Exhibit 10.2
Performance Restricted Stock Unit Agreement
Flowserve Corporation
2004 Stock Compensation Plan
          This Performance Restricted Stock Unit Agreement (the “Agreement”) is
made and entered into by and between Flowserve Corporation, a New York
corporation (the “Company”) and «First_Name» «Last_Name» (the “Participant”) as
of                     , 2007 (the “Date of Grant”).
W I T N E S S E T H
          WHEREAS, the Company has adopted the Flowserve Corporation 2004 Stock
Compensation Plan (the “Plan”) to strengthen the ability of the Company to
attract, motivate and retain Employees, Outside Directors and Consultants who
possess superior capabilities and to encourage such persons to have a
proprietary interest in the Company; and
          WHEREAS, the Organization and Compensation Committee of the Board of
Directors of the Company believes that the grant of Performance Restricted Stock
Units to the Participant as described herein is consistent with the stated
purposes for which the Plan was adopted; and
          NOW, THEREFORE, in consideration of the mutual covenants and
conditions hereafter set forth and for other good and valuable consideration,
the Company and the Participant agree as follows:

  1.   Performance Restricted Stock Units

          In order to encourage the Participant’s contribution to the successful
performance of the Company, and in consideration of the covenants and promises
of the Participant herein contained, the Company hereby grants to the
Participant as of the Date of Grant, an Award of «M___of_Shares_Granted»
Performance Restricted Stock Units (the “Performance Shares”), which may be
converted into the number of shares of Common Stock of the Company equal to the
number of vested Performance Shares, subject to the conditions and restrictions
set forth below and in the Plan.

  2.   Vesting and Conversion of Performance Shares into Common Stock

  (a)   Prior to March 31, 2007, the Committee shall establish a threshold,
target and maximum Performance Goal with respect to the Award, in accordance
with the requirements of Section 6.7 of the Plan, based upon the Company’s
return on net assets for the period beginning January 1, 2007 and ending
December 31, 2009 (the “Performance Cycle”). Following the end of the
Performance Cycle, the Committee shall compare the actual performance of the
Company with the Performance Goal and certify, in writing, whether and to what
extent the Performance Goal has been achieved for such Performance Cycle.
Subject to the provisions of Paragraphs 3 and 4 below, upon written
certification by the Committee, which shall occur no later than March 31, 2010,
whether, and to what extent, the Performance Goal has been achieved, the
Performance Shares will become vested (the “Vesting Date”) in accordance with
the table set forth below; provided, however, that the Performance Shares shall
not vest and shall be forfeited to the extent the Performance Goal is not
achieved for the Performance Cycle. The number of Performance Shares vested is
contingent

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      upon the Company’s achievement of the Performance Goal for the Performance
Cycle.

      Performance Goal   Percentage of Performance Shares Vested Achieved   and
Eligible for Conversion Less Than Threshold   0% Threshold   25% Target   100%
Maximum   200%

  (b)   Except as otherwise provided in Paragraphs 2(e) and 4 below, no later
than the date that is two and a half (2 1/2) months following the close of the
calendar year in which the Performance Shares vest in accordance with the table
set forth in Paragraph 2(a) above, the Company shall convert the vested
Performance Shares into the number of whole shares of Common Stock equal to the
number of vested Performance Shares, subject to the provisions of the Plan and
the Agreement.     (c)   Following conversion of the vested Performance Shares
into shares of Common Stock, such shares of Common Stock will be transferred of
record to the Participant and a certificate or certificates representing said
Common Stock will be issued in the name of such Participant and delivered to the
Participant. The delivery of any shares of Common Stock pursuant to this
Agreement is subject to the provisions of Paragraphs 7 and 9 below.     (d)  
Each year that this Agreement is in effect, the Participant may receive credits
(“Dividend Equivalents”) based upon the cash dividends that would have been paid
on the number of shares of Common Stock equal to 100% of the Performance Shares
as if such shares of Common Stock were actually held by the Participant.
Dividend equivalents shall be deemed to be reinvested in additional shares of
Common Stock (which may thereafter accrue additional dividend equivalents). Any
such reinvestment shall be at the Fair Market Value of the Common Stock at the
time thereof. Dividend Equivalents may be settled in cash or shares of Common
Stock, or any combination thereof, as determined by the Committee, in its sole
and absolute discretion. Following conversion of the vested Performance Shares
into shares of Common Stock, the Participant also shall receive a distribution
of the Dividend Equivalents accrued with respect to such Performance Shares
prior to the date of such conversion. In the event any Performance Shares do not
vest, the Participant shall forfeit his or her right to any Dividend Equivalents
accrued with respect to such unvested Performance Shares.     (e)  
Notwithstanding the foregoing provisions of Paragraphs 2(c) and 2(d), the
Committee may, in its sole and absolute discretion, in lieu of distributing any
shares of Common Stock to the Participant, elect to pay the Participant an
amount in cash equal to the Fair Market Value on the date of conversion of the
shares of Common Stock that the Participant otherwise would be entitled to
receive pursuant to this Agreement.

