EXHIBIT 10.15

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This Executive Employment Agreement (“Agreement”), dated effective the 5th day
of January, 2004 (the “Effective Date”), is entered into by and between Dresser,
Inc., a Delaware corporation (the “Employer”) and James Nattier (“Employee”).

 

W I T N E S S E T H:

 

WHEREAS, Employer desires to employ Employee pursuant to the terms and
conditions set forth herein and Employee desires to accept such employment
pursuant to the terms and conditions set forth herein, and to amend and restate
any prior employment agreements between the Principal DEG Entities and Employee;

 

WHEREAS, 85% of the outstanding voting securities (on a fully diluted basis) of
Dresser, Ltd., a Bermuda corporation, are owned by DEG Acquisitions, L.L.C.
(“DEG”);

 

WHEREAS, Dresser Holding, Ltd. (“DHL”) is a wholly owned subsidiary of Dresser,
Ltd.;

 

WHEREAS, Dresser Holding, Inc. (“DHI”) is a wholly owned subsidiary of DHL;

 

WHEREAS, Employer is a wholly owned subsidiary of DHI;

 

WHEREAS, Dresser, Ltd. and Employer are referred to collectively as the
“Principal DEG Entities”;

 

NOW, THEREFORE, for and in consideration of the mutual promises, covenants and
obligations contained herein, Employer and Employee agree as follows:

 

ARTICLE 1: EMPLOYMENT AND DUTIES:

 

1.1 Employer agrees to employ Employee, and Employee agrees to be employed by
Employer, beginning as of the Agreement Date and continuing until the second
anniversary of the Agreement Date (the “Initial Term”), subject to the terms and
conditions of this Agreement. Commencing on the first anniversary of the
Agreement Date, the Initial Term will be automatically extended each day by one
day, until two years following the date on which either party delivers to the
other written notice of termination in accordance with the provisions of Section
7.3 below. Employer acknowledges and agrees that Employee is accepting
employment hereunder in reliance upon the facts set forth in the Whereas clauses
set forth above, which Employer represents and warrants to be true and correct
in all respects.

 

1.2 Beginning as of the Agreement Date, Employee shall be employed as the
Executive Vice President and Chief Financial Officer of Employer. As Executive
Vice President and Chief Financial Officer, President, Employee will report
directly to the President and Chief Executive Officer of Employer (“CEO”) and
the Board of Directors of Employer (the “Board”), and Employee’s duties will
include such functions and operations consistent with

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Employee’s title and assigned him from time to time by the President, CEO or the
Board. Employee agrees to perform such functions and operations diligently and
to the best of Employee’s abilities as well as such additional or different
duties and services appropriate to such positions which Employee from time to
time may be reasonably directed to perform by the President, CEO or the Board.

 

1.3 Employee shall at all times comply with and be subject to such policies and
procedures as Employer may establish from time to time, including, without
limitation, Employer’s Code of Business Conduct (the “Code of Business
Conduct”), which at any time during the period of his employment by Employer
have been furnished in writing to Employee.

 

1.4 Employee shall, during the period of Employee’s employment by Employer,
devote Employee’s full business time, energy, and best efforts to the business
and affairs of Employer. Employee may not engage, directly or indirectly, in any
other business, investment, or activity that materially interferes with
Employee’s performance of Employee’s duties hereunder, is contrary to the
interest of Employer or any of Dresser, Ltd.’s current or future affiliated
subsidiaries (each a “Dresser Entity”, or collectively, the “Dresser Entities”),
or requires any significant portion of Employee’s business time. The foregoing
notwithstanding, the parties recognize and agree that Employee may engage in
passive personal investments and other business activities which do not conflict
with the business and affairs of the Dresser Entities or materially interfere
with Employee’s performance of his duties hereunder. In addition, Employee may
serve on not more than two (2) corporate, civic, or charitable boards of
directors, provided that he first obtain approval to serve on any for-profit
corporate boards in accordance with Employer’s policies and procedures regarding
such service to the extent previously furnished in writing to Employee. Employee
shall be permitted to retain any compensation received for approved service on
any unaffiliated corporation’s board of directors.

 

1.5 Employee acknowledges and agrees that Employee owes a fiduciary duty of
loyalty, fidelity, and allegiance to act at all times in the best interests of
Employer and the other Dresser Entities and to do no act which would, directly
or indirectly, injure any such entity’s business, interests, or reputation. It
is agreed that any direct or indirect interest in, connection with, or benefit
from any outside activities, particularly commercial activities, which interest
might in any way adversely affect Employer, or any other Dresser Entity,
involves a possible conflict of interest. In keeping with Employee’s fiduciary
duties to Employer, Employee agrees that Employee shall not knowingly become
involved in a conflict of interest with Employer or any Dresser Entity, or upon
discovery thereof, allow such a conflict to continue. Moreover, Employee shall
not engage in any activity that is reasonably likely to involve a possible
conflict of interest without first obtaining approval in accordance with
Employer’s policies and procedures.

 

1.6 Nothing contained herein shall be construed to preclude the transfer of
Employee’s employment to another Dresser Entity or Entities (“Subsequent
Employer”) as of, or at any time after, the Agreement Date and no such transfer
shall be deemed to be a termination of employment for purposes of Article 3
hereof; provided, however, that

 

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(1) effective with such transfer, all of Employer’s obligations hereunder shall
be assumed by and be binding upon, and all of Employer’s rights hereunder shall
be assigned to, such Subsequent Employer, jointly and severally with Employer in
all respects, and the defined term “Employer” as used herein shall thereafter be
deemed amended to include such Subsequent Employer, (2) Employee shall be
Executive Vice President and Chief Financial Officer of each of the one or more
companies that in the aggregate hold and/or are the successor or successors to
all or substantially all of the business of Employer (“Employer Successors”),
(3) Employer shall remain jointly and several liable and bound by this
Agreement, and (4) nothing in this Section 1.6 shall alter the definition of, or
Employee’s rights associated with, Employee Cause (as defined in Section 3.4(i)
below), or a Change of Control (as defined in Section 7.2 below). Except as
otherwise provided above, all of the terms and conditions of this Agreement,
including without limitation, Employee’s rights and obligations, shall remain in
full force and effect following such transfer of employment. An example of such
an assignment may be the division of Employer into two separate corporate
entities which each assume a portion of Employer’s business and which each then
shall become Employers, or the assignment of Employee’s contract to a Dresser
Entity which purchases all or substantially all of the assets of Employer, which
purchaser will then become an Employer.

