Document:

exv10w1

 

Exhibit 10.1

FLOWSERVE CORPORATION

OFFICER SEVERANCE PLAN

Article I

Introduction

     Effective January 1, 2007 (the “Effective Date”), Flowserve Corporation (the “Company”) hereby
establishes the Flowserve Corporation Officer Severance Plan (the “Plan”) to provide financial and
transitional assistance to Eligible Officers who separate from the Company or an Affiliate due to a
Reduction-in-Force or due to a termination of employment without Cause (as defined herein) in order
to assure the Company of the continued attention and dedication to duty of Eligible Officers and to
ensure the continued availability of service by Eligible Officers during periods of work force
reduction or reorganization. This Plan is intended to constitute an “employee welfare benefit
plan,” as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended.

     Except as otherwise provided below, as of the Effective Date, the Plan replaces any and all
severance pay plans, policies, practices, arrangements or programs, written or unwritten, that the
Company may have had in effect for its Eligible Officers from time to time prior to the Effective
Date; any Eligible Officer whose employment is terminated on or after the Effective Date shall not
be entitled to any severance benefits other than those set forth herein. Notwithstanding the
foregoing, nothing in this Plan shall adversely affect the rights an individual Eligible Officer
may have to severance payments under the Flowserve Corporation Executive Officer Change in Control
Severance Plan (or any successor plan thereto) (the “CIC Plan”) or any written agreement executed
by and between the Employer and that Eligible Officer (a “Severance Agreement”), including, without
limitation, any Restrictive Covenant Agreement by and between the Company and an Eligible Officer;
provided, however, that in the event any Eligible Officer that is a party to a Severance Agreement
or who is eligible for benefits under the CIC Plan suffers a termination of employment and is
entitled to and is receiving the severance benefits intended to be provided under his or her
Severance Agreement or the CIC Plan, such Eligible Officer shall not be entitled to receive
severance benefits pursuant to this Plan, unless such Eligible Officer is entitled to severance
benefits pursuant to a Restrictive Covenant Agreement, in which case, such Eligible Officer shall
receive benefits under such agreement first, and then shall be eligible for benefits under this
Plan to the extent such benefits are not duplicative of the benefits previously paid pursuant to
such agreement, with the maximum severance benefits payable to such Eligible Officer under both the
Plan and such agreement equal to the maximum aggregate benefit payable to such Eligible Officer
under this Plan.

Article II

Definitions

     The words used in this Plan shall have the respective meanings set forth below unless the
context clearly indicates otherwise. Except as otherwise indicated by the context, any masculine
terminology used herein also includes the feminine and vice versa, and the definition of any term
herein in the singular shall also include the plural, and vice versa.

     Section 2.1 Administrator means the Senior Vice President, Human Resources, or, if the
claim for benefits hereunder affects the Senior Vice President, Human Resources, such entity or
individual as may be designated by the Organization and Compensation Committee.

 

 

     Section 2.2 Affiliate means any Subsidiary or Parent of the Company that has been designated
to participate in the Plan by the Administrator, and has adopted the Plan pursuant to Article V
hereof.

     Section 2.3 Appeals Administrator means the Chief Executive Officer of the Company,
or, if the claim for benefits hereunder affects the Chief Executive Officer, such entity or
individual as may be designated by the Organization and Compensation Committee.

     Section 2.4 Cause means any of the following events, as determined by the Administrator in
its sole and absolute discretion:

     (a) the Eligible Officer’s willful and continued failure to perform his or her basic
duties with the Company or an Affiliate, provided the Company has provided the Eligible
Officer
with written notice of such failure and the Eligible Officer has failed to correct the
failure within
thirty (30) days of such notice; or

     (b) the Eligible Officer’s material violation of the Company’s Code of Business
Conduct.

     Section 2.5 Company means Flowserve Corporation.

     Section 2.6 Disability means a long-term disability as defined in and meeting the
terms and conditions of the appropriate plan of the Company that provides long-term disability
benefits to the Company’s eligible employees (or, as set forth in any successor plans), as
applicable to the Eligible Officer, or, if no long-term disability plan is in place or is
applicable to the Eligible Officer, a physical or mental condition resulting from bodily injury,
disease, or mental disorder which prevents the Eligible Officer from performing his or her duties
of employment for a period of six (6) continuous months, as determined in good faith by the
Administrator, based upon medical reports or other evidence satisfactory to the Administrator.

     Section 2.7 Eligible Officer means an Officer who:

     (a) is terminated by the Company or an Affiliate in connection with a Reduction-in-Force, or

     (b) is terminated by the Company or an Affiliate without Cause.

     Section 2.8 ERISA means the Employee Retirement Income Security Act of 1974, as
amended.

     Section 2.9 Organization and Compensation Committee means the committee designated by
the Board of Directors.

     Section 2.10 Officer means senior executive officers or other corporate officers of
the Company or an Affiliate.

     Section 2.11 Parent means an entity which directly or indirectly holds a majority of
the voting power or profits or capital interest of the Company.

     Section 2.12 Plan means the Flowserve Corporation Officer Severance Plan.

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     Section 2.13 Reduction-in-Force means the separation of an Officer from employment
with the Company or an Affiliate because of a work force reduction, restructuring, or other cost
containment or business decision as designated by the Administrator, in its sole and absolute
discretion, from time to time.

