Document:

1997 Incentive Plan of Dril-Quip, Inc.

 Exhibit 10.3 
 1997 INCENTIVE PLAN 
 OF 
 DRIL-QUIP, INC. 
 (As Amended and Restated Effective as of December 31,
2008) 
 1. Establishment of This Plan. Dril-Quip, Inc., a Delaware corporation (the “Company”), established the
1997 Incentive Plan of Dril-Quip, Inc. (the “Superseded Plan”), effective as of September 19, 1997. The Company subsequently amended and restated the Superseded Plan in the form of the 1997 Incentive Plan of Dril-Quip, Inc. as
amended March 16, 2001 (the “Prior Plan”). By this instrument, the Company now amends and restates the Prior Plan as set forth herein (the “Plan”), effective as of December 31, 2008, in order to
provide for certain changes rendered necessary or desirable by the enactment of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and the promulgation of final regulations thereunder (collectively,
“Section 409A”). References in this Plan to “Paragraphs” are to Paragraphs of this Plan. 
 2. Definitions.
As used in this Plan, the following terms have the following respective meanings: 
 “Annual Meeting” means the annual
meeting of the stockholders of the Company which is held pursuant to Section 211(b) of the Delaware General Corporation Law. 
 “Authorized Officer” means any Chairman of the Board (or any other senior officer of the Company to whom any Chairman of the Board delegates, by written notice to the Committee of that delegation, authority to execute any
Award Agreement). 
 “Award” means an Employee Award. 
 “Award Agreement” means any Employee Award Agreement. “Board” means the Board of Directors of the Company. “Cash
Award” means an award denominated in cash. 
 “Code” means the Internal Revenue Code of 1986, as amended from time to
time. 
 “Committee” means the Committee of the Board designated by the Board, which shall initially be the Compensation
Committee of the Board, consisting of at least two nonemployee members of the Board. 
 “Common Stock” means the Common
Stock, par value $0.01 per share, of the Company. 
 “Company” means Dril-Quip, Inc., a Delaware corporation.
“Director” means an individual serving as a member of the Board. 
 “Dividend Equivalents” means, with respect to
shares of Restricted Stock, an amount equal to all dividends and other distributions (or the economic equivalent thereof) that are payable to stockholders of record during the Restriction Period applicable to those shares on a like number of shares
of Common Stock. 

 “Employee” means any salaried employee of the Company or any of its Subsidiaries.

 “Employee Award” means the grant under this Plan of any Option, SAR, Stock Award, Cash Award or Performance Award,
whether granted singly or in combination or tandem with any other Award, to a Participant who is an Employee on such terms and subject to such conditions and limitations as the Committee may establish consistent with the terms of this Plan.

 “Employee Award Agreement” means a written agreement between the Company and a Participant who is an Employee that sets
forth the terms, conditions and limitations applicable to an Employee Award granted to that Employee. 
 “Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time. 
 “Fair Market Value” of a share of Common Stock
means, as of a particular date, (i) if shares of Common Stock are listed on a national securities exchange, the closing price per share of Common Stock on the consolidated transaction reporting system for the principal national securities
exchange on which shares of Common Stock are listed on that date or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, (ii) if shares of Common Stock are not so
listed, but are quoted on the Nasdaq National Market, the closing price per share of Common Stock reported by the Nasdaq National Market on that date or, if there shall have been no such sale so reported on that date, on the last preceding date on
which such a sale was so reported, (iii) if the Common Stock is not so listed or quoted, the closing bid price on that date or, if there are no quotations available for that date, on the last preceding date for which those quotations are
available, as reported by the Nasdaq Stock Market or, if not reported by the Nasdaq Stock Market, by the National Quotation Bureau Incorporated or (iv) if shares of Common Stock are not publicly traded, the most recent value determined by an
independent appraiser appointed by the Company for that purpose. 
 “Incentive Option” means an Option that is intended to
comply with the requirements set forth in Section 422 of the Code. 
 “Nonqualified Stock Option” means an Option that
is not an Incentive Option. 
 “Option” means a right to purchase a specified number of shares of Common Stock at a
specified price. 
 “Participant” means an Employee to whom an Award has been made under this Plan. 
 “Performance Award” means an award made pursuant to this Plan to a Participant who is an Employee the earning of which is subject to the
attainment of one or more Performance Goals. 
 “Performance Goal” means a standard established by the Committee to
determine in whole or in part whether a Performance Award will be earned. 
  

