ALAMO GROUP
INC.
2009
EQUITY INCENTIVE PLAN
Section 1. Background and Purpose of the Plan.
(a)
Background. The name of this plan is the
Alamo Group Inc. 2009 Equity Incentive Plan (the
“Plan”). Alamo Group Inc., a Delaware corporation
(the “Company”), established an incentive compensation
plan known as the “First Amended and Restated 1999
Non-Qualified Stock Option Plan,” effective August 31, 1999
(the “1999 Plan”). The 1999 Plan expires as of
July 6, 2009. Subject to the approval of the Company’s
stockholders, the Company now desires to adopt the Plan as of May
7, 2009, to replace the 1999 Plan, as set forth below.
(b) Purpose.
The purpose of the Plan is to provide incentives to those officers,
employees, and directors of the Company and its direct and indirect
subsidiaries whose contributions are essential to the growth and
success of the Company’s business, in order to strengthen the
long-term commitment of such persons to 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 persons. To accomplish such purposes, the Plan provides
that the Company may grant Nonqualified Stock Options, Restricted
Stock, and Restricted Stock Units. The Plan is intended to
permit awards that satisfy the requirements of Section 162(m) of
the Code and shall be interpreted in a manner consistent with the
requirements therefor.
Section 2. Definitions.
For purposes of the Plan, in addition to terms defined elsewhere in
the Plan, the following terms shall be defined as set forth
below:
(a) “Award”
means an award of Options, Restricted Stock, or Restricted Stock
Units under the Plan.
(b) “Award
Agreement” means, with respect to any Award, the written
agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
(c) “Board”
means the Board of Directors of the Company.
(d) “Change in
Control” means, unless otherwise provided in an Award
Agreement, the first to occur of any one of the events set forth in
the following paragraphs:
(i) a change in the ownership of the Company which occurs on
the date that any one person, or more than one person acting as a
group (as such terms are defined in Section 13(d)(3) of the
Exchange Act), becomes the “beneficial owner” (as
defined in Rule 13d-3 of the Exchange Act), directly or indirectly,
of Shares representing more than fifty percent (50%) of the
total voting power of the issued and outstanding stock of the
Company entitled to vote in the election of directors of the
Company (“Voting Stock”) and such person or group has
the power and authority to vote such Shares; provided, however,
that for purposes of this subsection (i), the acquisition of
additional Shares by any one person or group who have then been
owners of 10% or more of the Shares of the Company for a continuous
period at least ten (10) years will not be considered a Change in
Control; or
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(ii) a change in the effective control of the Company which occurs
on the date that a majority of members of the Board is replaced
during any twelve (12) month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Board prior to the date of the appointment or
election; or
(iii) any sale, lease, exchange, or other disposition (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company (together with the
assets of the Company’s direct and indirect subsidiaries) to
any person or more than one person acting as a group (as such
terms are defined in Section 13(d)(3) of the Exchange Act);
provided, however, that for purposes of this subsection (iii),
a transfer of assets by the Company to an entity that is controlled
by the Company’s stockholders immediately after the transfer
will not be considered a Change in Control; or
(iv) the consummation of a merger or consolidation of the Company
with another entity in which immediately following the consummation
of the transaction, those stockholders of the Company immediately
before the consummation of the transaction cease to own
collectively at least fifty percent (50%) of the Voting Stock of
the Company.
(e) “Code”
means the Internal Revenue Code of 1986, as amended from time to
time, or any successor thereto.
(f)
“Committee” means the Compensation Committee of the
Board, as appointed from time to time by at least a majority of the
whole Board.
(g) “Common
Shares” means the shares of common stock, par value $0.10 per
share, of the Company.
(h) “Exchange
Act” means the Securities Exchange Act of 1934, as amended
from time to time.
(i) “Fair
Market Value” of a Share on a particular date shall mean (1)
the closing sale price reported for such Share on the national
securities exchange or national market system on which such Share
is principally traded on such date (or, if there were no trades on
such date, on the most recently preceding day on which there was a
sale thereon), or (2) if the Shares are not then listed on a
national securities exchange or national market system, or if the
value of such Shares is not otherwise determinable, such value as
determined by the Committee in good faith in its sole
discretion. In making such determination, the Committee
should (but is not required to) use a valuation method that is
presumed reasonable under Treas. Reg.
§1.409A-1(b)(5)(iv)(B)(2). If the Committee does not use
a method that is presumed reasonable, the Committee nevertheless
shall use a method designed to comply with the reasonableness
requirements of Treas. Reg. §1.409A-1(b)(5)(iv)(B).
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(j)
“Nonqualified Stock Option” means an Option that by its
terms is a nonqualified stock option and that will not be treated
as an “incentive stock option” within the meaning of
Section 422 of the Code.
(k) “Option”
means a right to purchase Shares, granted to a Participant pursuant
to the Plan. As used herein, the term “Option”
shall include only a Nonqualified Stock Option, and the Plan shall
be construed in a manner that will effectuate the intent for all
Options granted hereunder to be treated as Nonqualified Stock
Options.
(l)
“Participant” means the holder of an outstanding
Award.
(m) “Restricted
Stock” means Shares issued pursuant to an Award Agreement in
accordance with Section 7 of the Plan.
