Exhibit 10.3

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”), dated as of March 7, 2017, by and
between DRIL-QUIP, INC. a Delaware corporation (the “Company”), and JERRY M.
BROOKS (the “Executive”) shall become effective as of March 13, 2017 (the
“Effective Date”).

WITNESSETH:

WHEREAS, the Executive is employed as the Company’s Vice President of Finance
and Chief Financial Officer; and

WHEREAS, the Company and the Executive desire to continue the Executive’s
employment with the Company in the position of Vice President of Investor
Relations of the Company on the terms set forth herein.

NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements herein contained, and intending to be legally bound hereby, effective
as of the Effective Date, the Company and the Executive hereby enter into this
Agreement:

1.    Employment. The Company agrees that the Company or an Affiliate will
continue to employ the Executive, and the Executive agrees to continue to be
employed by the Company or an Affiliate, for the period set forth in Paragraph
2, in the position and with the duties and responsibilities set forth in
Paragraph 3, and upon the other terms and conditions herein provided. Unless
otherwise defined in another paragraph of this Agreement, capitalized terms used
herein shall have the meanings set forth in Paragraph 11.

2.    Term. The employment of the Executive by the Company under this Agreement
shall commence as of the Effective Date and continue until the first anniversary
of the Effective Date (the “Term”) and this Agreement shall terminate as of the
last day of the Term (the “Expiration Date”). Following the Expiration Date, the
Executive may continue his employment with the Company as an “at will” employee
in the position set forth in Paragraph 3 and/or such other position as assigned
by the Company. For the avoidance of doubt, the expiration of this Agreement
shall not result in the Executive’s termination of employment.

3.    Positions and Duties.

(a)    During the Term, the Executive shall serve in the position of Vice
President of Investor Relations of the Company reporting to the Company’s Chief
Executive Officer and shall have such duties, functions, responsibilities and
authority commensurate with such position.

 

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(b)    During the Term, the Executive shall devote the Executive’s full time,
skill and attention, and the Executive’s reasonable best efforts, during normal
business hours to the business and affairs of the Company, and in furtherance of
the business and affairs of its Affiliates, to the extent necessary to discharge
faithfully and efficiently the duties and responsibilities delegated and
assigned to the Executive herein or pursuant hereto, except for usual, ordinary
and customary periods of vacation and absence due to illness or other
disability; provided, however, that the Executive may (i) serve on
industry-related, civic or charitable boards or committees, (ii) with the
approval of the Company’s Board of Directors (the “Board”) serve on corporate
boards or committees, (iii) deliver lectures, fulfill speaking engagements or
teach at educational institutions, and (iv) manage the Executive’s personal
investments, so long as such activities do not significantly interfere with the
performance and fulfillment of the Executive’s duties and responsibilities as an
employee of the Company or an Affiliate in accordance with this Agreement and,
in the case of the activities described in clause (ii) of this proviso, will
not, in the good faith judgment of the Board, constitute an actual or potential
conflict of interest with the business of the Company or an Affiliate. It is
understood and agreed that, to the extent that any such activities have been
conducted by the Executive during the term of the Executive’s employment by the
Company or its Affiliates prior to the Effective Date consistent with the
provisions of this Paragraph 3(b), the continued conduct of such activities (or
of activities similar in nature and scope thereto) subsequent to the Effective
Date shall not thereafter be deemed to interfere with the performance and
fulfillment of the Executive’s duties and responsibilities to the Company and
its Affiliates.

(c)    In connection with the Executive’s employment hereunder, the Executive
shall be based at the headquarters of the Company, subject, however, to required
travel for the investor relations activities for the Company.

(d)    All services that the Executive may render to the Company or any of its
Affiliates in any capacity during the Term shall be deemed to be services
required by this Agreement and consideration for the compensation provided for
herein.

4.    Compensation and Related Matters.

(a)    Base Salary. During the Term, the Company shall pay to the Executive an
annual base salary of $305,000.00 (“Base Salary”), payable in accordance with
the Company’s normal payroll practices as in effect from time to time, less
withholding for taxes and deductions for other appropriate items. During the
Term, the Executive’s Base Salary shall be subject to such increases (but not
decreases), if any, as may be determined from time to time by the Company, in
its sole discretion. Payments of Base Salary to the Executive shall not be
deemed exclusive and shall not prevent the Executive from participating in any
employee benefit plans, programs or arrangements of the Company and its
Affiliates in which the Executive is entitled to participate. Payments of Base
Salary to the Executive shall not in any way limit or reduce any other
obligation of the Company hereunder, and no other compensation, benefit or
payment to the Executive hereunder shall in any way limit or reduce the
obligation of the Company regarding the Executive’s Base Salary hereunder.

 

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(b)    Bonus. The Executive shall be paid a bonus in the amount of $75,000 (the
“Bonus”), in a single lump-sum cash payment, on the Expiration Date, provided
the Executive is employed with the Company as of such date.

(c)    Employee Benefits.

(i)    Incentive, Savings and Retirement Plans. During the Term, the Executive
shall be entitled to participate in all savings and retirement plans, programs
and arrangements provided by the Company and its Affiliates, as amended from
time to time, on the same basis as those benefits are generally made available
to other senior executives of the Company. The Executive shall not be eligible
for an annual incentive bonus under the Company’s annual bonus plan or
equity-based awards under the Company’s long-term incentive plan.

