Exhibit 10.8
(J.P.MORGAN LOGO) [d78719d7871901.gif]
TRUST FOR NON-QUALIFIED DEFERRED
COMPENSATION BENEFIT PLANS
TRUST AGREEMENT
BETWEEN
FLOWSERVE CORPORATION
AND
JPMORGAN CHASE BANK, N.A.
Grantor Trust Agreement

 

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TABLE OF CONTENTS

         
AGREEMENT
    4  
1. Continuation of Trust
    4  
2. Payments to Plan Participants and their Beneficiaries
    5  
3. Trustee Responsibility Regarding Payments to Trust Beneficiary When Company
Is Insolvent
    6  
4. Payments to the Company
    7  
5. Investment Authority
    10  
6. Disposition of Income
    13  
7. Records; Annual Account
    13  
8. Responsibility of Trustee
    14  
8A. Indemnification
    15  
9. Compensation and Expenses of the Trustee
    16  
10. Resignation and Removal of Trustee
    17  
11. Appointment of Successor
    18  
12. Amendment or Termination
    18  
13. Miscellaneous
    18  
14. Effective Date
    21  

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TRUST FOR NON-QUALIFIED DEFERRED COMPENSATION BENEFIT PLANS OF
FLOWSERVE CORPORATION

     This amended and restated trust agreement (this “Agreement”) is made this
_____ day of _______________, 20__ by and between Flowserve Corporation (the
“Company”) and JPMorgan Chase Bank, N.A. (“Trustee”);

RECITALS

  (A)   The Company has adopted the nonqualified deferred compensation Plan(s)
as listed in Schedule A.     (B)   The Company has incurred or expects to incur
liability under the terms of such Plan(s) with respect to the individuals
participating in such Plan(s);     (C)   On October 1, 1987, The Duriron
Company, Inc., now known as Flowserve Corporation, established two grantor
trusts, the Duriron Company, Inc. First Master Benefit Trust and the Duriron
Company, Inc. Second Master Benefit Trust (hereinafter collectively called the
“Trust”) to which it has contributed assets to be held therein, subject to the
claims of the Company’s creditors in the event of the Company’s Insolvency, as
herein defined, until paid to Plan participants and their beneficiaries in such
manner and at such times as specified in the Plan(s);     (D)   The Company now
wishes to consolidate the Duriron Company, Inc. First Master Benefit Trust and
the Duriron Company, Inc. Second Master Benefit Trust into a single trust
arrangement pursuant to which the assets of both such trusts will be merged,
consolidated and held under, and pursuant to, this Agreement, as of the
effective date listed in Section 16;     (E)   It is the intention of the
parties that this Trust shall continue to constitute an unfunded arrangement and
shall not affect the status of the Plan(s) as an unfunded plan maintained for
the purpose of providing deferred compensation for a select group of management
or highly compensated employees for purposes of Title I of the Employee
Retirement Income Security Act of 1974;     (F)   It is the intention of the
Company to make contributions to the Trust to provide itself with a source of
funds to assist it in the meeting of its liabilities under the Plan(s);     (G)
  The parties desire to amend and restate the Trust upon the terms and
conditions hereinafter set forth;     (H)   Section 13.2 of each of the Duriron
Company, Inc. First Master Benefit Trust and the Duriron Company, Inc. Second
Master Benefit Trust respectively permit the amendment of such trusts by the
Company, as successor to the Duriron Company, Inc., and the Trustee;     (I)  
Nothing herein is intended to constitute a material modification of any deferred
compensation arrangement under which all deferred amounts were earned and

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      vested as of December 31, 2004 and which the Board of Directors of the
Company (the “Board”) has or shall have designated as not subject to Section
409A of the Internal Revenue Code of 1986, as amended (the “Code”) pursuant to
Treasury Regulation section 1.409A-6, and this Agreement shall be interpreted
accordingly;     (J)   The parties agree to continue the Trust and agree that
from the date of this Agreement the Trust shall be comprised, held and disposed
of as follows.

AGREEMENT

1.   Continuation of Trust

  (a)   The Company and the Trustee hereby continue the Trust previously
established, which shall be held, administered and disposed of by the Trustee as
provided in this Agreement. This amendment of the previously established Trust
is not intended to adversely affect the rights of participants thereunder.    
(b)   The Trust hereby established shall be irrevocable.     (c)   The Trust is
intended to be a grantor trust, of which the Company is the grantor, within the
meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the
Internal Revenue Code of 1986, as amended, and shall be construed accordingly.  
  (d)   The principal of the Trust, and any earnings thereon, shall be held
separate and apart from other funds of the Company and shall be used exclusively
for the uses and purposes of Plan participants and general creditors as herein
set forth. Plan participants and their beneficiaries shall have no preferred
claim on, or any beneficial ownership interest in, any assets of the Trust. Any
rights created under the Plan(s) and this Agreement shall be mere unsecured
contractual rights of Plan participants and their beneficiaries against the
Company. Any assets held by the Trust will be subject to the claims of the
Company’s general creditors under federal and state law in the event of
Insolvency, as defined in Section 3(a) herein.     (e)   The Company, in its
sole discretion, may at any time, or from time to time, make additional deposits
of cash or other property acceptable to the Trustee in trust with the Trustee to
augment the principal to be held, administered and disposed of by the Trustee as
provided in this Agreement. Neither the Trustee nor any Plan participant or
beneficiary shall have any right to compel such additional deposits.     (f)  
It is the intent of the Company that all benefits payable under the Plans that
were earned and vested as of December 31, 2004 (the “Grandfathered Benefits”)
not be subject to Section 409A of the Code. Accordingly, except as explicitly
provided therein, no amendment to any Plan or the Trust shall be effective with
respect to the Grandfathered Benefits if such amendment would constitute a
material modification for purposes of Section 409A of the Code and the
regulations and other guidance issued thereunder.

