Document:

Prepared by R.R. Donnelley Financial -- Amendment 6 to Amended & Restated Credit Agreement

  
 Exhibit 10.2 
 AMENDMENT NUMBER SIX 
 TO 
 AMENDED
AND RESTATED CREDIT AGREEMENT 
  
 THIS AMENDMENT NUMBER SIX TO AMENDED AND RESTATED CREDIT AGREEMENT (this
“Amendment”) is made as of August 23, 2002, by and among BANK OF AMERICA, N.A., a national banking association, U.S. BANK NATIONAL ASSOCIATION, a national banking association, KEYBANK NATIONAL ASSOCIATION, a national banking association
(“Lenders”), BANK OF AMERICA, N.A., as agent for the Lenders (“Agent”); and FLOW INTERNATIONAL CORPORATION, a Washington corporation (“Borrower”). 
  
 RECITALS 
  
 A.  Lenders, Agent
and Borrower are parties to that certain Amended and Restated Credit Agreement dated as of December 29, 2000, as amended by that certain Amendment Number One to Amended and Restated Credit Agreement dated as of February 28, 2001, that certain
Amendment Number Two to Amended and Restated Credit Agreement dated as of May 30, 2001, that certain Amendment Number Three to Amended and Restated Credit Agreement dated as of July 31, 2001, that certain Amendment Number Four to Amended and
Restated Credit Agreement dated as of December 13, 2001 and that certain Amendment Number Five to Amended and Restated Credit Agreement dated as of July 26, 2002 (the “Credit Agreement”). 
  
 B.  John Hancock Life Insurance Company and the other Noteholders and Company are parties to that certain agreement to purchase
the Company’s 13% Senior Subordinated Notes dated as of April 30, 2001 (the “Note Purchase Agreement”); 
  
 C.  The Note Purchase Agreement provides for Noteholders to obtain subordinated guaranties from any subsidiaries of Company that execute guaranties in favor of Lenders; 
  

D.  As a condition to the effectiveness of an amendment to the Note Purchase Agreement requested by Company, Noteholders have required Company and certain of
its subsidiaries to grant Noteholders a security interest in the property that secures the Credit Agreement; 
  
 E.  In the absence of this Amendment, the Credit Agreement would prohibit Company from granting the security interest required by Noteholders; and 
  
 F.  The execution and delivery of that certain Intercreditor Agreement among Noteholders, Lenders, Agent, Company and Guarantors is one of the material conditions
to the effectiveness of this Amendment, 
  
 NOW, THEREFORE, the parties hereto agree as follows: 

  
 AGREEMENT 
  
 1.  Definitions.    Capitalized terms not otherwise defined in this Amendment shall have the meaning set forth in the Credit
Agreement. 
  
 2.  Amendment to Credit Agreement. 
  
 (a)  Amendment to Section 1.1.    Section 1.1 of the Credit Agreement is hereby amended as follows:

  
 (i)  Amendment of Definition of
“Collateral.”    The definition of “Collateral” is hereby amended by deleting it entirely and replacing it with the following: 
  
 “Collateral” means all personal or real property in which any of the Security Documents now or hereafter create or purport to create a
Lien. 
  
 (ii)  Addition of Definition of “Control
Agreement.”    The definition of “Control Agreement” is hereby added to the Credit Agreement as follows: 
  
 “Control Agreement” means an agreement in substantially the form of Exhibit K hereto or any other agreement in form and substance
acceptable to Agent which gives Agent “control” over the Deposit Accounts for purposes of perfecting Agent’s security interest therein. 
  
 (iii)  Addition of Definition of “Deeds of Trust.”    The definition of “Deeds of Trust” is hereby
added to the Credit Agreement as follows: 
  
 “Deeds of Trust” means (i) the Indiana
Mortgage; (ii) when executed and delivered by the Borrower, Washington Deed of Trust; and (iii) any other real estate mortgages or deeds of trust from time to time executed by Borrower or any Guarantor to secure any of the obligations under the Loan
Documents. 
  
 (iv)  Addition of Definition of “Deposit
Accounts.”    The definition of “Deposit Accounts” is hereby added to the Credit Agreement as follows: 
  
 “Deposit Accounts” means the Deposit Accounts (as defined therein) in which the Security Agreement or Guarantor Security Agreement creates or purports to create a security interest.

  
 (v)  Addition of Definition of “Environmental Indemnity
Agreement.”    The definition of “Environmental Indemnity Agreement” is hereby added to the Credit Agreement as follows: 
  
 “Environmental Indemnity Agreement” means that certain Environmental Indemnity Agreement dated as of the date of the Sixth Amendment by and
among Borrower, Lenders, Agent and in substantially the form of Exhibit F attached hereto. 
 

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 (vi)  Addition of Definition of “Financial
Transaction Obligations.”    The definition of “Financial Transaction Obligations” is hereby added to the Credit Agreement as follows: 
  
 “Financial Transactions Obligations” means all indebtedness, liabilities and obligations of Borrower to Bank of America or any Affiliate of
Bank of America now or hereafter existing, whether joint or several, direct or indirect, absolute or contingent or due or to become due, arising under or in connection with any agreement (including all schedules thereto, confirmations of
transactions thereunder, and documents, definitions, and agreements incorporated therein by reference or relating thereto) pursuant to which Bank of America has agreed to permit daylight overdrafts to occur on accounts maintained by Borrower with
Bank of America, provide remote disbursement services for Borrower, process automated clearing house (ACH) transactions for the account of Borrower or extend credit to Borrower, in the form of credit card accounts, including, without limitation, any
interest due thereon, all fees, costs, and expenses incurred by Bank of America in connection therewith, and termination payments and indemnifications relating thereto. 
  
  (vii)  Addition of Definition of “Guarantor Documents.”    The definition of “Guarantor Documents”
is hereby added to the Credit Agreement as follows: 
  
 “Guarantor Documents” means
the Guaranty, the Guarantor Security Agreement and, when executed and delivered, any Deed of Trust executed by any Guarantor. 
  
 (viii)  Addition of Definition of “Guarantor Security Agreement.”    The definition of “Guarantor Security Agreement” is hereby added to the
Credit Agreement as follows: 
  
 “Guarantor Security Agreement” means that
certain Security Agreement dated as of the date of the Sixth Amendment executed by, or otherwise binding upon, current and future Guarantors in favor of Agent and Lenders in substantially the form of Exhibit H attached hereto. 

 
 (ix)  Amendment to Definition of “Guarantors.”     The
definition of “Guarantor” is hereby amended by deleting it entirely and replacing it with the following: 
  
 “Guarantors” means the Domestic Subsidiaries listed on Schedule 7 to the Security Agreement and any other Domestic Subsidiary that from time to time executes and delivers a supplement in the form attached
to, or otherwise becomes bound by, the Guaranty. 
  
 (x)  Addition of Definition of
“Guaranty.”    The definition of “Guaranty” is hereby added to the Credit Agreement as follows: 
  
 “Guaranty” means the Guaranty dated as of the date of the Sixth Amendment executed by Guarantors in favor of Agent and Lenders, and 
 

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 by any additional Guarantors from time to time in accordance with this Agreement,
in substantially the form of Exhibit G attached hereto. 
  
 (xi)  Addition of
Definition of “Indiana Mortgage.”    The definition of “Indiana Mortgage” is hereby added to the Credit Agreement as follows: 
  
 “Indiana Mortgage” means that certain Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of the date
of the Sixth Amendment executed by Borrower in favor of Agent and Lenders covering certain real property located in Indiana in substantially the form of Exhibit E attached hereto. 
  
 (xii)  Amendment to definition of “Intercreditor Agreement.”    The definition of “Intercreditor
Agreement” is hereby deleted and replaced with the following: 
  
 “Intercreditor
Agreement” means that certain Intercreditor Agreement dated as of the date of the Sixth Amendment by and among Borrower, Lenders, Agent, Guarantors and Noteholders in substantially the form of Exhibit I attached hereto. 