(ii)    Welfare Benefit Plans. During the Term, the Executive and the
Executive’s dependents, as the case may be, shall be eligible to participate in
and shall receive all benefits under the welfare benefit plans, programs and
arrangements provided by the Company and its Affiliates (including medical,
prescription, dental, disability, employee life, group life, accidental death
and travel accident insurance plans, programs and arrangements), as amended from
time to time, on the same basis as those benefits are generally made available
to other senior executives of the Company.

(d)    Expenses. During the Term, the Executive shall be entitled to receive
prompt reimbursement for all reasonable expenses incurred by the Executive in
performing the Executive’s duties and responsibilities hereunder in accordance
with the policies, practices and procedures of the Company.

(e)    Vacation. During the Term, the Executive shall be entitled to paid
vacation in accordance with the policies, practices and procedures of the
Company as in effect immediately prior to the Effective Date.

(f)    Vesting of Equity Awards Upon Expiration Date. Subject to the Executive’s
continuous employment with the Company during the Term, as of the Expiration
Date, the Company shall provide for (a) the immediate vesting, settlement and
exercisability of, and termination of any restrictions on sale or transfer
(other than any such restriction arising by operation of law) with respect to,
each and every restricted stock award that is subject to time-based vesting that
is outstanding immediately prior to the Expiration Date (i.e., restricted stock
awards) and (b) the vesting of any performance award that is subject to
performance-based vesting based on actual results at the end of the relevant
performance period and without any pro-rata adjustment for early termination,
payable at the same time as if Executive had remained employed through the end
of the applicable performance period.

5.    Termination of Employment Prior to the Expiration Date.

(a)    Death. The Executive’s employment shall terminate automatically upon the
Executive’s death prior to the Expiration Date.

 

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(b)    Disability. If the Company determines in good faith that the Disability
(as defined below) of the Executive has occurred prior to the Expiration Date,
the Company may give the Executive notice of its intention to terminate the
Executive’s employment. In such event, the Executive’s employment hereunder
shall terminate effective on the 30th day after receipt of such notice by the
Executive (the “Disability Effective Date”); provided, however, that within the
30-day period after such receipt, the Executive shall not have returned to
full-time performance of the Executive’s duties. For purposes of this Agreement,
“Disability” shall mean the absence of the Executive from the Executive’s duties
with the Company or an Affiliate on a full-time basis for 180 consecutive
Business Days, as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive’s legal
representative (such agreement as to acceptability not to be withheld
unreasonably).

(c)    Termination by Company. The Company may terminate the Executive’s
employment hereunder for Cause (as defined below) or without Cause at any time
prior to the Expiration Date. For purposes of this Agreement, “Cause” shall mean
the Company’s termination of the Executive’s employment by reason of:

(i)    the commission of a felony or any other crime by the Executive involving
intentional and actual fraud, dishonesty or breach of trust;

(ii)    willful misconduct or gross negligence with respect to the Executive’s
performance of his employment duties for the Company, including the duties as
contemplated by Paragraph 3 above (other than such failure resulting from
incapacity due to physical or mental illness or injury);

(iii)    conduct by the Executive bringing the Company or its Affiliates into
material public disgrace; or

(iv)    substantial failure to perform duties of the office held by the
Executive as reasonably directed in writing by the Board or the Company’s Chief
Executive Officer (other than such failure resulting from incapacity due to
physical or mental illness or injury);

provided, however, that Cause shall not exist in the case of clause (iv) unless
and until the Company has given written notice to the Executive detailing the
alleged grounds for Cause and such grounds remain uncured for 30 days
thereafter.

(d)    Termination by Executive. The Executive may terminate the Executive’s
employment hereunder at any time prior to the Expiration Date for Good Reason
(as defined below) or voluntarily without Good Reason. For purposes of this
Agreement, “Good Reason” shall mean any of the following (without the
Executive’s written consent):

(i)    the assignment to the Executive of any duties materially inconsistent in
any respect with the Executive’s position (including offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Paragraph 3 or any other action by the Company which results in a material
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 notice
thereof given by the Executive;

 

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

(iii)    the Company’s requiring the Executive to be based at any office other
than the Company’s headquarters; or

(iv)    any failure by the Company to comply with and satisfy the requirements
of Paragraph 19(c), provided that (a) the successor described in Paragraph 19(c)
has received, at least ten days prior to the Termination Date, written notice
from the Company or the Executive of the requirements of such provision and
(b) such failure to be in compliance and satisfy the requirements of Paragraph
19(c) shall continue as of the Termination Date.

Notwithstanding the foregoing, the Executive shall not have the right to
terminate the Executive’s employment hereunder for Good Reason unless (i) within
60 days of the initial existence of the condition or conditions giving rise to
such right the Executive provides written notice to the Company of the existence
of such condition or conditions, and (ii) the Company fails to remedy such
condition or conditions within 30 days following the receipt of such written
notice. If any such condition is not remedied within such 30-day period, the
Executive may provide a Notice of Termination (as defined below) for Good Reason
in accordance with the provisions of Paragraph 5(e).