     Section 2.14 Retirement means the termination of an Eligible Officer’s employment for
any reason other than for Cause, due to the Participant’s death or Disability, or due to a
Reduction-in-Force, or on or after the earlier of (i) the Eligible Officer’s Early Retirement Date
(as such term is defined within the retirement plan in effect and in which such Eligible Officer
participates on the date of the Eligible Officer’s termination); or (ii) the Eligible Officer
attaining the normal retirement date (as such term is defined within the retirement plan in effect
and in which such Eligible Officer participates on the date of the Eligible Officer’s termination,
or if no such plan is in effect, age 65).

     Section 2.15 Severance Benefit means a benefit to which an Eligible Officer may
become entitled pursuant to Article III hereof.

     Section 2.16 Subsidiary means any entity in which the Company, directly or indirectly, holds
a majority of the voting power or profits or capital interest of such entity.

Article III

Severance Benefits

     Section 3.1
Eligibility for Severance Benefits.

     (a) An Eligible Officer shall be entitled to receive a Severance Benefit in
accordance with this Article III only if the Administrator, in its reasonable discretion,
determines that:

     (i) the Eligible Officer’s employment with the Company or an Affiliate has
been involuntarily terminated as the result of a Reduction-in-Force or without
Cause.

     (ii) the Severance Benefit described herein is not otherwise duplicative of
payments already owed to the Eligible Officer under an employment, pre-existing
retention, severance, change-in-control, or other special compensation agreement or
pursuant to any applicable laws.

     (iii) the Eligible Officer has not otherwise received and accepted an offer of
employment with (A) the Company, (B) an Affiliate, (C) another company providing
services to the Company or an Affiliate, or (D) any other company that entered into
an agreement with the Company or an Affiliate to purchase, acquire, or transfer the
stock or assets of the Company, an Affiliate, or a group, function or part of the
Company or an Affiliate.

     (iv) the Eligible Officer has not otherwise declined an offer of employment,
the terms of which would have permitted the Eligible Officer to continue employment
within fifty (50) miles of the location in which the Eligible Officer performed
substantially all of his or her services immediately prior to the
Reduction-in-Force, with (A) the Company, (B) an Affiliate, (C) another company
providing services to the Company or an Affiliate, or (D) any other company that
entered into an agreement with

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the Company or an Affiliate to purchase, acquire, or transfer the stock or assets of the
Company, an Affiliate, or a group, function or part of the Company or an Affiliate.

     (v) the Eligible Officer has not terminated from the Company or an Affiliate for any
of the following reasons:

     (A) death,

     (B) Disability,

     (C) resignation,

     (D) Retirement, or

     (E) discharge for Cause.

     (vi) the Eligible Officer continues to comply with the provisions of any written
agreement in effect between the Eligible Officer and the Company (or any of its
Affiliates) that contains non-competition, confidentiality and/or non-solicitation
provisions, including, without limitation, the terms and conditions of any Restrictive
Covenant Agreement by and between the Company and the Eligible Officer.

     (vii) the Eligible Officer has executed and timely provided a release and covenant
not to sue in a form reasonably satisfactory to the Company.

     (b) Notwithstanding anything herein to the contrary, if an Eligible Officer has otherwise
satisfied the criteria described in Section 3.1(a) above and is rehired by the Company or an
Affiliate, such Eligible Officer’s entitlement to further Severance Benefit payments shall cease
immediately, unless the Administrator, in its sole and absolute discretion, determines that the
relationship between the former Eligible Officer and the Company or Affiliate for whom services
are being provided constitutes a non-employee consulting relationship and that continued payment
of such benefits is permitted by applicable law without adverse consequences to either the Company
or the Eligible Officer, as determined by the Administrator in its sole discretion. Regardless of
the nature of a former Eligible Officer’s relationship with the Company or Affiliate, if such
former Eligible Officer provides services to or for the Company or an Affiliate following a
Reduction-in-Force, such former Eligible Officer shall not be obligated to repay any Severance
Benefits that have been paid pursuant to this Plan.

     Section 3.2
Salary Continuation.

     (a) Salary continuation benefits paid to an Eligible Officer who has satisfied the applicable
requirements reflected in Section 3.1 above shall be based upon the amounts determined under
Section 3.2(b) below and shall continue until the earlier of:

     (i) the date that is twenty-four (24) months following the Eligible Officer’s
termination of employment, or

     (ii) the date the Eligible Officer fails to comply with the provisions of any written
agreement in effect between the Eligible Officer and the Company (or any of its Affiliates)
that contains non-competition, confidentiality and/or non-solicitation

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provisions, including, without limitation, the terms and conditions of any Restrictive
Covenant Agreement by and between the Company and the Eligible Officer.

