice.
(b) Within thirty (30) days of leaving the Company voluntarily or
within thirty (30) days of the Company's termination of the Optionee's
employment without cause, the Optionee must give written notice to the Company
of the exercise of those shares which are exercisable or the
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<PAGE>
Optionee shall forfeit any rights to such shares. The written notice shall
specify a business day not more than fifteen (15) days after the expiration of
the thirty (30) days for the payment of the purchase price in cash or shares of
the Company's Common Stock against delivery of the shares being purchased.
(c) The Company shall cause certificates for any shares to be
delivered to the Optionee or Optionee's executors or administrators within ten
(10) business days after the receipt of payment therefor.
10. NONTRANSFERABILITY OF OPTIONS. No option granted under this Plan or
any right evidenced thereby shall be transferable by the Optionee other than by
will or the laws of descent and distribution. During the lifetime of an
Optionee, he alone may exercise his options.
In the event of the Optionee's death during his employment with the
Company, or during the thirty (30) day period following the date of termination
of such employment, Optionee's options shall thereafter be exercisable, as
provided in paragraph 8(e)(3), only by Optionee's executors or administrators.
11. RIGHTS OF OPTIONEE. 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 subject to an option granted under this Plan until
certificates for such shares shall have been issued upon the exercise of such
option.
12. RIGHT TO TERMINATE EMPLOYMENT. This Plan is purely voluntary on the
part of the Company, and while the Company hopes to continue it indefinitely,
the continuance of the Plan shall not be deemed to constitute a contract between
the Company and any employee, or to be consideration for or a condition of the
employment of any employee. Nothing contained in the Plan shall be deemed to
give any employee the right to be retained in the employ of the Company or its
parent or subsidiary corporations, or to interfere with the right of the Company
or its parent or subsidiary corporations to discharge or retire any employee
thereof at any time. No employee shall have any right to or interest in Options
authorized hereunder prior to the grant of such an Option to such employee, and
upon such grant Optionee shall have only such rights and interests as are
expressly provided herein.
13. CHANGE IN CONTROL; ANTIDILUTION.
(a) Notwithstanding any provision of the Plan to the contrary, each
outstanding Option granted hereunder shall become and remain exercisable in full
for its term,
(1) on the date 10 days prior to the record date for a meeting
of shareholders of the Company called for the purpose of voting upon any
transaction or series of transactions (other than a transaction to which
only the Company and one or more of its subsidiaries are parties) pursuant
to which the Company would become a subsidiary of another corporation or
merged or consolidated with or into another corporation, or would
5
<PAGE>
engage in an exchange of shares with another corporation, or substantially
all of the assets of the Company would be sold to or acquired by another
person, corporation or group of associated persons acting in concert; or
(2) on the date upon which any person, corporation or group of
associated persons acting in concert, excluding any persons who have then
been owners of 10% or more of the Common Stock of the Company for a
continuous period of at least ten (10) years, becomes a direct or indirect
beneficial owner of shares of stock of the Company representing an
aggregate of more than 50% of the votes then entitled to be cast at a
meeting for the purpose of electing Directors of the Company; or
(3) on the date upon which the persons who are members of the
Board of Directors of the Company as of the effective date of the Plan
(the "Original Directors"), cease to constitute a majority of the Board of
Directors; provided, however, that any new Director whose nomination or
selection has been approved by the affirmative vote of at least three of
the Original Directors then in office shall also be deemed an Original
Director for all purposes of this paragraph 13(a)(3).
The Company shall use its best efforts to notify each holder of an option of his
rights under this paragraph 13(a) within a reasonable period of time prior to
the date or effective date of any transaction or event described above.
(b) In the event that the Common Stock of the Company subject to
options granted hereunder is hereafter changed into or exchanged for a different
number or kind of shares or other securities of the Company or of another
corporation by reason of merger, consolidation, exchange of shares, other
reorganization, recapitalization, reclassification, combination of shares, stock
split-ups or stock dividends,
(1) the aggregate number and kind of shares subject to
outstanding options granted hereunder shall be adjusted appropriately;
(2) rights under outstanding options granted hereunder, both
as to the number of subject shares and with respect to options, the option
price, shall be adjusted appropriately;
(3) where dissolution or liquidation of the Company is
involved, each outstanding option granted hereunder shall terminate, but
the holder of an option shall have the right, immediately prior to such
dissolution or liquidation to exercise his option in full, notwithstanding
the provisions of paragraph 8 (but subject to the other terms and
conditions of this Plan) and the Company shall notify each holder of an
option of such right within a reasonable period of time prior to any such
dissolution or liquidation; and
(4) where any merger, consolidation or exchange of shares is
involved from and after the effective time of such merger, consolidation
or exchange of shares, each
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<PAGE>
holder of an option shall be entitled, upon exercise of his option in
accordance with all of the terms and conditions of this Plan, to receive
in lieu of Common Stock of the Company, shares of such stock or other
securities or consideration as the holders of Common Stock of the Company
received pursuant to the terms of the merger, consolidation or exchange of
shares.
