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EXHIBIT 10.14
7-7-98
FLOWSERVE CORPORATION
SECOND AMENDMENT TO 1989 STOCK OPTION PLAN,
AS PREVIOUSLY AMENDED AND RESTATED
THIS AMENDMENT of the Flowserve Corporation 1989 Stock Option Plan
(the "Plan") is being executed as of the 22nd day of July, 1998 under the
following circumstances:
A. The Plan was adopted by the Board of
Directors of Flowserve Corporation (the "Company") in
February 1989 and was approved by the shareholders of
the Company on April 26, 1989.
B. Pursuant to authorization by the Board of
Directors, the Plan was amended and restated
effective April 23, 1991 and was further amended by
First Amendment effective July 26, 1996.
C. Pursuant to authorization by the Compensation
Committee of the Board of Directors, the Plan is
being further amended by this Second Amendment.
NOW, THEREFORE, the Plan is hereby amended, effective July 22, 1998,
as follows:
PART 1. Section 2 of the Plan is amended by adding the following
definitions:
(j) "Designation of Beneficiary" means the written
designation by the Holder of the person or entity to receive the
Holder's options and any related Stock Appreciation Rights and
Unlimited Rights upon the Holder's death, which designation shall be
on such form as prescribed by the Committee and filed with the General
Counsel, the Chief Financial Officer, or the Treasurer of the Company
(or such other person as the Committee may designate).
(m) "Family Members" means children, stepchildren,
grandchildren, parents, stepparents, grandparents, spouse, siblings
(including half-brother and -sisters), nephews, nieces and in-laws.
(n) "Grantee" means the person who received the option
and any related Stock Appreciation Right and/or Limited Right from the
Company.
(o) Except where the context otherwise requires, "Holder"
or "holder" means the person(s) or entity who owns
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the option and any related Stock Appreciation Right and/or Limited
Right, whether the Grantee, Transferee, heir or other beneficiary. As
used in Section 9A, the term "Holder" shall have the meaning indicated
in Section 9A(a)(4).
(x) "Transferee" means the person who received the option
and any related Stock Appreciation Right and/or Limited Right from the
Grantee during the Grantee's lifetime in accordance with this Plan.
The other subsections of Section 2 shall be re-lettered so that all
definitions appear in alphabetical order.
PART 2. The word "holder" is changed to "Grantee" in the following
places:
1. Section 6(b)(1).
2. Section 6(b)(5), first and third uses only.
3. Section 6(b)(6), first use only.
4. Section 6(d).
5. Section 7(d), all uses.
PART 3. The first sentence of Section 6(b)(4) is amended to read as
follows:
Except as otherwise provided in the Plan, an option may be
exercised only if the Grantee thereof has been continuously
employed by the Company or a Subsidiary since the date of
grant.
PART 4. Section 10 of the Plan is amended in its entirety to read as
follows:
Non-Transferability.
(a) General Rule. Except as otherwise provided in
this Section 10, options, Stock Appreciation Rights and
Limited Rights may not be sold, pledged, assigned,
hypothecated, or transferred other than by Designation of
Beneficiary, or if none, by will or the laws of descent and
distribution upon the Holder's death, and may be exercised
during the lifetime of the Grantee only by such Grantee or by
his guardian or legal representative. All grants under the
Plan, with the exception of Incentive Stock Options and any
Stock Appreciation Rights and Limited Rights relating thereto,
may be transferred pursuant to a Qualified Domestic Relations
Order.
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(b) Transfers Permitted by the Committee. Subject to
this Section 10 and except as the Committee may otherwise
prescribe from time to time, the Committee may act to permit
the transfer or assignment of an option (together with any
related Stock Appreciation Right and/or Limited Right) by a
Grantee for no consideration to the Grantee's Family Members,
trusts for the sole benefit of the Grantee's Family Members,
or partnerships whose only partners are Family Members of the
Grantee; provided, however, that any such permitted transfer
or assignment shall not apply to an option that is an
Incentive Stock Option (but only if nontransferability is
necessary in order for the option to qualify as an Incentive
Stock Option) and to any Stock Appreciation Rights or Limited
Rights related to an Incentive Stock Option.
(c) Other Permitted Transfers. Unless the Committee
otherwise determines at the time of grant, the following
options (together with any related Stock Appreciation Right
and/or Limited Right) may be transferred or assigned by the
Grantee thereof for no consideration to the Grantee's Family
Members, trusts for the sole benefit of the Grantee's Family
Members, or partnerships whose only partners are Family
Members of the Grantee: (i) Director Options; and (ii) options
that both (x) are granted to or held by an individual who is
an officer of the Company, and (y) at the time of grant, are
Nonqualified Options. The provisions of this Section 10(c)
shall be applicable to any such option (described in the
preceding sentence) granted prior to July 22, 1998
notwithstanding that the written agreement evidencing such
option does not permit such transfer or assignment.
(d) Method and Effect of Transfer. Any permitted
transfer or assignment of an option and any Stock Appreciation
Right and/or Limited Right related thereto shall only be
effective upon receipt by the General Counsel, the Chief
Financial Officer, or the Treasurer of the Company (or such
other person as the Committee may designate) of an instrument
acceptable in form and substance to the Committee that effects
the transfer or assignment and that contains an agreement by
the Transferee to accept and comply with all the terms and
conditions of the stock option award and this Plan. A
Transferee shall possess all the same rights and obligations
as the Grantee under the Plan, except that
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the Transferee can subsequently transfer such option and any
related Stock Appreciation Rights and/or Limited Rights only
by (i) Designation of Beneficiary or, if none, then by will or
the laws of descent and distribution, or (ii) a transfer to a
beneficiary or partner if the Transferee is a trust or
partnership, respectively.
(e) Satisfaction of Withholding Tax Obligations.
Unless the Committee otherwise prescribes, upon the exercise
of a Nonqualified Option or its related Stock Appreciation
Rights or Limited Rights by a Transferee, when and as
permitted in accordance with this Section 10, the Grantee is
required to satisfy the applicable withholding tax obligations
by paying cash to the Company with respect to any income
recognized by the Grantee upon the exercise of such option by
the Transferee. If the Grantee does not satisfy the
applicable withholding tax obligations on the exercise date of
the option or related Stock Appreciation Right or Limited
Right, the Company shall, in the case of the exercise of an
option, retain from the Shares to be issued to the Transferee
upon the exercise of the option a number of Shares having a
Current Market Value on the exercise date equal to the
mandatory withholding tax payable by the Grantee or, in the
case of the exercise of a Stock Appreciation Right or Limited
Right, deduct from the cash to be delivered to the Transferee
such amount as in equal to the mandatory withholding taxes
payable by the Grantee.
PART 5. The last sentence of Section 17 of the Plan is amended to
read as follows:
No option shall be granted under the Plan after December 31,
1998.
PART 6. The term "option holder" is changed to "Grantee" in the
following places:
1. Section 9(A)(c), all uses.
2. Section 9A(d)(2), (3), and (4), all uses.
3. 9A(e).
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IN WITNESS WHEREOF, the undersigned officer has executed this Second
Amendment as of the day and year first written above.
FLOWSERVE CORPORATION
By /s/ Ronald F. Shuff
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Ronald F. Shuff
Vice President, Secretary
and General Counsel
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