Document:

<PAGE>   1
                                                                   EXHIBIT 10.16

                               AMENDMENT NO. 2 TO
                              FLOWSERVE CORPORATION
                           1989 RESTRICTED STOCK PLAN

Effective October 1, 2000, the Flowserve Corporation 1989 Restricted Stock Plan
is amended to provide exclusively for the settlement of account by delivery of a
fixed number of shares. The number of shares is fixed at the date of award and
equals the number of shares held in the Participant's account for deferred
restricted shares. Any cash received from the payment of dividends as of
September 30, 2000 shall be deemed held pursuant to the 1989 Restricted Stock
Dividend Plan.

         1.       Paragraph (d) of Section 2 of Article V "Accounts for Deferred
                  Restricted Shares" are amended to read in its entirety as
                  follows:

                  (d)      Any dividends paid on the Deferred Shares in a
                           Participant's account ("Dividends") will be credited
                           to a Participant's deferred cash account established
                           pursuant to the Flowserve Corporation 1989 Restricted
                           Stock Dividend Plan.

         2.       The first and second sentences of Paragraph (e) of Section 2
                  of Article V "Accounts for Deferred Restricted Shares" is
                  amended to read as follows:

                  (e)      Any Deferred Shares of a Participant credited to the
                           Deferred Shares Trust accounts of a Participant will
                           represent only an unsecured promise of the Company to
                           deliver the amount so credited in accordance with the
                           terms of this Article of the Plan. Neither a
                           Participant nor any beneficiary of a Participant will
                           acquire any right, title or interest in any asset of
                           the Company as a result of any Deferred Shares
                           credited to a Participant's account or accounts.

         3.       Paragraph (a) of Section 3 of Article V "Distribution of
                  Deferred Shares" is amended as follows:

                  (a)      Deferred Shares will be distributed only in
                           accordance with the following sections, pursuant to
                           the election for a lump sum or installment
                           distribution in kind specified by the Participant.

                           (i)      In the event a Participant ceased to be a
                                    director or employee of the Company, as the
                                    case may be, for any reason, any Deferred
                                    Shares (other than Deferred Shares, if any,
                                    that are forfeited) previously or currently
                                    credited to his/her account will be
                                    distributed commencing within 60 calendar
                                    days of his/her termination in accordance
                                    with the method of in kind distribution
                                    elected by the Participant.

<PAGE>   2

                           (ii)     The Participant may elect to receive such
                                    distributions in a lump sum, in equal annual
                                    installments (not exceeding ten), or in some
                                    designated combination thereof.

                           (iii)    If the election is a lump sum, the entire
                                    Deferred Shares account balance will be
                                    transferred in kind, to the Participant
                                    within 60 days of his/her termination.

                           (iv)     If installments have been elected, the
                                    aggregate number of Deferred Shares held in
                                    the separate account for Deferred Shares
                                    will be divided by the number of
                                    installments elected and allocated in equal
                                    whole number proportions to be distributed
                                    with each such installment payment (with any
                                    remainder after such equal division to be
                                    included in the first installment). All
                                    Deferred Shares so allocated will be
                                    distributed in kind and the first payment
                                    made within 60 days of termination. The
                                    second and all subsequent payments shall be
                                    made between January 1 and 30 of each
                                    following year. Certificates representing
                                    the applicable amount of Deferred Shares
                                    held for the then longest time in the
                                    Deferred Shares account of the Trust will be
                                    delivered with each installment, where
                                    applicable.

                           (v)      If any portion of a Participant's deferred
                                    account remains undistributed at his/her
                                    death, then after his/her death such shares
                                    will be distributed (i) to his/her
                                    beneficiary(ies) in accordance with the
                                    method of distribution elected by the
                                    Participant (following the procedures for
                                    lump sum and installment payments set forth
                                    above) or (ii) if the beneficiary
                                    predeceases the Participant, to the
                                    Participant's estate in a lump sum in kind.
                                    Should a beneficiary die after the
                                    Participant has terminated service, but
                                    before the entire Deferred Shares have been
                                    disbursed, the Deferred Shares benefit will
                                    be transferred to the beneficiary's estate
                                    in kind.

                           (vi)     Notwithstanding anything to the contrary
                                    above, no Deferred Shares shall be paid to
                                    the Participant until expiration or
                                    termination of the applicable Restriction
                                    Period or, if earlier, until the provisions
                                    of Article I, Section 5 (a) cease to apply
                                    to such Shares, and until satisfaction of
                                    applicable performance-related conditions,
                                    if any.

                                       2
<PAGE>   3

The remainder of the Plan shall remain unchanged and in full force and effect.