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 “Restricted Stock” means any Common Stock that has its transfer restricted or that is
subject to forfeiture provisions as provided in the Award Agreement relating thereto. 
 “Restriction Period” means a period
of time beginning as of the effective date as of which an Award of Restricted Stock is made pursuant to this Plan and ending as of the date on which the Common Stock subject to that Award is no longer restricted as to its transfer or subject to
forfeiture provisions. 
 “SAR” means a right to receive a payment, in cash or Common Stock, equal to the excess of the Fair
Market Value or other specified valuation of a specified number of shares of Common Stock on the date the right is exercised over a specified strike price, in each case, as determined by the Committee. 
 “Stock Award” means an award in the form of shares of Common Stock or units denominated in shares of Common Stock. 
 “Subsidiary” means (i) in the case of a corporation, any corporation of which the Company directly or indirectly owns shares
representing more than 50 % of the combined voting power of the shares of all classes or series of capital stock of that corporation that have the right to vote generally on matters submitted to a vote of the stockholders of that corporation
and (ii) in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns more than 50% of the voting, capital or profits interests (whether in the
form of partnership interests, membership interests or otherwise). 
 3. Objectives. The Company has designed this Plan (i) to
attract and retain key Employees, (ii) to encourage the sense of proprietorship of these persons in the Company and (iii) to stimulate the active interest of these persons in the development and financial success of the Company and its
Subsidiaries by making Awards under this Plan. 
 4. Eligibility. Key Employees eligible for Employee Awards are those assigned or to
be assigned positions of responsibility and whose performance, in the judgment of the Committee, can have a significant effect on the success of the Company and its Subsidiaries. 
 5. Common Stock Available for Awards. Subject to the provisions of paragraph 15 hereof, there shall be available for Awards under this Plan
granted wholly or partly in Common Stock (including rights or options that may be exercised for or settled in Common Stock) an aggregate of 2,400,000 shares of Common Stock. No more than 2,400,000 shares of Common Stock will be used for Awards of
Incentive Options. The number of shares of Common Stock that are the subject of Awards which are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or in a manner such that all or some of the shares covered
thereby are not issued to a Participant or are exchanged for a consideration that does not involve Common Stock will again immediately become available for Awards hereunder. The Committee may from time to time adopt and observe such procedures
concerning the counting of shares against the Plan maximum as it may deem appropriate. The Board and the appropriate officers of the Company will from time to time take whatever actions are necessary to file any required documents with governmental
authorities, stock exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards. 
  

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 6. Administration. 
 (a) The Committee will administer this Plan. 
 (b) Subject to the provisions hereof, the Committee will have
full and exclusive power and authority to administer this Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. The Committee also will have full and
exclusive power to interpret this Plan and to adopt such rules, regulations and guidelines for carrying out this Plan as it may deem necessary or proper, all of which powers will be exercised in the best interests of the Company and in keeping with
the objectives of this Plan. The Committee may, in its discretion, provide for the extension of the exercisability of any Employee Award, accelerate the vesting or exercisability of any Employee Award, eliminate or make less restrictive any
restrictions contained in any Employee Award, waive any restriction or other provision of this Plan or any Employee Award or otherwise amend or modify any Employee Award in any manner that is either (i) not adverse to the Participant to whom
that Employee Award was granted or (ii) consented to in writing by that Participant. The Committee may grant an Employee Award to any individual who has agreed in writing to become an Employee within six months after the date of that agreement,
provided that the effectiveness of that Award will be subject to the condition that the individual actually becomes an Employee within that time period. The Committee may correct any defect or supply any omission or reconcile any inconsistency in
this Plan or in any Employee Award in the manner and to the extent the Committee deems necessary or desirable to further the purposes of this Plan. Any decision of the Committee in the interpretation and administration of this Plan will lie within
its sole and absolute discretion and will be final, conclusive and binding on all parties concerned. 
 (c) No member of the Committee or
officer of the Company to whom the Committee has delegated authority in accordance with the provisions of paragraph 7 of this Plan will be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer
of the Company in connection with the performance of any duties under this Plan, except for his or her own willful misconduct or as expressly provided by statute. 
 7. Delegation of Authority. The Committee may delegate to any Chairman of the Board and to other senior officers of the Company its duties under this Plan on such terms and subject to such conditions or
limitations as the Committee may establish, except that the Committee may not delegate to any person the authority to grant Awards to, or take other action with respect to, Employee Participants who are subject to Section 16 of the Exchange
Act. 
 8. Employee Awards. 
 (a) The Committee will determine the type or types of Employee Awards to be made and will designate from time to time the Employees who are to receive Employee Awards. Each Employee Award will be evidenced by an Employee Award Agreement
containing such terms, conditions and limitations as the Committee determines in its sole 

  

