FORM OF PERFORMANCE RESTRICTED STOCK UNIT AGREEMENT

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

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

(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.

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 b