                               FLOWSERVE CORPORATION

                               By: /s/ Ronald F. Shuff
                                   --------------------------------------------
                                   Ronald F. Shuff
                                   Vice President, Secretary and General Counsel

                                       3<PAGE>   1
                                                                   EXHIBIT 10.17

                              FLOWSERVE CORPORATION

                       1989 RESTRICTED STOCK DIVIDEND PLAN

                           (EFFECTIVE OCTOBER 1, 2000)

ARTICLE 1.    GENERAL PROVISIONS

SECTION 1.  PURPOSE

The purpose of the Flowserve Corporation 1989 Restricted Stock Dividend Plan
("1989 Dividend Plan") is to provide for the deferral of cash dividends payable
to Participants under the Flowserve Corporation 1989 Restricted Stock Plan
("1989 Restricted Stock Plan").

SECTION 2.  DEFINITIONS

For purposes of the 1989 Dividend Plan, all terms shall have the meanings as
defined under Section 2 of Article I of the 1989 Restricted Stock Plan unless
defined in this document.

ARTICLE 2.    PARTICIPANT DEFERRAL OF RESTRICTED SHARES

SECTION 1.  ACCOUNTS FOR DEFERRED DIVIDENDS

         (a)      Any dividends paid on the Deferred Shares in the separate
                  account of a Participant ("Dividends") will be credited to a
                  deferred cash account created through a trust ("Trust")
                  established by the Company in which the amount of the
                  Dividends will be recorded for the benefit of the Participant,
                  with interest to be credited to the Dividends in the following
                  manner. The Company will credit to each such cash account, as
                  of the first day of each calendar quarter, interest on the
                  amount then credited to such account, including all previous
                  credits to such account by operation of this Section, computed
                  at an annual rate equal to 120% of the long-term applicable
                  federal rate compounded quarterly as published by the Internal
                  Revenue Service for the beginning month of each calendar
                  quarter to determine imputed interest income for tax purposes.

         (b)      Any amount of Dividends or interest credited to the cash
                  account of a Participant hereunder will represent only an
                  unsecured promise of the Company to pay or deliver the amount
                  so credited in accordance with the terms of this Article of
                  the 1989 Dividend Plan. Neither a Participant nor any
                  beneficiary of a Participant will acquire any right, title or
                  interest in any asset of the Company as a result of any amount
                  of cash credited to a Participant's account. At all times, a
                  Participant's rights with respect to an amount credited to
                  his/her account will be only those of an unsecured creditor of
                  the Company. The Company will not be obligated

<PAGE>   2

                  or required in any manner to restrict the use of any of its
                  assets as a result of any amount credited to a Participant's
                  account. No right or benefit under the 1989 Dividend Plan
                  shall be subject to anticipation, alienation, sale,
                  assignment, pledge, lien, encumbrance or charge and any
                  attempt to take any such action shall be void.

SECTION 2.  DISTRIBUTION OF DEFERRED DIVIDENDS

Dividends will be distributed only in accordance with the following sections,
pursuant to the election specified by the Participant.

         (a)      In the event a Participant ceases to be a director or employee
                  of the Company as the case may be, for any reason, any
                  Dividends and the interest on those Dividends previously or
                  currently credited to his/her account will be distributed
                  commencing within 60 calendar days of his/her termination in
                  accordance with the method of distribution elected by the
                  Participant.

         (b)      The Participant may elect to receive such distribution in a
                  lump sum, in equal installments (not exceeding ten), or in
                  some designated combination thereof.

         (c)      If the election is a lump sum, then interest and Dividends
                  will be credited to the account through the date of
                  distribution and the entire amount of Dividends, with
                  applicable interest, will be paid to the Participant within 60
                  days of his/her termination.

         (d)      If installments have been elected, any Dividends, with
                  applicable interest, will be calculated through the date of
                  termination and added to the account. The resulting deferred
                  cash total shall be divided equally by the number of
                  installments elected and the first payment made within 60 days
                  of termination. The second and all subsequent installment
                  payments shall be made between January 1 and 30 of each
                  following year. Interest will continue to accrue to the
                  account on the balance remaining in the Participant's Dividend
                  account until all installments have been paid. Interest will
                  be paid annually with each installment payment.

         (e)      If any portion of a Participant's deferred account remains
                  unpaid at his/her death, then, after his/her death, such
                  amount will be paid (i) to his/her beneficiary(ies) in
                  accordance with the method of distribution elected by the
                  Participant (following the procedures for lump sum and
                  installment payments set forth above), or (ii) if the
                  beneficiary predeceases the Participant, to the Participant's
                  estate in a lump sum. Should a beneficiary die after the
                  Participant has terminated service but before the entire
                  Deferred Shares have been disbursed pursuant to the 1989
                  Restricted Stock Plan, the balance of the cash benefit under
                  this 1989 Dividend Plan will be paid to the beneficiary's
                  estate in a lump sum.

                                       2
<PAGE>   3

IN WITNESS WHEREOF, the Company has caused this instrument to be executed this
19th day of January, 2001.

                               FLOWSERVE CORPORATION

                               By: /s/ Ronald F. Shuff
                                   ---------------------------------------------
                                   Ronald F. Shuff
                                   Vice President, Secretary and General Counsel

                                       3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00022-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00022-of-00352.parquet"}]]