Exhibit 10.1
 
AMENDMENT NUMBER FIVE
TO
AMENDED AND RESTATED CREDIT AGREEMENT
 
THIS AMENDMENT NUMBER FIVE TO AMENDED AND RESTATED CREDIT AGREEMENT (this
“Amendment”) is made as of July 26th, 2002, by and among BANK OF AMERICA, N.A.,
a national banking association, U.S. BANK NATIONAL ASSOCIATION, a national
banking association, KEYBANK NATIONAL ASSOCIATION, a national banking
association (the “Lenders”), BANK OF AMERICA, N.A., as agent for the Lenders
(the “Agent”); and FLOW INTERNATIONAL CORPORATION, a Washington corporation
(“Borrower”).
 
RECITALS
 
A.  Lenders, Agent and Borrower are parties to that certain Amended and Restated
Credit Agreement dated as of December 29, 2000, as amended by that certain
Amendment Number One to Amended and Restated Credit Agreement dated as of
February 28, 2001, that certain Amendment Number Two to Amended and Restated
Credit Agreement dated as of May 30, 2001, that certain Amendment Number Three
to Amended and Restated Credit Agreement dated as of July 31, 2001 and that
certain Amendment Number Four to Amended and Restated Credit Agreement dated as
of December 13, 2001 (the “Credit Agreement”).
 
B.  Borrower has requested that Lenders and Agent amend, among other things,
certain financial covenants, change the pricing structure and incorporate the
Sweepline Commitment into the Total Revolving Commitment, pursuant to the terms
and subject to the conditions set forth herein.
 
NOW, THEREFORE, the parties hereto agree as follows:
 
AGREEMENT
 
1.  Definitions.    Capitalized terms not otherwise defined in this Amendment
shall have the meaning set forth in the Credit Agreement.
 
2.  Amendment to Credit Agreement.
 
(a)  Amendment to Section 1.1.    Section 1.1 of the Credit Agreement is hereby
amended as follows:
 
(i)  Amendment to Definition of “Applicable Percentage.”    The definition of
“Applicable Percentage” is hereby deleted and replaced with the following:
 
“Applicable Percentage” means on any date, the rate per annum that is determined
by reference to the following matrix or subclause (ii) below:
 
Pricing Level

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Applicable Percentage with respect to the LIBOR Rate

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Applicable Percentage with respect to the Base Rate

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Applicable Percentage with respect to the Unused Portion

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Applicable Percentage with respect to standby Letters of Credit

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Applicable Percentage with respect to commercial Letters of Credit

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I
 
1.30%
  
     0%
  
25 basis points
  
130 basis points
  
37.5 basis points
II
 
1.40%
  
     0%
  
25 basis points
  
140 basis points
  
37.5 basis points
III
 
1.75%
  
  .50%
  
30 basis points
  
175 basis points
  
37.5 basis points
IV
 
Not Available
  
3.00%
  
50 basis points
  
500 basis points
  
75 basis points

 

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(i)  The Applicable Percentage shall be adjusted forty-five (45) days after the
end of each of the first three fiscal quarters in each of Borrower’s fiscal
years and ninety (90) days after the end of each fiscal year of Borrower.
 
In the event that any of the financial statements or quarterly compliance
certificates required to be delivered pursuant to Section 6.9 are not delivered
when due, then (aa) if such financial statements and certificates are delivered
after the date such financial statements and certificates were required to be
delivered (without giving effect to any applicable cure period) and the
Applicable Percentage increases from that previously in effect as a result of
the delivery of such financial statements, then the Applicable Percentage during
the period from the date upon which such financial statements were required to
be delivered (without giving effect to any applicable cure period) until the
date upon which they actually are delivered shall, except as otherwise provided
in clause (cc) below, be the Applicable Percentage as so increased; (bb) if such
financial statements and certificates are delivered after the date such
financial statements and certificates are required to be delivered (without
giving effect to any applicable cure period) and the Applicable Percentage
decreases from that previously in effect as a result of the delivery of such
financial statements, then such decrease in the Applicable Percentage shall not
become effective until the date upon which the financial statements and
certificates actually were delivered; and (cc) if such financial statements and
certificates are not delivered prior to the expiration of the applicable cure
period, then, effective upon such expiration, for the period from the date upon
which such financial statements and certificates were required to be delivered
(after the expiration of the applicable cure period) until two (2) Business Days
following the date upon which they actually are delivered, Pricing Level IV
shall apply.

