Document:

Thrift Plan Restoration Plan for Salaried Employees of Lufkin Industries, Inc

 Exhibit 10.2 
  
 THRIFT PLAN RESTORATION PLAN 
 FOR SALARIED EMPLOYEES OF LUFKIN INDUSTRIES, INC. 
  
 1. Introduction 
  
 The following are the provisions of the THRIFT PLAN RESTORATION PLAN FOR SALARIED EMPLOYEES OF LUFKIN INDUSTRIES, INC. (hereinafter referred to as the “Restoration
Plan”) which is being established by Lufkin Industries, Inc. (hereinafter referred to as the “Company”), effective as of January 1, 1991, in order to provide for the payment of retirement and retirement related benefits to a
certain select group of highly compensated employees who are participants in the THRIFT PLAN FOR SALARIED EMPLOYEES OF LUFKIN INDUSTRIES, INC. (hereinafter referred to as the “Basic Plan”) as in effect from time to time on and after the
effective date hereof and whose contributions and benefits under the Basic Plan are restricted by application of the limitations of any of the following sections of the Internal Revenue Code of 1986, as amended (hereinafter referred to as the
“Code”): Section 401(a)(l7), Section 401(k)(3), Section 401(m), Section 402(g) or Section 415. The Company intends and desires by the adoption of this Restoration Plan to recognize the value to the Company of the
past and present services of its employees covered by the Restoration Plan and to encourage and assure their continued service to the Company by making more adequate provision for their future retirement security. 
  
 2. Definitions 
  
 As used herein, the term “Participant” means an individual who has become a
participant in this Restoration Plan in accordance with the provisions of Section 4 hereof and whose interest hereunder has not been fully paid. The term “Employer” shall include the Company and any other incorporated or
unincorporated trade or business which may adopt this Restoration Plan in accordance with the provisions of Section 17 hereof. The term “Compensation” shall have the meaning assigned in the Basic Plan except that it shall be
determined without regard to the dollar limit required by Section 401(a)(l7) of the Code and before any deferred cash contributions under this Restoration Plan. All other terms used in this Restoration Plan shall have the same meaning assigned
to them under the provisions of the Basic Plan unless otherwise qualified by the context. 
  
 3. Administration 
  
 This Restoration Plan shall be administered by a committee appointed by the Board of Directors of the Company from time to time (hereinafter referred to as the
“Committee”). The Committee shall administer the Restoration Plan in a manner consistent with the administration of the Basic Plan, as from time to time amended and in effect, except that this Restoration Plan shall be administered as an
unfunded plan that is not intended to meet the qualification requirements of Section 401 of the Code. The Committee shall have full power and authority to interpret, construe, and administer this Restoration Plan and the Committee’s
interpretations and construction thereof, and actions thereunder, including the amount or recipient of the payment to be made therefrom, shall be binding and conclusive on all persons for all purposes, subject to any rights of the Participant to
make a claim under Title I of the Employee Retirement Income Security Act of 1974. 
  
 4. Eligibility 
  
 A Salaried Employee of an Employer that has adopted this Restoration Plan, (a) who is a “highly compensated employee” (within the meaning of
Section 414(q) of the Code) for the applicable Plan Year, (b) who is a Participant in the Basic Plan and (c) whose Salary Deferral Contributions and/or allocated portion of the Employer Contributions under the Basic Plan are limited
for such Plan Year due to the provisions of either Section 401(a)(17), Section 40l(k)(3), Section 401(m), Section 402(g) or Section 415 of the Code, shall be eligible to participate in this Restoration Plan for such Plan
Year. In no event shall an Employee who is not a Participant in the Basic Plan be eligible to participate under this Restoration Plan. 

 5. Participant’s Salary Deferral Contributions 
  
 Each eligible Employee may become a Participant by electing to defer a portion of his
Compensation under this Restoration Plan for the Plan Year by entering into a salary deferral agreement with his Employer under which he agrees to defer a portion of his future Compensation. The amount of Compensation that is deferred by the
Participant pursuant to such agreement (herein referred to as the Participant’s “Restoration Salary Deferral Contributions”) shall be subject to a maximum equal to the excess, if any, of (i) 12% of his Compensation for the
applicable month of the Plan Year over (ii) the maximum Salary Deferral Contribution that he is entitled to make under the Basic Plan for such month of the Plan Year. A Participant may at any time change the specified amount of his future
deferrals of Compensation under this Restoration Plan, subject to the above maximum rate, by entering into a new salary deferral agreement with his Employer with respect to such future deferrals. 
  
 6. Employer’s Matching Contribution Amount

  
 The Employer shall provide a matching contribution amount for each
Participant in this Restoration Plan as of each Valuation Date subsequent to the effective date of the Restoration Plan in an amount equal to the excess of (a) the amount of the Employer Contributions that would have been credited to the
Employer Contribution Account of the Participant under the Basic Plan as of such Valuation Date if (i) contributions to the Basic Plan were not restricted due to the limitations imposed by Sections 401(a)(17), 401(k)(3), 401(m), 402(g), and 415
of the Internal Revenue Code and (ii) the Restoration Plan Salary Deferral Contributions of the Participant were added to his Salary Deferral Contributions under the Basic Plan for the valuation period just ended over (b) the amount of the
Employer Contributions that are allocated to his Employer Contribution Account under the Basic Plan as of such Valuation Date. 
  
 7. Establishment of Reserve Accounts 
  
 An Employer shall establish and maintain on its books and records for each of its Salaried Employees who is a Participant in this Restoration Plan two separate liability
accounts, called the “Salary Deferral Contribution Reserve Account” and the “Employer Contribution Reserve Account,” respectively. Such accounts shall be identified on the books and records of the Employer as a contingent
liability of the Employer to the Participant. Each separate liability account shall be divided into separate investment fund reserve subaccounts as are required to reflect the applicable Interest Accumulation Factors described below. 
  