  3.   Effect of Termination of Employment or Services

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  (a)   The Performance Shares granted pursuant to this Agreement shall vest in
accordance with the provisions of Paragraph 2(a) above, as long as the
Participant remains employed by or continues to provide services to the Company
or a Subsidiary. If, however:

  (i)   the Company and its Subsidiaries terminate the Participant’s employment
(or if the Participant is not an Employee, determine that the Participant’s
services are no longer needed), or     (ii)   the Participant terminates
employment (or if the Participant is not an Employee, ceases to perform services
for the Company and its Subsidiaries),

      Then, except as otherwise provided in Paragraphs 3(b) or 3(c) below, the
Performance Shares that have not previously vested in accordance with the
vesting schedule reflected in Paragraph 2(a) above, as of the date of such
termination of employment (or cessation of services, as applicable), shall be
forfeited by the Participant to the Company.     (b)   In the event the
Participant’s employment with the Company terminates due to his or her
Retirement, Total and Permanent Disability or death, then on the Vesting Date
the Participant (or the Participant’s estate) shall be entitled to receive a
pro-rata portion of the number of shares of Common Stock that would have been
payable to such Participant if he or she had continued to provide services up to
the Vesting Date, based upon the number of whole years of employment completed
during the Performance Cycle. By way of example, if the Participant Retires on
the one year anniversary of the Date of Grant, such Participant would be
entitled to receive 1/3 of the shares of Common Stock he or she would have
received on the Vesting Date had he or she remained employed through such date.
For purposes of this Agreement, the terms “Retirement” and “Retire” shall mean
the termination of a Participant’s employment with the Company for any reason
other than due to the Participant’s death or Total and Permanent Disability on
or after the earlier of (i) the Participant’s early retirement date (as such
term is defined within the retirement plan in effect and in which such
Participant participates on the date of the Participant’s termination); or
(ii) the Participant attaining the normal retirement date (as such term is
defined within the retirement plan in effect and in which such Participant
participates on the date of the Participant’s termination, or if no such plan is
in effect, age 65).     (c)   Notwithstanding Paragraphs 2(a) and 3(a) above,
upon the cessation of the Participant’s employment or services (whether
voluntary or involuntary), the Committee may, in its sole and absolute
discretion, elect to accelerate the vesting of some or all of the unvested
Performance Shares.

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  4.   Forfeiture and Disgorgement Upon Competition

  (a)   Notwithstanding any provisions in this Agreement to the contrary, in the
event either (A) the Participant violates the provisions of Paragraph 4(b) or
the provisions of any restrictive covenants agreement by and between the Company
or its subsidiaries and the Participant or (B) the Participant, or anyone acting
on the Participant’s behalf, brings a claim against the Company seeking to
declare any term of this Paragraph 4 void or unenforceable or the provisions of
any other restrictive covenants agreement by and between the Company or its
subsidiaries and the Participant void or unenforceable, then:

  (i)   the Performance Shares shall immediately cease to vest and all
Performance Shares that have not previously vested in accordance with the
vesting schedule reflected in Paragraph 2(a) above, as of the date of such
violation shall be forfeited by the Participant to the Company;     (ii)   any
vested Performance Shares that have not been converted into shares of Common
Stock shall be immediately forfeited;     (iii)   the Participant will
immediately sell to the Company one-third of all shares of Common Stock acquired
by the Participant pursuant to this Agreement and that the Participant still
owns on the date of such violation for the Fair Market Value of such Common
Stock on the date of sale to the Company;     (iv)   the Participant will
immediately pay to the Company one-third of any gain that the Participant
realized on the sale of shares of Common Stock acquired pursuant to this
Agreement; and     (v)   the Company shall be entitled to payment by the
Participant of its attorneys’ fees and costs incurred in enforcing the
provisions of Paragraph 4, in addition to any other legal remedies.

