Document:

2005 Equity Incentive Plan

 Exhibit 10.1 
  
 FLOW INTERNATIONAL CORPORATION 
  
 2005 EQUITY INCENTIVE PLAN 
  
 1. Purposes of the Plan. The purposes of this Plan are to further the growth, development and financial success of the Company
by attracting and retaining the most talented Employees, Consultants and Directors available, and by aligning the long-term interests of Employees, Consultants and Directors with those of the shareholders by providing an opportunity to acquire an
ownership interest in the Company and by providing both performance rewards and long term incentives for future contributions to the success of the Company. 
  
 The Plan permits the grant of Incentive Stock Options, Nonqualified Stock Options, Restricted Stock, Restricted Stock Units, Stock
Appreciation Rights, or cash awards, at the discretion of the Committee and as reflected in the terms of the Award Agreement. Each Award will be subject to conditions specified in the Plan, such as continued employment or satisfaction of performance
criteria, as well as any conditions specified in the Award Agreement. 
  
 This Plan will serve as a framework for the Committee to establish sub-plans or procedures governing the grants to Employees, Directors, Consultants and Employees working for the Company outside of the United States.
The options granted under the Former Plan shall continue to be administered under the Former Plan until such time as those options are exercised, expire or become unexercisable for any reason. 
  
 2. Definitions. As used herein, the following
definitions shall apply: 
  
 (a)
“Award” shall mean any award or benefits granted under the Plan, including Options, Shares, Restricted Stock, Restricted Stock Units, SARs and cash. 
  
 (b) “Award Agreement” shall mean a written or electronic agreement between the
Company and the Participant setting forth the terms of the Award. 
  
 (c) “Beneficial Ownership” shall have the meaning set forth in Rule 13d-3 promulgated under the Exchange Act. 
  
 (d) “Board” shall mean the Board of Directors of the Company. 
  
 (e) “Change in Control” shall mean
any of the following: (1) Approval by the holders of the Company’s Common Stock of any merger or consolidation of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of common stock
are converted into cash, securities or other property, other than a merger of the Company in which the holders of the Common Stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving
corporation immediately after the merger; (2) Approval by the holders of the common stock of any sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the Company’s
assets other than a transfer of the Company’s assets to a majority-owned subsidiary of the Company; or (3) Approval by the holders of the Common Stock of any plan or proposal for the liquidation or dissolution of the Company. 

 
 (f) “Code” shall mean the
Internal Revenue Code of 1986, as amended. 
  
 (g) “Committee” shall mean the Compensation and Plan Administrator Committee of the Board, which at all times shall consist of two (2) or more members of the Board, each of whom must qualify as an Independent
Director. 
  
 (h) “Common
Stock” shall mean the common stock of the Company, $0.01 par value per share. 
  
 (i) “Company” shall mean Flow International Corporation., a Washington corporation and any successor thereto.

 (j) “Consultant” shall mean any person, except an Employee,
engaged by the Company or any Subsidiary of the Company, to render personal services to such entity, including as an advisor, pursuant to the terms of a written agreement. 
  
 (k) “Continuous Status as a Participant” shall mean (i) for Employees, the
absence of any interruption or termination of service as an Employee, (ii) for Directors, the absence of any interruption or termination of service as a Director, and (iii) for Consultants, the absence of any interruption, expiration, or
termination of such person’s consulting or advisory relationship with the Company or the occurrence of any termination event as set forth in such person’s Award Agreement. Continuous Status as a Participant shall not be considered
interrupted (A) for an Employee on leave under any recognized form of leave under policies of the Company or any applicable Subsidiary as may be in effect from time to time, and (B) for a Consultant, in the case of any temporary
interruption in such person’s availability to provide services to the Company which has been authorized in writing by a vice president of the Company prior to its commencement. 
  
 (l) “Director” shall mean a member of the Board. 
  
 (m) “Disability” shall mean
(i) in the case of a Participant whose employment with the Company or a Subsidiary is subject to the terms of an employment or consulting agreement that includes a definition of “Disability” as used in this Plan shall have the meaning
set forth in such employment or consulting agreement during the period that such employment or consulting agreement remains in effect; and (ii) in all other cases, the term “Disability” as used in this Plan shall mean a
“permanent and total disability” as the term is defined for purposes of Section 22(e)(3) of the Code. 
  
 (n) “Effective Date” shall mean the date on which the Company’s shareholders have approved this Plan in
accordance with applicable NASDAQ rules. 
  
 (o)
“Employee” shall mean any person, including an officer, who is a common law employee of, receives remuneration for personal services to, is reflected on the official human resources database as an employee of, and is on the
payroll of the Company or any Subsidiary of the Company. A person is on the payroll if he or she is paid from or at the direction of the payroll department of the Company, or any Subsidiary of the Company. Persons providing services to the Company,
or to any Subsidiary of the Company, pursuant to an agreement with a staff leasing organization, temporary workers engaged through or employed by temporary or leasing agencies, and workers who hold themselves out to the Company, or a Subsidiary to
which they are providing services as being independent contractors, or as being employed by or engaged through another company while providing the services, and persons covered by a collective bargaining agreement (unless the collective bargaining
agreement applicable to the person specifically provides for participation in this Plan) are not Employees for purposes of this Plan and do not and cannot participate in this Plan, whether or not such persons are, or may be reclassified by the
courts, the Internal Revenue Service, the U. S. Department of Labor, or other person or entity, as common law employees of the Company, or any Subsidiary, either solely or jointly with another person or entity. 
  
 (p) “Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended. 
  
 (q) “Executive Officers” shall mean the officers of the Company as such term is defined in Rule 16a-1 under the Exchange Act. 
  

(r) “Fair Market Value” shall mean the closing price per share of the Common Stock on the Nasdaq National
Market or the Nasdaq SmallCap Market as to the date specified (or the previous trading day if the date specified is a day on which no trading occurred), or if the Nasdaq National Market or the Nasdaq SmallCap Market shall cease to be the principal
exchange or quotation system upon which the shares of Common Stock are listed or quoted, then such exchange or quotation system as the Company elects to list or quote its shares of Common Stock and that the Committee designates as the Company’s
principal exchange or quotation system. 
  
 (s)
“Former Plan” shall mean the 1995 Long-Term Incentive Compensation Plan. 
  
 (t) “Incentive Stock Option” shall mean any Option intended to qualify as an incentive stock option within the
meaning of Section 422 of the Code. 

 (u) “Independent Director” shall mean a Director who:
(1) meets the independence requirements set forth in NASD Rule 4200(a)(15), or any successor rule, as in effect from time to time; (2) qualifies as an “outside director” under Section 162(m) of the Code and the Treasury
Regulations promulgated thereunder; (3) qualifies as a “non-employee director” under Rule 16b-3 promulgated under the Exchange Act; and (4) satisfies independence criteria under any other applicable laws or regulations relating
to the issuance of Shares to Employees. 
  
 (v)
“Maximum Annual Cash Award” shall have the meaning set forth in Section 10. 
  
 (w) “Maximum Annual Participant Stock Award” shall have the meaning set forth in Section 6(b). 
  