     (b) The amount of each salary continuation benefit payment that shall be paid to an
Eligible Officer during the applicable salary continuation period described in Section 3.2(a)
above, shall be calculated by the Administrator, in its sole and absolute discretion, by
dividing the
Eligible Officer’s annual base salary (excluding all bonuses and financial
perquisites)
immediately prior to the Eligible Officer’s termination of employment by the number of
regularly
scheduled paydays on which the Eligible Officer would have otherwise been paid during the year
if a termination of employment had not occurred; provided, however, that if an Eligible
Officer is
on an approved short-term disability leave or on designated leave pursuant to the Family and
Medical Leave Act or other similar law, such Eligible Officer’s salary continuation benefits
shall
be based upon the Eligible Officer’s salary immediately preceding the inception of the leave

     (c) Salary continuation benefits shall commence on the date that would have
otherwise been the Eligible Officer’s next regularly scheduled payday following the later of
(i) the Eligible Officer’s termination of employment or (ii) the expiration of the revocation
period
provided in the release executed by the Eligible Officer in connection with
this Plan.
Notwithstanding the foregoing, the Administrator may delay payment by as much as six (6)
months in order to comply with the requirements of section 409A of the Code, if
the Administrator, in its sole and absolute discretion, determines that the Eligible Officer is a
“key
employee,” as defined in section 416(i) of the Code.

     (d) Notwithstanding anything in Section 3.2(b) above to the contrary, to the extent an
Eligible Officer is on an approved short-term disability leave or on designated leave pursuant
to the Family and Medical Leave Act or other similar law, such Eligible Officer’s salary
continuation benefits shall be based upon the Eligible Officer’s salary or regular hourly wage
immediately preceding the inception of the leave.

     Section 3.3
Annual Incentive Plan Bonus.

     (a) In addition to the salary continuation benefit described in Section 3.2 above, each
Eligible Officer who is terminated by the Company or an Affiliate in connection with a
Reduction-in-Force or without Cause shall be entitled to receive a lump-sum
payment
substantially equivalent to the annual incentive payment such Eligible Officer would have
otherwise received under the Company’s annual incentive plan if (i) the Company satisfied the
targeted performance results established under the Flowserve Corporation annual incentive plan
for the performance period in which the Eligible Officer’s termination of employment occurs,
and (ii) the Eligible Officer had been employed at the end of such performance period and
otherwise
eligible for a payment under the Company’s annual incentive plan.

     (b) Payment of annual target incentive payments described in Section 3.3(a) above,
shall be made at the same time as payments are made under the Company’s annual incentive plan;
provided, however that the Administrator may delay payment by as much as six (6) months in
order to comply with the requirements of section 409A of the Code, if the Administrator, in
its sole and absolute discretion, determines that the Eligible Officer is a “key employee,” as
defined in section 416(i) of the Code.

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Article IV

Claims Procedures

     Section 4.1 Initial Claim. If an individual makes a written request alleging a right
to receive benefits under this Plan or alleging a right to receive an adjustment in benefits being
paid under the Plan, the Administrator shall treat it as a claim for benefits. All claims for
benefits under the Plan shall be sent in writing to the Administrator and must be received within
thirty (30) days after the effective date of the Eligible Officer’s termination of employment. If
the Administrator, in its sole and absolute discretion, determines that a claimant is not entitled
to receive all or any part of the benefits claimed, the Administrator will inform the claimant in
writing of its determination and an explanation regarding the reason for its determination.

     Section 4.2
Initial Claim Determination.

     (a) Once the Administrator makes a determination regarding a claim,
the Administrator will send, by means of the U.S. mail, hand delivery or e-mail, a written
notice providing:

     (i) the Administrator’s determination,

     (ii) the basis for the determination (along with appropriate references to
pertinent provisions on which the denial is based),

     (iii) a description of any additional material or information necessary to
perfect the claim and an explanation of why such material is necessary, and

     (iv) the procedure that must be followed to obtain a review of the
determination, including a description of the appeals procedure and how to bring a
civil action for benefits under section 502(a) of ERISA.

     (b) The initial claim determination notice described above will be provided within a
reasonable period of time, but no later than 90 days from the day the Administrator
received the
claim, unless grounds for an extension (reflected in Section 4.2(c) below) exist.

     (c) Grounds for an extension may arise in certain instances when the Administrator,
for reasons beyond its control, cannot make a determination within the initial 90-day
period. In
such situations, the Administrator, acting in its sole and absolute discretion, may
extend the initial
90-day period for up to an additional 90 days (for a total of 180 days);
provided the
Administrator:

     (i) determines that an extension is necessary due to matters beyond its
control, and

     (ii) provides the claimant with written notice (which may be communicated by
mail, hand delivery, or e-mail) prior to the expiration of the initial
determination period that:

     (A) an extension is necessary,

     (B) the reason for the extension, and

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     (C) when a determination is expected to be rendered.

     Section 4.3
Appeal of a Denied Claim.

     (a) If a claim for benefits is denied, either in whole or in part, and the claimant wants
to contest such denial, the claimant must appeal the Administrator’s denial by requesting a
review
of the claim by the Appeals Administrator. A claimant has the following rights if a claim for
benefits is denied (whether in whole or in part):

     (i) an opportunity to request an appeal,

     (ii) the ability to submit written comments, documents, records and other information
in connection with the appeal, and

     (iii) reasonable access to, and copies of, all documents, records, and other
information relevant to the denied claim at no charge.

     (b) If a claimant chooses to file an appeal of a claim that was denied in whole or in
part, the request for review must be received within 60 days of the date in which the claimant
received notice from the Administrator indicating that the initial claim was denied.

     (c) The review of an initial adverse determination by the Appeals Administrator will
take into account all comments, documents, records and other information that has been
submitted, without regard to whether such information was submitted and considered by the
Administrator in the initial determination.