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discretion and signed by the Participant to whom the Employee Award is made and by an Authorized Officer for and on behalf of the Company. Employee Awards
may consist of those listed in this paragraph 8(a) hereof and may be granted singly or in combination or tandem with other Employee Awards. Employee Awards also may be made in combination or tandem with, in replacement of or as alternatives to
grants or rights under this Plan or any other employee plan of the Company or any of its Subsidiaries, including the plan of any acquired entity. No option may be granted in exchange or in replacement of an option having a higher exercise price. An
Employee Award may provide for the grant or issuance of additional, replacement or alternative Employee Awards upon the occurrence of specified events, including the exercise of the original Employee Award granted to a Participant. All or part of an
Employee Award may be subject to conditions established by the Committee, which may include, but are not limited to, continuous service with the Company and its Subsidiaries, achievement of specific business objectives, increases in specified
indices, attainment of specified growth rates and other comparable measurements of performance. If a Participant holding an Employee Award ceases to be an Employee, any unexercised, deferred, unexercisable, unvested or unpaid portion of that
Employee Award will be treated as set forth in the applicable Employee Award Agreement. 
 (i) Stock Option. An
Employee Award may be in the form of an Option. An Option awarded pursuant to this Plan may consist of an Incentive Option or a Nonqualified Option. The price at which any share of Common Stock may be purchased on the exercise of any Option will not
be less than the Fair Market Value of a share of the Common Stock on the date of grant of that Option, and the Committee will determine the other terms, conditions and limitations applicable to each Option, including its term and the date or dates
on which it becomes exercisable. 
 (ii) Stock Appreciation Right. An Employee Award may be in the form of an SAR. The
Committee will determine the terms, conditions and limitations applicable to each SAR awarded pursuant to this Plan, including its term and the date or dates on which it becomes exercisable. 
 (iii) Stock Award. An Employee Award may be in the form of a Stock Award. The Committee will determine the terms, conditions and
limitations applicable to each Stock Award granted pursuant to this Plan. 
 (iv) Cash Award. An Employee Award may be
in the form of a Cash Award. The Committee will determine the terms, conditions and limitations applicable to each Cash Award granted pursuant to this Plan. 
 (v) Performance Award. Without limiting the type or number of Employee Awards that may be made under the other provisions of this
Plan, an Employee Award may be in the form of a Performance Award. A Performance Award will be paid, vested or otherwise deliverable solely on account of the attainment of one or more pre-established, objective Performance Goals established by the
Committee prior to the earlier to occur of (x) 90 days after the commencement of the period of service to which the Performance Goal relates or (y) the lapse of 25 % of the period of service (as scheduled in good faith at the time the
goal is established), and in any event while the outcome is substantially uncertain. A Performance Goal is objective if a third party 

  

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having knowledge of the relevant facts could determine whether the goal is met. A Performance Goal may be based on one or more business criteria, including,
but not limited to, those that apply to the individual, one or more lines or classes of products or services of the Company, one or more business divisions, groups or units of the Company, or the Company as a whole, and may include one or more of
the following: increased revenue, net income, stock price, market share, earnings per share, return on equity, return on assets or decrease in costs. Unless otherwise stated, a Performance Goal need not be based on an increase or positive result
under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria). In interpreting Plan provisions applicable to
Performance Goals and Performance Awards, it is the intent of this Plan to conform with the standards of Section 162(m) of the Code and Treasury Regulation §1.162- 27(e)(2)(i) or any successor law or regulation, and the Committee in
establishing such goals and interpreting the Plan will be guided by those provisions. Prior to the payment of any compensation based on the achievement of Performance Goals, the Committee must certify in writing that the applicable Performance Goals
were, in fact, satisfied. Subject to the foregoing provisions, the Committee will determine the terms, conditions and limitations applicable to Performance Awards. 
 (b) Notwithstanding anything to the contrary contained in this Plan, the following limitations will apply to each Employee Award: 
 (i) no Participant may be granted, during any one-year period, Employee Awards consisting of Options or SARs that are exercisable for more
than 300,000 shares of Common Stock; 
 (ii) no Participant may be granted, during any one-year period, Stock Awards covering
or relating to more than 10,000 shares of Common Stock (the limitation set forth in this clause (ii), together with the limitation set forth in clause (i) above, being hereinafter collectively referred to as the “Stock-based Awards
Limitations”); and 
 (iii) no Participant may be granted Employee Awards consisting of cash or in any other form
permitted under this Plan (other than Employee Awards consisting of Options or SARs or otherwise consisting of shares of Common Stock or units denominated in such shares) in respect of any one-year period having a value determined on the date of
grant in excess of $1,000,000. 
 9. Payment of Awards. 
 (a) General. Payment of Employee Awards may be made in the form of cash or Common Stock, or a combination thereof, and may include such restrictions as the Committee may determine, including, in the case of
Common Stock, restrictions on transfer and forfeiture provisions. If payment of an Employee Award is made in the form of shares of Restricted Stock, the applicable Award Agreement relating to those shares will specify whether they are to be issued
at the beginning or end of their Restriction Period. If shares of Restricted Stock are to be issued at the beginning of their Restriction Period, the certificates evidencing those shares (to the extent that those shares are so evidenced) will
contain appropriate legends and restrictions that 

  

