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Exhibit 10.2

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into effective as of
August 18, 2006 (the “Effective Date”), by and between LUFKIN INDUSTRIES, INC.,
a Texas corporation (the “Company”), and John F. Glick of Lufkin, Texas (the
“Executive”).

WHEREAS, the Company wishes to continue the employment of the Executive as a
Vice President of the Company, under the terms and conditions set forth herein;
and

WHEREAS, the Executive wishes to continue his employment under those terms and
conditions;

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, and for other consideration mutually acknowledged the Company and the
Executive (the “Parties”) agree as follows:

1.     Employment.

The Company hereby agrees to continue to employ the Executive, and the Executive
hereby agrees to continue his employment with the Company, for the term set
forth in Section 2 below, in the positions and with the duties and
responsibilities set forth in Section 3 below, at an office location in Lufkin,
Texas or such other location as the Parties may mutually agree, and upon such
other terms and conditions as are hereinafter stated.

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2.     Term.

Subject to renewal and other provisions as hereinafter set forth in this Section
2, the term of the Executive’s employment with the Company shall commence on the
Effective Date and shall continue through the second annual anniversary of the
Effective Date (the “Initial Term”), unless sooner terminated in accordance with
the terms and provisions hereinafter set forth. The Initial Term shall be
automatically renewed and extended for a period of twelve (12) months commencing
on the first annual anniversary of the Effective Date and on each successive
annual anniversary thereafter on the same terms and conditions contained herein
in effect as of the time of renewal (the “Extended Term”), unless either Party
shall give the other Party written notice, at least sixty (60) days prior to the
first annual anniversary of the Effective Date of this Agreement (or, if
previously renewed and extended, at least sixty (60) days prior to any
succeeding annual anniversary), of the notifying Party’s desire not to renew
this Agreement. The non-renewal or non-extension of this Agreement by either
Party at the end of the Initial Term or any Extended Term (hereinafter, the
“Term,” unless otherwise indicated) shall not be deemed a termination by the
Company without Cause (as such term is defined below) and the Executive shall
only receive those amounts set forth in Section 5.4 in such circumstances. The
Executive shall, unless requested otherwise by the Company, remain in the employ
of the Company during the entirety of the remaining Term. Notwithstanding any
other provision of this Section 2 to the contrary, in no event shall the Term
extend beyond the Executive’s “normal retirement age” under the U.S. Social
Security Act, as amended from time to time.

3.     Position and Duties.

(a)    During the Term, the Executive shall serve as Vice President of the
Company reporting directly to the President or Chief Operating Officer of the
Company. As such, the Executive shall have the responsibilities, duties and
authority customarily pertaining to such office and such other duties as may
reasonably be assigned to the Executive by the President or Chief Operating
Officer of the Company and consistent with such position.

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(b)    While employed hereunder, the Executive shall devote his full business
time and attention to the operations and activities of the Company, and shall
not be employed by, consult with or otherwise render services to, any other
business, except with the consent of the Board of Directors of the Company. The
foregoing notwithstanding, the Parties recognize and agree that the Executive
may engage in passive personal investments and other business, industry, civic
and charitable activities that do not conflict with the business and affairs of
the Company or interfere with the Executive’s performance of his duties
hereunder.

4.     Compensation and Benefits.

(a)    Salary. The Company shall pay the Executive a base salary (“Salary”) at
an annual rate of $205,000 (the “Base Rate”). Salary shall be payable in
accordance with the Company’s payroll practices. The Compensation Committee of
the Board of Directors of the Company (the “Committee”) shall review with the
Executive the Salary during February of each year in the Term, and may adjust
such Salary in its sole discretion, provided that such Salary shall never be at
an annual rate less than the Base Rate.

(b)    Bonus. The Executive will have an opportunity to receive a bonus with
respect to each year during the Term. The level or levels of the annual bonus
for each year during the Term and the criteria for entitlement to such level or
levels shall be reasonable and reflective of industry norms as shall be
determined in good faith by the Company with the advice and counsel of competent
compensation consultants of the Company’s choosing who shall currently review
such data as may be available with respect to bonuses that are made available to
similarly situated executives of companies that are in the same industry and are
approximately the same size (based on sales) as the Company. The bonus for any
bonus year during the Term shall be paid in the form of a lump sum cash payment
on the last day of the bonus year to which the annual bonus relates; provided,
however, if calculation of the amount of the annual bonus is not
administratively practicable due to events beyond the control of the Company,
such annual bonus shall be paid during the first bonus year in which calculation
is administratively practicable.