     (d) In reviewing appeals, no deference will be given to an initial adverse benefit
determination by the Administrator, and the review itself will be conducted by an appropriate
named fiduciary who is neither the individual who made the adverse benefit determination that
is the subject of the appeal nor the subordinate of such individual.

     (e) If, following an appeal, a claim is denied, either in whole or in part, after a
review of the appeal and any additional information that a claimant has submitted, a notice
containing the following information (which will be provided in writing by U.S. mail, hand
delivery, or e-mail) will be provided within a reasonable period of time, but not later than
sixty
(60) days from the date that a request for a review was received, unless grounds for an
extension
reflected in Section 4.3(f) below exist:

     (i) the specific reason or reasons for the decision, including any adverse
determinations,

     (ii) references to the specific provisions on which the determination was based,

     (iii) a statement describing how to request reasonable access to, and copies of, all
documents, records, and other information that is relevant to the denied claim (free of
charge),

     (iv) a description of any voluntary appeals procedure, if any, and how to obtain
information about such procedure, and

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     (v) the ability to bring a cause of action for benefits under section 502(a) of
ERISA.

     (f) Grounds for an extension may arise in certain instances when, due to events beyond
the Appeals Administrator’s control, a decision cannot be made within the initial 60-day
period. In such situations, the initial 60-day period may be extended for up to an
additional 60 days (for a total of 120 days); provided:

     (i) a determination is made that an extension is necessary due to matters
beyond the Appeals Administrator’s control, and

     (ii) the claimant is provided with written notice (which may be communicated
by mail, hand delivery, or e-mail) prior to the expiration of the initial
determination period that:

     (A) an extension is necessary,

     (B) the reason for the extension, and

     (C) when a determination is expected to be rendered.

Article V

Adoption of the Plan by Affiliates

     This Plan may be adopted by any Affiliate of the Company if the Organization and Compensation
Committee or its delegate approves such adoption. Upon such adoption, the provisions of the Plan
shall be fully applicable to the Eligible Officers of that Affiliate. At any time that an
Affiliate ceases to qualify as an Affiliate, it shall no longer be eligible to participate
hereunder and any Eligible Officers in its employ shall no longer be eligible to receive benefits
under this Plan.

Article VI

Duration, Amendment and Termination

     Section 6.1
Duration. This Plan shall continue in full force and effect from the
Effective Date until December 31, 2011 unless extended or earlier terminated by action of the
Organization and Compensation Committee or its delegate.

     Section 6.2 Termination and Amendment. Although the Company hopes and expects to continue the
Plan for a five (5) year period, the Plan may be amended, changed, replaced, extended or
terminated by the Organization and Compensation Committee or its delegate at any time, in its sole
and absolute discretion. The Organization and Compensation Committee or its delegate shall have
full authority to amend any provision of the Plan to reduce, eliminate or alter benefits payable
hereunder, or to alter, in any way, the criteria for eligibility to participate herein.

     Section 6.3
Form of Amendment. The form of any Amendment of the Plan shall be a
written instrument signed by any person authorized to sign by the Organization and Compensation
Committee or its delegate. An Amendment of the Plan in accordance with the terms hereof shall
automatically effect a corresponding amendment to the rights of all Eligible Officers hereunder.

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Article VII

Miscellaneous

     Section 7.1 Employment Status. This Plan does not constitute a contract of employment
or impose upon the Company or any Affiliate any obligation to retain the Eligible Officer as an
employee, to change or not change the status of the Eligible Officer’s employment, or to change
the Company’s policies or those of its Affiliates regarding termination of employment.

     Section 7.2 Validity and Severability. The invalidity or unenforceability of any provision of
the Plan shall not affect the validity or enforceability of any other provision of the Plan, which
shall remain in full force and effect, and any prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other jurisdiction.

     Section 7.3 Governing Law. To the extent not preempted by ERISA, the validity,
interpretation, construction and performance of the Plan shall in all respects be governed by the
laws of Texas, without reference to principles of conflict of law.

     Section 7.4 Funding. The Plan is funded through the general assets of the Company and all
payments of Severance Benefits with respect to a particular Eligible Officer shall be paid from
the general assets of the Company. Neither the Company nor the Administrator shall have any
obligation to establish a trust or fund for the payment of benefits under the Plan or to insure
any of the benefits under the Plan. None of the officers, members of the Board of Directors, or
agents of the Company, any Affiliate or the Administrator guarantees in any manner the payment of
benefits hereunder.

Article VIII

General Information

	 	 	 	 	 	 	 
	 

	 	Section 8.1
	 	Official Plan Name.
	 	Flowserve Corporation Officer
	 

	 	 	 	 	 	Severance Plan
	 
	 	 	 	 	 	 
	 

	 	Section 8.2
	 	Plan Sponsor and Plan Administrator.
	 	Flowserve Corporation
	 

	 	 	 	 	 	5215 N. O’Connor Blvd.
	 

	 	 	 	 	 	Irving, TX 75039
	 

	 	 	 	 	 	(972) 443-6500
	 
	 	 	 	 	 	 
	 

	 	Section 8.3
	 	Employer Identification Number.
	 	31-0267900
	 
	 	 	 	 	 	 
	 

	 	Section 8.4
	 	Plan Number.
	 	504
	 
	 	 	 	 	 	 
	 

	 	Section 8.5
	 	Plan Year.
	 	January 1 through December 31
	 
	 	 	 	 	 	 
	 

	 	Section 8.6
	 	Type of Plan.
	 	Welfare benefit plan providing
	 

	 	 	 	 	 	severance benefits to certain
	 

	 	 	 	 	 	officers in the event of a
	 

	 	 	 	 	 	reduction-in-force or
	 

	 	 	 	 	 	termination without Cause.
	 
