Document:

Securities Purchase Agreement

 Exhibit 10.1 
  
 SECURITIES PURCHASE AGREEMENT 
  

This Securities Purchase Agreement (this “Agreement”) is dated as of February     , 2005, among Flow
International Corporation, a Washington corporation (the “Company”), and the investors identified on the signature pages hereto (each, an “Investor” and collectively, the “Investors”).

  
 WHEREAS, subject to the terms and conditions set forth in this
Agreement and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated thereunder, the Company desires to issue and sell to each Investor, and each Investor, severally and not jointly, desires to purchase from the
Company certain securities of the Company, as more fully described in this Agreement. 
  
 NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the
Investors agree as follows: 
  
 ARTICLE I. 
 DEFINITIONS 
  
 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have
the meanings indicated in this Section 1.1: 
  
 “Action” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting the Company, any
Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility.

  
 “Affiliate” means any Person that, directly
or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144. 
  
 “Business Day” means any day except Saturday, Sunday and any day which is a federal legal holiday or a day
on which banking institutions in the State of New York are authorized or required by law or other governmental action to close. 
  
 “Closing” means the closing of the purchase and sale of the Securities pursuant to Article II. 

 “Closing Date” means the Business Day immediately following the date on which all of the
conditions set forth in Sections 5.1 and 5.2 hereof are satisfied, or such other date as the parties may agree. 
  
 “Commission” means the Securities and Exchange Commission. 
  
 “Common Stock” means the common stock of the Company, par value $.01 per share, and any securities into
which such common stock may hereafter be reclassified. 
  
 “Common Stock Equivalents” means any securities of the Company or any Subsidiary which entitle the holder thereof to acquire Common Stock at any time, including without limitation, any debt, preferred stock, rights,
options, warrants or other instrument that is at any time convertible into or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock or other securities that entitle the holder to receive, directly or indirectly, Common
Stock. 
  
 “Company Counsel” means Preston, Gates
& Ellis, LLP. 
  
 “Company Deliverables” has
the meaning set forth in Section 2.2(a). 
  
 “Disclosure
Materials” has the meaning set forth in Section 3.1(h). 
  
 “Effective Date” means the date that the Registration Statement required by Section 2(a) of the Registration Rights Agreement is first declared effective by the Commission. 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as
amended. 
  
 “GAAP” means U.S. generally accepted
accounting principals. 
  
 “Intellectual Property
Rights” has the meaning set forth in Section 3.1(p). 
  
 “Investment Amount” means, with respect to each Investor, the Investment Amount indicated on such Investor’s signature page to this Agreement (subject to the Company’s right, in its sole discretion, to reduce or
cut back such amount). 
  
 “Investor
Deliverables” has the meaning set forth in Section 2.2(b). 
  
 “Investor Party” has the meaning set forth in Section 4.7. 
  
 “Lien” means any lien, charge, encumbrance, security interest, right of first refusal or other restrictions of any kind. 
  
 “Material Adverse Effect” means any of (i) a material and adverse effect on the legality, validity or
enforceability of any Transaction Document, (ii) a material and adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) an adverse
impairment to the Company’s ability to perform on a timely basis its obligations under any Transaction Document. 
  

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 “New York Courts” means the state and federal courts sitting in the City of New York,
Borough of Manhattan. 
  
 “Outside Date” means
March 21, 2005. 
  
 “Per Share Purchase Price”
equals $3.70. 
  
 “Per Unit Purchase Price”
equals $3.72, comprised of $3.70 for each Share and $.02 for each Warrant (rounded up to the nearest penny). 
  
 “Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. 
  
 “Placement Agents” mean Roth Capital Partners, LLC, and Cascadia Capital, LLC. 
  
 “Proceeding” means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. 
  
 “Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and
covering the resale by the Investors of the Shares and the Warrant Shares. 
  
 “Registration Rights Agreement” means the Registration Rights Agreement, dated as of the date of this Agreement, among the Company and the Investors, in the form of Exhibit B hereto.

  
 “Rule 144” means Rule 144 promulgated by the
Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
  
 “SEC Reports” has the meaning set forth in Section 3.1(h).

  
 “Securities” means the Shares, the Warrants
and the Warrant Shares. 
  
 “Securities Act”
means the Securities Act of 1933, as amended. 
  
 “Shares” means the shares of Common Stock issued or issuable to the Investors pursuant to this Agreement. 
  

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 “Short Sales” include, without limitation, all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps and similar arrangements (including on a total return basis), and
sales and other transactions through non-US broker dealers or foreign regulated brokers. 
  
 “Subsidiary” means any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation S-X promulgated by the Commission under the Exchange Act. 
  
 “Trading Day” means (i) a day on which the Common Stock is
traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported
by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day. 
  
 “Trading Market” means whichever of the New York Stock
Exchange, the American Stock Exchange, the NASDAQ National Market, the NASDAQ SmallCap Market or OTC Bulletin Board on which the Common Stock is listed or quoted for trading on the date in question. 
  
 “Transaction Documents” means this Agreement, the Warrants,
the Registration Rights Agreement, and any other documents or agreements executed in connection with the transactions contemplated hereunder. 
  
 “Warrants” means the Common Stock purchase warrants in the form of Exhibit A, which are issuable to the Investors at the
Closing. 
  
 “Warrant Shares” means the
shares of Common Stock issuable upon exercise of the Warrants. 
  
 ARTICLE II. 
 PURCHASE AND SALE 
  
 2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to each Investor, and
each Investor shall, severally and not jointly, purchase from the Company, the Shares and the Warrants representing such Investor’s Investment Amount. The Closing shall take place at the offices of Bryan Cave LLP, 1290 Avenue of the Americas,
New York, NY 10104 on the Closing Date or at such other location or time as the parties may agree. 
  

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 2.2 Closing Deliveries. (a) At the Closing, the Company shall deliver or cause to be delivered to
each Investor the following (the “Company Deliverables”): 
  
 (i) a certificate evidencing a number of Shares equal to such Investor’s Investment Amount divided by the Per Unit Purchase Price, registered in the name of such Investor; 
  
 (ii) a Warrant, registered in the name of such Investor, pursuant to which
such Investor shall have the right to acquire the number of shares of Common Stock equal 10% of the number of Shares issuable to such Investor pursuant to Section 2.2(a)(i); 
  
 (iii) the legal opinion of Company Counsel, in agreed form, addressed to the Investors; and 
  
 (iv) the Registration Rights Agreement, duly executed by the Company.

  
 (b) At the Closing, each Investor shall deliver or cause to be
delivered to the Company the following (the “Investor Deliverables”): 
  
 (i) its Investment Amount, in United States dollars and in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose; and 
  
 (ii) the Registration Rights Agreement, duly executed by such Investor.

  
 ARTICLE III. 
 REPRESENTATIONS AND WARRANTIES 
  
 3.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to each Investor:

  
 (a) Subsidiaries. The Company has no direct or
indirect Subsidiaries other than as specified in the SEC Reports. Except as disclosed in Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital stock of each Subsidiary free and clear of any and all Liens, and all the
issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights. 
  
 (b) Organization and Qualification. The Company and each Subsidiary are duly incorporated or otherwise organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently
conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter 

  

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documents. The Company and each Subsidiary are duly qualified to conduct its respective businesses and are in good standing as a foreign corporation or other
entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse Effect. 
  
 (c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to
carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of
the Company and no further action is required by the Company in connection therewith. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will
constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or
similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. 
  
 (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other
organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party
or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to
which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii),
such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. 
  
 (e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or
make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) the
filing with the Commission of one or more Registration Statements in accordance with the requirements of the Registration Rights 

  

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Agreement, (ii) filings required by state securities laws, (iii) the filing of a Notice of Sale of Securities on Form D with the Commission under Regulation
D of the Securities Act (iv) the filing of a Notification of Listing of Additional Shares with The Nasdaq Stock Market (v) the filings required in accordance with Section 4.5, and (vi) those that have been made or obtained prior to the date of this
Agreement. 
  
 (f) Issuance of the Securities. The
Securities have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The Company has reserved from its duly
authorized capital stock the shares of Common Stock issuable pursuant to this Agreement and the Warrants in order to issue the Shares and the Warrant Shares. 
  
 (g) Capitalization. The number of shares and type of all authorized, issued and outstanding capital stock of the Company, and all shares of Common
Stock reserved for issuance under the Company’s various option and incentive plans, is specified in the SEC Reports. Except as specified in the SEC Reports, no securities of the Company are entitled to preemptive or similar rights, and no
Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as specified in the SEC Reports, there are no outstanding
options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any
shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into
shares of Common Stock. The issue and sale of the Securities will not, immediately or with the passage of time, obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Investors) and will not result in
a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. 
  
 (h) SEC Reports; Financial Statements. Except as set forth in Schedule 3.1(h), the Company has filed all reports required to be filed by it
under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (or such shorter period as the Company was required by law to file such reports) (the foregoing
materials, plus all other filings made by the Company in accordance with the Exchange Act during the twelve months preceding the date hereof, being collectively referred to herein as the “SEC Reports” and, together with the
Schedules to this Agreement (if any), the “Disclosure Materials”) on a timely basis or has timely filed a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.
Except as set forth in Schedule 3.1(h), as of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission
promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of
the 

  

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circumstances under which they were made, not misleading. Except as set forth in Schedule 3.1(h) the financial statements of the Company included in
the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Except as set forth in Schedule 3.1(h), such
financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material
respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal,
immaterial, year-end audit adjustments. 
  
 (i) Material
Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports and in Schedule 3.1(i), (i) there has been no event, occurrence or development that
has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the
ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company
has not altered its method of accounting or the identity of its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase
or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the
Commission any request for confidential treatment of information. 
  
 (j) Litigation. There is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) except as specifically disclosed in the SEC Reports,
could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof (in his or her
capacity as such), is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty, except as specifically disclosed in the SEC Reports. There has
not been, and to the knowledge of the Company, there is not pending any investigation by the Commission involving the Company or any current or former director or officer of the Company (in his or her capacity as such). The Commission has not issued
any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. 
  
 (k) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect
to any of the employees of the Company. 
  

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 (l) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of
(and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default
under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived),
(ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and
local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not, individually or in the aggregate, have or reasonably be expected
to result in a Material Adverse Effect. The Company is in compliance with all effective requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations thereunder, that are applicable to it, except where such noncompliance
could not have or reasonably be expected to result in a Material Adverse Effect. 
  
 (m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to
conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, and neither the
Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any such permits. 
  
 (n) Title to Assets. Except as set forth in Schedule 3.1(n), the Company and the Subsidiaries have good and marketable title in fee simple
to all real property owned by them that is material to their respective businesses and good and marketable title in all personal property owned by them that is material to their respective businesses, in each case free and clear of all Liens, except
for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries. Any real property and facilities held under lease by the
Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance, except as could not, individually or in the aggregate, have or reasonably be expected to result
in a Material Adverse Effect. 
  
 (o) Patents and
Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or
material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect
(collectively, the “Intellectual Property Rights”). The SEC Reports describe all claims and Actions made or filed by others against the Company deemed material by the Company to the effect that Intellectual Property Rights used by
the Company or any Subsidiary violate or infringe upon the rights of such claimant. Except as set forth in the 

  

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SEC Reports, to the knowledge of the Company, all of the Intellectual Property Rights are enforceable and there is no existing infringement by another Person
of any of the Intellectual Property Rights. 
  
 (p)
Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the
Subsidiaries are engaged. The Company has no reason to believe that it will not be able to renew its and the Subsidiaries’ existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may
be necessary to continue its business on terms consistent with market for the Company’s and such Subsidiaries’ respective lines of business. 
  
 (q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to
the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any
entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner. 
  
 (r) Internal Accounting Controls. Except as disclosed in the SEC Reports, the Company and the Subsidiaries maintain a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements
in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in the SEC Reports, the Company has established disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company, including its Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in which the Company’s Form 10-K or 10-Q, as the case may be, is being prepared. The Company’s certifying officers have evaluated the effectiveness of the
Company’s controls and procedures in accordance with Item 307 of Regulation S-K under the Exchange Act for the Company’s most recently ended fiscal quarter or fiscal year-end (such date, the “Evaluation Date”). The Company
presented in its most recently filed Form 10-K or Form 10-Q the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Except as disclosed in the
SEC Reports, since the Evaluation Date, there have been no significant changes in the Company’s internal controls (as such term is defined in Item 308(c) of Regulation S-K under the Exchange Act) or, to the Company’s knowledge, in other
factors that could significantly affect the Company’s internal controls. 
  

