Exhibit 10.8

FIRST AMENDMENT AND LIMITED WAIVER TO
LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

     THIS FIRST AMENDMENT AND LIMITED WAIVER TO LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT (this “Amendment”) is entered into as of March 15, 2005,
among FLOWSERVE B.V., a company organized under the laws of the Netherlands
(“Company”), FLOWSERVE CORPORATION, a New York corporation (“Parent”), the
Material Subsidiaries (as defined in the Agreement) (each of Parent and each
Material Subsidiary a “Guarantor” and collectively, the “Guarantors”), the
LENDERS (hereinafter defined), and CALYON NEW YORK BRANCH, a duly licensed
branch under the New York Banking Law of a foreign banking corporation organized
under the laws of the Republic of France, as Administrative Agent (hereinafter
defined) for itself and the other Lenders.

     Reference is made to the Letter of Credit and Reimbursement Agreement,
dated as of the 28th day of July, 2004 (as amended to date, the “Agreement”),
among Company, Guarantors, Administrative Agent, and the Lenders party thereto.
Unless otherwise defined in this Amendment, capitalized terms used herein shall
have the meaning set forth in the Agreement; all Section references herein are
to Sections in the Agreement; and all Paragraph references herein are to
Paragraphs in this Amendment.

RECITALS

     A. Pursuant to Sections 7.4(a)(i) and (iii) of the Agreement, Parent is
required to deliver the audited financial statements, opinion, and the
accountants’ certificate referred to therein within 100 days after the end of
each fiscal year;

     B. Pursuant to Sections 7.4(b)(ii) and (v) of the Agreement, Company is
required to deliver the audited financial statements, opinion, and accountants
certificate referred to therein within 210 days after the end of each fiscal
year;

     C. Company has requested that Determining Lenders waive compliance with
such requirements under Sections 7.4(a)(i) and (iii) and 7.4(b)(ii) and (v) of
the Agreement with respect to the fiscal year ended December 31, 2004, until
September 30, 2005, and any consequences resulting from such non-compliance
during such period; and

     D. Company and Lenders desire to amend the Agreement to permit senior
unsecured debt and to modify certain of its financial definitions as set forth
below.

     Accordingly, for adequate and sufficient consideration, the parties hereto
agree as follows:

1. Amendments to Agreement.

     a. The definition of “Consolidated EBITDA” in Section 1.1 of the Agreement
is hereby amended and restated in its entirety as follows:

     “Consolidated EBITDA” means, for any period, Consolidated Net Income for
such period, plus (a) without duplication and to the extent deducted in
determining such Consolidated Net Income, the sum of (i) Consolidated Interest
Expense for such period, (ii) consolidated income tax expense for such period,
(iii) all amounts attributable to depreciation and amortization for such period,
(iv) any

First Amendment and Limited Waiver to
Letter of Credit and Reimbursement Agreement

 

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

 

extraordinary losses or extraordinary non-cash charges for such period, (v) the
amount of premium payments made by Parent or its Subsidiaries associated with
the repurchase or prepayment of the Subordinated Notes from the proceeds of the
Fall 2001 Equity Issuance and the amount of such premium payments and
unamortized fees associated with any further repurchase or prepayment of the
Subordinated Notes to the extent such repurchase or prepayment is permitted
hereunder, (vi) integration and restructuring charges in connection with the IDP
Transactions and taken with respect to periods ended on or prior to December 31,
2001, (vii) integration and restructuring charges in connection with the
Acquisition and taken with respect to periods ended on or prior to June 30,
2004, in an aggregate amount not to exceed $40,000,000, and (viii) restructuring
and integration charges taken with respect to periods beginning on July 1, 2003
and ended on or prior to December 31, 2004, in an aggregate amount not to exceed
$15,000,000, and minus (b) without duplication and to the extent included in
determining such Consolidated Net Income, any extraordinary gains for such
period, all determined on a consolidated basis in accordance with GAAP.

     b. The definition of “Consolidated Interest Expense” in Section 1.1 of the
Agreement is hereby amended and restated in its entirety as follows:

     “Consolidated Interest Expense” means, for any period, for the Parent and
its Subsidiaries on a consolidated basis, the sum, without duplication, of:
(a) all interest, premium payments, fees, charges, and related expenses payable
by the Parent and its Subsidiaries in connection with borrowed money(including
capitalized interest) (other than premium payments associated with the
repurchase or prepayment of the Subordinated Notes from proceeds of the Fall
2001 Equity Issuance and premium payments and unamortized fees associated with
any further repurchase or prepayment of the Subordinated Notes to the extent
such repurchase or prepayment is permitted hereunder) or in connection with the
deferred purchase price of assets, in each case to the extent treated as
interest in accordance with GAAP and payable in cash, (b) the portion of rent
payable by the Parent and its Subsidiaries with respect to such period under
capital leases that is treated as interest in accordance with GAAP and payable
in cash, and (c) all fees, discounts, premiums, expenses, or similar amounts
incurred by the Parent or any of its Subsidiaries in connection with the
Receivables Program for such period, including purchase discounts (net of any
loss reserves), purchase premiums, operating expense fees, structuring fees,
collection agent fees, unutilized purchase limit fees, and other similar fees
and expenses.

     c. The definition of “New Subordinated Debt” in Section 1.1 of the
Agreement amended and restated in its entirety as follows:

     “New Unsecured Debt” means Indebtedness having the following
characteristics: (i) the obligors shall be the Parent and/or Flowserve Finance
B.V., (ii) such Indebtedness shall be unsecured, (iii) if such Indebtedness is
subordinated, such Indebtedness shall be subordinated in right of payment to the
Obligations in a manner reasonably acceptable to Administrative Agent, (iv) such
Indebtedness shall not have any scheduled payment of principal, scheduled
prepayment, scheduled mandatory redemption or sinking fund payment prior to
December 31, 2009, (v) such Indebtedness shall not contain any provision
prohibiting the creation or assumption of any Lien on any of the properties or
assets of Parent or its Subsidiaries, whether then owned or thereafter acquired,
or prohibiting guaranties by Parent or any of its Subsidiaries to secure payment
of the Obligations or any agreement renewing, refinancing or extending the
Obligations or this Agreement, (vi) the Parent shall be in compliance with
Sections 8.11, 8.12 and 8.13 on a pro forma basis after giving effect to the
incurrence of such Indebtedness, (vii) other terms and conditions shall be no
less favorable to the Parent or its Subsidiaries or the Lenders in any material
respect than the terms and conditions

First Amendment and Limited Waiver to
Letter of Credit and Reimbursement Agreement

2

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

 

applicable to the Subordinated Notes, and (viii) such Indebtedness shall be
issued pursuant to documentation reasonably satisfactory to the Administrative
Agent.

     d. The definition of “Total Debt” in Section 1.1 of the Agreement is hereby
amended and restated in its entirety as follows:

     “Total Debt” means, at any time, the total consolidated Indebtedness of the
Parent and its Subsidiaries at such time (excluding (a) Indebtedness under
Section 8.1(k), and (b) Indebtedness of the type described in clause (i) of the
definition of such term and under Section 8.1(l), except in each case to the
extent of any unreimbursed drawings or payments thereunder).

     e. Section 8.1(o) of the Agreement is hereby amended and restated in its
entirety to read as follows:

     (o) Indebtedness of the Parent constituting New Unsecured Debt in an
aggregate principal amount not to exceed $325,000,000 or its Dollar Equivalent;
provided, however, that the proceeds of any such New Unsecured Debt shall be
used to redeem, repurchase, prepay, or otherwise acquire for consideration, the
Indebtedness permitted under clause (i) above (including any premium payments)
until repaid in full and, once repaid, such amounts referenced in clause (i)
above shall no longer be permitted under this Agreement.

     f. Section 8.8 of the Agreement is hereby amended and restated in its
entirety to read as follows:

     Engage at any time in any business or business activity other than the
business currently conducted by the Credit Parties and business activities
reasonably incidental thereto, including any activities permitted hereunder;
provided, however, that the Parent shall be entitled to create a wholly-owned
Subsidiary engaged solely in the business of providing the insurance coverage
required under Section 7.2 hereof solely to the Credit Parties, so long as such
Subsidiary is adequately capitalized to satisfy the requirements of Section 7.2
and investments therein do not exceed $1,000,000 in the aggregate (a “Captive
Insurance Company”).

     g. Section 8.9(b) of the Agreement is hereby amended and restated in its
entirety to read as follows:

     (b) (i) With respect to any Credit Party, make any distribution, whether in
cash, property, securities, or a combination thereof, other than regular
scheduled payments of interest as and when due (to the extent not prohibited by
applicable subordination provisions), in respect of, or pay, or offer or commit
to pay, or directly or indirectly redeem, repurchase, retire, or otherwise
acquire for consideration, or set apart any sum for the aforesaid purposes, any
subordinated Indebtedness (except the redemption or repurchase of the
Subordinated Notes with the proceeds of the issuance of the New Unsecured Debt),
or (ii) pay in cash any amount in respect of any Indebtedness or preferred
equity interests that may at the obligor’s option be paid in kind or in other
securities; provided that the Parent was permitted to repurchase and/or prepay
the Subordinated Notes to the extent provided in the final proviso of
Section 2.13(c) of the Original Credit Agreement.

2. Waiver of certain Financial Reporting Covenants.

     A. Subject to the terms and conditions set forth herein and in reliance on
the representations and warranties of each Credit Party herein contained, the
Lenders hereby temporarily waive (i) compliance with the

First Amendment and Limited Waiver to
Letter of Credit and Reimbursement Agreement

3

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

 

requirement under Sections 7.4(a)(i) and (iii) and 7.4(b)(ii) and (v) of the
Agreement that the financial statements for the fiscal year ending December 31,
2004, delivered pursuant to Section 7.4(a)(i) and 7.4(b)(ii) of the Agreement
are audited and accompanied by an opinion of an independent public accountant
and a certificate of such accountant certifying matters set forth in
Section 7.4(a)(iii) and 7.4(b)(v) of the Agreement, (ii) any consequences or
further affirmative obligations of the Parent or the Company under the Agreement
resulting from such noncompliance, and (iii) any Default or Event of Default
arising from an event of default under any agreement or instrument evidencing or
governing Material Indebtedness of the Credit Parties arising from the failure
to provide similar financial information (or opinions or certifications thereof)
or annual or quarterly public filings during or for the fiscal year ending
December 31, 2004, or for the first three fiscal quarters of the fiscal year
ending December 31, 2005; in each case, resulting from such noncompliance during
the period from the Effective Date (as defined in Section 3) through and
including the earlier to occur of (a) the date of delivery of audited financial
statements for the fiscal year ending December 31, 2004, and the accompanying
accountant’s opinion and certificate in accordance with Sections 7.4(a)(i) and
(iii) and 7.4(b)(ii) and (v) of the Agreement to the Lenders, and
(b) September 30, 2005 (such temporary waiver being the “Waiver”); provided,
however, all waivers and accommodations made to the Credit Parties in this
Waiver shall be rescinded and be null and void and of no force and effect upon
the commencement by any holder of Material Indebtedness of the Credit Parties of
any action, exercising rights with respect to collateral or rights to accelerate
arising from any default or event of default under any agreement or instrument
evidencing or governing Material Indebtedness of the Credit Parties.

     B. The Waiver shall be limited precisely as written and relates solely to
the temporary noncompliance by the Parent and the Company with
Sections 7.4(a)(i) and (iii) and 7.4(b)(ii) and (v) of the Agreement in the
manner and to the extent described above, and nothing in this Waiver shall be
deemed to:

     1. constitute a waiver of compliance by any Credit Party with respect to
(i) Section 7.4(a)(i) or (iii) and 7.4(b)(ii) and (v) of the Agreement in any
other instance or (ii) any other term, provision or condition of the Agreement
or any other instrument or agreement referred to therein; or

     2. prejudice any right or remedy that Administrative Agent or any Lender
may now have (except to the extent such right or remedy was based upon existing
defaults that will not exist after giving effect to this Waiver) or may have in
the future under or in connection with the Agreement or any other instrument or
agreement referred to therein.

     C. Except as expressly set forth herein, the terms, provisions and
conditions of the Agreement shall remain in full force and effect and in all
other respects are hereby ratified and confirmed.

3. Effective Date. Notwithstanding any contrary provision, this Amendment is not
effective until the date (the “Effective Date”) upon which (a) the
representations and warranties in this Amendment are true and correct;
(b) Administrative Agent receives counterparts of this Amendment executed by
Company, each Guarantor, and Determining Lenders; (c) Company pays all
reasonable costs, fees, and expenses of Administrative Agent’s counsel incurred
in connection with the Loan Papers, including without limitation, all reasonable
legal fees and expenses outstanding on the Effective Date; and
(d) Administrative Agent shall have received payment for the account of each
Lender that executes this Amendment on or before 5:00 p.m. New York time on
March 15, 2005, of an amendment fee equal to 0.02% of such Lender’s Committed
Sum on the Effective Date.