	 	 	 	 	 	 
	 

	 	Section 8.7
	 	Type of Administration.
	 	The Plan is administered by the
	 

	 	 	 	 	 	Plan Administrator.

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	 	Section 8.8
	 	Claims Administrator.
	 	Plan Administrator for the
	 

	 	 	 	 	 	Flowserve Corporation Officer
	 

	 	 	 	 	 	Severance Plan
	 

	 	 	 	 	 	Flowserve Corporation
	 

	 	 	 	 	 	 5215
N. O’Connor Blvd.
 Suite 2300
Irving, TX 75039
	 

	 	 	 	 	 	(972) 443-6500
	 
	 	 	 	 	 	 
	 

	 	Section 8.9
	 	Agent for Service of Legal Process.
	 	Flowserve Corporation
	 

	 	 	 	 	 	General Counsel
	 

	 	 	 	 	 	5215 N. O’Connor Blvd.
	 

	 	 	 	 	 	Irving, TX 75039
(972) 443-6500
	 
	 	 	 	 	 	 
	 

	 	Section 8.10
	 	Funding.
	 	The Plan is funded through the
	 

	 	 	 	 	 	general assets of the Company.

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     IN
WITNESS WHEREOF, the Company has caused this instrument to be
executed May 7, 2007.

	 	 	 	 	 
	 

	 	FLOWSERVE CORPORATION	 	 
	 
	 	 	 	 
	 

	 	/s/ Ronald F. Shuff
 

Ronald F. Shuff

Vice President, Secretary and General Counsel
	 	 

11exv10w2

 

EXHIBIT 10.2

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (this “Agreement”) dated and effective May 7, 2007 (the “Effective
Date”), is made and entered into between Flowserve Corporation (the “Company”) and Mark Blinn
(“Executive”).

RECITALS

     A. The Company desires to continue to employ Executive and secure his services for the period
provided in this Agreement upon the terms and conditions provided herein and Executive desires to
be so employed.

     D. As a condition to the Company’s employment of Executive, the Company desires to receive
from Executive certain covenants and agreements.

     E. The Company and Executive desire to set forth in writing the terms and conditions of their
agreement and understandings with respect to the employment of Executive.

AGREEMENT

     NOW, THEREFORE, in consideration of the mutual promises and agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Executive (collectively “Parties”) agree as follows:

1. Employment.

     (a) Position and Duties of the Executive. During Executive’s employment pursuant to
this Agreement, Executive will serve as a Senior Vice President and the Chief Financial Officer of
the Company. As Chief Financial Officer, Executive is responsible for the overall financial
management and operation of the Company and Affiliated Companies. For purposes of this Agreement,
“Affiliated Companies” means any entity in which the Company, directly or indirectly, holds a
majority of the voting power or profits or capital interest of such entity. The title, powers, and
duties of Executive will be more specifically determined by the Company and may be modified by the
Company from time to time in its sole discretion. Executive will report to the Chief Executive
Officer (“CEO”).

     (b) Performance. During the Term (as defined below), Executive will use his best
efforts in performing his duties and will devote on a full-time basis all necessary time, energy
and skill in performing his duties. Executive will comply with all the employee policies and
written manuals of the Company and Affiliated Companies including the Code of Business Conduct and
the Flowserve Financial Management Code of Ethics. Executive will not work for any other business
or enterprise during the Term. Executive further agrees that he will not, directly or indirectly,
engage or participate in any activity during the Term which may injure the interests of the Company
or the Affiliated Companies, whether such interests are business-related, financial or otherwise.
Executive may serve on corporate, civic, or charitable boards or committees and manage Executive’s
personal investments and affairs, provided that: (1) such activities do not interfere with the
performance of Executive’s duties under this Agreement; (2) such activities do not cause Executive
to breach his obligations in Section 7 of this Agreement; and (3) Executive keeps the Company
informed of Executive’s commitments. Additionally, Executive must notify and seek permission from
the Company’s Board of Directors before he can serve as a director on a corporate board of
directors. If the Company determines that any of Executive’s

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corporate, civic or charitable activities are interfering with the performance of Executive’s
duties, the Company will notify Executive in writing and provide him thirty (30) days in which to
remedy the issue.

2. Term of Employment and Agreement. Executive’s employment with the Company is
on an at-will basis, meaning that either Executive or the Company may terminate the employment
relationship at any time and for any reason not expressly prohibited by law and in accordance with
the provisions of Sections 4, 5 and 6 of this Agreement. The at-will nature of Executive’s
employment cannot be modified orally, but may only be modified by a written agreement approved by
the Company’s Board of Directors. The actual period of Executive’s employment hereunder is
referred to herein as the “Term.” This Agreement will terminate on December 14, 2010 regardless of
Executive’s employment status with the Company at the time.