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 (s) Solvency. Based on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs
taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof; and (ii) the current cash flow of the Company, together with the proceeds the
Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company
does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). 
  
 (t) Certain Fees. Except as described in Schedule 3.1(t), no brokerage or finder’s fees or commissions
are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Investors shall have no
obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by an Investor pursuant to written agreements executed by such Investor which fees or commissions shall be the sole responsibility of such
Investor) made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. 
  
 (u) Certain Registration Matters. Assuming the accuracy of the Investors’ representations and warranties set
forth in Section 3.2(b)-(e), no registration under the Securities Act is required for the offer and sale of the Shares and Warrant Shares by the Company to the Investors under the Transaction Documents. The Company is eligible to register the resale
of its Common Stock for resale by the Investors under Form S-1 promulgated under the Securities Act. Except as specified in Schedule 3.1(u), the Company has not granted or agreed to grant to any Person any rights (including
“piggy-back” registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied. 
  
 (v) Listing and Maintenance Requirements. Except as specified in the SEC Reports, the Company has not, in the two
years preceding the date hereof, received notice from any Trading Market to the effect that the Company is not in compliance with the listing or maintenance requirements thereof. The Company is, and has no reason to believe that it will not in the
foreseeable future continue to be, in compliance with the listing and maintenance requirements for continued listing of the Common Stock on the Trading Market on which the Common Stock is currently listed or quoted. The issuance and sale of the
Securities under the Transaction Documents does not contravene the rules and regulations of the Trading Market on which the Common Stock is currently listed or quoted, and no approval of the shareholders of the Company thereunder is required for the
Company to issue and deliver to the Investors the Securities contemplated by the Transaction Documents. 
  

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 (w) Investment Company. The Company is not, and is not an Affiliate of, and immediately following
the Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. 
  
 (x) Application of Takeover Protections. The Company has taken all necessary action, if any, in order to render inapplicable any control share
acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its
state of incorporation that is or could become applicable to the Investors as a result of the Investors and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation the
Company’s issuance of the Securities and the Investors’ ownership of the Securities. 
  
 (y) No Additional Agreements. The Company does not have any agreement or understanding with any Investor with respect to the transactions contemplated by the Transaction Documents other than as specified in the
Transaction Documents. 
  
 (z) Disclosure. The Company
confirms that neither it nor any Person acting on its behalf has provided any Investor or its respective agents or counsel with any information that the Company believes constitutes material, non-public information except (i) insofar as the
existence and terms of the proposed transactions hereunder may constitute such information, and (ii) as to Investors who executed non-disclosure or confidentiality agreements with the Company in connection with the transactions contemplated hereby.
The Company understands and confirms that the Investors will rely on the foregoing representations and covenants in effecting transactions in securities of the Company. All disclosure provided to the Investors regarding the Company, its business and
the transactions contemplated hereby, furnished by or on behalf of the Company (including the Company’s representations and warranties set forth in this Agreement) are true and correct and do not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 
  
 3.2 Representations and Warranties of the Investors. Each Investor hereby, for itself and for no other Investor,
represents and warrants to the Company as follows: 
  
 (a)
Organization; Authority. Such Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and
to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by such Investor of the transactions contemplated by this Agreement
has been duly authorized by all necessary corporate or, if such Investor is not a corporation, such partnership, limited liability company or other applicable like action, on the part of such Investor. Each of this Agreement and the Registration

  

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Rights Agreement has been duly executed by such Investor, and when delivered by such Investor in accordance with terms hereof, will constitute the valid and
legally binding obligation of such Investor, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to,
or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application. 
  
 (b) Investment Intent. Such Investor is acquiring the Securities as principal for its own account for investment purposes only and not with a view
to or for distributing or reselling such Securities or any part thereof, without prejudice, however, to such Investor’s right at all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal
and state securities laws. Subject to the immediately preceding sentence, nothing contained herein shall be deemed a representation or warranty by such Investor to hold the Securities for any period of time. Such Investor is acquiring the Securities
hereunder in the ordinary course of its business. Such Investor does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities. 
  
 (c) Investor Status. At the time such Investor was offered the Securities, it was, and at the date hereof it is, and
on each date on which it exercises Warrants it will be, an “accredited investor” as defined in Rule 501(a) under the Securities Act. Such Investor is not a registered broker-dealer under Section 15 of the Exchange Act. 
  
 (d) General Solicitation. Such Investor is not purchasing the
Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general
solicitation or general advertisement. Prior to the time that such Investor was first contacted by the Company or a Placement Agent such Investor had a pre-existing relationship with the Company or such Placement Agent. Such Investor was first
contacted regarding the purchase of Securities, and provided to the Company or a Placement agent its indication of interest, prior to February 16, 2002. 
  
 (e) Access to Information. Such Investor acknowledges that it has reviewed the Disclosure Materials and has been afforded (i) the opportunity to
ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Securities; (ii) access to
information about the Company and the Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to
obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other
investigation conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or affect such Investor’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s
representations and warranties contained in the Transaction Documents. 
  

 13 

 (f) Certain Trading Activities. Such Investor has not directly or indirectly, nor has any Person
acting on behalf of or pursuant to any understanding with such Investor, engaged in any transactions in the securities of the Company (including, without limitations, any Short Sales involving the Company’s securities) since the earlier to
occur of (1) the time that such Investor was first contacted by the Company, a Placement Agent or any other Person regarding an investment in the Company and (2) the 30th day prior to the date of this Agreement. Such Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with it
will engage in any transactions in the securities of the Company (including Short Sales) prior to the time that the transactions contemplated by this Agreement are publicly disclosed. 
  
 (g) Limited Ownership. The purchase by such Investor of the Securities issuable to it at the Closing will not result
in such Investor (individually or together with other Person with whom such Investor has identified, or will have identified, itself as part of a “group” in a public filing made with the Commission involving the Company’s securities)
acquiring, or obtaining the right to acquire, in excess of 19.999% of the outstanding shares of Common Stock or the voting power of the Company on a post transaction basis that assumes that the Closing shall have occurred. Such Investor does not
presently intend to, alone or together with others, make a public filing with the Commission to disclose that it has (or that it together with such other Persons have) acquired, or obtained the right to acquire, as a result of the Closing (when
added to any other securities of the Company that it or they then own or have the right to acquire), in excess of 19.999% of the outstanding shares of Common Stock or the voting power of the Company on a post transaction basis that assumes that the
Closing shall have occurred. 
  
 (h) Independent Investment
Decision. Such Investor has independently evaluated the merits of its decision to purchase Securities pursuant to the Transaction Documents, and such Investor confirms that it has not relied on the advice of any other Investor’s business
and/or legal counsel in making such decision. Such Investor has not relied on the business or legal advice of Roth Capital Partners, LLC or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none
of such Persons has made any representations or warranties to such Investor in connection with the transactions contemplated by the Transaction Documents. 
  
 The Company acknowledges and agrees that no Investor has made or makes any representations or warranties with respect to the transactions contemplated hereby other than
those specifically set forth in this Section 3.2. 
  
 ARTICLE IV.

 OTHER AGREEMENTS OF THE PARTIES 
  
 4.1 (a) Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of the Securities other
than pursuant to an effective registration statement, to the Company, to an Affiliate of an Investor or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof 

  

 14 

 
to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the
Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. 
  
 (b) Certificates evidencing the Securities will contain the following legend, until such time as they are not required under Section 4.1(c): 

 
 [NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF
THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY
ACCEPTABLE TO THE COMPANY. [THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. 
  
 The Company acknowledges and agrees that an Investor may from time to time
pledge, and/or grant a security interest in some or all of the Securities pursuant to a bona fide margin agreement in connection with a bona fide margin account and, if required under the terms of such agreement or account, such Investor may
transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be
required in connection with the pledge, but such legal opinion may be required in connection with a subsequent transfer following default by the Investor transferee of the pledge. No notice shall be required of such pledge. At the appropriate
Investor’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder. 
  
 (c) Certificates evidencing the Shares and Warrant Shares shall not contain
any legend (including the legend set forth in Section 4.1(b)): (i) following a sale or transfer of 

  

 15 

 
such Securities pursuant to an effective registration statement (including the Registration Statement), or (ii) following a sale or transfer of such Shares
or Warrant Shares pursuant to Rule 144 (assuming the transferor is not an Affiliate of the Company), or (iii) while such Shares or Warrant Shares are eligible for sale under Rule 144(k). The Company may not make any notation on its records or give
instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section. 
  
 4.2 Furnishing of Information. As long as any Investor owns the Securities, the Company covenants to timely file (or obtain extensions in respect
thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. Upon reasonable request of such holder of Securities, the Company shall deliver to such holder a
written certification of a duly authorized officer as to whether it has complied with the preceding sentence. As long as any Investor owns Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish
to the Investors and make publicly available in accordance with Rule 144(c) such information as is required for the Investors to sell the Shares and Warrant Shares under Rule 144. The Company further covenants that it will take such further action
as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell the Shares and Warrant Shares without registration under the Securities Act within the limitation of the exemptions
provided by Rule 144. 
  
 4.3 Integration. The Company
shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be
integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Investors, or that would be integrated with the offer or sale of the Securities for
purposes of the rules and regulations of any Trading Market in a manner that would require stockholder approval of the sale of the securities to the Investors. 
  

4.4 Subsequent Registrations. Other than pursuant to the Registration Statement, prior to the Effective Date, the Company may not file any
registration statement (other than on Form S-8) with the Commission with respect to any securities of the Company. 
  
 4.5 Securities Laws Disclosure; Publicity. By 9:00 a.m. (New York time) on the Trading Day following the execution of this Agreement, and by 9:00
a.m. (New York time) on the Closing Date, the Company shall issue press releases disclosing the transactions contemplated hereby and the Closing. On the Trading Day following the execution of this Agreement the Company will file a Current Report on
Form 8-K disclosing the material terms of the Transaction Documents (and attach as exhibits thereto the Transaction Documents), and on the Closing Date the Company will file an additional Current Report on Form 8-K to disclose the Closing. In
addition, the Company will make such other filings and notices in the manner and time required by the Commission and the Trading Market on which the Common Stock is listed. Notwithstanding the foregoing, the Company shall not publicly disclose the
name of any Investor, or include the name of any Investor in any filing with the Commission (other than the 

  

 16 

 
Registration Statement and any exhibits to filings made in respect of this transaction in accordance with periodic filing requirements under the Exchange
Act) or any regulatory agency or Trading Market, without the prior written consent of such Investor, except to the extent such disclosure is required by law or Trading Market regulations. 
  
 4.6 Limitation on Issuance of Future Priced Securities. During the six months following the Closing Date, the Company
shall not issue any future priced securities. 
  
 4.7
Indemnification of Investors. In addition to the indemnity provided in the Registration Rights Agreement, the Company will indemnify and hold the Investors and their directors, officers, shareholders, partners, employees and agents (each, an
“Investor Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees
and costs of investigation (collectively, “Losses”) that any such Investor Party may suffer or incur as a result of or relating to: (a) any misrepresentation, breach or inaccuracy of any representation, warranty, covenant or
agreement made by the Company in any Transaction Document; and/or (b) any cause of action, suit or claim brought or made against such Investor Party and arising solely out of or solely resulting from the Investor’s execution, delivery,
performance or enforcement of this Agreement or any of the other Transaction Documents and without causation by any other activity, obligation, condition or liability pertaining to such Investor. In addition to the indemnity contained herein, the
Company will reimburse each Investor Party for its reasonable legal and other expenses (including the cost of any investigation, preparation and travel in connection therewith) incurred in connection therewith, as such expenses are incurred.

  
 4.8 Non-Public Information. The Company covenants and
agrees that, from and after the date of this Agreement, neither it nor any other Person acting on its behalf will provide any Investor or its agents or counsel with any information that the Company believes constitutes material non-public
information, unless prior thereto such Investor shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Investor shall be relying on the foregoing
representations in effecting transactions in securities of the Company. 
  
 4.9 Listing of Securities. The Company hereby agrees to use commercially reasonable efforts to maintain the listing of the Common Stock on the Trading Market, and as soon as reasonably practicable following the Closing (but not later
than the earlier of the Effective Date and the first anniversary of the Closing Date) to list the applicable Shares on the Trading Market. The Company further agrees, (i) if the Company applies to have the Common Stock traded on any other Trading
Market, it will include in such application the Shares and Warrant Shares, and will take such other action as is necessary or desirable to cause the Shares and Warrant Shares to be listed on such other Trading Market as promptly as possible, and
(ii) it will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all material respects with the Company’s reporting, filing and other obligations under the bylaws
or rules of the Trading Market. 
  