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2.   Payments to Plan Participants and their Beneficiaries

  (a)   The Company shall deliver to the Trustee a schedule (the “Payment
Schedule”) that indicates the amounts payable in respect of each Plan
participant (and his or her beneficiaries) or that provides other instructions
acceptable to the Trustee for determining the amounts so payable, the form in
which such amount is to be paid (as provided for or available under the Plan),
and the time of commencement for payment of such amounts. Except as otherwise
provided herein, the Trustee shall make payments to the Plan participants and
their beneficiaries in accordance with such Payment Schedule. The Company shall
provide the Trustee with written instructions as to the aggregate amount of any
federal, state and local taxes that may be required to be withheld with respect
to the payment of benefits from the Trust, and the Trustee shall remit such
amounts to the Company for payment and reporting to the appropriate taxing
authorities by the Company.     (b)   The entitlement of a Plan participant or
his or her beneficiaries to benefits under the Plan(s) shall be determined by
the Company or such party as it shall designate under the Plan(s) (which party
shall not be the Trustee), and any claim for such benefits shall be considered
and reviewed under the procedures set out in the Plan(s).     (c)   The Company
shall be responsible for providing the Trustee complete and accurate information
required or otherwise requested by the Trustee, within the time frame and in the
manner prescribed or agreed to by the Trustee, in order to make such payments or
transfers, including, without limitation, a payee’s name and address.     (d)  
The Company may make payment of benefits directly to Plan participants or their
beneficiaries as they become due under the terms of the Plan(s). In such event,
the Company may direct the Trustee to reimburse the Company for its payment of
Plan benefits or other expenses paid by the Company upon the Company’s written
certification that it has made such payment and the amount to be reimbursed. In
addition, if the principal of the Trust, and any earnings thereon, are not
sufficient to make payments of benefits in accordance with the Payment Schedule
provided to the Trustee by the Company, the Company shall make the balance of
each such payment as it falls due. The Trustee shall notify the Company where
principal and earnings are not sufficient to comply with the Company’s specific
payment instructions.     (e)   The Trustee shall have no duty to question the
propriety of any direction of the Company to make payments, reimbursements or
transfers, to account for funds retained in or disbursed from any accounts to
which payments or transfers are made, to see to the application of payments,
reimbursements or transfers, or to ascertain whether the Company’s directions to
make payments, reimbursements or transfers comply with the terms of the Plan(s).
The Trustee shall have no liability hereunder and shall be fully protected by
the Company against any claims, damages, liabilities, losses, costs and
expenses, including reasonable attorneys fees, resulting from its making
payments, reimbursements or transfers pursuant to the Company’s direction or
failure to make any payments, reimbursements or transfers in the absence of
directions.

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  (f)   After payment of all benefits pursuant to each Plan made hereunder, any
remaining assets shall be paid in a lump sum to the Company (and not to any
affiliate of the Company) at the direction of the Company’s Board, which shall
certify to the Trustee that all Plan obligations have been satisfied.
Additionally, the Company shall have the right annually, by written notice to
the Trustee within one hundred twenty (120) days after the end of each calendar
year, to request a distribution to the Company from the Trust of the amount, if
any, by which the fair market value of Plan assets at the end of the most
recently completed calendar year is more than 110% of the aggregate present
value of all applicable Plan liabilities; provided, however, that this
withdrawal right may not be exercised by the Company on or after a Change of
Control (as defined in Section 5 below). For purposes of this Section 2(f), the
present value of amounts to be paid under the Plans shall, if withdrawal is to
be made, be certified to the Trustee by an independent firm of accredited
actuarial consultants, such independent firm of accredited actuarial consultants
which shall be selected by the Company,and which is acceptable to the Trustee.

3.   Trustee Responsibility Regarding Payments to Trust Beneficiary When Company
Is Insolvent

  (a)   The Trustee shall cease payment of benefits to Plan participants and
their beneficiaries if the Company is Insolvent. The Company shall be considered
“Insolvent” for purposes of this Agreement if (i) the Company is unable to pay
its debts as they become due, or (ii) the Company is subject to a pending
proceeding as a debtor under the United States Bankruptcy Code.     (b)   At all
times during the continuance of this Trust, as provided in Section 1(d) hereof,
the principal and income of the Trust shall be subject to claims of general
creditors of the Company under federal and state law as set forth below.

  (1)   The Board and the Chief Executive Officer of the Company shall have the
duty to inform the Trustee in writing of the Company’s Insolvency. If a person
claiming to be a creditor of the Company alleges in writing to the Trustee that
the Company has become Insolvent, the Trustee shall determine whether the
Company is Insolvent and, pending such determination, the Trustee shall
discontinue payment of benefits to Plan participants or their beneficiaries.    
(2)   Unless the Trustee has actual knowledge of the Company’s Insolvency, or
has received notice from the Company or a person claiming to be a creditor
alleging that the Company is Insolvent, the Trustee shall have no duty to
inquire whether the Company is Insolvent. The Trustee may in all events rely on
such evidence concerning the Company’s solvency as may be furnished to the
Trustee and that provides the Trustee with a reasonable basis for making a
determination concerning the Company’s solvency. The Trustee shall not be
considered to have knowledge or received notice of the Company’s Insolvency
unless and until the knowledge or notice is actually received by:

  (i)   The individual, or his successor, last identified in writing by the
Trustee as the proper party to receive notices; or

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  (ii)   The individuals held out to the Company as being responsible for the
day to day administration of this Agreement; or     (iii)   The manager of the
department in which the individuals described in sub-section (ii) above perform
their duties with respect to this Agreement.

  (3)   If at any time the Trustee has determined that the Company is Insolvent,
the Trustee shall discontinue payments to Plan participants or their
beneficiaries and shall hold the assets of the Trust for the benefit of the
Company’s general creditors. Nothing in this Agreement shall in any way diminish
any rights of Plan participants or their beneficiaries to pursue their rights as
general creditors of the Company with respect to benefits due under the Plan(s)
or otherwise.     (4)   The Trustee shall resume the payment of benefits to Plan
participants or their beneficiaries in accordance with Section 2 of this
Agreement only after the Trustee has determined that the Company is not
Insolvent (or is no longer Insolvent).