(e)    Notice of Termination. Any termination of the Executive’s employment
hereunder by the Company or by the Executive prior to the Expiration Date, other
than a termination pursuant to Paragraph 5(a), shall be communicated by a Notice
of Termination to the other party hereto. For purposes of this Agreement, a
“Notice of Termination” shall mean a notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) in the case of a
termination for Disability, Cause or Good Reason, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive’s employment under the provision so indicated, and (iii) specifies
the Termination Date; provided, however, that notwithstanding any provision in
this Agreement to the contrary, a Notice of Termination given in connection with
a termination for Good Reason shall be given by the Executive within a
reasonable period of time, not to exceed 150 days, following the initial
existence of one or more of the conditions giving rise to such right of
termination. The failure by the Company or the Executive to set forth in the
Notice of Termination any fact or circumstance which contributes to a showing of
Disability, Cause or Good Reason shall not waive any right of the Company or the
Executive hereunder or preclude the Company or the Executive from asserting such
fact or circumstance in enforcing the Company’s or the Executive’s rights
hereunder.

(f)    Termination Date. For purposes of this Agreement, the Executive’s
employment Termination Date will be (i) if the Executive’s employment is
terminated by the

 

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Executive’s death, the date of the Executive’s death, (ii) if the Executive’s
employment is terminated because of the Executive’s Disability, the Disability
Effective Date, (iii) if the Executive’s employment is terminated by the Company
(or applicable Affiliate) for Cause or by the Executive for Good Reason, the
date on which the Notice of Termination is given, and (iv) if the Executive’s
employment is terminated for any other reason, the date specified in the Notice
of Termination, which date shall in no event be earlier than the date such
notice is given.

6.    Obligations of the Company upon Termination of the Executive Prior to the
Expiration Date.

(a)    By the Company Without Cause and Prior to Change of Control Period.
Subject to the provisions of Paragraph 6(d) of this Agreement, if prior to the
Expiration Date and not during a Change of Control Period, the Company
terminates the Executive’s employment hereunder without Cause, the Company shall
pay or provide to or in respect of the Executive, on the tenth Business Day next
following the Executive’s Termination Date, all of the following amounts and
benefits set forth in this Paragraph 6(a):

(i)    The Executive shall receive a lump-sum cash payment in an amount equal to
the sum of (a) the Executive’s Base Salary through the Termination Date and
(b) compensation for all of the Executive’s accrued vacation time based upon the
Executive’s current Base Salary (notwithstanding any limitation on payment for
accrued vacation then set forth in the Company’s policies or practices), in each
case to the extent not theretofore paid (the sum of the amounts described in
clauses (a) and (b) shall be hereinafter referred to as the “Accrued
Obligation”).

(ii)    The Executive shall receive a lump-sum cash payment in an amount equal
to the Bonus.

(iii)    The Executive’s equity awards described in Paragraph 4(f) shall be
vested as provided in Paragraph 4(f), but as of the Executive’s Termination
Date.

(b)    By the Company Without Cause or By the Executive for Good Reason and
During the Change of Control Period. Subject to the provisions of Paragraph 6(d)
of this Agreement, if prior to the Expiration Date and during a Change of
Control Period the Executive’s employment is terminated (i) by the Company
without Cause or (ii) by the Executive for Good Reason, then the Company shall
pay or provide to or in respect of the Executive, on the tenth Business Day next
following the Executive’s Termination Date, all of the following amounts and
benefits set forth in this Paragraph 6(b).

(i)    The Executive shall receive a lump-sum cash payment in an amount equal to
the Accrued Obligation.

(ii)    The Executive shall receive a lump-sum cash payment in an amount equal
to two times his Base Salary.

(iii)    The Executive shall receive a lump-sum cash payment in an amount equal
to the product of (a) the Bonus and (b) a fraction, the numerator of which shall
be the number of Business Days from the beginning of the Term to the Termination
Date, inclusive, and the denominator of which shall be 260.

 

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(iv)    The Executive shall receive a lump sum cash payment in an amount equal
to two times the average annual bonus paid in respect of the three most recent
years prior to the Termination Date.

(v)    Effective as of the Termination Date and unless otherwise provided in the
terms of the award agreement under which a Compensatory Award (as defined below)
was granted, the Company shall provide for (a) the immediate vesting, settlement
and exercisability of, and termination of any restrictions on sale or transfer
(other than any such restriction arising by operation of law) with respect to,
each and every stock option, restricted stock award, restricted stock unit award
and other equity-based award and performance award (with such performance awards
vesting at target level) (each, a “Compensatory Award”) that is outstanding as
of a time immediately prior to the Termination Date and (b) the extension of the
term during which each and every Compensatory Award may be exercised by the
Executive until the earlier of (x) the first anniversary of the Termination Date
or (y) the date upon which the right to exercise any Compensatory Award would
have expired if the Executive had continued to be employed by the Company under
the terms of this Agreement until the Expiration Date.