 17 

 4.10 Use of Proceeds. The Company will use the net proceeds from the sale of the Securities
hereunder to pay down existing Company debt, and not to redeem any Common Stock or Common Stock Equivalents. 
  
 ARTICLE V. 
 CONDITIONS PRECEDENT TO CLOSING 
  
 5.1 Conditions Precedent to the Obligations of the Investors to Purchase
Securities. The obligation of each Investor to acquire Securities at the Closing is subject to the satisfaction or waiver by such Investor, at or before the Closing, of each of the following conditions: 
  
 (a) Representations and Warranties. The representations and
warranties of the Company contained herein shall be true and correct in all material respects as of the date when made and as of the Closing as though made on and as of such date; 
  
 (b) Performance. The Company shall have performed, satisfied and complied in all material respects with all
covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing; 
  
 (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents; 
  
 (d) Adverse Changes. Since the date of execution of this Agreement, no event or series of events shall have occurred
that reasonably could have or result in a Material Adverse Effect; 
  
 (e) No Suspensions of Trading in Common Stock; Listing. Trading in the Common Stock shall not have been suspended by the Commission or any Trading Market (except for any suspensions of trading of not more than one Trading Day solely
to permit dissemination of material information regarding the Company) at any time since the date of execution of this Agreement, and the Common Stock shall have been at all times since such date listed for trading on a Trading Market; 

 
 (f) Company Deliverables. The Company shall have delivered the
Company Deliverables in accordance with Section 2.2(a); and 
  
 (g) Nasdaq Listing. The Nasdaq Stock Market shall have approved the Company’s application for the listing of the Shares and shall not have objected to the transactions contemplated by this Agreement. The Nasdaq Stock Market
shall have also provided a written interpretation to the Company that the issuance of the Securities does not require approval by the shareholders of the Company. 
  

 18 

 5.2 Conditions Precedent to the Obligations of the Company to sell Securities. The obligation of
the Company to sell Securities at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions: 
  
 (a) Representations and Warranties. The representations and warranties of each Investor contained herein shall be
true and correct in all material respects as of the date when made and as of the Closing Date as though made on and as of such date; 
  
 (b) Performance. Each Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions
required by the Transaction Documents to be performed, satisfied or complied with by such Investor at or prior to the Closing; 
  
 (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents; 
  
 (d) Investors Deliverables. Each Investor shall have delivered its Investors Deliverables in accordance with Section
2.2(b); and 
  
 (e) Nasdaq Listing. The Nasdaq Stock Market
shall have approved the Company’s application for the listing of the Shares and shall not have objected to the transactions contemplated by this Agreement. The Nasdaq Stock Market shall have also provided a written interpretation to the Company
that the issuance of the Securities does not require approval by the shareholders of the Company. 
  
 ARTICLE VI. 
 MISCELLANEOUS 
  
 6.1 Fees and Expenses. Each party shall pay the fees and expenses of its advisers, counsel, accountants and other
experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents. The Company shall pay all stamp and other taxes and duties levied in
connection with the sale of the Shares. 
  
 6.2 Entire
Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and
representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 
  

 19 

 6.3 Notices. Any and all notices or other communications or deliveries required or permitted to be
provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation
of successful transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized
overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: 
  

			
	If to the Company:	  	Flow International Corporation
	 	  	23500 64th Avenue South
	 	  	Kent, Washington 98032
	 	  	Attn: General Counsel
	 	  	Facsimile: (253) 813-3280
		
	With a copy to:	  	Preston, Gates & Ellis, LLP
	 	  	925 Fourth Avenue, Suite 2900
	 	  	Seattle, WA 98104
	 	  	Attn.: Robert S. Jaffe
	 	  	Facsimile: (206) 370-6092
		
	If to an Investor:	  	To the address set forth under such Investor’s name on the signature pages hereof;

  
 or such other address as may be
designated in writing hereafter, in the same manner, by such Person. 
  
 6.4 Amendments; Waivers; No Additional Consideration. No provision of this Agreement may be waived or amended except in a written instrument signed by the Company and the Investors holding a majority of the Shares. No waiver of any
default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. No consideration shall be offered or paid to any Investor to amend or consent to a waiver or modification of any
provision of any Transaction Document unless the same consideration is also offered to all Investors who then hold Shares. 
  
 6.5 Termination. This Agreement may be terminated prior to Closing: 
  
 (a) by written agreement of the Investors and the Company; 
  

 20 

 (b) by the Company or an Investor (as to itself but no other Investor) upon written notice to the other,
if the Closing shall not have taken place by 6:30 p.m. Eastern time on the Outside Date; provided, that the right to terminate this Agreement under this Section 6.5(b) shall not be available to any Person whose failure to comply with its
obligations under this Agreement has been the cause of or resulted in the failure of the Closing to occur on or before such time;  
  
 (c) by an Investor (as to itself but no other Investor) if it concludes in good faith that any of the conditions precedent contained in Section 5.1 shall
have been breached or shall not be capable of being satisfied by the Outside Date despite the assumed best efforts of the Company. 
  
 In the event of a termination pursuant to this Section, the Company shall promptly notify all non-terminating Investors. Upon a termination in accordance with this
Section 6.5, the Company and the terminating Investor(s) shall have no further obligation or liability (including as arising from such termination) to the other and no Investor will have any liability to any other Investor under the Transaction
Documents as a result therefrom. 
  
 6.6 Construction. The
headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring
any party by virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents. 
  
 6.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investors. Any Investor may assign any or all of its rights under this Agreement to any Person to whom such Investor
assigns or transfers any Securities, provided such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the “Investors.” 
  
 6.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.7 (as to each Investor
Party). 
  
 6.9 Governing Law. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof.
Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective
Affiliates, 

  

 21 

 
employees or agents) shall be commenced exclusively in the New York Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the
New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the any of the Transaction Documents), and hereby
irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party
hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at
the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorneys’
fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding. 
  
 6.10 Survival. The representations, warranties, agreements and covenants contained herein shall survive the Closing and the delivery of the
Securities. 
  
 6.11 Execution. This Agreement may be
executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood
that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page were an original thereof. 
  
 6.12 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall
incorporate such substitute provision in this Agreement. 
  
 6.13
Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Investor exercises a right, election, demand or option under a
Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Investor may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any
relevant notice, demand or election in whole or in part without prejudice to its future actions and rights. 
  

 22 

 6.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of
evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable
third-party costs associated with the issuance of such replacement Securities. If a replacement certificate or instrument evidencing any Securities is requested due to a mutilation thereof, the Company may require delivery of such mutilated
certificate or instrument as a condition precedent to any issuance of a replacement. 
  
 6.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Investors and the Company will be entitled to specific
performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any
action for specific performance of any such obligation the defense that a remedy at law would be adequate. 
  
 6.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Investor pursuant to any Transaction Document or an
Investor enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable
cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or
setoff had not occurred. 
  
 6.17 Independent Nature of
Investors’ Obligations and Rights. The obligations of each Investor under any Transaction Document are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of
the obligations of any other Investor under any Transaction Document. The decision of each Investor to purchase Securities pursuant to the Transaction Documents has been made by such Investor independently of any other Investor. Nothing contained
herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents. Each Investor acknowledges that no other Investor has acted as agent for such Investor in
connection with making its investment hereunder and that no Investor will be acting as agent of such Investor in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents. Each Investor shall
be entitled to independently protect and enforce its 

  

 23 

 
rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for
any other Investor to be joined as an additional party in any proceeding for such purpose. The Company acknowledges that each of the Investors has been provided with the same Transaction Documents for the purpose of closing a transaction with
multiple Investors and not because it was required or requested to do so by any Investor. 
  
 6.18 Limitation of Liability. Notwithstanding anything herein to the contrary, the Company acknowledges and agrees that the liability of an Investor arising directly or indirectly, under any Transaction
Document of any and every nature whatsoever shall be satisfied solely out of the assets of such Investor, and that no trustee, officer, other investment vehicle or any other Affiliate of such Investor or any investor, shareholder or holder of shares
of beneficial interest of such a Investor shall be personally liable for any liabilities of such Investor. 
  
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGES FOLLOW] 
  

 24 

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	FLOW INTERNATIONAL CORPORATION
		
	 By:
	 	 /s/ Stephen D. Reichenbeck

	 Name:
	 	 Stephen D. Reichenbeck

	 Title:
	 	 Chief Financial Officer

  
 [REMAINDER OF
PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGES FOR INVESTORS FOLLOW] 

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Third Point Partners L.P.

	
	 By:

	Name: Lloyd Blumberg
	Title: CFO
	
	Investment Amount: $2,545,224.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	 22-3352246

	
	ADDRESS FOR NOTICE
		
	c/o:	 	 Third Point LLC

		
	Street:	 	 360 Madison Ave 24th FL

		
	City/State/Zip:	 	 NewYork, NY 10017

		
	Attention:	 	 Lloyd Blumberg

		
	Tel:	 	 212-224-7400

		
	Fax:	 	 212-224-7401

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Third Point Partners Qualified L.P.

	
	 By:

	Name:	 	Lloyd Blumberg
	Title:	 	CFO
	
	Investment Amount: $482,112.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Third Point Offshore Fund, Ltd.

	
	 By:

	Name:	 	Lloyd Blumberg
	Title:	 	CFO
	
	Investment Amount: $10,193,544.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
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	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Points West International Investments Ltd.

	
	 By:

	Name:	 	Lloyd Blumberg
	Title:	 	CFO
	
	Investment Amount: $1,781,880.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 JLF Partners I, L.P.

	
	 By:

	Name: Eric Lieberman
	Title: CFO
	
	Investment Amount: $5,628,360.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	 22-3352246

	
	ADDRESS FOR NOTICE
		
	c/o:	 	 Third Point LLC

		
	Street:	 	 360 Madison Ave 24th FL

		
	City/State/Zip:	 	 NewYork, NY 10017

		
	Attention:	 	 Lloyd Blumberg

		
	Tel:	 	 212-224-7400

		
	Fax:	 	 212-224-7401

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 JLF Partners II, L.P.

	
	 By:

	Name:	 	Eric Lieberman
	Title:	 	CFO
	
	Investment Amount: $438,960.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 JLF Offshore Fund, Ltd.

	
	 By:

	Name:	 	Eric Lieberman
	Title:	 	CFO
	
	Investment Amount: $8,935,440.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 The Pinnacle Fund

	
	 By:

	Name:	 	Barry M. Kitt
	Title:	 	General Partner
	
	Investment Amount: $7,740,000.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Trustman c/o Arthur V. Davis Foundation

	
	 By:

	Name:	 	Adam Stewart
	Title:	 	Vice President
	
	Investment Amount: $81,096.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Trustman c/o TUA Troval G. Brooks

	
	 By:

	Name:	 	Adam Stewart
	Title:	 	Vice President
	
	Investment Amount: $16,368.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	Trustman c/o STI Classic Small Cap Growth Fund
	
	 By:

	Name:	 	Adam Stewart
	Title:	 	Vice President
	
	Investment Amount: $ 6,424,440.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Trustman c/o TUA Sandra G. Brooks

	
	 By:

	Name:	 	Adam Stewart
	Title:	 	Vice President
	
	Investment Amount: $6,696.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Zeke, L.P.

	
	 By:

	Name:	 	Ed Antoian
	Title:	 	General Partner
	
	Investment Amount: $4,002,720.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 SF Capital Partners Ltd.

	
	 By:

	Name:	 	Michael A. Roth
	Title:	 	Authorized Signatory
	
	Investment Amount: $3,720,000.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Jon D Gruber & Linda W. Gruber

	
	 By:

	Name:	 	 Jon D Gruber & Linda W. Gruber

	Title:	 	 
	
	Investment Amount: $446,400.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Lindsay Gruber Dunham

	
	 By:

	Name:	 	Gruber & McBaine Capital Management
	Title:	 	Investment Advisor
	
	Investment Amount: $29,760.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	Jon D. Gruber TTEE FBO Jonathan Wyatt Gruber Trust
	
	 By:

	Name:	 	Jon D. Gruber
	Title:	 	Trustee
	
	Investment Amount: $29,760.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 J. Patterson McBaine

	
	 By:

	Name:	 	 J. Patterson McBaine

	Title:	 	 
	
	Investment Amount: $186,000.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Lagunitas Partners L.P.