 (x) “Non-Employee Director” shall
mean a Director who is not an Employee. 
  
 (y)
“Nonqualified Stock Option” shall mean an Option that is not an Incentive Stock Option. 
  
 (z) “Option” shall mean a stock option granted pursuant to Section 7 of the Plan. 
  
 (aa) “Option Price” shall mean the
per share purchase price of a Share purchased pursuant to an Option. 
  
 (bb) “Parent” shall mean a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code. 
  
 (cc) “Participant” shall mean an
Employee, Director or Consultant. 
  
 (dd)
“Performance Criteria” shall have the meaning set forth in Section 8(c). 
  
 (ee) “Plan” shall mean this Flow International Corporation 2005 Equity Incentive Plan, including any amendments
thereto. 
  
 (ff)
“Reprice” shall mean the adjustment or amendment of the exercise price of Options or SARs previously awarded whether through amendment, cancellation, replacement of grants or any other means. 
  
 (gg) “Restricted Stock” shall mean a
grant of Shares pursuant to Section 8 of the Plan. 
  
 (hh) “Restricted Stock Units” shall mean a grant of the right to receive Shares in the future or their cash equivalent (or both) pursuant to Section 8 of the Plan. 
  
 (ii) “SAR” shall mean a stock
appreciation right awarded pursuant to Section 9 of the Plan. 
  
 (jj) “SEC” shall mean the Securities and Exchange Commission. 
  
 (kk) “Share” shall mean one share of Common Stock, as adjusted in accordance with Section 4 of the Plan.

  
 (ll) “Stand-Alone
SARs” shall have the meaning set forth in Section 9(c) of the Plan. 
  
 (mm) “Subcommittee” shall have the meaning set forth in Section 5(d). 
  
 (nn) “Subsidiary” shall mean
(1) in the case of an Incentive Stock Option a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code, and (2) in the case of a Nonqualified Stock Option, Restricted Stock, a
Restricted Stock Unit or a SAR, in addition to a subsidiary corporation as defined in (1), (A) a limited liability company, partnership or other entity in which the Company controls fifty percent (50%) or more of the voting power or equity
interests, or (B) an entity with respect to which the Company possesses the power, directly or indirectly, to direct or cause the direction of the management and policies of that entity, whether through the Company’s ownership of voting
securities, by contract or otherwise. 
  
 (oo)
“Tandem SARs” shall have the meaning set forth in Section 9(a) of the Plan. 

 (pp) “Ten Percent Shareholder” shall mean a person who owns (or
is deemed to own pursuant to Section 424(d) of the Code) stock comprising more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary. 
  
 3. Shares Subject to the Plan. 
  
 (a) Reservation of
Shares. The shares of Common Stock reserved under this Plan will include reserved shares of Common Stock that are not subject to a grant or as to which the option award granted has been forfeited under the Former Plan, and an
additional One Million Seven Hundred Thousand (1,700,000) Shares of Common Stock. Subject to the provisions of Section 4, the maximum aggregate number of Shares which may be awarded and delivered under the Plan shall not exceed Two Million
Five Hundred Thousand (2,500,000) Shares (adjusted, proportionately, in the event of any stock split or stock dividend with respect to the Shares), and the maximum number which may be granted as Incentive Stock Options under the Plan shall not
exceed One Million (1,000,000) Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. Shares available for issuance
under the Plan shall be increased by any shares of Common Stock subject to outstanding awards under the Former Plan on the date of shareholder approval of the Plan that later cease to be subject to such awards for any reason other than such awards
having been exercised, subject to adjustment from time to time as provided in Section 5, which shares of Common Stock shall, as of the date such shares cease to be subject to such awards, cease to be available for grant and issuance under the
Former Plan, but shall be available for issuance under the Plan. The number of shares of Common Stock underlying an Award not issued as a result of any of the following actions shall again be available for issuance under the Plan: (i) a payout
of a Stand-Alone SAR, or a performance-based award of Restricted Stock or Restricted Stock Units in the form of cash; (ii) a cancellation, termination, expiration, forfeiture, or lapse for any reason (with the exception of the termination of a
Tandem SAR upon exercise of the related Options, or the termination of a related Option upon exercise of the corresponding Tandem SAR) of any Stock Award; or (iii) payment of the Option exercise price and/or payment of any taxes arising upon
exercise of the Option by withholding shares of Common Stock which otherwise would be acquired on exercise or issued upon such payout. The Shares may be authorized but unissued, or reacquired shares of Common Stock. 
  
 (b) Substitutions and Assumptions. The
Board or the Committee shall have the right to substitute or assume Awards in connection with mergers, reorganizations, separations, or other transactions to which Section 424(a) of the Code applies, provided such substitutions and assumptions
are permitted by Section 424 of the Code and the regulations promulgated thereunder. The number of Shares reserved pursuant to Section 3(a) (but not the maximum number of Shares which may be granted as Incentive Stock Options under the
Plan) may be increased by a corresponding number of Awards assumed and, in the case of substitution, by the net increase in the number of Shares subject to Awards before and after the substitution. 
  
 (c) Securities Law Compliance. Shares
shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities
Act of 1933, as amended, the Exchange Act, the rules and regulations promulgated under either such Act, and the requirements of any stock exchange or quotation system upon which the Shares may then be listed or quoted, and shall be further subject
to the approval of counsel for the Company with respect to such compliance. 
  
 4. Adjustments to Shares Subject to the Plan. 
  
 (a) Capitalization Adjustments. If any change is made to the Shares by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change affecting the outstanding Shares as a class without the Company’s receipt of consideration, appropriate adjustments shall be made to (i) the maximum number and/or
class of securities issuable under the Plan, (ii) the number and/or class of securities and/or the price per Share covered by outstanding Awards under the Plan, (iii) the Maximum Annual Participant Stock Award and (iv) the maximum
number of Shares which may be granted as Incentive Stock Options under the Plan. The Committee may also make adjustments described in (i)-(iv) of the previous sentence in the event of any distribution of assets to shareholders other than a
normal cash dividend. In determining adjustments to be made under this Section 4, the Committee may take into account such factors as it deems appropriate, including the restrictions of applicable law and the potential tax consequences of an

 
adjustment, and in light of such factors may make adjustments that are not uniform or proportionate among outstanding Awards. Adjustments, if any, and any
determinations or interpretations, including any determination of whether a distribution is other than a normal cash dividend, made by the Committee shall be final, binding and conclusive. The Committee in its discretion may provide holders of
Restricted Stock or Restricted Stock Units a dividend equivalent right with respect to the Shares the Participant shall be entitled to receive or purchase. For purposes of this Section 4, conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.” 
  
 (b) Change in Control. In the event of Change in Control, then, to the extent permitted by applicable law: (1) any
surviving corporation may assume any Awards outstanding under the Plan or may substitute similar stock awards (including an award to acquire the same consideration paid to the shareholders in the transaction described in this Section 4(b)) for
those outstanding under the Plan, or (2) in the event any surviving corporation does not agree to assume or continue such Awards, or to substitute similar stock awards for those outstanding under the Plan in accordance with the preceding
clause, then the time during which such Awards may be exercised automatically will be accelerated and become fully vested and exercisable immediately prior to the consummation of such transaction, and the Awards shall automatically terminate upon
consummation of such transaction if not exercised prior to such event. 
  