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(ii)  Notwithstanding the foregoing to the contrary and without limiting any
other rights which the Agent or Lenders may have under any Loan Document or
applicable law in respect thereof, at any time that Borrower is in default of
its obligations under Section 6.17 of this Agreement, the Applicable Interest
Rate in effect shall be the Prime Rate plus seven percent (7%).
 
(ii)  Amendment to Definition of “Base Rate.”    The definition of “Base Rate”
is hereby deleted and replaced with the following:
 
“Base Rate” means the sum of (i) the Prime Rate and (ii) the Applicable
Percentage.
 
(iii)  Addition of Definition of “Fifth Amendment.”    The definition of “Fifth
Amendment” is hereby added to the Credit Agreement as follows:
 
“Fifth Amendment” means that certain Fifth Amendment to the Amended and Restated
Credit Agreement dated as of July 26th, 2002.
 
(iv)  Amendment to Definition of “Pricing Level.”    The definition of “Pricing
Level” is hereby deleted and replaced with the following:
 
“Pricing Level” means a pricing level determined from the following matrix:
 
Pricing Level

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Senior Funded Debt Ratio as of the end of the previous fiscal quarter

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Funded Debt Ratio as of the end of the previous fiscal quarter

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I
  
Less than 1.00:1
  
and
  
Equal to or less than 4.00:1
II
  
Greater than or equal to 1.00:1 and less than 2.00:1
  
and
  
Equal to or less than 4.00:1
III
  
Greater than and equal to 2.00:1 and less than or equal to 3.00:1
  
and
  
Equal to or less than 4.00:1
IV
  
Greater than 3.00:1
  
or
  
Greater than 4:00:1

 
(v)  Addition of Definition of “Prime Rate.”    The definition of Prime Rate is
hereby added to the Credit Agreement as follows:
 
“Prime Rate” means the rate publicly announced from time to time by Bank of
America at its “prime rate.” The “prime rate is a rate set by Bank of America
based upon various factors including Bank of America’s costs and desired return,
general economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such announced
rate. Any change in the prime rate announced by Bank

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of America shall take effect at the opening of business on the day specified in
the public announcement of such change.
 
(vi)  Amendment to Definition of “Total Revolving Commitment.”    The definition
of “Total Revolving Commitment” is hereby deleted and replaced with the
following:
 
“Total Revolving Commitment” means $73,000,000.
 
(b)  Amendment to Section 2.1(a).    The matrix set forth in Section 2.1(a) is
hereby deleted and replaced with the following:
 
Lender

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Revolving Commitment

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Pro Rata Share

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Bank of America
  
$32,490,000
  
44.506849315%
U.S. Bank
  
$21,840,000
  
29.917808220%
KeyBank
  
$18,670,000
  
25.575342465%
Total Revolving Commitment
  
$73,000,000
  
100.00%

 
(c)  Amendment to Section 2.1(b).    Section 2.1(b) of the Credit Agreement is
hereby amended by inserting after the first sentence the following:
 
Sweepline Bank may, at its option, notify Agent that any overdraft covered by
this Section 2.1(b) shall be deemed a Notice of Borrowing under Section 2.2(a)
requesting a Base Rate Loan. If Sweepline Bank so notifies Agent, then all
parties hereto agree that, for all purposes under this Agreement, Borrower will
be deemed to have delivered a Notice of Borrowing to Agent pursuant to Section
2.2(a) requesting a Revolving Loan on the date and in the amount of such
overdraft to bear interest at the Base Rate. Borrower shall, if requested by
Agent, provide a written Notice of Borrowing to Agent as additional evidence of
its request for such Revolving Loan.
 
(d)  Amendment to Section 2.7(a).    Section 2.7(a) of the Credit Agreement is
hereby amended by deleting the second sentence and replacing it with the
following:
 
If default shall occur in the payment when due of any Loan (whether at maturity,
upon acceleration or otherwise), interest shall accrue at a per annum rate equal
to seven percentage points (7%) above the Prime Rate.

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(e)  Amendment to Section 2.7(b).    Section 2.7(b) of the Credit Agreement is
hereby amended by deleting the word “and” before subclause (vi) and adding the
following at the end of the section:
 
and (vii) the Pricing Level shall be at either I, II, or III.
 
