FLOW INTERNATIONAL CORPORATION
23500 - 64th Avenue South
Kent, Washington 98032
7.20% Senior Notes due September 26, 2005
September 1, 1995
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Flow International Corporation, a Delaware corporation (the
"COMPANY"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $15,000,000
aggregate principal amount of its 7.20% Senior Notes due September 26, 2005 (the
"NOTES", such term to include any such notes issued in substitution therefor
pursuant to Section 14 of this Agreement or the Other Agreement (as hereinafter
defined)). The Notes shall be substantially in the form set out in Exhibit 1,
with such changes therefrom, if any, as may be approved by you and the Company.
Certain capitalized terms used in this Agreement are defined in Schedule B;
references to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the
Company will issue and sell to you and you will purchase from the Company, at
the Closing provided for in Section 4, Notes in the principal amount specified
opposite your name in Schedule A at the purchase price of 100% of the principal
amount thereof. Contemporaneously with entering into this Agreement, the
Company is entering into separate Note Purchase Agreements (the "OTHER
AGREEMENTS") identical with this Agreement with each of the other purchasers
named in Schedule A (the "OTHER PURCHASERS"), providing for the sale at such
Closing to the Other Purchaser of Notes in the principal amount specified
Note Purchase Agreement/Flow International Corporation
opposite its name in Schedule A. Your obligation hereunder and the obligations
of the Other Purchaser under the Other Agreement are several and not joint
obligations and you shall have no obligation under any Other Agreement and no
liability to any Person for the performance or non-performance by any Other
Purchaser thereunder.
3. SECURITY.
The Notes are to be secured by (i) a Security Agreement, dated as
of the date hereof, between the Company and the Bank Agent, as agent for the
holders of the Notes, substantially in the form annexed hereto as Exhibit A
(which, together with all supplements and amendments thereto, is referred to
herein as the "Security Agreement") relating to the Collateral which is owned by
the Company, and (ii) a Subsidiary Security Agreement, dated as of the date
hereof, between certain U.S. Subsidiaries and the Bank Agent, as agent for the
holders of the Notes, substantially in the form annexed hereto as Exhibit B
(which, together with all supplements and amendments thereto, is referred to
herein as the "Subsidiary Security Agreement") relating to the Collateral which
is owned by such U.S. Subsidiaries. The Security Documents will create a first
priority security interest in the Collateral for the benefit of the Bank Agent,
as agent for the holders of the Notes PARI PASSU with the first priority
security interest in the Collateral for the benefit of the Bank Agent, as agent
for the Bank Lenders. The Security Documents will be in a form substantially
identical to the form of the Bank Security Documents.
4. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchaser shall occur at the offices of CIGNA Investments, Inc., 900
Cottage Grove Road, Bloomfield, Connecticut 06002, at 10:00 a.m., local time, at
a closing (the "CLOSING") on September 26, 1995 or on such other Business Day
thereafter on or prior to October 31, 1995, as may be agreed upon by the Company
and you and the Other Purchaser. At the Closing the Company will deliver to you
the Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $100,000 as you may request) dated
the date of the Closing and registered in your name (or in the name of your
nominee), against delivery by you to the Company or its order of immediately
available funds in the amount of the purchase price therefor by wire transfer of
immediately available funds for the account of the Company to account number
0226000610 at U.S. Bank of Washington, National Association, Kent, Washington,
ABA # 125000105. If at the Closing the Company shall fail to
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tender such Notes to you as provided above in this Section 4, or any of the
conditions specified in Section 5 shall not have been fulfilled to your
satisfaction, you shall, at your election, be relieved of all further
obligations under this Agreement, without thereby waiving any rights you may
have by reason of such failure or such nonfulfillment.
5. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to
you at the Closing is subject to the fulfillment to your satisfaction, prior to
or at the Closing, of the following conditions:
5.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this
Agreement shall be correct when made and at the time of the Closing.
5.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or complied
with by it prior to or at the Closing and after giving effect to the issue and
sale of the Notes (and the application of the proceeds thereof as contemplated
by Schedule 6.14) no Default or Event of Default shall have occurred and be
continuing. Neither the Company nor any Subsidiary shall have entered into any
transaction since the date of the Memorandum that would have been prohibited by
Sections 11.1, 11.3, 11.4, 11.6, 11.8, or 11.11 had such Sections applied since
such date.
5.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying that the
conditions specified in Sections 5.1, 5.2 and 5.12 have been fulfilled.
(b) SECRETARY'S CERTIFICATE. The Company shall have delivered
to you a certificate certifying as to the resolutions attached thereto and
other corporate proceedings relating to the authorization, execution and
delivery of the Notes and the Agreements.
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5.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance
satisfactory to you, dated the date of the Closing (a) from Preston, Gates and
Ellis, special counsel for the Company, covering the matters set forth in
Exhibit 5.4(a) and covering such other matters incident to the transactions
contemplated hereby as you or your counsel may reasonably request (and the
Company hereby instructs its counsel to deliver such opinion to you), and (b)
from John Leness, general counsel for the Company, covering the matters set
forth in Exhibit 5.4(b) and covering such other matters incident to the
transactions contemplated hereby as you or your counsel may reasonably request.
5.5. SECURITY DOCUMENTS.
(a) The Company and certain of its U.S. Subsidiaries shall have
duly authorized, executed and delivered all such security agreements and other
instruments, documents and agreements creating security interests, in form and
substance satisfactory to you, as shall be necessary, in your sole discretion,
to grant or create valid first priority Liens, in and to all of the Collateral,
equally and ratably securing the obligations of the Company and such U.S.
Subsidiaries to the holders of the Notes pursuant to the Financing Documents and
to the Bank Lenders under the Bank Credit Agreement, including, without
limitation, the Security Documents and the Bank Security Documents.
(b) To the extent required by the Bank Agent in connection with
the initial closing under the Bank Credit Agreement, all actions necessary to
perfect the Liens of the Bank Agent in the Collateral for the benefit of the
Bank Lenders and the holders of the Notes (including without limitation the
filing of all financing statements or amendments to financing statements with
appropriate public officials and the payment of all recording, documentary,
stamp and other similar taxes and fees) shall have been taken in accordance with
the terms of the provisions of the Security Documents and written confirmation
thereof received by you. The Liens of the Bank Agent in the Collateral shall be
valid and enforceable, perfected (to the extent required by the Bank Agent)
except as permitted by Section 11.7, shall rank prior to any Liens or claims of
any other creditor or Person in and to the Collateral.
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5.6. SUBSIDIARY GUARANTY AGREEMENTS.