 The Employer shall credit the amount of the Restoration Plan Salary Deferral Contributions of
a Participant to his Salary Deferral Contribution Reserve Account no later than the Valuation Date next following the applicable payroll period for which his Compensation was reduced. The Restoration Plan Salary Deferral Contributions shall be
credited among the investment fund reserve subaccounts in accordance with the Participant’s current Investment Fund election for Salary Deferral Contributions under the Basic Plan. After crediting the amount of the Restoration Plan Salary
Deferral Contributions for the valuation period just ended, the investment fund reserve subaccounts in the Salary Deferral Contribution Reserve Account shall also be credited as of such Valuation Date with an amount determined by multiplying the
average account balance during the valuation period just ended by the applicable Interest Accumulation Factor that applies on the current Valuation Date. 
  
 The Interest Accumulation Factor (herein referred to as the “Interest Accumulation Factor”) that applies on any given Valuation Date to an investment fund
reserve subaccount shall be equal to the rate of return that would have been earned by such contributions as of such Valuation Date for the valuation period just ended under the Investment Fund that would have applied under the Basic Plan if such
contributions had been invested in the Investment Fund being maintained under the Basic Plan on the Valuation Date on which the contributions are credited under this Restoration Plan. 
  
 The Employer shall credit to the Employer Contribution Reserve Account of the Participant as of each Valuation Date an amount equal to the
matching contribution amount to which he is entitled as determined under Section 6 hereof as of such Valuation Date. The Employer Contribution shall be credited among the investment fund reserve subaccounts in accordance with the
Participant’s current Investment Fund election for Employer Contributions under the Basic Plan. After crediting the Employer Contribution Reserve Account with the matching contribution amount for the valuation period just ended, the Employer
Contribution Reserve Account shall be credited as of such Valuation Date with an amount determined by multiplying the average account balance during the valuation period just ended by the applicable Interest Accumulation Factor that applies on the
current Valuation Date. 

 8. Excess Contributions Refunded Under Basic Plan 
  
 In the event that a Participant receives a distribution under the Basic Plan due to an
“excess contribution” (as such term is defined in the Code), the Participant may enter into a salary deferral agreement with his Employer under which he agrees to reduce his Compensation each payroll period by a specified amount until the
total is equal to the amount of such distribution that he received from the Basic Plan. If the Participant makes such an election, an amount equal to such amount by which his Compensation is reduced shall be credited to his Salary Deferral
Contribution Reserve Account under this Restoration Plan as of the Valuation Date following the applicable payroll period for which his Compensation was reduced but the salary reductions credited to such subaccount shall be ignored or excluded from
Restoration Plan Salary Deferral Contributions for the purposes of determining the amount to be credited to the Employer Contribution Reserve Account under Section 6 above. The salary deferral contribution shall be credited among the investment
fund reserve subaccounts in accordance with the Participant’s current Investment Fund election for Salary Deferral Contributions under the Basic Plan. After crediting the amount of the salary reductions attributable to “excess
contributions” distributed to the Participant for the valuation period just ended, the investment fund reserve subaccounts in the Salary Deferral Contribution Reserve Account shall also be credited as of such Valuation Date with an amount
determined by multiplying the average account balance during the valuation period just ended by the applicable Interest Accumulation Factor that applies on the current Valuation Date. 
  
 The maximum percentage of Compensation that may be deferred by the Participant pursuant to a salary deferral agreement described in
Section 5 hereof shall be determined without regard to the percentage of Compensation that is deferred by the Participant pursuant to this Section 8. 

 9. Amount of Benefit 
  
 The benefit payable to Participant or his Beneficiary or Beneficiaries under this
Restoration Plan shall be an amount equal to the sum of:
  

	 	(1)	100% of the balance in his Salary Deferral Contribution Reserve Account as of the Valuation Date coincident with or next following the date of termination of his service; and

  

	 	(2)	an amount equal to the vested interest, if any, of the balance in his Employer Contribution Reserve Account, determined as follows: 

  

	 	(a)	if the Participant had attained the age of 65 years as of the date of termination of his service or if his service is terminated as a result of his death or Total and Permanent
Disability, his vested interest in his Employer Contribution Reserve Account shall be equal to: 

  

	 	(i)	100%; 

  
 multiplied by 
  

	 	(ii)	the balance in his Employer Contribution Reserve Account as of the Valuation Date coincident with or next following the date of termination of his service; or

  

	 	(b)	if the Participant had not attained the age of 65 years as of the date of termination of his service and his service is terminated for any reason other than his death or Total and
Permanent Disability, his vested interest in his Employer Contribution Reserve Account shall be equal to the product of: 

  

	 	(i)	the Participant’s Vested Percentage as specified in the schedule below based upon his number of years of “Vesting Service” (as defined in the Basic Plan) as of the
date of termination of his service; 

  
 multiplied by 
  

	 	(ii)	the balance in his Employer Contribution Reserve Account as of the Valuation Date coincident with or next following the date of termination of his service: 

 

				
	 Number of Years of Vesting
 Service as of
Date of
 Termination of Service

	  	 Vested
Percent
 age

	 
	 Less than 3
	  	0	%
	 3
	  	20	%
	 4
	  	40	%
	 5
	  	60	%
	 6
	  	80	%
	 7 or more
	  	100	%

  
 The noninvested interest, if any, in a
Participant’s Employer Contribution Reserve Account to which he is not entitled as of the date of termination of his service because his Vested Percentage as determined above is less than 

 100% shall be debited from his Employer Contribution Reserve Account and forfeited. All forfeitures shall be considered
as an advance upon the Employer’s obligations under Section 6 hereof, or if no further contributions are to be made thereunder by the Employer, shall be credited to the Employer. 
  