 (c) No Limitations. Except as expressly provided herein, no issuance by the Company of shares of any class, or securities convertible into shares of any class, shall affect, and no adjustment by
reason thereof shall be made with respect to, the number or price of Shares subject to an Award. 
  
 5. Plan Administration. 
  
 (a) Authority. The Plan shall be administered by the Committee. The Committee shall have full and exclusive power to
administer the Plan on behalf of the Board, subject to such terms and conditions as the Committee may prescribe. Notwithstanding anything herein to the contrary, the Committee’s power to administer the Plan, and actions the Committee takes
under the Plan, shall be consistent with the provisions set forth in the Committee’s charter, as such charter may be amended from time to time. 
  
 (b) Powers of the Committee. Subject to the other provisions of this Plan, the Committee shall have the authority, in
its discretion: 
  
 (i) to grant Incentive Stock
Options, Nonqualified Stock Options, Shares, Restricted Stock, Restricted Stock Units, cash awards and SARs to Participants and to determine the terms and conditions of such Awards, including the determination of the Fair Market Value of the Shares
and the exercise price (subject to Section 7(b)), and to modify or amend each Award, with the consent of the Participant when required; 
  
 (ii) to determine the Participants to whom Awards, if any, will be granted hereunder, additional eligibility requirements for such awards,
the timing of such Awards, and the number of Shares (if any) to be represented by each Award; 
  
 (iii) to construe and interpret the Plan, the Awards granted hereunder, and any Award Agreement; 
  
 (iv) to prescribe, amend, and rescind rules and regulations
relating to the Plan, including the form of Award Agreement, and manner of acceptance of an Award, such as correcting a defect or supplying any omission, or reconciling any inconsistency so that the Plan or any Award Agreement complies with
applicable law, regulations and listing requirements and to avoid unanticipated consequences deemed by the Committee to be inconsistent with the purposes of the Plan or any Award Agreement; 
  
 (v) to establish performance, conduct and other criteria for
Awards made pursuant to the Plan in accordance with a methodology established by the Committee, and to determine whether performance, conduct and other goals have been attained; 
  
 (vi) to accelerate or defer (with the consent of the Participant) the exercise or vested date of any Award;

 (vii) to authorize any person to execute on behalf of the Company any instrument required
to effectuate the grant of an Award previously granted by the Committee; 
  
 (viii) to establish subplans, procedures or guidelines for the grant of Awards to Employees, Directors and Consultants; 
  
 (ix) to determine eligibility for an Award and to authorize the cancellation, forfeiture or suspension of an Award; and 
  
 (x) to make all other determinations deemed necessary or
advisable for the administration of the Plan; 
  
 Provided that, no consent of a Participant is necessary under clauses (i) or (vi) if a modification, amendment, acceleration, or deferral, in the reasonable judgment of the Committee confers a benefit on the Participant or is made
pursuant to an adjustment in accordance with Section 4. Furthermore, with respect to outstanding Awards granted to a Participant who violates any legal obligation owed to the Company, including contractual obligations, or who otherwise acts in
a manner detrimental to the Company’s interests, the Committee has the authority to cancel any such outstanding Awards as of the date such violation is discovered and to have the Participant return any gains realized with respect to such Awards
in the twelve months prior to the violation. 
  
 (c) Effect of Committee’s Decision. All decisions, determinations, and interpretations of the Committee shall be final, conclusive and binding on all Participants, the Company, any shareholder and all other persons.

  
 (d) Delegation and
Administration. Consistent with the Committee’s charter, as such charter may be amended from time to time, the Committee may delegate to one or more subcommittees consisting of members of the Committee or other Directors who are
Independent Directors (any such committee a “Subcommittee”) the administration of the Plan, and such administrator(s) may have the authority to directly, or under their supervision, execute and distribute agreements or other documents
evidencing or relating to Awards granted by the Committee under this Plan, to maintain records relating to the grant, vesting, exercise, forfeiture or expiration of Awards, to process or oversee the issuance of Shares upon the exercise, vesting
and/or settlement of an Award, to interpret the terms of Awards and to take such other actions as the Committee may specify. Any action by any such Subcommittee within the scope of such delegation shall be deemed for all purposes to have been taken
by the Committee. 

 6. General Eligibility. 
  
 (a) Awards. Awards may be granted to
Participants, provided that additional eligibility requirements may be set forth in specific arrangements that limit or narrow the category of Participants, and further provided that Incentive Stock Options may only granted to Employees. A
Consultant shall not be eligible for the grant of an Award (other than a cash award) if, at the time of grant, a Form S-8 Registration Statement under the Securities Act (“Form S-8”) is not available to register either the offer or the
sale of the Company’s securities to such Consultant because of the nature of the services that the Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the
use of Form S-8, unless the Company determines both (i) that such grant (1) shall be registered in another manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (2) does not require registration under the
Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant complies with the securities laws of all other relevant jurisdictions. Form S-8 generally is available to consultants and
advisors only if (I) they are natural persons, (II) they provide bona fide services to the issuer, its parents, its majority-owned subsidiaries or majority-owned subsidiaries of the issuer’s parent, and (III) the services are not in
connection with the offer or sale of securities in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the issuer’s securities. 
  
 (b) Maximum Annual Participant Stock Award. The aggregate number of Shares with respect
to which an Award or Awards may be granted to any one Participant in any one fiscal year of the Company (the “Maximum Annual Participant Stock Award”) shall not exceed one million (1,000,000) shares of Common Stock (adjusted,
proportionately, in the event of any stock split or stock dividend with respect to the Shares). If an Option is in tandem with a SAR, such that the exercise of the Option or SAR with respect to a Share cancels the tandem SAR or Option right,
respectively, with respect to each Share, the tandem Option and SAR rights with respect to each Share shall be counted as covering but one Share for purposes of the Maximum Annual Participant Stock Award. If the number of Shares that will be issued
under an Award depends upon the performance of the Company or the individual receiving the Award, then for purposes of applying the Maximum Annual Participant Stock Award, the number of Shares considered granted under the Award shall be the maximum
number of shares that the individual could receive under the Award, and those Shares shall be considered granted at the beginning of the performance period over which the Award is earned, not during or after the end of the performance period when
the amount of Shares actually earned by the Participant is determined and Shares are issued to the Participant. However, for purposes of Section 3, only the number of Shares actually issued to the Participant, and not the maximum potential
number of Shares that could have been earned by and issued to the Participant under the Award, will count against the reserve amount. This one million (1,000,000) Share maximum per Company fiscal year is in addition to (and not reduced by) cash
incentives awarded pursuant to Section 10 or Shares granted in satisfaction of such cash Awards. The Maximum Annual Participant Stock Award limit shall only apply to awards made after April 30, 2005. 
  