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describe the terms and conditions of the restrictions applicable thereto. If shares of Restricted Stock are to be issued at the end of their Restricted
Period, the right to receive those shares will be evidenced by book entry registration or in such other manner as the Committee may determine. 
 (b) Deferral. The Committee, in its sole discretion, may permit selected Participants to elect to defer payments of some or all types of Employee Awards, subject to the terms and conditions established by the Committee and the
requirements of Section 409A. Any deferred payment of an Employee Award, whether elected by the Participant or specified by the applicable Award Agreement or by the Committee, may be forfeited if and to the extent that the applicable Award
Agreement so provides. 
 (c) Dividends and Interest. Rights to dividends or Dividend Equivalents may be extended to and made part of
any Employee Award consisting of shares of Common Stock or units denominated in shares of Common Stock, subject to such terms, conditions and restrictions as the Committee may establish. The Committee also may establish rules and procedures for the
crediting of interest on deferred cash payments and Dividend Equivalents for Employee Awards consisting of shares of Common Stock or units denominated in shares of Common Stock. 
 (d) Substitution of Awards. At the discretion of the Committee, a Participant who is an Employee may be offered an election to substitute any
Employee Award for another Employee Award or Awards of the same or a different type. 
 10. Stock Option Exercise. The price at which
shares of Common Stock may be purchased under an Option will be paid in full at the time of exercise in cash or, if elected by the optionee, the optionee may purchase those shares by means of tendering Common Stock or surrendering another Award,
including shares of Restricted Stock, valued at their Fair Market Value per share on the date of exercise, or any combination thereof. The Committee will determine acceptable methods for Participants who are Employees to tender Common Stock or other
Employee Awards; provided, that any Common Stock that is or was the subject of an Employee Award may be so tendered only if it has been held by the Participant for six months. The Committee may provide for procedures to permit the exercise or
purchase of Employee Awards by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Employee Award. Unless otherwise provided in the applicable Award Agreement, if shares of Restricted Stock are tendered as
consideration for the exercise of an Option, the number of the shares issued on the exercise of the Option that equals the number of shares of Restricted Stock used as consideration therefor will be subject to the same restrictions as the Restricted
Stock so submitted as well as to any additional restrictions the Committee may impose. 
 11. Taxes. The Company will have the right
to deduct applicable taxes from any Employee Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under this Plan, or at the time otherwise required by applicable law, an appropriate amount of cash or
number of shares of Common Stock or a combination thereof for payment of taxes required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of those taxes. The Committee
may permit withholding to be satisfied by the transfer to the Company of shares of Common Stock 

  

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theretofore owned by the holder of the Employee Award with respect to which withholding is required. If shares of Common Stock are used to satisfy tax
withholding, those shares will be valued at their Fair Market Value per share when the tax withholding is required to be made. The Committee may provide for loans, on either a short-term or demand basis, from the Company to a Participant who is an
Employee to permit the payment of taxes required by law. 
 12. Amendment, Modification, Suspension or Termination. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that no amendment or alteration that would adversely affect the rights of any
Participant under any Award previously granted to that Participant will be made without the consent of that Participant. 
 13.
Section 409A. The following provisions shall apply to this Plan, notwithstanding any provision to the contrary: 
 (a) This Plan
is intended to comply with Section 409A of the Code and ambiguous provisions, if any, shall be construed in a manner that is compliant with or exempt from the application of Section 409A. If a provision of the Plan would result in the
imposition of applicable taxes and interest under Section 409A, such provision may be reformed to avoid imposition of such taxes and interest and no action taken to comply with Section 409A shall be deemed to adversely affect any rights or
benefits of the Participant hereunder. 
 (b) This Plan shall not be amended in a manner that would cause the Agreement or any amounts
payable under the Plan to fail to comply with the requirements of Section 409A, to the extent applicable, and, further, the provisions of any purported amendment that may reasonably be expected to result in such non-compliance shall be of no
force or effect with respect to the Agreement. 
 (c) The Plan shall neither cause nor permit any payment, benefit or consideration to be
substituted for a benefit that is payable under this Plan if such action would result in the failure of any amount that is subject to Section 409A to comply with the applicable requirements of Section 409A. 
 (d) Notwithstanding any provision of this Plan to the contrary, if the Participant is a “specified employee” within the meaning of
Section 409A as of the Participant’s Date of Termination, then any amounts or benefits which are payable under this Plan upon the Participant’s “separation from service” within the meaning of Section 409A which are
subject to the provisions of Section 409A and are not otherwise excluded under Section 409A and would otherwise be payable during the first six-month period following such separation from service shall be paid on the first business day
next following the earlier of (a) the date that is six months and one day following the Date of Termination or (b) the date of Participant’s death. 
 (e) For purposes of Section 409A, each payment under this Plan shall be deemed to be a separate payment. 
 14. Assignability. Unless otherwise determined by the Committee and provided in the applicable Award Agreement, no Award or any other benefit under this Plan will be assignable or otherwise transferable except by will or the laws of
descent and distribution or 

  

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pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended,
or the rules thereunder. The Committee may prescribe and include in any Award Agreement other restrictions on transfer. Any attempted assignment of an Award or any other benefit under this Plan in violation of this Paragraph 14 will be null and
void. 
 15. Adjustments. 
 (a) Notwithstanding any other provision of this Paragraph 15 to the contrary, the Company shall neither cause nor permit any adjustments to any equity interest to be made in a manner that would result in the equity interest’s becoming
subject to Section 409A unless, after such adjustment, the equity interest is in compliance with the requirements of Section 409A to the extent applicable. 
 (b) The existence of outstanding Awards will not affect in any manner the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or other stock (whether or not that issue is prior to, on a parity with or junior to the Common
Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or
proceedings enumerated above. 
 (c) If any subdivision, split or combination of outstanding shares of Common Stock, or any declaration of a
dividend payable in shares of Common Stock, occurs, then, except with respect to the Awards outstanding immediately prior to the Closing Date and consisting of Options, (i) the number of shares of Common Stock reserved under this Plan,
(ii) the number of shares of Common Stock covered by outstanding Awards in the form of Common Stock or units denominated in Common Stock, (iii) the exercise or other price in respect of such Awards, (iv) the appropriate Fair Market
Value and other price determinations for such Awards, and (v) the Stock-based Awards Limitations each will be proportionately adjusted by the Board to reflect the consequences of that occurrence. If any recapitalization or capital
reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, any adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities
or property (other than normal cash dividends) occurs, the Board will make appropriate adjustments to the amounts or other items referred to in clauses (ii), (iii), (iv) and (v) of the preceding sentence to give effect to that
transaction; provided, that such adjustments will be only those as are necessary to maintain the proportionate interest of the holders of the Awards and preserve, without exceeding, the value of those Awards. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee will be authorized to issue or assume Awards by means of substitution of new Awards, as appropriate, for previously issued Awards or to assume
previously issued Awards as part of such adjustment. 
 16. Restrictions. No Common Stock or other form of payment will be issued with
respect to any Award unless the Company is satisfied, on the basis of advice of its counsel, that the issuance will comply with applicable federal and state securities laws. Certificates 