Each of the U.S. Subsidiaries shall have executed and delivered
the Subsidiary Guaranty Agreement in favor of the Bank Agent, as agent for the
holders of the Notes, substantially in the form annexed hereto as Exhibit C
(which, together with all supplements and amendments thereto, is referred to
herein as the "Subsidiary Guaranty Agreement") pursuant to which each U.S.
Subsidiary shall guaranty, jointly and severally, the obligations of the Company
with respect to the Notes and this Agreement. The form of the Subsidiary
Guaranty Agreement shall be substantially identical to the Bank Subsidiary
Guaranty Agreement.
5.7. INTERCREDITOR AGREEMENT.
An Intercreditor Agreement, substantially in the form of Exhibit
D to this Agreement, shall have been duly authorized, executed and delivered by
the Bank for itself and as Bank Agent, the other Bank Lenders, the Company, and
each initial purchaser of the Notes and shall be in full force and effect and
you shall have received an original executed copy thereof.
5.8. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you are
subject, without recourse to provisions (such as Section 1405(a)(8) of the New
York Insurance Law) permitting limited investments by insurance companies
without restriction as to the character of the particular investment, (ii) not
violate any applicable law or regulation (including, without limitation,
Regulation G, T or X of the Board of Governors of the Federal Reserve System)
and (iii) not subject you to any tax, penalty or liability under or pursuant to
any applicable law or regulation, which law or regulation was not in effect on
the date hereof. If requested by you, you shall have received an Officer's
Certificate certifying as to such matters of fact as you may reasonably specify
to enable you to determine whether such purchase is so permitted.
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5.9. SALE OF OTHER NOTES.
Contemporaneously with the Closing the Company shall sell to the
Other Purchaser and the Other Purchaser shall purchase the Notes to be purchased
by them at the Closing as specified in Schedule A.
5.10. PAYMENT OF COUNSEL FEES.
Without limiting the provisions of Section 16.1, the Company
shall have paid on or before the Closing the allocated costs and expenses of
your inhouse counsel to the extent reflected in a statement of such counsel
rendered to the Company at least one Business Day prior to the Closing.
5.11. PRIVATE PLACEMENT NUMBER.
The Company shall deliver satisfactory evidence that it has
applied for a Private Placement number to be issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of the
National Association of Insurance Commissioners) for the Notes.
5.12. CHANGES IN CORPORATE STRUCTURE.
Except as specified in Schedule 5.12, the Company shall not have
changed its jurisdiction of incorporation or been a party to any merger or
consolidation and shall not have succeeded to all or any substantial part of the
liabilities of any other entity, at any time following the date of the most
recent financial statements referred to in Schedule 6.5.
5.13. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you, your in-house
counsel and your special local counsel, and you, your in-house counsel and your
special local counsel shall have received all such counterpart originals or
certified or other copies of such documents as you or they may reasonably
request.
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6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
6.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation, and is
duly qualified as a foreign corporation and is in good standing in each
jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. The Company has the corporate power and authority to
own or hold under lease the properties it purports to own or hold under lease,
to transact the business it transacts and proposes to transact, to execute and
deliver this Agreement and the Other Agreement and the Notes and to perform the
provisions hereof and thereof.
6.2. AUTHORIZATION, ETC.
This Agreement, the Other Agreement, the Security Documents and
the Notes have been duly authorized by all necessary corporate action on the
part of the Company, and this Agreement, the Other Agreement and the Security
Documents constitute, and upon execution and delivery thereof each Note will
constitute, legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
Upon execution and delivery thereof the Security Documents will create for the
benefit of the holders of the Notes a valid first priority security interest in
the Collateral subject only to Liens permitted by Section 11.7 and subject to
the provisions of the Intercreditor Agreement.
6.3. DISCLOSURE.
The Company, through its agent, Dain Bosworth Incorporated, has
delivered to you and each Other Purchaser a copy of a Confidential Information
Memorandum, dated July 1995 (the "MEMORANDUM"; PROVIDED, HOWEVER, for the
purposes of this Section 6.3, the term "Memorandum" shall not include the
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analysts reports, product information and press releases relating to products
contained therein), relating to the transactions contemplated hereby.
The Memorandum fairly describes, in all material respects, the general nature of
the business and principal properties of the Company and its Subsidiaries.
Except as disclosed in Schedule 6.3, this Agreement, the Memorandum, the
documents, certificates or other writings delivered to you by or on behalf of
the Company in connection with the transactions contemplated hereby and the
financial statements listed in Schedule 6.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum
or as expressly described in Schedule 6.3, or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 6.5, since April 30, 1995, there has been no
change in the financial condition, operations, business, properties or prospects
of the Company or any Subsidiary except changes that individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
There is no fact known to the Company that could reasonably be expected to have
a Material Adverse Effect that has not been set forth herein or in the
Memorandum or in the other documents, certificates and other writings delivered
to you by or on behalf of the Company specifically for use in connection with
the transactions contemplated hereby.
6.4. ORGANIZATION AND OWNERSHIP OF SHARES OF SUBSIDIARIES; AFFILIATES.
(a) Schedule 6.4 contains (except as noted therein) complete and
correct lists (i) of the Company's Subsidiaries, showing, as to each Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Company and each other Subsidiary, (ii) of
the Company's Affiliates, other than Subsidiaries, and (iii) of the Company's
directors and senior officers.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Subsidiary shown in Schedule 6.4 as being owned by the
Company and its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and clear
of any Lien (except as otherwise disclosed in Schedule 6.4).
(c) Each Subsidiary identified in Schedule 6.4 is a corporation
or other legal entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization, and is duly qualified as a
foreign
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corporation or other legal entity and is in good standing in each jurisdiction
in which such qualification is required by law, other than those jurisdictions
as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact the business it transacts and proposes to transact.
(d) No Subsidiary is a party to, or otherwise subject to any
legal restriction or any agreement (other than this Agreement, the Other
Agreement, the agreements listed on Schedule 6.4 and customary limitations
imposed by corporate law statutes) restricting the ability of such Subsidiary to
pay dividends out of profits or make any other similar distributions of profits
to the Company or any of its Subsidiaries that owns outstanding shares of
capital stock or similar equity interests of such Subsidiary.
6.5. FINANCIAL STATEMENTS.
The Company has delivered to each Purchaser copies of the
financial statements of the Company and its Subsidiaries listed on Schedule 6.5.
All of said financial statements (including in each case the related schedules
and notes) fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the respective dates
specified in such Schedule and the consolidated results of their operations and
cash flows for the respective periods so specified and have been prepared in
accordance with GAAP consistently applied throughout the periods involved except
as set forth in the notes thereto (subject, in the case of any interim financial
statements, to normal year-end adjustments).