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(c)    Employee Benefit Programs. During the Term, the Executive shall be
entitled to participate in all employee benefit programs of the Company as in
effect from time to time and in which the Company’s senior executives are
eligible to participate, subject to the regular eligibility requirements with
respect to each such employee benefit program, and such other benefits or
perquisites as may be approved for the Executive by the Board of Directors of
the Company.

(d)    Other Benefits. During his employment hereunder, the Executive shall be
afforded each and every one of the following benefits as incidences of his
employment:

(i)     Business and entertainment expenses - the Company will reimburse the
Executive for, or pay on behalf of the Executive, reasonable and appropriate
expenses incurred by the Executive for business related purposes, including dues
and fees to industry and professional organizations, costs of entertainment and
business development, and costs reasonably incurred as a result of the
Executive’s wife accompanying the Executive on business travel.

(ii)    Club memberships - in addition to the other business and entertainment
expenses reimbursable pursuant to item (i) above, the Company shall pay
membership fees, dues and assessments for one luncheon or country club
membership as the Board of Directors of the Company may deem to be justified by
business usage.

(iii)    Annual physical examination - the Company shall pay for the cost of an
annual physical examination to be conducted by a doctor or clinic of the
Executive’s choosing in Houston, Texas or in Lufkin, Texas up to a maximum of
$2,000 per year.

(iv)    Life insurance - the Executive’s life insurance benefit coverage will be
the same as that provided to other salaried employees.

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Such reimbursements and payments shall be paid in a lump sum in cash not later
than the 15th day of the third month following the last day of the calendar year
in which the reimbursable costs were incurred or the payment was initially due.

5.    Termination of Employment.

The Executive’s employment is subject to termination during the Term only as
provided in this Section 5.

5.1   Death or Disability.

If the Executive’s employment is terminated due to his death or total
disability, as determined under the Company’s applicable long-term disability
plan, then, subject to the subsequent provisions of this Section 5.1 and Section
23:

(i)     To the extent permitted without contravening the requirements of
applicable law, the Executive (or his estate) shall be entitled to receive
salary and benefit coverages for a period of six months from and after the date
of termination of employment; and

(ii)    The Executive (or his estate) shall be entitled to a bonus payment for
the year in which termination occurs equal to the bonus amount paid or payable
by the Company to the Executive for the immediately preceding bonus year
prorated to reflect the actual number of full weeks worked during the year in
which the Executive’s employment terminates.

To the extent that any benefit described in the immediately preceding sentence
cannot be provided without contravening the requirements of applicable law
because the Executive ceased to be employed by the Company, the Company shall
pay an amount hereunder equal to its cost of providing such benefit for the
period described in the immediately preceding sentence and such amount shall be
payable in accordance with the Company’s payroll procedures commencing with the
first payroll period that begins on or immediately after the Executive’s
termination of employment due to death or total disability.

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5.2   Termination by the Company without Cause.

The Company may terminate the Executive’s employment at any time without Cause
as such term is defined in Section 5.3 below, in which case, subject to Section
23:

(i)    The Executive shall be paid a lump sum cash payment, payable within 30
days after his termination of employment, equal to the total Salary which would
have been paid to him under this Agreement for the remainder of the Term, based
on a Salary rate equal to the greater of (A) the rate in effect on the Effective
Date, or (B) the rate in effect on termination of his employment; and

(ii)    The Executive shall be entitled to a lump sum payment payable within 30
days after his termination of employment equal to the amount of annual bonuses
which would have been paid to him under this Agreement for the remainder of the
Term based upon the bonus rate per annum that is equal to the bonus paid or
payable by the Company to the Executive for the immediately preceding bonus
year; and