  

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evidencing shares of Common Stock delivered under this Plan (to the extent that the shares are so evidenced) may be subject to such stop-transfer orders and
other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system on which the Common Stock is then listed or
to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon those certificates (if any) to make appropriate reference to those restrictions. 
 17. Unfunded Plan. Insofar as it provides for Awards of cash, Common Stock or rights thereto, this Plan will be unfunded. Although bookkeeping
accounts may be established with respect to Participants who are entitled to cash, Common Stock or rights thereto under this Plan, any such accounts will be used merely as a bookkeeping convenience. The Company will not be required to segregate any
assets that may at any time be represented by cash, Common Stock or rights thereto, nor will this Plan be construed as providing for that segregation, nor shall the Company, the Board or the Committee be deemed to be a trustee of any cash, Common
Stock or rights thereto to be granted under this Plan. Any liability or obligation of the Company to any Participant with respect to an Award of cash, Common Stock or rights thereto under this Plan shall be based solely on any contractual
obligations that may be created by this Plan and any Award Agreement, and no such liability or obligation of the Company will be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the
Board nor the Committee will be required to give any security or bond for the performance of any obligation that may be created by this Plan. 
 18. Governing Law. This Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, will be governed by and
construed in accordance with the laws of the State of Delaware. 
 19. Effective Date. The Plan shall be effective as of
December 31, 2008. 
  

 -10-Form of Standard Non-Qualified Stock Option Agreement.

 Exhibit 10.4 
 2004 INCENTIVE PLAN 
 OF 
 DRIL-QUIP, INC. 
 STANDARD 
 NON-QUALIFIED STOCK OPTION AGREEMENT 
 THIS AGREEMENT (“Agreement”) is made as of the      day of                     ,
20     (the “Grant Date”), by and between Dril-Quip, Inc., a Delaware corporation (the “Company”), and
                                        
(the “Grantee”). 
 The Company has adopted the 2004 Incentive Plan of Dril-Quip, Inc. (the “Plan”) for the benefit of
eligible employees of the Company and its Subsidiaries. Capitalized terms used and not otherwise defined herein shall have the meaning ascribed thereto in the Plan. 
 Pursuant to the Plan, the Committee, which has generally been assigned responsibility for administering the Plan, has determined that it would be in the interest of the Company and its stockholders to grant the
options provided herein in order to encourage the Grantee to remain in the employ of the Company or its Subsidiaries, to encourage the sense of proprietorship of the Grantee in the Company and to stimulate the active interest of the Grantee in the
development and financial success of the Company. 
 The Company and the Grantee therefore agree as follows: 
 1. Grant of Option. Subject to the terms and conditions herein, the Company grants to the Grantee during the period commencing on
                    , 20     and expiring at 5 p.m. Houston, Texas time (“Close of Business”) on
                    , 20     (the “Option Term”), subject to earlier termination pursuant to
paragraph 6 below, an option to purchase from the Company, at the price of $             per share (the “Option Price”),
             shares (the “Option Shares”) of Company Common Stock (“Common Stock”); provided that the price at which any share of Common Stock may be purchased on
the exercise of any Option will not be less than the Fair Market Value of a share of the Common Stock on the date of grant of that Option. The Grantee agrees that the Option Price complies with the provisions of the Grantee’s written employment
agreement with the Company dated                                 . The Option
Price and Option Shares are subject to adjustment pursuant to paragraph 9 below. This option is a “Nonqualified Stock Option” and is hereinafter referred to as the “Option.” 
 2. Conditions of Exercise. The Option is exercisable only in accordance with the conditions stated in this paragraph. 
 (a) Except as otherwise provided in this paragraph 2, this Option shall become exercisable in four installments, with one-fourth of
the Option Shares becoming exercisable on                     , 20     and an additional one-fourth becoming
exercisable on                      of each of 20    , 20     and
20    ; provided, however, that subject to paragraph 2(c), the right to purchase Option Shares is cumulative, so that the Grantee may purchase after any such anniversary and during the remainder of the Option
Term those quantities of Option Shares which the Grantee was entitled to purchase but did not purchase during any preceding 

  