 10. Payment of Benefits 
  
 The benefits payable to a Participant or, if the Participant is not living, to his
Beneficiary, under this Restoration Plan shall be paid as soon as administratively feasible following the Valuation Date coincident with or next following the date of the Participant’s retirement or other termination of service and shall be
paid in cash in accordance with the Participant’s irrevocable election made under such agreement either (i) in a single-sum amount or (ii) in quarterly or annual installments over a period not to exceed 10 years. The Beneficiary or
Beneficiaries of a Participant under the Basic Plan shall be the Beneficiary or Beneficiaries of such Participant under this Restoration Plan unless a specific designation of Beneficiary is made with respect to the benefits payable under this
Restoration Plan in accordance with such procedures as may be specified by the Committee. For the purposes of this Restoration Plan, a Participant’s service with an Employer shall not be considered to have terminated so long as such Participant
is in the employment of a Controlled Group Member. 
  
 No in-service withdrawals
or Participant loans are available under this Restoration Plan. 
  
 All benefits
payable under this Restoration Plan to or on behalf of Participants who are Employees of a particular Employer shall be paid from the general assets of that Employer. An Employer shall not be required to set aside any funds to discharge its
obligations hereunder, but the Employer may set aside such funds if it chooses to do so. Any and all funds so set aside shall remain subject to the claims of the general creditors of the Employer, present and future. No Employee, his Beneficiary or
Beneficiaries, or any other person shall have, under any circumstances, any interest whatever in any particular property or assets of the Employer by virtue of this Restoration Plan, and the rights of the Employee, his Beneficiary or Beneficiaries,
or any other person who may claim a right to receive benefits under this Restoration Plan shall be no greater than the rights of an unsecured general creditor of the Employer. 
  
 11. Merger, Consolidation, or Acquisition 
  
 In the event of a merger, consolidation, or acquisition where the Employer is not the
surviving corporation, unless the successor or acquiring corporation shall elect to continue and carry on this Restoration Plan, this Restoration Plan shall terminate with respect to that Employer. 
  
 12. Amendment and Termination 
  
 The Board of Directors of the Company may at any time amend or terminate this Restoration
Plan. If this Restoration Plan should be amended or terminated, each Employer shall remain liable for any benefits accrued by its Employees under this Restoration Plan (determined in the case of a Participant in the active service of the Employer on
the basis of such Participant’s presumed termination of employment as of the date of such amendment or termination) as of the date of such action. 

 13. Restrictions on Assignment 
  
 The benefits provided hereunder are intended for the personal security of persons entitled
to payment under this Restoration Plan and are not subject in any manner to the debts or other obligations of the persons to whom they are payable. The interest of a Participant or his Beneficiary or Beneficiaries may not be sold, transferred,
assigned, or encumbered in any manner, either voluntarily or involuntarily, and any attempt so to anticipate, alienate, sell, transfer, assign, pledge, encumber, or charge the same shall be null and void; neither shall the benefits hereunder be
liable for or subject to the debts, contracts, liabilities, engagements, or torts of any person to whom such benefits or funds are payable, nor shall they be subject to garnishment, attachment, or other legal or equitable process nor shall they be
an asset in bankruptcy, except that no amount shall be payable hereunder until and unless any and all amounts representing debts or other obligations owed to any Employer or any affiliate of any Employer by the Employee with respect to whom such
amount would otherwise be payable shall have been fully paid and satisfied. 
  
 14. Continued Employment 
  
 Nothing
contained in this Restoration Plan shall be construed as conferring upon any employee the right to continue in the employment of the Employer in any capacity. 
  

15. Liability of Committee 
  
 Unless resulting from his own fraud or willful misconduct, no member of the Committee shall be liable for any loss arising out of any action taken or failure to act by
the Committee or a member thereof in connection with this Restoration Plan. The Committee and any individual member of the Committee and any agent thereof shall be fully protected in relying upon the advice of the following professional consultants
or advisors employed by the Employer or the Committee: any attorney insofar as legal matters are concerned, any accountant insofar as accounting matters are concerned, and any actuary insofar as actuarial matters are concerned. 
  
 16. Indemnification 
  
 The Employers hereby jointly and severally indemnify and agree to hold harmless the members
of the Committee and all directors, officers and employees of an Employer against any loss, claim, cost, expense (including attorneys’ fees), judgment or liability arising out of any action taken or failure to act by the Committee or such
individual in connection with this Restoration Plan; provided, however, that this indemnity shall not apply to an individual if such loss, claim, cost, expense, judgment or liability is due to such individual’s fraud or willful misconduct.

  
 17. Rights of Other Employers to
Participate 
  
 The Company has adopted this Restoration Plan effective as of
January 1, 1991 on behalf of the Company. Any other Employer which may be a participating Employer in the Basic Plan may, in the future, adopt this Restoration Plan by formal action on its part and with the approval of the Board of Directors of
the Company. The administrative powers and control of the Company, as provided in this Restoration Plan, shall not be deemed diminished under this Restoration Plan by reason of the participation of any other Employer and the administrative powers
and control granted hereunder to the Company and to the Committee shall be binding upon any Employer adopting this Restoration Plan. Each Employer adopting this Restoration Plan shall have the obligation to pay the benefits to its employees
hereunder and no other Employer shall have such obligation and any failure by a particular Employer to live up to its obligations under this Restoration Plan shall have no effect on any other Employer. Any Employer may terminate this Restoration
Plan at any time by formal action on its part subject to the provisions of Section 12 hereof. 