(vi)    Until the earlier of (a) his receipt of equivalent coverage and benefits
under the plans and programs of a subsequent employer (such coverage and
benefits to be determined on a coverage-by-coverage or benefit-by-benefit basis)
or (b) two years after the Executive’s Termination Date, the Executive and his
eligible dependents shall continue to be covered by all medical, vision and
dental benefit plans maintained by the Company under which the Executive was
covered immediately prior to Executive’s Termination Date at the same active
employee premium cost as a similarly situated active employee; provided,
however, that such coverage shall not continue in the event the Company would be
subject to any excise tax under Section 4980D of the Code or other penalty or
liability pursuant to the provisions of the Patient Protection and Affordable
Care Act of 2010 (as amended from time to time), and in lieu of providing the
coverage described above, the Company shall instead pay to the Executive a fully
taxable monthly cash payment in an amount such that, after payment by the
Executive of all taxes on such payment, the Executive retains an amount equal to
the Company’s portion of the applicable premiums for such month, with such
monthly payment being made on the last day of each month for the remainder of
such two-year period; provided, further, that such benefits provided during the
two-year period shall run concurrent with the health continuation coverage
period mandated by Section 4980B of the Code.

(c)    With Cause; Other than for Good Reason; Due to Death or Disability. If
prior to the Expiration Date, the Executive’s employment is terminated by reason
of (i) the Company’s termination of Executive’s employment with Cause or
(ii) the Executive’s (a) voluntary termination of his employment other than for
Good Reason during a Change of Control Period or (b) death or Disability, then
this Agreement shall terminate without further obligations to the Executive
hereunder other than for (x) the payment of the Accrued Obligation, which,
subject to Paragraph 6(d) of this Agreement, shall be paid to the Executive in a
lump-sum in cash within 30 days after the Executive’s Termination Date, and
(y) the timely payment or provision of deferred compensation and other employee
benefits if and when otherwise due.

 

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(d)    Payment Delay for Specified Employee. Any provision of this Agreement to
the contrary notwithstanding, if the Executive is a “specified employee” within
the meaning of that term under Section 409A(a)(2)(B) of the Code, as determined
by the Company, on the Executive’s Termination Date, all amounts due under this
Agreement that constitute a “deferral of compensation” within the meaning of
Section 409A of the Code, that are provided as a result of a “separation from
service” within the meaning of Section 409A of the Code, and that would
otherwise be paid or provided during the first six months following the
Executive’s Termination Date, shall be accumulated through and paid or provided
on the first Business Day that is more than six months after the Executive’s
date Termination Date (or, if Executive dies during such six month period,
within 30 days after Executive’s death).

(e)    Clawback. Any compensation paid or provided by the Company under this
Agreement or otherwise shall be subject to recovery by the Company pursuant to
any Company policy regarding clawbacks or recovery of erroneously awarded
compensation, but only to the extent such policy is in effect prior to a Change
of Control.

7.    Certain Excise Taxes. Notwithstanding anything to the contrary in this
Agreement, if the Executive is a “disqualified individual” (as defined in
Section 280G(c) of the Code), and the payments and benefits provided for under
this Agreement, together with any other payments and benefits which the
Executive has the right to receive from the Company or any of its Affiliates,
would constitute a “parachute payment” (as defined in Section 280G(b)(2) of the
Code), then the payments and benefits provided for under this Agreement shall be
either (a) reduced (but not below zero) so that the present value of such total
amounts and benefits received by the Executive from the Company and its
Affiliates will be one dollar ($1.00) less than three times the Executive’s
“base amount”(as defined in Section 280G(b)(3) of the Code) and so that no
portion of such amounts and benefits received by the Executive shall be subject
to the excise tax imposed by Section 4999 of the Code or (b) paid in full,
whichever produces the better net after-tax position to the Executive (taking
into account any applicable excise tax under Section 4999 of the Code and any
other applicable taxes). The reduction of payments and benefits hereunder, if
applicable, shall be made by reducing, first, payments or benefits to be paid in
cash hereunder in the order in which such payment or benefit would be paid or
provided (beginning with such payment or benefit that would be made last in time
and continuing, to the extent necessary, through to such payment or benefit that
would be made first in time) and, then, reducing any benefit to be provided in
kind hereunder in a similar order. The determination as to whether any such
reduction in the amount of the payments and benefits provided hereunder is
necessary shall be made by the Company in good faith. If a reduced payment or
benefit is made or provided and through error or otherwise that payment or
benefit, when aggregated with other payments and benefits from the Company (or
its Affiliates) used in determining if a parachute payment exists, exceeds one
dollar ($1.00) less than three times the Executive’s base amount, then the
Executive shall immediately repay such excess to the Company upon notification
that an overpayment has been made. Nothing in this Paragraph 7 shall require the
Company (or any of its Affiliates) to be responsible for, or have any liability
or obligation with respect to, the Executive’s excise tax liabilities under
Section 4999 of the Code.

 

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8.    Representations and Warranties.

(a)    The Company represents and warrants to the Executive that the execution,
delivery and performance by the Company of this Agreement have been duly
authorized by all necessary corporate action of the Company and do not and will
not conflict with or result in a violation of any provision of, or constitute a
default under, any contract, agreement, instrument or obligation to which the
Company is a party or by which it is bound.

(b)    The Executive represents and warrants to the Company that the execution,
delivery and performance by the Executive of this Agreement do not and will not
conflict with or result in a violation of any provision of, or constitute a
default under, any contract, agreement, instrument or obligation to which the
Executive is a party or by which the Executive is bound.

