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EXHIBIT 10.38
AMENDMENT #1 TO
EMPLOYMENT AGREEMENT (THE "AGREEMENT")
DATED AUGUST 1, 1997
BETWEEN
XXXXXXX X. XXXXXX ("EXECUTIVE")
AND
FLOWSERVE CORPORATION (THE "COMPANY")
Effective October 20, 1998, the Company and the Executive agree to the following
amendment to the Agreement by adding the following paragraphs.
18. Non Competition and Cooperation
Except as otherwise approved by the Company, which shall not be
unreasonably withheld or delayed, during the term of the Agreement, the
Executive shall not compete in any way with the Company nor any of its
beneficially owned or controlled subsidiaries. As clarification, but
not limitation of this obligation, the Executive shall not be employed
by, retained as a consultant by (except by any subsidiary or division
of a company which subsidiary or division is not in competition with
the Company), invest in (except for a passive investment totaling less
than 10% of the outstanding common stock of a company), direct nor
otherwise assist, in any commercial manner, any company, organization,
person or group of persons which offer any products or services which
compete with those offered by the Company. The obligation shall apply
on a global basis. For purposes of this Agreement, competition shall
mean manufacturing, designing or distributing products for use in the
chemical process industries similar to products of the Company.
Additionally, the Executive will reasonably cooperate with the Company
in announcing his resignation as President and COO of the Company.
Executive will also then refrain from taking any intentional action
designed to be detrimental to the best interests of the Company before
the investment community and the Company's customers, suppliers and
employees during the balance of the term of the Agreement. The Company
will refrain from taking any intentional action detrimental to the best
interests of Executive.
19. Employment Duties
The Executive shall continue to be an employee of the Company; however,
Executive (i) shall not be required to devote any of his time and
attention to the business and affairs of the Company; (ii) may serve as
a director of other entities for which he currently serves as a
director, notwithstanding paragraph 18 of this Agreement; (iii) shall
have only such duties, if any, as shall be mutually agreeable to the
Executive and the Board; (iv) subject to paragraph 18 of this
Agreement, may perform services and/or serve as an employee, officer or
director or engage in any other activity for remuneration or otherwise
without the approval of the Company and without any diminution of
amounts payable under this Agreement, as amended.
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20. Dispute Resolution
Any dispute or controversy arising out of the Agreement, as amended,
shall be settled by arbitration in Dallas, Texas, in accordance with
the rules of the American Arbitration Association, and judgment may be
entered in thereon in any court having jurisdiction in Dallas, Texas.
21. Company Default
This Agreement, as amended, shall not be terminated by the Company. Any
wrongful termination of this Agreement by the Company, or any default
by the Company under this Agreement, as amended, shall entitle
Executive to obtain appropriate damages.
22. Change of Control
In the event of a "change of control" of the Company, as such term is
defined in the separate contract (the "CIC Agreement") between the
Company and the Executive noted in paragraph 9 of the Agreement, then
the following shall occur:
(a) The future base salary due the Executive under this Agreement
shall be computed and promptly paid in a lump sum, assuming
that such amount would have increased by 3.5% on each
following March 1 of the then remaining term of the Agreement;
(b) The future annual incentive payments and long-term incentive
payments, due Executive during the balance of the Agreement
term, shall also be computed and promptly paid in a lump sum,
assuming both that (i) such incentives would have been payable
at 100% of target amount and (ii) Executive's salary reference
rate would have increased by 3.5% on each following March 1 of
the then remaining term of the Agreement;
(c) All other rights and benefits of Executive under this
Agreement shall survive such change of control and be binding
obligations upon the Company; and
(d) The provisions of Section 9 of the CIC Agreement, which is
entitled "GROSS UP OF PAYMENTS DEEMED TO BE EXCESS PARACHUTE
PAYMENTS", shall apply to all payments and benefits received
by Executive hereunder after such change of control, as if
such provisions were specifically stated herein.
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In addition, the Company and the Executive agree that the Agreement shall be,
and hereby is, further amended by deleting paragraphs 2(d), 2(e), 3, 4, 6(a),
6(b), 6(c), 6(d), 6(e), 6(f), 7(a), 7(b), 7(c), the first clause beginning with
"If" and ending with "Reason" of 7(d), and 9 of the Agreement, in the mutual
understanding that the Executive's rights to compensation under the Agreement
shall survive his death or disability, if applicable and to the extent possible.
The Company and the Executive also agree that the CIC Agreement be immediately
terminated by mutual consent.
The remainder of the Agreement shall remain unchanged and in full force and
effect.
ACKNOWLEDGED AND AGREED:
FLOWSERVE CORPORATION EXECUTIVE
/S/ Xxxxx X. Xxxxxxx, Chairman /S/ Xxxxxxx X. Xxxxxx
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Compensation Committee
Board of Directors