  (c)   Provided that there are sufficient assets, if the Trustee discontinues
the payment of benefits from the Trust pursuant to Section 3(b) hereof and
subsequently resumes such payments, the first payment following such
discontinuance shall include the aggregate amount of all payments due to Plan
participants or their beneficiaries under the Payment Schedule for the period of
such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by the Company in lieu of the payments
provided for hereunder during any such period of discontinuance.

4.   Change of Control       A Change of Control, for purposes of this
Agreement, is defined as the occurrence of any of the following:

  (a)   On the date any “Person” (as defined in subparagraph 4(e) below)
acquires (or has acquired during the 12-month period ending on the date of the
most recent acquisition by such Person) ownership of stock of the Company
possessing thirty percent (30%) or more of the total voting power of the stock
of the Company (the “Voting Stock”); other than an acquisition (1) directly from
the Company; (2) by the Company or any Subsidiary (as defined in subparagraph
4(e) below); (3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary; (4) any acquisition by
any corporation pursuant to a reorganization, merger or consolidation, if,
following such reorganization, merger or consolidation, the conditions described
in subparagraph 4(c)(1) and (2) are satisfied; or (5) by any Person who is
considered to own stock of the Company constituting thirty percent (30%) or more
of the Voting Stock immediately prior to such additional acquisition.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur
solely because any Person (the “Subject Person”) acquired ownership of stock of
the Company possessing thirty percent (30%) or more of the Voting Stock as a
result of the acquisition of the Voting Stock, which, by reducing the number of

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      shares of Voting Stock, increases the proportional number of shares owned
by the Subject Person; provided, however, that if following such acquisition of
shares of Voting Stock by the Company, the Subject Person acquires additional
Voting Stock which increases the percentage ownership of the Subject Person to
an amount that would constitute thirty percent (30%) of the then outstanding
Voting Stock (excluding any shares of Voting Stock previously acquired by the
Company), then a Change of Control shall then be deemed to have occurred; or    
(b)   On the date a majority of members of the Board is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the Board before the date of the appointment or election; provided,
however, that any such director shall not be considered to be endorsed by the
Board if his or her initial assumption of office occurs as a result of either an
actual or threatened election contest or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board,
including by reason of agreement intended to avoid or settle any such actual or
threatened contest or solicitation; or     (c)   On the date of consummation of
a reorganization, merger, or consolidation, in each case, immediately following
which a Person owns stock of the Company that, together with stock held by such
Person prior to such reorganization, merger or consolidation, constitutes more
than fifty percent (50%) of the total fair market value of the Company; unless,
following such reorganization, merger or consolidation: (1) more than fifty
percent (50%) of the then outstanding Voting Stock is owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the owners of the Voting Stock immediately prior to such reorganization, merger
or consolidation, in substantially the same proportions as their ownership
immediately prior to such reorganization, merger or consolidation; or (2)
(a) officers of the Company as of the effective date of such reorganization,
merger or consolidation constitute at least three-quarters (3/4) of the officers
of the ultimate parent company of the corporation resulting from such
reorganization, merger or consolidation; (b) elected members of the Board as of
the effective date of such reorganization, merger or consolidation constitute at
least three quarters (3/4) of the board of directors of the ultimate parent
company of the corporation resulting from such reorganization, merger or
consolidation; and (c) the positions of Chairman of the board of directors, the
Chief Executive Officer and the President of the corporation resulting from such
reorganization, merger or consolidation are held by individuals with the same
positions at the Company as of the effective date of such reorganization, merger
or consolidation.     (d)   On the date any Person acquires (or has acquired
during the 12-month period ending on the date of the most recent acquisition by
such Person) assets from the Company that have a total gross fair market value
equal to or more than 50% of the total gross fair market value of all of the
assets of the Company immediately before such acquisition or acquisitions,
unless such assets have been acquired by a corporation with respect to which,
following such acquisition, (1) more than fifty percent (50%) of, respectively,
the then outstanding shares of stock of such corporation and the combined voting
power of the then outstanding voting stock of such corporation (or any parent
thereof) entitled to vote generally in the election of directors is then owned,
directly or indirectly, by all or substantially all of the individuals and
entities who were the owners, respectively, of

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outstanding stock of the Company and the Voting Stock immediate prior to such
acquisition, in substantially the same proportions as their ownership
immediately prior to such acquisition; (2) no Person (excluding the Company and
any employee benefit plan (or related trust) of the Company or a Subsidiary or
any Person owning immediately prior to such acquisition, directly or indirectly,
twenty percent (20%) or more of all of the outstanding shares of stock of the
Company or the Voting Stock, owns, directly or indirectly, twenty percent (20%)
or more of all of the then outstanding stock of such corporation or the combined
voting power of the then outstanding voting stock of such corporation (or any
parent thereof) entitled to vote generally in the election of directors and
(3) at least two-thirds (2/3) of the members of the board of directors of such
corporation (or any parent thereof) were members of the Company’s Board at the
time of the execution of the initial agreement or action of the Board providing
for such acquisition of the Company’s assets. For purposes of this subparagraph
(iv), gross fair market value means the value of the assets of the Company or
the value of the assets being disposed of, determined without regard to any
liabilities associated with such assets. Notwithstanding the foregoing, no
Change of Control shall be deemed to occur when there is such a sale or transfer
to (1) a shareholder of the Company (immediately before the asset transfer) in
exchange for or with respect to the Company’s then outstanding stock; (2) an
entity, at least fifty percent (50%) of the total value or voting power of the
stock of which is owned, directly or indirectly, by the Company; (3) a Person
that owns directly or indirectly, at least 50% of the total value or voting
power of the outstanding stock of the Company; or (4) an entity, at least fifty
percent (50%) of the total value or voting power of the stock of which is owned,
directly or indirectly, by a Person that owns, directly or indirectly, at least
fifty percent (50%) of the total value or voting power of the outstanding stock
of the Company. For purposes of the foregoing, a Person’s status is determined
immediately after the asset transfer.