	
	 By:

	Name:	 	Gruber & McBaine Capital Management
	Title:	 	General Partner
	
	Investment Amount: $1,897,200.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Gruber & McBaine International

	
	 By:

	Name:	 	Gruber & McBaine Capital Management
	Title:	 	Investment Advisor
	
	Investment Amount: $427,800.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Donaghy Sales Inc.

	
	 By:

	Name:	 	Gruber & McBaine Capital Management
	Title:	 	Investment Advisor
	
	Investment Amount: $                      (SUBJECT TO THE COMPANY’S
RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	TTEES Hamilton College
	
	 By:

	Name:	 	Gruber & McBaine Capital Management
	Title:	 	Investment Advisor
	
	Investment Amount: $241,800.00(SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	The Wallace Foundation
	
	 By:

	Name:	 	Gruber & McBaine Capital Management
	Title:	 	Investment Advisor
	
	Investment Amount: $148,800.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Potomac Capital Partners, L.P.

	
	 By:

	Name:	 	Kenneth Berkow
	Title:	 	CFO
	
	Investment Amount: $1,614,480.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Potomac Capital International Ltd.

	
	 By:

	Name:	 	Kenneth Berkow
	Title:	 	CFO
	
	Investment Amount: $891,312.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	Pleiades Investment Partner’s - R, L.P.
	
	 By:

	Name:	 	Kenneth Berkow
	Title:	 	CFO
	
	Investment Amount: $ 994,728.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Crestview Capital Master, LLC

	
	 By:

	Name:	 	Robert Hoyt
	Title:	 	Managing Director
	
	Investment Amount: $ 2,000,000.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Presidio Partners

	
	 By:

	Name:	 	Joseph Welsh
	Title:	 	CFO
	
	Investment Amount: $ 764,571.60 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Geary Partners

	
	 By:

	Name:	 	Joseph Welsh
	Title:	 	CFO
	
	Investment Amount: $568,181.64 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Brady Retirement Fund L.P.

	
	 By:

	Name:	 	Joseph Welsh
	Title:	 	CFO
	
	Investment Amount: $166,406.76 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 SRB Greenway Capital, L.P.

	
	 By:

	Name:	 	Steven R. Becker
	Title:	 	Member
	
	Investment Amount: $109,500.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	SRB Greenway Offshore Operations Fund, L.P.
	
	 By:

	Name:	 	Steve Becker
	Title:	 	Member
	
	Investment Amount: $83,400.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 SRB Greenway Capital (QP), L.P.

	
	 By:

	Name:	 	Steve Becker
	Title:	 	Member
	
	Investment Amount: $807,100.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Westpark Capital, L.P.

	
	 By:

	Name:	 	Patrick J. Brosnahan
	Title:	 	General Partner
	
	Investment Amount: $1,004,400.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 Pacific Asset Partners

	
	 By:

	Name:	 	Robert H. Stafford
	Title:	 	General Partner
	
	Investment Amount: $500,000.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed
by their respective authorized signatories as of the date first indicated above. 
  

			
	NAME OF INVESTOR
	
	 BTG Investments, LLC

	
	 By:

	Name:	 	Gordon Roth
	Title:	 	Member
	
	Investment Amount: $279,960.00 (SUBJECT TO THE COMPANY’S RIGHT, IN ITS SOLE DISCRETION, TO CUT-BACK OR REDUCE, SUCH AMOUNT)
		
	Tax ID No.:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

	
	DELIVERY INSTRUCTIONS
	(if different from above)
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

 Securities Purchase Agreement 
 Schedule 3.1 
  
 3.1(a) Subsidiaries. The shares of certain of the Company’s subsidiaries are pledged to the Company’s senior lenders pursuant to the terms of the Second Amended and Restated Credit Agreement dated July 28, 2003 (as amended
to date, the “Credit Agreement”), and subordinated lender, pursuant to the terms of the Note Purchase Agreements dated as of April 30, 2001 (as amended to date, the “Note Purchase Agreement”). 
  
 3.1(h) SEC Reports; Financial Statements. The Company’s Form 10-K/A for the year
ended April 30, 2004 and its Forms 10-Q for the quarters ended July 31, 2004 and October 31, 2004 were filed late. The Form 10-K for the year ended April 30, 2004 was amended by a Form 10-K/A restating the Company’s results. With respect to the
representations in the last three sentences of Section 3.1(h), the Company notes that it has received a comment letter from the Commission that it has filed on Form 8-K on February 16, 2005 and the representations are made subject to any changes in
the SEC Reports that may be made as a result of or that are related to the comment process commenced by such letter. 
  
 3.1(i) Material Changes. The Company has received a comment letter from the Commission that it has filed on Form 8-K on February 16, 2005. 
  
 3.1(n) Title to Assets. Assets owned by the Company and its subsidiaries are subject
to liens held by the Company’s senior and subordinated lenders pursuant to the terms of the Credit Agreement and the Note Purchase Agreement. 
  
 3.1(t) Certain Fees. The Company is obliged to pay fees to Roth Capital and to Cascadia Capital, LLC with respect to the transactions contemplated by this
Agreement. 
  
 3.1(u) Certain Registration Matters. The Company has granted
demand and piggy-back registration rights to holders of warrants issued in connection with the execution and subsequent amendment of the Credit Agreement and the Note Purchase Agreement. 

  
 REGISTRATION RIGHTS
AGREEMENT 
  
 This Registration Rights Agreement (this
“Agreement”) is made and entered into as of February [    ], 2005, by and among Flow International Corporation, a Washington corporation (the “Company”), and the investors signatory hereto
(each an “Investor” and collectively, the “Investors”). 
  
 This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof among the Company and the Investors (the “Purchase Agreement”). 
  
 The Company and the Investors hereby agree as follows: 
  
 1. Definitions. Capitalized terms used and not otherwise defined
herein that are defined in the Purchase Agreement will have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms have the respective meanings set forth in this Section 1: 
  
 “Advice” has the meaning set forth in Section 6(d).

  
 “Effective Date” means the date that the
Registration Statement filed pursuant to Section 2(a) or 2(b) is first declared effective by the Commission. 
  
 “Effectiveness Date” means (a) with respect to the initial Registration Statement required to be filed under Section 2(a), the earlier
of: (a)(i) the 180th calendar day following the Closing Date, and (ii) the fifth Trading Day following the date on
which the Company is notified by the Commission that the initial Registration Statement will not be reviewed or is no longer subject to further review and comments, and (b) with respect to any additional Registration Statements that may be required
pursuant to Section 2(b), the earlier of (i) the 180th calendar day following (x) if such Registration Statement is
required because the Commission shall have notified the Company in writing that certain Registrable Securities were not eligible for inclusion on a previously filed Registration Statement, the date or time on which the Commission shall indicate as
being the first date or time that such Registrable Securities may then be included in a Registration Statement, or (y) if such Registration Statement is required for a reason other than as described in (x) above, the date on which the Company first
knows, or reasonably should have known, that such additional Registration Statement(s) is required, and (ii) the fifth Trading Day following the date on which the Company is notified by the Commission that such additional Registration Statement will
not be reviewed or is no longer subject to further review and comments. 
  
 “Effectiveness Period” has the meaning set forth in Section 2(a). 
  
 “Exchange Act” means the Securities Exchange Act of 1934, as amended. 

 “Filing Date” means (a) with respect to the initial Registration Statement required to
be filed under Section 2(a), the 60th calendar day following the Closing Date, and (b) with respect to any
additional Registration Statements that may be required pursuant to Section 2(b), the 60th calendar day following
(x) if such Registration Statement is required because the Commission shall have notified the Company in writing that certain Registrable Securities were not eligible for inclusion on a previously filed Registration Statement, the date or time on
which the Commission shall indicate as being the first date or time that such Registrable Securities may then be included in a Registration Statement, or (y) if such Registration Statement is required for a reason other than as described in (x)
above, the date on which the Company first knows, or reasonably should have known, that such additional Registration Statement(s) is required. 
  
 “Holder” or “Holders” means the holder or holders, as the case may be, from time to time of Registrable Securities.

  
 “Indemnified Party” has the meaning set forth
in Section 5(c). 
  
 “Indemnifying Party” has the
meaning set forth in Section 5(c). 
  
 “Losses”
has the meaning set forth in Section 5(a). 
  
 “New York
Courts” means the state and federal courts sitting in the City of New York, Borough of Manhattan. 
  
 “Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened. 
  
 “Prospectus” means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a
Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. 
  
 “Registrable Securities” means: (i) the Shares, (ii) the
Warrant Shares, (iii) any shares of Common Stock issuable upon the exercise of warrants issued to any placement agent as compensation in connection with the financing subject of the Purchase Agreement, and (iv) any securities issued or issuable upon
any stock split, dividend or other distribution, recapitalization or similar event, or any adjustment with respect to any of the securities referenced in (i) or (ii) above. 
  
 “Registration Statement” means the initial registration statement required to be filed in accordance with
Section 2(a) and any additional registration statement(s) required to be filed under Section 2(b), including (in each case) the Prospectus, amendments and supplements to such registration statements or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference therein. 
  

 2 

 “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
  
 “Rule 415” means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
  
 “Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. 
  
 “Securities Act” means the Securities Act of 1933, as amended. 
  
 “Shares” means the shares of Common Stock issued or issuable to the Investors pursuant to the Purchase
Agreement. 
  
 “Warrants” means the Common Stock
purchase warrants issued or issuable to the Investors pursuant to the Purchase Agreement and to any placement agent identified in Schedule 3.1(t) to the Purchase Agreement in accordance with the terms of the engagement or similar agreements
between the Company and any such agents. 
  
 “Warrant
Shares” means the shares of Common Stock issued or issuable upon exercise of the Warrants. 
  
 2. Registration. 
  
 (a) On or prior to each Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all
Registrable Securities not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415, on Form S-1 (or on such other form appropriate for such purpose). Such Registration
Statement shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) the “Plan of Distribution” attached hereto as Annex A. The Company shall cause
such Registration Statement to be declared effective under the Securities Act as soon as possible but, in any event, no later than its Effectiveness Date, and shall use its reasonable best efforts to keep the Registration Statement continuously
effective under the Securities Act until the date which is the earlier of (i) five years after its Effective Date, (ii) such time as all of the Registrable Securities covered by such Registration Statement have been publicly sold by the Holders, or
(iii) such time as all of the Registrable Securities covered by such Registration Statement may be sold by the Holders pursuant to Rule 144(k) as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the Company’s transfer agent and the affected Holders (the “Effectiveness Period”). 
  

 3 

 (b) If for any reason the Commission does not permit all of the Registrable Securities to be included in
the Registration Statement filed pursuant to Section 2(a), or for any other reason any outstanding Registrable Securities are not then covered by an effective Registration Statement, then the Company shall prepare and file by the Filing Date for
such Registration Statement, an additional Registration Statement covering the resale of all Registrable Securities not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to
Rule 415, on Form S-1 (or on such other form appropriate for such purpose). Each such Registration Statement shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration
Statement) the “Plan of Distribution” attached hereto as Annex A. The Company shall cause each such Registration Statement to be declared effective under the Securities Act as soon as possible but, in any event, by its Effectiveness
Date, and shall use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act during the entire Effectiveness Period. 
  
 (c) Promptly following any date on which the Company becomes eligible to use a registration statement on Form S-3 to
register the Registrable Securities for resale, the Company shall file a registration statement on Form S-3 covering the Registrable Securities (or a post-effective amendment on Form S-3 to the then effective Registration Statement) and shall cause
such Registration Statement to be declared effective as soon as possible thereafter, but in any event prior to the Effectiveness Date therefor. Such Registration Statement shall contain (except if otherwise required pursuant to written comments
received from the Commission upon a review of such Registration Statement) the “Plan of Distribution” attached hereto as Annex A. The Company shall cause such Registration Statement to be declared effective under the Securities Act
as soon as possible but, in any event, by its Effectiveness Date, and shall use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act during the entire Effectiveness Period. 
  