(iii)    Benefits (as described in Sections 4(c) and 4(d) above) shall continue
to be provided to the Executive by the Company during the period of Salary
continuation described in item (i) above as if the Executive’s employment had
continued for the remainder of the Term; provided, however, that to the extent
any such benefit cannot be continued as a matter of law during the remaining
period of the Term because the Executive is no longer employed by the Company or
because providing the benefit would subject the Executive to additional income
taxes under Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), the Company shall pay the Executive in accordance with the Company’s
payroll procedures (commencing with the first payroll period that begins on or
immediately after the termination by the Company of the Executive’s employment
without cause) an amount equal to its cost of providing such benefit at the same
rate or level as such benefit was provided or available at the time the benefit
was required as a matter of law to be discontinued because the Executive ceased
to be employed by the Company or because providing the benefit would subject the
Executive to additional income taxes under Section 409A of the Code and;
provided, further, that any such benefit shall be discontinued on the date that
the Executive becomes entitled to coverage for a substantially equivalent rate
or level of a comparable benefit as a result of his employment by a successor
employer.

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5.3   Termination by the Company for Cause.

If the Company terminates the Executive’s employment for Cause, as defined in
this Agreement, subject to Section 23, the Executive shall be entitled only to
Salary, and any benefits, accrued as of the effective date of termination. Any
other benefits shall be determined under applicable plans, programs or other
coverages of the Company. For purposes of this Agreement, the term “Cause” shall
mean:

(i)     the Executive’s conviction for, or plea of nolo contendere to, a felony;
or

(ii)    the commission by the Executive of an act involving fraud or intentional
dishonesty, which act is intended to result in substantial personal enrichment
of the Executive at the expense of the Company or any of its subsidiaries; or

(iii)   the Executive’s material breach of any material provision of this
Agreement which remains uncorrected for 30 days after written notice and an
opportunity to correct; or

(iv)   the Executive’s knowing and willful misconduct in the performance of his
duties, which continues for 30 days after written notice from the Company and
which results in material injury to the reputation, business or operation of the
Company or any of its subsidiaries.

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The existence of “Cause” shall be determined by an affirmative vote of not less
than two-thirds of the members of the Board of Directors of the Company. If the
requisite affirmative vote by two-thirds of the members of the Board of
Directors of the Company is not obtained, any termination of the Executive’s
employment by the Company shall be deemed to be a termination by the Company
without Cause.

5.4   Voluntary Termination by the Executive Without Good Reason.

The Executive may terminate his employment at any time without Good Reason (as
such term is defined in Section 5.5 below) on 30 days’ written notice, in which
case, subject to Section 23, the Executive shall be entitled only to his Salary
earned through the effective date of termination and any benefits accrued as of
the effective date of termination as determined under applicable plans, programs
or other coverages of the Company.

5.5   Termination of the Executive for Good Reason.

In the event the Executive’s employment by the Company is terminated by the
Executive for Good Reason, as defined in this Section 5.5, such termination
shall be deemed to be a termination by the Company of the Executive’s employment
without Cause, as such term is defined in Section 5.3 above, in which case,
subject to Section 23, the Executive shall be entitled to the benefits described
in Section 5.2 of this Agreement. For purposes of this Agreement, the term “Good
Reason” shall mean any one of the following shall have occurred and shall not
been corrected within thirty days following written notice by the Executive to
the Company:

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(i)     the assignment to the Executive of any duties inconsistent in any
respect with the Executive’s position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 3 of this Agreement, or any other action by the Company, or any
affiliate which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose an isolated, insubstantial and
inadvertent action not taken in bad faith and which is remedied by the Company
promptly after receipt of written notice thereof given by the Executive; or

(ii)    any failure by the Company to comply with any of the provisions of
Section 3 of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith which is remedied by the Company
promptly after receipt of written notice thereof given by the Executive; or

(iii)   the Company’s requiring the Executive to be based at any office or
location other than that described in Section 1 hereof, except for travel
reasonably required in the performance of the Executive’s responsibilities; or

(iv)   any purported termination by the Company of the Executive’s employment
otherwise than as expressly permitted by this Agreement.

For purposes of this Section 5.5, any good faith determination of “Good Reason”
made by the Executive shall be final and binding upon the Parties, unless,
within thirty days following the Executive’s providing written notice to the
Company under the first sentence of this Section 5.5, not less than two-thirds
of the members of the Board of Directors of the Company affirmatively votes not
to confirm the Executive’s determination that such termination is for Good
Reason. If two-thirds of the members of the Board of Directors of the Company
affirmatively vote not to confirm the Executive’s determination that such
termination is for Good Reason, any termination by the Executive of his
employment by the Company shall be deemed to be a termination by the Executive
without Good Reason.