 18. Change in Employment Status 
  
 Notwithstanding any provision herein to the contrary, in the event that the Company, in its
sole discretion, determines that any Participant in this Restoration Plan is, at any time prior to his date of termination of employment, no longer eligible for participation in this Restoration Plan because of a change in his employment
classification, such Participant shall cease to be a Participant in this Restoration Plan as of the date such determination is made by the Company and no contributions shall be made by him or on his behalf to this Restoration Plan during such period
while he is in an ineligible status and prior to the date, if any, on which he subsequently becomes eligible for participation in this Restoration Plan. In the event his employment is terminated while he is in an ineligible status, his benefit under
Section 9 hereof shall be determined as of the date of his termination and paid in accordance with the provisions of Section 10 hereof. 
  
 19. Law Governing 
  
 This Restoration Plan shall be construed in accordance with and governed by the laws of the State of Texas. 
  
 20. Effective Date 
  
 This Restoration Plan shall be effective as of January 1, 1991. 
  
 IN WITNESS WHEREOF, LUFKIN INDUSTRIES, INC. has caused this instrument to be executed by its duly authorized officers on the l6th day of November, 1990, to be effective
as of January 1, 1991. 
  

					
	ATTEST:	 	COMPANY
		
	 	 	LUFKIN INDUSTRIES, INC.
			
	 /s/ C. J. Haley Jr.

	 	By:	 	 /s/ F. B. Stevenson

	Secretary	 	Title:	 	President

 AMENDMENT ONE TO 
  
 THRIFT PLAN RESTORATION PLAN 
  
 FOR SALARIED EMPLOYEES OF LUFKIN INDUSTRIES, INC. 
  
 WHEREAS, effective as of January 1, 1991, the THRIFT PLAN RESTORATION PLAN FOR SALARIED EMPLOYEES OF LUFKIN INDUSTRIES, INC.
(hereinafter referred to as the “Restoration Plan”) was adopted by Lufkin Industries, Inc. (hereinafter referred to as the “Company”), in order to provide for the payment of retirement and retirement related benefits to a certain
select group of highly compensated employees; whose contributions and benefits under the Thrift Plan for Salaried Employees of Lufkin Industries, Inc. are restricted by application of the limitations of the Internal Revenue Code. 
  
 WHEREAS, it is deemed desirable to amend the Restoration Plan in order to allow certain
highly compensated employees of the Company to participate prior to the date they become eligible to participate in the Thrift Plan for Salaried Employee of Lufkin Industries, Inc. 
  
 NOW, THEREFORE, the Restoration Plan is hereby amended effective as of January 1, 1993, as follows: 
  
 1. A new paragraph shall be added to Section 1 of the Restoration Plan to read as
follows: 
  
 “Effective as of January 1, 1993, the Restoration Plan has
been extended to include a select group of highly compensated employees of the Company who have not met the service requirement for participation in the Basic Plan, but who would otherwise qualify for participation in the Restoration Plan.”

  
 2. Section 4 of the Restoration Plan shall be amended in its entirety to
read as follows: 
  
 “4. Eligibility

  
 A Salaried Employee of an Employer that has adopted this Restoration Plan,
(a) who is a ‘highly compensated employee’ (within the meaning of Section 414(q) of the Code) for the applicable Plan Year, (b) who either (i) is a Participant in the Basic Plan or (ii) is ineligible to participate
in the Basic Plan but would be eligible to participate in the Basic Plan if the service requirement for such plan were to be waived, and (c) whose Salary Deferral Contributions and/or allocated portion of the Employer Contributions under the
Basic Plan are limited, or would be limited if he were eligible to participate in the Basic Plan, for such Plan Year due to the provisions of either Section 40l(a)(17), Section 401(k)(3), Section 401(m), Section 402(g) or
Section 415 of the Code, shall be eligible to participate in this Restoration Plan for such Plan Year. In no event shall an Employee who is eligible to participate in the Basic Plan, but has declined to participate, be eligible to participate
under this Restoration Plan.” 
  
 3. Section 6 of the Restoration Plan
shall be amended in its entirety to read as follows: 
  
 “6. Employer’s Matching Contribution Amount 
  
 The
Employer shall provide a matching contribution amount for each Participant in this Restoration Plan as of each Valuation Date subsequent to the effective date of the Restoration Plan in an amount equal to the excess of (a) the amount of the
Employer Contributions that would have been credited to the Employer Contribution Account of the Participant under the Basic Plan as of such Valuation Date if (i) contributions to the Basic Plan were not restricted due to the limitations
imposed by Sections 401(a)(17), 401(k)(3), 401(m), 402(g), and 415 of the Internal Revenue Code, (ii) in the case of a Participant who is ineligible to participate in the Basic Plan, the Participant had been a participant in the Basic Plan as
of such Valuation Date, (iii) the Restoration Plan Salary Deferral Contributions of the Participant had been included as Salary Deferral Contributions under the Basic Plan for the valuation period just ended over (b) the amount of the
Employer Contributions, if any, that are actually allocated to his Employer Contribution Account under the Basic Plan as of such Valuation Date.” 

 4. The second paragraph of Section 7 of the Restoration Plan shall be amended in its entirety to read as follows:

  
 “The Employer shall credit the amount of the Restoration Plan Salary
Deferral Contributions of a Participant to his Salary Deferral Contribution Reserve Account no later than the Valuation Date next following the applicable payroll period for which his Compensation was reduced. The Restoration Plan Salary Deferral
Contributions shall be credited among the investment fund reserve subaccounts in accordance with either (i) the Participant’s current Investment Fund election for Salary Deferral Contributions under the Basic Plan or (ii) in the case
of a Participant who is ineligible to participate in the Basic Plan, as he may elect in writing, among the Investment Funds available under the Basic Plan (and assuming for this purpose that the restrictions for Investment Fund election in the Basic
Plan apply to such election). After crediting the amount of the Restoration Plan Salary Deferral Contributions for the valuation period just ended, the investment fund reserve subaccounts in the Salary Deferral Contribution Reserve Account shall
also be credited as of such Valuation Date with an amount determined by multiplying the average account balance during the valuation period just ended by the applicable Interest Accumulation Factor that applies on the current Valuation Date.”