  (e)   For purposes of (a), (b), (c) and (d) above, “Person” shall have the
meaning given in Section 7701(a)(1) of the Code. Person shall include more than
one Person acting as a group as defined by the Treasury Regulations issued under
Section 409A of the Code. “Subsidiary” means any corporation which is a member
of a controlled group of corporations (determined in accordance with Section
414(b) of the Code) of which the Company is a member and any other trade or
business (whether or not incorporated) which is controlled by, or under common
control (determined in accordance with Section 414(c) of the Code) with the
Company.     (f)   The Board and the Chief Executive Officer of the Company
shall have the duty to inform the Trustee in writing of a Change in Control.
Unless the Trustee has received notice from the Board or the Chief Executive
Officer of the Company of the occurrence of a Change of Control, the Trustee
shall have no duty to inquire whether a Change of Control has occurred.

5.   Payments to the Company       Except as provided in (i) Section 2(a) with
respect to remittance to the Company of withheld taxes, (ii) Section 2(d) with
respect to reimbursement to the Company of benefits paid directly to the Plan
participant or his or her beneficiary and expenses paid by the Company,
(iii) Section 2(f) with respect to payment of Trust assets to the Company as a
result of overfunding of the Trust, and (iv) Section 3 hereof, after the Trust

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    has become irrevocable, the Company shall have no right or power to direct
the Trustee to return to the Company or to divert to others any of the Trust
assets before all payment of benefits have been made to Plan participants and
their beneficiaries pursuant to the terms of the Plan(s). The Trustee shall not
be required to independently determine whether all benefit payments have been
made to Plan participants and beneficiaries pursuant to the terms of the Plan(s)
and may rely upon written notification to such effect as provided by the Company
or its accountants, legal counsel or Plan consultants.   6.   Investment
Authority

  (a)   The Trustee shall have no discretion or authority with respect to the
investment of Trust assets, but shall act solely as a directed Trustee, and
shall invest and reinvest the principal and income of the Trust and keep the
Trust invested in such investments as directed by the Company or one or more
investment managers appointed by the Company in accordance with Section 6(b).
Upon and after a Change of Control, in the event that the persons serving as of
the date of the Change of Control will cease to serve as a majority of the
Board, then immediately prior to the Change of Control, such members of the
Board shall appoint an independent institutional Investment Manager, which shall
not be the Trustee, for purposes of directing investment of the Trust assets
upon and after a Change of Control, and such manager may only be removed by the
written consent of a sixty-five percent (65%) of the then plan participants,
including former plan participants whose benefits have not been fully
distributed. The Trustee shall have no duty to question any action or direction
or failure to give directions of the Company or any duly appointed Investment
Manager as to the investment, reinvestment, management, disposition or
distribution of Trust assets. To the extent necessary to carry out the
directions of the Company or any duly appointed Investment Manager, the Trustee
is authorized and empowered, but not by way of limitation, with the following
powers, rights and duties:

  (1)   to invest any part or all of the Trust without distinction between
principal and income and in such securities or any kind of property, real or
personal, wherever situated, including, but not limited to, common or preferred
stocks, warrants, rights, securities of any open-end or closed-end management
type investment company or investment trust registered under the Investment
Company Act of 1940, as amended (including any such investment company or
investment trust to which the Trustee or an affiliate provides services and/or
from which it receives fees as investment advisor, custodian, transfer agent or
sub-transfer agent, registrar, administrator or sub-administrator, or in any
other capacity), exchange funds, real estate investment trusts, limited
partnerships, venture capital funds, private equity investments, real estate,
farms and ranches, oil and gas rights, closely held companies, family limited
partnerships, and corporate or government bonds, notes, debentures and other
evidence of indebtedness or ownership.     (2)   to invest and reinvest or
otherwise deposit the Trust assets in savings accounts, time deposit accounts,
certificates of deposit, money market funds, or other evidences of deposit
issued by the Trustee and/or any other national bank, savings and loan
institution, state member bank,

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      state non-member bank, or other depository institution, including any such
entity which now or in the future is an affiliate of the Trustee.     (3)   to
retain in cash or cash equivalents so much of the Trust as may be required for
liquidity needs of the Plan(s) and to deposit any such cash held in the Trust
with any bank or savings institution, including its own banking department,
without liability for interest on such cash deposits.     (4)   to exercise any
exchange privileges, conversion privileges and conversion rights available under
any security or other property held in the Trust; consent to or dissent from the
reorganization, consolidation, merger or the readjustment of the finances of, or
the sale, mortgage, pledge, or lease of the property of any entity that has
issued any security held in the Trust; deposit any securities or other property
held in the Trust with any protective, reorganization, or similar committee and
delegate discretionary power to that committee; do any other act in connection
with matters described in this Section, including exercising options, making
agreements or subscriptions, or paying expenses, assessments, or subscriptions
which the Trustee believes is necessary or advisable.     (5)   to vote any
stock or other security and exercise any right appurtenant to any stock,
security or other property held in the Trust, either in person or by general or
limited proxy, power of attorney or other instrument.     (6)   to settle,
compromise, or submit to arbitration any claims, debts or damages due to or
owing from the Trust, commence and defend suits or legal proceedings and
represent the Trust in all suits or legal proceedings, except that the Trustee
may not exercise any of the powers referred to in this subsection without the
consent of the Company if the matter relates solely to the rights or status
under the Plan(s) of a participant or beneficiary or any other person.     (7)  
to manage, operate, repair, or improve and collect the income from any real or
personal property held in the Trust.     (8)   to renew or extend, or
participate in the renewal or extension of, any debt owing to the Trust and
agree to a reduction in the rate of interest on any such debt or to any other
modifications or changes to the terms of any mortgage or of any guarantee
pertaining thereto; waive any default whether in the performance of any covenant
or condition of any evidence of any debt or mortgage or in the performance of
any guarantee or to enforce any rights available to the Trustee because of any
default; exercise and enforce any and all rights of foreclosure, bid in property
on foreclosure, take a deed in lieu of foreclosure, with or without
consideration, and release the obligation on any note or other evidence of debt
secured by that mortgage; and exercise and enforce in any action, suit or other
proceeding at law and in equity any rights or remedies in respect to any such
debt, mortgage or guarantee.