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6.     Non-Competition.

The Executive recognizes that the Company’s willingness to enter into this
Agreement is based in material part on the Executive’s agreement to the
provisions of this paragraph 6 and that the Executive’s breach of the provisions
of this paragraph 6 could materially damage the Company. Subject to the further
provisions of this Agreement and in consideration of the Company’s agreement to
provide the Executive Confidential Information (as defined in Section 7) to
which the Executive did not have access prior to the execution of this
Agreement, and the receipt of which is hereby acknowledged, during the term of
his employment hereunder, and, for the period extending to the first anniversary
of his termination of employment for any reason other than termination of the
Executive’s employment by the Company without Cause or termination of the
Executive’s employment by the Executive for Good Reason (the “No-Compete
Period”), the Executive shall not, directly or indirectly, manage, control,
participate in, consult with, render services to, or in any manner engage in any
pumping unit or gear manufacturing business (the “Subject Businesses”) with (any
such action to be referred to as an “Association” with) any person, corporation,
partnership, trust or other business organization (any such person or entity to
be referred to as a “Person”) if such business is directly competitive with the
Subject Businesses of the Company; provided, however, that the foregoing shall
not restrict the Executive from having an Association with a Person that is
engaged in the Subject Businesses so long as the Executive is not personally
involved in a material respect in the Subject Businesses of such Person, it
being understood that an indirect supervisory role of a Subject Business and
other businesses of such Person shall not constitute involvement in a material
respect. If any court having jurisdiction determines that the provisions of this
Section 6 are not enforceable to the fullest extent, because of the provisions
as to the time period, the geographical area or the scope of activity covered,
the Parties agree that such court may narrow any such provision as the court
deems necessary to enforceability, and this Section 6 shall be enforced as so
narrowed.

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The Executive acknowledges that monetary damages would not constitute an
adequate remedy for the Company in the event of a breach of this Section 6, and
he therefore agrees that the Company shall be entitled to injunctive or other
equitable relief for the enforcement hereof. However, in no event shall an
asserted violation of the provisions of this Section 6 constitute a basis for
deferring or withholding any amounts otherwise payable to the Executive under
this Agreement.

7.     Confidential Information.
 
(a)    The Executive acknowledges and agrees that all Confidential Information
(as defined below) of the Company is confidential and a valuable, special and
unique asset of the Company that gives the Company an advantage over its actual
and potential, current and future competitors. The Executive further
acknowledges and agrees that the Executive owes the Company a fiduciary duty to
preserve and protect all Confidential Information from unauthorized disclosure
or unauthorized use, that certain Confidential Information constitutes “trade
secrets” under applicable laws and that unauthorized disclosure or unauthorized
use of the Company’s Confidential Information would irreparably injure the
Company.

(b)    Both during the term of the Executive’s employment and after the
termination of the Executive’s employment for any reason (including wrongful
termination), the Executive shall hold all Confidential Information in strict
confidence, and shall not use any Confidential Information except for the
benefit of the Company, in accordance with the duties assigned to the Executive.
The Executive shall not, at any time (either during or after the term of the
Executive’s employment), disclose any Confidential Information to any person or
entity (except other employees of the Company who have a need to know the
information in connection with the performance of their employment duties and
except such person or persons to whom such information is required to be
divulged, in which case the Executive shall give the Company prompt notice of
such required disclosure and use his reasonable best efforts, in cooperation
with the Company, to defend against any such required disclosure), or copy,
reproduce, modify, decompile or reverse engineer any Confidential Information,
or remove any Confidential Information from the Company’s premises, without the
prior written consent of the Board of Directors, or permit any other person to
do so. The Executive shall take reasonable precautions to protect the physical
security of all documents and other material containing Confidential Information
(regardless of the medium on which the Confidential Information is stored). This
Agreement applies to all Confidential Information, whether now known or later to
become known to the Executive.

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(c)    Upon the termination of the Executive’s employment with the Company for
any reason, and upon request of the Company at any other time, the Executive
shall promptly surrender and deliver to the Company all documents and other
written material of any nature containing or pertaining to any Confidential
Information and shall not retain any such document or other material. Within
five days of any such request, the Executive shall certify to the Company in
writing that all such materials have been returned.