9.    Confidential Information. The Executive recognizes and acknowledges that
the Company’s and its Affiliates’ trade secrets and other confidential or
proprietary information, as they may exist from time to time (“Confidential
Information”), are valuable, special and unique assets of the Company’s and/or
such Affiliates’ business, access to and knowledge of which are essential to the
performance of the Executive’s duties hereunder. The Executive confirms that all
such Confidential Information constitutes the exclusive property of the Company
and/or such Affiliates. During the Term and thereafter without limitation of
time, the Executive shall hold in strict confidence and shall not, directly or
indirectly, disclose or reveal to any person, or use for the Executive’s own
personal benefit or for the benefit of anyone else, any Confidential Information
(whether or not acquired, learned, obtained or developed by the Executive alone
or in conjunction with others) belonging to or concerning the Company or any of
its Affiliates, except (i) with the prior written consent of the Company duly
authorized by the Board, (ii) in the course of the proper performance of the
Executive’s duties hereunder, (iii) for Confidential Information (x) that
becomes generally available to the public other than as a result of unauthorized
disclosure by the Executive or the Executive’s affiliates or (y) that becomes
available to the Executive on a nonconfidential basis from a source other than
the Company or its Affiliates who is not bound by a duty of confidentiality, or
other contractual, legal or fiduciary obligation, to the Company, or (iv) as
required by applicable law or legal process provided that prior to the
disclosure or use by the Executive of any Confidential Information under this
clause (iv), the Executive will give prior written notice thereof to the Company
and provide the Company with the opportunity to contest that disclosure or use.
Nothing in this Paragraph 9 prohibits the Executive from reporting possible
violations of law or regulation to any governmental agency or entity (or of
making any other protected disclosures) without prior notice to the Company.
Pursuant to the Defend Trade Secrets Act of 2016, the Executive shall not be
held criminally or civilly liable under any Federal or state trade secret law
for the disclosure of any Confidential Information that (i) is made (A) in
confidence to a Federal, state or local government official, either directly or
indirectly, or to an attorney and (B) solely for the purpose of reporting or
investigating a suspected violation of law or (ii) is made in a complaint or
other document filed in a lawsuit or other proceeding, if such filing is made
under seal. The provisions of this Paragraph 9 shall continue in effect
notwithstanding termination of the Executive’s employment hereunder for any
reason.

 

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10.    Restrictive Covenants.

(a)    Definitions. As used in this Paragraph 10, the following terms shall have
the following meanings:

(i)    “Business” shall mean any endeavor in which the Company, including its
Affiliates, is engaged in during the Prohibited Period, and the provision of
products or services that are substantially similar to the products or services
provided by any business, partnership, firm, corporation or other entity which
the Company or one of its Affiliates has made substantial progress toward
acquiring on or before the Executive’s Termination Date. For the purposes of
this definition, the execution by the Company or one of its Affiliates of a
binding or non-binding letter of intent, term sheet, or similar agreement or a
confidentiality agreement or similar agreement with respect to the acquisition
of a business, partnership, firm, corporation or other entity on or before the
Executive’s Termination Date shall constitute sufficient evidence of the Company
or such Affiliate having made substantial progress towards acquiring such
business, partnership, firm, corporation or other entity.

(ii)    “Competing Business” shall mean any business, individual, partnership,
firm, corporation or other entity which wholly or in any significant part
engages in any business competing with the Business in the Restricted Area. In
no event will the Company or any of its Affiliates be deemed a Competing
Business.

(iii)    “Governmental Authority” shall mean any governmental,
quasi-governmental, state, county, city or other political subdivision of the
United States or any other country, or any agency, court or instrumentality,
foreign or domestic, or statutory or regulatory body thereof.

(iv)    “Legal Requirement” shall mean any law, statute, code, ordinance, order,
rule, regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization, or other directional requirement (including any of the
foregoing that relates to environmental standards or controls, energy
regulations and occupational, safety and health standards or controls including
those arising under environmental laws) of any Governmental Authority.

(v)    “Prohibited Period” shall mean the period during which the Executive is
employed by the Company hereunder and a period of 12 months following the
Executive’s Termination Date.

(vi)    “Restricted Area” shall mean any country or subdivision thereof in which
the Company or its Affiliates engages in the Business.

(b)    Non-Competition; Non-Solicitation. The Executive and the Company agree to
the non-competition and non-solicitation provisions of this Paragraph 10(i) in
consideration for the Confidential Information provided by the Company to the
Executive pursuant to Paragraph 9; (ii) as part of the consideration for the
compensation and benefits to be paid to the Executive hereunder; (iii) to
protect the trade secrets and confidential information of the Company or its
Affiliates disclosed or entrusted to the Executive by the Company or its
Affiliates or created or developed by the Executive for the Company or its

 

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Affiliates, the business goodwill of the Company or its Affiliates developed
through the efforts of the Executive and/or the business opportunities disclosed
or entrusted to the Executive by the Company or its Affiliates; and (iv) as an
additional incentive for the Company to enter into this Agreement.