3. Compensation for Employment.

     (a) Salary. During the Term, the Company will pay to Executive a salary to be agreed
upon between Executive and the Company, less applicable payroll taxes and normal withholdings, (the
“Salary”) for all services rendered by Executive under this Agreement. The payment of the Salary
will be made only during the Term, and any termination of employment pursuant to Section 4, 5 or 6
of this Agreement will terminate the Company’s obligation to pay the Salary for periods following
the date of such termination of employment. The Company will pay the Salary to Executive in equal
installments every other week on the same days of the month the Company pays its other employees,
subject to applicable deductions for withholding tax amounts, all in accordance with the normal
payroll policies of the Company.

     (b) Stock. On December 14, 2006, the Company granted Executive 30,000 restricted
shares of the Company’s common stock (the “Common Stock”) and an option to purchase 30,000 shares
of Common Stock, with an exercise price equal to the fair market value of a share of the Common
Stock on December 14, 2006 (collectively the grant of restricted shares and the option are referred
to herein as the “Equity Grants”). The Equity Grants are subject to the terms and conditions of
the applicable award agreements and applicable stock plan(s) and include, without limitation, the
following terms: (i) 100% vesting on December 14, 2009, if Executive is still employed by the
Company on such date; and (ii) immediate vesting of all shares subject to each Equity Grant if,
prior to December 14, 2009, either (x) Executive is not promoted to the Company’s CEO position
immediately following the date the Company’s current President and CEO, Mr. Lewis M. Kling,
terminates his employment with the Company for any reason, or (y) an individual, other than
Executive, is appointed as the Chief Operations Officer (“COO”) of the Company prior to the date
that Mr. Kling’s employment with the Company terminates for any reason. If Executive is, however,
so promoted to the CEO or COO position, the parties agree that the Equity Grants will be considered
part of any grant the Executive receives as a result of the promotion.

     (c) Benefits. During the Term, Executive will be entitled to participate in the
employee benefit plans and programs, including paid vacations, generally available to other
similarly situated Company employees, subject to the terms, conditions and overall administration
of such plans, as such plans may be modified, amended, terminated or replaced from time to time in
the sole discretion of the Company.

4. Termination for Cause.

     Termination by the Company with Cause. The Company may terminate the employment of
Executive at any time without notice for cause. For purposes of Section 4 of this Agreement, cause
means any of the following as determined in the Company’s sole discretion:(i) the Executive’s
continuing

Page 2

 

substantial failure to perform his duties for the Company (other than as a result of
incapacity due to mental or physical illness) after a written demand is delivered to the Executive
by the Company’s Board of Directors; (ii) the Executive’s willful engaging in illegal conduct or
gross misconduct that is materially and demonstrably injurious to the Company; (iii) the
Executive’s conviction of a felony or his plea of guilty or nolo contendere to a felony, (iv) the
Executive’s willful and material breach of his confidentiality obligations under Flowserve’s Code
of Business Conduct and/or local law.

          (b) The Company Obligations to the Executive. If Executive is terminated for cause as
defined in Section 4, the Company will have no further liability or obligation to the Executive
under this Agreement or in connection with his employment, except for (i) any unpaid Salary accrued
through the date of termination, (ii) any accrued but unused and unpaid vacation time, (iii) any
unreimbursed expenses properly incurred by Executive prior to his last date of employment; and (iv)
the Company’s obligations under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”).
Additionally, the Executive will retain the right to exercise any vested stock options in
accordance with the terms and conditions in the Flowserve Corporation 2004 Stock Compensation Plan
and any Incentive Stock Agreements and/or Nonqualified Stock Option Agreements to which Executive
and the Company are parties. Any rights or benefits Executive has vested under the Flowserve
Corporation Retirement Savings Plan (401k Plan), the Flowserve Corporation Cash Balance Plan and/or
any other benefit plan of the Company which is not specifically addressed in this Agreement will be
governed by the applicable plan documents.

5. Termination Without Cause.

     (a) Termination. The Company may terminate the employment of the Executive upon
thirty (30) days written notice without cause, as defined in Section 4(a), for any reason
whatsoever, including, without limitation, the death or Disability of the Executive. For purposes
hereof, “Disability” means a mental or physical condition which prevents the Executive from
performing the essential functions of Executive’s position with the Company, even with reasonable
accommodation, for a period of not less than 90 consecutive days.

     (b) The Company’s Obligations to the Executive. Upon termination without cause, as
defined in Section 4(a), the Company will have no further liability or obligation to Executive
under this Agreement or in connection with his employment, except for (i) any unpaid Salary accrued
through the date of termination, (ii) any accrued but unused and unpaid vacation time, (iii) any
unreimbursed expenses properly incurred prior to the date of termination, (iv) the Company’s
obligations under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) and (v) severance
benefits under the Officer Severance Plan in effect at the time this Agreement is executed, subject
to the requirements of the Plan. Additionally, all unvested restricted stock and stock options
granted to Executive from the Company, including the Equity Grants, will automatically vest upon
termination, but any unvested performance shares or restricted stock units which are contingent
upon specified levels of financial performance by the Company will then expire. Executive’s right
to exercise any vested stock options will be governed by the Flowserve Corporation 2004 Stock
Compensation Plan and any Incentive Stock Agreements and/or Nonqualified Stock Option Agreements to
which Executive and the Company are parties. Any rights or benefits Executive has vested under the
Flowserve Corporation Retirement Savings Plan (401k Plan), the Flowserve Corporation Cash Balance
Plan and/or any other benefit plan of the Company which is not specifically addressed in this
Agreement will be governed by the applicable plan documents.