(f)  Amendment to Section 3.2(b).    Section 3.2(b) of the Credit Agreement is
hereby deleted and replaced with the following:
 
(b)  Borrower shall pay to Agent for the account of Lenders, a letter of credit
fee (i) with respect to standby Letters of Credit, equal to the Applicable
Percentage per annum of the amount available to be drawn on the outstanding
standby Letters of Credit, which fee shall not be less than Two Hundred Fifty
Dollars ($250), (ii) with respect to commercial Letters of Credit, the
Applicable Percentage of the face value of each commercial Letter of Credit,
which fee shall not be less than One Hundred Twenty Five Dollars ($125), and
(iii) such other letter of credit fees. Computations of interest and fees
described in this section shall be made on the basis of a year of 365 days, for
the actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable.
 
(g)  Amendment to Section 6.9(g).    Section 6.9(g) of the Credit Agreement is
hereby renumbered Section 6.9(h) and a new Section 6.9(g) is added as follows:
 
(g)  Monthly Comparison Report.    As soon as available and in any event within
thirty (30) days after the end of each month, a comparison of the Borrower’s
consolidated financial statement to the financial projection for that month.
 
(h)  Amendment to Section 6.12—Fixed Charge Coverage Ratio.    Section 6.12 of
the Credit Agreement is hereby deleted and replaced with the following:
 
Section 6.12  Fixed Charge Coverage Ratio.    For any four consecutive fiscal
quarters, Borrower shall maintain, on a consolidated basis, a Fixed Charge
Coverage Ratio of at least (a) .95 to 1 as at the fiscal quarter ending April
30, 2002, (b) .57 to 1 as at the fiscal quarters ending July 31, 2002, unless
Borrower repays the remaining balance of any amounts owing to any Private Lender
under the Note Agreement prior to July 31, 2002, in which case the Fixed Charge
Coverage Ratio shall be at least .91 to 1, (c) .72 to 1 as of the fiscal quarter
ending October 31, 2002, (d) .80 to 1 as of the fiscal quarter ending January
31, 2003, (e) 1.29 to 1 as of the fiscal quarter ending April 30, 2003 and (f)
1.50 to 1 as of the fiscal quarter ending July 31, 2003. “Fixed Charge Coverage
Ratio” shall mean the quotient obtained by dividing (a) the sum of Cash Flow by
(b) the sum of Fixed Charges. “Cash Flow” shall mean Borrower’s net income after
taxes, plus interest expense, depreciation, amortization, and, with respect to
the fiscal quarter ending April 30, 2002, the after-tax charge of Three Million
Seven

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Hundred Eleven Thousand Dollars ($3,711,000) to the extent deducted from net
income after taxes, and less the aggregate amount of any dividends issued.
“Fixed Charges” shall mean Borrower’s interest expense, plus its Current Portion
Long-Term Debt. “Current Portion Long-Term Debt” shall mean any debt which is
due to Borrower within the subsequent twelve months, except debt which is owed
(i) under this agreement, (ii) under the German line of credit which is
supported by a Letter of Credit, or (iii) under the current Swedish Crown Fifty
Million Dollar ($50,000,000) Pressure Systems line of credit.
 
(i)  Amendment to Section 6.13—Funded Debt Ratio.    Section 6.13 of the Credit
Agreement is hereby deleted and replaced with the following:
 
Section 6.13  Funded Debt Ratio.    As of the end of each fiscal quarter,
Borrower shall maintain, on a consolidated basis, a Funded Debt Ratio of not
more than (a) 8.25 to 1 as at the fiscal quarter ending April 30, 2002, (b)24.00
to 1 as at the fiscal quarter ending July 31, 2002, (c) 38.50 to 1 as at the
fiscal quarter ending October 31, 2002, (d) 24.50 to 1 as at the fiscal quarter
ending January 31, 2003, (e) 8.15 to 1 as at the fiscal quarter ending April 30,
2003, and (f) 5.65 to 1 as at the fiscal quarter ending July 31, 2003. As used
herein “Funded Debt Ratio” shall mean as of the end of any fiscal quarter, the
quotient obtained by dividing (a) the Funded Debt as of the end of such fiscal
quarter by (b) the EBITDA for such quarter and the three immediately preceding
fiscal quarters, plus, in the event that Borrower has acquired any Subsidiaries
during such fiscal quarter or during the immediately preceding three fiscal
quarters, the EBITDA of such Subsidiaries from the first day of the immediately
preceding three fiscal quarters through the date of acquisition of each
Subsidiary. “EBITDA” shall mean pre-tax net income (or pre-tax net loss) plus,
the sum of (i) interest expense, (ii) depreciation expense, (iii) depletion
expense, (iv) amortization expense, and (v) with respect to the fiscal quarter
ending April 30, 2002, the pre-tax charge of Five Million Six Hundred Twenty
Three Thousand Dollars ($5,623,000) to the extent deducted from pre-tax net
income.
 