 
 (xiii)  Amendment to Definition of “Loan Documents.”    The
definition of “Loan Documents” is hereby deleted and replaced with the following: 
  
 “Loan Documents” means this Agreement, the Notes, the Letters of Credit, the Reimbursement Agreements, the Security Documents, the Guaranty, the Environmental Indemnity Agreement and all other certificates,
instruments and other documents executed by or on behalf of Borrower or any Guarantor in connection with this Agreement or the transactions contemplated hereby (including, without limitation, the Control Agreements when executed and delivered).

  
 (xiv)  Addition of Definition of “New Borrower
Documents.”    The definition of “New Borrower Documents” is hereby added to the Credit Agreement as follows: 
  
 “New Borrower Documents” means the Sixth Amendment, the Notes, the Security Agreement, the Pledge Agreement, the Indiana Mortgage, the
Environmental Indemnity Agreement, and the Intercreditor Agreement. 
  
 (xv)  Addition
of Definition of “New UCC Financing Statements.”    The definition of “New UCC Financing Statements” is hereby added to the Credit Agreement as follows: 
  
 “New UCC Financing Statements” means the UCC financing statements filed or to be filed to perfect,
or otherwise relating to, to security interests created by the Security Agreement, the Pledge Agreement or the Guarantor Security Agreement. 
 

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 (xvi)  Addition of Definition of “Noteholders.”    The
definition of “Noteholders” is hereby added to the Credit Agreement as follows: 
  
 “Noteholders” means John Hancock Life Insurance Company, John Hancock Variable Life Insurance Company, Signature 4 Limited, and Signature 5 L.P. 
  
 (xvii)  Addition of Definition of “Pledge Agreement.”    The definition of “Pledge Agreement” is
hereby added to the Credit Agreement as follows: 
  
 “Pledge Agreement” means that
certain pledge agreement dated as of the date of the Sixth Amendment executed by Borrower in favor of Bank of America as agent for Lenders in substantially the form of Exhibit C attached hereto. 
  
 (xviii)  Amendment to Definition of “Security Agreement.”    The definition
of “Security Agreement” is hereby deleted and replaced with the following: 
  
 “Security Agreement” means that certain Amended and Restated Security dated as of the date of the Sixth Amendment executed by Borrower in favor of Agent in substantially the form of Exhibit B attached hereto.

  
 (xix)  Addition of Definition of “Security
Documents.”    The definition of “Security Documents” is hereby added to the Credit Agreement as follows: 
  
 “Security Documents” means the Security Agreement, the Pledge Agreement, the Deeds of Trust, the Guaranty Security Agreement, and the UCC Financing Statements. 
  
 (xx)  Addition of Definition of “Sixth Amendment.”    The definition of
“Sixth Amendment” is hereby added to the Credit Agreement as follows: 
  
 “Sixth
Amendment” means that certain Amendment Number Six to Amended and Restated Credit Agreement dated as of August 23, 2002 among Borrower, Lenders and Agent. 
  
 (xxi)  Amendment to Definition of “UCC Financing Statements.”    The definition of “UCC Financing
Statements” is hereby deleted and replaced with the following: 
  
 “UCC Financing
Statements” means the UCC Financing (as defined in this Agreement prior to the date of the Sixth Amendment) together with the New UCC Financing Statements. 
  
 (xxii)  Addition of Definition of “Washington Deed of Trust.”    The definition of “Washington Deed of
Trust” is hereby added to the Credit Agreement as follows: 
  
 “Washington Deed of
Trust” means that certain Deed of Trust, Security Agreement and Financing Statement to be executed by Borrower in favor of Agent and Lenders covering certain real property located in Washington state in substantially the form of Exhibit
D attached hereto. 
 

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 (b)  Amendment to Section
2.9—Notes.    The second and third sentences in Section 2.9 are deleted. The first sentence of Section 2.9 is hereby amended and restated to read as follows: 
  

The Revolving Loans shall be evidenced by promissory notes of Borrower substantially in the forms attached hereto as Exhibits A-1,
A-2, and A-3 to the Sixth Amendment. 
  
 (c)  Amendment to Section
2.13—Application of Payments.    Section 2.13 of the Credit Agreement is hereby amended by replacing the first sentence with the following: 
  
 Any payment by Borrower hereunder shall be applied first, against fees, expenses and indemnities due hereunder; second, against interest then due in respect
of any Loan; third, against amounts due under Section 3.4 hereof; fourth, against any Financial Transaction Obligations; and thereafter, ratably against amounts owing under Swap Documents and Loan principal. 
  
 (d)  Amendment to Section 4.2—Conditions to All Loans and Issuances of Letters of
Credit.    Section 4.2 is hereby amended by adding a new subsection (e) as follows: 
  
 (e)  Neither the Agent nor any Lender shall have received from the Borrower or any Guarantor any notice terminating or purporting to terminate any Guarantor’s obligations under the Guaranty to which it
is a party or claiming that any such Guaranty is not or will in the future not be fully enforceable against each Guarantor in accordance with their terms. 
  
 (e)  Amendment to Section 5.5—Litigation.    Section 5.5 is hereby amended and restated to read as follows: 
  
 There are no actions, proceedings, investigations, or claims against or affecting Borrower or any Guarantor now pending
before any court, arbitrator or Governmental Authority (nor to the knowledge of Borrower has any thereof been threatened nor does any basis exist therefor) which might reasonably be determined adversely to Borrower or such Guarantor and which, if
determined adversely, would be likely to have a material adverse effect on the financial condition or operations of Borrower or any Guarantor or to impair Agent’s lien on the Collateral or Borrower’s or any Guarantor’s rights therein,
except as described on Schedule 5.5 to the Sixth Amendment. 
  
 (f)   Amendment to Section 5.6—Lien
Priority.    Section 5.6 of the Credit Agreement is hereby amended deleting it entirely and replacing it with the following: 
  
 Lien Priority.    On the date any Loan is made or any Letter of Credit is issued hereunder, each Security Document will
constitute a valid and perfected lien of first priority in and to all the Collateral and will be enforceable against all third parties in all jurisdictions as security for all obligations which such Security Document purports to secure.

 

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 (g)  Amendment to Section 5.16—Real
Property.    The following is added as a new Section 5.16. 
  
 Real
Property.    Schedule 5.16 to the Sixth Amendment accurately identifies all real property and real property interests (including leasehold interests) owned by Borrower and each Guarantor as of the date of the Sixth Amendment.

  
 (h) Amendment to Section 6.8—Insurance.    Section 6.8 of the Credit Agreement is
hereby amended by replacing the reference to “Security Agreement” with “Security Documents.” 
  
 (i)  Amendment to Section 6.16—Guaranties and Security Agreements from Subsidiaries.    Section 6.16 of the Credit Agreement is hereby amended by deleting it entirely and replacing it with
the following: 
  
 Guaranties and Security Agreements from
Subsidiaries.    After any person becomes a Domestic Subsidiary of Borrower and unless Agent and the Majority Lenders provide prior written consent to the contrary, such Domestic Subsidiary shall execute and deliver to Agent,
promptly upon Agent’s request: (a) a supplement to the Guaranty, unconditionally guarantying Borrower’s obligations under the Loan Documents, (b) a supplement to the Guarantor Security Agreement granting Agent for its benefit and the
ratable benefit of Lenders, a first priority and exclusive security interest in all personal property of such Domestic Subsidiary, (c) Deeds of Trust granting Agent for its benefit and the ratable benefit of Lenders, a first priority and exclusive
lien in all real property of such Domestic Subsidiary, (d) a copy of a resolution adopted by the Board of Directors of such Domestic Subsidiary authorizing the execution, delivery, and performance of the Guaranty, Guarantor Security Agreement and
any such Deed of Trust, and (e) such other documents and agreements as Agent may reasonably request. All of the foregoing documents shall be in form and substance satisfactory to Agent. Each such Domestic Subsidiary shall be referred to herein as a
“Guarantor.” 
  