(d)    As used in this Agreement, the term “Confidential Information” shall mean
any information or material known to or used by or for the Company (whether or
not owned or developed by the Company and whether or not developed by the
Executive) that is not generally known to persons in the Subject Businesses.
Confidential Information includes, but is not limited to, the following: all
trade secrets of the Company; all information that the Company has marked as
confidential or has otherwise described to the Executive (either in writing or
orally) as confidential; all nonpublic information concerning the Company’s
products, services, prospective products or services, research, product designs,
prices, discounts, costs, marketing plans, marketing techniques, market studies,
test data, customers, customer lists and records, suppliers and contracts; all
business records and plans; all personnel files; all financial information of or
concerning the Company; all information relating to operating system software,
application software, software and system methodology, hardware platforms,
technical information, inventions, computer programs and listings, source codes,
object codes, copyrights and other intellectual property; all technical
specifications; any proprietary information belonging to the Company; all
computer hardware or software manuals; all training or instruction manuals; and
all data and all computer system passwords and user codes.

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(e)    However, in no event shall an asserted violation of the provisions of
this Section 7 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

8.     Indemnification.

8.1    If at any time the Executive is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise, the Company shall indemnify the Executive and
hold him harmless against reasonable expenses (including attorneys’ fees),
judgments, fines, penalties, amounts paid in settlement and other liabilities
actually and reasonably incurred by him in connection with such action, suit or
proceeding to the full extent permitted by law.

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8.2    Expenses (including attorneys’ fees) incurred by the Executive in
appearing at, participating in, or defending any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, shall be paid by the Company at reasonable intervals in advance
of the final disposition of such action, suit or proceeding upon receipt of an
undertaking by the Executive to repay such amounts if it shall ultimately be
determined that he is not entitled to be indemnified.

8.3    All claims for indemnification under this Agreement shall be asserted and
resolved as is set forth below in this Section 8.3.

(a)    The Executive (i) shall promptly notify the Company of any third-party
claim or claims asserted against him (“Third Party Claim”) that could give rise
to a right of indemnification under this Agreement and (ii) shall transmit to
the Company a written notice (“Claim Notice”) describing in reasonable detail
the nature of the Third Party Claim, a copy of all papers served with respect to
such claim (if any), and the basis of his request for indemnification under this
Agreement.

(b)    Within 30 days after receipt of any Claim Notice (“Election Period”), the
Company shall notify the Executive (i) whether the Company disputes its
potential liability to the Executive under this Section 8 with respect to such
Third Party Claim and (ii) whether the Company desires, at its sole cost and
expense, to defend the Executive against such Third Party Claim by any
appropriate proceedings, which proceedings shall be prosecuted diligently by the
Company to a final conclusion or settled at the discretion of the Company in
accordance with this Subsection 8.3(b). The Company shall have full control of
such defense and proceedings, including any compromise or settlement thereof.
The Executive is hereby authorized, at the Company’s sole cost and expense (but
only if he is actually entitled to indemnification hereunder or if the Company
assumes the defense with respect to the Third Party Claim), to file, during the
Election Period, any motion, answer or other pleadings which he shall deem
necessary or appropriate to protect his interests or those of the Company and
not prejudicial to the Company. If requested by the Company, the Executive
agrees, at the Company’s sole cost and expense, to cooperate with the Company
and its counsel in contesting any Third Party Claim that the Company elects to
contest, including without limitation, through the making of any related
counterclaim against the person asserting the Third Party Claim or any
cross-complaint against any person. The Executive may participate in but not
control, any defense or settlement of any Third Party Claim controlled by the
Company pursuant to this Section 8.3 and the Company shall bear his costs and
expenses with respect to such participation.