 

ARTICLE 2: COMPENSATION AND BENEFITS:

 

2.1 From the Agreement Date to the date of termination of Employee’s employment
pursuant to the provisions of Article 3 (the “Termination Date”), Employee’s
base salary shall be not less than $300,000 per annum, which shall be paid by
Employer in accordance with its standard payroll practice for its executives.
Employee’s base salary may be increased from time to time. Such increased base
salary shall become the minimum base salary under this Agreement and may not be
decreased thereafter without the written consent of Employee.

 

2.2 From the Agreement Date to the Termination Date, Employee will be eligible
for an Annual Bonus to be awarded, if at all, based on achievement of
performance goals established annually by the Board, in consultation with
Employee, within the first ninety days of Employer’s fiscal year. The Board will
reasonably determine whether these performance goals have been met and the
amount of any Annual Bonus in its sole discretion, subject to the following
guidelines: (1) the Target Annual Bonus will be equal to 50% of Employee’s base
salary and the Maximum Annual Bonus will be equal to 100% of Employee’s base
salary; (2) the Board may increase the Target Annual Bonus or the Maximum Annual
Bonus at any time, but may not decrease them without Employee’s express written
consent; and (3) the Annual Bonus to be paid under the severance provisions of
Sections 3.3 or 3.5, should they become applicable, will be the Target Annual
Bonus.

 

2.3 From the Agreement Date to the Termination Date, Employee will receive a
perquisite allowance as the Board may establish from time to time for senior
executive employees. In addition, Employer shall pay or reimburse Employee for
all actual, reasonable and customary expenses incurred by Employee in the course
of his employment; provided that such expenses are incurred and accounted for in
accordance with Employer’s applicable policies and procedures.

 

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2.4 From the Agreement Date to the Termination Date, Employee shall be allowed
to participate, on the same basis as other senior executive employees of
Employer, in all general employee benefit plans and programs, including
improvements or modifications of the same, which on the Agreement Date or
thereafter are made available by Employer to Employer’s similarly situated
executive employees, excluding, however, those plans established by predecessors
of Employer which as of the Effective Date are not generally open to new
participants. Such benefits, plans, and programs may include, without
limitation, medical, health, and dental care, life insurance, disability
protection, and qualified and non-qualified retirement plans. Except as
specifically provided herein, nothing in this Agreement is to be construed or
interpreted to increase or alter in any way the rights, participation, coverage,
or benefits under such benefit plans or programs than provided to similarly
situated executive employees pursuant to the terms and conditions of such
benefit plans and programs.

 

2.5 Notwithstanding anything to the contrary in this Agreement, with the
exception of equity based incentives and option plans pursuant to which Employee
has received, or is contractually entitled to receive, any awards, it is
specifically understood and agreed that Employer shall not be obligated to
institute, maintain, or refrain from changing, amending, or discontinuing any
incentive, compensation, or employee benefit program or plan, so long as such
actions are similarly applicable to covered employees generally.

 

2.6 Employer may withhold from any compensation, benefits, or amounts payable
under this Agreement all federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.

 

ARTICLE 3: TERMINATION OF EMPLOYMENT AND EFFECTS OF SUCH TERMINATION:

 

3.1 Employee’s employment with Employer shall be terminated (i) upon the death
of Employee, (ii) upon Employee’s Retirement (as defined below), (iii) upon
Employee’s Permanent Disability (as defined below), (iv) at any time by Employer
upon notice to Employee, or (v) by Employee upon thirty (30) days’ notice to
Employer, for any or no reason.

 

3.2 If Employee’s employment is terminated by reason of any of the following
circumstances (i), (ii), or (iii), Employee shall be entitled to receive the
benefits set forth only in Section 3.3 below:

 

  (i) Retirement. “Retirement” shall mean either (a) Employee’s retirement at or
after normal retirement age (either voluntarily or pursuant to Employer’s
retirement policy) or (b) the voluntary termination of Employee’s employment by
Employee in accordance with Employer’s early retirement policy.

 

  (ii) Employer Termination for Cause. Termination of Employee’s employment by
Employer for Employer Cause shall mean a termination of employment at the
election of Employer when there is “Employer Cause”. “Employer Cause” shall mean
any of the following: (a) Employee’s gross negligence or willful

 

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misconduct in the performance of the duties and services required of Employee
pursuant to this Agreement that results in or with the passage of time poses a
reasonable risk of material financial detriment to Employer, (b) Employee’s
final conviction of or plea of guilty or nolo contendere to a felony or Employee
engaging in fraudulent or criminal activity relating to the scope of Employee’s
employment (whether or not prosecuted), (c) a material violation of the Code of
Business Conduct, provided that it has been provided to Employee in writing
prior to such alleged violation; (d) Employee’s material breach of any material
provision of this Agreement, provided that Employee has received written notice
from Employer and been afforded a reasonable opportunity (not to exceed 30 days)
to cure such breach, or (e) any continuing or repeated failure to perform the
duties as requested in writing by the Board after Employee has been afforded a
reasonable opportunity (not to exceed 30 days) to cure such breach.
Determination as to whether or not Employer Cause exists for termination of
Employee’s employment will be made by not less than 75% of the members of the
Board at a meeting in which Employee shall have the right (a) to have received
not less than 10 days prior to the meeting written notice of the date, time and
place of the meeting and the charges (in reasonable detail) to be considered,
(b) to appear at the meeting with counsel, and (c) to answer any charges made
concerning the existence of Employer Cause. Any determination by the Board of
Employer Cause at such meeting shall not be entitled to any deferential or
evidentiary weight or presumption of correctness, and at the election of
Employee, shall be determined pursuant to Section 7.7 in a de novo review, with
Employer having the obligation to prove Employer Cause by clear and convincing
evidence. During the foregoing process, Employer may, without Employer creating
any default under this Agreement or incurring any additional liability of any
kind and at Employer’s sole discretion, place Employee on paid administrative
leave and relieve Employee of all or any part of his responsibilities.
Notwithstanding the foregoing, and regardless of whether the process results in
a finding that Employer Cause existed for the termination, the year in which
such termination shall be deemed to have occurred, for purposes of determining
Employee’s entitlement to payments of unpaid Annual Bonus shall be the year in
which Employer first informs Employee that he is terminated for Employer Cause.
“Employer Cause” shall not mean any of the following: (a) Employee’s bad
judgment; (b) Employee’s negligence; (c) any act or omission that Employee
believed in good faith was in or was not opposed to the interests of Employer;
or (d) any act or omission of which any non-employee member of the Board who is
not a party to such act or omission had actual knowledge for at least six (6)
months.

 

  (iii) Resignation, Other Than For Cause. Termination of Employee’s employment
by resignation other than for Employee Cause as described in Section 3.4(i).