6.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this
Agreement, the Other Agreement and the Notes will not (i) contravene, result in
any breach of, or constitute a default under, or result in the creation of any
Lien in respect of any property of the Company or any Subsidiary under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or bylaws, or any other agreement or instrument to which the
Company or any Subsidiary is bound or by which the Company or any Subsidiary or
any of their respective properties may be bound or affected, (ii) conflict with
or result in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority
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applicable to the Company or any Subsidiary or (iii) violate any provision of
any statute or other rule or regulation of any Governmental Authority applicable
to the Company or any Subsidiary.
6.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required in connection with
the execution, delivery or performance by the Company of this Agreement, the
Other Agreement or the Notes.
6.8. LITIGATION; OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS.
(a) Except as disclosed in Schedule 6.8, there are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or any Subsidiary or any property of the
Company or any Subsidiary in any court or before any arbitrator of any kind or
before or by any Governmental Authority that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under
any term of any agreement or instrument to which it is a party or by which it is
bound, or any order, judgment, decree or ruling of any court, arbitrator or
Governmental Authority or is in violation of any applicable law, ordinance, rule
or regulation (including without limitation Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
6.9. TAXES.
The Company and its Subsidiaries have filed all tax returns that
are required to have been filed in any jurisdiction, and have paid all taxes
shown to be due and payable on such returns and all other taxes and assessments
levied upon them or their properties, assets, income or franchises, to the
extent such taxes and assessments have become due and payable and before they
have become delinquent, except for any taxes and assessments (i) the amount of
which is not individually or in the aggregate Material or (ii) the amount,
applicability or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which the Company or a Subsidiary,
as the case may be, has established adequate reserves in accordance with GAAP.
The Company knows of no basis for any other tax or assessment that could
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reasonably be expected to have a Material Adverse Effect. The charges, accruals
and reserves on the books of the Company and its Subsidiaries in respect of
Federal, state or other taxes for all fiscal periods are adequate. The Federal
income tax liabilities of the Company and its Subsidiaries have been determined
by an audit by the Internal Revenue Service and paid for all fiscal years up to
and including the fiscal year ended April 30, 1990.
6.10. TITLE TO PROPERTY; LEASES.
The Company and its Subsidiaries have good and sufficient title
to their respective real and personal properties that individually or in the
aggregate are Material, including all Collateral and all other such properties
reflected in the most recent audited balance sheet referred to in Section 6.5 or
purported to have been acquired by the Company or any Subsidiary after said date
(except as sold or otherwise disposed of in the ordinary course of business), in
each case free and clear of Liens prohibited by this Agreement. All leases that
individually or in the aggregate are Material are valid and subsisting and are
in full force and effect in all material respects.
6.11. LICENSES, PERMITS, ETC.
Except as disclosed in Schedule 6.11,
(a) the Company and its Subsidiaries own or possess all licenses,
permits, franchises, authorizations, patents, copyrights, service marks,
trademarks and trade names, or rights thereto, that individually or in the
aggregate are Material, without known conflict with the rights of others;
(b) to the best knowledge of the Company, no product of the Company
infringes in any material respect any license, permit, franchise,
authorization, patent, copyright, service mark, trademark, trade name or
other right owned by any other Person; and
(c) to the best knowledge of the Company, there is no Material
violation by any Person of any right of the Company or any of its
Subsidiaries with respect to any patent, copyright, service mark,
trademark, trade name or other right owned or used by the Company or any of
its Subsidiaries.
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6.12. COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and could not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any
ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in Section 3 of ERISA), and no event, transaction or condition
has occurred or exists that could reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate, or in
the imposition of any Lien on any of the rights, properties or assets of the
Company or any ERISA Affiliate, in either case pursuant to Title I or IV of
ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or
412 of the Code, other than such liabilities or Liens as would not be
individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end of
such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities. The term "BENEFIT LIABILITIES"
has the meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE"
and "PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined
as of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106, without
regard to liabilities attributable to continuation coverage mandated by section
4980B of the Code) of the Company and its Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the Other
Agreement and the issuance and sale of the Notes hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA or in
connection with which a tax could be imposed pursuant to section 4975(c)(1)(A)-
(D) of the Code. The representation by the Company in the
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first sentence of this Section 6.12(e) is made in reliance upon and subject to
the accuracy of your representation in Section 7.2 as to the sources of the
funds used to pay the purchase price of the Notes to be purchased by you.
6.13. PRIVATE OFFERING BY THE COMPANY.
Neither the Company nor anyone acting on its behalf has offered
the Notes or any similar securities for sale to, or solicited any offer to buy
any of the same from, or otherwise approached or negotiated in respect thereof
with, any person other than you, the Other Purchaser and not more than 20 other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of Section 5 of the Securities Act.
6.14. USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes as
set forth in Schedule 6.14. No part of the proceeds from the sale of the Notes
hereunder will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation G of the Board of
Governors of the Federal Reserve System (12 CFR 207), or for the purpose of
buying or carrying or trading in any securities under such circumstances as to
involve the Company in a violation of Regulation X of said Board (12 CFR 224) or
to involve any broker or dealer in a violation of Regulation T of said Board (12
CFR 220). Margin stock does not constitute more than 20% of the value of the
consolidated assets of the Company and its Subsidiaries and the Company does not
have any present intention that margin stock will constitute more than 20% of
the value of such assets. As used in this Section, the terms "MARGIN STOCK" and
"PURPOSE OF BUYING OR CARRYING" shall have the meanings assigned to them in said
Regulation G.
6.15. EXISTING INDEBTEDNESS; FUTURE LIENS; EXISTING INVESTMENTS.
(a) Except as described therein, Schedule 6.15 sets forth a
complete and correct list of all outstanding Indebtedness of the Company and its
Subsidiaries as of September 22, 1995, since which date there has been no
Material change in the amounts, interest rates, sinking funds, instalment
payments or maturities of the Indebtedness of the Company or its Subsidiaries.
Neither the Company nor any Subsidiary is in default and no waiver of default is
currently in effect, in the payment of any principal or interest on any
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Indebtedness of the Company or such Subsidiary and no event or condition exists
with respect to any Indebtedness of the Company or any Subsidiary that would
permit (or that with notice or the lapse of time, or both, would permit) one or
more Persons to cause such Indebtedness to become due and payable before its
stated maturity or before its regularly scheduled dates of payment.
(b) Neither the Company nor any of the Subsidiaries is a party
to, or otherwise subject to any provision contained in, any instrument
evidencing Indebtedness of the Company or such Subsidiary, any agreement
relating thereto or any other contract or agreement (including its articles of
incorporation, charter, by-laws or other constitutive documents) that limits the
amount of, or otherwise imposes restrictions on the incurring of, Indebtedness
of the Company of the type to be evidenced by the Note Purchase Agreements or
the Notes, except as set forth in the agreements listed in Schedule 6.15 hereto
(none of the terms of which are violated by the issuance of the Notes or the
execution and delivery of, or compliance with the Note Purchase Agreements by
the Company, other than ones for which effective consents have been obtained and
delivered to you).