  
 5. The fourth paragraph of Section 7 of the Restoration Plan shall be
amended in its entirety to read as follows: 
  
 “The Employer shall credit
to the Employer Contribution Reserve Account of the Participant as of each Valuation Date an amount equal to the matching contribution amount to which he is entitled as determined under Section 6 hereof as of such Valuation Date. The Employer
Contribution shall be credited among the investment fund reserve subaccounts in accordance with either (i) the Participant’s current Investment Fund election for Employer Contributions under the Basic Plan or (ii) in the case of a
Participant who is ineligible to participate in the Basic Plan, as he may elect in writing, among the Investment Funds available under the Basic Plan (and assuming for this purpose that the restrictions for Investment Fund election in the Basic Plan
apply to such election). After crediting the Employer Contribution Reserve Account with the matching contribution amount for the valuation period just ended, the Employer Contribution Reserve Account shall be credited as of such Valuation Date with
an amount determined by multiplying the average account balance during the valuation period just ended by the applicable Interest Accumulation Factor that applies on the current Valuation Date.” 
  
 IN WITNESS WHEREOF, LUFKIN INDUSTRIES, INC. has caused this instrument to be executed by its
duly authorized officers on the 18th day of January, 1993, to be effective as of January 1, 1993. 
  

					
	ATTEST:	 	COMPANY
		
	 	 	LUFKIN INDUSTRIES, INC.
			
	 /s/ C. J. Haley Jr.

	 	By:	 	 /s/ H. J. Green

	Secretary	 	Title:	 	Executive Vice President

 AMENDMENT TWO TO THE 
  
 THRIFT PLAN RESTORATION PLAN 
  

FOR SALARIED EMPLOYEES OF LUFKIN INDUSTRIES, INC. 
  
 WHEREAS, effective as of January 1, 1991, the THRIFT PLAN RESTORATION PLAN FOR SALARIED EMPLOYEES OF LUFKIN INDUSTRIES, INC. (the “Plan”) was adopted by
Lufkin Industries, inc. (the “Company”) to provide for the payment of retirement and retirement related benefits to a certain select group of highly compensated employees whose contributions and benefits under The Thrift Plan for Salaried
Employees of Lufkin Industries, Inc. are restricted by application of the limitations of the Internal Revenue Code; and 
  
 WHEREAS, the Company desires to amend the Plan to clarity the manner in which participants may elect to defer compensation under the Plan and to change the procedure by
which a participant may elect a form of distribution from the Plan; 
  
 NOW,
THEREFORE, the Plan is hereby amended as follows effective as of January 31, 2001: 
  
 1. Section 5 of the Plan is hereby amended in its entirety to read as follows: 
  
 “5. Participant’s Salary Deferral Contributions 
  
 Each eligible Employee may become a Participant by irrevocably electing to defer a portion of his Compensation under this Restoration Plan
for the Plan Year by entering into a salary deferral agreement with his Employer under which he agrees to defer a portion of his future Compensation. Any such salary deferral agreement must be completed prior to the date specified by .the Committee,
but in any event prior to the period of service for which the Compensation is payable. The amount of Compensation that is deferred by the Participant pursuant to such agreement (herein referred to as the Participant’s “Restoration Salary
Deferral Contributions”) shall be subject to a maximum equal to the excess, if any, of (i) 12% of his Compensation (or such other amount as the Committee may authorize in its discretion) for the applicable month of the Plan Year over
(ii) the maximum Salary Deferral Contribution that he is entitled to make under the Basic Plan for such month of the Plan Year. A Participant may, at the times and in the manner designated by the Committee, change the specified amount of his
future deferrals of Compensation under this Restoration Plan, subject to the above maximum rate, by entering .into a new salary deferral agreement with his Employer with respect to such future deferrals; provided that any such new salary deferral
agreement must be completed prior to the period of service for which the Compensation is payable.” 
  
 2. The first paragraph of Section 10 of the Plan is hereby amended in its entirety to read as follows: 
  
 The benefits payable to a Participant or, if the Participant is not living, to his Beneficiary, under this Restoration Plan shall commence to be paid as soon as
administratively practicable following the Valuation Date coincident with or next following the date of the Participant’s retirement or other termination of service. For purposes of this Restoration Plan a Participant’s service with an
Employer shall not be considered to have terminated so long as such Participant is in the employment of a Controlled Group Member. 
  
 A Participant may elect in accordance with procedures established by the Committee to receive his benefit under this Restoration Plan (i) in the form of a single
cash lump sum payment or (ii) in the form of quarterly or annual cash installments over a period of five (5) or ten (10) years. In either case, to be effective, such election must be made prior to (x) the date a Participant
becomes a Participant or (y) the beginning of the one-year period ending on the date the Participant (or his Beneficiary if the Participant is not living) first becomes entitled to receive such benefit hereunder (provided that in no event shall
an election under this subparagraph (y) be effective in the same calendar year in which the election is made). If a Participant does not choose a method of payment in accordance with the Committee’s procedures, or fails to elect the
payment option in accordance with the above time limitations, payment to the Participant (or his Beneficiary if the Participant is not living) shall be made in the form of a single cash lump sum. If a benefit is to be paid in installments, each
installment payment shall equal the Participant’s total remaining benefit divided by the number of installment payments remaining to be paid in the installment payment period 

 chosen by the Participant. The Participant’s death shall not affect any such installment payment election, and in
such case any remaining installments shall be paid to the Participant’s Beneficiary. Notwithstanding the foregoing, the Committee may establish procedures by which a Participant may elect a form of benefit payment for the period beginning after
January 31, 2001 and ending on the effective date of a new election made in accordance with the foregoing; provided that a Participant who fails to make an election in accordance with such interim procedures and who becomes (or whose
Beneficiary becomes) entitled to receive a benefit during such period shall receive such benefit in the form of a single cash lump sum. 
  