 

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3.3 If Employee’s employment is terminated by reason of Section 3.2 (i), (ii),
or (iii), Employee shall be entitled to each of the following:

 

  (i) Employee shall be entitled to a pro rata base salary (pro rated through
the date of termination as if it accrued throughout the year on a daily basis)
through the date of such termination and shall be entitled to any earned but
unpaid Annual Bonus payable for years prior to the year of Employee’s
termination of employment, but shall not be entitled to any Annual Bonus for the
year in which he terminates employment or any other payments or benefits by or
on behalf of Employer except for those which may be payable pursuant to the
terms of Employer’s employee benefit plans (as defined in Section 3.7), stock
options or other equity interests or the applicable agreements underlying such
plans, or, Section 3.3(ii) of this Agreement in the event that Employer makes
the applicable election thereunder.

 

  (ii) If Employee’s employment is terminated for reasons under Section 3.2 (i),
(ii) or (iii), then Employer, at its sole option, shall be entitled to enforce
the covenant not to compete and other conditions set forth in Article 5 herein
for a period not to exceed two (2) years. In the event that Employer elects to
trigger such option, Employer agrees to pay an amount equal to Employee’s base
salary and the Target Annual Bonus (both based upon Employee’s last base salary
amount prior to termination) for a period of two (2) years. Payments to Employee
for the base salary amount shall be in equal installments in accordance with
Employer’s customary payroll practices over the two year period. Payments of the
Target Annual Bonus shall be made at the time such a payment is made to
similarly situated employees. In the event that Employee willfully and
materially breaches any of the terms of Article 5 during the aforementioned two
(2) year period, then Employer shall be entitled to immediately cease making
further payments to Employee, retroactively treat Employee’s termination as
being an “Employer Termination For Cause” and recover from Employee any
consideration that has previously been paid to Employee which is inconsistent
with an “Employer Termination For Cause,” and, in addition, shall be entitled to
seek damages and such other relief (including an injunction against Employee) to
which it is entitled under the law. Employee agrees that any payment under this
Article constitutes full and adequate consideration to Employee’s obligations
under Article 5.

 

3.4 If Employee’s employment is terminated by reason of (i), (ii), (iii), or
(iv) below, Employee shall be entitled to receive the benefits set forth in
Section 3.5 or Section 3.6, as applicable.

 

  (i) Employee Termination For Cause. “Employee Termination For Cause” shall
mean a termination of employment at the election of Employee when there is
“Employee Cause”. “Employee Cause” shall mean a termination of employment by
Employee for any reason or no reason within the ninety (90) calendar day period
commencing twelve (12) calendar months after a Change of Control as defined in
Section 7.2 of Employer; or a termination of employment by Employee because and
within six months of: (a) a material breach by Employer of any material
provision of this Agreement which remains uncorrected for thirty (30)

 

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days following written notice of such breach by Employee to Employer; (b) a
material reduction in Employee’s status, position, responsibilities, or
compensation which remains unrestored for thirty (30) days following written
notice of such occurrence by Employee to Employer; (c) any failure to employ,
appoint, or maintain Employee as Executive Vice President and Chief Financial
Officer; (d) an act causing or requiring Employee to report to anyone other than
the CEO, the President, the Board or a Committee or member of the Board; (e) an
assignment of duties materially inconsistent with Employee’s position and
responsibilities described in this Agreement which is not promptly changed
within ten (10) days of written notice by Employee to the Board of such material
inconsistency; (f) the failure of an Employer to assign this Agreement, as
permitted pursuant to Section 1.6, to any one or more Employer Successor; or (g)
material interference by any officer, employee, director, board of directors,
member, partner, manager or other agent of any Dresser Entity (other than
Employer) in Employee’s performance of his duties hereunder or exercise of his
authority as Executive Vice President and Chief Financial Officer of Employer
which, to the extent it is capable of correction, remains uncorrected for thirty
(30) days following written notice of such breach by Employee to Employer.
Determination as to whether or not Employee Cause exists for termination of
Employee’s employment will be made by the Board at a meeting in which Employee
shall have the right to present his case for the existence of Employee Cause
with, at his election, the assistance of counsel. Any determination by the Board
of Employee Cause at such meeting shall not be entitled to any deferential or
evidentiary weight or presumption of correctness and at the election of Employee
shall be determined pursuant to Section 7.7 in a de novo review, with the
Employee having the obligation to prove Employee Cause by clear and convincing
evidence. During the foregoing process, Employer may, without Employer creating
any default under this Agreement or incurring any additional liability of any
kind and at Employer’s sole discretion, place Employee on paid administrative
leave and relieve Employee of all or any part of his responsibilities.
Notwithstanding the foregoing, and regardless of whether the process results in
a finding that Employee Cause existed for the termination, the year in which
such termination shall be deemed to have occurred, for purposes of determining
Employee’s entitlement to payments of unpaid Annual Bonus shall be the year in
which Employee first informs Employer that he is terminating his employment for
Employee Cause.

 

  (ii) Employer Termination Without Employer Cause. Termination of Employee’s
employment by Employer without Employer Cause shall mean a termination of
employment of Employee by Employer for no reason or any reason other than one
set forth in Section 3.2(ii).

 

  (iii) Death.

 

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  (iv) Permanent Disability. “Permanent Disability” shall mean Employee’s
physical or mental incapacity to perform his usual duties with or without
reasonable accommodations for a period of not less than 90 days within a given
twelve month period with such condition likely to remain continuously and
permanently as determined by Employer.

 

3.5 If Employee’s employment is terminated by Employee under Section 3.4 (i) or
by Employer under Section 3.4 (ii), Employee shall be entitled to each of the
following:

 

  (i) Employee’s (1) earned but unpaid base salary; (2) earned but unpaid Annual
Bonus payable for years prior to the year of Employee’s termination of
employment; and (3) unpaid Target Annual Bonus for the year of termination, pro
rated through the date of termination as if it accrued throughout the year on a
daily basis. Such amounts shall be paid to Employee in a single lump sum cash
payment no later than thirty (30) days following Employee’s termination of
employment.

 

  (ii) Subject to the provisions of Section 3.7, Employer shall pay to Employee
a severance benefit consisting of continued periodic payments of Employee’s base
salary as in effect at the date of Employee’s termination of employment and his
Target Annual Bonus (based upon Employee’s last base salary amount prior to
termination) for each year during the Severance Term (as defined below) in
accordance with Employer’s customary payroll practices during the period (the
“Severance Term”) commencing on the effectiveness of such termination and ending
on the earlier of (A) the second anniversary of the date of such termination, or
(B) the date Employee willfully and materially violates any of the covenants set
forth in Article 4 or Article 5 hereof. Notwithstanding the foregoing, if
Employer terminates Employee in anticipation of or within one year following a
Change of Control (and excluding a termination for Employer Cause), Employer
shall pay to Employee a severance benefit consisting of two times Employee’s
base salary as in effect at the date of Employee’s termination of employment and
two times his Target Annual Bonus (based upon Employee’s last base salary amount
prior to termination) in a single lump sum cash payment no later than thirty
(30) days following Employee’s termination of employment.