(j)  Amendment to Section 6.15—Debt to Tangible Net Worth Ratio.    Section 6.15
of the Credit Agreement is hereby deleted in its entirety and replaced with the
following:
 
Section 6.15  Debt to Tangible Net Worth Ratio.    Borrower shall maintain, on a
consolidated basis, a ratio of Debt to Tangible Net Worth of not more than 2.75
to 1. As used herein, “Debt” shall mean, on a consolidated basis, all
liabilities of

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Borrower as determined and computed in accordance with GAAP other than the
Senior Subordinated Notes, and for clarification purposes only, minority
interests.
 
(k)  Amendment to Section 6.17—Senior Funded Debt Ratio.    Section 6.17 of the
Credit Agreement is hereby deleted in its entirety and replaced with the
following:
 
Section 6.17  Senior Funded Debt Ratio.    Borrower shall maintain, on a
consolidated basis, a Senior Funded Debt Ratio of not more than (a) 5.26 to 1 as
at the fiscal quarter ending April 30, 2002, (b) 15.75 to 1 as at the fiscal
quarter ending July 31, 2002, (c) 26.00 to 1 as at the fiscal quarter ending
October 31, 2002, (d) 16.50 to 1 as at the fiscal quarter ending January 31,
2003, (e) 5.45 to 1 as at the fiscal quarter ending April 30, 2003 and (f) 3.90
to 1 as at the fiscal quarter ending July 31, 2003. As used herein, “Senior
Funded Debt Ratio” shall mean, as of the end of any fiscal quarter, the quotient
obtained by dividing (A) Senior Funded Debt as of the end of such fiscal quarter
by (B) the EBITDA for such quarter and the three immediately preceding fiscal
quarters, plus, in the event that Borrower has acquired any Subsidiaries during
such fiscal quarter or during the immediately preceding three fiscal quarters,
the EBITDA of such Subsidiaries from the first day of the immediately preceding
three fiscal quarters through the date of acquisition of each Subsidiary.
 
(l)  Deletion of Section 7.10—Repayment Restrictions.    Section 7.10 is hereby
deleted from the Credit Agreement.
 
(m)  Addition of New Section 7.10—Capital Expenditures.    A new Section 7.10 is
hereby added to the Credit Agreement:
 
Section 7.10  Capital Expenditures.    Borrower shall not make or become legally
obligated to make any expenditure in respect of the purchase or other
acquisition of any fixed or capital asset (excluding normal replacements and
maintenance which are properly charged to current operations), except for
capital expenditures in the ordinary course of business not exceeding, in the
aggregate for the Borrower during each fiscal quarter set forth below, the
amount set forth opposite such fiscal quarter:
 
July 31, 2002    
  
$3,000,000
October 31, 2002
  
$3,000,000
January 31, 2003
  
$1,300,000
April 30, 2003
  
$1,300,000
July 31, 2003
  
$1,300,000

 
 
 
 
 

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(n)  Amendment to Section 8.1—Events of Default.    Section 8.1 of the Credit
Agreement is hereby amended by adding the word “or” to the end of subsection (n)
and adding a new subsection (o) as follows:
 
(o)  Additional Event of Default.    It shall be an additional Event of Default:
 
(1)  if any of the following is not completed within 30 days of the execution of
the Fifth Amendment, Borrower shall provide: (i) executed guaranties and related
security documents in a form acceptable to Lenders from its domestic
subsidiaries in accordance with Section 6.16 of the Credit Agreement; (ii)
evidence of Agent’s first priority perfected security interest in the personal
property of Borrower located in foreign countries; (iii) evidence of Agent’s
first priority perfected security interest in all of Borrower’s registered
patents and trademarks and applications for patents and trademarks; (iv) if
requested by Agent, evidence that sixty-five percent (65%) of shares of stock of
Borrower’s foreign subsidiaries have been pledged to Agent and that such pledge
is a first priority perfected security interest in such securities; or (v) if
requested by Agent, information concerning additional real and personal property
and assets, and evidence of Agent’s first priority perfected security interest
in such property and assets of Borrower; or
 
(2)  if Borrower has not cooperated with Agent in conducting a collateral exam
of inventory and accounts receivable, at Borrower’s expense, by October 31,
2002.
 