 (c) No Employment/Service Rights. Nothing
in the Plan shall confer upon any Participant the right to an Award or to continue in service as an Employee or Consultant for any period of specific duration, or interfere with or otherwise restrict in any way the rights of the Company (or any
Subsidiary employing or retaining such person), or of any Participant, which rights are hereby expressly reserved by each, to terminate such person’s services at any time for any reason, with or without cause (as such term is defined in a
Company subplan or an Award Agreement, as applicable). 
  
 7. Grant, Terms and Conditions of Options. 
  
 (a) Designation. Each Option shall be designated in an Award Agreement as either an Incentive Stock Option or a Nonqualified Stock Option. However, notwithstanding the foregoing, if an Option is not
designated as an Incentive Stock Option, such Option will be deemed to be a Nonqualified Stock Option. To the extent that the aggregate Fair Market Value (determined at the time of grant) of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Employee during any calendar year exceeds $100,000, such excess Options shall be treated as Nonqualified Stock Options. For this purpose, Options shall be taken into account in the
order in which they were granted. 
  
 (b)
Option Price. The per Share exercise price under an Incentive Stock Option (i) granted to a Ten Percent Shareholder, shall be no less than 110% of the Fair Market Value per Share on the date of grant, or (ii)

 
granted to any other Participant, shall be no less than 100% of the Fair Market Value per Share on the date of grant. The per Share exercise price under a
Nonqualified Stock Option or SAR shall be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. In no event shall the Board or the Committee be permitted to Reprice an Option after the date of grant.

  
 (c) Term of Options. The
term of each Incentive Stock Option shall be no more than ten (10) years from the date of grant. However, in the case of an Incentive Stock Option granted to a Ten Percent Shareholder, the term of the Option shall be no more than five
(5) years from the date of grant. The term of all Nonqualified Options shall be seven (7) years unless otherwise provided by the Committee in its discretion. 
  
 (d) Vesting. To the extent Options vest and become exercisable in increments, unless
otherwise provided in the applicable Award Agreement or any severance agreement (i) such Options shall cease to vest upon a Participant’s Disability or termination of such Participant’s Continuous Status as a Participant (other than
upon a Participant’s death), and (ii) such Options shall immediately vest in full upon a Participant’s death. 
  
 (e) Substitution of SARs for Options. The Committee may provide in the Award Agreement evidencing the grant of an
Option that the Committee shall have the sole discretion to substitute without receiving Participants’ permission, SARs paid only in stock for outstanding Options; provided, the terms of the substituted stock SARs are the same as the terms of
the Options, the number of shares underlying the number of stock SARs equals the number of shares underlying the Options and the difference between the Fair Market Value of the underlying Shares and the grant price of the SARs is equivalent to the
difference between the Fair Market Value of the underlying Shares and the exercise price of the Options. 
  
 (f) Exercise. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined
by the Committee at the time of grant, and as shall be permissible under the terms of the Plan. No fractional Shares may be issued or delivered pursuant to the Plan or any Award. 
  
 8. Grant, Terms and Conditions of Stock Awards. 
  
 (a) Designation. Restricted Stock or
Restricted Stock Units may be granted under the Plan. Restricted Stock or Restricted Stock Units may include a dividend equivalent right, as permitted by Section 4. After the Committee determines that it will offer Restricted Stock or
Restricted Stock Units, it will advise the Participant in writing or electronically, by means of an Award Agreement, of the terms, conditions and restrictions, including vesting, if any, related to the offer, including the number of Shares that the
Participant shall be entitled to receive or purchase, the price to be paid, if any, and, if applicable, the time within which the Participant must accept the offer. The offer shall be accepted by execution of an Award Agreement or as otherwise
directed by the Committee. Restricted Stock Units may be paid as permitted by Section 11(b). The term of each award of Restricted Stock or Restricted Stock Units shall be at the discretion of the Committee. 
  
 (b) Restrictions. Subject to
Section 8(c), the Committee may impose such conditions or restrictions on the Restricted Stock or Restricted Stock Units granted pursuant to the Plan as it may determine advisable, including the achievement of specific performance goals, time
based restrictions on vesting, conduct criteria or others. If the Committee established performance or other goals, the Committee shall determine whether a Participant has satisfied the performance of such goals. 
  
 (c) Performance Criteria. Restricted
Stock, Restricted Stock Units and cash awards granted pursuant to the Plan that are intended to qualify as “performance based compensation” under Section 162(m) of the Code shall be subject to the attainment of performance goals
relating to the Performance Criteria selected by the Committee and specified at the time such Restricted Stock, Restricted Stock Units and cash awards are granted. For purposes of this Plan, “Performance Criteria” means one or more of the
following (as selected by the Committee): (i) cash flow; (ii) earnings per share; (iii) earnings per share growth; (iv) earnings before interest, taxes, and amortization; (v) return on equity; (vi) market share;
(vii) total shareholder return; (viii) share price performance; (ix) return on capital; (x) return on assets, net assets or invested assets; (xi) revenue; (xii) revenue growth; (xiii) earnings growth;
(xiv) operating income; (xvi) operating profit; (xvii) growth in operating income or profit; (xviii) profit margin; (xix) return on operating revenue; (xx) return on invested capital; (xxi) market price of Shares;
(xxii) brand recognition; (xxiii) customer satisfaction; (xxiv) operating 

 
efficiency; (xxv) productivity; or (xxvi) reduction in costs. Any of these Performance Criteria may be used to measure the performance of the
Company as a whole or any business unit or division of the Company. 
  
 (d) Vesting. Unless the Committee determines otherwise, the Award Agreement shall provide for the forfeiture of the non-vested Shares underlying Restricted Stock or the termination of Restricted
Stock Units upon cessation of a Participant’s Continuous Status as a Participant. Unless the Committee determines otherwise, non-vested Shares underlying Restricted Stock and Restricted Stock Units shall vest in full immediately upon death. To
the extent that the Participant purchased the Shares granted under any such Restricted Stock award and any such Shares remain non-vested at the time of cessation of a Participant’s Continuous Status as a Participant, the cessation of
Participant’s Continuous Status as a Participant shall cause an immediate sale of such non-vested Shares to the Company at the original price per Share paid by the Participant. 
  
 9. Grant, Terms and Conditions of SARs. 
  
 (a) Grants. The Committee shall have the full power and authority, exercisable in its
sole discretion, to grant SARs to selected Participants. The Committee is authorized to grant both tandem stock appreciation rights consisting of SARs with underlying Options (“Tandem SARs”) and stand-alone stock appreciation rights
consisting of SARs not tied to underlying Options (“Stand-Alone SARs”). The term of a SAR shall be at the discretion of the Committee. In no event shall the Board or the Committee be permitted to Reprice a SAR after the date of grant
without shareholder approval. 
  
 (b)
Tandem SARs.  
  
 (i) Participants
may be granted a Tandem SAR, exercisable upon such terms and conditions as the Committee shall establish, to elect between the exercise of the underlying Option for Shares or the surrender of the Option in exchange for a distribution from the
Company in an amount equal to the excess of (A) the Fair Market Value (on the Option surrender date) of the number of Shares in which the Participant is at the time vested under the surrendered Option (or surrendered portion thereof) over
(B) the aggregate exercise price payable for such vested Shares. 
  