 

  (iii) For as long as Employee continues to receive a severance benefit
pursuant to Section 3.5(ii) (or for a period of two years following Employee’s
termination because of a Change of Control), Employee shall be allowed to
participate, on the same basis generally as other senior executive employees of
Employer, in all applicable employee benefit plans and programs, including
improvements or modifications of the same, which are made available by Employer
to Employer’s similarly situated actively employed executive employees,
excluding, however, those plans established by predecessors of Employer which as
of the Effective Date are not generally open to new participants. Such benefits,
plans, and programs may include, without limitation, medical, health, and dental
care, life

 

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insurance, disability protection, and qualified and non-qualified retirement
plans. Except as specifically provided herein, nothing in this Agreement is to
be construed or interpreted to increase or alter in any way the rights,
participation, coverage, or benefits under such benefit plans or programs than
provided to similarly situated executive employees pursuant to the terms and
conditions of such benefit plans and programs; provided, however, at the option
of Employer, Employer may upon sixty (60) days advance written notice effective
at any time more than eighteen months after such termination elect to provide
Employee with the cash value of providing such benefits from a third party
(which cash value shall not exceed 125% of Employer’s historic out-of-pocket
cost of providing such benefits).

 

3.6 If Employee’s employment is terminated by reason of Section 3.4 (iii) or
(iv), Employee’s estate, in the case of death, or Employee or his legal
guardian, in the case of Permanent Disability, shall be entitled to payment of
Employee’s (1) unpaid base salary; (2) earned but unpaid Annual Bonus payable
for years prior to the year of Employee’s termination of employment; and (3)
earned but unpaid Annual Bonus for the year of termination, pro rated through
the date of termination as if it accrued throughout the year on a daily basis,
of the Target Amount. Such amounts shall be paid in a single lump sum cash
payment no later than thirty (30) days following Employee’s termination of
employment.

 

3.7 The severance benefit paid to Employee pursuant to Section 3.3 or Section
3.5 above shall be in consideration of Employee’s continuing obligations
hereunder after such termination, including, without limitation, Employee’s
obligations under Article 4 and Article 5. Further, as a condition to the
receipt of such severance benefit, Employer, in its sole discretion, may require
Employee to first execute a release, in the form established by Employer,
releasing Employer and all other Dresser Entities, and their officers,
directors, employees, and agents, from any and all claims and from any and all
causes of action of any kind or character, including, but not limited to, all
claims and causes of action arising out of Employee’s employment with Employer
or any other Dresser Entities or the termination of such employment; provided
that Employee shall not be expected to waive any rights accruing under this
Agreement, including but not limited to rights to indemnification and coverage
under directors’ and officers’ liability insurance, rights to benefits under the
terms of applicable benefit plans of Employer including health benefits, rights
to option and/or equity incentive plan participation and rights with respect to
any stock or other rights acquired thereunder (“Retained Rights”). The
performance of Employer’s obligations under Section 3.3 or Section 3.5 and the
receipt of the severance benefit provided thereunder by Employee and provision
of the Retained Rights shall constitute full settlement of all such claims and
causes of action. Employee shall not be under any duty or obligation to seek or
accept other employment following a termination of employment pursuant to which
a severance benefit payment under Section 3.3 or Section 3.5 is owing and the
amounts due Employee pursuant to Section 3.3 or Section 3.5 shall not be reduced
or suspended if Employee accepts subsequent employment or earns any amounts as a
self-employed individual. Employee’s rights under Section 3.3 or Section 3.5 and
the Retained Rights are Employee’s sole and exclusive rights against Employer,
or any affiliate of Employer, and Employer’s sole and exclusive liability to

 

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Employee under this Agreement, whether such claim is based in contract, tort or
otherwise, for the termination of his employment relationship with Employer.
Employee agrees that all disputes relating to Employee’s employment or
termination of employment shall be resolved as provided in Section 7.7 hereof;
provided, however, that decisions as to whether and as of what date Employee has
become permanently disabled shall be limited to whether such decision was
reached by a mutually acceptable medical expert. Nothing contained in this
Article 3 shall be construed to be a waiver by Employee of any benefits accrued
for or due Employee under any employee benefit plan (as such term is defined in
the Employees’ Retirement Income Security Act of 1974, as amended) maintained by
Employer except that Employee shall not be entitled to any severance benefits
pursuant to any severance plan or program of Employer.

 

3.8 Termination of the employment relationship does not terminate those
obligations imposed by this Agreement, which are continuing obligations,
including, without limitation, Employee’s obligations under Article 4 and
Article 5.

 

3.9 The payment of any monies to Employee under this Agreement after the date of
termination of employment does not constitute an offer or a continuation of
employment of Employee. In no event shall Employee represent or hold himself out
to be an employee of Employer after the date of termination of employment.
Except as provided in Article 6, Employee shall be responsible for any and all
federal, state, or local taxes that arise out of any payments to Employee
hereunder (subject to the obligation of Employer under law to submit to the
applicable taxing authorities any amounts withheld from Employer’s compensation
on account of any such taxes).

 

3.10 During any period during which any monies are being paid to Employee under
this Agreement after the date of termination, Employee shall provide to Employer
reasonable levels of assistance to Employer in answering questions concerning
the business of Employer, transition of responsibility, or litigation, provided
that all out of pocket expenses of Employee reasonably incurred in connection
with such assistance is fully and promptly reimbursed and that any such
assistance after the Non-Compete Period (as defined below) shall not interfere
or conflict with the obligations which Employee may owe to any other employer.

 

ARTICLE 4: OWNERSHIP AND PROTECTION OF INTELLECTUAL PROPERTY AND CONFIDENTIAL
INFORMATION:

 

4.1 All information, ideas, concepts, improvements, discoveries, and inventions,
whether patentable or not, which are conceived, made, developed or acquired by
Employee, individually or in conjunction with others, during Employee’s
employment by Employer or any of the other Dresser Entities (whether during
business hours or otherwise and whether on Employer’s premises or otherwise)
which relate to the business, products or services of Employer or the other
Dresser Entities (including, without limitation, all such information relating
to corporate opportunities, research, financial and sales data, pricing and
trading terms, evaluations, opinions, interpretations, acquisition prospects,
the identity of customers or their requirements, the identity of key contacts
within the customer’s organizations or within the organization of acquisition
prospects, or marketing and merchandising techniques, prospective

 

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names, and marks), and all writings or materials of any type embodying any of
such items, shall be the sole and exclusive property of Employer or another
Dresser Entity, as the case may be, and shall be treated as “work for hire”.