(i)    Subject to the exceptions set forth in Paragraph 10(b)(ii), the Executive
covenants and agrees that during the Prohibited Period (a) the Executive will
refrain from carrying on or engaging in, directly or indirectly, any Competing
Business in the Restricted Area and (b) the Executive will not, and the
Executive will cause the Executive’s affiliates not to, directly or indirectly,
own, manage, operate, join, become an employee, partner, owner or member of (or
an independent contractor to), control or participate in or loan money to, sell
or lease equipment to or sell or lease real property to any business,
individual, partnership, firm, corporation or other entity which engages in a
Competing Business in the Restricted Area.

(ii)    Notwithstanding the restrictions contained in Paragraph 10(b)(i), the
Executive or any of the Executive’s affiliates may own an aggregate of not more
than 1% of the outstanding voting securities of any class of an entity engaged
in a Competing Business, if such securities are listed on a national securities
exchange or regularly traded in the over-the-counter market by a member of a
national securities exchange, without violating the provisions of Paragraph
10(b), provided that neither the Executive nor any of the Executive’s affiliates
(A) has the power, directly or indirectly, to control or direct the management
or affairs of such entity and (B) is involved in the management of such entity.

(iii)    The Executive further covenants and agrees that during the Prohibited
Period, the Executive will not, and the Executive will cause the Executive’s
affiliates not to (a) engage or employ, or solicit or contact with a view to the
engagement or employment of, any person who is an officer or employee of the
Company or any of its Affiliates or (b) canvass, solicit, approach or entice
away or cause to be canvassed, solicited, approached or enticed away from the
Company or any of its Affiliates any person who or which is a customer of any of
such entities during the period during which the Executive is employed by the
Company.

(iv)    The Executive may seek the written consent of the Company, which may be
withheld for any or no reason, to waive the provisions of this Paragraph 10 on a
case-by-case basis.

(v)    The Executive recognizes that the Executive is a high-level, executive
employee who will be provided with access to trade secrets as part of the
Executive’s employment and that the restrictive covenants set forth in this
Paragraph 10(b) are reasonable and necessary in light of the Executive’s
position and access to the Company’s trade secrets.

(c)    Reasonableness; Enforcement. The Executive and the Company agree and
acknowledge that the limitations as to time, geographical area and scope of
activity to be

 

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restrained as set forth in Paragraph 10(b) are reasonable and do not impose any
greater restraint than is necessary to protect the legitimate business interests
of the Company. The Executive hereby represents to the Company that the
Executive has read and understands, and agrees to be bound by, the terms of this
Paragraph 10. The Executive acknowledges that the geographic scope and duration
of the covenants contained in this Paragraph 10 are the result of arm’s-length
bargaining and are fair and reasonable in light of (i) the nature and wide
geographic scope of the operations of the Business, (ii) the Executive’s level
of control over and contact with the Business in all jurisdictions in which it
is conducted, (iii) the fact that the Business is conducted throughout the
Restricted Area and (iv) the amount of compensation, trade secrets and
Confidential Information that the Executive is receiving in connection with the
performance of the Executive’s duties hereunder. It is the desire and intent of
the parties that the provisions of this Paragraph 10 be enforced to the fullest
extent permitted under applicable Legal Requirements, whether now or hereafter
in effect and therefore, to the extent permitted by applicable Legal
Requirements, the Executive and the Company hereby waive any provision of
applicable Legal Requirements that would render any provision of this Paragraph
10 invalid or unenforceable.

(d)    Reformation. The Company and the Executive agree that the foregoing
restrictions are reasonable under the circumstances and that any breach of the
covenants contained in this Paragraph 10 would cause irreparable injury to the
Company. The Executive represents that enforcement of the restrictive covenants
set forth in this Paragraph 10 will not impose an undue hardship upon the
Executive or any person or entity affiliated with the Executive. The Executive
understands that the foregoing restrictions may limit the Executive’s ability to
engage in certain businesses anywhere in the Restricted Area during the
Prohibited Period, but acknowledges that the Executive will receive sufficiently
high remuneration and other benefits from the Company to justify such
restriction. Further, the Executive acknowledges that the Executive’s skills are
such that the Executive can be gainfully employed in non-competitive employment,
and that the agreement not to compete will not prevent the Executive from
earning a living. Nevertheless, if any of the aforesaid restrictions are found
by a court of competent jurisdiction to be unreasonable, or overly broad as to
geographic area or time, or otherwise unenforceable, the parties intend for the
restrictions herein set forth to be modified by the court making such
determination so as to be reasonable and enforceable and, as so modified, to be
fully enforced. By agreeing to this contractual modification prospectively at
this time, the Company and the Executive intend to make this provision
enforceable under the Legal Requirements of all applicable jurisdictions so that
the entire agreement not to compete and this Agreement as prospectively modified
shall remain in full force and effect and shall not be rendered void or illegal.

11.    Certain Definitions. Capitalized terms used in the Agreement and not
otherwise defined herein shall have the following respective meanings:

(a)    “Affiliate” shall mean any company or other entity controlled by,
controlling or under common control with the Company.

(b)    “Annual Bonus Plan” shall mean any annual bonus or short-term incentive
plan or program established by the Company (other than the 2004 Incentive Plan
of Dril-Quip, Inc. or any successor long-term incentive plan).

 

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(c)    “Business Day” shall mean any day other than a Saturday, Sunday or a day
on which banking institutions in the State of New York are authorized or
obligated by law or executive order to close.

