EMPLOYMENT AGREEMENT DATED 01/05/2004: DRESSER AND

EXHIBIT 10.13

EMPLOYMENT AGREEMENT

This Employment Agreement (“Agreement”), dated this 5 ^th day of January, 2004 (the “Effective Date”), is entered into by and between Dresser, Inc., a Delaware corporation (the “Employer”) and Patrick M. Murray (“Employee”).

W I T N E S S E T H:

WHEREAS , Employer and Employee desire to amend and replace with this Agreement the existing Executive Employment Agreement between Employer or its affiliates and Employee, dated January 29, 2001 (the “Original Agreement”);

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 Effective Date and continuing until April 30, 2004 (such period being referred to as the “Term”), subject to any termination of such employment as set forth in Article 3, and subject to other rights and obligations set forth in the terms and conditions of this Agreement. 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 Effective Date, Employee shall be employed as the Chief Executive Officer of Employer and will serve as a member of the Board of Directors of Employer (the “Board”). As Chief Executive Officer, Employee will report directly to the Board, and Employee’s duties will include such functions and operations consistent with Employee’s title and assigned him from time to time by 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 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 or this Agreement to another Dresser Entity or Entities (“Subsequent Employer”) as of, or at any time after, the Effective Date and no such transfer shall be deemed to be a termination of employment for purposes of Article 3 hereof; provided, however, that (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 Chief Executive Officer and member of the board of directors 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 severally liable and bound by this Agreement, and (4) nothing in this Section 1.6 shall alter the

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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 Effective Date to the “Termination Date” (as defined in Article 3), Employee’s base salary shall be not less than $650,000 per annum, which base salary 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 for such office under this Agreement and may not be decreased thereafter without the written consent of Employee.

2.2 From the Effective Date to the end of the Term, 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 So long as a Termination Date has not occurred prior to the end of the Term (other than as a result of Employee’s Retirement on, but not before, the last day of the Term), then on the last day of the Term, Employee shall receive an “End of Term” bonus equal to $1,217,670.

2.4 From the Effective 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.

2.5 From the Effective 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 Effective Date or thereafter are made available by Employer to Employer’s similarly

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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 and in which Employee is not already a participant. 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.

2.6 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.

2.7 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 AND EFFECTS OF 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. The first date that any of the events described in clauses (i) through (v) above becomes effective is the “Termination Date.”

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:

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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.

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:

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Bonus payable for years prior to the year of Employee’s termination of employment, but, except as set forth in Section 3.3(iii), 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. Employee shall not be entitled to the End of Term Bonus unless Employee’s employment is terminated by reason of Section 3.2(i) on the last day of the Term.

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disability protection, or qualified and non-qualified retirement plans. For so long as Employee has not willfully and materially violated any of the covenants set forth in Article 4 or Article 5 hereof, Employer shall provide Employee with benefits (or cash value, as provided below) under the Severance Benefit Plans at the level provided to Employee as of the end of the Term until December 31, 2007. 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 (which cash value shall not exceed 125% of Employer’s cost of providing such benefits at the time Employee’s employment was terminated). In addition, if Employer’s employment is terminated under Section 3.2(i) on the last day of the Term, then Employee shall also be entitled to receive a pro rata amount of the Annual Bonus for the year ended December 31, 2004, pro rated through such date of termination upon payment of such Annual Bonus to other employees of Employer. Also, the Board has made a determination pursuant to Section 5.3 of the Dresser, Inc. Senior Executives’ Deferred Compensation Plan that, if Employer’s employment is terminated under Section 3.2(i) on the last day of the Term, all “unforfeited Benefits” under such plan will be paid in the form of shares of common stock (or successor shares in Dresser, Ltd.), valued in accordance with such plan.

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.

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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 Chief Executive Officer, 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.

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:

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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. No payment of the End of Term Bonus shall be made.