The adjustments contained in clauses (1), (2), (3) and (4) of this subsection
(b) and the manner of application of such provisions shall be determined solely
by the Committee and any such adjustment may provide for the elimination of
fractional share interests.
14. FORM OF AGREEMENTS WITH OPTIONEES. Each option granted under this Plan
shall be substantially in the form annexed hereto as Exhibit "A" which such
modifications or additions, not inconsistent with the provisions of this Plan as
the Committee shall provide.
15. LEGALITY. The obligation of the Company to issue shares upon the
exercise of an option shall be subject as conditions precedent to compliance
with applicable provisions of the Securities Act of 1933, the Securities
Exchange Act of 1934 (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 are listed.
Prior to such time as an option granted under this Plan may be
exercised, if the Company is registered under the 1934 Act, the Company shall
register the Common Stock subject to the Plan with the Securities and Exchange
Commission on Form S-8, or such form as then applicable.
16. LIMITATION ON AMOUNT OF OPTIONS. In no event shall the aggregate fair
market value (determined at the time the option is granted) of the stock with
respect to which incentive stock options are exercisable by an Employee for the
first time during any calendar year (under all incentive stock option plans of
the Company) exceed $100,000 or such other amount which is permissible under the
Internal Revenue Code of 1986, as it may be amended.
17. INVALID PROVISIONS. In the event that any provision of this Plan
document is found to be invalid or otherwise unenforceable under any applicable
law, such invalidity or unenforceability shall not be construed as rendering any
other provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid or unenforceable provision were not contained herein.
18. APPLICABLE LAW. THIS PLAN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE.
19. SUCCESSORS AND ASSIGNS. This Plan shall be binding on and inure to the
benefit of the Company and the employees to whom an option is granted hereunder,
and such employees' heirs, executors, administrators, legatees, personal
representatives, assignees and transferees.
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<PAGE>
20. EFFECTIVE DATE OF PLAN. The amendments to the 1994 Incentive Stock
Option Plan shall become effective upon their adoption by the Board of Directors
of the Company; subject, however, to their approval by the Company's
shareholders after the date of such adoption. No option granted after the
adoption of these amendments may be exercised prior to approval of the
amendments by the stockholders of the Company.
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<PAGE>
ALAMO GROUP INC.
STOCK OPTION AGREEMENT
This Stock Option Agreement is made between Alamo Group Inc., a Delaware
corporation (the "Company"), and __________________________(the "Optionee"),
pursuant to the Company's Amended and Restated 1994 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. The
Company and the Optionee agree as follows:
1. The Company hereby grants to the Optionee on the terms and conditions
of this Agreement the right and the option to purchase all or any part of
__________________________ shares of the Company's Common Stock at a purchase
price of $_________ per share. The grant shall have an effective date as of
______________ ("Grant Date").
2. The option granted herein shall be exercisable according to the
provisions of the Plan and this Agreement as provided in Annex 1.
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 subsidiary 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 employment with the Company or during the thirty (30)
day period following the date of termination of such employment, but not
later than one year after the Optionee's death;
(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 or convicted of a felony.
<PAGE>
(e) The expiration of such period of time or the occurrence of such
event as the Board, in its discretion, may provide upon the granting
thereof.
4. (a) Except as provided in subparagraph (b) below, the annual exercise
period applicable to each option (the "Exercise Period") in any given year shall
commence on the anniversary date of the Grant Date and end at the close of
business on a date thirty (30) days thereafter for each year prior to the
expiration of the option. After receiving notice from the Company of the
beginning and ending dates of the Exercise Period, the Optionee (or Optionee's
executors or administrators, as provided in the Plan) must give written notice
to the Company of the intent to exercise and the number of shares to be
purchased. In addition, the Optionee's written notice shall specify a business
day during the Exercise Period for the payment in full in cash or shares of the
Company's Common Stock for the shares 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 specified in the notice on the date
specified in the notice.
(b) Within thirty (30) days of leaving the Company voluntarily or
within thirty (30) days of the Company's termination of the Optionee's
employment without cause, the Optionee must give written notice to the Company
of the exercise of those shares which are exercisable or the Optionee shall
forfeit any rights to such shares. The written notice shall specify a business
day not more than fifteen (15) days after the expiration of the thirty (30) days
for the payment of the purchase price in cash or shares of the Company's Common
Stock against delivery of the shares being purchased.
(c) The Company shall cause certificates for any shares 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 subject to this option until a certificate or certificates for such
shares 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.
