LUFKIN
INDUSTRIES, INC.
STOCK
OPTION AGREEMENT
Agreement made effective
the ___ day of ______, 2008 (the “ Grant
Date ”) between Lufkin Industries, Inc., a Texas
corporation (the " Company
"), and ___________
(" Optionee
"). Except as otherwise defined herein,
capitalized terms shall have the meaning set forth in the
Lufkin Industries, Inc. Incentive Stock Compensation Plan
2000 (the "Plan").
To carry out the purposes
of the Plan, 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,
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 _______ shares
of Common Stock, on the terms and conditions set forth herein and
in the Plan. The Option is not intended to be an
"incentive stock option" within the meaning of the Section 422 of
the Code.
2.
Exercise Price . The exercise price of the Option
shall be ______ 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 only as set forth below:
|
Exercise
Date
|
Percentage
of Option Shares Exercisable
|
|
|
1.
|
Prior
to first anniversary of Grant Date
|
0%
|
|
|
2.
|
After
1, and prior to February 12, 2010
|
25%
|
|
|
3.
|
After
2, and prior to February 12, 2011
|
50%
|
|
|
4.
|
After
3, and prior to February 12, 2012
|
75%
|
|
|
5.
|
After
4, and prior to February 12, 2013
|
100%
|
|
The
"Percentage of Option Shares Exercisable" shall be determined
with reference to the aggregate number of shares of Common
Stock subject to the Option as set forth in Section 1
above. The Optionee's right to exercise the Option
in accordance with the foregoing shall accrue only to the
extent the Optionee remains in the continuous employment or
service of the Company.
(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) and payment of the
Option exercise price 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 committee to reflect
exercise of the Option and compliance with all applicable
laws, rules and regulations.
(c)The vesting and
exercisability of the Option shall be subject to acceleration
on the terms and conditions stated in Section 8 of the Plan,
which relates to a "Change in Control".
(d)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 (i) in cash or by check payable and acceptable to the
Company or (ii) subject to the approval of the Committee, by
tendering to the Company shares of Common Stock owned by the
Optionee having an aggregate Fair Market Value per share as of the
date of exercise and tender that is not greater than the full
Option exercise price for the shares with respect to which the
Option is bein