 (d) If: (i) a Registration Statement is not filed on or prior to its Filing
Date (if the Company files a Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) hereof, the Company shall not be deemed to have satisfied this clause (i)), or (ii) a
Registration Statement is not declared effective by the Commission on or prior to its required Effectiveness Date, or (iii) after its Effective Date, without regard for the reason thereunder or efforts therefore, such Registration Statement ceases
for any reason to be effective and available to the Holders as to all Registrable Securities to which it is required to cover at any time prior to the expiration of its Effectiveness Period for more than an aggregate of 40 Trading Days (which need
not be consecutive) (any such failure or breach being referred to as an “Event,” and for purposes of clauses (i) or (ii) the date on which such Event occurs, or for purposes of clause (iii) the date which such 40 Trading Day-period
is exceeded, being referred to as “Event Date”), then in addition to any other rights the Holders may have hereunder or under applicable law: on each such Event Date, and on each monthly anniversary of each such Event Date (if the
applicable Event shall not have been cured by such date) until the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as partial liquidated damages and not as a penalty, equal to 1.0% of the aggregate Investment
Amount paid by such Holder for Shares pursuant to the Purchase Agreement. The parties agree that the Company will not be liable for liquidated damages under this Section in respect of the Warrants. The partial liquidated damages pursuant to the
terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of an Event, except in the case of the first Event Date. 
  

 4 

 (e) Each Holder agrees to furnish to the Company a completed Questionnaire in the form attached to this
Agreement as Annex B (a “Selling Holder Questionnaire”). The Company shall not be required to include the Registrable Securities of a Holder in a Registration Statement and shall not be required to pay any liquidated or other
damages under Section 2(d) to any Holder who fails to furnish to the Company a fully completed Selling Holder Questionnaire at least two Trading Days prior to the Filing Date (subject to the requirements set forth in Section 3(a)). 
  
 3. Registration Procedures. 
  
 In connection with the Company’s registration obligations hereunder,
the Company shall: 
  
 (a) Not less than four Trading Days prior
to the filing of a Registration Statement or any related Prospectus or any amendment or supplement thereto, the Company shall furnish to each Holder copies of the “Selling Stockholders” section of such document, the “Plan of
Distribution” and any risk factor contained in such document that addresses specifically this transaction or the Selling Stockholders, as proposed to be filed which documents will be subject to the review of such Holder. The Company shall not
file a Registration Statement, any Prospectus or any amendments or supplements thereto in which the “Selling Stockholder” section thereof differs from the disclosure received from a Holder in its Selling Holder Questionnaire (as amended or
supplemented). 
  
 (b) (i) Prepare and file with the Commission
such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable
Securities for its Effectiveness Period and prepare and file with the Commission such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to
be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to each
Registration Statement or any amendment thereto and, as promptly as reasonably possible provide the Holders true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that would not result in
the disclosure to the Holders of material and non-public information concerning the Company; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the Registration Statements and the
disposition of all Registrable Securities covered by each Registration Statement. 
  
 (c) Notify the Holders as promptly as reasonably possible (and, in the case of (i)(A) below, not less than three Trading Days prior to such filing) and (if requested by any such Person) confirm such notice in writing
no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration 

  

 5 

 
Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a “review” of such Registration Statement and
whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders that pertain to the Holders as a Selling Stockholder or
to the Plan of Distribution, but not information which the Company believes would constitute material and non-public information); and (C) with respect to each Registration Statement or any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of
any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and (v) of the occurrence of any event or
passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus or any document incorporated or deemed to be incorporated
therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 
  
 (d) Use its reasonable best efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the
earliest practicable moment. 
  
 (e) Furnish to each Holder,
without charge, at least one conformed copy of each Registration Statement and each amendment thereto and all exhibits to the extent requested by such Person (including those previously furnished) promptly after the filing of such documents with the
Commission. 
  
 (f) Promptly deliver to each Holder, without
charge, as many copies of each Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. 
  
 (g) Prior to any public offering of Registrable Securities, to register or
qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of all
jurisdictions within the United States, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by the Registration Statements. 
  

 6 

 (h) Cooperate with the Holders to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statements, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such
Registrable Securities to be in such denominations and registered in such names as any such Holders may request. 
  
 (i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the affected Registration Statements or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter
delivered, no Registration Statement nor any Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. 
  
 4. Registration
Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and
expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with any Trading Market on which
the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without
limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. 
  
 5.
Indemnification. 
  
 (a) Indemnification by the
Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, agents, investment advisors, partners, members and employees of each of them, each Person who
controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of 

  

 7 

 
preparation and reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, arising out of or relating to any
untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or
to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto (it being understood that the Holder has approved Annex A hereto for this purpose) or (2) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus is outdated or defective and prior to the receipt by such Holder of an Advice or an
amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected. The Company shall
notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. 
  
 (b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising solely out of or based solely upon: (x) such Holder’s failure to comply with the prospectus delivery requirements of the
Securities Act or (y) any untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent that, (1) such untrue statements or omissions are based solely upon information regarding such Holder
furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and
expressly approved in writing by such Holder expressly for use in the Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective Prospectus after the Company has notified such Holder in writing that the Prospectus
is outdated or defective and prior to the receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement
or omission giving rise to such Loss would have been corrected. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. 
  

 8 

 (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against
any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying
Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party. 
  
 An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in writing to pay such fees and expenses; (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof
and such counsel shall be at the expense of the Indemnifying Party). The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. 
  
 All fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is
ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally
judicially determined that such Indemnified Party is not entitled to indemnification hereunder). 
  
 (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the 

  

 9 

 
amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party
shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. 
  
 The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were
determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder
shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that
such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. 
  
 The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties. 
  
 6. Miscellaneous. 
  
 (a) Remedies. In the event of a breach by the Company or by a Holder,
of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. 
  
 (b) No Piggyback on Registrations. Except as and to the extent specified in Schedule 3.1(u) to the Purchase
Agreement, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in a Registration Statement other than the Registrable Securities, and the Company shall
not during the Registration Period enter into any agreement providing any such right to any of its security holders. 
  

 10 

 (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. 
  
 (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company
of the occurrence of any event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the “Advice”) by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any
additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. 

 
 (e) Piggy-Back Registrations. If at any time during the
Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own
account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if
within fifteen calendar days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered,
subject to customary underwriter cutbacks applicable to all holders of registration rights. 
  
 (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this Section 6(f), may not be amended, modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of no less than a majority in interest of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a
majority of the Registrable Securities to which such waiver or consent relates. 
  
 (g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date
of transmission, if such notice or communication is delivered via facsimile (provided the sender receives a machine-generated confirmation of successful transmission) at the facsimile number specified in this Section prior to 6:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30
p.m. (New York City time) on any 

  

 11 

 
Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt
by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: 
  

			
	If to the Company:	  	 Flow International Corporation

	 	  	 23500 64th Avenue
South

	 	  	 Kent, Washington 98032

	 	  	 Attn: General Counsel

	 	  	 Facsimile: (253) 813-3280

		
	With a copy to:	  	 Preston, Gates & Ellis, LLP

	 	  	 925 Fourth Avenue, Suite 2900

	 	  	 Seattle, WA 98104

	 	  	 Attn.: Robert S. Jaffe

	 	  	 Facsimile: (206) 370-6092

		
	If to a Investor:	  	To the address set forth under such Investor’s name on the signature pages hereto.
	
	If to any other Person who is then the registered Holder:
		
	 	  	To the address of such Holder as it appears in the stock transfer books of the Company

  
 or such other address as may be
designated in writing hereafter, in the same manner, by such Person. 
  
 (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its
rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement. 
  
 (i) Execution and Counterparts. This Agreement may be executed in any
number of 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. In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. 
  
 (j) Governing Law. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees
that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) will be commenced in the New
York Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in 

  

 12 

 
connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any
Proceeding, any claim that it is not personally subject to the jurisdiction of any New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of
process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party
hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall
commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding. 
  
 (k)
Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. 
  
 (l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of
the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. 
  
 (m) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. 
  
 (n) Independent Nature of Investors’ Obligations and Rights. The obligations of each Investor under this Agreement are several and not joint with the obligations of each other Investor, and no Investor
shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement. Nothing contained herein or in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement or any other Transaction Document. Each Investor acknowledges that no other Investor will be acting as agent of such Investor in enforcing its rights under this Agreement. Each Investor shall be entitled to
independently protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Investor to be joined as an additional party in any Proceeding for such purpose. The
Company acknowledges that each of the Investors has been provided with the same Registration Rights Agreement for the purpose of 

  

 13 

 
closing a transaction with multiple Investors and not because it was required or requested to do so by any Investor. 
  
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGES TO FOLLOW] 
  

 14 

 IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first
written above. 
  

			
	FLOW INTERNATIONAL CORPORATION
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  
 [REMAINDER OF
PAGE INTENTIONALLY LEFT BLANK 
 SIGNATURE PAGES OF INVESTORS TO FOLLOW] 

 IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first
written above. 
  

			
	NAME OF INVESTING ENTITY
	  

	By:	 	  

	Name:	 	  

	Title:	 	  

	
	ADDRESS FOR NOTICE
		
	c/o:	 	  

		
	Street:	 	  

		
	City/State/Zip:	 	  

		
	Attention:	 	  

		
	Tel:	 	  

		
	Fax:	 	  

		
	Email:	 	  

  

 16 

 Annex A 
  
 Plan of Distribution 
  
 The Selling Stockholders and any of their pledgees, donees, transferees, assignees and successors-in-interest may, from time to time, sell any or all of
their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares: 
  

	•	 	ordinary brokerage transactions and transactions in which the broker-dealer solicits Investors; 

  

	•	 	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

  

	•	 	purchases by a broker-dealer as principal and resale by the broker-dealer for its account; 

  

	•	 	an exchange distribution in accordance with the rules of the applicable exchange; 

  

	•	 	privately negotiated transactions; 

  

	•	 	to cover short sales made after the date that this Registration Statement is declared effective by the Commission; 

  

	•	 	broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; 

  

	•	 	a combination of any such methods of sale; and 

  

	•	 	any other method permitted pursuant to applicable law. 

  
 The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. 
  
 Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The
Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. 
  
 The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Shares owned by them and, if they default in the
performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. 
  

 17 

 Upon the Company being notified in writing by a Selling Stockholder that any material arrangement has
been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of Common
Stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference
in this prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a Selling Stockholder that a donee or pledgee intends to sell more than 500 shares of Common Stock, a supplement to this
prospectus will be filed if then required in accordance with applicable securities law. 
  
 The Selling Stockholders also may transfer the shares of Common Stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes
of this prospectus. 
  
 The Selling Stockholders and any
broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or
agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, that can be attributed
to the sale of Securities will be paid by the Selling Stockholder and/or the purchasers. Each Selling Stockholder has represented and warranted to the Company that it acquired the securities subject to this registration statement in the ordinary
course of such Selling Stockholder’s business and, at the time of its purchase of such securities such Selling Stockholder had no agreements or understandings, directly or indirectly, with any person to distribute any such securities.

  
 The Company has advised each Selling Stockholder that it may
not use shares registered on this Registration Statement to cover short sales of Common Stock made prior to the date on which this Registration Statement shall have been declared effective by the Commission. If a Selling Stockholder uses this
prospectus for any sale of the Common Stock, it will be subject to the prospectus delivery requirements of the Securities Act. The Selling Stockholders will be responsible to comply with the applicable provisions of the Securities Act and Exchange
Act, and the rules and regulations thereunder promulgated, including, without limitation, Regulation M, as applicable to such Selling Stockholders in connection with resales of their respective shares under this Registration Statement. 

 
 The Company is required to pay all fees and expenses incident to the
registration of the shares, but the Company will not receive any proceeds from the sale of the Common Stock. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act. 
  

 18 

 Annex B 
  
 FLOW INTERNATIONAL CORPORATION 
  
 Selling Securityholder Notice and Questionnaire 
  
 The undersigned beneficial owner of common stock (the “Common Stock”), of Flow International Corporation (the “Company”) understands
that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a Registration Statement for the registration and resale of the Registrable Securities, in accordance with the terms of the
Registration Rights Agreement, dated as of             , 2005 (the “Registration Rights Agreement”), among the Company and the Investors named therein. A copy of the
Registration Rights Agreement is available from the Company upon request at the address set forth below. All capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

  
 The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate: 
  
 QUESTIONNAIRE 
  
 1. Name. 
  

			
	(a)	  	Full Legal Name of Selling Securityholder
	 	  	  

		
	(b)	  	Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held:
	 	  	  

		
	(c)	  	Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the
questionnaire):
	 	  	  

  
 2. Address for Notices to Selling
Securityholder: 
  

			
	  

	  

	  

	Telephone:	 	  

	Fax:	 	  

	Contact Person:	 	  

  

 19 

 3. Beneficial Ownership of Registrable Securities: 
  

	
	Type and Principal Amount of Registrable Securities beneficially owned:
	
	  

	  

	  

  
 4. Broker-Dealer Status:

  

			
	(a)	  	Are you a broker-dealer?
		