 

4.2 Employee acknowledges that the businesses of Employer and the other Dresser
Entities are highly competitive and that their strategies, methods, books,
records, and documents, their technical information concerning their products,
equipment, services, and processes, procurement procedures and pricing
techniques, the names of and other information (such as credit and financial
data) concerning their customers and business affiliates, all comprise
confidential business information and trade secrets which are valuable, special,
and unique assets which Employer or the other Dresser Entities use in their
business to obtain a competitive advantage over their competitors. Employee
further acknowledges that protection of such confidential business information
and trade secrets against unauthorized disclosure and use is of critical
importance to Employer and the other Dresser Entities in maintaining their
competitive position. Employee hereby agrees that Employee will not, at any time
during or after his employment by Employer, make any unauthorized disclosure of
any confidential business information or trade secrets of Employer or the other
Dresser Entities, or make any use thereof, except in the carrying out of his
employment responsibilities hereunder. Confidential business information shall
not include information in the public domain (but only if the same becomes part
of the public domain through a means other than a disclosure prohibited
hereunder). The above notwithstanding, a disclosure shall not be unauthorized if
(i) it is required by law or by a court of competent jurisdiction or (ii) it is
in connection with any judicial, arbitration, dispute resolution or other legal
proceeding in which Employee’s legal rights and obligations as an employee or
under this Agreement are at issue; provided, however, that Employee shall, to
the extent practicable and lawful in any such events, give prior notice to
Employer of his intent to disclose any such confidential business information in
such context so as to allow Employer or any other Dresser Entity an opportunity
(which Employee will not oppose) to obtain such protective orders or similar
relief with respect thereto as may be deemed appropriate.

 

4.3 All written materials, records, and other documents made by, or coming into
the possession of, Employee during the period of Employee’s employment by
Employer which contain or disclose confidential business information or trade
secrets of Employer or the other Dresser Entities shall be and remain the
property of Employer, or the other Dresser Entities, as the case may be. Upon
termination of Employee’s employment by Employer, for any reason, Employee
promptly shall deliver the same, and all copies thereof, to Employer.

 

ARTICLE 5: COVENANT NOT TO COMPETE:

 

5.1 From the Agreement Date to the Termination Date, and for a period of two (2)
years thereafter, if termination of employment is under Section 3.4 above, or
for the period that payments are made pursuant to Section 3.3 (iv) if
termination of employment is under Section 3.2 (the “Non-Compete Period”), he
will not, in association with or as an officer, principal, member, advisor,
agent, partner, director, material stockholder, employee or consultant of any
corporation (or sub-unit, in the case of a diversified business) or other

 

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enterprise, entity or association, work on the acquisition or development of, or
engage in any line of business, property or project in which Employee (i) is
involved in or responsible for on the date of such termination, or (ii) has
worked with or evaluated in the last year and which were still being pursued or
evaluated by a Dresser Entity within one month of the time of such termination.
Such restriction shall cover Employee’s activities anywhere in the world.

 

5.2 From the Agreement Date to the Termination Date and during the Non-Compete
Period, Employee will not solicit or induce any person who is or was employed by
any of the Dresser Entities at any time during such term or period, excluding
employees who may have left their employment by such Dresser Entity more than 60
days prior to being hired or solicited for employment by Employee, (A) to
interfere with the activities or businesses of any Dresser Entity or (B) to
discontinue his or her employment with any of the Dresser Entities, or employ
any such person in a business or enterprise which competes with any of the
Dresser Entities.

 

5.3 From the Agreement Date to the Termination Date or during the Non-Compete
Period, Employee will not, directly or indirectly, influence or attempt to
influence any customers, distributors or suppliers of any of the Dresser
Entities to divert their business to any competitor of the Dresser Entities or
their affiliates.

 

5.4 Employee understands that the provisions of Article 5 hereof may limit his
ability to earn a livelihood in a business similar to the business in which he
is involved, but as an executive officer of Employer he nevertheless agrees and
hereby acknowledges that (i) such provisions do not impose a greater restraint
than is necessary to protect the goodwill or other business interests of
Employer and any of the other Dresser Entities; (ii) such provisions contain
reasonable limitations as to time, scope of activity, and geographical area to
be restrained; and (iii) the consideration provided hereunder, including without
limitation, any amounts or benefits provided under Article 3 hereof, is
sufficient to compensate Employee for the restrictions contained in Article 5
hereof. In consideration of the foregoing and in light of Employee’s education,
skills and abilities, Employee agrees that he will not assert that, and it
should not be considered that, any provisions of Article 5 otherwise are void,
voidable or unenforceable or should be voided or held unenforceable.

 

5.5 Employee acknowledges and agrees that his duties with Employer are of an
executive nature and that he is a member of Employer’s management group.
Employee agrees that the remedy at law for any breach by him of any of the
covenants and agreements set forth in this Article 5 will be inadequate and that
in the event of any such breach, Employer may, in addition to the other remedies
which may be available to it at law, and pursuant to Section 5.7 of this
Agreement obtain injunctive relief prohibiting Employee (together with all those
persons associated with him) from the breach of such covenants and agreements.

 

5.6 Each of the covenants of this Article 5 are given by Employee as part of the
consideration for this Agreement and as an inducement to Employer to enter into
this Agreement and accept the obligations hereunder.

 

5.7 In the event of a willful and material breach of any of the covenants of
this Article 5, the parties agree that the damages to Employer could be
significant and will be

 

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extremely difficult or impracticable to ascertain. Based upon the facts as known
by the parties at the time of this Agreement, the parties agree that any
payments Employee has received pursuant to Article 3 as of the date of any
willful breach constitutes reasonable liquidated damages due Employer.