      The provisions of this Paragraph 4 shall survive the termination or
expiration of this Agreement.     (b)   By execution of this Agreement, the
Participant, either individually or as a principal, partner, stockholder,
manager, agent, consultant, contractor, employee, lender, investor, volunteer or
as a director or officer of any corporation or association, or in any other
manner or capacity whatsoever, agrees to the following from the date of grant
until the date one (1) year immediately following his or her termination of
employment (for any reason):         The Participant shall not, whether directly
or indirectly, without the express prior written consent of the Company:

  (i)   Non-Competition         Become employed by, advise, perform services or
otherwise engage in any capacity with a Competing Business in the Restricted
Area. For purposes of this Agreement, “Competing Business” means any entity or

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      business that is in the business of providing flow management products and
related repair and/or replacement services. Because the scope and nature of the
Company’s business is international in scope and the Participant’s job duties
are international in scope, the “Restricted Area” is worldwide. However, the
Participant may own, directly or indirectly, solely as an investment, securities
of any business traded on any national securities exchange or NASDAQ, provided
that the Participant is not a controlling person of, or member of a group that
controls such business, and provided further that the Participant does not,
directly or indirectly, own three percent (3%) or more of any class of
securities of such business;     (ii)   Non-Solicitation         Solicit
business from, attempt to transact business with, or transact business with any
customer or prospective customer of the Company with whom the Company transacted
business or solicited within the preceding twenty-four (24) months, and which
either: (1) the Participant contacted, called on, serviced, conducted business
with or had contact with during the Participant’s employment or that the
Participant attempted to contact, call on, service, or do business with during
the Participant’s employment; or (2) the Participant became acquainted with or
dealt with, for any reason, as a result of the Participant’s employment with the
Company. This restriction applies only to business that is in the scope of
services or products provided by the Company; or     (iii)   Non-Recruitment    
    Hire, solicit for employment, induce or encourage to leave the employment of
the Company or its subsidiaries any current employee of the Company or any
former employee of the Company or its subsidiaries whose employment ceased less
than three (3) months earlier.

  (c)   Confidential Information         Immediately upon Participant’s
execution of this Agreement, and continuing on an ongoing basis during
Participant’s employment, the Company agrees to provide Participant with new
Confidential Information (defined in this Paragraph 4(c)) to which Participant
has not previously had access. For purposes of this Agreement, “Confidential
Information” includes any trade secrets or confidential or proprietary
information of the Company, including, but not limited to, the following:

  (i)   information concerning customers, clients, marketing, business and
operational methods of the Company and their customers or clients, contracts,
financial or other data, technical data, e-mail and other correspondence or any
other confidential or proprietary information possessed, owned or used by any of
the Company;     (ii)   business records, product construction, product
specifications, financial information, audit processes, pricing, business
strategies, marketing and

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      promotional practices (including internet-related marketing) and
management methods and information;     (iii)   financial data, strategies,
systems, research, plans, reports, recommendations and conclusions;     (iv)  
names, arrangements with, or other information relating to any of the Company’s
customers, clients, suppliers, financiers, owners, representatives and other
persons who have business relationships with the Company or who are prospects
for business relationships with the Company; and     (v)   any non-public matter
or thing obtained or ascertained by Participant through Participant’s
association with the Company, the use or disclosure of which might reasonably be
construed to be contrary to the best interests of the Company.