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(c)    If the Company fails to notify the Executive within the Election Period
that the Company elects to defend the Executive pursuant to Subsection 8.3(b),
or if the Company elects to defend the Executive pursuant to Subsection 8.3(b)
but fails to diligently and promptly prosecute or settle the Third Party Claim,
then the Executive shall have the right to defend, at the sole cost and expense
of the Company, the Third Party Claim. The Executive shall have full control of
such defense and proceedings; provided, however, that the Executive may not
enter into, without the Company’s consent, which shall not be unreasonably
withheld, any compromise or settlement of such Third Party Claim.
Notwithstanding the foregoing, if the Company has delivered a written notice to
the Executive to the effect that the Company disputes its potential liability to
the Executive under this Section 8, and if such dispute is resolved in favor of
the Company by final, nonappealable order of a court of competent jurisdiction,
the Company shall not be required to bear the costs and expenses of the
Executive’s defense pursuant to this Section 8 or of the Company’s participation
therein at the Executive’s request, and the Executive shall reimburse the
Company promptly in full for all costs and expenses of such litigation. The
Company may participate in, but not control, any defense or settlement
controlled by the Executive pursuant to this Section 8.3(c), and the Company
shall bear its own costs and expenses with respect to such participation.

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(d)    The indemnification provided by this Section 8 shall apply whether or not
the negligence of a party is alleged or proved.

9.     Withholding.

Anything to the contrary notwithstanding, all payments required to be made by
the Company hereunder to the Executive, his spouse, his estate or beneficiaries,
shall be subject to withholding of such amounts relating to taxes as the Company
may reasonably determine it should withhold pursuant to any applicable law or
regulation. In lieu of withholding such amounts in whole or in part, the Company
may, in its sole discretion, accept other provisions for payment of taxes as
required by law, provided it is satisfied that all requirements of law affecting
its responsibilities to withhold such taxes have been satisfied.

10.   Assignability; Binding Nature.

This Agreement is binding upon, and shall inure to the benefit of, the Parties
hereto and their respective successors, heirs, administrators, executors and
assigns. No rights or obligations of the Executive under this Agreement may be
assigned or transferred by the Executive except that (i) his rights to
compensation and benefits hereunder, which rights shall remain subject to the
limitations of this Agreement, may be transferred by will or operation of law,
and (ii) his rights under employee benefit plans or programs as referred to in
Section 4, above, may be assigned or transferred in accordance with such plans
or programs. No rights or obligations of the Company under this Agreement may be
assigned or transferred except that such rights or obligations may be assigned
or transferred by operation of law in the event of a merger or consolidation in
which the Company is not the continuing entity, or the sale or liquidation of
all or substantially all of the assets of the Company, provided that the
assignee or transferee is the successor to all or substantially all of the
assets of the Company and such assignee or transferee assumes the liabilities,
obligations and duties of the Company, as contained in this Agreement, either
contractually or as a matter of law.

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11.           Effect of Agreement.

This Agreement contains the entire agreement between the Parties concerning the
subject matter hereof and supersedes all prior agreements, understandings,
discussions, negotiations, and undertakings, whether written or oral, between
the Parties with respect thereto.

12.   Amendments and Waivers.

This Agreement may not be modified or amended except by a writing signed by both
Parties. A Party may waive compliance by the other Party with any term or
provision of this Agreement, or any part thereof, provided that the term or
provision, or part thereof, is for the benefit of the waiving Party. Any waiver
shall be limited to the facts or circumstances giving rise to the noncompliance
and shall not be deemed either a general waiver or modification with respect to
the term or provision, or part thereof, being waived, or as to any other term or
provision of this Agreement, nor shall it be deemed a waiver of compliance with
respect to any other facts or circumstances then or thereafter occurring.

13.   Arbitration.

Except with respect to injunctive relief which may be sought by the Company or
the Executive, the Parties agree to resolve any and all claims or controversies
arising out of or relating to this Agreement, the Executive’s employment and/or
termination of employment with Company including, but not limited to, claims for
wrongful termination of employment, and claims under the Civil Rights Act of
1866, Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act, the Age Discrimination in Employment Act, the Family Medical Leave Act, the
Sarbanes-Oxley Act, the Equal Pay Act, Chapter 21 of the Texas Labor Code,
formerly known as the Texas Commission on Human Rights Act, the retaliatory
discharge provisions of the Texas Worker’s Compensation Act, the Texas Pay Day
Act, and any similar state law or local ordinance by binding arbitration under
the Federal Arbitration Act, before one arbitrator in the City of Houston, State
of Texas, in a non-administered proceeding under the American Arbitration
Association National Rules for the Resolution of Employment Disputes. The
Parties further agree that the work of the Executive involves interstate
commerce, the award rendered by the arbitrator is final and binding, and
judgment thereon may be entered in any court having jurisdiction thereof. The
invalidity of unenforceability of any provision of this Section 13 shall not
affect the validity or enforceability of any other provision of this Agreement
which shall remain in full force and effect. If any Party to this Agreement
brings legal action to enforce the terms of this Agreement against another Party
to this Agreement, except as may otherwise be ordered by the court or other
forum, each such Party shall be liable for his or its own expenses incurred in
such legal action including costs of court or other forum and the fees and
expenses of counsel.