 (j)  Amendment to Section 7.5—Liens.    Section
7.5 of the Credit Agreement is hereby amended by deleting it entirely and replacing it with the following: 
  
 Liens.    Neither Borrower nor any Guarantor shall create, assume or suffer to exist any Lien except (a) liens pursuant to the Security Documents, (b) existing Liens reflected in the balance sheet referred
to in Section 5.7, (c) Liens described on Schedule 7.5 to the Sixth Amendment, (d) the Junior Security Interest (as defined in the Intercreditor Agreement), but such Junior Security Interest shall be permitted only so long as the Intercreditor
Agreement is in effect, and (e) with respect to any Guarantor, liens pursuant to the Guarantor Security Agreement. 
 

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 (k)  Amendment to Section 8.1(o)—Events of
Default.    Section 8.1(o) of the Credit Agreement is hereby amended by deleting it entirely and replacing it with the following: 
  
 (o)  Additional Event of Default.    It shall be an additional Event of Default: 
  
 (1)  if any of the following has not occurred within 30 days after the date of the Sixth Amendment: 
  
 (i)  Agent shall have received evidence of Agent’s perfected first priority lien in all of Borrower’s
and Guarantors’ property located outside the United States (or in such portion of such property as Agent may request); 
  
 (ii)  notices of Agent’s security interest in all of Borrower’s and Guarantors’ registered patents and trademarks and applications for patents and trademarks shall have been
filed with the applicable Governmental Authority; 
  
 (iii)  Borrower shall have duly
executed and delivered the Washington Deed of Trust to Agent and Borrower and each Guarantor shall have granted Agent a lien on their interests in all other real property located in the United States (or in such portion of such property as Agent may
request); 
  
 (iv)  Agent shall have received evidence satisfactory to it that (A) the
liens referred to in clause (iii) above have been duly authorized, are enforceable against the grantor and all third parties, and have priority over all other Liens against such property other than Liens consented to by Agent, and (B) Borrower or
the applicable Guarantor has obtained all such consents or approvals from third parties as may be required in connection with the grant of each such lien; 
  
 (v)  Agent shall have received Control Agreements, duly executed by the parties thereto perfecting Agent’s security interest in all Deposit
Accounts; 
  
 (vi)  (A)  Avure Technologies, Inc. shall have duly issued share
certificates evidencing all ownership interests therein; (B) Borrower shall have executed and delivered to Agent a Supplement (as defined in the Pledge Agreement) pledging such shares to Agent; (C) Borrower shall have delivered such share
certificates to Agent together with assignments separate from certificate duly executed by Borrower in blank; and (D) Agent shall have received evidence satisfactory to it that such issuance, execution and delivery were duly authorized and effective
and that 
 

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 Agent has a perfected security interest in all such shares free of all Liens
other than those expressly permitted by this Agreement; 
  
 (vii) (A) Agent shall have received
evidence that all conditions to the attachment of Agent’s security interest in Borrower’s ownership interests in Flow Autoclave Systems, Inc., a Delaware corporation (“Flow Autoclave”) have been satisfied and that Agent has a
perfected first priority security interest in all such ownership interests of Borrower; (B) Borrower shall have delivered to Agent all share certificates evidencing Borrower’s ownership of Flow Autoclave together with assignments separate from
certificate duly executed by Borrower in blank; (C) Flow Autoclave shall have become a party to and bound by the Guaranty and Guarantor Security Agreement through the execution and delivery to Agent of Supplements (as defined in each such
agreement); and (D) Agent shall have received evidence satisfactory to it that the security interests granted by Flow Autoclave under the Guarantor Security Agreement are perfected first priority security interests free of all Liens other than those
expressly permitted by this Agreement; provided, however, a Event of Default shall not occur if any of clauses (A) through (D) of this subsection (vii) are not fulfilled notwithstanding the best efforts of Borrower. 

 
 (viii)  (A) Borrower shall have delivered to Agent share certificates evidencing Borrower’s
ownership interest in CIS Acquisition Corporation (“CIS”) and Flow Waterjet Florida Corporation (“Flow Waterjet”) together with assignments separate from certificate duly executed by Borrower in blank; (B) the shares of CIS and
Flow Waterjet shall have been added to the Pledge Agreement through a Supplement as contemplated thereby; and (C) Agent shall have received evidence satisfactory to it that Agent’s security interests Borrower’s ownership interest in CIS
and Flow Waterjet are perfected first priority security interests free of all Liens other than those expressly permitted by this Agreement; 
  
 (ix)  (A) Borrower shall have delivered to Agent share certificates evidencing 65% of Borrower’s ownership interest in each of the Foreign Subsidiaries (as defined in the Pledge
Agreement) together with assignments separate from certificate duly executed by Borrower in blank; (B) all such shares and ownership interests shall have been added to the Pledge Agreement through a Supplement as contemplated thereby; and (C) Agent
shall have received evidence satisfactory to it that Agent’s security interests Borrower’s ownership interest in all such Foreign Subsidiaries are perfected first priority security interests free of all Liens other than those expressly
permitted by this Agreement; 
 

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 (x)   All Waived Conditions (as defined below) shall
have been fulfilled to Agent’s satisfaction. “Waived Conditions” means any of the Conditions to Effectiveness set forth in Section 3 of the Sixth Amendment that were waived by Agent for the purposes thereof or otherwise not been
fulfilled in connection with effectiveness of the Sixth Amendment; 
  
 (xi)  Agent shall
have received from Borrower a completed Schedule 4 (Patents and Patent Licenses) and Schedule 5 (Trademarks and Trademark Licenses) to the Guarantor Security Agreement; 
  
 (xii)  Agent shall have received such other evidence as it may deem necessary or appropriate that all documents executed and/or delivered and all
actions taken pursuant to clauses (i) through (xi) above have been duly authorized and are legally effective, binding and enforceable; 
  
 (xiii)  Agent shall have received a legal opinion from Borrower’s counsel (acceptable to Agent) in substantially in the form of Exhibit J-2 hereto or otherwise covering, to
Agent’s satisfaction, all matters covered by the opinion attached hereto as Exhibit J-1 that have not, in Agent’s opinion, been adequately addressed by the opinion of counsel delivered in connection with the Sixth Amendment; and

  
 (xiv)  Borrower and Guarantors shall have provided such additional information
concerning their real and personal property and assets as Agent may request; or 
  
 (2)  if
Borrower has not cooperated with Agent in conducting a collateral exam of inventory and accounts receivable, at Borrower’s expense, by October 31, 2002. 
  
 (l)  Amendment of Section 8.1—Events of Default.    Section 8.2 of the Credit Agreement is hereby amended by adding the word “or” after subsection
(o) and adding the following new sections: 
  
 (p)  Guarantor Default; Invalidity of
Guaranty.    (i) Any Guarantor shall fail to perform or observe any covenant, obligation or term of any Guarantor Document and such failureshall continue unremedied after the applicable grace period, if any, specified
therein; (ii) any misrepresentation or breach of any warranty by any Guarantor under any Guarantor Document shall occur; (iii) any of the events or circumstances referred to in Section 8.1(e) through 8.1(n) whose occurrence or existence would
constitute a Default or an Event of Default with respect to Borrower shall occur or exist with respect to any Guarantor; or (iv) any Guarantor 
 

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 Document shall for any reason be revoked or invalidated, or otherwise cease to be in full force and
effect (except as expressly permitted hereunder) in respect of any Guarantor, or any Guarantor or any other Person shall contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder;
or 
  
 (q)  Impairment of Security.    Any Security Document ceases to be in
full force and effect, or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect; or the Agent shall not have or shall cease to have a valid and perfected Lien of first priority in the
Collateral purported to be covered thereby. 
  