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period or periods. Notwithstanding the foregoing, subject to the provisions of any applicable written employment agreement between the Grantee and the
Company or any Subsidiary, no additional Option Shares shall become available for purchase if the Grantee has not remained in continuous Employment through the applicable date. “Employment” for purposes of this Agreement means employment
with the Company or any of its Subsidiaries. 
 (b) Notwithstanding the limitations set forth in paragraph 2(a), the Option
shall become fully exercisable, provided that the Grantee has been in continuous Employment since the commencement of the Option Term, upon the occurrence of a Change of Control. 
 For the purposes of this Agreement, “Change of Control” shall mean a change in control of the Company after the commencement of
the Option Term, which shall be deemed to have occurred in any one of the following circumstances occurring after such date: (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) other than the Stockholder Group shall have become the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Corporation representing 30% or more of the combined voting power of the Corporation’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 of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or
(iv) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors (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 of Directors. For the purposes
of this Agreement, “Stockholder Group” shall mean, to the extent such group is deemed to be a “person” under Section 13(d) of the Exchange Act, collectively, but not individually, J. Mike Walker, Larry E. Reimert, Reimert
Family Partners, Ltd., Gary D. Smith and Four Smith’s Company, Ltd. 
 (c) To the extent the Option becomes exercisable,
such Option may be exercised only in whole or in increments of one-fourth, one-half or three-quarters of the total number of Option Shares (at any time or from time to time, except as otherwise provided herein) until expiration of the Option Term or
earlier termination thereof. 
  

 2 

 3. Manner of Exercise. The Option shall be considered exercised (as to the number of Option Shares
specified in the notice referred to in subparagraph (a) below) on the latest of (i) the date of exercise designated in the written notice referred to in subparagraph (a) below, (ii) if the date so designated is not a business
day, the first business day following such date or (iii) the earliest business day by which the Company has received all of the following: 
 (a) Written notice, in the form attached hereto as Exhibit A, designating, among other things, the date of exercise and the number of Option Shares to be purchased; 
 (b) If the Option is to be exercised, payment of the Option Price for each Option Share to be purchased in cash, Common Stock or in such
other form (or combination of forms) of payment contemplated by paragraph 10 of the Plan as the Committee may permit; provided, however, that any shares of Common Stock delivered in payment of the Option Price that are or were the
subject of an Employee Award must be shares that the Grantee has owned for a period of at least six months prior to the date of exercise; and 
 (c) Any other documentation that the Committee may reasonably require. 
 4. Mandatory Withholding for
Taxes. The Grantee acknowledges and agrees that no certificates representing shares of Common Stock purchased hereunder shall be delivered to or in respect of the Grantee unless the amount of all federal, state and other governmental withholding
tax requirements imposed upon the Company with respect to the issuance of such shares of Common Stock has been remitted to the Company or unless provisions to pay such withholding requirements have been made to the satisfaction of the Committee
pursuant to paragraph 11 of the Plan. The Committee may make such provisions as it may deem appropriate for the withholding of any taxes which it determines is required in connection with this Option. The Grantee may pay all or any portion of
the taxes required to be withheld by the Company or paid by the Grantee in connection with the exercise of all or any portion of this Option by delivering cash, or, with the Committee’s approval, by electing to have the Company withhold shares
of Common Stock, or by delivering previously owned shares of Common Stock, having a Fair Market Value determined in accordance with paragraph 11 of the Plan, equal to the amount required to be withheld or paid. 
 5. Delivery by the Company. As soon as practicable after receipt of all items referred to in paragraph 3, and subject to the withholding
referred to in paragraph 4, the Company shall deliver to the Grantee certificates issued in the Grantee’s name for the number of Option Shares purchased by exercise of the Option. If delivery is by mail, delivery of shares of Common Stock
shall be deemed effected for all purposes when a stock transfer agent of the Company shall have deposited the certificates in the United States mail, addressed to the Grantee. 
 6. Termination of Option: The Option hereby granted shall terminate and be of no force and effect with respect to any shares of Common Stock
not previously purchased by the Grantee upon the first to occur of: 
 (a) the expiration of the Option Term; or 

 

 3 

 (b) with respect to 
 (i) the portion of the Option exercisable upon termination, the expiration of (A) 90 days following the Grantee’s termination of
Employment for reasons other than death or Disability (as defined below), or (B) one year following the Grantee’s termination of Employment by reason of death or Disability; and 
 (ii) the portion of the Option not exercisable upon termination, the date of the Grantee’s termination of Employment. 
 “Disability” for purposes of the Agreement means illness or other incapacity which continues for a period of more than six months. 