(o)  Deletion of Multi-Currency Facility.    To reflect that the Borrower is no
longer utilizing the Multi-Currency facility and the Multi-Currency Commitment
has been terminated, all references to, and sections and exhibits concerning
“Multi-Currency Bank,” “Multi-Currency Commitment,” “Multi-Currency Loan,”
“Multi-Currency Maturity Date” and “Multi-Currency Rate” are hereby deleted from
the Credit Agreement.
 
3.  Fees.    Borrower shall pay the following fees:
 
(a)  Amendment Fee to Lenders.    Borrower shall pay to the Agent for the
benefit of each Lender, an amendment fee in the amount of fifty (50) basis
points of such Lender’s Pro Rata Share of the Total Revolving Commitment, as
amended by this Amendment. Borrower’s obligations to pay such fee under this
Section 3 shall constitute an amount payable under the Credit Agreement for
purposes of Section 8.1(a) thereof.
 
(b)  Agent’s Arrangement Fee.    Borrower shall pay solely to Bank of America,
N.A., as Agent, an arrangement fee as outlined in a separate letter agreement.

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(c)  Expenses.    Borrower shall pay or reimburse Agent and Lenders for all
reasonable expenses, including legal fees, incurred by Agent or any Lender in
connection with the preparation of the Loan Documents.
 
4.  Conditions to Effectiveness.    This Amendment shall become effective when
Borrower, Agent and each Lender have executed and delivered counterparts hereof
to Agent and each of the fees and the expenses described in Section 3 above have
been paid in full.
 
5.  Representations and Warranties.    Borrower hereby represents and warrants
to the Lenders and Agent that each of the representations and warranties set
forth in Article 5 of the Credit Agreement is true and correct in each case as
if made on and as of the date of this Amendment and Borrower expressly agrees
that it shall be an additional Event of Default under the Credit Agreement if
any representation or warranty made hereunder shall prove to have been incorrect
in any material respect when made.
 
6.  Condition for Partially Reversing this Amendment.    Except for the change
in the default interest rate and Section 7 of this Amendment which shall remain
in full force and effect, this Amendment shall become ineffective if the audit
report provided pursuant to Section 6.9(a) of the Credit Agreement for fiscal
year ending April 30, 2002 is not issued or is qualified by reason of restricted
or limited examination of any material portion of the records of Borrower or any
Subsidiary or contains a disclaimer of opinion or adverse opinion (including,
without limitation, a “going concern” qualification or disclaimer).
 
7.  Release and Waiver.    Borrower ratifies and reconfirms the Loan Documents
and all of its obligations and liabilities thereunder and hereby waives and
releases any and all defenses that either of them may now have or hereafter
acquire with respect to the Loan Documents based on or otherwise relating to any
events or circumstances which occurred or existed on or prior to the date
hereof. Borrower hereby releases and forever discharges the Agent and the
Lenders, their respective affiliates, and their respective officers, directors,
agents and employees from every claim, demand and cause of action whatsoever, of
every kind and nature, whether presently known or unknown, suspected or
unsuspected, arising or alleged or to have risen or which shall arise hereafter
from any act, omission or condition which occurred or existed on or prior to the
date of this Amendment.
 
8.  No Further Amendment.    Except as expressly modified by the terms of this
Amendment, all of the terms and conditions of the Credit Agreement and the other
Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder.
 
9.  Governing Law.    This Amendment shall be governed by and construed in
accordance with the laws of the State of Washington.
 
10.  Counterparts.    This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.

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11.  Oral Agreements Not Enforceable.
 
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
 
IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number Five
to Amended and Restated Credit Agreement as of the date first above written.
 
BORROWER:
 
FLOW INTERNATIONAL CORPORATION
   
By:
  

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Michael R. O’Brien
Chief Financial Officer
   
By:
  

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Ronald W. Tarrant
President and Chief Executive Officer

 
LENDERS:
 
BANK OF AMERICA, N.A.
   
By:
  

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Thomas E. Brown
Senior Vice President
   
U.S. BANK NATIONAL ASSOCIATION
   
By:
  

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Alan Forney
Vice President
   
KEYBANK NATIONAL ASSOCIATION
   
By:
  

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Jason R. Gill
Vice President
AGENT:
 
BANK OF AMERICA, N.A.
   
By:
  

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Ken Puro
Vice President

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