 

ARTICLE 6: EXCISE TAX GROSS-UP PROVISIONS:

 

6.1 Anything in this Agreement to the contrary notwithstanding, and except as
set forth below, in the event it shall be determined that any Payment would be
subject to the Excise Tax, then Employee shall be entitled to receive an
additional payment (the “Gross-Up Payment”) in an amount such that, after
payment by Employee of all Taxes, including any income taxes and Excise Tax
imposed upon the Gross-Up Payment, Employee retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments. Notwithstanding the
foregoing provisions of this Section 6.1, if it shall be determined that
Employee is entitled to the Gross-Up Payment, but that the Parachute Value of
all Payments does not exceed one hundred and ten percent (110%) of the Safe
Harbor Amount, then except as provided below, no Gross-Up Payment shall be made
to Employee and the amounts payable under this Agreement or under any other
agreement between Employee and Employer or its affiliates, other than amounts or
benefits provided under the letter agreement attached as Exhibit A hereto or
pursuant to any other option or equity grants to Employee (the “Subject
Payments”), shall be reduced (but not below zero) so that the Parachute Value of
all Payments, in the aggregate, equals the Safe Harbor Amount. The reduction of
the amounts payable hereunder, if applicable, shall be made by first reducing
any payments under Section 3.3(ii) or Section 3.5(ii) of this Agreement, and in
any event shall be made in such a manner as to maximize the Value of all
Payments actually made to Employee. For purposes of reducing the Parachute Value
of all Payments to the Safe Harbor Amount, only the Subject Payments shall be
reduced. If the reduction of the Subject Payments would not result in a
reduction of the Parachute Value of all Payments to the Safe Harbor Amount, no
amounts payable under the Agreement shall be reduced pursuant to this Section
6.1, and the Gross-Up Payment shall be made to Employee. Employer’s obligation
to make Gross-Up Payments under this Section 6.1 shall not be conditioned upon
Employee’s Termination of Employment.

 

6.2 Subject to the provisions of Section 6.3, all determinations required to be
made under this Article 6, including whether and when a Gross-Up Payment is
required, the amount of such Gross-Up Payment and the assumptions to be utilized
in arriving at such determination, shall be made by PricewaterhouseCoopers, or
if such firm is unwilling to act in such capacity, such other nationally
recognized certified public accounting firm as may be mutually agreed upon by
Employee and Employer (the “Accounting Firm”). The Accounting Firm shall provide
detailed supporting calculations both to Employer and Employee within fifteen
(15) business days of the receipt of notice from Employee that there has been a
Payment or such earlier time as is requested by Employer. In the event that the
Accounting Firm is serving as accountant or auditor for the individual, entity
or group effecting the change of control, at Employee’s request Employee and
Employer shall mutually agree upon another nationally recognized accounting firm
to make the determinations required hereunder (which accounting

 

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firm shall then be referred to as the Accounting Firm hereunder). All fees and
expenses of the Accounting Firm shall be borne solely by Employer. Any Gross-Up
Payment, as determined pursuant to this Article 6, shall be paid by Employer to
or on behalf of Employee within five (5) business days of the receipt of the
Accounting Firm’s determination, provided that no such payment shall be due
under this Article 6 before five (5) days prior to the date the related payments
of Taxes are required to be paid by Employee to the applicable taxing authority.
Any determination by the Accounting Firm shall be binding upon Employer and
Employee, absent manifest error. As a result of the uncertainty in the
application of Sections 280G and 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments that will not have been made by Employer should have been made (the
“Underpayment”), consistent with the calculations required to be made hereunder.
In the event Employer exhausts its remedies pursuant to Section 6.3 and Employee
thereafter is required to make a payment of any additional Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by Employer to or for the
benefit of Employee.

 

6.3 Employee shall notify Employer in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by Employer of
the Gross-Up Payment. Such notification shall be given as soon as practicable,
but no later than ten (10) business days after Employee is informed of such
claim. Employee shall apprise Employer of the nature of such claim and, if
applicable, the date on which such claim is requested to be paid. Employee shall
not pay such claim prior to the expiration of the thirty (30) calendar day
period following the date on which Employee gives such notice to Employer (or
such shorter period ending on the date that any payment of Taxes with respect to
such claim is due). If Employer notifies Employee in writing prior to the
expiration of such period that Employer desires to contest such claim (or if
Employee pays the related Taxes within such shorter period and Employer
requests, within such thirty (30)-day period, that Employee claim a refund of
some or all of such Taxes), then Employee shall:

 

  (i) give Employer any information reasonably requested by Employer relating to
such claim;

 

  (ii) take such action in connection with contesting such claim or claiming
such refund as Employer shall reasonably request in writing from time to time,
including accepting legal representation with respect to such claim by an
attorney reasonably selected by Employer;

 

  (iii) cooperate with Employer in good faith in order effectively to contest
such claim or pursue such refund, and

 

  (iv) permit Employer to participate in any proceedings relating to such claim;

 

provided, however, that Employer shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest or refund claim (including, but only to the extent reasonably
incurred, costs and expenses incurred by Employee), and shall indemnify and hold
Employee harmless, on an after-tax basis, for any

 

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Excise Tax or income tax (including interest and penalties) imposed as a result
of such representation and payment of costs and expenses. Without limitation on
the foregoing provisions of this Section 6.3, Employer shall control all
proceedings taken in connection with such contest, and, at its sole discretion,
may pursue or forgo any and all administrative appeals, proceedings, hearings
and conferences with the applicable taxing authority in respect of such claim
and may, at its sole discretion, either direct Employee to pay the tax claimed
and sue for a refund or contest the claim in any permissible manner, and
Employee agrees to prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction and in one or more
appellate courts, as Employer shall determine; provided, however, that, if
Employer directs Employee to pay such claim and sue for a refund, Employer shall
advance the amount of such payment to Employee, on an interest-free basis, and
shall indemnify and hold Employee harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties) imposed with respect
to such advance or with respect to any imputed income in connection with such
advance; and provided, further, that any extension of the statute of limitations
relating to payment of Taxes for the taxable year of Employee with respect to
which such contested amount is claimed to be due (other than any such extension
arising by operation of law) is limited solely to such contested amount.
Furthermore, Employer’s control of the contest shall be limited to issues with
respect to which the Gross-Up Payment would be payable hereunder, and Employee
shall be entitled to settle or contest, as the case may be, any other issue
raised by the Internal Revenue Service or any other taxing authority.

 

6.4 If, after the receipt by Employee of a Gross-Up Payment or an amount
advanced by Employer pursuant to Section 6.3, Employee becomes entitled to
receive any refund with respect to the Excise Tax to which such Gross-Up Payment
relates or with respect to such claim, Employee shall (subject to Employer
complying in all material respects with the requirements of Section 6.3, if
applicable) promptly pay to Employer the amount of such refund (together with
any interest paid or credited thereon after Taxes applicable thereto), less any
Taxes required to be paid by Employee with respect to the receipt thereof. If,
after the receipt by Employee of an amount advanced by Employer pursuant to
Section 6.3, a determination is made that Employee shall not be entitled to any
refund with respect to such claim and Employer does not notify Employee in
writing of its intent to contest such denial of refund prior to the expiration
of thirty (30) calendar days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall be offset, to the extent thereof, against the amount of Gross-Up
Payment required to be paid. Employer may request that Employee pursue a refund
of any Gross-Up Payment paid under this Article 6, and in such case the
provisions of Section 6.3 and this Section 6.4 shall govern the pursuit of such
refund.