     (c) Transition Services. In the event the Company terminates Executive without cause
as defined in Section 4, the Company may request Executive to perform transitional services from
Executive
for a period of time, not to exceed 120 days, following notification of his termination without
cause,

Page 3

 

provided that the Company will continue to pay compensation and provide benefits (as
described in Section 3(a) and 3(c) above) to Executive during such period.

6. Resignation by Executive.

     (a) Without Good Reason. Executive may resign his employment with the Company for any
reason whatsoever so long as he provides thirty (30) days written notice of his intent to resign
his employment to the Company prior to his last date of employment. In the event that Executive
resigns without good reason, the Company will have no further liability or obligation to Executive
under this Agreement or in connection with his employment hereunder, except for (i) any unpaid
Salary accrued through Executive’s last date of employment, (ii) any accrued but unused and unpaid
vacation time, and (iii) any unreimbursed expenses Executive properly incurred prior to his last
date of employment; and (iv) the Company’s obligations under the Consolidated Omnibus Budget
Reconciliation Act (“COBRA”). Additionally, the Executive will retain the right to exercise any
vested stock options in accordance with the terms and conditions in the Flowserve Corporation 2004
Stock Compensation Plan and any Incentive Stock Agreements and/or Nonqualified Stock Option
Agreements to which Executive and the Company are parties. . Any rights or benefits Executive has
vested under the Flowserve Corporation Retirement Savings Plan (401k Plan), the Flowserve
Corporation Cash Balance Plan and/or any other benefit plan of the Company which is not
specifically addressed in this Agreement will be governed by the applicable plan documents.

     (b) With Good Reason. Executive may resign his employment with the Company with good
reason under the following circumstances: (i) if the Company has materially breached this Agreement
and has failed to cure the breach after Executive has provided the Company at least thirty (30)
days written notice of the alleged breach, (ii) Executive is not promoted to the Company’s CEO
position immediately following the date Mr. Kling terminates his employment with the Company for
any reason, or (iii) an individual, other than Executive, is appointed as the Chief Operations
Officer of the Company prior to the date that Mr. Kling’s employment with the Company’s terminates
for any reason. In order for Executive’s resignation to be treated as with good reason for
purposes of Section 6(b)(ii) or Section 6(b)(iii) of this Agreement, he must resign his employment
with the Company and its Affiliated Companies within thirty (30) days following the date he becomes
aware of either of these events.

     (c) The Company’s Obligations to the Executive if Executive Resigns With Good
Reason.. If Executive resigns his employment with good reason as defined in Section 6(b), the
Company will have no further liability or obligation to Executive under this Agreement or in
connection with his employment except for (i) any unpaid Salary accrued through Executive’s last
date of employment, (ii) any accrued but unused and unpaid vacation time, (iii) any unreimbursed
expenses Executive properly incurred prior to Executive’s last date of employment, (iv) the
Company’s obligations under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”); (v)
severance benefits under the Officer Severance Plan in effect at the time this Agreement is
executed, subject to the requirements of the Plan; and all unvested restricted stock and stock
options granted to Executive from the Company, including the Equity Grants, will automatically vest
upon termination, but any unvested performance shares or restricted stock units which are
contingent upon specified levels of financial performance by the Company will then expire. The
Executive will retain the right to exercise any vested stock options in accordance with the terms
and conditions in the Flowserve Corporation 2004 Stock Compensation Plan and any Incentive Stock
Agreements and/or Nonqualified Stock Option Agreements to which Executive and the Company are
parties. Any rights or benefits Executive has vested under the Flowserve Corporation Retirement
Savings Plan (401k Plan), the Flowserve Corporation Cash Balance Plan and/or any other benefit plan
of the Company which is not specifically addressed in this Agreement will be governed by the
applicable plan documents.

Page 4

 

     (d) Transitional Services. If the Executive resigns his employment with good reason
as defined in Section 6(b), the Company may request Executive to perform transitional services for
a period of time, not to exceed 120 days, following notification of his resignation with good
reason, provided that the Company will continue to pay compensation and provide benefits (as
described in Section 3(a) and 3(c) above) to Executive during such period.

7. Restrictive Covenants. Executive reaffirms his obligations set forth in the
Restrictive Covenants Agreement between the Company and Executive executed by the Parties in 2006,
as may be amended from time to time, and any other agreements between the Company and Executive
which impose restrictions on Executive’s use of the Company’s confidential information and/or
restrictions on Executive’s ability to work for a competitor of the Company, solicit the Company’s
employees to leave the Company and/or solicit business from the Company’s customers, as those
agreements may be amended from time to time (“Restrictive Covenants Agreements”). The parties
agree that nothing in this Agreement nullifies Executive’s obligations as set forth in the
Restrictive Covenants Agreements.