	 	  	Yes   ̈        No   ̈
		
	Note:	  	If yes, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
		
	(b)	  	Are you an affiliate of a broker-dealer?
		
	 	  	Yes   ̈        No   ̈
		
	(c)	  	If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable
Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?
		
	 	  	Yes   ̈        No   ̈
		
	Note:	  	If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

  
 5. Beneficial Ownership of Other
Securities of the Company Owned by the Selling Securityholder. 
  

			
	Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed
above in Item 3.
		
	 	  	Type and Amount of Other Securities beneficially owned by the Selling Securityholder:
		
	 	  	  

		
	 	  	  

		
	 	  	  

  

 20 

 6. Relationships with the Company: 
  

	
	Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the
undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.
	
	State any exceptions here:
	
	  

	  

  
 The undersigned agrees to promptly
notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof and prior to the Effective Date for the Registration Statement. 
  
 By signing below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items 1 through 6 and the inclusion of such information in the Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the
preparation or amendment of the Registration Statement and the related prospectus. 
  
 IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent. 
  

					
	Dated:                         	 	Beneficial Owner:
                                        
                
			
	 	 	By:	 	  

	 	 	Name:	 	 
	 	 	Title:	 	 

  
 PLEASE FAX A COPY OF THE COMPLETED
AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO: 
  
 [            ] 
  

 21 

  
 NEITHER THESE SECURITIES NOR THE SECURITIES
ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES. 
  
 FLOW INTERNATIONAL CORPORATION 
  
 WARRANT 
  

			
	Warrant No. [    ]	  	Original Issue Date: [    ], 2005

  
 Flow International
Corporation, a Washington corporation (the “Company”), hereby certifies that, for value received, [            ] or its registered assigns (the
“Holder”), is entitled to purchase from the Company up to a total of [            ] shares of Common Stock (each such share, a “Warrant Share” and all such
shares, the “Warrant Shares”), at any time and from time to time from and after the Original Issue Date and through and including [            ], 2010 (the
“Expiration Date”), and subject to the following terms and conditions: 
  
 1. Definitions. As used in this Warrant, the following terms shall have the respective definitions set forth in this Section 1. Capitalized terms that are used and not defined in this Warrant that are defined
in the Purchase Agreement (as defined below) shall have the respective definitions set forth in the Purchase Agreement. 
  
 “Business Day” means any day except Saturday, Sunday and any day that is a federal legal holiday in the United States or a day on which
banking institutions in the State of New York are authorized or required by law or other government action to close. 
  
 “Closing Price” means, for any date of determination, the price determined by the first of the following clauses that applies: (i) if the
Common Stock is then listed or quoted on a Trading Market, the closing bid price per share of the Common Stock for such date (or the 

 
nearest preceding date) on such market; (ii) if prices for the Common Stock are then quoted on the OTC Bulletin Board, the closing bid price per share of the
Common Stock for such date (or the nearest preceding date) so quoted; (iii) if prices for the Common Stock are then reported in the “Pink Sheets” published by the National Quotation Bureau Incorporated (or a similar organization or agency
succeeding to its functions of reporting prices), the most recent bid price per share of the Common Stock so reported; or (iv) in all other cases, the fair market value of a share of Common Stock as determined by an independent qualified appraiser
selected in good faith and paid for by the Company. 
  
 “Common Stock” means the common stock of the Company, par value $.01 per share, and any securities into which such common stock may hereafter be reclassified. 
  
 “Exercise Price” means $4.07, subject to adjustment in accordance with Section 9. 
  
 “Fundamental Transaction” means any of the following: (i)
the Company effects any merger or consolidation of the Company with or into another Person, (ii) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (iii) any tender offer or exchange
offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (iv) the Company effects any reclassification of the
Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property. 
  
 “Original Issue Date” means the Original Issue Date first set forth on the first page of this Warrant.

  
 “New York Courts” means the state and federal
courts sitting in the City of New York, Borough of Manhattan. 
  
 “Purchase Agreement” means the Securities Purchase Agreement, dated February [    ], 2005, to which the Company and the original Holder are parties. 
  
 “Trading Day” means (i) a day on which the Common Stock is
traded on a Trading Market (other than the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading Market (other than the OTC Bulletin Board), a day on which the Common Stock is traded in the over-the-counter market, as reported
by the OTC Bulletin Board, or (iii) if the Common Stock is not quoted on any Trading Market, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar
organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day. 
  
 “Trading Market” means whichever of the New York Stock
Exchange, the American Stock Exchange, the NASDAQ National Market, the NASDAQ SmallCap Market on which the Common Stock is listed or quoted for trading on the date in question. 
  
 “Warrant Equity Conditions Are Satisfied” means, as of any date of determination, that each of the
following conditions is (or would be) satisfied on such date, if the Company 

  

 2 

 
were to issue on such date all of the Warrant Shares then issuable upon exercise in full of all the Warrants: (i) the number of authorized but unissued and
otherwise unreserved shares of Common Stock is sufficient for such issuance, (ii) the Common Stock is listed or quoted (and is not suspended from trading) on a Trading Market and such shares of Common Stock are approved for listing on such market
upon issuance, (iii) such Common Stock is registered for resale under the Registration Statement and the prospectus under such Registration Statement is available for the sale of all Registrable Securities held by the Holder, and (iv) such issuance
would be permitted in full without violating Section 11 or the rules or regulations of the Trading Market on which the Common Stock is then listed or quoted for trading. 
  
 2. Registration of Warrant. The Company shall register this Warrant upon records to be maintained by the Company for
that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise
hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. 
  
 3. Registration of Transfers. The Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of
this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified herein. Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this
Warrant (any such new Warrant, a “New Warrant”), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any,
shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant. 
  
 4. Exercise and Duration of Warrants. 
  
 (a) This Warrant shall be exercisable by the registered Holder at any time
and from time to time from and after the six month anniversary of the Original Issue Date and through and including the Expiration Date. At 6:30 p.m., New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto
shall be and become void and of no value. Except as set forth in subsection (b) hereof, the Company may not call or redeem any portion of this Warrant without the prior written consent of the affected Holder. 
  
 (b) Subject to the provisions of this Section 4(b), commencing the six month
anniversary of the Original Issue Date, the Company may deliver a written notice (such notice, a “Company Exercise Notice”) to the Holder, stating its irrevocable election to cause the exercise at the Exercise Price of all (but not
less than all) of this Warrant if each of the following conditions are satisfied from the date of the Company Exercise Notice through the Company Exercise Date (as defined below): (i) the Closing Price of the Common Stock for each of the 20
consecutive Trading Days prior to such Company Exercise Notice exceeds 200% of the Exercise Price then in effect and (ii) the Warrant Equity Conditions Are Satisfied. Subject to the terms and conditions of this Section 4(b), the Company shall effect
the exercise of this Warrant pursuant to a Company Exercise Notice on the 5th Trading Day immediately succeeding the
date of the Company Exercise Notice (such fifth day, the “Company Exercise Date”). 

  

 3 

 
Notwithstanding anything to the contrary set forth in this Warrant, the Holder shall have the right to nullify a Company Exercise Notice if any of the
conditions set forth in this Section 4(b) shall not have been met on each date from the date of the Company Exercise Notice through the Company Exercise Date. The parties agree that all exercises of this Warrant that occur on the Company Exercise
Date will occur on a cashless exercise basis. The Company covenants to honor all Exercise Notices delivered prior to the Company Exercise Date. Notwithstanding the foregoing, the Company and the Holder agree that, if and to the extent Section 11 of
this Warrant would restrict the right of the Company to issue or the right of the Holder to receive any of the Warrant Shares otherwise issuable upon the conversion in respect of a Company Exercise Notice, then notwithstanding anything to the
contrary set forth in the Company Exercise Notice, the Company Exercise Notice shall be deemed automatically amended to apply only to such portion of this Warrant as would permit exercise in full in compliance with Section 11. The Holder will
promptly (and, in any event, prior to the Company Exercise Date) notify the Company in writing following receipt of a Company Exercise Notice if Section 11 would restrict its right to receive the full number of otherwise issuable Warrant Shares
following such Company Exercise Notice. 
  
 5. Delivery of
Warrant Shares. 
  
 (a) To effect exercises hereunder, the
Holder shall not be required to physically surrender this Warrant unless the aggregate Warrant Shares represented by this Warrant is being exercised. Upon (x) delivery of the Exercise Notice (in the form attached hereto) to the Company (with the
attached Warrant Shares Exercise Log) at its address for notice set forth herein and upon payment of the Exercise Price multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder and (y) the Company Exercise Date, the
Company shall promptly (but in no event later than three Trading Days after the Date of Exercise (as defined herein)) issue and deliver to the Holder, a certificate for the Warrant Shares issuable upon such exercise, which, unless otherwise required
by the Purchase Agreement, shall be free of restrictive legends. The Company shall, upon request of the Holder and subsequent to the date on which a registration statement covering the resale of the Warrant Shares has been declared effective by the
Securities and Exchange Commission, use its reasonable best efforts to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions, if available,
provided, that, the Company may, but will not be required to change its transfer agent if its current transfer agent cannot deliver Warrant Shares electronically through the Depository Trust Corporation. A “Date of Exercise”
means each of the (A) Company Exercise Date and (B) the date on which the Holder shall have delivered to the Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) if such
Holder is not utilizing the cashless exercise provisions set forth in this Warrant, payment of the Exercise Price for the number of Warrant Shares so indicated by the Holder to be purchased. 
  
 (b) If by the third Trading Day after a Date of Exercise the Company fails to
deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), then the Holder will have the right to rescind such exercise. 
  
 (c) If by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required
pursuant to Section 5(a), 

  

 4 

 
and if after such third Trading Day and prior to the receipt of such Warrant Shares, the Holder purchases (in an open market transaction or otherwise) shares
of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to the Holder the amount by
which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to
deliver to the Holder in connection with the exercise at issue by (B) the closing bid price of the Common Stock at the time of the obligation giving rise to such purchase obligation and (2) at the option of the Holder, either reinstate the portion
of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery
obligations hereunder. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect of the Buy-In. 
  
 (d) The Company’s obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of
any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment,
limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance
which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity
including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing Warrant Shares upon exercise of the Warrant as required pursuant to the
terms hereof. 
  
 6. Charges, Taxes and Expenses. Issuance
and delivery of Warrant Shares upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for
Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof.

  
 7. Replacement of Warrant. If this Warrant is
mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which shall not include a surety bond), if requested. Applicants for a New Warrant under such circumstances shall also comply with such
other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant
to the Company as a condition precedent to the Company’s obligation to issue the New Warrant. 
  

 5 

 8. Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep
available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which
are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of Persons other than the Holder (taking into account the adjustments and restrictions of Section
9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and
nonassessable. 
  
 9. Certain Adjustments. The Exercise
Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9. 
  
 (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a
smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall
be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to
receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. 
  
 (b) Fundamental Transactions. If, at any time while this Warrant is
outstanding there is a Fundamental Transaction, then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the “Alternate
Consideration”). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one
share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate
Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction. At the Holder’s option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall, either (1) 

  

 6 

 
issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder’s
right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof, or (2) purchase the Warrant from the Holder for a purchase price, payable in cash within five Trading Days after such request (or, if later, on the
effective date of the Fundamental Transaction), equal to the Black Scholes value of the remaining unexercised portion of this Warrant on the date of such request. The terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply with the provisions of this paragraph (b) and insuring that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction
analogous to a Fundamental Transaction. 
  
 (c) Number of
Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to this Section 9, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after
such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment. 
  
 (d) Calculations. All calculations under this Section 9 shall
be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock. 
  
 (e) Notice of Adjustments. Upon the occurrence of each adjustment
pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise
Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is
based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company’s Transfer Agent. 
  
 (f) Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect
of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits
stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and
conditions of such transaction (but only to the extent such disclosure would not result in the dissemination of material, non-public information to the Holder) at least 10 calendar days prior to the applicable record or effective date on which a
Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise
this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be
described in such notice. 
  