(c) Except as disclosed in Schedule 6.15, neither the Company
nor any Subsidiary has agreed or consented to cause or permit in the future
(upon the happening of a contingency or otherwise) any of its property, whether
now owned or hereafter acquired, to be subject to a Lien not permitted by
Section 11.7.
(d) Except as described therein, Schedule 6.15 sets forth a
complete and correct list of all outstanding Investments of the Company and its
Subsidiaries as of September 22, 1995 (other than (a) property used or to be
used in the ordinary course of business of the Company and its Subsidiaries; (b)
current assets arising from the sale of goods and services in the ordinary
course of business of the Company and its Subsidiaries; (c) Investments in its
Subsidiaries), since which date there has been no Material change in such
Investments.
6.16. FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its
use of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United States
Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
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6.17. STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Subsidiary is subject to regulation
under the Investment Company Act of 1940, as amended, the Public Utility Holding
Company Act of 1935, as amended, the Interstate Commerce Act, as amended, or the
Federal Power Act, as amended.
6.18. ENVIRONMENTAL MATTERS.
Neither the Company nor any Subsidiary has knowledge of any claim
or has received any notice of any claim, and no proceeding has been instituted
raising any claim against the Company or any of its Subsidiaries or any of their
respective real properties now or formerly owned, leased or operated by any of
them or other assets, alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably be
expected to result in a Material Adverse Effect. Except as otherwise disclosed
to you in writing,
(a) neither the Company nor any Subsidiary has knowledge
of any facts which would give rise to any claim, public or
private, of violation of Environmental Laws or damage to the
environment emanating from, occurring on or in any way related to
real properties now or formerly owned, leased or operated by any
of them or to other assets or their use, except, in each case,
such as could not reasonably be expected to result in a Material
Adverse Effect;
(b) neither the Company nor any of its Subsidiaries has
stored any Hazardous Materials on real properties now or formerly
owned, leased or operated by any of them and has not disposed of
any Hazardous Materials in a manner contrary to any Environmental
Laws in each case in any manner that could reasonably be expected
to result in a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased
or operated by the Company or any of its Subsidiaries are in
compliance with applicable Environmental Laws, except where
failure to comply could not reasonably be expected to result in a
Material Adverse Effect.
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6.19. COMPANY AND SUBSIDIARIES.
The Company and the Subsidiaries are part of one consolidated
business entity and are directly dependent upon each other for and in connection
with their respective business activities and their respective financial
resources. The Subsidiaries will receive direct economic and financial benefits
from the Indebtedness incurred under the Notes and the incurrence of such
Indebtedness is in the best interest of the Subsidiaries.
7. REPRESENTATIONS OF THE PURCHASER.
7.1. PURCHASE FOR INVESTMENT.
You represent that you are purchasing the Notes for your own
account or for one or more separate accounts maintained by you or for the
account of one or more pension or trust funds and not with a view to the
distribution thereof, PROVIDED that the disposition of your or their property
shall at all times be within your or their control. You understand that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
7.2. SOURCE OF FUNDS.
You represent that, for the purpose only of determining whether
the acquisition by you of the Notes to be purchased by you hereunder is a
"prohibited transaction" (as that term is used in section 406 of ERISA or
section 4975 of the Code), at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source does not include any asset of any "employee benefit
plan" as defined in Section 3(3) of ERISA, or its related trust, or "plan"
as defined in section 4975 of the Code, or its related trust (each a
"PLAN"); or
(b) the Source is an insurance company general account of which the
assets are such that if any of them are, or are deemed to be, assets of any
Plan, the acquisition of the Notes by you pursuant hereto is eligible
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Note Purchase Agreement/Flow International Corporation
for and satisfies the requirements of Prohibited Transaction Exemption
("PTE") 95-60 (issued July 12, 1995); or
(c) the Source is an insurance company separate account (as
contemplated by the exception set forth in 29 C.F.R. Section
2510.3-101(h)(1)(iii)) that is maintained solely in connection with fixed
contractual obligations of an insurance company under which the amounts
payable, or credited, to any Plan having an interest in such account and to
any participant or beneficiary of such plan (including any annuitant) are
not affected in any manner by the investment performance of the separate
account; or
(d) the Source is an insurance company pooled separate account,
within the meaning of Prohibited Transaction Exemption ("PTE") 90-1 (issued
January 29, 1990), and, except as you have disclosed to the Company in
writing pursuant to this paragraph (d), no employee benefit plan or group
of plans maintained by the same employer or employee organization
beneficially owns more than 10% of all assets allocated to such pooled
separate account; or
(e) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this paragraph (c); or
(f) the Source is a governmental plan; or
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Note Purchase Agreement/Flow International Corporation
(g) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each
of which has been identified to the Company in writing pursuant to this
paragraph (e); or
(h) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 7.2, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