(n) “Restricted
Stock Unit” means a bookkeeping entry representing an amount
equal to the Fair Market Value of one Share, granted pursuant to
Section 8 of the Plan. Each Restricted Stock Unit represents
an unfunded and unsecured obligation of the Company.
(o) “Service
Provider” means an employee, officer, or director of the
Company or any of the Company’s direct or indirect
subsidiaries. For purposes of this paragraph, the term
“direct or indirect subsidiaries” shall refer only to
those subsidiaries that qualify as eligible issuers of the
Company’s stock under Treas. Reg.
§1.409A-1(b)(5)(iii)(E).
(p) “Shares”
means the Common Shares and the common equity of any successor
security.
Section 3. Shares Subject to the Plan.
(a) There shall be
reserved and available for issuance under the Plan 400,000 Common
Shares. In determining the terms and conditions of an Award
hereunder, the Committee shall not impose any conditions on the
Common Shares (such as a mandatory repurchase obligation or a put
or call right) that would cause the Common Shares issued under the
Award not to be considered “Service Recipient Stock”
under Treas. Reg.
§1.409A-1(b)(5)(iii).
(b) To the extent that
(i) an Option expires or is otherwise cancelled or terminated
without being exercised as to the underlying Shares, (ii) any
Shares subject to any award of Restricted Stock or Restricted Stock
Units are forfeited, or (iii) Shares are withheld from payment of
an Award in satisfaction of any minimum federal, state, local, or
foreign withholding requirements, such Shares shall again be
available for issuance in connection with future Awards granted
under the Plan. The Shares issued under the Plan may be
authorized but unissued Common Shares, reacquired Common Shares,
issued Common Shares held in the Company’s treasury, or any
combination of the foregoing.
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(c) The Company, during
the term of the Plan, will at all times reserve and keep available
such number of Shares as will be sufficient to satisfy the
requirements of the Plan.
Section 4. Administration of the Plan.
(a) The Plan shall be
administered by the Committee. The Committee shall consist
solely of two or more “Non-Employee Directors,” as
defined in Rule 16b-3(b)(3)(i) of the Exchange Act.
(b) To the extent
desirable to qualify transactions hereunder as exempt under Rule
16b-3 of the Exchange Act, the transactions contemplated hereunder
will be structured to satisfy the requirements for exemption under
Rule 16b-3 of the Exchange Act.
(c) The Committee shall
have the power and authority, in its discretion:
(i) to select the
Service Providers to whom Awards may be granted hereunder;
(ii) to determine whether
and to what extent Options, Restricted Stock, or Restricted Stock
Units are to be granted hereunder to Service Providers;
(iii) to determine the number
of Shares to be covered by each Award granted hereunder;
(iv) to determine the terms and
conditions, not inconsistent with the terms of the Plan, of any
Award granted hereunder;
(v) to determine the
terms and conditions, not inconsistent with the terms of the Plan,
which shall govern all written instruments evidencing Awards
granted hereunder;
(vi) to adopt, alter, and
rescind rules and regulations relating to the Plan as it shall from
time to time deem advisable; and
(vii) to construe and interpret the
terms of the Plan and Awards granted pursuant to the Plan (and any
Award Agreement relating thereto), and to otherwise supervise the
administration of the Plan.
In exercising such discretion pursuant to this Section 4(c), the
Committee shall ensure that a grant of Options, Restricted Stock,
or Restricted Stock Units is structured so as not to cause a
deferral of compensation under Code §409A and the Regulations
thereunder.
(d) The Committee’s
decisions, determinations, and interpretations will be final,
conclusive, and binding on all persons, including the Company and
the Participants. No member of the Committee, nor any officer
or employee of the Company acting on behalf of the Committee, shall
be personally liable for any action, determination, or
interpretation taken or made in good faith with respect to the
Plan, and all members of the Committee and each and any officer or
employee of the Company acting on their behalf shall, to the extent
permitted by law, be fully indemnified and protected by the Company
in respect of any such action, determination, or
interpretation.
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Section 5.
Eligibility.
The Participants under the Plan shall be selected from time to time
by the Committee, in its sole discretion, from among Service
Providers. The Committee shall have the authority to grant to
any Service Provider Options, Restricted Stock, or Restricted Stock
Units, in accordance with the terms of the Plan.
Section 6.
Options.
(a) General
. Options may be granted alone or in addition to other Awards
granted under the Plan. Any Option granted under the Plan
shall be evidenced by an Award Agreement. The provisions of
each Option need not be the same with respect to each
Participant. The Committee shall determine the Service
Providers to whom, and the time or times at which, awards of
Options shall be made, and the terms of such Options, not
inconsistent with the terms of the Plan. Participants who are
granted Options shall enter into an Award Agreement with the
Company, in such form as the Committee shall determine, which Award
Agreement shall set forth, among other things, the exercise price
of the Option, the term of the Option, and provisions regarding
exercisability of the Option granted thereunder. The Options
granted under the Plan must be Nonqualified Stock Options.
More than one Option may be granted to the same Participant and be
outstanding concurrently hereunder. Options granted under the
Plan shall be subject to the terms and conditions set forth in
paragraphs (b) –(h) of this Section 6 and shall contain such
additional terms and conditions, not inconsistent with the terms of
the Plan, as the Committee shall deem desirable.
(b) Exercise Price
. The per share exercise price of Shares purchasable under an
Option shall be determined by the Committee in its sole dis