 (ii) No such Option surrender shall be effective unless it is approved by the Committee, either at the time of the actual Option surrender or at any earlier time. If the surrender is so approved, then the
distributions to which the Participant shall become entitled under this Section 9(b) may be made in Shares valued at Fair Market Value (on the Option surrender date), in cash, or partly in Shares and partly in cash, as the Committee shall deem
appropriate. 
  
 (iii) If the surrender of an
Option is not approved by the Committee, then the Participant shall retain whatever rights he or she had under the surrendered Option (or surrendered portion thereof) on the Option surrender date and may exercise such rights at any time prior to the
later of (A) five (5) business days after the receipt of the rejection notice or (B) the last day on which the Option is otherwise exercisable in accordance with the terms of the instrument evidencing such Option, but in no event may
such rights be exercised more than ten (10) years after the date of the Option grant. 
  
 (c) Stand-Alone SARs.  
  
 (i) A Participant may be granted a Stand-Alone SAR not tied to any underlying Option under Section 7 of the Plan. The Stand-Alone SAR
shall cover a specified number of Shares and shall be exercisable upon such terms and conditions as the Committee shall establish. Upon exercise of the Stand-Alone SAR, the holder shall be entitled to receive a distribution from the Company in an
amount equal to the excess of (A) the aggregate Fair Market Value (on the exercise date) of the Shares underlying the exercised right over (B) the aggregate base price in effect for those Shares. 
  
 (ii) The number of Shares underlying each Stand-Alone SAR
and the base price in effect for those Shares shall be determined by the Committee at the time the Stand-Alone SAR is granted. In no event, however, may the base price per Share be less than the Fair Market Value per underlying Share on the grant
date. 

 (iii) The distribution with respect to an exercised Stand-Alone SAR may be made in Shares
valued at Fair Market Value on the exercise date, in cash, or partly in Shares and partly in cash, as the Committee shall deem appropriate. 
  
 10. Cash Awards. Cash awards that are intended to qualify as “performance based compensation” under
Section 162(m) of the Code may be made under the Plan and will be paid in cash upon the achievement, in whole or part, of performance goals relating to one or more of the Performance Criteria selected by the Committee and specified at the time
such cash awards are granted. These criteria shall be selected and calculated under a methodology established in writing by the Committee prior to the issuance of a cash Award. Such writing may be a plan or other arrangement established by the
Committee hereunder, which shall set forth the terms and conditions of the performance-based cash Awards, and may combine cash Awards with other forms of grants described in this Plan. Such plan or arrangement shall not expand the class of
individuals entitled to participate under the Plan, add to any of the Performance Criteria, or increase the maximum amount payable to any single Participant with respect to any fiscal year of the Company, as set forth below. The maximum amount of
total payments of cash (or Shares in lieu of cash) that can be awarded under plans or arrangements established by the Committee pursuant to this Section 10 to any single Participant in any fiscal year of the Company will not exceed a value of
two million dollars ($2,000,000) (the “Maximum Annual Cash Award”). For purposes of applying the Maximum Annual Cash Award, cash Awards shall be considered awarded at the beginning of the performance period over which the Award is
earned, not during or after the end of the performance period when the amount of cash actually earned by the Participant is determined and cash is paid (or Shares are issued) to the Participant. For incentive programs (other than SARs) where the
final amount of the Award is first calculated in cash and then paid in whole or in part in Shares, the entire amount of the Award shall be treated as a cash incentive award that is subject to the Maximum Annual Cash Award limitation in this
Section 10, not the Maximum Annual Participant Stock Award limitation in Section 6(b). 
  
 11. Procedure for Exercise; Rights as a Shareholder. 
  
 (a) Procedure. An Award shall be exercised when written, electronic or verbal notice of
exercise has been given to the Company, or the brokerage firm or firms approved by the Company to facilitate exercises and sales under this Plan, in accordance with the terms of the Award by the person entitled to exercise the Award and full payment
for the Shares with respect to which the Award is exercised has been received by the Company or the brokerage firm or firms, as applicable. The notification to the brokerage firm shall be made in accordance with procedures of such brokerage firm
approved by the Company. Full payment may, as authorized by the Committee, consist of any consideration and method of payment allowable under the terms of this Plan. The Company shall issue (or cause to be issued) such share certificate promptly
upon exercise of the Award. In the event that the exercise of an Award is treated in part as the exercise of an Incentive Stock Option and in part as the exercise of a Nonqualified Stock Option pursuant to Section 7(a), the Company shall issue
a share certificate evidencing the Shares treated as acquired upon the exercise of an Incentive Stock Option and a separate share certificate evidencing the Shares treated as acquired upon the exercise of a Nonqualified Stock Option, and shall
identify each such certificate accordingly in its share transfer records. No adjustment will be made for a dividend or other right for which the record date is prior to the date the share certificate is issued, except as provided in Section 4
of the Plan. 
  
 (b) Method of
Payment. The consideration to be paid for any Shares to be issued upon exercise or other required settlement of an Award, including a method of payment, shall be determined by the Committee at the time of settlement, and which forms may
include: (i) check; (ii) wire transfer; (iii) tender of shares of Common Stock owned by the Participant in accordance with rules established by the Committee from time to time; and (iv) a request that the Company or a designated
brokerage firm conduct a cashless exercise of the Option. Shares used to pay the Option Price shall be valued at their Fair Market Value on the exercise date. Payment of the aggregate Option Price by means of tendering previously-owned shares of
Common Stock shall not be permitted when the same may, in the reasonable opinion of the Company, cause the Company to record a loss or expense as a result thereof. 
  
 (c) Withholding Obligations. To the extent required by applicable federal, state, local
or foreign law, the Committee may and/or a Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise with respect to any Incentive Stock Option, 

 
Nonqualified Stock Option, SAR, Restricted Stock or Restricted Stock Units, cash awards or any sale of Shares. The Company shall not be required to issue
Shares or to recognize the disposition of such Shares until such obligations are satisfied. These obligations may be satisfied by having the Company withhold a portion of the Shares that otherwise would be issued to a Participant under such Award
(provided, however, that no Shares are withheld with a value exceeding the minimum amount of tax required to be withheld by law) or by tendering Shares previously acquired by the Participant in accordance with rules established by the Committee from
time to time. 
  
 (d) Shareholder
Rights. Except as otherwise provided in this Plan, until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the share certificate evidencing such
Shares, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Shares subject to the Award, notwithstanding the exercise of the Award. 
  
 (e) Non-Transferability of Awards. An Award may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in exchange for consideration, and may not be transferred other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant;
unless the Committee permits further transferability, on a general or specific basis, in which case the Committee may impose conditions and limitations on any permitted transferability. 

 12. Expiration of Awards. 
  
 (a) Expiration, Termination or Forfeiture of
Awards. Unless otherwise provided in the applicable Award Agreement or any severance agreement, vested Awards granted under this Plan shall expire, terminate, or otherwise be forfeited as follows: 
  
 (i) ninety (90) days after the date of termination of a
Participant’s Continuous Status as a Participant other than in circumstances covered by (ii), (iii), (iv) or (v) below; 
  
 (ii) immediately upon termination of a Participant’s Continuous Status as a Participant for cause (as defined in a Company subplan or
Award Agreement, as applicable); 
  
 (iii) twelve
(12) months after the date on which a Participant ceased performing services as a result of his or her Disability; and 
  
 (iv) twelve (12) months after the date of the death of a Participant who was a Participant whose Continuous Status as a Participant
terminated as a result of his or her death. 
  