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  (9)   to hold securities in bulk or bearer form, or deposit them with any
central depository authorized under applicable law, in its own name or in the
name of a nominee without the addition of words indicating that the property is
held in a fiduciary capacity.     (10)   to join in or oppose the
reorganization, recapitalization, consolidation, sale or merger of corporations
or properties, including those in which it is interested as Trustee.     (11)  
to make, execute and deliver, as Trustee, with or without providing for no
individual liability on its part, any and all conveyances, mortgages, contracts,
waivers, releases, leases, assignments, powers of attorney or other written
instruments considered necessary and appropriate in the administration of the
Trust.     (12)   to lend securities to banks and broker-dealers approved by the
Company, consistent with regulations issued by applicable regulatory
authorities, and under the terms of a written agreement between the Company and
the Trustee.     (13)   except as otherwise provided in this Agreement or under
applicable law, execute all instruments, engage in all proceedings and exercise
all rights, powers and privileges considered necessary and appropriate to
discharge the purposes of this Agreement.

  (b)   The Company may appoint one or more investment managers (“Investment
Managers”), pursuant to a written investment management agreement describing the
powers and duties of the Investment Manager, to direct the investment and
reinvestment of all or a portion of the Trust. The Trustee shall be fully
protected in relying upon the effectiveness of such appointment and the
Investment Manager’s continuing satisfaction of the requirements set forth above
until it receives written notice from the Company to the contrary.     (c)   The
Trustee will not be responsible to invest or otherwise manage any portion of the
Trust that is subject to the investment direction of the Company or an
Investment Manager and will not be liable, in any respect for any investment
decision made by the Company or Investment Manager. The Company or Investment
Manager, as the case may be, shall provide directions to the Trustee as to the
exercise of voting and other discretionary rights with respect to any securities
that are subject to the Company’s or Investment Manager’s investment direction.
The Trustee shall not be required to implement any investment or other direction
which is not given to the Trustee in writing or otherwise in accordance with the
Trustee’s prescribed form and format. Any instructions received from the Company
or an Investment Manager under this Section will remain in effect and will be
binding until they are revoked or amended in writing or otherwise in accordance
with the Trustee’s prescribed procedures and delivered to the Trustee. The
Trustee is not responsible for the propriety of any directed investment, will
not be required to consult with or advise the Company or Investment Manager
regarding the investment quality of any directed investment, and shall have no
obligation to review or make recommendations with respect to any investment made
at the direction of the Company or

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      Investment Manager. The Trustee will retain custody of any securities or
other property acquired as a result of any investment directions received from
the Company or Investment Manager until the Company or Investment Manager, as
the case may be, directs the Trustee, in writing or otherwise in accordance with
prescribed procedures, to dispose of them.     (d)   In no event may the Trustee
invest in securities (including stock or rights to acquire stock) or obligations
issued by the Company, other than a de minimis amount held in common investment
vehicles in which the Trustee invests. All rights associated with assets of the
Trust shall be exercised by the Trustee or the person designated by the Trustee,
and shall in no event be exercisable by or rest with Plan participants.     (e)
  The Trustee is not authorized and shall not disclose the name, address, or
security positions of the beneficial owners of the Trust in response to requests
concerning shareholder communications under Section 14 of the Securities
Exchange Act of 1934, the rules and regulations thereunder, or any similar
statute, regulation, or rule in effect from time to time.

7.   Disposition of Income       During the term of this Trust, all income
received by the Trust, net of expenses and taxes, shall be accumulated and
reinvested.   8.   Records; Annual Account       The Trustee shall maintain
appropriate records pertaining to administration of the Trust and the Trust fund
and any other records that the Company requests and which the Trustee agrees to
maintain. At any time during the Trustee’s normal business hours, the Company or
any person designated by the Company may audit and inspect the accounts, books
and records of the Trustee maintained in connection with the Trust fund. Within
90 days following the close of each fiscal year of the Trust and within 90 days
following the effective date of the removal or resignation of the Trustee or
termination of the Trust, the Trustee shall file with the Company a written
accounting of all Trust fund transactions since the most recent report was
filed. The Company may approve this accounting by giving written notice of
approval to the Trustee. The Company will be deemed to have approved any
accounting to which it has not objected by giving the Trustee written notice of
its objection within 60 days after receiving the accounting. If the Company
approves the accounting in writing (or fails to object, in writing, within
60 days after receiving the accounting), the Trustee shall be released and
discharged as to all items, matters and things included in that accounting
(except as to any item, matter or thing that (i) is attributable to the
Trustee’s fraud, criminal violation, or willful misconduct, or (ii) could not
have been discovered by a reasonably diligent review of the accounting). The
Trustee also may have its accounts settled by judicial proceedings. In such
event, only the Trustee and the Company shall be necessary parties although the
Trustee, in its discretion, may join as defendants any other person or persons
who may have or claim an interest in the Trust Fund. Except as otherwise
provided by applicable law, only the Company may require the Trustee to prepare
an accounting under this Section or may institute an action or proceeding
against the Trustee with respect to any accounting delivered under this Section.