 3.  Conditions to
Effectiveness.    This Amendment (other than Sections 2(j)) shall become effective upon the fulfillment to Agent’s satisfaction (or Agent’s waiver) of all of the following conditions: 
  
 (a)  New Documents.    The New Borrower Documents (other than the Intercreditor Agreement) and the
Guarantor Documents shall have been duly executed and delivered by the parties thereto. 
  
 (b)  Security Interest and Lien.    Agent shall have received evidence of perfection and the first priority of the security interest and liens created by the Security Documents and the absence of
any other Liens on the Collateral other than those expressly permitted by the Credit Agreement. 
  
 (c)  Borrower and Guarantor Authority.    Agent shall have received in form and substance satisfactory to it (i) copies of the Articles of Incorporation and Bylaws of Borrower and each Guarantor,
certified by the Secretary of Borrower or such Guarantor, as applicable; (ii) a copy of a resolution adopted by the Board of Directors of Borrower authorizing the execution, delivery and performance of the New Borrower Documents, certified by the
Secretary of Borrower; (iii) a copy of a resolution adopted by the Board of Directors of each Guarantor authorizing the execution, delivery and performance of the Guarantor Documents, certified by the Secretary of the applicable Guarantor; (iv)
evidence of the authority and specimen signatures of the persons who have signed the New Borrower Documents and the Guarantor Documents on behalf of Borrower and each Guarantor; (v) a Certificate of Good Standing dated as of a recent date issued by
the Secretary of State of Washington in respect of Borrower; (vi) a Certificate of Good Standing dated as of a recent date issued by the Secretary of State of each Guarantor’s state of incorporation and (vii) such other evidence of corporate
authority as Agent shall reasonably require. 
  
 (d)  Legal
Opinion.    Agent on behalf of each Lender shall have received a legal opinion of counsel to Borrower reasonably acceptable to Agent, substantially in form of Exhibit J-1 hereto. 
  
 (e)  Fees and Expenses.    Borrower shall have paid Agent for all fees and expenses (including
attorneys’ fees) incurred in connection with this Sixth Amendment. 
 

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 Section 2(j) of this Amendment (amending Section 7.5 of the Credit Agreement) shall become effective
when the Conditions to Effectiveness set forth above have been fulfilled to Agent’s satisfaction (or waived by Agent) and, in addition, the Intercreditor Agreement shall have been executed and delivered by the parties thereto. 

 
 3.  Representations and Warranties.    Borrower hereby represents and warrants to the
Lenders and Agent that each of the representations and warranties set forth in Article 5 (as amended herein) of the Credit Agreement is true and correct in each case as if made on and as of the date of this Amendment and Borrower expressly agrees
that it shall be an additional Event of Default under the Credit Agreement if any representation or warranty made hereunder shall prove to have been incorrect in any material respect when made. 
  
 4.  Release and Waiver.    Borrower ratifies and reconfirms the Loan Documents (as amended herein)
and all of its obligations and liabilities thereunder and hereby waives and releases any and all defenses that either of them may now have or hereafter acquire with respect to the Loan Documents based on or otherwise relating to any events or
circumstances which occurred or existed on or prior to the date hereof. Borrower hereby releases and forever discharges the Agent and the Lenders, their respective affiliates, and their respective officers, directors, agents and employees from every
claim, demand and cause of action whatsoever, of every kind and nature, whether presently known or unknown, suspected or unsuspected, arising or alleged or to have risen or which shall arise hereafter from any act, omission or condition which
occurred or existed on or prior to the date of this Amendment. 
  
 5.  No Further
Amendment.    Except as expressly modified by the terms of this Amendment, all of the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect and the parties hereto
expressly reaffirm and ratify their respective obligations thereunder. 
  
 6.  Fees and
Expenses.    Immediately upon the execution and delivery of this Amendment, Borrower shall have paid Agent for all fees and expenses (including attorneys’ fees) incurred in connection herewith. 

 
 7.  Governing Law.    This Amendment shall be governed by and construed in accordance with
the laws of the State of Washington. 
  
 8.  Counterparts.    This
Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original, and all of which taken together shall constitute one and the same
agreement. 
  
 9.  Oral Agreements Not Enforceable. 
  
 ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW. 
 

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 IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number Six to
Amended and Restated Credit Agreement as of the date first above written. 
  
 
	 BORROWER: 
 	 	  	 	 FLOW INTERNATIONAL CORPORATION
 
	 
	  	 	  	 	  	 	  
 By:
 	 	  
 

	  	 	  	 	  	 	  	 	 Michael R. O’Brien
 Chief
Financial Officer
 
	  	 	  	 	  
	 
	  	 	  	 	  	 	 By:
 	 	 

	  	 	  	 	  	 	  	 	 John Leness
 General Counsel
and Secretary
 
	 
	 LENDERS:
 	 	  	 	 BANK OF AMERICA, N.A. 
 
	 
	  	 	  	 	  	 	 By:
 	 	  
 

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

	  	 	  	 	  	 	  	 	 Elizabeth C. Hengeveld
 Vice
President
 
	 
	  	 	  	 	 KEYBANK NATIONAL ASSOCIATION

	 
	  	 	  	 	  	 	 By:
 	 	  
 

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

	  	 	  	 	  	 	  	 	 Ken Puro
 Vice
President
 

 
 

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 Schedule 5.5 
 (to Sixth Amendment) 
  
 Litigation 
  
 In addition to a number of product liability matters, all of which involve insured losses, the following contractual dispute is pending:

  
 Robotic Production Technology, Inc. v. Flow International Corporation, U.S. District Court, E.D. Mich.
Case No. 99-74659. 
 

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 Schedule 5.16 
 (to Sixth Amendment) 
  
 Real Property and Real Property Interests 

 
 Borrower Real Property 
  
 
	 Name and Location
 of
Property
 
	 	 Fee Owner/Lessor
 
	 	 Nature of Borrower’s
 Interest (if not Fee)
 

	 ASI Manufacturing Facility 1635
 Production Road,
 Jeffersonville, Indiana 47130
  
 	 	 Borrower
 	 	 Fee Simple
 
	 Corporate Offices
 23500
64th Avenue South
 Kent, Washington 98032
  
 	 	 Property Reserve, Inc.
 	 	 Leasehold Interest
 
	 Technical Center
 23307
66th Avenue South
 Kent, Washington 98032
  
 	 	 Security Capital Industrial Trust
 	 	 Leasehold Interest
 
	 CIS Robotics Location
 Demo Lab/Training
 30000 Beck Road
 Wixom,
Michigan 48393
  
 	 	 Andrew B. Pelto, Trustee
 	 	 Leasehold Interest
 
	 HydroDynamic Cutting
 Services Location
 207 Nolan Road
 Broussard,
Louisiana
  
 	 	 To be provided by Borrower
 	 	 Leasehold Interest
 

 
  
 Guarantor’s Real Property 
  
 
	 Name of Guarantor
 
	 	 Name and Location of Property
 
	 	 Fee Owner/Lessor
 
	 	 Nature of Guarantor’s
 Interest (if not Fee)
 

	 Avure Technologies, Inc.
 	 	 Corporate Offices
   Southwind Office Center
   Building A
   8245 Tournament Dr.
   Memphis, Tennessee 38125
 	 	 Highwoods/Tennessee Holdings, LP
 	 	 Leasehold Interest
 

 
 

 15 

  
 Schedule 7.5 
 (to Sixth Amendment) 
 Liens 
  
 The following liens, as amended, continued or assigned: 
  
 1.  UCC-1 filed on September 15, 1994 with the Washington Department of Licensing against Borrower as debtor by U.S. Bancorp Leasing & Financial as secured party under Filing No. 942580397 covering certain leased
equipment comprised of one new okuma MC-40VB vertical machining center and related controls and attachments describe therein subject to that certain Lease Agreement dated February 26, 1993. 
  