 The Participant’s Beneficiary (or Beneficiaries) under this Restoration Plan shall be the Beneficiary (or Beneficiaries) of the Participant under the Basic Plan
unless the Participant makes a specific designation of Beneficiary for purposes of this Restoration Plan in accordance with procedures established by the Committee. 
  
 3. Except as hereinabove amended, the provisions of the Plan as previously amended shall remain in fall force and effect. 
  
 IN WITNESS WHEREOF, the Company has caused this instrument to be executed by
its duly authorized officer on this 31 day of January, 2001. 
  

					
	ATTEST:	 	COMPANY
		
	 	 	LUFKIN INDUSTRIES, INC.
			
	 /s/ P. G. Perez.

	 	By:	 	 /s/ D. V. Smith

	Secretary	 	Title:	 	President & Chief Executive Officer

 AMENDMENT THREE 
 THRIFT PLAN RESTORATION PLAN 
 FOR SALARIED EMPLOYEES OF LUFKIN INDUSTRIES, INC. 
  
 WHEREAS, effective as of January 1, 1991, Lufkin Industries, Inc.
(hereinafter referred to as the “Company”) heretofore established the Thrift Plan Restoration Plan for Salaried Employee so Lufkin Industries, Inc. (the “Plan”) for the benefit of certain highly compensated employees; and

  
 WHEREAS, the Company desires to amend the Plan to
comply with the requirements of section 409A of the Internal Revenue Code of 1986 as amended (the “Code”); 
  
 NOW, THEREFORE, The Plan is hereby amended as follows effective as of January 1, 2005: 
  

	1.	Section 2 of the Plan is hereby amended by adding the following at the end thereof: 

  
 “The term “Performance Pay” shall mean any Compensation that is determined to be
performance-based compensation within the meaning of section 409A of the Code and which is attributable to services performed over a performance period of at least twelve months. The term “Plan Year” shall mean the calendar year in which
Compensation deferred under the Plan is earned.” 
  

	2.	Section 5 of the Plan is hereby amended in its entirety to read as follows: 

  

	 	“5.	Participant’s Salary Deferral Contributions 

  
 Each eligible Employee may become a Participant by irrevocably electing to defer a portion of his Compensation under this Restoration Plan
for the Plan Year by entering into a salary deferral agreement with his Employer under which he agrees to defer a portion of his future Compensation. Any such salary deferral agreement must be completed prior to the date specified by the Committee,
but in any event prior to the last day of the calendar year prior to the Plan Year in which the services are performed giving rise to the Compensation. Notwithstanding the foregoing, however, an Eligible Employee may elect to defer any Compensation
which is determined by the Committee to be Performance Pay at any time prior to the date specified by the Committee but not later than six months prior to the end of the performance period over which such Performance Pay is earned. An Employee who
first becomes an eligible Employee after the commencement of a Plan year, may make a deferral election with respect to the portion of Compensation earned in such Plan year after the date of the election, provided that such eligible Employee makes
such deferral election prior to the date specified by the Committee but not later than thirty days after first becoming eligible to participate. The amount of compensation that may be deferred by the Participant pursuant to such agreement (herein
referred to as the Participant’s “Restoration Salary Deferral Contributions”) shall be subject to a maximum equal to the excess, if any , of (12% of his Compensation (or such other amount as the Committee may authorize in its
discretion) for the applicable Plan Year over (ii) the maximum Salary Deferral Contribution that he is entitled to make under the Basic Plan for such Plan Year. The salary deferral election made pursuant to this section shall be irrevocable as
of the last day of the calendar year prior to the Plan Year for which it is made. A Participant may, at the times and in the manner designated by the Committee, change or terminate a salary deferral election to be effective as of the next following
Plan Year.” 
  

	3.	The first and second paragraphs of Section 10 of the Plan (as amended by Amendment Two) are hereby amended in their entirety to read as follows: 

  
 “The benefits payable to a Participant or, if the
Participant is not living, to his Beneficiary, under this Restoration Plan shall be paid or commence to be paid as soon as administratively practicable following the Valuation Date coincident with or next following the date of the Participant’s
retirement or other termination of service. For purposes of this Restoration Plan a Participant’s service with an Employer shall not be considered to have terminated so long as such Participant is in the employment of a Controlled Group Member.
Notwithstanding the foregoing, however, in the event that a Participant is determined by the Committee to be a “key employee” (as defined in section 416(i) of the Code without regard to paragraph (5) thereof) as of the last day of the
Plan Year prior to the year Participant’s distributions under 

 this Restoration Plan would be paid or commence, Participant’s distributions shall not be paid or
commence until the date that is the earlier of (i) Participant’s date of death or (ii) six (6) months following such separation from service. If such Participant would have received installment payments during such six-month
period but for the immediately preceding sentence, Participant’s installment payments shall be accumulated during such six-month period and paid as soon as administratively feasible after such six-month period. 
  