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9.   Responsibility of Trustee

  (a)   The Trustee shall act with the care, skill, prudence and diligence under
the circumstances then prevailing that a prudent person acting in like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims; provided, however, that the Trustee shall
incur no liability to any person for any action taken pursuant to a direction,
request or approval given by the Company which is contemplated by, and in
conformity with, the terms of this Trust and is given in writing by the Company.
    (b)   The Trustee shall not be required to defend any suit or other action
against the Trust Fund unless it holds assets in the Trust Fund sufficient for,
or has been indemnified to its satisfaction for, its reasonable counsel fees,
costs, disbursements and all other reasonable associated expenses and
liabilities to which it may, in its judgment, be subjected on account of that
suit or other action. The Trustee may seek reimbursement for such expenses from
the Company as described in Section 9(a) or may apply any asset of the Trust
Fund to meet those expenses and liabilities.     (c)   The Trustee has the
right, but not the obligation, to consult with counsel of its own choosing, who
also may be counsel for the Trustee or the Company, and to act or decline to act
in accordance with such counsel’s advice. The Trustee may also act or decline to
act in accordance with the opinion or determination of the Company’s auditor
with respect to matters within the authority of the auditor. To the extent
permitted by law, the Trustee shall have no liability in any respect for any
action taken, suffered or omitted in good faith by the Trustee either in
accordance with the advice of counsel chosen by the Trustee, or in accordance
with any opinion of counsel to the Company addressed and delivered to the
Trustee, or in accordance with the opinion or determination of the Company’s
auditor.     (d)   The Trustee, may hire agents, accountants, actuaries,
investment advisors, financial consultants or other professionals to assist it
in performing any of its duties or obligations hereunder. The Trustee shall not
be liable for any acts or omissions of any such person provided that the Trustee
selects and supervises that person in accordance with the standard of care set
forth in Section 8(a) of this Agreement.     (e)   Subject to the terms of this
Agreement, the Trustee shall have, without exclusion, all powers conferred on
trustees by applicable law, unless expressly provided otherwise herein,
provided, however, that if an insurance policy is held as an asset of the Trust,
the Trustee shall have no responsibility to review the policy or the
creditworthiness of the issuer thereof at any time or from time to time or to
determine the amount of premium to be paid, and no power to name a beneficiary
of the policy other than the Trust, to assign the policy (as distinct from
conversion of the policy to a different form) other than to a successor Trustee,
or to loan to any person the proceeds of any borrowing against such policy. The
Company may make premium payments directly to the insurance carrier with respect
to any insurance policy held as an asset of the Trust.

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  (f)   Each direction, notice, request, or approval by the Company (whether or
not certified to the Trustee in writing) shall constitute a certification by the
Company to the Trustee that such direction conforms with the Plan(s) and
applicable law.     (g)   The Trustee shall not be under any duty to require
payment of any contributions to the Trust, or to see that any payment made to it
is computed in accordance with the provisions of the Plan(s), or otherwise be
responsible for the adequacy of the Trust to meet and discharge any liabilities
under the Plan(s).     (h)   Notwithstanding any powers granted to the Trustee
pursuant to this Agreement or to applicable law, the Trustee shall not have any
power that could give this Trust the objective of carrying on a business and
dividing the gains therefrom, within the meaning of section 301.7701-2 of the
Procedure and Administrative Regulations promulgated pursuant to the Internal
Revenue Code.     (i)   Unless otherwise specifically required by this
Agreement, directives, instructions and other communications under this
Agreement or relating to the Trust Fund (including, without limitation,
instructions regarding the investments of the Trust Fund and directions to make
benefit payments and other disbursements) must be provided in writing or by
telex, fax or facsimile transmission, bank wire or other teleprocess or
electronic or trade information system acceptable to the Trustee.     (j)   The
duties and obligations of the Trustee shall be limited to those expressly
imposed upon it by this Agreement or subsequently agreed upon by the parties in
writing, notwithstanding any reference herein to the Plan(s), or to the
provisions thereof, it being expressly agreed that the Trustee is not a party to
the Plan(s). The Trustee has no responsibility for the application of the terms
or administration of the Plan(s), including, without limitation, the
determination of matters relating to the eligibility of any employee to become a
participant or remain a participant, the amount of benefit which a participant
or beneficiary is entitled to receive, whether a distribution to a participant
or beneficiary is appropriate, or the size and type of any insurance policy to
be purchased from any insurer for any participant; the Company has these
responsibilities under the Plan(s).     (k)   Following a Change in Control, the
Trustee shall be authorized to interpret the terms and conditions of the Plan(s)
insofar as they relate directly or indirectly to the rights and responsibilities
of the Trustee.

10.   Indemnification

  (a)   To the maximum extent permitted by law, the Trustee shall be indemnified
and held harmless by the Company from and against any and all liability to which
the Trustee may be subjected as a result of this Agreement or its performance of
services hereunder, including, but not limited to, any Liability arising from
(i) any action or failure to act resulting from compliance with proper
instructions of the Company or any other person authorized by the Company to
give directions to the Trustee except to the extent that the Trustee was grossly
negligent in implementing any such instruction or direction, or (ii) by reason
of any breach of any statutory or other duty owed to the Plan(s) or Plan
participants by the Company, or any of its officers, directors, employees, or
agents, whether or not

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      the Trustee may also be considered liable for that other person’s breach
under the provisions of applicable law; provided, however, that except as
described in (i) and with respect to (ii), Trustee shall not be entitled to
indemnification to the extent that such Liability is directly attributable to
the Trustee’s gross negligence or willful misconduct. Furthermore, under no
circumstances shall the Trustee incur liability to any person for any indirect,
consequential or special damages (including, without limitation, lost profits)
of any form, whether or not foreseeable and regardless of the form of the action
in which such a claim may be brought, with respect to the Trust or its role as
the Trustee.     (b)   The Trustee, its affiliates, and their officers, agents
and employees may bring action against the Company to contribute to the
satisfaction of any Liability to the extent that the Liability (i) is not
subject to indemnification under Sub-section (a) and (ii) is caused by the
culpable conduct of the Company or any of its affiliates or agents, including
but not limited to, any Investment Manager.     (c)   The foregoing rights of
indemnification and contribution shall not supersede any common law or equitable
rights or remedies which may be available.     (d)   For purposes of this
Agreement, “Liability” means any liability, loss, cost, damage, penalty, fine,
obligation or expense of any kind whatsoever (including, without limitation,
reasonable attorneys’, accountants’, consultants’ or experts’ fees and
disbursements).     (e)   The provisions of this Section 10 shall survive the
termination of this Agreement.