8. INFORMATION AS TO COMPANY.
8.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies
of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter,
(ii) consolidated statements of income of the Company and its
Subsidiaries, for such quarter, and
(iii) consolidated statements of income and cash flow of the
Company and its Subsidiaries for the portion of the fiscal year ending
with such quarter (in the case of the first, second and third fiscal
quarters),
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial Officer
as fairly presenting, in all material respects, the financial position of
the companies being reported on and their results of operations and cash
flows, subject to changes resulting from year-end adjustments, PROVIDED
that delivery
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Note Purchase Agreement/Flow International Corporation
within the time period specified above of copies of the Company's Quarterly
Report on Form 10-Q prepared in compliance with the requirements therefor
and filed with the Securities and Exchange Commission shall be deemed to
satisfy the requirements of this Section 8.1(a);
(b) ANNUAL STATEMENTS -- within 105 days after the end of each fiscal
year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company and its Subsidiaries, for such
year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP,
and accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall state that
such financial statements present fairly, in all material respects, the
financial position of the companies being reported upon and their results
of operations and cash flows and have been prepared in conformity with
GAAP, and that the examination of such accountants in connection with such
financial statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable basis for
such opinion in the circumstances; PROVIDED that the delivery within the
time period specified above of the Company's Annual Report on Form 10-K for
such fiscal year (together with the Company's annual report to
shareholders, if any, prepared pursuant to Rule 14a-3 under the Exchange
Act) prepared in accordance with the requirements therefor and filed with
the Securities and Exchange Commission, shall be deemed to satisfy the
requirements of this Section 8.1(b);
(c) SEC AND OTHER REPORTS -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to public securities holders
generally, and (ii) each regular or periodic report, each registration
statement (without exhibits except as expressly requested by such holder),
and each prospectus and all amendments thereto filed by the Company or any
Subsidiary with the Securities and Exchange Commission and of all financial
press releases and other releases or
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Note Purchase Agreement/Flow International Corporation
statements made available generally by the Company or any Subsidiary
to the public concerning developments that are Material;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in
any event within five days after a Responsible Officer becoming aware
of the existence of any Default or Event of Default or that any Person
has given any notice or taken any action with respect to a claimed
default hereunder or that any Person has given any notice or taken any
action with respect to a claimed default of the type referred to in
Section 12(f), a written notice specifying the nature and period of
existence thereof and what action the Company is taking or proposes to
take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if
any, that the Company or an ERISA Affiliate proposes to take with
respect thereto:
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations
thereunder, for which notice thereof has not been waived pursuant
to such regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could
result in the incurrence of any liability by the Company or any
ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty
or excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, could reasonably
be expected to have a Material Adverse Effect;
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Note Purchase Agreement/Flow International Corporation
(f) NOTICES FROM GOVERNMENTAL AUTHORITY -- promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any Federal or state Governmental
Authority directed to the Company relating to any order, ruling,
statute or other law or regulation that could reasonably be expected
to have a Material Adverse Effect;
(g) DELIVERY OF NOTICES TO BANK AGENT -- contemporaneously with
the delivery to the Bank Agent, copies of all notices, reports, and
financial information delivered to the Bank Agent in accordance with
the terms of the Bank Credit Agreement which are not otherwise
required to be delivered to the holders of the Notes pursuant to the
provisions of this Section 8.1; and
(h) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Subsidiaries or relating to the ability of the Company to
perform its obligations hereunder and under the Notes as from time to
time may be reasonably requested by any such holder of Notes.
8.2. OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to Section 8.1(a) or Section 8.1(b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was
in compliance with the requirements of Section 11.3 through Section
11.11, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Subsidiaries from the beginning of
the quarterly or
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Note Purchase Agreement/Flow International Corporation
annual period covered by the statements then being furnished to the
date of the certificate and that such review shall not have disclosed
the existence during such period of any condition or event that
constitutes a Default or an Event of Default or, if any such condition
or event existed or exists (including, without limitation, any such
event or condition resulting from the failure of the Company or any
Subsidiary to comply with any Environmental Law), specifying the
nature and period of existence thereof and what action the Company
shall have taken or proposes to take with respect thereto.
8.3. INSPECTION.
The Company shall permit the representatives of each holder of
Notes that is an Institutional Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in
writing; and
(b) DEFAULT -- if a Default or Event of Default then exists, at
the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to
make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and
accounts of the Company and its Subsidiaries), all at such times and
as often as may be requested.
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Note Purchase Agreement/Flow International Corporation
9. PREPAYMENT OF THE NOTES.
9.1. REQUIRED PREPAYMENTS.
On September 26, 1999 and on each September 26 thereafter to and
including September 26, 2004, the Company will prepay $2,142,857 principal
amount (or such lesser principal amount as shall then be outstanding) of the
Notes at par and without payment of the Make-Whole Amount or any premium,
PROVIDED that upon any partial prepayment of the Notes pursuant to Section 9.2
or purchase of the Notes permitted by Section 9.5 the principal amount of each
required prepayment of the Notes becoming due under this Section 9.1 on and
after the date of such prepayment or purchase shall be reduced in the same
proportion as the aggregate unpaid principal amount of the Notes is reduced as a
result of such prepayment or purchase.
9.2. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the Notes, in an
aggregate amount equal to not less than $1,000,000 in the case of a partial
prepayment, at 100% of the principal amount so prepaid, plus the Make-Whole
Amount determined for the prepayment date with respect to such principal amount.
The Company will give each holder of Notes written notice of each optional
prepayment under this Section 9.2 not less than 30 days and not more than 60
days prior to the date fixed for such prepayment. Each such notice shall
specify such date, the aggregate principal amount of the Notes to be prepaid on
such date, the principal amount of each Note held by such holder to be prepaid
(determined in accordance with Section 9.3), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid, and shall
be accompanied by a certificate of a Senior Financial Officer as to the
estimated Make-Whole Amount due in connection with such prepayment (calculated
as if the date of such notice were the date of the prepayment), setting forth
the details of such computation. Two Business Days prior to such prepayment,
the Company shall deliver to each holder of Notes a certificate of a Senior
Financial Officer specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
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Note Purchase Agreement/Flow International Corporation
9.3. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes, the
principal amount of the Notes to be prepaid shall be allocated among all of the
Notes at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.
9.4. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section
9, the principal amount of each Note to be prepaid shall mature and become due
and payable on the date fixed for such prepayment, together with interest on
such principal amount accrued to such date and the applicable Make-Whole Amount,
if any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and Make-
Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
9.5. PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to
purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of
the outstanding Notes except upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes. The Company will
promptly cancel all Notes acquired by it or any Affiliate pursuant to any
payment, prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
9.6. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, PROVIDED that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole
Amount, the following terms have the following meanings:
"CALLED PRINCIPAL" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 9.2 or has become or
24
Note Purchase Agreement/Flow International Corporation
is declared to be immediately due and payable pursuant to Section
13.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all
Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the
Settlement Date with respect to such Called Principal, in
accordance with accepted financial practice and at a discount
factor (applied an the same periodic basis as that on which
interest an the Notes is payable) equal to the Reinvestment Yield
with respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called
Principal of any Note, the sum of (x) the yield to maturity
implied by (i) the yields reported, as of 10:00 A.M. (New York
City time) on the second Business Day preceding the Settlement
Date with respect to such Called Principal, on the display
designated as "PX1" on The BLOOMBERG (or such other display as
may replace PX1 on The BLOOMBERG) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date,
or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the
Treasury Constant Maturity Series Yields reported, for the latest
day for which such yields have been so reported as of the second
Business Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15
(519) (or any comparable successor publication) for actively
traded U.S. Treasury securities having a constant maturity equal
to the Remaining Average Life of such Called Principal as of such
Settlement Date PLUS (y) fifty basis points (.50%). Such implied
yield will be determined, if necessary, by (a) converting U.S.
Treasury bill quotations to bond-equivalent yields in accordance
with accepted financial practice and (b) interpolating linearly
between (1) the actively traded U.S. Treasury security with the
average life closest to and greater than the Remaining Average
Life and (2) the actively traded U.S. Treasury security with the
average life closest to and less than the Remaining Average Life.