4. Acknowledgment and Ratification. As a material inducement to Administrative
Agent and the Lenders to execute and deliver this Amendment, Company and each
Guarantor (a) consent to the agreements in this Amendment and (b) agree and
acknowledge that the execution, delivery, and performance of this

First Amendment and Limited Waiver to
Letter of Credit and Reimbursement Agreement

4

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

 

Amendment shall in no way release, diminish, impair, reduce, or otherwise affect
the respective obligations of Company or Guarantors under their respective Loan
Papers, which Loan Papers shall remain in full force and effect, and all Liens,
guaranties, and rights thereunder are hereby ratified and confirmed.

5. Representations. As a material inducement to Lenders to execute and deliver
this Amendment, Company and each Guarantor represent and warrant to Lenders
(with the knowledge and intent that Lenders are relying upon the same in
entering into this Amendment) that as of the Effective Date and as of the date
of execution of this Amendment (after giving effect to the amendments and waiver
set forth herein), (a) all representations and warranties in the Loan Papers are
true and correct in all material respects as though made on the date hereof,
except to the extent that (i) any of them speak to a different specific date,
(ii) the facts on which any of them were based have been changed by transactions
contemplated or permitted by the Loan Papers, or (iii) the financial statements
delivered pursuant to Section 6.5 were subject to subsequent restatements, and
(b) no Default or Event of Default exists other than as waived herein.

6. Delivery of Financial Statements. Parent and Company hereby agrees to provide
within 100 days after the end of the fiscal year ending December 31, 2004, its
unaudited consolidated balance sheet and related statements of income,
stockholders’ equity and cash flows showing the financial condition of Parent
and its consolidated Subsidiaries and of Company and its consolidated
Subsidiaries as of the close of the fiscal year ending 2004 and the results of
its operations and the operations of such Subsidiaries during such year, and a
certificate of a Financial Officer opining on or certifying such statements and
certifying that no Event of Default or Default has occurred or, if such an Event
of Default or Default has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect thereto, and,
setting forth the Parent’s calculation of Excess Cash Flow.

7. Expenses. Company shall pay all reasonable costs, fees, and expenses paid or
incurred by Administrative Agent incident to this Amendment, including, without
limitation, the reasonable fees and expenses of Administrative Agent’s counsel
in connection with the negotiation, preparation, delivery, and execution of this
Amendment and any related documents.

8. Miscellaneous.

     8.1 This Amendment is a “Loan Paper” referred to in the Agreement, and the
provisions relating to Loan Papers in Section 11 of the Agreement are
incorporated in this Amendment by reference. Unless stated otherwise (a) the
singular number includes the plural and vice versa and words of any gender
include each other gender, in each case, as appropriate, (b) headings and
captions may not be construed in interpreting provisions, (c) this Amendment
must be construed, and its performance enforced, under New York law, (d) if any
part of this Amendment is for any reason found to be unenforceable, all other
portions of it nevertheless remain enforceable, and (e) this Amendment may be
executed in any number of counterparts with the same effect as if all
signatories had signed the same document, and all of those counterparts must be
construed together to constitute the same document.

     8.2 The Loan Papers shall remain unchanged and in full force and effect,
except as provided in this Amendment, and are hereby ratified and confirmed. On
and after the Effective Date, all references to the “Agreement” shall be to the
Agreement as herein amended. The execution, delivery, and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a waiver of
any rights of Lenders under any Loan Paper, nor constitute a waiver under any of
the Loan Papers.

9. Entire Agreement. This Amendment represents the final agreement between the
parties about the subject matter of this Amendment and may not be contradicted
by

First Amendment and Limited Waiver to
Letter of Credit and Reimbursement Agreement

5

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

 

evidence of prior, contemporaneous, or subsequent oral agreements of the
parties. There are no unwritten oral agreements between the parties.

10. Parties. This Amendment binds and inures to Company, Guarantors,
Administrative Agent, Lenders, and their respective successors and assigns.

     The parties hereto have executed this Amendment in multiple counterparts to
be effective as of the Effective Date.

Remainder of Page Intentionally Blank.
Signature Pages to Follow.