11.   Compensation and Expenses of the Trustee

  (a)   The Trustee shall be entitled to compensation for its services as set
forth in the fee schedule attached hereto as Schedule B, for reimbursement of
its out of pocket expenses as provided in this Agreement, and for all other
necessary and proper disbursements made or incurred by the Trustee in the
performance of its duties and obligations under this Agreement. The Company
shall promptly pay or reimburse the Trustee for the payment of any expense or
liability named by the Trustee, including (but not limited to) the following
payments on the account of the Company: delivery charges, insurance, interest,
taxes, management, accountant and legal fees, and other operating expenses of
the Trustee incurred in the administration of the Trust. If the Company does not
pay the Trustee’s fees, costs, expenses and liabilities within thirty (30) days
of being billed, the Trustee may obtain payment from the Trust, and is hereby
granted a lien on the assets of the Trust for such payment. The Trustee shall be
entitled, as an additional part of its compensation under this Agreement, to the
earnings derived from use of funds (“float”) that may be held (i) as uninvested
trust cash or (ii) in demand deposit or other non-interest bearing accounts
established for the payment of benefits or disbursements or that are otherwise
maintained for similar purposes in administering the Trust Fund. Float is earned
at the federal funds rate. The float period for disbursements commences one to
five business days after a check for the payment of such benefits or Plan
disbursements is mailed and ends on the date the check is presented to the
Trustee for payment.     (b)   The Trustee is authorized to advance cash or
securities to effect the orderly processing and settlement of securities and
other financial market transactions in

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      accordance with the Trustee’s established settlement policies and
procedures for overdraft protection services. The Trustee shall promptly notify
the Company of any overdraft and shall request immediate steps be taken to
correct such overdraft. The Trustee shall be entitled to immediate repayment of
any such advanced funds plus the Trustee’s customary overdraft charges
determined as follows: (i) with respect to domestic assets, an amount equal to
what would have been earned on the sums advanced (an amount approximating the
“federal funds” interest rate) or (ii) with respect to non-domestic assets, the
rate applicable to the appropriate foreign market.

12.   Resignation and Removal of Trustee

  (a)   The Trustee may resign at any time by giving written notice to the
Company at least 60 days before its effective date unless the Company and the
Trustee agree to reduce this period.     (b)   Prior to a Change of Control, the
Company may remove the Trustee at any time by giving written notice to the
Trustee at least 60 days before its effective date unless the Company and the
Trustee agree to reduce this period. Upon and after a Change of Control, the
Trustee may not be removed by the Company or any successor thereto, without the
written consent of sixty-five percent (65%) of the then plan participant,
including former plan participants whose benefits have not been fully
distributed.     (c)   Upon resignation or removal of the Trustee and
appointment of a successor Trustee, the resigning or removed Trustee shall
transfer and deliver all assets to the successor Trustee after reserving such
reasonable amount as it shall deem necessary to provide for any expenses and
payments then chargeable against the Trust Fund for which the Trust Fund may be
liable, or for payment of the retiring Trustee’s fees and expenses in connection
with the settlement of its account or otherwise. If the assets so withheld shall
be insufficient or excessive for such purposes, the retiring Trustee shall be
entitled to reimbursement for any deficiency out of the Trust Fund from the
successor the Trustee, or shall deliver the excess to the successor the Trustee,
as the case may be.     (d)   If the Trustee resigns or is removed, a successor
shall be appointed, in accordance with Section 13 hereof, by the effective date
of resignation or removal under paragraphs (a) or (b) of this section. If no
such appointment has been made, the Trustee may apply to a court of competent
jurisdiction for appointment of a successor or for instructions. All expenses of
the Trustee in connection with the proceeding shall be allowed as administrative
expenses of the Trust.

13.   Appointment of Successor

  (a)   If the Trustee resigns or is removed in accordance with Section 12(a) or
(b) hereof, the Company may appoint as successor any third party, such as a bank
trust department or other party that may be granted corporate trustee powers.
The appointment of a successor shall be effective when accepted in writing by
the new trustee, who shall have all of the rights and powers of the former
Trustee, including ownership rights in the Trust assets. The former Trustee
shall execute any instrument necessary or reasonably requested by the Company or
the

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      successor Trustee to evidence the transfer. The Trustee and any successor
thereof appointed hereunder shall be a commercial bank which is not an affiliate
of Flowserve, but which is a national banking association or is established
under the laws of one of the states of the United States.     (b)   The
successor Trustee need not examine the records and acts of any prior Trustee,
and may retain or dispose of existing Trust assets, subject to Sections 8 and 9
hereof. The successor Trustee shall not be responsible for, and the Company
shall indemnify and defend the successor Trustee from, any claim or liability
resulting from any action or inaction of any prior Trustee or from any other
past event or any condition existing at the time it becomes successor Trustee.  
  (c)   Any corporation into which the Trustee or any successor corporate
trustee hereunder may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Trustee or
any successor trustee may be a party, or any corporation to which all or
substantially all the trust business of the Trustee or any successor trustee may
be transferred, shall thereupon become and be the Trustee of the Trust with the
same effect as though specifically so named and without the filing of any
instrument or performance of any further act.

14.   Amendment or Termination

  (a)   This Agreement may be amended by a written instrument executed by the
Trustee and the Company.     (b)   The Trust shall not terminate until the date
on which Plan participants and their beneficiaries are no longer entitled to
benefits pursuant to the terms of the Plan(s). Upon termination of the Trust any
assets remaining in the Trust shall be returned to the Company.

