Amendment No. 2 to Receivables Purchase Agreement

Exhibit 10.3

AMENDMENT NO . 2

     This AMENDMENT NO. 2 (this “Amendment”), is dated as of January 14, 2005, and is entered into by and among FLOWSERVE RECEIVABLES CORPORATION, a Delaware corporation (the “Seller”), FLOWSERVE US INC., a Delaware corporation, as the Servicer (the “Servicer”), the funding sources party hereto as the financial institutions (the “Financial Institutions”), JUPITER SECURITIZATION CORPORATION (together with the Financial Institutions, the “Purchasers”), and JPMORGAN CHASE BANK, N.A. (successor by merger to Bank One, NA (Main Office Chicago)), as agent (the “Agent”) for the Purchasers.

W I T N E S S E T H:

     WHEREAS, the Seller, the Servicer, the Purchasers and the Agent are parties to that certain Receivables Purchase Agreement, dated as of October 7, 2004 (as amended, restated, supplemented or otherwise modified from time to time, the “Agreement”); and

     WHEREAS the parties hereto desire to amend the Agreement on the terms and conditions set forth below;

     NOW THEREFORE, in consideration of the premises herein contained, and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto hereby agree as follows:

     1.      Defined Terms. Capitalized terms used and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement.

     2.      Amendment to the Agreement. Subject to the satisfaction of the conditions precedent set forth in Section 5 below, clause (i)(a) to the definition of the term “Eligible Receivable” set forth in Exhibit I to the Agreement is hereby amended and restated in its entirety to read as follows:

     "(i) (a) if a natural person, is a resident of the United States or, if a corporation or other business organization, is organized under the laws of the United States or any political subdivision thereof and has its chief executive office in the United States;”

     3.      Representations and Warranties of the Seller. In order to induce the parties hereto to enter into this Amendment, the Seller represents and warrants that:

     (a)      The representations and warranties of Seller set forth in Section 5.1 of the Agreement are true, correct and complete on the date hereof as if made on and as of the date hereof and there exists no Amortization Event or Potential Amortization Event on the date hereof, provided that in the case of any representation or warranty in Section 5.1 of the Agreement that expressly relates to facts in existence on an earlier date, the reaffirmation thereof under this Section 3(a) shall be made as of such earlier date.

     (b)      The execution and delivery by the Seller of this Amendment has been duly authorized by proper corporate proceedings of the Seller and this Amendment, and the Agreements, as amended by this Amendment, constitute the legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general applicability affecting the enforcement of creditors’ rights generally.

     4.      Representations and Warranties of the Servicer. In order to induce the parties hereto to enter into this Amendment, the Servicer represents and warrants that:

     (a)      The representations and warranties of the Servicer set forth in Section 5.1 of the Agreement are true, correct and complete on the date hereof as if made on and as of the date hereof and there exists no Amortization Event or Potential Amortization Event on the date hereof, provided that in the case of any representation or warranty in Section 5.1 of the Agreement that expressly relates to facts in existence on an earlier date, the reaffirmation thereof under this Section 4(a) shall be made as of such earlier date.

     (b)      The execution and delivery by the Servicer of this Amendment has been duly authorized by proper corporate proceedings of the Servicer and this Amendment, and the Agreement, as amended by this Amendment, constitute the legal, valid and binding obligations of the Servicer, enforceable against the Servicer in accordance with its terms, except as such enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws of general applicability affecting the enforcement of creditors’ rights generally.

     5.      Conditions Precedent. The amendment to the Agreement provided for hereunder shall become effective as of the date first written above upon the Agent’s receipt of each of the following:

     (a)      counterparts of this Amendment executed by the Seller, the Servicer and each Purchaser; and

     (b)      a Reaffirmation of Performance Undertaking in substantially the form attached hereto as Exhibit A hereto, executed by the Provider in respect of the Performance Undertaking.

     6.      Ratification. The Agreement, as amended hereby, is hereby ratified, approved and confirmed in all respects.

     7.      Reference to Agreement. From and after the effective date hereof, each reference in the Agreement to “this Agreement”, “hereof”, or “hereunder” or words of like import, and all references to the Agreement in any and all agreements, instruments, documents, notes, certificates and other writings of every kind and nature shall be deemed to mean the Agreement as amended by this Amendment.

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     8.      Costs and Expenses. The Seller agrees to pay all reasonable costs, fees and out-of-pocket expenses (including attorneys’ fees and time charges of attorneys representing the Agent, which attorneys may be employees of the Agent) incurred by the Agent in connection with the preparation, execution and enforcement of this Amendment.

     9.      CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF ILLINOIS.

     10.      Execution of Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed and delivered by their duly authorized officers as of the date first written above:

Signature Page to Amendment No. 2

Signature Page to Amendment No. 2

EXHIBIT A

FORM OF REAFFIRMATION OF PERFORMANCE UNDERTAKING

(attached)

REAFFIRMATION OF PERFORMANCE UNDERTAKING

As of January 14, 2005

JPMorgan Chase Bank, N.A.
(successor by merger to Bank One, N.A. (Main Office Chicago)), as Agent
c/o J.P. Morgan Securities Inc.
270 Park Avenue, 10th Floor
New York, New York 10017

     The undersigned, Flowserve Corporation, hereby:

     (i)      acknowledges, and consents to, the execution of that certain Amendment No. 2 (the “Amendment”), of even date herewith, among Flowserve Receivables Corporation, Flowserve US Inc., the funding sources party thereto as the Financial Institutions, Jupiter Securitization Corporation (together with the Financial Institutions, the “Purchasers”) and JPMorgan Chase Bank, N.A. (successor by merger to Bank One, NA (Main Office Chicago)), as agent;

     (ii)      reaffirms all of its obligations under that certain Performance Undertaking dated as of October 7, 2004 (the “Performance Undertaking”) made by the undersigned in favor of the Agent and the Purchasers; and

     (iii)      acknowledges and agrees that, after giving effect to the Amendment, such Performance Undertaking remains in full force and effect and is hereby ratified and confirmed.