 7 

 10. Payment of Exercise Price. The Holder may pay the Exercise Price in one of the following
manners: 
  
 (a) Cash Exercise. The Holder may deliver
immediately available funds; or 
  
 (b) Cashless Exercise.
If an Exercise Notice is delivered at a time when a registration statement permitting the Holder to resell the Warrant Shares is not then effective or the prospectus forming a part thereof is not then available to the Holder for the resale of the
Warrant Shares, then the Holder may notify the Company in an Exercise Notice of its election to utilize cashless exercise, in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows: 
  
 X = Y [(A-B)/A] 
  
 where: 
  
 X = the number of Warrant Shares to be issued to the Holder. 
  
 Y = the number of Warrant Shares with respect to which this
Warrant is being exercised. 
  
 A = the average of the closing
prices for the five Trading Days immediately prior to (but not including) the Exercise Date. 
  
 B = the Exercise Price. 
  
 For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise
transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued. 
  
 11. Limitations on Exercise. Notwithstanding anything to the contrary
contained herein, the number of Warrant Shares that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other
issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d)
of the Exchange Act, does not exceed 9.999% of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be
determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. This provision shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to
determine the amount of securities or other consideration that such Holder may receive in the event of a Fundamental Transaction as contemplated in Section 9 of this Warrant. This restriction may not be waived. 
  

 8 

 12. No Fractional Shares. No fractional shares of Warrant Shares will be issued in connection with
any exercise of this Warrant. In lieu of any fractional shares which would, otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the closing price of one Warrant Share as reported by the applicable
Trading Market on the date of exercise. 
  
 13. Notices.
Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally
recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be: (i) if to the Company, to Flow International Corporation, Attn: President, or
to Facsimile No.: (253) 813-3285 (or such other address as the Company shall indicate in writing in accordance with this Section), or (ii) if to the Holder, to the address or facsimile number appearing on the Warrant Register or such other address
or facsimile number as the Holder may provide to the Company in accordance with this Section. 
  
 14. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon 10 days’ notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or
any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of
its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by
first class mail, postage prepaid) to the Holder at the Holder’s last address as shown on the Warrant Register. 
  
 15. Miscellaneous. 
  
 (a) This Warrant shall be binding on and inure to the benefit of the parties hereto and their respective successors and assigns. Subject to the preceding
sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the
Company and the Holder and their successors and assigns. 
  
 (b)
All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York (except for matters governed by
corporate law in the State of Delaware), without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of this Warrant and the transactions herein
contemplated (“Proceedings”) (whether brought against a 

  

 9 

 
party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the New York Courts. Each party hereto hereby irrevocably
submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal
service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it
under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each
party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant or the transactions contemplated hereby. If either party
shall commence a Proceeding to enforce any provisions of this Warrant, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorney’s fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such Proceeding. 
  
 (c) The
headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof. 
  
 (d) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute
therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant. 
  
 (e) Prior to exercise of this Warrant, the Holder hereof shall not, by reason of by being a Holder, be entitled to any rights of a stockholder with respect to the Warrant Shares 
  
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK, 
 SIGNATURE PAGE FOLLOWS] 
  

 10 

 IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as
of the date first indicated above. 
  

			
	FLOW INTERNATIONAL CORPORATION
		
	By:	 	  

	Name:	 	 
	Title:	 	 

  

 11 

 EXERCISE NOTICE 
 FLOW INTERNATIONAL CORPORATION 
 WARRANT DATED [    ], 2005 
  
 The undersigned Holder hereby irrevocably elects to purchase
                     shares of Common Stock pursuant to the above referenced Warrant. Capitalized terms used herein and not otherwise defined
have the respective meanings set forth in the Warrant. 
  
 (1) The undersigned
Holder hereby exercises its right to purchase                      Warrant Shares pursuant to the Warrant. 
  
 (2) The Holder intends that payment of the Exercise Price shall be made as (check one):

  
                      “Cash Exercise” under Section 10 
  
                               “Cashless Exercise” under Section 10 

 
 (3) If the holder has elected a Cash Exercise, the holder shall pay the sum of
$____________ to the Company in accordance with the terms of the Warrant. 
  
 (4)
Pursuant to this Exercise Notice, the Company shall deliver to the holder                      Warrant Shares in accordance with the terms of
the Warrant. 
  
 (5) By its delivery of this Exercise Notice, the undersigned
represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in excess of the number of shares of Common Stock (determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934) permitted to be owned under Section 11 of this Warrant to which this notice relates. 
  

					
	Dated:             ,     	 	Name of Holder:
			
	 	 	(Print)	 	  

			
	 	 	By:	 	  

			
	 	 	Name:	 	  

			
	 	 	Title:	 	  

		
	 	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)

  

 12 

 Warrant Shares Exercise Log 
  

							
	 Date

	  	 Number of Warrant
 Shares Available
 to be Exercised

	  	 Number of Warrant
 Shares Exercised

	  	 Number of Warrant
 Shares Remaining
 to be Exercised

  

 13 

 FLOW INTERNATIONAL CORPORATION 
 WARRANT ORIGINALLY ISSUED [    ], 2005 
 WARRANT NO.
[    ] 
  
 FORM OF ASSIGNMENT 
  
 [To be completed and signed only upon transfer of Warrant] 
  
 FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
                             the right represented by the above-captioned Warrant to purchase
                 shares of Common Stock to which such Warrant relates and appoints
                             attorney to transfer said right on the books of the Company with full
power of substitution in the premises. 
  

			
	Dated:             ,     	 	  

	 	 	(Signature must conform in all respects to name of holder as specified on the face of the Warrant)
	 	 	  

	 	 	Address of Transferee
	 	 	  

	 	 	  

  

			
	In the presence of:
	  

  

 14AGREEMENT AND GENERAL RELEASE

       THIS AGREEMENT AND GENERAL RELEASE ("Agreement") is entered into by and between Mark G. Morrison on his/her own behalf and on behalf of his/her representatives, attorneys, heirs, executors, administrators, successors and assigns (hereinafter collectively, "Employee"), and Footstar Corporation, on behalf of itself, Footstar, Inc., and each of their respective subsidiaries, affiliates, divisions, officers, directors, employees, agents, representatives, attorneys, successors and assigns (hereinafter "Footstar" and/or "Company"). In consideration of the covenants, conditions and obligations set forth herein the parties agree as follows: 

	
1.      

	
Employee's last day of work with the Company and date of separation shall be January 31, 2005. 

	 
	
2.      

	
Subject to the terms of this Agreement Footstar agrees to pay Employee the following sums in accordance with Key Employee Retention Plan (KERP) established by order of the U.S. Bankruptcy Court of the Southern District of New York in May 2004 within 14 days of separation; provided, however, Footstar is in receipt of a fully executed copy of this Agreement and the requisite revocation period set forth in Paragraph (28) has expired: 

	 
	 	
a)      

	
KERP payment of $410,000.00 (Four Hundred Ten Thousand Dollars and 00/Cents); 

	 
	 	
b)      

	
Sum of $615,525.00 (Six Hundred Fifteen Thousand Five Hundred Twenty Five Dollars and 00/Cents) representing severance benefits of 78 weeks pay. 

	 
	 	
c)      

	
The amounts described in paragraph 2 (a)-(b) above shall be paid in one lump sum payment less all required withholdings and/or deductions. 

	 
	
3.      

	
2003 Bonus Payment: Employee acknowledges receipt of the 2003 bonus payment in the amount of $127,350.00 (One Hundred Twenty Seven Thousand Three Hundred Fifty Dollars and 00/Cents), less required withholdings and/or deductions which was paid via direct deposit on or about December 1, 2004. 

	 
	
4.      

	
Footstar agrees not to contest any claim by Employee for unemployment benefits. 

	 
	
5.      

	
Employee Benefit Plans: Employee shall be permitted to continue to participate in the Medical and Dental Plans ("Plans" or "Plan") that were in effect for the Employee on the day immediately preceding 

	 

	
1

	
Initials MGM
DWH

	
      

	
Employee's separation for a period of (18) months from the date of separation1.  Notwithstanding anything to the contrary contained herein, it is agreed and understood that in the event medical and/or dental insurance coverage becomes available as a result of obtaining other employment, then in that event, Employee shall promptly notify the Company and the medical and dental insurance coverage described herein shall cease upon the effective date of the new coverage. It is further understood and agreed that Footstar, in its sole discretion, may from time to time, during the period following Employee's separation, increase or decrease the monthly contributions or change Plan provisions. If such changes are implemented, Employee's contributions and/or coverage will change in the same manner as
for other active employees participating in the Plan. The medical benefit continuation referred to in this paragraph will be provided through COBRA. Employee contributions for this coverage will remain at the same level an active employee pays under the group plan. If medical coverage is elected beyond this period, the full COBRA rates will apply. Employee will not be entitled to participate in the Company's short term or long term disability plans or its life insurance program after January 31, 2005. 

	 

	
6.      

	
Outplacement Services: The Company will provide Outplacement Services for the Employee through Right Management Consultants following Employee's last day of employment for a period of 18 months from the date of separation. 

	 
	
7.      

	
401 (k) Profit Sharing Plan: Employee shall not be permitted to make contributions to his/her 401(k) account after January 31, 2005. 

	 
	
8.      

	
Stock Options: Employee shall continue to vest in any outstanding stock options through the date of separation and shall have ninety (90) days following the date of the last payment pursuant to Paragraph (2) to exercise such stock options pursuant to the terms of such options. Employee shall not be eligible for any additional stock option grants and shall forfeit any stock options not then vested and/or exercised. 

	 
	
9.      

	
Switch to Equity Plan (STEP): Employee shall receive as soon as practicable after January 31, 2005 100% of the Employee's deferred vested shares. 

	
____________________

1 Medical and dental plan deductions at their current levels will be deducted from Employee's lump sum payment for the first quarter of 2005. In the event Employee obtains coverage during the first quarter of 2005 the company shall issue a refund (for the amounts deducted) on a pro-rata basis. In the event Employee elects to continue coverage beyond the first quarter of 2005 for the remaining months of the 16 month period he will be responsible for all payments at the active rate. If Employee elects to continue coverage after the end of the first quarter of 2005 he must submit in writing (at least (2) weeks prior to the end of the quarter) a notice of intent to continue coverage and the company shall invoice Employee .The same process shall continue for any remaining quarters. In the event Employee obtains coverage during any quarter, the Company shall issue a refund of amounts paid on a pro-rata
basis. 

	
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	10.      	Disposition of Stock. Employee acknowledges that he shall be responsible for complying with any and all applicable laws related to his disposition of Company stock. 
	 
	
11.      

	It is agreed that the sums paid in accordance with Paragraph (2) and (3) shall be deemed to include and shall constitute full payment for any and all vacation, vacation pay, incentive compensation, severance compensation, bonuses, commissions, draws and other forms of compensation to which Employee may be entitled, and whether earned or calculated on a pro rata basis; except for any unused, accrued vacation time and any claim Employee may have filed with the Bankruptcy Court for the 2004 Cash Performance Incentive (CPI) payment provided Employee has filed a valid Proof of Claim with the Bankruptcy Court for such CPI payment within the established deadline. Employee acknowledges that the validity of any CPI claim will be determined through the bankruptcy process. 
	 
	12.      	In consideration for the Company's agreement to the provisions and payment of amounts set forth in this Agreement: 
	 
	 	(A)      	Employee expressly releases and forever discharges the Company and its representatives, agents, predecessors, successors, parent companies, subsidiaries, affiliates, principals and insurers- but as to insurers, retains any rights he may have under Paragraph 15 below- (and their current and former officers, directors, employees, agents, shareholders, successors and assigns), and any and all employee benefit plans (and any fiduciary of such plans) sponsored by any of them, and all other persons, firms or corporations who might be claimed to be liable by Employee, from any and all claims, actions, causes of action, losses, damages (including actual, liquidated, compensatory, punitive or other damages), demands, promises, agreements, obligations, costs, expenses and attorneys fees, known or unknown, which Employee now has or may later discover or which may hereafter exist against them, or any of them, in connection with or arising directly or indirectly out of or in
any way related to any and all matters, transactions, events or other things occurring prior to the effective date of this Agreement, including those arising out of or in connection with Employee's employment or employment agreement with Footstar or arising out of events, facts or circumstances which either preceded, flowed from or followed the cessation of Employee's employment with Footstar, or which occurred during the course of Employee's employment with Footstar or incidental thereto, and including but not limited to any arising under Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination In Employment Act of 1967, as amended; the Civil Rights Act of 1991, as amended; the Employee Retirement Income Security Act of 1964, as amended; the Family and Medical Leave Act, as amended; 42 U.S.C. Sections 1981 through 1988; CEPA (N.J.S.A. 34:19-1 et .seq.); the Occupational Safety and Health Act; the Worker Adjustment and Retraining Notification (WARN) Act; the

	 

	
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	 	American's with Disabilities Act; the Fair Credit Reporting Act; the Immigration Reform Control Act; the National Labor Relations Act; or under any other federal, state or local civil or human rights law or any other local, state or federal law, ordinance and regulation, or under any public policy, contract, tort or common law. Notwithstanding the foregoing, should any third party institute any action, suit or proceeding, or threaten to institute any action, suit or proceeding, against Employee by reason of the fact that Employee was a director, officer, or employee of the Company, Employee reserves all rights to assert any and all claims as defenses, set-offs, and the like against any third party in response to such actual or threatened action, suit or proceeding. Notwithstanding the foregoing, Employee does not release any claim he/she may have for any 2004 CPI payment provided
Employee has filed a valid Proof of Claim with the Bankruptcy Court within the established deadline. 
	 