8. Delay of Severance Payments. To the extent (i) any post-termination payments
to which Executive becomes entitled under this Agreement or any agreement or plan referenced herein
constitute deferred compensation subject to Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) and (ii) Executive is deemed at the time of such termination of employment to
be a “specified employee” under Section 409A of the Code, then such payment will not be made or
commence until the earliest of (x) the expiration of the six (6) month period measured from the
date of Executive’s “separation from service” (as such term is defined in Proposed Treasury
Regulations under Section 409A of the Code and any other guidance issued under Section 409A of the
Code) with the Company; (y) the date Executive becomes “disabled” (as defined in Section 409A of
the Code); and (z) the date of Executive’s death following such separation from service. Upon the
expiration of the applicable deferral period, any payments which would have otherwise been made
during that period (whether in a single sum or in installments) in the absence of this Section 8
(together with reasonable accrued interest) will be paid to Executive or Executive’s beneficiary in
one lump sum.

9. Severability. Should a court determine that any portion of this Agreement is
invalid, unenforceable, or void, this determination will not have the effect of invalidating the
remainder of the Agreement. Further, the court should construe this Agreement by limiting and
reducing it only to the extent necessary to be enforceable under applicable law.

10. Controlling Law. Any dispute in the meaning, effect, or validity of this
Agreement will be resolved in accordance with the laws of the State of Texas without regard to any
conflict of laws. This Agreement will be governed by and construed under the laws of the State of
Texas. Venue of any litigation arising from this Agreement will be in a federal or state court of
competent jurisdiction in Dallas County, Texas.

11. Successors. This Agreement will be binding upon and inure to the benefit of
the Parties and their respective heirs, successors and permitted assigns. The Company may assign
this Agreement to any individual, business, firm, company, partnership, joint venture, organization
or other entity who or which may acquire substantially all of the Company’s assets or business or
with or into which the Company may be liquidated, consolidated, merged or otherwise combined. This
Agreement is personal to Executive and may not be assigned or delegated by him, and any such
purported assignment or delegation will be null and void.

Page 5

 

12. No Waiver. The failure of either party to insist in any one or more instances
upon performance of any terms or conditions of this Agreement will not be construed as a waiver of
future performance of any such term, covenant or condition, but the obligations of either party
will continue in full force and effect.

13. Non-Disparagement. Executive agrees that the Company’s goodwill and
reputation are assets of great value to the Company which were obtained through great costs, time
and effort. Therefore, Executive agrees that during his employment and after the termination of
his employment, Executive will not in any way disparage, libel or defame the Company, its business
or business practices, its products or services, or its current or past employees.

14. Notices. Any notice given hereunder will be in writing and be delivered or
mailed by Registered or Certified Mail, Return Receipt Requested:

	 	 	 	 	 	 	 
	 

	 	(a)
	 	to the Company:
	 	General Counsel
	 

	 	 	 	 	 	Flowserve Corporation
	 

	 	 	 	 	 	5215 North O’Connor Boulevard, Suite 2300
	 

	 	 	 	 	 	Irving, Texas 75039
	 
	 	 	 	 	 	 
	 

	 	(b)
	 	to Executive:
	 	Mark Blinn
	 

	 	 	 	 	 	To Be Sent to the Home Address Most Recently on File With the
	 

	 	 	 	 	 	Company’s EAS Department for Payroll Purposes

     Any party may, by notice given as provided for above, designate a different address. Any
notice given hereunder will be effective on the date of receipt.

15. Entire Agreement. There are no oral representations, understanding or
agreements with the Company, the Affiliated Companies or any of their officers, directors or
representatives covering the same subject matter as this Agreement. Except for the Restrictive
Covenants Agreement and any restricted stock, stock option, and/or any restricted stock unit
agreements executed by Executive, this Agreement supersedes all previous employment agreements
between Executive and the Company and contains the final, complete and exclusive understanding and
agreement between the Parties with respect to the subject matter hereof and cannot be amended,
modified or supplemented in any respect except by subsequent written agreement entered into by both
Parties; provided, however, that in the event the Company determines, in its sole
discretion, that an amendment, modification or supplement is necessary for purposes of compliance
with or exemption from the requirements of Section 409A of the Code and to avoid the imposition of
additional tax on Executive, Executive agrees not to unreasonably withhold his consent to such
amendment, modification or supplement or to unreasonably condition his consent on the renegotiation
by the Company of any other provision of this Agreement.

16. Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement, and all of which, when taken
together, will be deemed to constitute one and the same Agreement. The exchange of copies of this
Agreement and of signature pages by facsimile transmission will constitute effective execution and
delivery of this Agreement as to the Parties and may be used in lieu of the original Agreement for
all purposes. Signatures of the Parties transmitted by facsimile will be deemed to be their
original signatures for any purpose whatsoever.

17. Change in Control. If Executive becomes eligible to receive severance benefits or
accelerated vesting of stock option or restricted stock awards under a Company change in control
plan or program,

Page 6

 

Executive will not be entitled, as the case may be, to severance benefits and/or the acceleration
of vesting of stock option or restricted stock awards under this Agreement.

18. Captions. The captions herein are for the convenience of reference of the Parties and
are not to be construed as part of the terms of this Agreement.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement the day and year first above
written.

	 	 	 	 	 
	 	 	Flowserve Corporation
	 
	 	 	 	 
	 

	 	By:	 	/s/ Mark A. Blinn
	 

	 	 	 	 
	 

	 	Name:	 	Mark A. Blinn
	 

	 	 	 	 
	 

	 	Title:	 	Senior Vice President and Chief Financial Officer
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 	 	May 7, 2007

Page 7

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