LUFKIN INDUSTIES, INC. NONEMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
LUFKIN
INDUSTIES, INC.
Agreement
made effective the _____ day of ____, 2008, (the "Grant Date") between
Lufkin Industries, Inc., a Texas corporation (the "Company"), and
___________ ("Optionee").
To carry
out the decision of the Lufkin Industries, Inc.’s Board of Directors and in
accordance with the Lufkin Industries, Inc.’s Incentive Stock Option Plan 2000,
to which this Agreement is expressly subject and a copy of which is attached
hereto as Exhibit A, by affording Optionee the opportunity to purchase shares of
Common Stock, par value $1.00 per share, of the Company ("Stock"), and in
consideration of the mutual agreements and other matters set forth herein and in
the Plan, the Company and Optionee hereby agree as follows:
1. Grant of
Option. The Company hereby grants to the Optionee the right
and option (the "Option") to purchase all or any part of an aggregate of 2,000
shares of Stock, on the terms and conditions set forth herein and in the
Plan.
2. Exercise Price. The
exercise price of the Option shall be $75.10 per share.
3. Exercise of
Option. (a) Subject to the further provisions of this
Agreement, the Option granted pursuant to this Agreement may be exercised
immediately on the date of grant.
(b) Subject
to the earlier expiration of the Option as herein provided and subject to the
terms and conditions contained herein, the Option may be exercised by written
notice (which complies in all respects with the provisions of this Agreement) to
the Company at its principal executive office addressed to the attention of the
Secretary of the Company, identifying the Option and specifying the number of
shares that the Optionee decides to purchase, such exercise to be effective at
the time of receipt of such written notice at the Company's principal executive
office during normal business hours. The notice shall not be
considered to be properly given unless accompanied by all documentation deemed
appropriate by the Company to reflect exercise of the Option and compliance with
all applicable laws, rules and regulations.
(c) Notwithstanding
anything herein to the contrary, in no event shall the Option, or any part
thereof, be exercisable after the tenth anniversary of the Grant
Date.
4. Payment of Option Exercise
Price. Upon exercise of an Option, the full option exercise
price for the shares with respect to which the Option is being exercised shall
be payable to the Company in cash or by check payable and acceptable to the
Company. Payment instructions will be received subject to
collection.
5. Non-Transferability. The
Option may not be transferred by Optionee separately or otherwise than by will
or the laws of descent and distribution or pursuant to a qualified domestic
relations order as defined in the Internal Revenue Code of 1986, as
amended.
6. Termination. (a) If
the Optionee gives notice of his resignation from the Board of Directors of the
Company, the Option shall be exercisable by him, subject to Section 3(c) above,
only within three months after such date of resignation.
(b) If,
however, Optionee gives notice that he does not intend to stand for reelection,
is given notice that he will be asked to retire from the Board of Directors or
becomes disabled and is unable to serve while a member of the Board of
Directors, the Option shall be exercisable by the Optionee at any time within
twelve months after the effective date of such retirement or termination of
service, subject to Section 3(c) above.
(c) If
the Optionee shall die while entitled to exercise the Option, the Optionee's
estate, personal representative or beneficiary, as the case may be, shall have
the right subject to the provisions of Section 3(c) above, to exercise the
Option at any time within 12 months after the date of the Optionee's death, to
the extent that the Optionee was entitled to exercise the same on the day
immediately prior to the Optionee's death.
7. Withholding of Tax. Any
issuance of Stock pursuant to the exercise of the Option under this Agreement
shall not be made until appropriate arrangements have been made for the payment
of any amounts that may be required to be withheld or paid with respect
thereto. Such arrangements may be paid in cash or by check payable
and acceptable to the Company. Payment instruments will be received
subject to collection.
8. Securities
Matters. The Option granted herein shall be subject to the
requirement that, if at any time the Board of Directors shall determine, in its
discretion, that the listing, registration or qualification of the shares
subject to such Option upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the issue of
purchase of shares hereunder, such Option may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not reasonably acceptable
to the Board of Directors.
9. Relationship. Any question as
to whether and when there has been a termination of Optionee's services on the
Board of Directors, for purposes of this Agreement, and the cause of such
termination, for purposes of this Agreement, shall be determined by the Board of
Directors, and its determination shall be final. Nothing herein shall
give the Optionee any right to continued service or affect in any manner the
right of the Company to terminate the service of the Optionee.
10. Binding
Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
the Optionee. This Agreement and all actions taken shall be governed by and
constructed in accordance with the laws of the State of Texas. In the
event of conflict between this Agreement and the Plan, the terms of the Plan
shall control. All undefined capitalized terms used herein shall have
the meaning assigned to them in the Plan. The Board of Directors
shall have authority to construe the terms of this Agreement, and the Board of
Directors' determinations shall be final and binding on the Optionee and the
Company.
IN WITNESS WHEREOF, the
Company has caused this Agreement to be duly executed and the Optionee has
executed this Agreement as of the day and year first above
written.
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LUFKIN
INDUSTRIES, INC.
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By:
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Its:
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President
and CEO
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OPTIONEE:
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(Name)
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