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-
twelfth year) obtained by dividing (i) such Called Principal into
(ii) the sum of the products obtained by multiplying (a) the
principal component of each Remaining Scheduled Payment with
respect to such Called Principal by (b)
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Note Purchase Agreement/Flow International Corporation
the number of years (calculated to the nearest one-twelfth year) that will
elapse between the Settlement Date with respect to such Called Principal
and the scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, PROVIDED that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 9.2 or
13.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 9.2 or has become or is declared to be immediately due and payable
pursuant to Section 13.1, as the context requires.
10. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to
comply with all laws, ordinances or governmental rules or regulations to which
each of them is subject, including, without limitation, Environmental Laws, and
will obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the ownership of
their respective properties or to the conduct of their respective businesses, in
each case to the extent necessary to ensure that non-compliance with such laws,
ordinances or governmental rules or regulations or failures to obtain or
maintain in effect such licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
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Note Purchase Agreement/Flow International Corporation
10.2. INSURANCE.
The Company will and will cause each of its Subsidiaries to
maintain, with financially sound and reputable insurers, insurance with respect
to their respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts (including
deductibles, co-insurance and self-insurance, if adequate reserves are
maintained with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and similarly
situated.
10.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Subsidiaries to
maintain and keep, or cause to be maintained and kept, their respective
properties in good repair, working order and condition (other than ordinary wear
and tear), so that the business carried on in connection therewith may be
properly conducted at all times, PROVIDED that this Section shall not prevent
the Company or any Subsidiary from discontinuing the operation and the
maintenance of any of its properties if such discontinuance is desirable in the
conduct of its business and the Company has concluded that such discontinuance
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
10.4. PAYMENT OF TAXES AND CLAIMS.
The Company will and will cause each of its Subsidiaries to file
all tax returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns and all other
taxes, assessments, governmental charges, or levies imposed on them or any of
their properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company or any Subsidiary, PROVIDED
that neither the Company nor any Subsidiary need pay any such tax or assessment
or claims if (i) the amount, applicability or validity thereof is contested by
the Company or such Subsidiary on a timely basis in good faith and in
appropriate proceedings, and the Company or a Subsidiary has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or such Subsidiary or (ii) the nonpayment of all such taxes and assessments in
the aggregate could not reasonably be expected to have a Material Adverse
Effect.
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Note Purchase Agreement/Flow International Corporation
10.5. CORPORATE EXISTENCE, ETC.
The Company will at all times preserve and keep in full force and
effect its corporate existence. Subject to Sections 11.2 and 11.10, the Company
will at all times preserve and keep in full force and effect the corporate
existence of each of its Subsidiaries (unless merged into the Company or a
Subsidiary) and all rights and franchises of the Company and its Subsidiaries
unless, in the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence, right or
franchise could not, individually or in the aggregate, have a Material Adverse
Effect.
10.6. MAINTENANCE OF LIENS ON COLLATERAL; ADDITIONAL COLLATERAL; ADDITIONAL
SUBSIDIARY GUARANTY AGREEMENTS.
(a) The Company agrees that it will take or cause to be taken
all action necessary to maintain and preserve the Liens granted under the
Security Agreement and the Subsidiary Security Agreement, including, without
limitation, the proper filing and refiling of appropriate Uniform Commercial
Code financing statements and continuation statements so as to make and keep
effective the Lien on the Collateral intended to be created by the Security
Agreement and the Subsidiary Security Agreement, paying all required filing fees
in connection therewith and executing and delivery such instruments of further
assurance as the holders of the Notes or the Bank Agent may from time to time
require; PROVIDED, HOWEVER, in accordance with the provisions of the
Intercreditor Agreement, if the Bank Agent releases any or all of the Liens
created by the Bank Security Documents, the Bank Agent shall also release the
identical Liens granted under the Security Documents.
(b) At such time as the Bank Agent requires that the Company
grant a security interest in the shares of stock or other equity interests of
any or all of its Subsidiaries to secure the obligations of the Company under
the Bank Credit Agreement (the agreement pursuant to which such security
interest is granted, as amended or supplemented from time to time, the "BANK
PLEDGE AGREEMENT"), the Company shall execute and deliver to each holder of
Notes a copy of the Pledge Agreement, between the Company and the Bank Agent, as
agent for the holders of the Notes, in substantially identical form to the Bank
Pledge Agreement (which, together with all supplements and amendments thereto,
is referred to herein as the "PLEDGE AGREEMENT"), together with copies of all
other documents, instruments and opinions (which shall also be addressed to such
holders) delivered to the Bank Agent in connection with such Pledge Agreement,
and shall take all other action necessary to grant to the Bank Agent,
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Note Purchase Agreement/Flow International Corporation
as agent for the holders of the Notes, a first priority security interest in
such shares of stock or equity interests, PARI PASSU with the security interest
in such shares of stock or equity interests as are granted to the Bank Agent
pursuant to the Bank Pledge Agreement.
(c) At such time as the Bank Agent requires that the Company
deliver any guaranty from any of its Subsidiaries which is not then a party to
the Subsidiary Guaranty Agreement, the Company shall cause each such Subsidiary
to execute and deliver to each holder of Notes a Subsidiary Guaranty Agreement,
and the Company shall deliver to each holder of Notes such other documents,
instruments or opinions has such holders may deem appropriate in connection with
the delivery of such Subsidiary Guaranty Agreement.
(d) The Company further agrees that if at any time the Company
or any one or more of its Subsidiaries (i) amends any Bank Security Document,
the Company will enter, or cause such Subsidiaries to enter, into a similar
amendment to the comparable Security Document or (ii) executes and delivers to
the Bank Agent any new Bank Security Document granting a Lien on any new
Collateral, the Company will, or will cause such Subsidiaries to, execute and
deliver to the Bank Agent as agent for the holders of the Notes a new
substantially identical Security Document granting a Lien on such new
Collateral.
11. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
11.1. TRANSACTIONS WITH AFFILIATES.
The Company will not and will not permit any Subsidiary to enter
into directly or indirectly any transaction or Material group of related
transactions (including without limitation the purchase, lease, sale or exchange
of properties of any kind or the rendering of any service) with any Affiliate
(other than the Company or another Subsidiary), except in the ordinary course
and pursuant to the reasonable requirements of the Company's or such
Subsidiary's business and upon fair and reasonable terms no less favorable to
the Company or such Subsidiary than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
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11.2. MERGER, CONSOLIDATION, ETC.
