THIS AGREEMENT, made and entered into this 14th day of August, 2001, by

and between SMC CORPORATION, an Illinois corporation, hereinafter called

"Seller," R.G. ROB STANEK, hereinafter referred to as "Stanek," and ALAMO GROUP

(SMC) INC., a Nevada corporation, hereinafter called "Buyer."



                             W I T N E S S E T H:



      WHEREAS, Seller designs, develops, engineers, manufactures, assembles,

promotes, advertises, markets, merchandises, sells, and distributes a wide range

of heavy-duty equipment including, but not limited to, tractor-mounted equipment

including loaders, blades, buckets, trailers, power units, and related equipment

and, further, Seller manufactures and/or distributes related assemblies and

parts associated with all of such equipment, all of which business of Seller

(including activities associated therewith) is sometimes hereinafter referred to

as the "Business"; and



      WHEREAS, Buyer desires to purchase from Seller substantially all of the

assets and assume certain designated liabilities of Seller associated therewith;

and



      WHEREAS, Stanek, being the owner of 93.21% of the issued and outstanding

capital stock of Seller, is an indirect beneficiary of this Agreement, and joins

with the Seller in executing this Agreement as herein provided; and



      WHEREAS, the parties desire to enter into and execute this Agreement for

the purpose of setting forth the terms and conditions of the sale and purchase

contemplated herein.



      NOW, THEREFORE, in consideration of the premises set forth above and the

mutual covenants and agreements set forth herein, the parties hereby agree as

follows:



      1. ASSETS TO BE PURCHASED. On the Closing Date (as hereinafter defined),

Seller agrees to sell, transfer, assign, and deliver to Buyer, and Buyer agrees

to purchase and accept from Seller, subject to and upon the terms and conditions

contained herein, free and clear of any pledge, lien, option, security interest,

mortgage, claim, charge or other encumbrance of any kind



{PAGE}



whatsoever, except as listed on SCHEDULE 5(C), all of the assets of Seller

(excluding the Retained Assets as hereinafter defined), of any kind, character,

or description, known or unknown, whether accrued, absolute, or otherwise, all

as they exist on the Closing Date, including without limitation: (a) All right,

title and interest of Seller in and to all of Seller's inventory, wherever

located, including raw material, work in process, and finished goods;



            (b)   All of Seller's accounts, accounts receivable, trade

                  receivables and notes receivable;



            (c)   All of Seller's real property, wherever situated including

                  land and buildings, improvements, fixtures thereon, easements,

                  rights-of-way, and other appurtenant rights thereto (such as

                  appurtenant rights in and to public streets);



            (d)   All of Seller's machinery, equipment, furniture, and supplies;



            (e)   All right, title and interest of Seller in and to all prepaid

                  rentals and other prepaid expenses, bonds and deposits

                  (including those for health insurance);



            (f)   All vehicles owned by Seller;



            (g)   All jigs, dies, tooling, drawings, blueprints, schematics, and

                  similar property owned by Seller, including those fabricated

                  by third parties on behalf of Seller and in the possession of

                  those third parties as of the Closing;



            (h)   All business records including all drawings, bills of

                  materials and lists, vendor agreements and lists, credit

                  files, sales records, warranty records, inventory records,

                  product literature and marketing studies;



            (i)   All licenses, permits, trade names, trademarks, patents, and

                  other intellectual property used in connection with the

                  Business of Seller, if any, including without limitation:



                  1)    All goodwill associated therewith;





                                       2

{PAGE}



                  2)    All right, title, and interest in and to the names "SMC"

                        and "Schwartz"; and



                  3)    All  right,  title and  interest  in and to the domain

                        name "www.smc/schwartz.com."



            (j)   Life insurance  policies  listed on SCHEDULE  1(J) attached

                  hereto and incorporated herein;



            (k)   All other books and records associated with the Business of

                  Seller (but excluding Seller's corporate minute books and

                  related corporate records of which Buyer shall be entitled to

                  retain photocopies);



            (l)   To the extent  assignable,  all  rights of Seller  under any

                  contracts,  leases or other  agreements  listed on SCHEDULE

                  1(L) attached hereto and incorporated herein,  including but

                  not limited to, that one certain Lease  Agreement with Diane

                  E.  Wood,  regarding  property  located  at 129 Pine  Street

                  South,  Lester  Prairie,  Minnesota,  and that  one  certain

                  Lease  Agreement  with J & J  Land  Co.,  L.L.C.,  regarding

                  property  located  at 2821  West 6th  Street,  Sioux  Falls,

                  South Dakota (the "Leases") ; and



            (m)   All customer,  distributor and supplier files and mailing

                  lists of the Seller.



All of the assets referenced above and being purchased under this Agreement are

collectively referred to herein as the "Assets." The Assets will not include,

and Buyer is not purchasing, those specified assets which are listed on SCHEDULE

1(M) attached hereto and incorporated herein (the "Retained Assets"), and which

Buyer agrees Seller may retain or distribute to its shareholders.



      2. LIABILITIES TO BE ASSUMED BY BUYER. On the Closing Date, Buyer shall

assume, pay, perform, and discharge only those charges, debts, obligations,

contracts, agreements, and liabilities of Seller specifically referenced in

Section 2.1 below, and no others (the "Assumed Liabilities").



            2.1 Buyer shall assume, pay, perform and discharge only the

following liabilities of Seller:





                                       3

{PAGE}



            (a)   All liabilities of the Seller on the Closing Balance Sheet

                  (rather than in any notes thereto), except as set forth in

                  Section 2.2 hereof;



            (b)   Accounts payable as specified on the Closing Balance Sheet;



            (c)   Accrued bonuses, commissions,  salaries, wages, vacation and

                  sick pay, as specified on SCHEDULE 2.1(C);



            (d)   Accrued payroll taxes;



            (e)   Accrued employee deductions;



            (f)   Claims for remedy of a defective product pursuant to an

                  existing warranty, but not Product Recall or Product Liability

                  Claims as specified in Section 2.2(h) and (i) hereof;



            (g)   Liabilities under certain real and personal property leases

                  and operating leases as specified on SCHEDULE 2.1(G) to the

                  extent such liabilities arise subsequent to the Closing Date;



            (h)   Agreement between United Electrical, Radio and Machine Workers

                  of America (UE) and its agent Local 1128, United Electrical,

                  Radio and Machine Workers of America and SMC Corporation (the

                  "Union Contract") dated April 23, 2001, to the extent

                  liabilities or claims arise pursuant to such Union Contract

                  subsequent to the Closing Date, with such liability assumed

                  only as to employees of Seller hired by Buyer, with such hire

                  decisions within the discretion of Buyer;



            (i)   All liabilities under the contracts, agreements and leases

                  listed on SCHEDULE 1(L) and SCHEDULE 5(U), including, without

                  limitation, purchase orders which are incurred in the Ordinary

                  Course of Business (as hereinafter defined), to the extent the

                  liabilities or claims arise subsequent to the Closing Date.



As used in this Agreement, "Ordinary Course of Business" shall mean the ordinary

course of business consistent with past custom and practice (including, where

appropriate, with respect to quantity and frequency).



      2.2 LIABILITIES TO BE RETAINED BY SELLER. Seller shall retain all other

liabilities including without limitation the following (the "Retained

Liabilities"):





                                       4

{PAGE}



            (a)   Taxes of any kind whatsoever due and payable prior to the

                  Closing Date including, without limitation, federal, foreign,

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