 2.  UCC-1 filed on August 25, 1997 with the Washington Department of Licensing against Borrower as debtor by Panasonic Communications, assigned to Sanwa Leasing
Corp., as secured party under Filing No. 972370362 covering certain leased equipment comprised of a copy machine. 
  
 3.  UCC-1 filed on March 23, 1998 with the Washington Department of Licensing against Borrower as debtor by Panasonic Communications, assigned to Sanwa Leasing Corp., as secured party under Filing No. 980820100 covering
certain leased equipment comprised of a fax machine. 
  
 4.  UCC-1 filed on April 29, 1999 with the
Washington Department of Licensing against Borrower as debtor by Panasonic Communications, assigned to Fleet Leasing Corp., as secured party under Filing No. 991190205 covering certain leased equipment comprised of a fax machine. 

 
 5.  UCC-1 filed on May 24, 1999 with the Washington Department of Licensing against Borrower as debtor by Panasonic
Communications, assigned to Fleet Leasing Corp., as secured party under Filing No. 991440209 covering certain leased equipment comprised of a copy machine. 
  
 6.  UCC-1 filed on July 6, 1999 with the Washington Department of Licensing against Borrower as debtor by Winthrop Resources Corp., as secured party under Filing No. 991870742 covering
certain leased equipment comprised of AS/400. 
  
 7.  UCC-1 filed on October 21, 1999 with the Washington
Department of Licensing against Borrower as debtor by Winthrop Resources Corp., assigned to Fleet Business Credit Corp., as secured party under Filing No. 992940139 covering certain leased equipment comprised of computer and network equipment.

  
 8.  UCC-1 filed on November 17, 1999 with the Michigan Department of State against Borrower as debtor
by Crown Credit Company, as secured party under Filing No. D588465. 
  
 9.  UCC-1 filed on June 22, 2000
with the Washington Department of Licensing against Borrower as debtor by PCL Leasing Corp., assigned to U.S. Bank, National 
 

 16 

  
 Association, as secured party under Filing No. 20001740030 covering certain leased equipment comprised
of computer and network equipment. 
  
 10.  UCC-1 filed on August 10, 2000 with the Washington Department
of Licensing against Borrower as debtor by Winthrop Resources Corp. as secured party under Filing No. 20002230274, and assigned to U.S. Bankcorp Leasing & Financial on April 2, 2001, as secured party under Filing No. 20010920111 covering certain
leased equipment comprised of computer and network equipment. 
  
 11.  UCC-1 filed on November 11, 2000
with the Washington Department of Licensing against Borrower as debtor by Winthrop Resources Corp. as secured party under Filing No. 20003180416, and assigned to U.S. Bankcorp Leasing & Financial on April 2, 2001, as secured party under Filing
No. 20010920113 covering certain leased equipment comprised of computer and network equipment. 
  
 12.  UCC-1 filed on December 12, 2001 with the Washington Department of Licensing against Borrower as debtor by Minolta Business Solutions, as secured party under Filing No. 200200459558 covering certain leased equipment
comprised of a copy machine. 
  
 13.  UCC-1 filed on April 13, 2001 with the Washington Department of
Licensing against Borrower as debtor by Jules and Associates, Inc., assigned to TCF Leasing, Inc., as secured party under Filing No. 20011030227 covering certain leased equipment comprised of manufacturing equipment. 
  
 14.  UCC-1 filed on February 22, 2002 with the Michigan Department of State against Borrower as debtor by Trumpf, Inc., as
secured party under Filing No. D876799. 
 

 17Prepared by R.R. Donnelley Financial -- 2nd Amendment to Note Purchase Agmt. dated 9/13/02

  
 Exhibit 10.3 
  
 SECOND AMENDMENT TO NOTE PURCHASE AGREEMENTS 
  
 This SECOND AMENDMENT, dated as of September 13, 2002, to the separate Note Purchase Agreements, each dated as of April 30, 2001, is by and among Flow International Corporation, a Washington corporation (the
“Company”), John Hancock Life Insurance Company, John Hancock Variable Life Insurance Company, Signature 4 Limited and Signature 5 L.P. (collectively, the “Noteholders”). Capitalized terms used herein without
definition shall have the meanings set forth in the Note Purchase Agreements referred to below (including as amended hereby). 
  
 RECITALS: 
  
 A.  The Company and the Noteholders have heretofore entered into the
separate Note Purchase Agreements, each dated as of April 30, 2001, as amended by the First Amendment to Note Purchase Agreements dated as of December 14, 2001 (as amended, the “Note Purchase Agreements”), under and pursuant to
which there are outstanding (a) the Company’s 13% Senior Subordinated Notes, due April 30, 2008, in the aggregate principal amount of $35,000,000 (the “Notes”) and (b) certain Warrants to purchase common stock of the Company
(the “Warrants”). 
  
 B.  The Company and the Noteholders now desire to amend the Note
Purchase Agreements and the Notes in the respects, but only in the respects, hereinafter set forth. 
  
 C.  The Company and the Noteholders agree that the amendments to the Note Purchase Agreements and the Notes contemplated in this Second Amendment are being made in connection with a plan of reorganization pursuant to
Section 368 of the Code. 
  
 NOW, THEREFORE, the Company and the Noteholders, for good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, do hereby agree as follows: 
  
 SECTION
1.    Amendments. 
  
 Section 1.1.  Monthly
Statements.    Section 7.1 of the Note Purchase Agreements shall be amended by deleting the “.” at the end of paragraph (h) and by inserting in lieu thereof “; and” and by adding after paragraph (h) a new
paragraph (i) to read as follows: 
  
 “(i)  Monthly Statements—as soon as
available and in any event within 30 days after the end of each calendar month, a comparison of the Company’s consolidated financial statement to the financial projection for that month.” 
  
 Section 1.2.  Funded Debt Ratio.    Section 9.6 of the Note Purchase Agreements shall be amended in
its entirety by inserting in lieu thereof the following: 

  
 “Section 9.6.  Fixed Charge Coverage
Ratio.    For each four consecutive fiscal quarters, the Company shall maintain, on a consolidated basis, a Fixed Charge Coverage Ratio of at least (a) 0.86 to 1 as at the fiscal quarter ending April 30, 2002, (b) 0.51
to 1 as at the fiscal quarter ending July 31, 2002, unless the Company repays the remaining balance of any amounts owing to under the Senior Private Placement Agreement prior to July 31, 2002, in which case the Fixed Charge Coverage Ratio shall be
at least 0.82 to 1, (c) 0.65 to 1 as at the fiscal quarter ending October 31, 2002, (d) 0.72 to 1 as at the fiscal quarter ending January 31, 2003, (e) 1.16 to 1 as at the fiscal quarter ending April 30, 2003 and (f) 1.25 to 1 as at the fiscal
quarters ending July 31, 2003 and thereafter. 
  
 As used herein: 
  
 ‘Fixed Charge Coverage Ratio’ shall mean the quotient obtained by dividing (a) the sum of Cash Flow by
(b) the sum of Fixed Charges. 
  
 ‘Cash Flow’ shall mean the Company’s net
income after taxes, plus interest expense, depreciation and amortization, and, with respect to the fiscal quarter ending April 30, 2002, the after-tax charge of $3,711,000 to the extent deducted from net income after taxes, and less the aggregate
amount of any dividend issued. and less the aggregate amount of any dividends issued. 
  
 ‘Fixed Charges’ shall mean the Company’s interest expense, plus its Current Portion of Long-Term Debt. 
  
 ‘Current Portion of Long-Term Debt’ shall mean any portion of the Company’s long-term debt which will be due within 12 months from the
date of determination; provided that the Current Portion of Long-Term Debt shall not include any Indebtedness of the Company (i) under the Senior Credit Agreement, (ii) under the German line of credit which is supported by a letter of credit
issued under the Senior Credit Agreement, or (iii) under the current Swedish Crown $50,000,000 Pressure Systems line of credit.” 
  