The Company shall not consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its assets in a
single transaction or series of transactions to any Person unless:
(a) the successor formed by such consolidation or the survivor of
such merger or the Person that acquires by conveyance, transfer or lease
substantially all of the assets of the Company as an entirety, as the case
may be (the "Successor Corporation"), shall be a solvent corporation
organized and existing under the laws of the United States or any State
thereof (including the District of Columbia), and, if the Company is not
the Successor Corporation, (i) such corporation shall have executed and
delivered to each holder of any Notes its assumption of the due and punct-
ual performance and observance of each covenant and condition of this
Agreement, the Other Agreement and the Notes and (ii) shall have caused to
be delivered to each holder of any Notes an opinion of nationally
recognized independent counsel, or other independent counsel reasonably
satisfactory to the Required Holders, to the effect that all agreements or
instruments effecting such assumption are enforceable in accordance with
their terms and comply with the terms hereof;
(b) immediately after giving effect to such transaction, (i) no
Default or Event of Default shall have occurred and be continuing and (ii)
the Successor Corporation would be permitted by the provisions of Section
11.3 hereof to incur at least $1.00 of additional Debt owing to a Person
other than a Subsidiary of the Successor Corporation.
No such conveyance, transfer or lease of substantially all of the assets of the
Company shall have the effect of releasing the Company or any successor
corporation that shall theretofore have become such in the manner prescribed in
this Section 11.2 from its liability under this Agreement or the Notes.
11.3. LIMITATION ON INDEBTEDNESS.
(a) The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, assume, guarantee, or otherwise
become directly or indirectly liable with respect to, any Debt, unless on
the date the Company or such Subsidiary becomes liable with respect to any
such Debt and immediately after giving effect thereto and the concurrent
retirement of any other Debt,
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(i) no Default or Event of Default exists, and
(ii) Consolidated Debt does not exceed 58% of
Consolidated Total Capitalization.
(b) The Company will not, and will not permit any Subsidiary to,
directly or indirectly, create, incur, assume, guarantee, or otherwise
become directly or indirectly liable with respect to, any Current Debt,
unless on the date the Company or such Subsidiary becomes liable with
respect to any such Debt and immediately after giving effect thereto and
the concurrent retirement of any other Current Debt,
(i) no Default or Event of Default exists, and
(ii) Consolidated Current Debt does not exceed the
greater of (x) 10% of Consolidated Total Capitalization or (y)
$15,000,000.
For the purposes of this Section 11.3, any Person becoming a Subsidiary after
the date hereof shall be deemed, at the time it becomes a Subsidiary, to have
incurred all of its then outstanding Debt, and any Person extending, renewing or
refunding any Debt shall be deemed to have incurred such Debt at the time of
such extension, renewal or refunding.
11.4. LIMITATION ON SUBSIDIARY INDEBTEDNESS.
The Company will not at any time permit any Subsidiary to,
directly or indirectly, create, incur, assume, guarantee, have outstanding, or
otherwise become or remain directly or indirectly liable with respect to, any
Debt other than:
(a) Debt of a Subsidiary outstanding on the date hereof and disclosed
in Schedule 6.15, and any extension, renewal or refunding thereof, PROVIDED
that the principal amount thereof is not increased after the date hereof;
(b) Debt of a Subsidiary owed to the Company or a Wholly-Owned
Subsidiary;
(c) (x) Debt of a Joint Venture Subsidiary owed directly by such
Joint Venture Subsidiary to a Joint Venture Partner, and (y) Debt of a
Joint
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Venture Subsidiary owed to a Person or Persons other than the Company or
such Joint Venture Partner, but only to the extent of the portion of the
principal amount of such Debt which is guaranteed by such Joint Venture
Partner, PROVIDED, HOWEVER, that the portion of the principal amount of
such Debt (A) which is not guaranteed by a Joint Venture Partner, (B) which
is guaranteed by the Company, or (C) for which the Company or another
Subsidiary is jointly and severally liable (either as the result of the
operation of law or as the result of an agreement) with such Joint Venture
Partner, shall not be permitted to be incurred by such Joint Venture
Subsidiary except in accordance with subparagraph (e) of this Section 11.4;
(d) Debt of a Subsidiary outstanding at the time such Subsidiary
becomes a Subsidiary, PROVIDED that (i) such Debt shall not have been
incurred in contemplation of such Subsidiary becoming a Subsidiary and (ii)
immediately after such Subsidiary becomes a Subsidiary no Default or Event
of Default shall exist, and PROVIDED FURTHER that any extension, renewal or
refunding thereof shall not increase the principal amount thereof and no
Default or Event of Default exists at the time of such extension, renewal
or refunding; or
(e) Debt of a Subsidiary in addition to that otherwise permitted by
the foregoing provisions of this Section 11.4, PROVIDED that on the date
the Subsidiary incurs or otherwise becomes liable with respect to any such
additional Debt and immediately after giving effect thereto and the
concurrent retirement of any other Debt,
(i) no Default or Event of Default exists, and
(ii) the total amount of (x) all Debt incurred pursuant to
this subparagraph (e) PLUS (y) the aggregate amount of all
reimbursement obligations of the Company or any Subsidiary under
any Standby Letter of Credit does not exceed 20% of Consolidated
Total Capitalization.
For the purposes of this Section 11.4, any Person becoming a Subsidiary after
the date hereof shall be deemed, at the time it becomes a Subsidiary, to have
incurred all of its then outstanding Debt, and any Person extending, renewing or
refunding any Debt shall be deemed to have incurred such Debt at the time of
such extension, renewal or refunding.
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11.5. RESTRICTED PAYMENTS.
(a) LIMITATION. The Company will not, and will not permit any
of its Subsidiaries to, at any time, declare or make, or incur any liability to
declare or make, any Restricted Payment UNLESS immediately after giving effect
to such action:
(i) the aggregate amount of Restricted Payments of the
Company and its Subsidiaries declared or made during the period
commencing on August 1, 1995 and ending on the date such
Restricted Payment is declared or made, inclusive, would not
exceed 50% of Consolidated Net Income for such period (or minus
100% of Consolidated Net Income for such period if Consolidated
Net Income for such period is a loss);
(ii) no Default or Event of Default would exist; and
(iii) the Company would be permitted by the provisions
of Section 11.3 to incur at least $1.00 of additional Debt owing
to a Person other than a Subsidiary of the Company.
(b) TIME OF PAYMENT. The Company will not, nor will it permit
any of its Subsidiaries to, authorize a Restricted Payment that is not payable
within sixty (60) days of authorization.
11.6. CURRENT RATIO.
The Company will not, at any time, permit the ratio of
Consolidated Current Assets to Consolidated Current Liabilities to be less than
1.25 to 1.