First Amendment and Limited Waiver to
Letter of Credit and Reimbursement Agreement

6

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

 

              COMPANY:
 
            FLOWSERVE B.V.
 
       

  By:   /s/ John M. Nanos

       

      John M. Nanos

 Address for Notices:
      Managing Director
 
       
5215 N. O’Connor Blvd., Suite 2300
       
Irving, Texas 75039
       
Attention: Paul Fehlman
       
Telephone No.: 972-443-6517
       
Facsimile No.: 972-445-6817
       

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

GUARANTORS:

          Address for Notices:
 
        5215 N. O’Connor Blvd., Suite 2300 Irving, Texas 75039 Attention: Paul
Fehlman Acting Vice President and Treasurer Telephone No.: 972-443-6517
Facsimile No.: 972-445-6817
 
        FLOWSERVE INTERNATIONAL B.V.
FLOWSERVE REPAIR & SERVICES B.V.   By:   /s/ John M. Nanos           John M.
Nanos
Managing Director
 
        FLOWSERVE S.A.
 
        By:   /s/ John M. Nanos           John M. Nanos
Chairman
 
        FLOWSERVE FLOW CONTROL
BENELUX B.V.
 
        By:   FLOWSERVE B.V., its Managing Director
 
            By:   /s/ John M. Nanos                   John M. Nanos
Managing Director

          FLOWSERVE CORPORATION   By:   /s/ Paul Fehlman           Paul Fehlman
    Acting Vice President and Treasurer   FLOWSERVE DORTMUND GMBH & CO. KG   By:
  FLOWSERVE DORTMUND VERWALTUNGS-GMBH, its General Partner  

  By:   /s/ John M. Nanos

       

      John M. Nanos
Managing Director   FLOWSERVE BELGIUM N.V.   By:   /s/ John M. Nanos          
John M. Nanos
Director   By:   /s/ Jan van Rens           Jan van Rens     Managing Director

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

              ADMINISTRATIVE AGENT, ISSUING LENDER,
AND A LENDER:
 
            CALYON NEW YORK BRANCH
 
       

  By:   /s/ Philippe Soustra

       

      Name: Philippe Soustra
Title: Senior Vice President
 
       

  By:   /s/ Attila Coach

       

      Name: Attila Coach
Title: Managing Director

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

              LENDER:
 
            ABN AMRO BANK N.V.
 
       

  By:   /s/ Terrence J. Ward

       

      Name: Terrence J. Ward
Title: Senior Vice President
 
       

  By:   /s/ Agnacio Pineros

       

      Name: Agnacio Pineros
Title: Vice President

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

              LENDER:
 
       

  BANK OF AMERICA, N.A.
 
       

  By:   /s/ John Pocalyko

       

      Name: John Pocalyko
Title: Senior Vice President

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

              LENDER:
 
       

  BANK OF TOKYO-MITSUBISHI, LTD.
 
       

  By:   /s/

       

      Name:
Title:

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

              LENDER:
 
       

  CITICORP NORTH AMERICA, INC.
 
       

  By:   /s/ Cornelius Mahon

       

      Name: Cornelius Mahon
Title: Vice-President

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

              LENDER:
 
       

  CRÉDIT INDUSTRIEL ET COMMERCIAL
 
       

  By:   /s/ Anthony Rock

       

      Name: Anthony Rock
Title: Vice President
 
       

  By:   /s/ Brian O’Leary

       

      Name: Brian O’Leary
Title: Vice President

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

              LENDER:
 
       

  CREDIT SUISSE FIRST BOSTON, ACTING THROUGH ITS CAYMAN ISLANDS BRANCH
 
       

  By:   /s/ James Moran

       

      Name: James Moran
Title: Managing Director
 
       

  By:   /s/ Denise L. Alvarez

       

      Name: Denise L. Alvarez
Title: Associate

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

              LENDER:
 
       

  MIZUHO CORPORATE BANK, LTD.
 
       

  By:   /s/ Robert Gallagher

       

      Name: Robert Gallagher
Title: Senior Vice President

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement

 

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

 

              LENDER:
 
       

  WACHOVIA BANK, NATIONAL ASSOCIATION
 
       

  By:   /s/ Nathan R. Rantala

       

      Name: Nathan R. Rantala
Title: Vice President

Signature Page to
First Amendment and Limited Waiver to Letter of Credit and Reimbursement
Agreement