 Section 1.3.  Funded Debt Ratio.    Section 9.7 of the Note Purchase Agreements shall be amended in its entirety by inserting in lieu thereof the following: 
  
  “Section 9.7.  Funded Debt Ratio.    As of the end of each fiscal
quarter, the Company shall maintain, on a consolidated basis, a Funded Debt Ratio of not more than (a) 9.06 to 1 as at the fiscal quarter ending April 30, 2002, (b) 26.40 to 1 as at the fiscal quarter ending July 31, 2002, (c) 42.35 to 1 as at the
fiscal quarter ending October 31, 2002, (d) 26.95 to 1 as at the fiscal quarter ending January 31, 2003, (e) 8.96 to 1 as at the fiscal quarter ending April 30, 2003 and (f) 6.22 to 1 as at the fiscal 
 

 2 

  
 quarter ending July 31, 2003 and (g) 5.00 to 1 as at the fiscal quarters ending
October 31, 2003 and thereafter. 
  
 As used herein: 
  
 ‘Funded Debt Ratio’ shall mean as of the end of any fiscal quarter, the quotient obtained by dividing (a) Funded Debt as of the end of such
fiscal quarter by (b) the EBITDA for such quarter and the three immediately preceding fiscal quarters, plus, in the event that the Company has acquired any Subsidiaries during such fiscal quarter or during the immediately preceding three
fiscal quarters, the EBITDA of such Subsidiaries from the first day of the immediately preceding three fiscal quarters through the date of acquisition of each Subsidiary. 
  
 ‘EBITDA’ shall mean pre-tax net income (or pre-tax net loss) of the Company and its Subsidiaries, plus, the sum of (i) interest expense,
(ii) depreciation expense, (iii) depletion expense, (iv) amortization expense, and (v) with respect to the fiscal quarter ending April 30, 2002, the pre-tax charge of $5,623,000 to the extent deducted from pre-tax net income.” 

 
 Section 1.4.  Senior Funded Debt Ratio.    Section 9.9 of the Note Purchase Agreements
shall be amended in its entirety by inserting in lieu thereof the following: 
  
  “Section
9.9.  Senior Funded Debt Ratio.    The Company shall maintain, on a consolidated basis, a Senior Funded Debt Ratio of not more than (a) 5.78 to 1 as at the fiscal quarter ending April 30, 2002, (b) 17.33 to 1
as at the fiscal quarter ending July 31, 2002, (c) 28.60 to 1 as at the fiscal quarter ending October 31, 2002, (d) 18.15 to 1 as at the fiscal quarter ending January 31, 2003, (e) 6.00 to 1 as at the fiscal quarter ending April 30, 2003, (f) 4.29
to 1 as at the fiscal quarter ending July 31, 2003, and (g) 3.50 to 1 as at the fiscal quarters ending October 31, 2003 thereafter. 
  
 As used herein, ‘Senior Funded Debt Ratio’ shall mean, as of the end of any fiscal quarter, the quotient obtained by dividing (A) Senior Funded Debt as of the end of such fiscal
quarter by (B) the EBITDA for such quarter and the three immediately preceding fiscal quarters, plus, in the event that the Company has acquired any Subsidiaries during such fiscal quarter or during the immediately preceding three fiscal
quarters, the EBITDA of such Subsidiaries from the first day of the immediately preceding three fiscal quarters through the date of acquisition of each Subsidiary.” 
  
 Section 1.5.  Additional Covenants.    New Sections 9.11, 9.12, 10.12 and 10.13, are hereby added to the Note Purchase Agreements to
read as follows: 
 

 3 

  
  “Section 9.11.  Agreement to Provide
Subsidiary Guaranties and Collateral.    (a) On or before September 20, 2002, the Company shall deliver, or cause to be delivered, to the Noteholders (or an agent on their behalf): 
  
 (i)  duly executed Subsidiary Guaranties from each Subsidiary which delivered a Guaranty in favor of the lenders
under the Senior Credit Agreement (a “Subsidiary Guarantor”), and each other item required in connection with the delivery of such Subsidiary Guaranties, all as contemplated in Section 9.10 of this Agreement; and

  
 (ii)  all security documents and related filings in form and substance satisfactory to
the Noteholders necessary to provide to the Noteholders (or an agent on their behalf) second priority security interests (the “Noteholder Liens”) in the same assets and property (both real and personal) of the Company and its
Subsidiaries in which the Company has, on or before such date, granted to the lenders under the Senior Credit Agreement a first priority security interest, together with such documents and evidence (including legal opinions) (all in substantially
the same form as accepted by the lenders under the Senior Credit Agreement) as the Noteholders may reasonably request evidencing the authorization, validity and binding nature of such security documents; 
  
 (iii)  an intercreditor agreement in form and substance satisfactory to the Noteholders among such holders and
the lenders under the Senior Credit Agreement which shall set forth the relative rights and priorities of such creditors in the collateral and shall detail the nature of the Noteholder Liens; and 
  

(iv)  such further amendments to the Note Purchase Agreements as the Noteholders may reasonably request in connection with the foregoing.

  
 (b)  On or before September 23, 2002, the Company shall deliver, or cause to be
delivered, to the Noteholders (or an agent on their behalf) all additional security documents and related filings in form and substance satisfactory to the Noteholders necessary to provide to the Noteholders (or an agent on their behalf) Noteholder
Liens in the same assets and property (both real and personal) of the Company and its Subsidiaries in which the Company has, on or before such date, granted to the lenders under the Senior Credit Agreement a first priority security interest,
together with such documents and evidence (including legal opinions) (all in substantially the same form as accepted by the lenders under the Senior Credit Agreement) as the Noteholders may reasonably 
 

 4 

  
 request evidencing the authorization, validity and binding nature of such
security documents, including: 
  
 (i)  evidence of the holders’ of the Notes (or an
agent on their behalf) perfected second priority lien in all of Company’s and Subsidiary Guarantors’ property located outside the United States (or in such portion of such property as the lenders under the Senior Credit Agreement shall
have perfected); 
  
 (ii)  notices of the holders’ of the Notes security interest in
all of Company’s and Subsidiary Guarantors’ registered patents and trademarks and applications for patents and trademarks shall have been filed with the applicable Governmental Authority; 
  
 (iii)  a deed of trust in form and substance satisfactory to the Noteholders with respect to the Company’s
leased property in the State of Washington, and, in addition, the Company and each Subsidiary Guarantor shall have granted the Noteholders (or an agent on their behalf) a lien on their interests in all real property located in the United States (or
in such portion of such property as the lenders under the Senior Credit Agreement shall have been granted such liens); 
  
 (iv)  evidence satisfactory to the Noteholders that (A) the liens referred to in clause (iii) above have been duly authorized, are enforceable against the grantor and all third parties, and have priority
over all other Liens against such property other than Liens consented to by the Noteholders, and (B) the Company or the applicable Subsidiary Guarantor has obtained all such consents or approvals from third parties as may be required in connection
with the grant of each such lien; 
  
 (v)  control agreements in form and substance
satisfactory to the Noteholders, duly executed by the parties thereto perfecting to the holders’ of the Notes (or an agent on their behalf) security interest in all deposit accounts required by the Noteholders; 
  
 (vi)  evidence that (A) Avure Technologies, Inc. shall have duly issued share certificates evidencing all
ownership interests therein; (B) the Company shall have executed and delivered to a collateral agent on behalf of the Noteholders an agreement pledging such shares to such collateral agent; (C) the Company shall have delivered such share
certificates to a collateral agent on behalf of the Noteholders together with assignments separate from certificate duly executed by the Company in blank; and (D) such issuance, execution and delivery were duly authorized and effective and that such
collateral 
 

 5 

  
 agent has a perfected security interest in all such shares free of all Liens
other than those expressly permitted by this Agreement; 
  