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, this option shall thereafter be exercisable, as
provided in paragraph 3(c) above and paragraph 8 of the Plan, 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 Company's
outstanding Common Stock while any portion of this option is outstanding but
unexercised, the Board appointed under the Plan shall make such
2
<PAGE>
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.
If the Company participates in any transaction resulting in a
corporate merger, consolidation, acquisition of property or stock, separation,
reorganization or liquidation, the Board or any surviving or acquiring
corporation 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.
9. 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.
Prior to such time as this option may be exercised, if the Company
is registered under the 1934 Act, the Company shall register the Common Stock
subject to the Plan with the Securities and Exchange Commission on Form S-8, or
such 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 subsidiaries.
11. It is understood and agreed that this option has been granted subject
to approval of the 1994 Incentive Stock Option Plan by the stockholders of the
Company after the date of adoption of the Plan by the Board and that
notwithstanding any other provision hereof, this option may not be exercised, in
whole or in part, unless and until such approval has been obtained.
IN WITNESS WHEREOF, the parties have executed this Agreement in duplicate
on this _____ day of ________________, _____.
ALAMO GROUP INC.
By: _____________________________________
Its: ___________________________________
ATTEST:
__________________________
Secretary
ACCEPTED AND AGREED TO:
_________________________________________
Optionee
3
<PAGE>
ANNEX 1:
The option granted herein shall become exercisable as follows:
(a) After the expiration of one (1) year following the Grant Date,
the Optionee shall have the right to exercise up to twenty percent (20%) of the
total shares granted under this Option; provided, however, that any exercise of
less than five percent (5%) of the total shares covered under this Option must
be for a number of shares equal to either one percent (1%), two percent (2%),
three percent (3%), or four percent (4%) of the total number of shares granted
hereunder.
(b) After the expiration of one (1) year following the Grant Date,
should the Optionee exercise this option for a number of shares equal to less
than five percent (5%) of the total number of shares granted hereunder, then
this option shall be retroactively adjusted downward to an amount of shares
equal to the total number of shares covered hereby on the Grant Date multiplied
by the percent exercised divided by five percent (5%). For instance, if an
Optionee elects to exercise only four percent (4%) of the Optionee's original
part of 10,000 shares in the Exercise Period as defined in the Plan, the
Optionee's original grant shall be reduced to 8,000 shares (10,000 X 4%/5%)).
After the expiration of each year following the expiration of one (1) year from
the Grant Date, an annual exercise during the Exercise Period as defined in the
Plan of a number of shares equal to less than five percent (5%) of the number of
shares granted under this option shall result in a forfeiture of the right to
exercise this option with respect to any shares representing vested options that
are not exercised.
(c) Any option, which may have been adjusted pursuant to paragraphs
8(b) or 13 of the Plan, granted under the Plan shall become exercisable as
follows (or after the lapse of such additional period or periods of time or the
occurrence of such event or events as the Committee, in its discretion, may
provide upon the granting thereof):
YEARS FOLLOWING GRANT DATE PERCENTAGE OF OPTION EXERCISABLE
- -------------------------- --------------------------------
one 20%
two 40%
three 60%
four 80%
five 100%
4
<PAGE>
PROXY
ALAMO GROUP INC.
PROXY FOR 1999 SPECIAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Donald J. Douglass, Ronald A. Robinson or
Robert H. George or any one of them, proxies or proxy with full power of
substitution and revocation as to each of them, to represent the undersigned and
to act and vote, with all powers which the undersigned would possess if
personally present, at the Special Meeting of Stockholders of Alamo Group Inc.
to be held at 8:30 a.m. on the 6th floor of the Bank of America Plaza, 300
Convent Street, San Antonio, Texas, Tuesday, August 31, 1999 on the following
matters and in their discretion on any other matters which may come before the
meeting or any adjournments thereof. Receipt of Notice-Proxy Statement dated
July 30, 1999 is acknowledged.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
Please mark
your votes as [X]
indicated in
this example
- --------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1 AND 2.
- --------------------------------------------------------------------------------
ITEM 1 - To approve the Company's 1999 Non-Qualified Stock Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 2 - To approve the Company's Amended and Restated 1994 Incentive Stock
Option Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 3 - In their discretion, upon such other business as may properly come
before the meeting.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned.
In the absence of such direction the proxy will be voted FOR the Proposal set
forth in Item 1 and FOR the Proposal set forth in Item 2.
I PLAN TO ATTEND THE MEETING [ ]
- --------------------------------------------------------------------------------
----- (Sign exactly as name(s) appears at
| left. If shares are held jointly, each
| holder should sign. If signing for
| estate, trust or corporation, title or
capacity should be stated.)
Please date, sign and return this Proxy
in the enclosed business envelope.
Date:_____________________________, 1999
________________________________________
________________________________________
(Signature if held jointly)
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