7. Nontransferability of Option. During the Grantee’s lifetime, the Option is not transferable (voluntarily or involuntarily) other than
pursuant to a qualified domestic relations order and, except as otherwise required pursuant to a qualified domestic relations order, is exercisable only by the Grantee or the Grantee’s court-appointed legal representative. The Grantee may
designate a beneficiary or beneficiaries to whom the Option shall pass upon the Grantee’s death and may change such designation from time to time by filing a written designation of beneficiary or beneficiaries with the Committee on the form
annexed hereto as Exhibit B or such other form as may be prescribed by the Committee, provided that no such designation shall be effective unless so filed prior to the death of the Grantee. If no such designation is made or if the
designated beneficiary does not survive the Grantee’s death, the Option shall pass by will or the laws of descent and distribution. Following the Grantee’s death, the Option, to the extent it was exercisable on the date of the
Grantee’s death, may be exercised in accordance with the terms of this Agreement by the person to whom such Option passes. 
 8. No
Stockholder Rights. The Grantee shall not be deemed for any purpose to be, or to have any of the rights of, a stockholder of the Company with respect to any shares of Common Stock as to which this Agreement relates until such shares shall have
been issued to the Grantee by the Company. Furthermore, the existence of this Agreement shall not affect in any way the right or power of the Company or its stockholders to accomplish any corporate act, including, without limitation, the acts
referred to in paragraph 15 of the Plan. 
 9. Adjustments. As provided in paragraph 15 of the Plan and subject to paragraph
13 of the Plan, certain adjustments may be made to the Option upon the occurrence of events or circumstances described in paragraph 15 of the Plan. The Grantee agrees that, upon a merger or other similar business combination transaction
relating to the Company wherein all of the outstanding Common Stock of the Company is exchanged for shares of capital stock of another company (an “Acquiror”), the Board may, in its sole discretion, provide that this Option shall be
exchanged for (a) a similar option to purchase shares of capital stock of such Acquiror, the specific terms of which shall be determined by the Committee or (b) cash in an amount equal to the Fair Market Value of the Option Shares on a
date determined by the Committee less the aggregate exercise price of the Option Shares. 
  

 4 

 10. Restrictions Imposed by Law. Without limiting the generality of paragraphs 13 or 16 of
the Plan, the Grantee agrees that the Grantee will not exercise the Option and that the Company will not be obligated to deliver any shares of Common Stock, if counsel to the Company determines that such exercise or delivery would violate any
applicable law or any rule or regulation of any governmental authority or any rule or regulation of, or agreement of the Company with, any securities exchange or association upon which the Common Stock is listed or quoted. The Company shall in no
event be obligated to take any affirmative action in order to cause the exercise of the Option or the resulting delivery of shares of Common Stock to comply with any such law, rule, regulation or agreement. 
 11. Notice. Unless the Company notifies the Grantee in writing of a different procedure, any notice or other communication to the Company with
respect to this Agreement shall be in writing and shall be delivered personally or sent by first class mail, postage prepaid to the following address: 
 Dril-Quip, Inc. 
 13550 Hempstead Hwy. 
 Houston, Texas 77040 
 Attn: Corporate
Secretary 
 Any notice or other communication to the Grantee with respect to this Agreement shall be in writing and shall be delivered personally, or shall
be sent by first class mail, postage prepaid, to the Grantee’s address as listed in the records of the Company on the Grant Date, unless the Company has received written notification from the Grantee of a change of address. 
 12. Amendment. Notwithstanding any other provisions hereof, this Agreement may be supplemented or amended from time to time as approved by the
Committee as contemplated by paragraph 6 of the Plan. Without limiting the generality of the foregoing, without the consent of the Grantee, 
 (a) subject to paragraph 13 of the Plan, this Agreement may be amended or supplemented to (i) cure any ambiguity or to correct or supplement any provision herein which may be defective or inconsistent with any
other provision herein, or (ii) add to the covenants and agreements of the Company for the benefit of the Grantee or to surrender any right or power reserved to or conferred upon the Company in this Agreement, subject, however, to
any required approval of the Company’s stockholders and, provided that, in each case, subject to paragraph 9, such changes or corrections shall not adversely affect the rights of the Grantee with respect to the Award evidenced hereby
without the Grantee’s consent, or (iii) make such other changes as the Company, upon advice of counsel, determines are necessary or advisable because of the adoption or promulgation of, or change in or of the interpretation of, any law or
governmental rule or regulation, including any applicable federal or state securities laws; and 
  

 5 

 (b) subject to paragraphs 6 and 13 of the Plan and any required approval of the
Company’s stockholders, the Award evidenced by this Agreement may be canceled by the Committee and a new Award made in substitution therefor, provided that, subject to paragraph 9, the Award so substituted shall satisfy all of the
requirements of the Plan as of the date such new Award is made and no such action shall adversely affect the Option to the extent then exercisable without the Grantee’s consent. 
 13. Grantee Employment. Nothing contained in this Agreement, and no action of the Company or the Committee with respect hereto, shall confer or be
construed to confer on the Grantee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any employing Subsidiary to terminate the Grantee’s employment at any time
for any reason. 
 14. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of
Delaware without regard to principles of conflicts of law. 
 15. Construction. References in this Agreement to “this
Agreement” and the words “herein,” “hereof,” “hereunder” and similar terms include all Exhibits appended hereto. This Agreement is entered into, and the Award evidenced hereby is granted, pursuant to the Plan and
shall be governed by and construed in accordance with the Plan and the administrative interpretations adopted by the Committee thereunder. All decisions of the Committee upon questions regarding the Plan or this Agreement shall be conclusive. Unless
otherwise expressly stated herein, in the event of any inconsistency between the terms of the Plan and this Agreement, the terms of the Plan shall control. The headings of the paragraphs of this Agreement have been included for convenience of
reference only, are not to be considered a part hereof and shall in no way modify or restrict any of the terms or provisions hereof. 
 16.
Duplicate Originals. The Company and the Grantee may sign any number of copies of this Agreement. Each signed copy shall be an original, but all of them together represent the same agreement. 
 17. Rules by Committee. The rights of the Grantee and obligations of the Company hereunder shall be subject to such reasonable rules and
regulations as the Committee may adopt from time to time hereafter. 
 18. Entire Agreement. Subject to the provisions of any
applicable written employment agreement between the Grantee and the Company or any Subsidiary, the Grantee and the Company hereby declare and represent that no promise or agreement not herein expressed has been made and that this Agreement contains
the entire agreement between the parties hereto with respect to the Option and replaces and makes null and void any prior agreements, oral or written, between the Grantee and the Company regarding the Option. 
 19. Grantee Acceptance. The Grantee shall signify acceptance of this Agreement, subject to the terms and conditions of this Agreement and of the
Plan and of the administrative interpretations thereof referred to above, by signing in the space provided at the end hereof and returning a signed copy to the Company. 
  