 (vii)  evidence that (A) all
conditions to the attachment of the security interest of a collateral agent on behalf of the Noteholders in the Company’s ownership interests in Flow Autoclave Systems, Inc., a Delaware corporation (“Flow Autoclave”) have been
satisfied and that a collateral agent on behalf of the Noteholders has a perfected security interest in all such ownership interests of Company; (B) the Company shall have delivered to such collateral agent all share certificates evidencing the
Company’s ownership of Flow Autoclave together with assignments separate from certificate duly executed by the Company in blank; (C) Flow Autoclave shall have become a party to and bound by the Subsidiary Guaranty and any Security Document to
which the Subsidiary Guarantors are a party; and (D) the security interests granted by Flow Autoclave under the Security Document to which it is a party are perfected security interests free of all Liens other than those expressly permitted by this
Agreement; provided, however, an Event of Default shall not occur if any of clauses (A) through (D) of this subsection (vii) are not fulfilled notwithstanding the best efforts of the Company; 
  
 (viii)  evidence that (A) the Company shall have delivered to a collateral agent on behalf of the Noteholders
share certificates evidencing Company’s ownership interest in CIS Acquisition Corporation (“CIS”) and Flow Waterjet Florida Corporation (“Flow Waterjet”) together with assignments separate from certificate duly
executed by the Company in blank; (B) the shares of CIS and Flow Waterjet shall have been added to the appropriate Security Document; and (C) such collateral agent’s security interests Company’s ownership interest in CIS and Flow Waterjet
are perfected security interests free of all Liens other than those expressly permitted by this Agreement; 
  
 (ix)  evidence that (A) Company shall have delivered to a collateral agent on behalf of the Noteholders share certificates evidencing 65% of the Company’s ownership interest in each of the Foreign Subsidiaries (as
defined in the Security Documents) together with assignments separate from certificate duly executed by Company in blank; (B) all such shares and ownership interests shall have been added to the appropriate Security Document; and (C) such collateral
agent’s security interests the Company’s ownership interest in all such Foreign Subsidiaries are perfected security interests free of all Liens other than those expressly permitted by this Agreement; 
  
 (x)  evidence that all Waived Conditions (as defined below) shall have been fulfilled to holders’ of the
Notes satisfaction; “Waived 
 

 6 

  
 Conditions” means any of the Conditions to Effectiveness set forth in
Section 4 of the Second Amendment to the Note Purchase Agreement dated as of September 6, 2002 that were waived by the Noteholders for the purposes thereof or otherwise not been fulfilled in connection with effectiveness of such Second Amendment;

  
 (xi)  a completed Schedule 4 (Patents and Patent Licenses) and Schedule 5 (Trademarks
and Trademark Licenses) to the security agreement delivered by the Subsidiary Guarantors; 
  
 (xii)  such other evidence as the Noteholders may deem necessary or appropriate that all documents executed and/or delivered and all actions taken pursuant to clauses (i) through (xi) above have been duly
authorized and are legally effective, binding and enforceable; 
  
 (xiii)  a legal opinion
from Company’s counsel (acceptable to the Noteholders) in form and substance satisfactory to the Noteholders and substantially similar to the legal opinion accepted by the lenders under the Senior Credit Agreement; and 
  
 (xiv)  such additional information concerning the Company’s and the Subsidiary Guarantor’s real and
personal property and assets as the Noteholders may request. 
  
 (c)  From time to time,
the Company shall deliver, or cause to be delivered, to the Noteholders (or an agent on their behalf) all additional security documents and related filings in form and substance satisfactory to the Noteholders necessary to provide to the Noteholders
(or an agent on their behalf) Noteholder Liens in the same assets and property (both real and personal) of the Company and its Subsidiaries in which the Company from time to time grants to the lenders under the Senior Credit Agreement a first
priority security interest, together with such documents and evidence (including legal opinions) as the Noteholders may reasonably request evidencing the authorization, validity and binding nature of such security documents.” 

 
 “Section 9.12.  Agreements Regarding Bankruptcy Orders.    The
Company agrees that in the event of a proceeding under the U.S. Bankruptcy Code involving the Company as a “debtor”: (a) in any order submitted by the Company for approval by the bankruptcy court in which the lenders under the Senior
Credit Agreement are to be granted liens and security interests as “adequate protection”, such order will provide for the Noteholders to be granted subordinate liens on, and security interests in, the same assets as “adequate
protection” to the extent necessary to avoid any diminution in the value of the collateral securing the Noteholders’ 
 

 7 

  
 secured claim resulting from the bankruptcy proceeding and the application of the
automatic stay; and (b) in any order submitted by the Company for approval by the bankruptcy court in which the lenders under the Senior Credit Agreement are to be granted cash payments of interest as “adequate protection”, such order will
provide for the Noteholders to be granted the right to accrue interest as “adequate protection”, with such interest to be payable in the bankruptcy case as an administrative claim.” 
  
 “Section 10.12.  Capital Expenditures.    The Company shall not make or become
legally obligated to make any expenditure in respect of the purchase or other acquisition of any fixed or capital asset (excluding normal replacements and maintenance which are properly charged to current operations), except for capital expenditures
in the ordinary course of business not exceeding, in the aggregate for the Company during each fiscal quarter set forth below, the amount set forth opposite such fiscal quarter: 
  
 
	 July 31, 2002
 	  	 $3,000,000
 	  
 
	 
	 October 31, 2002
 	  	 $3,000,000
 	  
 
	 
	 January 31, 2003
 	  	 $1,300,000
 	  
 
	 
	 April 30, 2003
 	  	 $1,300,000
 	  
 
	 
	 July 31, 2003
 	  	 $1,300,000
 	 ”
 

 
  
 “Section 10.13.  Restrictions on
Senior Debt.    Notwithstanding the terms of Section 9.6, 9.7 or 9.9 of this Agreement as in effect from time to time, until such time as the Company shall be in compliance with Section 9.6 (Fixed Charge
Coverage Ratio), Section 9.7 (Funded Debt Ratio) and Section 9.9 (Senior Funded Debt Ratio), each as in effect on the original date of Closing, the Company shall not incur additional Senior Debt other than Senior Debt under the Senior
Credit Agreement (subject to the other limitations applicable to Senior Debt hereunder). 
  
 Section
1.6.  Events of Default.    Section 12 of the Note Purchase Agreements is hereby amended as follows: 
  
 (a)  paragraph (c) of Section 12 shall be amended in its entirety by inserting in lieu thereof the following: 
  
 “(c)  the Company defaults in the performance of or compliance with any term contained in Sections 9.5 through 9.11, inclusive,
Sections 10.1 through 10.10, inclusive, or Sections 10.12  and 10.13, inclusive; or” 
 

 8 

  
 (b)  paragraph (f) of Section 12 shall be amended in
its entirety by inserting in lieu thereof the following: 
  
 “(f)  the Subsidiary
Guaranty, if any, or any Security Document shall cease to be in full force and effect for any reason whatsoever, including, without limitation, a determination by a Governmental Authority of competent jurisdiction that any such agreement is invalid,
void or unenforceable or the perfected security interests created pursuant to any Security Document is not legal, valid and binding, or the Company or any Subsidiary shall contest or deny in writing the validity or enforceability of any of its
obligations under any Security Document or the Subsidiary Guaranty, as applicable; or” 
  
 Section
1.7.  Expenses of Security Documents.    Section 16.1 of the Note Purchase Agreements is hereby amended by adding thereto a new sentence at the end to read as follows: 
  
 “Without limiting the foregoing, the Company will pay all of the costs and expenses heretofore described in this
Section 16.1 incurred by you and each Other Purchaser or holder of a Note or Warrant in connection with the preparation, execution and recording of the Security Documents and any enforcement thereof, including such costs and expenses as may
be incurred by any collateral agent serving on behalf of the Noteholders.” 
  