 (b) Extension of Term. Notwithstanding subsection (a) above, the Committee shall have the authority to extend the expiration date of any outstanding Options or SARs other than an Incentive Stock Option in
circumstances in which it deems such action to be appropriate (provided that no such extension shall extend the term of an Option or SAR beyond the date on which the Award would have expired or been forfeited if there had been no termination of the
Employee’s Continuous Status as a Participant). 
  
 13. Term, Amendment and Termination of the Plan. 
  
 (a) Term of Plan. The Plan shall become effective as of the Effective Date. It shall continue in effect until the tenth
anniversary of the Effective Date or until terminated under this Section 13 of the Plan or extended by an amendment approved by the shareholders of the Company pursuant to Section 13(a). 
  
 (b) Amendment and Termination. The Board
or the Committee may amend or terminate the Plan from time to time in such respects as the Board may deem advisable (including, but not limited to amendments which the Board deems appropriate to enhance the Company’s ability to claim deductions
related to stock option exercises); provided that to the extent required by the Code or any Nasdaq or SEC requirements, shareholder approval shall be required for any amendment of the Plan. Subject to the foregoing, it is specifically intended that
the Board or Committee may amend the Plan without shareholder approval to comply with legal, regulatory and listing requirements and to avoid unanticipated consequences deemed by the Committee to be inconsistent with the purpose of the Plan or any
Award Agreement. 
  
 (c) Participants in
Foreign Countries. The Committee shall have the authority to adopt such modifications, procedures, and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or its
Subsidiaries may operate to assure the viability of the benefits from Awards granted to Participants performing services in such countries and to meet the objectives of the Plan. 
  
 (d) Effect of Amendment or Termination. Any such amendment or termination of the Plan
shall not affect Awards already granted and such Awards shall remain in full force and effect as if this Plan had not been amended or terminated, unless mutually agreed otherwise between the Participant and the Committee, which agreement must be in
writing and signed by the Participant and the Company. 
  
 (e) Code Section 409A. Notwithstanding anything to the contrary in this Section 13, the Committee may amend the Plan and the Award Agreements without any additional consideration to affected Participants to the
extent necessary to avoid penalties arising under Code Section 409A, even if those amendments reduce, restrict or eliminate rights granted under the Plan or Award Agreement (or both) before those amendments. 
  
 14. Shareholder Approval. The Plan is subject to
approval by the shareholders of the Company in accordance with applicable Nasdaq rules.Annual Incentive Plan

 Exhibit 10.2 
  
 FLOW INTERNATIONAL CORPORATION 
 ANNUAL INCENTIVE PLAN FOR EXECUTIVES, SENIOR MANAGERS AND 
 SELECT ADMINISTRATIVE STAFF

 For Fiscal Year 2006 
  
 A. Purpose. This Annual Incentive Plan for Executives, Senior Managers and Select Administrative Staff (the “Plan”) is intended to provide cash and stock
incentives (“Incentive Awards”) for certain executives, senior managers and select administrative staff who assist the Company in meeting the Company’s annual financial goals and/or who meet their own individual performance goals.

  
 B. Term. This plan is in effect for the Company’s 2006 fiscal
year. Upon action by the Compensation Committee of the Board of Directors (“Compensation Committee”), the Plan may be extended on a yearly basis, subject to any amendments that the Compensation Committee may adopt. If the Compensation
Committee extends the Plan for a new fiscal year, the Compensation Committee will determine which executives, senior managers and administrative staff are eligible to receive awards, the amount of each participant’s incentive awards, and the
performance criteria applicable to such fiscal year. This Plan and any extension thereof shall be a subplan of, and subject to the applicable terms of, the equity plan that is approved by the Company’s shareholders in September, 2005.

  
 C. Eligibility criteria. Only executives, senior managers and select
administrative staff of the Company (“Eligible Employees”) will be eligible for an award under this Plan. To be eligible for an award under this Plan, an Eligible Employee must meet all of the following criteria. He or she must:

  

	 	•	 	Be notified in writing of the decision of the Compensation Committee to include the Eligible Employee in the Plan for that fiscal year; 

  

	 	•	 	Be continuously employed by the Company through the last day of the Company’s fiscal year unless the Eligible Employee’s employment terminates due to death or permanent
total disability, as determined under the Company’s long term disability policy; 

  

	 	•	 	Be in full compliance with all of the Eligible Employee’s contractual obligations to the Company; 

  

	 	•	 	Sign and deliver all required documents and agreements related to Incentive Awards under the Plan, including documents related to stock awards; and be free of any significant
disciplinary actions during that fiscal year. 

  
 An Eligible Employee does not have a right to be included in the Plan for any particular performance period, but instead the Compensation Committee will decide in its sole discretion whether an Eligible Employee will participate in the Plan
and have the potential to earn an award for a particular fiscal year. 

 D. How awards are calculated and earned. Each participant will have an opportunity to obtain an Incentive Award
composed of cash and stock for the fiscal year based on four criteria. Three of the criteria are based on Company-wide financial goals for the fiscal year regarding return on invested assets, revenue and operating profit that are determined by the
Compensation Committee. The fourth criterion is the participant’s achievement of objective and subjective goals that the Company has assigned to the participant. 
  
 Individual factors. Both individual factors and factors common to all participants will influence the amount of Incentive Awards
achievable by individual participants. Individual factors include: 
  

	 	•	 	The amount of the individual’s base salary, as determined by the Compensation Committee; 

  

	 	•	 	The Incentive Target Percentage for the individual, as determined by the Compensation Committee. This number represents the percentage of the individual’s base salary that
would be earned as a bonus if the Company fully satisfies its financial goals at the level of Planned Results and the individual achieves his or her individual performance goals. For example, if a participant with an annual base salary of $100,000
were assigned an Incentive Target Percentage of 25%, he or she would have the opportunity to obtain an Incentive Award of $25,000 if actual performance for each of the four criteria was exactly at the level of Planned Results, as described below
(“Target Incentive Opportunity”). 

  

	 	•	 	For the fourth criterion for earning an Incentive Award —individual goals— each participant will be assigned unique individual annual goals, both objective and subjective.
The Compensation Committee, with input from the CEO, will determine whether and to what degree such goals are achieved. The Compensation Committee is not required to follow any recommendation by the CEO with respect to the achievement of the goals.

  
 Factors common to all participants. The factors common to
all participants in the plan include (i) the four criteria for Incentive Awards and their respective weights and (ii) the multiplier that is factored into the Incentive Award for the three Company financial criteria based on actual Company
financial results. These are described below. 
  