 A Participant may elect at the time of his or her initial
deferral election in accordance with procedures established by the Committee to receive his benefit under this Restoration Plan (i) in the form of a single cash lump sum payment or (ii) in the form of quarterly or annual cash installments
over a period of five (5) or ten (10) years. In either case, to be effective, such election must be made prior to the effective date of the Participant’s first deferral election and except as provided below shall be irrevocable. If a
Participant does not choose a method of payment in accordance with the Committee’s procedures, payment to the Participant (or his Beneficiary if the Participant is not living) shall be made in the form of a single cash lump sum. If a
Participant is to be paid in installments, each installment payment shall equal the Participant’s total remaining benefit divided by the number of installments payments remaining to be paid in the installment payment period chosen by the
Participant. The Participant’s death shall not affect any such installment payment election, and in such case any remaining installments shall be paid to the Participant’s Beneficiary. Notwithstanding the foregoing, the Participant may
elect to postpone a scheduled distribution and have such amount paid out during a sixty (60) day period commencing immediately after an allowable alternative distribution date designated by the Participant in accordance with this Section
provided that such payment election change complies with the requirements imposed by the Committee and each of the following requirements: 
  

	 	(a)	Such payment election change must be submitted to and accepted by the Committee in its sole discretion at least twelve (12) months prior to the Participant’s previously
designated scheduled distribution commencement date; and 

  

	 	(b)	The new scheduled distribution commencement date selected by the Participant must be at least five years after the previously designated scheduled distribution date; and

  

	 	(c)	The election of the new scheduled distribution commencement date shall have no effect until at least twelve (12) months after the date on which the election is made.”

  

	4.	Except as hereinabove amended, the provision of the Plan as previously amended shall remain in full force and effect. 

  
 IN WITNESS WHEREOF, the Company has caused this instrument to be
executed by its duly authorized officer on this 2nd day of November, 2005. 
  

					
	ATTEST:	 	COMPANY
		
	 	 	LUFKIN INDUSTRIES, INC.
			
	 /s/ P. G. Perez.

	 	By:	 	 /s/ R. D. Leslie

	Secretary	 	Title:	 	Vice President/Treasurer/Chief Financial OfficerAgreement and Third Amendment to Credit Agreement

 Exhibit 10.3 
  
 AGREEMENT AND THIRD AMENDMENT TO CREDIT AGREEMENT 
  
 THIS AGREEMENT AND THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of
December 30, 2005, is made and entered into by and among LUFKIN INDUSTRIES, INC., a Texas corporation (the “Borrower”) and JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (formerly known as JPMorgan Chase Bank)
(“JPMCB”), as the Lender, as the Issuing Bank, and as the Administrative Agent under the Credit Agreement referred to below (JPMCB, in all such capacities, the “Bank”). The Borrower and the Bank are herein sometimes
called the “Parties”. 
  
 Preliminary Statements.

  
 1. The Parties entered into a Credit Agreement dated as
of December 30, 2002, an Agreement and First Amendment to Credit Agreement dated as of June 30, 2004, and an Agreement and Second Amendment to Credit Agreement dated as of February 1, 2005 (such Credit Agreement, as so amended, the
“Credit Agreement”). Unless defined herein, terms used herein which are defined in the Credit Agreement shall have the meanings therein ascribed to them. 
  
 2. The Borrower has asked the Bank to extend the Maturity Date as defined in the Credit Agreement and to change the
Applicable Margin for ABR Loans to create a more comparable structure to the Applicable Margin for Eurodollar Loans. The Bank is willing to grant that extension and to change the Applicable Margin for ABR Loans, all upon the terms and conditions set
forth in this Amendment. 
  
 Agreements. 
  
 NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged by the Parties, the Parties agree as follows: 
  
 1. Amendment of Definitions. The definition of “Applicable Margin” set forth in Section 1.01 of the Credit Agreement
is hereby amended to provide in its entirety as follows: 
  
 ““Applicable Margin” means, for any day, with respect to any ABR Loan or Eurodollar Loan, as the case may be, the applicable rate per annum set forth in basis points below under the caption “ABR Margin” or
“Eurodollar Margin”, as the case may be, based upon the Leverage Ratio: 
  

					
	 Leverage Ratio

	  	 ABR
 Margin

	  	 Eurodollar
 Margin

	Less than 1.00	  	Minus 150 bps	  	Plus 100 bps
	Equal to or more than 1.00 but less than 2.00	  	Minus 125 bps	  	Plus 125 bps
	Equal to or more than 2.00 but less than 3.00	  	Minus 100 bps	  	Plus 150 bps
	Equal to or more than 3.00	  	Minus 75 bps	  	Plus 175 bps

 For purposes of determining the Applicable Margin, the Leverage Ratio shall be determined based upon the
Borrower’s financial statements for each respective fiscal quarter end, commencing with the fiscal quarter ending September 30, 2002, delivered to the Administrative Agent as required by Section 5.01(a) (with respect to the
Borrower’s fiscal quarter ending December 31 of each year) and Section 5.01(b) (with respect to all other fiscal quarters of the Borrower), and any resulting change in the Applicable Margin shall become effective on the first
day of the calendar month following the calendar month in which such financial statements and the compliance certificate required by Section 5.01(c) are delivered to the Administrative Agent; provided, however, that in the event
the Borrower fails to deliver any such financial statements or compliance certificate to the Administrative Agent during the month in which such delivery is required by this Agreement, the Applicable Margin for all ABR Loans shall be minus 75 basis
points and the Applicable Margin for all Eurodollar Loans shall be plus 175 basis points, in each case effective on the first day of the calendar month following the calendar month in which such financial statements and compliance certificates were
required to be delivered pursuant to Section 5.01 and shall continue at that rate until otherwise determined in accordance with this definition. Each change in the Applicable Margin shall apply during the period commencing on the
effective date of such change and ending on the date immediately preceding the effective date of the next such change.” 
  
 The definition of “Maturity Date” set forth in Section 1.01 of the Credit Agreement is hereby amended to provide in its entirety as
follows: 
  
 ““Maturity
Date” means the first to occur of (a) the date the Obligations become due pursuant to Article VII and (b) December 31, 2008.” 
  