	         (B)      	Except as to his Proof of Claim for any 2004 CPI payment, Employee affirms that Employee has not filed, caused to be filed, and presently is not a party to any claim, complaint or action against the Company in any forum or form. Except as to his Proof of Claim for any 2004 CPI payment, Employee further affirms that Employee has been paid and/or has received all leave (paid or unpaid), compensation, wages, bonuses2, commissions, and/or benefits to which Employee may have been entitled and that no other leave (paid or unpaid), compensation, wages, bonuses, commissions and/or benefits are due to Employee. Employee furthermore affirms that Employee has no known workplace injuries or occupational diseases and had been provided and/or has not been denied any leave requested under
the Family Medical Leave Act and/or any other federal, state or local leave law. Employee further affirms Employee has not complained of and is not aware of any fraudulent activity or any act(s) which would form the basis of a claim of fraudulent or illegal activity against the Company. In the event Employee is subject to subpoena, court order or otherwise compelled to testify, appear or provide information regarding the Company, within (3) days of Employee's receipt of said subpoena, court order or other notification, Employee will provide written notice, via facsimile transmission and mail to Footstar, 933 MacArthur Blvd., Mahwah, NJ 07430 Attention: Legal Department; Facsimile Number (201) 934-2270 to the Company without regard to who brought the action, suit, cause of action or claim. 
	 
	_______________________

2  By accepting the Retention Payment benefits Employee has waived the right to receive any additional bonuses.

	
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	         (C)      	Employee understands and agrees that the Employment Agreement between Footstar and Employee and all Employee's rights there under are null and void. 
	 
	         (D)      	Employee understands and agrees that the claims released and discharged herein are forever waived and relinquished by this Agreement, and that this Agreement expressly contemplates the total extinguishment of any and all such claims. Employee further understands and agrees that Employee has no right or claim to employment with Footstar at any time after the effective date of this Agreement. Employee specifically acknowledges that this provision applies equally to all persons and entities described in Paragraph 12(A) above as well as to Footstar itself.
	 

	13.      	Employee covenants and agrees that on Employee's date of separation Employee shall return any and all property, including all copies or duplicates thereof belonging to the Company, including but not limited to keys, security cards, equipment, computer disks, tapes, electronic media, documents, supplies, customer lists, and customer information, confidential documents, etc. A breach of this provision shall be considered a material breach of this Agreement. 
	 
	14.      	Employee agrees to cooperate with the Company by making himself/herself available to testify on behalf of the Company or any subsidiary or affiliate of the Company, in any action, suit or proceeding whether civil, criminal, administrative or investigative, and to assist the Company or any subsidiary, or affiliate of the Company, in any action, suit or proceeding by providing information and meeting and consulting with Company representatives or counsel or any subsidiary or affiliate of the Company as reasonably requested. The Company agrees to reimburse Employee, for all reasonable and necessary out of pocket expenses incurred in connection with his provision of testimony or assistance (excluding attorneys fees Employee may incur because of retention of counsel, independent of Employer's counsel, to assist in any threatened or pending litigation unless such attorneys fees are governed by Paragraph 15 below). The Company's reimbursement shall occur within thirty (30) days of
receiving a receipt for Employee's reasonable expenses. A breach of this provision will be considered a material breach of this Agreement. 
	 
	15.      	Liability Insurance. Indemnification. The Company acknowledges that Employee was covered by the Company's Director's & Officers liability insurance policy, and certain of the Company's other liability policies during the course of his employment as an Officer of the Company. The Company agrees that if the Employee is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil or criminal (a "Proceeding"), by reason of the fact that he was a director, officer or Employee of the Company, the Employee shall be held harmless to the fullest extent legally permitted or authorized by the Company's Director's & Officer's liability insurance policy, and/or any other applicable liability insurance policy and/or as may have been authorized by the Company pursuant to its certificate  
	 

	
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	 	of incorporation or bylaws or resolutions of the Company's Board of Directors to the extent permitted by law and/or any applicable bankruptcy proceedings against all cost, expense, liability and loss (including without limitation, reasonable and necessary defense costs, attorneys fees, judgments, fines, or penalties and amounts paid or to be paid in the settlement) reasonably incurred or suffered by the Employee in connection therewith. 
	 
	16.      	Employee represents and agrees that Employee will keep confidential the terms and execution of this Agreement. The sole exceptions to this confidentiality provision are for communications to Employee's immediate family, personal attorney (and attorney's employees), accountant or financial advisor, or as required by law and then, only on the condition that Employee shall advise such person or entity that the terms of the Agreement are confidential and further disclosure is prohibited. Moreover, Employee shall be entitled to disclose to prospective future employers, the dates of Employee's employment with the Company, amounts of compensation received by Employee from the Company and that Employee was not terminated by the Company for cause. A breach of this provision shall be considered a material breach of this Agreement. 
	 
	17.      	Employee agrees that Employee will make no statements or remarks to anyone, including any of Employee's potential employers or to the Company suppliers, vendors or customers, about Footstar or any of the entities and persons described in Paragraph 12(A) above, that are disparaging, derogatory or defamatory to them. A breach of this provision shall be considered a material breach of this Agreement. 
	 
	18.      	Employee agrees that in Employee's position as Senior Vice President, Human Resources, Employee has been made privy to certain confidential information, proprietary property and trade secrets of the Company and that disclosure or use by Employee of such information, property or trade secrets would damage the Company. Employee agrees that he will hold in confidence and will not, without the Company's prior written permission or as required by law, use, disclose or disseminate (or act so as to cause the use, disclosure or dissemination of) any such confidential information, property or trade secrets. The obligations set forth in this provision shall not apply to any confidential information, property or trade secrets, which have become generally known to the public through no act or limitation upon the Employee. 
	 
	19.      	
Employee agrees that in the event Employee materially breaches or violates any provision of this Agreement then the Company, in addition to any other rights or remedies it may have, shall have no obligation to make any further payments otherwise due Employee pursuant to this Agreement and the Company shall be entitled to seek injunctive relief and/or compensatory damages and to seek recovery from Employee any sums paid or expenses incurred by the Company on behalf of the Employee pursuant 

	 

	
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	 	to this Agreement without reinstatement of any claim or demand Employee has settled through this Agreement; provided, however, this provision does not apply to any claims brought pursuant to the Age Discrimination in Employment Act or the Older Worker's Benefits Protection Act. 
	 
	20.      	Nothing contained in this Agreement, or the fact the parties have signed the Agreement and exchanged the consideration provided hereunder, should be construed to be an admission of liability of wrongdoing on the part of either party. Moreover, neither this Agreement or anything herein shall be admissible in any proceedings as evidence of, or an admission by, the Company of any violation of any federal, state or local laws, or of their own policies or procedures. This Agreement shall not be admissible in any forum except to secure enforcement of its terms and conditions, or as required by law. 
	 
	21.      	No waiver of any breach of any term or conditions of this Agreement shall be or shall be construed to be a waiver of any other breach of this Agreement. No waiver shall be binding under this Agreement unless in writing and signed by the party waiving such breach. 
	 
	22.      	This Agreement shall be construed according to and governed by the laws of the State of New Jersey and all disputes governing this Agreement shall be brought in a court of competent jurisdiction in the State of New Jersey. 
	 
	23.      	If any of the provisions, terms, clauses or waivers or releases of claims or rights contained in this Agreement are declared illegal, unenforceable, or ineffective in a legal forum, all other provisions, terms, clauses and waivers and releases of claims and rights contained in the Agreement shall remain valid and binding upon both parties, and the Court shall have the power to modify the invalid and unenforceable provisions in a manner which most closely fulfills the intent and terms of this Agreement as herein set forth. 
	 
	24.      	This Agreement may not be changed, altered and/or modified except by a writing signed by Employee and the Company. 
	 
	25.      	The parties agree that this Agreement may be executed in counterparts, each of which shall be deemed to constitute an executed original. 
	 
	26.      	
In the event it shall be determined that there is ambiguity contained in this Agreement, said ambiguities shall not be construed against any party hereto as a result of such party's preparation of this Agreement, but shall be construed in favor or against either of the parties hereto in light of all the facts, circumstances and intentions of the parties at the time this Agreement goes into effect. 

	 

	
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	27.      	Employee acknowledges that Employee has been provided with, and has read a copy of the Agreement. Employee further acknowledges that Employee has had a period of twenty one (21) days to examine the terms and conditions contained in this Agreement and has been advised to consult with an attorney before signing this Agreement and Employee has used as much of the aforesaid twenty one (21) day period as he/she desired before entering into this Agreement. Employee further acknowledges that Employee has executed this Agreement freely and voluntarily, without fraud, duress or undue influence of any kind or nature whatsoever. 
	 
	28.      	
Notwithstanding anything to the contrary contained in this Agreement Employee shall have the right to revoke this Agreement for a period of seven (7) days following execution of the Agreement by both parties. It is agreed and understood that this Agreement will not become effective until the expiration of the seven (7) day period. In the event Employee elects to revoke this Agreement, upon revocation, this Agreement shall be deemed null and void and Employee shall not receive payment hereunder. Revocation should be made by providing notice to the Company in accordance with Paragraph 29 below, which notice must be received by Footstar no later than the close of business on the seventh (7th) day after the date upon which the Agreement is executed by both parties. 

	 
	29.      	All notices or other communications shall be deemed to be given if delivered by hand, sent via overnight delivery (for which a receipt is obtained), or mailed (certified or registered mail), with postage prepaid as follows: 
	 
	 	To Employee: 7 Arrowhead Drive, Monroe, CT 06468, or to such other person and/or place as Employee may designate in writing to the Company. 
	 
	 	To Company: 933 MacArthur Blvd., Mahwah, NJ 07430Attn: Senior Vice President Human Resources, or such other persons and/places as the Company may designate in writing to Employee. 
	 
	30.      	This Agreement shall be binding and shall inure to the benefit of the parties and their respective heirs, legal representatives, successors and assigns. 
	 
	31.      	The Company represents and warrants that it is authorized and empowered to enter into this Agreement and that the performance of its obligations under this Agreement will not violate any Agreement between it and any other person, firm or organization. 
	 

 

	
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EMPLOYEE ACKNOWLEDGES AND AGREES THAT EMPLOYEE HAS READ AND UNDERSTANDS THIS

AGREEMENT, AND THAT EMPLOYEE HAS SIGNED THIS AGREEMENT VOLUNTARILY FOR THE

PURPOSES OF RECEIVING ADDITIONAL BENEFITS FROM THE COMPANY BEYOND THOSE

PROVIDED BY COMPANY POLICY. 
 

              IN WITNESS WHEREOF, the parties hereto have executed this Agreement consisting of 9 pages

including this signature page. 

	 

FOOTSTAR:  

	  	EMPLOYEE:  
	  
	By: /s/ Dale W. Hilpert                         	  	     By: /s/ Mark G. Morrison                      
	     Dale Hilpert  	  	
              Mark G. Morrison  

	
      Chief Executive Officer  

	  	  
	  
	Sworn and subscribed  	  	     Sworn and subscribed  
	before me on this  	  	     before me on this  
	17th day of February, 2005 	  	     14th day of February, 2005 
	 
	 
	 	 	 
	/s/ Joan H. Koch                                       		     /s/ Sandra S. Spremullo                          
	Notary Public, New Jersey  	  	     Notary Public, Connecticut  
	My Commission Expires: May 19, 2008  	  	     My Commission Expires: August 31, 2008 

	
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