(d)    “Change of Control” shall mean:

(i)    there shall have occurred an event required to be reported with respect
to the Company in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item or any similar schedule or form) promulgated under
the Exchange Act, whether or not the Company is then subject to such reporting
requirement;

(ii)    any “person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) shall have become the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company’s then
outstanding voting securities;

(iii)    the Company is a party to a merger, consolidation, sale of assets or
other reorganization, or a proxy contest, as a consequence of which members of
the Board in office immediately prior to such transaction or event constitute
less than a majority of the Board thereafter; or

(iv)    during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board (including, for this purpose, any
new director whose election or nomination for election by the Company’s
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board.

(e)    “Change of Control Period” shall mean the period commencing on the
occurrence of a Change of Control and ending on the Expiration Date.

(f)    “Code” shall mean the Internal Revenue Code of 1986, as amended.

(g)    Common Stock” shall mean the common stock, par value $0.01 per share, of
the Company.

(h)    “ERISA” shall mean the Employee Retirement Income Security Act of 1974,
as amended.

(i)    “Exchange Act” shall mean the Securities Exchange Act of 1934.

(j)    “Termination Date” shall mean the date of the Executive’s “separation
from service” within the meaning of Section 409A of the Code and the regulations
and other guidance promulgated thereunder with the Company and all of its
Affiliates, as described in Paragraph 5(f).

 

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12.    Full Settlement.

(a)    There shall be no right of set off or counterclaim against, or delay in,
any payments to the Executive, or to the Executive’s heirs or legal
representatives, provided for in this Agreement, in respect of any claim against
or debt or other obligation of the Executive or others, whether arising
hereunder or otherwise.

(b)    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, and such amounts shall
not be reduced whether or not the Executive obtains other employment.

(c)    If the Executive prevails in any material respect, the Company agrees to
pay, all costs and expenses (including attorneys’ fees) that the Executive, or
the Executive’s heirs or legal representatives, may reasonably incur as a result
of any contest by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement, or any
guarantee of performance thereof (including as a result of any contest by the
Executive, or the Executive’s heirs or legal representatives, about the amount
of any payment pursuant to this Agreement). The amounts payable by the Company
pursuant to this Paragraph 12(c) shall be paid no later than the end of the
taxable year of the Executive that immediately follows the taxable year of the
Executive in which such costs and expenses were incurred.

13.    No Effect on Other Contractual Rights. Subject to Paragraph 20(f), the
provisions of this Agreement, and any payment provided for hereunder, shall not
reduce any amounts otherwise payable to the Executive, or in any way diminish
the Executive’s rights as an employee of the Company or any of its Affiliates,
whether existing on the date of this Agreement or hereafter, under any employee
benefit plan, program or arrangement or other contract or agreement of the
Company or any of its Affiliates providing benefits to the Executive.

14.    Directors and Officers Insurance. The Company shall ensure that during
the Term, the Company acquires and maintains directors and officers liability
insurance covering the Executive to the extent it is available at commercially
reasonable rates as determined by the Board. The provisions of this Paragraph 14
shall continue in effect notwithstanding termination of the Executive’s
employment hereunder for any reason.

15.    Injunctive Relief. In recognition of the fact that a breach by the
Executive of any of the provisions of Paragraph 9 or Paragraph 10 will cause
irreparable damage to the Company and/or its Affiliates for which monetary
damages alone will not constitute an adequate remedy, the Company shall be
entitled as a matter of right (without being required to prove damages or
furnish any bond or other security) to obtain a restraining order, an
injunction, an order of specific performance, or other equitable or
extraordinary relief from any court of competent jurisdiction restraining any
further violation of such provisions by the Executive or requiring the Executive
to perform the Executive’s obligations hereunder. Such right to equitable or
extraordinary relief shall not be exclusive but shall be in addition to all
other rights and remedies to which the Company or any of its Affiliates may be
entitled at law or in equity, including the right to recover monetary damages
for the breach by the Executive of any of the provisions of this Agreement.

 

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16.    Section 409A.

(a)    This Agreement is intended to be exempt from or comply with the
requirements of Section 409A of the Code (“Section 409A”) and shall be construed
and interpreted in accordance with such intent. To the extent any payment or
benefit provided under this Agreement is subject to Section 409A, such benefit
shall be provided in a manner that complies with Section 409A, including any IRS
guidance promulgated with respect to Section 409A.

(b)    All reimbursements or provision of in-kind benefits pursuant to this
Agreement shall be made in accordance with Treasury Regulation §
1.409A-3(i)(1)(iv) such that the reimbursement or provision will be deemed
payable at a specified time or on a fixed schedule relative to a permissible
payment event. Specifically, the amount reimbursed or in-kind benefits provided
under this Agreement during Executive’s taxable year may not affect the amounts
reimbursed or provided in any other taxable year (except that total
reimbursements may be limited by a lifetime maximum under a group health plan),
the reimbursement of an eligible expense shall be made on or before the last day
of the Executive’s taxable year following the taxable year in which the expense
was incurred, and the right to reimbursement or provision of in-kind benefit is
not subject to liquidation or exchange for another benefit.