 

6.5 Notwithstanding any other provision of this Article 6, Employer may, in its
sole discretion, withhold and pay over to the Internal Revenue Service or any
other applicable taxing authority, for the benefit of Employee, all or any
portion of any Gross-Up Payment, and Employee hereby consents to such
withholding.

 

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6.6 For purposes of this Article 6, the following definitions will apply:

 

  (i) “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

 

  (ii) “Excise Tax” means the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such excise tax.

 

  (iii) “Parachute Value” of a Payment shall mean the portion of such Payment,
if any, that constitutes a “parachute payment” under Section 280G(b)(2) of the
Code, to the extent taken into account (including any discount to the present
value as of the date of the change of control for purposes of Section 280G of
the Code) in determining whether and to what extent the Excise Tax will apply to
such Payment, as determined by the Accounting Firm.

 

  (iv) “Payment” shall mean any payment or distribution by or on behalf of
Employer or its affiliates in the nature of compensation (within the meaning of
Section 280G(b)(2) of the Code) to or for the benefit of Employee, whether paid
or payable pursuant to this Agreement or otherwise, other than the Gross-Up
Payment.

 

  (v) “Safe Harbor Amount” means 2.99 times Employee’s “base amount,” within the
meaning of Section 280G(b)(3) of the Code.

 

  (vi) “Taxes” means the incremental United States federal, state and local
income, excise and other taxes payable by Employee with respect to any
applicable item of income. The amount of any tax, interest or penalty shall (a)
be reduced to take into account the deductibility of such item for purposes of
any other tax, and (b) include any interest and penalties with respect to such
tax other than interest or penalties arising from Employee’s failure to pay such
tax on a timely basis following payment thereof by Employer to Employee in
accordance with this Agreement, or from Employee’s failure to comply with the
terms of this Agreement.

 

  (vii) “Value” of a Payment shall mean the economic present value of a Payment
as of the date of the change of control for purposes of Section 280G of the
Code, as determined by the Accounting Firm using the discount rate required by
Section 280G(d)(4) of the Code.

 

ARTICLE 7: MISCELLANEOUS:

 

7.1 For purposes of this Agreement, the terms “affiliate” or “affiliated” mean
an entity or entities in which a Principal DEG Entity has a 20% or more direct
or indirect equity interest or entity or entities that have a 20% or more direct
or indirect equity interest in a Principal DEG Entity.

 

7.2 For purposes of this Agreement, the term “Change of Control” means any one
or more of the following events: (i) any person (as such term is used in Rule
13d-5 under the

 

16

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Securities Exchange Act of 1934 (the “Exchange Act”)) or group (as such term is
defined in Sections 3(a)(9) and 13(d)(3) of the Exchange Act), other than DEG or
its affiliates, or a subsidiary or employee benefit plan (or any related trust)
of Employer, becomes, directly or indirectly, the beneficial owner of (A) 50% or
more of the common stock of a Principal DEG Entity or (B) securities of a
Principal DEG Entity entitled to vote generally in the election of directors of
such Principal DEG Entity (“Voting Securities”) representing 50% or more of the
combined voting power of all Voting Securities of such Principal DEG Entity;
(ii) if the persons who were shareholders of Dresser, Ltd. as of the Effective
Date (“Existing Shareholders”) directly or indirectly own less than 33% of the
Voting Securities of a Principal DEG Entity and there is another beneficial
owner of a greater percentage of the Voting Securities of such Principal DEG
Entity than the Existing Shareholders as a group; (iii) if Dresser, Ltd. (or any
successor to all or substantially all of its assets) owns, directly or
indirectly, less than 66-2/3% of the Voting Securities of Employer (or any
successor to all or substantially all of its assets) and each other current or
future company then in the chain of ownership between Dresser, Ltd. and Employer
(including, without limitation, DHL and DHI from the Agreement Date until they
cease to be in such chain of ownership), other than as a result of a merger or
consolidation of Employer, DHL, or DHI (or their successors) with and into
Dresser, Ltd., DHL, or DHI (or their successors) or the downstream merger or
liquidation of Dresser, Ltd. as a result of tax restructuring as a result of
which (in the case of each of a merger, consolidation, downstream merger or
liquidation) the holding company structure is eliminated, and in each case which
do not otherwise constitute a Change of Control; (iv) individuals who, as of the
Agreement Date, constitute the Board of a Principal DEG Entity (the “Incumbent
Directors”) cease for any reason to constitute at least 75% of the members of
the Board; provided that any individual who becomes a director after the
Agreement Date whose election or nomination for election by Employer’s
shareholders was approved by at least 75% of the members of the Incumbent
Directors or who was elected by the shareholders at a time when the First
Reserve Funds and Odyssey Investment Partners directly or indirectly own more
than 75% of the Voting Securities of a Principal DEG Entity (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened “election contest” relating to the
election of the directors of a Principal DEG Entity (as such terms are used in
Rule 14a-11 under the Exchange Act), “tender offer” (as such term is used in
Section 14(d) of the Exchange Act) or a proposed Merger (as defined below))
shall be deemed to be a member of the Incumbent Board; (v) approval by the
stockholders of a Principal DEG Entity of either of the following: (A) a merger,
reorganization, consolidation or similar transaction (any of the foregoing, a
“Merger”) as a result of which the individuals and entities who were the
respective beneficial owners of the outstanding common stock and Voting
Securities of a Principal DEG Entity immediately before such Merger are not
expected to beneficially own, immediately after such Merger, directly or
indirectly, more than 60% of, respectively, the common stock and the combined
voting power of the Voting Securities of the corporation resulting from such
Merger in substantially the same proportions as immediately before such Merger,
or (B) a plan of liquidation of a Principal DEG Entity or a plan or agreement
for the sale or other disposition of all or substantially all of the assets of
Employer other than any such sale or other disposition to a Subsequent Employer;
or (vi) any other transaction, event, or circumstance, regardless of form
(collectively “Transaction”), which results in control over the strategic and
operational decisions of a Principal DEG Entity by a

 

17

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board of directors, committee, or group other than the Board or some
subcomponent thereof (collectively, the “New Board”); provided however, that
such Transaction referenced in (vi) and not also referenced in (i), (ii), (iii),
(iv) or (v) shall not be deemed to result in a Change of Control if Employee
reports to and is a member of the New Board, and remains Executive Vice
President and Chief Financial Officer of Employer. Notwithstanding the
foregoing, Employer may request and Employee may in his sole discretion accept
that any transaction or series of transaction not be considered to be a Change
of Control hereunder.

 

7.3 For purposes of this Agreement, notices and all other communications
provided for herein shall be in writing and shall be deemed to have been duly
given when received by or tendered to Employee or Employer, as applicable, by
pre-paid courier or by United States registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:

 

If to Employer:

  Dresser, Ltd. 15455 Dallas Parkway, Suite 1100, Addison, TX 75001, (or
Dresser’s current headquarters address) to the attention of the Vice-President &
General Counsel.