 The four
criteria. Each of the four criteria for Incentive Awards accounts for a portion of the Target Incentive Opportunity for each participant, as follows: 
  

	 	•	 	20% for the Company meeting its annual goal for return on invested assets, 

  

	 	•	 	30% for the Company meeting its annual goal for revenue, 

  

	 	•	 	30% for the Company meeting its annual goal for operating profit, and 

  

	 	•	 	20% for the participant achieving his or her individual annual goals. 

 The application of the Multiplier. Additionally, all participants in the plan will have the same
multiplier used in the calculation of the Incentive Award based on Company financial criteria (“Multiplier”). At the outset of the fiscal year, the Compensation Committee, with input from the CEO and Audit Committee, will select three
reference points for each of the three Company financial measurements: 
  

	 	•	 	the Planned Result, which would result in an Incentive Award for that criterion of 100% of the Target Incentive Opportunity allocated to that financial criterion,

  

	 	•	 	the Lower Threshold Result, which would be less than the Planned Result and the point below which no Incentive Award would be provided; and 

  

	 	•	 	the Outstanding Performance Result, representing a financial result more favorable than the Planned Result and which, if reached or exceeded, would result in the award of as much as
200% of the Target Incentive Opportunity allocated to that financial criterion for each individual. 

  
 The Compensation Committee is not required to follow any recommendations by the CEO or Audit Committee with respect to the reference points. Thus, the Multiplier for each
of the three Company financial measurement criterion may range from 0% to 200% based on the financial results for each of the financial criteria, which individually are capped at 200%. When financial results for any of these three financial measures
fall between the three reference points, the appropriate Multiplier will be determined by interpolation.1

  
 E. How individual awards are calculated. The CFO, with review from the
Audit Committee of the Board of Directors, will determine whether and to what extent the three Company financial goals have been achieved and the appropriate Multiplier, if any, to be applied in determining individual Incentive Awards. 

 
 The CFO will present his/her calculations and determination to the Compensation Committee.
The Compensation Committee will consider the CFO’s calculations and determinations, ask for additional information as it deems necessary, and make the final determination of the Company’s financial performance with respect to the three
Company financial criteria and of the Multiplier, if any, that will apply to the portion of the Incentive Award attributable to such Company financial goals. Individual awards would be calculated as follows: 

	1	The Multiplier applicable to results that fall between the three reference points is calculated as follows: 

  

	 	•	 	If the actual result is more than the Lower Threshold Result but less than the Planned Result: Divide the difference between the Actual Result and the Lower Threshold Result by the
difference between the Planned Result and the Lower Threshold result. 

  

	 	•	 	If the actual result is more than the Planned Result : Divide the difference between the Actual Result and the Planned Result by the difference between the Outstanding Result and
the Planned Result AND ADD 1.00, subject to a maximum of 2.0. 

  
 If the actual result meets or exceeds the Outstanding Result, the Multiplier applicable to that result will be 2.0. 

 1. Determine amount of Incentive Award attributable to achievement of Company financial goals. Each
financial criterion would be reviewed to determine if the results meet or exceed the Lower Threshold Result. If so, for each such criterion, the individual Incentive Award would be calculated in view of the weight of the criterion (20% or 30%), the
Multiplier for the criterion and the participant’s Target Incentive Opportunity.2 
  
 2. Determine the amount of Incentive Award attributable to individual goals. The CEO will determine the degree to which the individual objectives had been
achieved for each participant on a case-by-case basis to determine an Individual Goal Multiplier in the range of 0% to 200%. Determine the amount of Incentive Award attributable to the achievement of individual goals in view of the weight of the
criterion (20%), the Multiplier for the criterion and the participant’s Target Incentive Opportunity.3 The CEO will present his/her recommendations to the Compensation Committee, and the Compensation
Committee will review and determine the individual Multiplier. The Compensation Committee is not required to follow any recommendation by the CEO with respect to the Multiplier. 
  
 3. For each individual, the Compensation Committee will consider whether it is aware of any information that would make an
individual ineligible for an Incentive Award in view of all eligibility factors. The Company will aggregate the Incentive Awards attributable to the consolidated financial criteria and the amount attributable to individual goals to determine the
total Incentive Award for that fiscal year. The aggregate amount of bonus that may be earned by and awarded to any individual will be no higher than 200% of the participant’s Target Incentive Opportunity for that individual. 
  
 An example of the calculation of an Incentive Award based on hypothetical company results and
individual factors is attached. 
  
 F. Timing and payment of awards.
Estimated Incentive Awards based on preliminary annual results, as determined by the Compensation Committee, will be provided to participants within 30 after the end of the fiscal year, less a 10% cash holdback pending the calculation of final
Incentive Awards upon the closing of the books for the fiscal year. The initial award based on the Estimated Incentive Award will be composed of a cash payment in the amount of the 40% of the Estimated Incentive Award and a stock award in the amount
of 50% of the Estimated Incentive Award. Final Incentive Awards are calculated after the closing of the books for the fiscal year, after 

	2	The following formula is used to calculate an individual Incentive Award for a Company financial criterion: 

  
 (Multiplier) x (Participant’s Target Incentive Opportunity) x (20% or
30%, as applicable) 
  

	3	The amount of Incentive Award attributable to individual goals is determined by the following formula: 

  
 (Individual Goal Multiplier) x (Participant’s Target Incentive
Opportunity) x 20% 

 which the Company will provide cash awards that reflect the remainder of any amounts due. In no event will Estimated
Incentive Awards or Final Incentive Awards be paid later than December 31 of the calendar year in which the Company’s fiscal year (and the performance period) ends. For example, all bonus amounts payable for FY 2006 will be paid no later
than December 31, 2006. In the event of a corporate transaction, payment will be made no later than December 31 of the calendar year in which the transaction closes. 
  
 All required tax withholdings will be withheld from the cash and stock portions of the estimated and final Incentive Award, with the tax
withholding owed with respect to the stock portion being accomplished by the Company retaining shares necessary to cover the withholding obligation and the participant receiving the net shares. The number of shares of Company stock awarded shall be
determined by taking the amount of Incentive Award net of applicable tax withholdings and multiplying the net by 50%, and then dividing that product by the average closing price of the Company’s common stock during the final 20 trading days of
the measured fiscal year, rounding down for partial shares. Participants have no rights regarding stock ownership until the date the shares are actually issued. 
  

G. Termination of employment and other special circumstances. If employment of a participant terminates for any reason before the award of an Incentive
Award, that participant will not be entitled to an Incentive Award for such year. Nonetheless, if employment terminates due to total permanent disability, as determined under the Company’s long term disability plan, or death, the Company will
provide the participant (or the participant’s estate, if applicable) a prorated amount of Incentive Award for such year. The amount payable to the disabled participant (or, in the event of a participant’s death, to his or her estate) will
be determined after the end of the annual performance period, and will be determined by calculating the Incentive Award based on a full year’s employment using the foregoing formula and then multiplying that amount by a fraction whose numerator
is the number of calendar days of the employee’s employment during the fiscal year before death or disability and whose denominator is 365. 
  