17.    Governing Law and Venue. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas,
without regard to the principles of conflicts of laws thereof. Venue for any
action or proceeding relating to this Agreement and/or the employment
relationship hereunder shall lie exclusively in courts in Harris County, Texas.

18.    Notices. All notices, requests, demands and other communications required
or permitted to be given or made hereunder by either party hereto shall be in
writing and shall be deemed to have been duly given or made (i) when delivered
personally, (ii) when sent by facsimile transmission, or (iii) five days after
being deposited in the United States mail, first class registered or certified
mail, postage prepaid, return receipt requested, to the party for which intended
at the following addresses (or at such other addresses as shall be specified by
the parties by like notice, except that notices of change of address shall be
effective only upon receipt):

 

  If to the Company, at            

  Dril-Quip, Inc.     Attention: General Counsel     6401 N. Eldridge Pkwy.    
Houston, TX 77041     Fax No.: (713) 939-5329  

If to the Executive, at the current address in the Company’s personnel files.

19.    Binding Effect; Assignment; No Third Party Benefit.

(a)    This Agreement is personal to the Executive and without the prior written
consent of the Company shall not be assignable by the Executive otherwise than
by will or the laws of descent and distribution. This Agreement shall inure to
the benefit of and shall be enforceable by the Executive’s legal
representatives.

 

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(b)    This Agreement shall inure to the benefit of and be binding upon the
Company and its successors and assigns.

(c)    The Company shall require any successor or assign (whether direct or
indirect, by purchase, merger, consolidation, amalgamation or otherwise) to all
or substantially all the business and/or assets of the Company, by agreement in
writing in form and substance reasonably satisfactory to the Executive,
absolutely and unconditionally to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. As used in this
Agreement, the “Company” shall mean the Company as hereinbefore defined and any
successor or assign to the business and/or assets of the Company as aforesaid
which executes and delivers the agreement provided for in this Paragraph 19(c)
or which otherwise becomes bound by all the terms and provisions of this
Agreement by operation of law.

(d)    Nothing in this Agreement, express or implied, is intended to or shall
confer upon any person other than the parties hereto and their respective heirs,
legal representatives, successors and permitted assigns, any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.

20.    Miscellaneous.

(a)    Amendment. This Agreement may not be modified or amended in any respect
except by an instrument in writing signed by the party against whom such
modification or amendment is sought to be enforced. No person, other than
pursuant to a resolution of the Board or a committee thereof, shall have
authority on behalf of the Company to agree to modify, amend or waive any
provision of this Agreement or anything in reference thereto.

(b)    Waiver. Any term or condition of this Agreement may be waived at any time
by the party hereto which is entitled to have the benefit thereof, but such
waiver shall only be effective if evidenced by a writing signed by such party,
and a waiver on one occasion shall not be deemed to be a waiver of the same or
any other type of breach on a future occasion. No failure or delay by a party
hereto in exercising any right or power hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right or power.

(c)    Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such federal, state, local or foreign taxes as shall be
required to be withheld pursuant to any applicable law or regulation.

(d)    Nonalienation of Benefits. The Executive shall not have any right to
pledge, hypothecate, anticipate or in any way create a lien upon any payments or
other benefits provided under this Agreement; and no benefits payable hereunder
shall be assignable in anticipation of payment either by voluntary or
involuntary acts, or by operation of law, except by will or pursuant to the laws
of descent and distribution.

 

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(e)    Severability. If any provision of this Agreement is held to be invalid or
unenforceable, (i) this Agreement shall be considered divisible, (ii) such
provision shall be deemed inoperative to the extent it is deemed invalid or
unenforceable, and (iii) in all other respects this Agreement shall remain in
full force and effect; provided, however, that if any such provision may be made
valid or enforceable by limitation thereof, then such provision shall be deemed
to be so limited and shall be valid and/or enforceable to the maximum extent
permitted by applicable law.

(f)    Entire Agreement. This Agreement constitutes the entire agreement between
the parties hereto concerning the subject matter hereof, and from and after the
date of this Agreement, this Agreement shall supersede any other prior agreement
or understanding, both written and oral, between the parties with respect to
such subject matter, including the Employment Agreement between the Company and
Executive dated December 8, 2011, which as of the Effective Date shall be null
and void.

(g)    Captions. The captions herein are inserted for convenience of reference
only, do not constitute a part of this Agreement, and shall not affect in any
manner the meaning or interpretation of this Agreement.

(h)    References. All references in this Agreement to Paragraphs, subparagraphs
and other subdivisions refer to the Paragraphs, subparagraphs and other
subdivisions of this Agreement unless provided otherwise. The words “this
Agreement”, “herein”, “hereof”, “hereby”, “hereunder” and words of similar
import refer to this Agreement as a whole and not to any particular subdivision
unless so limited. Whenever the words “include”, “includes” and “including” are
used in this Agreement, such words shall be deemed to be followed by the words
“without limitation”. Words in the singular form shall be construed to include
the plural and vice versa, unless the context otherwise requires.

[Execution Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officer, and the Executive has executed this
Agreement, as of the date first above set forth.

 

DRIL-QUIP, INC.

/s/ Blake T. DeBerry

Name: Blake T. DeBerry Title: President and Chief Executive Officer

EXECUTIVE

/s/ Jerry M. Brooks

Jerry M. Brooks

 

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