With a copy to:

  William Macaulay, care of First Reserve Corporation at its most recent
business address.

If to Employee:

 

To his last known personal residence

 

7.4 This Agreement shall be governed by and construed and enforced, in all
respects in accordance with the law of the State of Delaware, without regard to
principles of conflicts of law, unless preempted by federal law, in which case
federal law shall govern; provided, however, that either Employer’s Dispute
Resolution Plan, or the rules of the American Arbitration Association, as
elected by Employee, shall govern in all respects with regard to the resolution
of disputes hereunder as provided in Section 7.7.

 

7.5 No failure by either party hereto at any time to give notice of any breach
by the other party of, or to require compliance with, any condition or provision
of this Agreement shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time.

 

7.6 It is a desire and intent of the parties that the terms, provisions,
covenants, and remedies contained in this Agreement shall be enforceable to the
fullest extent permitted by law. If any such term, provision, covenant, or
remedy of this Agreement or the application thereof to any person, association,
or entity or circumstances shall, to any extent, be construed to be invalid or
unenforceable in whole or in part, then such term, provision, covenant, or
remedy shall be construed in a manner so as to permit its enforceability under
the applicable law to the fullest extent permitted by law. In any case, the
remaining provisions of this Agreement or the application thereof to any person,
association, or entity or circumstances other than those to which they have been
held invalid or unenforceable, shall remain in full force and effect.

 

18

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7.7 It is the mutual intention of the parties to have any dispute concerning
this Agreement resolved out of court. Accordingly, the parties agree that any
such dispute shall, as the sole and exclusive remedy, be submitted for
resolution either through Employer’s Dispute Resolution Plan or pursuant to
binding arbitration to be held in Dallas, Texas, under the rules of the American
Arbitration Association concerning Commercial Arbitration, as elected by
Employee; provided, however, that Employer, on its own behalf and on behalf of
any of the other Dresser Entities, shall be entitled to seek a restraining order
or injunction in any court of competent jurisdiction to prevent any breach or
the continuation of any breach of the provisions of Article 4 and Employee
hereby consents that such restraining order or injunction may be granted without
the necessity of Employer posting any bond. The parties agree that the
resolution of any dispute concerning this Agreement through any of the means set
forth in this Section 7.7 shall be final and binding.

 

7.8 This Agreement shall be binding upon and inure to the benefit of Employer,
its successors in interest, or any other person, association, or entity which
may hereafter acquire or succeed to all or substantially all of the business
assets of Employer by any means, whether indirectly or directly, and whether by
purchase, merger, consolidation, or otherwise. Employee’s rights and obligations
under this Agreement are personal and such rights, benefits, and obligations of
Employee shall not be voluntarily or involuntarily assigned, alienated, or
transferred, whether by operation of law or otherwise, without the prior written
consent of Employer, other than in the case of death or permanent disability of
Employee.

 

7.9 This Agreement replaces and merges any previous agreements and discussions
pertaining to the subject matter covered herein. This Agreement constitutes the
entire agreement of the parties with regard to the terms of Employee’s
employment, termination of employment and severance benefits, and contains all
of the covenants, promises, representations, warranties, and agreements between
the parties with respect to such matters. Each party to this Agreement
acknowledges that no representation, inducement, promise, or agreement, oral or
written, has been made by either party with respect to the foregoing matters
which is not embodied herein, and that no agreement, statement, or promise
relating to the employment of Employee by Employer that is not contained in this
Agreement shall be valid or binding. Any modification of this Agreement will be
effective only if it is in writing and signed by each party whose rights
hereunder are affected thereby.

 

7.10 Employer will maintain directors’ and officers’ liability insurance for
Employee while employed, and for a five (5) year period following termination of
employment at a level equivalent to the most favorable and protective coverage
for any active officer or director of Employer.

 

7.11 Employer agrees to indemnify Employee for any job-related liability to the
fullest extent permitted under Employer’s by-laws and other applicable
indemnification agreements.

 

7.12 Employer will pay Employee’s legal fees and legal expenses in connection
with the negotiation, drafting, implementation, interpretation, and enforcement
of this Agreement.

 

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7.13 Employee is currently a party to the Amended and Restated Investor Rights
Agreement, as amended, between the Employer and certain of its stockholders (the
“IRA”). In the event of a termination of employment or status of Employee under
Sections 3.2 or 3.4, Employee shall have the right to cause Employer to purchase
all or part of the shares of common stock of Employer held by Employee pursuant
to Section 4.1 of the IRA. The rights described in this Section 7 shall be
deemed to be the “terms set forth in the “Executive Employment Agreement”
entered into between each Employee Stockholder and the Company,” as contemplated
by Section 4.1 of the IRA. Section 4 of the IRA shall govern the respective
rights of the Employer and Employee with respect to the repurchase of any stock
or stock rights of Employee, except that the following provisions shall apply:

 

(a) notwithstanding language in Section 4.1 of the IRA, the term “Put Shares”
shall include vested Stock Rights (as defined in Section 3.5 of the IRA);

 

(b) Employer shall deliver the “Notice of Repurchase” described in Section 4.3
of the IRA, if at all, prior to the date which is 358 days following the
Termination Date;

 

(c) following (i) delivery of any Put Notice, or (ii) delivery of any Notice of
Repurchase, provided Employee has delivered the number of Repurchase Shares
specified in the Put Notice or Repurchase Notice, as the case may be, Employer
shall pay the “Repurchase Price” for such “Repurchase Shares” in cash in
immediately available funds prior to the date which is the later of (x) 90 days
following the Put Notice or Notice of Repurchase, as the case may be, or (y) the
first date that Employer may make such payment without violating any legal
restrictions or contractual restrictions imposed on Employer pursuant to its
financing arrangements.

 

In addition, notwithstanding anything in any agreement between Employer and
Employee to the contrary, any unvested options held by Employee will terminate
without value upon termination of Employee’s employment for Employer Cause or
resignation by Employee without Employee Cause. However, all unvested options
will immediately vest upon any termination other than for Employer Cause. Vested
options will expire if unexercised on the first anniversary of termination.

 

In the event of any conflict between Section 4 of the IRA and this Section 7.13,
this Section 7.13 shall govern.

 

[signatures follow]

 

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IN WITNESS WHEREOF, Employer and Employee have duly executed this Agreement in
multiple originals to be effective on the Agreement Date.

 

DRESSER, INC.

By:

--------------------------------------------------------------------------------

Name:

Title:

EMPLOYEE

 

 

--------------------------------------------------------------------------------

James Nattier

 

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