15.   Miscellaneous

  (a)   Any provision of this Agreement prohibited by law shall be ineffective
to the extent of any such prohibition, without invalidating the remaining
provisions hereof.     (b)   Benefits payable to Plan participants and their
beneficiaries under this Agreement may not be anticipated, assigned (either at
law or in equity), alienated, pledged, encumbered or subjected to attachment,
garnishment, levy, execution or other legal or equitable process.     (c)   This
Agreement shall be governed by and construed in accordance with the laws of the
State of Ohio without regard to its choice of law rules, except that the
foregoing shall not reduce any statutory right to choose Ohio law or forum.    
(d)   The Company shall certify to the Trustee the names and specimen signatures
of those persons entitled to act on behalf of the Company or any Employer. Such
certificates will be conclusive proof of the authority of those named until the
Trustee is provided with a subsequent certificate stating that such authority is
withdrawn. The Trustee may rely upon any instrument, certificate or document it

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      reasonably believes to be genuine and to have been signed or presented by
an authorized person. The Trustee shall not be required to inquire into or to
determine the validity of the Plan(s), this Agreement or any other document,
instruction or authorization which it believes to be genuine, or their proper
execution or adoption by the Company.     (e)   The Company, or its designated
agent are responsible for the timely and accurate provision of any necessary
information to the Trustee to enable the Trustee to perform its duties
hereunder, including, but not limited to information relating to distributions
to participants. The Trustee shall not be responsible for the completeness and
accuracy of the material and information provided to it under this Agreement.  
  (f)   The terms and conditions, procedures, and rights and obligations of the
parties with respect to the Trustee’s provision of benefit payment, record
keeping, funds transfer, depository, banking, and other services for or on
behalf of the Plan(s) or Trust may from time to time be described in and/or
subject to separate written procedures, agreements, user guides, service terms
or other instruments (“Services Documents”), which are hereby incorporated by
reference and made a part hereof. In the event of a conflict between this
Agreement and any Services Documents, the provisions of the Services Documents
shall control with respect to the subject matter thereof, subject at all times
to the provisions of applicable law.     (g)   If circumstances beyond the
Trustee’s reasonable control, including, but not limited to, natural disasters,
acts of war or terrorism, civil or military disturbances, work stoppages, power
outages or other interruptions, loss or malfunctions of utilities or
communications services, computer viruses, acts of civil or military authority
or other governmental action, suspension or restriction of trading on or the
closure of any securities markets, or other similar acts, events or conditions,
make it impossible for the Trustee to fully perform its duties under this
Agreement, then the principles of force majeure will apply and the obligations
of the Trustee will be temporarily suspended during the force majeure period to
the extent performance is reasonably affected thereby and the Trustee shall not
be responsible or liable for any failure or delay in the performance of its
obligations.     (h)   The Company and the Trustee waive any right to have a
jury participate in resolving any controversy, claim, misunderstanding or
dispute, whether sounding in contract, tort or otherwise, between or among them
arising out of, connected with, related to or incidental to this Agreement or
any breach hereof. Instead, the parties hereby agree that any controversies,
claims, misunderstandings or disputes to be resolved in court will be resolved
in a bench trial without a jury. Notwithstanding anything herein to the
contrary, either party may proceed to a court of competent jurisdiction to
obtain injunctive relief at any time.     (i)   Only the Company and the Trustee
are necessary parties to any action arising under or in connection with this
Agreement and notice of any action need not be given to any participant,
beneficiary or other person claiming an interest in the Trust Fund. However, the
Trustee or the Company may join as a defendant any participant, beneficiary or
other person claiming an interest in the Trust Fund.

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      Any judgment entered or settlement reached on any matter affecting the
Trust Fund will be conclusive upon all persons claiming an interest in the Trust
Fund, whether or not they were notified of or joined as a party to the action.  
  (j)   Security Holding Disclosure. With respect to Securities and Exchange
Commission Rule 14b-2 under The U.S. Shareholder Communications Act, regarding
disclosure of beneficial owners to issuers of Securities, Trustee is instructed
not to disclose the name, address or Security positions of the Trust in response
to shareholder communications requests regarding the Account.     (k)   Any
notices given under this Agreement must be given in writing and sent to the
other party’s last known address. Such notices shall be deemed given if
delivered personally, if mailed (by registered or certified mail, return receipt
requested and postage prepaid), if sent by overnight courier service for next
business day delivery, by facsimile transmission, or by electronic transmittal
with return receipt, to the appropriate address for each party. Such
communications shall be effective immediately (if delivered in person or by
confirmed facsimile), upon the date acknowledged to have been received in return
receipt, or upon the next business day (if sent by overnight courier service).
Each party to this Agreement shall notify all other parties of any change in its
address in the manner provided in this Section.     (l)   Section 326 of the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) requires
Trustee to implement reasonable procedures to verify the identity of any person
that opens a new Account with it. Accordingly, Company acknowledges that
Section 326 of the USA PATRIOT Act and Trustee’s identity verification
procedures require Trustee to obtain information which may be used to confirm
Company’s identity including without limitation Company’s name, address and
organizational documents (“identifying information”). Company may also be asked
to provide information about its financial status such as its current audited
and unaudited financial statements. Company agrees to provide Trustee with and
consents to Trustee obtaining from third parties any such identifying and
financial information required as a condition of opening an account with or
using any service provided by Trustee.

16.   Effective Date       The effective date of this Agreement shall be
February 11, 2011.

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              FLOWSERVE CORPORATION   JPMORGAN CHASE BANK, N.A.
 
           
By:
      By:    
 
           
 
           
Name:
      Name:    
 
           
 
           
Title:
      Title:    
 
           
 
           
Date:
      Date:    
 
           

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Schedule A -Plans Covered by this Agreement
The Duriron Company, Inc. Deferred Compensation Plan for Directors
The Duriron Company, Inc. Supplemental Pension Plan
The Duriron Company, Inc. Retirement Compensation Plan for Directors effective
January 1, 1989
The Duriron Company, Inc. 1989 Restricted Stock Plan
Flowserve Corporation Annual Incentive Compensation Plan for Senior Executives
Flowserve Corporation Annual Stock Incentive Compensation Plan for Senior
Executives
Flowserve Corporation Deferred Compensation Plan
Flowserve Corporation Director Stock Deferral Plan
Flowserve Corporation Director Cash Deferral Plan
Grantor Trust Agreement

22