 6 

															
	DRIL-QUIP, INC.	 		 	DRIL-QUIP, INC.	 	DRIL-QUIP, INC.
								
	By:	 	  
	 		 	By:	 	  
	 		 	By:	 	  

		 	Gary D. Smith	 		 		 	J. Mike Walker	 		 		 	Larry E. Reimert
		 	Co-Chairman of the Board	 		 		 	Co-Chairman of the Board	 		 		 	Co-Chairman of the Board
							
	ACCEPTED:	 		 		 		 		 		 	
							
	  
	 		 		 		 		 		 	
	Grantee	 		 		 		 		 		 	

  

 7 

					
		  		  	Exhibit A to Non-Qualified Stock Option
		  		  	Agreement dated as of                     , 20    

 2004 Incentive Plan of Dril-Quip, Inc. 
 Notice of Option Exercise 
 Dril-Quip, Inc.

 13660 Hempstead Hwy. 
 Houston, Texas 77040 
 Attention: Secretary 
 I refer to the Stock Option Agreement
dated as of                     , 20     (the “Option Agreement”) between Dril-Quip, Inc. (the
“Company”) and the undersigned (the “Grantee”) in which the Company granted the Grantee a nonqualified stock option (the “Option”) to purchase from the Company up to
                     shares of the Common Stock, par value $.01 per share, of the Company (the “Option Shares”) at a price per
Option Share equal to $             (the “Exercise Price”). Words and terms used herein which are defined in the Option Agreement or the 2004 Incentive Plan of Dril-Quip,
Inc. (the “Plan”) are used herein as defined therein. 
 1. Exercise of Option. The Grantee hereby elects to exercise
the Option to purchase the following number of vested Option Shares: 
 [check one] 
  

	 ̈	One-fourth of the total number of Option Shares [on or after
                    , 20    ] 

  

	 ̈	One-half of the total number of Option Shares [on or after
                    , 20    ] 

  

	 ̈	Three-quarters of the total number of Option Shares [on or after
                    , 20    ] 

  

	 ̈	All of the Option Shares [on or after                     ,
20    ] 

 2. Representations of Grantee. The Grantee hereby acknowledges, represents
and warrants that the Grantee has received, read and understood the Option Agreement and the Plan and will abide by and be bound by their terms and conditions. The Grantee understands that the Grantee may incur tax liability as a result of the
Grantee’s purchase or disposition of the Option Shares. The Grantee represents that the Grantee has consulted with a tax advisor in connection with the purchase or disposition of the Option Shares and that the Grantee is not relying on the
Company for any tax advice. 
 3. Delivery of Payment. The Grantee herewith delivers to the Company the aggregate Exercise
Price for the Option Shares that the Grantee has elected to purchase, as follows: 
 In
cash:                                $        
    ; and 
  

 8 

 In shares of Common Stock:
                     shares having an aggregate Fair Market Value on the date hereof of
$            . 
 4. Withholding. The Grantee has made
provision for the payment of any federal or state withholding taxes required to be paid or withheld by the Company. 
  

					
	SUBMITTED BY:
		
	Grantee:	 	  

			
		 	Name:	 	  

		 	Address:	 	  

		 		 	  

		
	Date:	 	  

  

 9 

					
		  		  	Exhibit B to Non-Qualified Stock Option
		  		  	Agreement dated as of                     , 20    

 2004 Incentive Plan of Dril-Quip, Inc. 
 Designation of Beneficiary 
  

					
	 I,
	 	  
	  	(the “Grantee”), hereby declare

					
			
	 that upon my death
	 	  
	  	(the “Beneficiary”) of

							
		
	 	 	,        

							
	Street Address	 	City	 	State	 	Zip Code

					
			
	 who is my
	 	  
	 	, shall be entitled to the
		 	Relationship to Grantee	 	

 Option granted the Grantee by the above-referenced agreement (the “Agreement”). 
 It is understood that this Designation of Beneficiary is made pursuant to the Agreement and is subject to the conditions stated herein, including the
Beneficiary’s survival of the Grantee’s death. If any such condition is not satisfied, such rights shall devolve according to the Grantee’s will or the laws of descent and distribution. 
 It is further understood that all prior designations of beneficiary under the Agreement are hereby revoked and that this Designation of Beneficiary may
only be revoked in writing, signed by the Grantee, and filed with the Company prior to the Grantee’s death. 
  

			
	  
	  	  

	Date	  	Grantee

  

 10

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