 Section
1.8.  Definitions.    Schedule B to the Note Purchase Agreements is hereby amended by adding thereto the following new definitions in the appropriate alphabetical order: 
  
 “Note Documents” means and includes this Agreement and the Other Agreement, the Notes, the Subsidiary
Guaranty, the Security Documents and all documents ancillary or related to any of the foregoing.” 
  
 “Noteholders” means, at the time of any determination, the holders of the Notes then outstanding.” 
  
 “Security Documents” means and includes each security agreement, pledge agreement, assignment agreement, mortgage, deed of trust, and each other document or agreement delivered to the
Noteholders (or an agent on their behalf) from time to time pursuant to Section 9.11 of this Agreement for the purpose of securing the obligations of the Company or any Subsidiary under this Agreement, the Other Agreements and the Notes
and/or preserving or protecting the collateral provided thereunder or the interests of the Noteholders therein.” 
  
 Section 1.9.  Interest Rate.    From and after July 29, 2002, and until such time as the Company shall have achieved a Fixed Charge Coverage of at least 1.25 to 1, a Funded Debt Ratio equal to or
below 5.00 to 1 and a Senior Funded Debt Ratio equal to or below 3.50 to 1, (a) all references to “13%” as the interest rate applicable to the Notes appearing in the Note 
 

 9 

  
 Purchase Agreements and in the Notes shall be amended to read “15%” and (b) all references to
“15%” as the Default Rate of interest applicable to the Notes appearing in the Note Purchase Agreements and the Notes shall be amended to read “17%”. 
  
 SECTION 2.  Consent. 
  
 Notwithstanding the provisions of Section 10.10(a) of the Note Purchase Agreements to the contrary, the Noteholders hereby agree that the Company shall be permitted to prepay the senior notes outstanding under the Senior Private
Placement Agreement on the terms set forth in Section 2(d) of the Seventh Amendment to the Senior Private Placement Agreement dated as of April 30, 2002 as originally executed and delivered. 
  

SECTION 3.  Representations and Warranties of the Company. 
  
 To induce the Noteholders to execute and deliver this Second Amendment, the Company represents and warrants to the Noteholders (which representations and warranties shall survive the execution and
delivery of this Second Amendment) that: 
  
 (a)  this Second Amendment has been duly
authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation, contract and agreement of the Company enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally; 
  
 (b)  the execution, delivery and performance by the Company of this Second Amendment (i) does not require the consent or approval of any governmental or regulatory body or agency, and (ii)
will not (A) violate (1) any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2) any order of any court or any rule, regulation or order of any other agency or government binding upon it, or (3) any
provision of any material indenture, agreement or other instrument to which it is a party or by which its properties or assets are or may be bound, or (B) result in a breach or constitute (alone or with due notice or lapse of time or both) a default
under any indenture, agreement or other instrument referred to in clause (ii)(A)(3) of this clause (b); 
  
 (c)  as of the date hereof and after giving effect to this Second Amendment, no Default or Event of Default has occurred which is continuing; 
  
 (d)  attached hereto as Exhibit A is a true, correct and complete copy of Amendment Number Five to the Senior Credit Agreement dated
as of July 26, 2002; and 
  
 (e)  attached hereto as Exhibit B is a true,
correct and complete copy of Amendment Number Six to the Senior Credit Agreement dated as of August 30, 2002; and 
 

 10 

  
 (f)  on July 31, 2002, the Company repaid in full all
Indebtedness outstanding under the Senior Private Placement Agreement and such agreement has been terminated and is of no further force or effect. 
  
 SECTION 4.  Conditions to Effectiveness of This Second Amendment. 
  
 This Second Amendment shall not become effective until, and shall become effective when: 
  
 (a)  executed counterparts of this Second Amendment, duly executed by the Company and the holders of at least 100% in aggregate principal amount of outstanding Notes, shall have been delivered to the Noteholders;

  
 (b)  the Noteholders shall have received (i) a fully executed copy of Amendment Number
Five to the Senior Credit Agreement, and (ii) a fully executed copy of the Seventh Amendment to the Senior Private Placement Agreement; 
  
 (c)  the representations and warranties of the Company set forth in Section 3 hereof shall be true and correct on and with respect to the effective date hereof and the execution and
delivery by the Company of this Second Amendment shall constitute the certification by the Company of the same; and 
  
 (d)  each Noteholder shall have received, and the Company hereby agrees to pay to each Noteholder, an amendment and consent fee equal to 0.50% of the aggregate principal amount of the outstanding Notes held by such
Noteholder as of the date of this Second Amendment, such fee to be paid by wire transfer of immediately available funds in the manner provided in Schedule A to the Note Purchase Agreements. The Company’s agreement to pay such fees shall
constitute an obligation to be performed by the Company under the Note Purchase Agreements for purposes of Section 12(d) thereof. 
  
 Upon satisfaction of all of the foregoing, this Second Amendment shall become effective. 
  
 SECTION
5.  Miscellaneous. 
  
 This Second Amendment shall be construed in connection with and as part of the
Note Purchase Agreements, and except as modified and expressly amended by this amendment, all terms, conditions and covenants contained in the Note Purchase Agreements, the Notes and the Warrants are hereby ratified and confirmed and shall be and
remain in full force and effect. The obligations of the Company under the Note Purchase Agreements, the Notes and the Warrants shall not be released, discharged or in any way affected by (a) any exercise or nonexercise of any right, remedy, power or
privilege under or in respect of the Note Purchase Agreements, the Notes or the Warrants or applicable law, including, without limitation, any waiver, consent, extension, indulgence or other action or inaction in respect thereof; or (b) any other
act or thing or omission or delay to do any other act or thing which could operate as or be deemed to be a discharge of the 
 

 11 

  
 Company as a matter of law, other than payment in full of all obligations under the Note Purchase
Agreements and the Notes and performance under the Warrants. 
  
 Any and all notices, requests, certificates and
other instruments executed and delivered after the execution and delivery of this amendment may refer to the Note Purchase Agreements without making specific reference to this amendment, but nevertheless all such references shall be deemed to
include this amendment unless the context otherwise requires. 
  
 This Second Amendment may be executed in any number
of counterparts, each executed counterpart constituting an original, but all together only one agreement. 
  
 This
Second Amendment shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Washington, excluding choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State. 
  
 Oral agreements or oral commitments to
loan money, extend credit, or to forbear from enforcing repayment of a debt are not enforceable under Washington Law. 
 

 12 

  
 IN WITNESS WHEREOF, the Company and the Noteholders have caused this Second
Amendment to be executed, all as of the day and year first above written. 
  
 
	 FLOW INTERNATIONAL CORPORATION
 
	 
	 By
 	 	  
 

	 
	 Its
 

 	 	  
 

 
 

 13 

  
  
 
	 THE NOTEHOLDERS:
  
 JOHN HANCOCK LIFE INSURANCE COMPANY
 
	 
	 By
 	 	  
 

	 
	 Its
 	 	  
 

 
  
 
	 JOHN HANCOCK VARIABLE LIFE
INSURANCE COMPANY
 
	 
	 By
 	 	  
 

	 
	 Its
 	 	  
 

 
  
 
	 SIGNATURE 4 LIMITED
  
 BY JOHN HANCOCK LIFE INSURANCE COMPANY, AS
PORTFOLIO ADVISER
 
	 
	 By
 	 	  
 

	 
	 Its
 	 	  
 

 
  
 
	 SIGNATURE 5 L.P.
  
 BY JOHN HANCOCK LIFE INSURANCE COMPANY, AS
PORTFOLIO ADVISER
 
	 
	 By
 	 	  
 

	 
	 Its
 	 	  
 

 
  
  
 

 14 

  
 Attachments 
  
 
	 EXHIBIT A
 	 	 —
 	 	 Amendment Number Five to Senior Credit Agreement
 
	 
	 EXHIBIT B
 	 	 —
 	 	 Amendment Number Six to Senior Credit Agreement
 

 
 

 15

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