  (d)   Non-Disclosure         In exchange for the Company’s promise to provide
Participant with Confidential Information, Participant shall not, during the
period of Participant’s employment or at any time thereafter, disclose to
anyone, or publish, or use for any purpose, any Confidential Information, except
as: (i) required in the ordinary course of the Company’s business or the
Participant’s work for the Company; (ii) required by law; or (iii) directed and
authorized in writing by the Company. Upon the termination of Participant’s
employment for any reason, Participant shall immediately return and deliver to
the Company any and all Confidential Information, computers, hard drives,
papers, books, records, documents, memoranda, manuals, e-mail, electronic or
magnetic recordings or data, including all copies thereof, which belong to the
Company or relate to the Company’s business and which are in Participant’s
possession, custody or control, whether prepared by Participant or others. If at
any time after termination of Participant’s employment, for any reason,
Participant determines that Participant has any Confidential Information in
Participant’s possession or control, Participant shall immediately return to the
Company all such Confidential Information in Participant’s possession or
control, including all copies and portions thereof.     (e)   By execution of
this Agreement, the Participant agrees that the provisions of this Paragraph 4
shall apply to all grants (including, without limitation, grants of incentive
stock options, nonqualified stock options and Performance Shares) made to the
Participant pursuant to the Plan in 2006 and, to the extent the provisions of
such grants are inconsistent with any of the provisions of this Paragraph 4, the
Company and the Participant agree that (i) the provisions of this Paragraph 4
shall control and (ii) the provisions of any such award agreements are hereby
amended by the terms of this Paragraph 4.

  5.   Limitation of Rights         Nothing in this Agreement or the Plan shall
be construed to:

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  (a)   give the Participant any right to be awarded any further Performance
Shares or any other Award in the future, even if Performance Shares or other
Awards are granted on a regular or repeated basis, as grants of Performance
Shares and other Awards are completely voluntary and made solely in the
discretion of the Committee;     (b)   give the Participant or any other person
any interest in any fund or in any specified asset or assets of the Company or
any Subsidiary; or     (c)   confer upon the Participant the right to continue
in the employment or service of the Company or any Subsidiary, or affect the
right of the Company or any Subsidiary to terminate the employment or service of
the Participant at any time or for any reason.

  6.   Prerequisites to Benefits

          Neither the Participant, nor any person claiming through the
Participant, shall have any right or interest in the Performance Shares awarded
hereunder, unless and until all the terms, conditions and provisions of this
Agreement and the Plan which affect the Participant or such other person shall
have been complied with as specified herein.

  7.   Delivery of Shares

          No shares of Common Stock shall be delivered to the Participant upon
conversion of the Performance Shares into shares of Common Stock until:

  (a)   all the applicable taxes required to be withheld have been paid or
withheld in full;     (b)   the approval of any governmental authority required
in connection with this Performance Share, or the issuance of shares of Common
Stock hereunder under has been received by the Company; and     (c)   if
required by the Committee, the Participant has delivered to the Committee an
“Investment Letter” in form and content satisfactory to the Company as provided
in Paragraph 9 hereof.

  8.   Successors and Assigns

          This Agreement shall bind and inure to the benefit of and be
enforceable by the Participant, the Company and their respective permitted
successors and assigns (including personal representatives, heirs and legatees),
except that the Participant may not assign any rights or obligations under this
Agreement except to the extent and in the manner expressly permitted herein.

  9.   Securities Act

          The Company will not be required to deliver any shares of Common Stock
pursuant to this Agreement if, in the opinion of counsel for the Company, such
issuance would violate the Securities Act of 1933, as amended (the “Securities
Act”) or any other applicable federal or state securities laws or regulations.
The Committee may require that the Participant, prior to the issuance of any
such shares, sign and deliver to the Company a written statement, which shall be
in a form and contain content acceptable to the Committee, in its sole
discretion (“Investment Letter”):

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  (a)   stating that the Participant is acquiring the shares for investment and
not with a view to the sale or distribution thereof;     (b)   stating that the
Participant will not sell any shares of Common Stock that the Participant may
then own or thereafter acquire except either:

  (i)   through a broker on a national securities exchange or     (ii)   with
the prior written approval of the Company; and

  (c)   containing such other terms and conditions as counsel for the Company
may reasonably require to assure compliance with the Securities Act or other
applicable federal or state securities laws and regulations.