 In the event of a “corporate transaction” with respect to the Company during the fiscal year that is the performance period, the Plan shall terminate as of the
date the corporate transaction closes. Any performance goal that is an amount (not a percentage), such as operating profit or growth, shall be prorated to reflect the fact that the entire fiscal year was not completed, and the amount payable to each
participant will be prorated to reflect the fact that the participant was not required to complete the entire fiscal year in order to earn the Incentive Award. Performance goals that are amounts shall be multiplied by a fraction, the numerator of
which is the number of days completed in the fiscal year through the date the corporate transaction closes, and the denominator of which is 365. Performance goals that are a percentage (such as return on invested assets) shall not be prorated, but
the percentage shall be determined over the period between the start of the fiscal year and the closing of the corporate transaction. The Company’s actual performance results as of the time immediately 

 
preceding the closing of the corporate transaction shall be compared to the annual goals for each such criteria (as prorated for goals that are amounts as
described above), and the amount of the bonus payable to a participant for each criteria is determined. The final amount of the Incentive Award payable to a participant is determined by multiplying the aggregated bonus amount for the participant by
a fraction, the numerator of which is the number of days completed in the fiscal year through the date the corporate transaction closes, and the denominator of which is 365. For the purposes of this provision, “corporate transaction” means
any of the following events: 
  
 (a) Approval by
the holders of the Company’s common stock of any merger or consolidation of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of common stock are converted into cash, securities or other
property, other than a merger of the Company in which the holders of the common stock immediately prior to the merger have substantially the same proportionate ownership of common stock of the surviving corporation immediately after the merger;

  
 (b) Approval by the holders of the common
stock of any sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of the Company’s assets other than a transfer of the Company’s assets to a majority-owned subsidiary of
the Company; or 
  
 (c) Approval by the holders
of the common stock of any plan or proposal for the liquidation or dissolution of the Company. 
  
 H. Other terms and conditions. This document contains guidelines relating to compensation of certain employees of the Company. This document is not intended and shall not be read to create any express or
implied promise or contract for employment, for any benefit, or for specific treatment in specific situations. Except to the extent modified by individual written agreements, the employment relationship between participants in this Plan with the
Company is at-will, meaning employment is not for any minimum or set period, it is subject to the mutual consent of the employee and the Company, and either the employee or the Company can terminate the employment relationship at any time, for any
reason or no reason, with or without cause, notice or any kind of pre- or post-termination warning, discipline or procedure. All Incentive Awards under this Plan are subject to withholding of applicable taxes. For purposes of this Plan, the terms
“return on invested assets”, “operating profit” and “revenue” shall be given the same meaning as they are used in the Company’s normal accounting practices provided, however, that when calculating the
Company’s return on invested assets, operating profit and revenue during the one year performance period for purposes of this Plan, the Company and Compensation Committee shall not consider any of the following to the extent appropriate to
assure a consistent measurement of the Company’s financial performance for Plan purposes over the one year performance evaluation period:
  
 1. Gains or losses on sales or dispositions of assets outside of normal business 

 2. Asset impairments and write-downs 
  
 3. Litigation costs or claims judgments or settlements 
  
 4. Historic environmental obligations 
  
 5. Changes in tax law or rate, including the impact on deferred tax liabilities 
  
 6. Uninsured catastrophic property losses 
  
 7. The cumulative effect of changes in accounting principles 
  
 8. Extraordinary items described in Accounting Principles Board Opinion
No. 30. 
  
 9. Acquisitions occurring during the one year
performance period or unbudgeted costs incurred related to future acquisitions 
  
 10. Operations discontinued, divested or restructured during the one year performance period, including severance and related costs 
  
 11. Gains or losses on, or charges related to, refinancing or extinguishment of debt 
  
 12. Recognition of deferred tax assets or loss carry forwards 
  
 13. Unbudgeted non-cash compensation expense, including stock option changes

  
 14. Realized or unrealized foreign exchange gain or loss in
other expenses 
  
 15. Impact of an unanticipated accounting
changes 
  
 Any adjustments will be applied in a consistent manner. The
Compensation Committee may interpret the terms of the Plan. The Company may, in its sole discretion, amend or terminate this Plan at any time without prior notice provided that any such amendment or termination shall apply only prospectively and
shall not apply to awards with respect to performance periods in progress at the time the amendment or termination is adopted. 
  

					
	 FLOW INTERNATIONAL CORPORATION

	
	 Flow Annual Incentive Plan Approved By:

			
	 	 	  Date 
	 	 
	 Dr. J. Michael Ribaudo, Chairman

	 Compensation and Plan Administrator Committee

  
 ATTACHMENT A

  
 Hypothetical Example of Calculation of Incentive
Award 
  
 This example illustrates the calculation of an
Incentive Award and assumes that all eligibility requirements are satisfied. The numbers are used for illustrative purposes only and do not reflect a promise or prediction of any particular results. 
  

	 	•	 	At the start of the fiscal year, the Compensation Committee sets the following Company financial goals: 

  

							
	 Criterion

	  	Lower Threshold
Result

	  	Planned Result

	  	Outstanding Performance
Result

	 Return on Invested
 Assets (20%)
	  	 	  	 	  	 
				
	Revenues (30%)	  	 	  	 	  	 
				
	Operating Profit (30%)	  	 	  	 	  	 

  

	 	•	 	At the start of the fiscal year, the Compensation Committee assigns the following factors to participant Joe Dokes: 

  

	 	•	 	Salary: $100,000 

  

	 	•	 	Incentive Target Percentage: 25% 

  

	 	•	 	Individual goals: 

  

	 	•	 	Complete product testing for Project A 

  

	 	•	 	Recruit and hire three qualified industrial engineers for Project B

  

	 	•	 	Complete training of business unit in workplace respect and diversity

  

	 	•	 	Satisfactorily complete capital improvements in laboratory 

  

	 	•	 	Within 30 after the end of the fiscal year, the Compensation Committee determines the following Company financial results and based on the goals set earlier, their respective
Multipliers: 

  

	 	•	 	Return on invested assets:
$                                      
      % 

  

	 	•	 	Revenues:
          $                            
                % 

  

	 	•	 	Operating profit:
$                                      
      % 

 The Compensation Committee also determines, after consideration of the recommendations from the CEO, that
Joe successfully completed all of the personal goals except for part of the capital improvements project and assigns him an Individual Goal Multiplier of 1.25. 
  

Based on these results, the Compensation Committee determines the following estimated Incentive Award for each of the four criteria: 
  

							
	Return on invested assets:         (            ) x
(            ) x (.20) = _______________
				
	Revenues:	 	(            ) x (            ) x (.30)	 	=	  	_______________
				
	Operating profit:	 	(            ) x (            ) x (.30)	 	=	  	_______________
				
	Personal goals:	 	(            ) x (1.25) x (.20)	 	=	  	_______________

  
 Estimated Incentive Award:        $_________________ 
  
 The Compensation Committee will reduce the Estimated Incentive Award by the required tax withholding, giving rise to a Net Estimated Incentive Award of
$                    . Joe will receive half of the Net Estimated Incentive Award in stock and 40% of the Net Estimated Incentive Award in
cash, rounding down for partial shares. After the closing of the books, the final Incentive Award will be calculated and any further amounts owed, if any, will be awarded in cash, net of taxes.

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