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14.   Notices.

Any notice given hereunder shall be in writing and shall be deemed given when
delivered personally or by courier, or five days after being mailed, certified
or registered mail, duly addressed to the Party concerned at the address
indicated below or at such other address as such Party may subsequently provide:
 
To the Company:
 
Lufkin Industries, Inc.
   
601 South Raguet
   
Lufkin, Texas 75901
   
Attn: Secretary

with a copy to:
 
Michael O’Leary, Esq.
   
Andrews Kurth LLP
   
600 Travis, Suite 4200
   
Houston, Texas 77002

To the Executive:
 
John F. Glick
   
12 Columbia Ct
   
Lufkin, Texas 75901

 
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15.   Severability.

In the event that any provision or portion of this Agreement shall be determined
to be invalid or unenforceable for any reason, the remaining provisions or
portions of this Agreement shall be unaffected thereby and shall remain in full
force and effect to the fullest extent permitted by law.

16.   Survivorship.

The respective rights and obligations of the Parties hereunder shall survive any
termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.

17.   References.

In the event of the Executive’s death or a judicial determination of his
incompetence, reference in this Agreement to the Executive shall be deemed,
where appropriate, to refer to his legal representative or, where appropriate,
to his beneficiary or beneficiaries.

18.   Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REFERENCE TO THE PRINCIPLES OF
CONFLICTS OF LAW.

19.   Legal Fees.

The Company promptly shall reimburse the Executive for all of his reasonable
legal fees and expenses incurred in connection with the negotiation and
documentation of this Agreement.

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20.   Mitigation.

In no event shall the Executive be obligated to seek other employment or take
any other action by way of mitigation of the amounts payable to the Executive
under any of the provisions of this Agreement.

21.   Headings.

The headings of paragraphs contained in this Agreement are for convenience only
and shall not be deemed to control or affect the meaning or construction of any
provision of this Agreement.

22.   Counterparts.

This Agreement may be executed in one or more counterparts.

23.   Compliance with Code Section 409A. This Agreement is intended to comply
with the requirements of Section 409A of the Code and, as a result, this
Agreement (i) shall automatically be amended to the extent necessary to
incorporate any provisions required to ensure such compliance (which the Parties
hereby agree are hereby adopted, approved, consented to, ratified and
incorporated herein by reference) and (ii) shall be construed, interpreted and
operated in a manner that will ensure such compliance. Without limiting the
scope of the preceding provisions of this Section 23, to the extent that the
Executive is a key employee (as defined in Section 416(i) of the Code without
regard to paragraph 5 thereof) at any time prescribed under regulations or other
regulatory guidance issued under Section 409A of the Code, no distribution or
payment that is subject to Code Section 409A shall be made under this Agreement
on account of the Executive’s separation from service with the Company (at any
time when the Executive is deemed under regulations or other regulatory guidance
issued under Code Section 409A to be a specified employee described in Code
Section 409A and regulations or other regulatory authority issued thereunder and
any stock of the Company is publicly traded on an established securities market
or otherwise) before the date that is the first day of the month that occurs six
months after the date of his separation from service (or, if earlier, the date
of death of the Executive or any other date permitted under regulations or other
regulatory guidance issued under Code Section 409A).

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IN WITNESS WHEREOF, the Parties have executed this Agreement effective for all
purposes as the date first written above.

 
LUFKIN INDUSTRIES, INC.
                                
By: 
/s/
Douglas V. Smith
 
Name:
Douglas V. Smith
 
Title:
President & CEO

 

 
EXECUTIVE
         
/s/ John F. Glick
 
Name:
John F. Glick
 
Title:
Vice President and General Manager-Power Transmission Division

 
 
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