  10.   Federal and State Taxes

  (a)   Any amount of Common Stock that is payable or transferable to the
Participant hereunder may be subject to the payment of or reduced by any amount
or amounts which the Company is required to withhold under the then applicable
provisions of the laws of the jurisdiction where the Participant is employed,
and, if applicable, the Internal Revenue Code of 1986, as amended (the “Code”),
or its successors, or any other foreign, federal, state or local tax withholding
requirement. When the Company is required to withhold any amount or amounts
under the applicable provisions of any foreign, federal, state or local
requirement or the Code, the Company shall withhold from the Common Stock to be
issued to the Participant a number of shares necessary to satisfy the Company’s
withholding obligations. The number of shares of Common Stock to be withheld
shall be based upon the Fair Market Value of the shares on the date of
withholding.     (b)   Notwithstanding Paragraph 10(a) above, if the Participant
elects, and the Committee agrees, the Company’s withholding obligations may
instead be satisfied as follows:

  (i)   the Participant may direct the Company to withhold cash that is
otherwise payable to the Participant;     (ii)   the Participant may deliver to
the Company a sufficient number of shares of Common Stock then owned by the
Participant to satisfy the Company’s withholding obligations, based on the Fair
Market Value of the shares as of the date of withholding;     (iii)   the
Participant may deliver sufficient cash to the Company to satisfy its
withholding obligations; or     (iv)   any combination of the alternatives
described in Paragraphs 10(b)(i) through 10(b)(iii) above.

  (c)   Authorization of the Participant to the Company to withhold taxes
pursuant to one or more of the alternatives described in Paragraph 10(b) above
must be in a

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      form and content acceptable to the Committee. The payment or authorization
to withhold taxes by the Participant shall be completed prior to the delivery of
any shares pursuant to this Agreement. An authorization to withhold taxes
pursuant to this provision will be irrevocable unless and until the tax
liability of the Participant has been fully paid.

  11.   Definitions; Copy of Plan

          Except as specifically provided otherwise herein, all capitalized
terms used in this Agreement shall have the same meanings ascribed to them in
the Plan. By the execution of this Agreement, the Participant acknowledges
receipt of a copy of the Plan.

  12.   Administration

          This Agreement is subject to the terms and conditions of the Plan. The
Plan will be administered by the Committee in accordance with its terms. The
Committee has sole and complete discretion with respect to all matters reserved
to it by the Plan and the decisions of the majority of the Committee with
respect to the Plan and this Agreement shall be final and binding upon the
Participant and the Company. In the event of any conflict between the terms and
conditions of this Agreement and the Plan, the provisions of the Plan shall
control.

  13.   Adjustment of Number of Performance Shares

          The number of Performance Shares granted hereunder shall be subject to
adjustment in accordance with Articles 11 and 12 of the Plan.

  14.   Non-transferability

          The Performance Shares granted by this Agreement are not transferable
by the Participant other than by will or pursuant to applicable laws of descent
and distribution. The Performance Shares and any rights and privileges in
connection therewith, cannot be transferred, assigned, pledged or hypothecated
by operation of law, or otherwise, and is not otherwise subject to execution,
attachment, garnishment or similar process. In the event of such occurrence,
this Agreement will automatically terminate and will thereafter be null and
void.

  15.   No Right to Stock

          No Participant and no beneficiary or other person claiming under or
through such Participant shall have any right, title or interest in any shares
of Common Stock allocated or reserved under the Plan or subject to this
Agreement, except as to such shares of Common Stock, if any, that have been
issued or transferred to such Participant.

  16.   Notice

          Any notice to be given to the Company or the Committee shall be
addressed to the Company in care of its Secretary at its principal office. Any
such notice shall be in writing and shall be delivered personally or shall be
sent by first class mail, postage prepaid, to the Company.

  17.   Amendments

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          This Agreement may be amended only by a written agreement executed by
the Company and the Participant. Any such amendment shall be made only upon the
mutual consent of the parties, which consent (of either party) may be withheld
for any reason.

  18.   Governing Law

          This Agreement shall be governed by, construed and enforced in
accordance with the laws of the State of Texas.

  19.   Definitions

          All capitalized terms in this Agreement shall have the meanings
ascribed to them in the Plan unless otherwise defined in this Agreement.
          IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Participant has
hereunto set his/her hand as of the day and year first above written.

                  FLOWSERVE CORPORATION    
 
  By:        
 
     
 
   
 
           
 
  Name:        
 
     
 
   
 
  Title:        
 
     
 
   
 
                «First_Name» «Last_Name»    
 
           
 
  Name:        
 
     
 
   

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