 2. Amendment of Section 2.04(c). The first sentence of Section 2.04(c) is hereby amended to provide
in its entirety as follows: 
  
 “Each Letter of Credit shall
expire at or prior to the close of business on December 31, 2010.” 
  
 3. Conditions Precedent. This Amendment shall be effective as of the date set forth above, subject to the satisfaction, in a manner satisfactory to the Bank, of each of the following conditions
precedent: 
  
 (a) The Bank shall have received
counterparts of this Amendment, duly executed by each of the Parties. 
  

 2 

 (b) The Bank shall have received a certificate signed by a Financial Officer of the
Borrower certifying that 
  
 (i) Since
September 30, 2005, there has been no material adverse change in the assets, liabilities, financial condition, business or affairs of the Borrower other than as disclosed in writing to the Administrative Agent before the execution of this
Amendment. Each such written disclosure shall be included in the definition of “Disclosed Matter” for purposes of the Credit Agreement and this Amendment. Since September 30, 2005, there has occurred no change, event, circumstance, or
condition in or with respect to the assets, liabilities, financial condition, business or affairs or the Parent Company and its Subsidiaries, taken as a whole, which, individually or in the aggregate with all other such changes, events,
circumstances and conditions occurring since September 30, 2005, could reasonably be expected to result in a Material Adverse Effect, except for Disclosed Matters; 
  
 (ii) The representations and warranties of the Borrower set forth in the Credit Agreement are true and
correct (except to the extent such representations and warranties expressly relate solely to an earlier date); 
  
 (iii) The Borrower has no material domestic Subsidiary that has not executed and delivered to the Bank a Guaranty; 
  
 (iv) The Borrower has no material international Subsidiary
that has not executed and delivered to the Bank a Guaranty; and 
  
 (v) No Default has occurred and is continuing. 
  
 (c) No Legal Bar. The effectiveness of this Amendment shall not violate any Legal Requirement applicable to the Bank. 

 
 4. Representations True; No Default. The Borrower represents
and warrants to the Bank that 
  

	 	(a)	the representations and warranties contained in the Credit Agreement are true and correct on and as of the date of this Amendment as though made on and as of such date (except to
the extent such representations and warranties expressly relate solely to an earlier date); 

  

	 	(b)	no event has occurred and is continuing which constitutes a Default under the Credit Agreement; 

  

 3 

	 	(c)	the execution, delivery of this Amendment have been duly authorized by all necessary corporate action on the part of the Borrower; 

  

	 	(d)	this Amendment has been duly executed and delivered by the Borrower and constitutes the legal, valid and binding obligations of the Borrower, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at
law; and 

  

	 	(e)	There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or
affecting the Borrower or any of its consolidated Subsidiaries (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters), or (ii) that involve this Agreement, any of the other Loan Documents, any Collateral, or the Transactions. 

  
 5. Ratification. Except as expressly amended hereby, the Credit
Agreement, as hereby amended, and the other Loan Documents are in all respects ratified and confirmed and are, and shall continue to be, in full force and effect. The Borrower hereby agrees and acknowledges that all of its liabilities and
obligations under the Credit Agreement and the other Loan Documents remain in full force and effect as of the date of this Amendment and after giving effect to it. 
  
 6. Definitions and References. Unless otherwise defined herein, terms used herein which are defined in the
Credit Agreement shall have the meanings therein ascribed to them. The term “Agreement” as used in the Credit Agreement and the term “Credit Agreement” as used in the other Loan Documents or any other instrument, document or
writing furnished to the Bank by or on behalf of the Borrower shall mean the Credit Agreement as hereby amended. 
  
 7. Expenses; Additional Information. The Borrower shall pay to the Bank on demand all expenses (including reasonable counsel’s fees)
incurred in connection with the preparation, reproduction, execution and delivery of this Amendment. 
  
 8. Severability. If any term or provision of this Amendment or the application thereof to any person or circumstances shall, to any extent,
be deemed invalid or unenforceable, the remainder of this Amendment, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby and this
Amendment shall be valid and enforced to the fullest extent permitted by applicable law. Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining portions thereof or affecting the validity or enforceability of such provision in any other jurisdiction and, to this end, the provisions of this Amendment are severable. 

 

 4 

 9. Miscellaneous. This Amendment (a) shall be binding upon and inure to the benefit of
the Parties and their respective successors, assigns, receivers and trustees (however, the Borrower may not assign its rights hereunder without the express prior written consent of the Bank); (b) may be modified or amended only by a writing
signed by each of the Parties; (c) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAWS PRINCIPLES) AND OF THE UNITED STATES OF AMERICA; (d) may be
executed and delivered by facsimile, and may be executed in several counterparts, and by the Parties on separate counterparts, and each counterpart, when so executed and delivered, shall constitute an original agreement, and all such separate
counterparts shall constitute but one and the same agreement, (e) embodies the entire agreement and understanding among the Parties with respect to the subject matter hereof and supersedes all prior agreements, consents and understandings
relating to such subject matter, and (f) is a Loan Document. The headings herein shall be accorded no significance in interpreting this Amendment. 
  
 10. ENTIRE AGREEMENT 
  
 THIS AMENDMENT REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. 
  

 5 

 IN WITNESS WHEREOF, the Parties have caused this Amendment to be executed by their respective duly
authorized officers effective as of the date written above. 
  

			
	LUFKIN INDUSTRIES, INC., a Texas corporation
		
	By:	 	 /s/ R. D. Leslie

	Name:	 	R.D. Leslie
	Title:	 	Vice President/Treasurer/Chief Financial Officer

			
	JPMORGAN CHASE BANK, N.A. (formerly known as JPMorgan Chase Bank), as Lender, as Issuing Bank, and as Administrative Agent under the Credit Agreement
		
	By:	 	 /s/ Paul Bedford

	Name:	 	Paul Bedford
	Title:	 	Senior Vice President

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