11.7. LIENS.
The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly create, incur, assume or permit to exist (upon the
happening of a contingency or otherwise) any Lien on or with respect to any
property or asset (including, without limitation, any document or instrument in
respect of goods or accounts receivable) of the Company or any such Subsidiary,
whether now owned or held or hereafter acquired, or any income or profits
therefrom, or assign or otherwise convey any right to receive income or profits,
except:
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Note Purchase Agreement/Flow International Corporation
(a) Liens securing the Notes and obligations of the Company
under the Bank Credit Agreement, which Liens shall, at all times, be PARI
PASSU; PROVIDED, HOWEVER, if, in accordance with the Intercreditor
Agreement, the Bank Agent releases all of the Liens securing the
obligations of the Company under the Bank Credit Agreement and all of the
Liens securing the Notes, thereafter no Liens securing the Bank Credit
Agreement shall be permitted unless such Liens also secure the Notes;
(b) other Liens existing on the date of this Agreement and securing
the Debt of the Company and its Subsidiaries identified on Schedule 6.15 as
"Flow Canada Revolving Line of Credit" and ["Flow Europe GMBH Bank debt"];
(c) any Lien created to secure all or any part of the purchase price,
or to secure Debt incurred or assumed to pay all or any part of the
purchase price or cost of construction, of property (or any improvement
thereon) acquired or constructed by the Company or a Subsidiary after the
date of the Closing, PROVIDED that
(i) any such Lien shall extend solely to the item or items
of such property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument
originally creating such Lien, other property (or improvement
thereon) which is an improvement to or is acquired for specific
use in connection with such acquired or constructed property (or
improvement thereon) or which is real property being improved by
such acquired or constructed property (or improvement thereon),
(ii) the principal amount of the Debt secured by any such
Lien shall at no time exceed an amount equal to the lesser of (A)
the cost to the Company or such Subsidiary of the property (or
improvement thereon) so acquired or constructed and (B) the Fair
Market Value (as determined in good faith by the board of
directors of the Company) of such property (or improvement
thereon) at the time of such acquisition or construction, and
(iii) any such Lien shall be created contemporaneously
with, or within thirty (30) days after, the acquisition or
construction of such property;
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(d) Liens for taxes, assessments or other governmental charges the
payment of which is not at the time required by Section 10.4;
(e) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, materialmen and other similar Liens, in each case, incurred in
the ordinary course of business for sums not yet due or the payment of
which is not at the time required by Section 10.4;
(f) Liens (other than any Lien imposed by ERISA) incurred or deposits
made in the ordinary course of business (i) in connection with workers'
compensation, unemployment insurance and other types of social security or
retirement benefits, or (ii) to secure (or to obtain letters of credit that
secure) the performance of tenders, statutory obligations, surety bonds,
appeal bonds, bids, leases (other than Capital Leases), performance bonds,
purchase, construction or sales contracts and other similar obligations, in
each case not incurred or made in connection with the borrowing of money,
the obtaining of advances or credit or the payment of the deferred purchase
price of property;
(g) any attachment or judgment Lien, unless the judgment it secures
shall not, within fifteen (15) days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have
been discharged within five (5) days after the expiration of any such stay;
(h) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case
incidental to, and not interfering with, the ordinary conduct of the
business of the Company or any of its Subsidiaries, PROVIDED that such
Liens do not, in the aggregate, materially detract from the value of such
property;
(i) any Lien existing on property of a Person immediately prior to
its being consolidated with or merged into the Company or a Subsidiary or
its becoming a Subsidiary, or any Lien existing on any property acquired by
the Company or any Subsidiary at the time such property is so acquired
(whether or not the Debt secured thereby shall have been assumed), PROVIDED
that (i) no such Lien shall have been created or assumed in contemplation
of such consolidation or merger or such Person's becoming a Subsidiary or
such acquisition of property, and (ii) each such Lien shall extend solely
to the item or items of property so
35
Note Purchase Agreement/Flow International Corporation
acquired and, if required by the terms of the instrument originally
creating such Lien, other property which is an improvement to or is
acquired for specific use in connection with such acquired property;
(j) any Lien renewing, extending or refunding any Lien permitted
by paragraphs (b), (c) or (i) of this Section 11.7, PROVIDED that (i)
the principal amount of Debt secured by such Lien immediately prior to
such extension, renewal or refunding is not increased or the maturity
thereof reduced, (ii) such Lien is not extended to any other property,
and (iii) immediately after such extension, renewal or refunding no
Default or Event of Default would exist; and
(k) other Liens not otherwise permitted by paragraphs (a)
through (j), PROVIDED that the Debt secured by such Liens does not
exceed 5% of Consolidated Total Capitalization.
11.8. MINIMUM FIXED CHARGES COVERAGE.
The Company will not, at any time, permit the Fixed Charges
Coverage Ratio to be less than 2.00 to 1.
11.9. MINIMUM CONSOLIDATED NET WORTH.
The Company will not, at any time, permit Consolidated Net Worth
to be less than the sum of (a) $40,000,000, plus (b) 50% of its aggregate
Consolidated Net Income (but only if a positive number) for the period beginning
on May 1, 1995 and ending at the end of the most recently completed fiscal
quarter.
11.1O. SALE OF ASSETS.
The Company will not, and will not permit any of its Subsidiaries
to, make any Transfer, PROVIDED that the foregoing restriction does not apply to
a Transfer if:
(a) the property that is the subject of such Transfer
constitutes either (i) inventory held for sale, or (ii) equipment,
fixtures, supplies or materials no longer required in the operation of
the business of the Company or such Subsidiary or that is obsolete,
and, in the case of any Transfer described in clause (i) or clause
(ii), such Transfer is in the ordinary course of business (an
"Ordinary Course Transfer"); or
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Note Purchase Agreement/Flow International Corporation
(b) either
(i) such Transfer is from a Subsidiary to the Company or a
Wholly-Owned Subsidiary, or
(ii) such Transfer is from the Company to a Wholly-Owned
Subsidiary, or
(iii) such Transfer is from the Company to a Subsidiary
(other than a Wholly-Owned Subsidiary) or from a Subsidiary to
another Subsidiary and in either case is for Fair Market Value,
so long as immediately before and immediately after the consummation
of such transaction, and after giving effect thereto, no Default or
Event of Default exists or would exist (each such Transfer, an
"Intergroup Transfer"); or
(c) such Transfer is not an Ordinary Course Transfer or an
Intergroup Transfer (such transfers collectively referred to as
"Excluded Transfers"), and all of the following conditions shall have
been satisfied with respect thereto (the date of the consummation of
such Transfer of property being referred to herein as the "Property
Disposition Date"):
(i) such Transfer does not involve a Substantial Portion
of the property of the Company and its Subsidiaries,
(ii) in the good faith opinion of the Company, the Transfer
is in exchange for consideration with a Fair Market Value at
least equal to that of the property exchanged, and is in the best
interests of the Company, and
(iii) immediately after giving effect to such transaction no
Default or Event of Default would exist.
11.11. RESTRICTED INVESTMENTS.
(a) LIMITATION. The Company will not, and will not permit any
of its Subsidiaries to, declare, make or authorize any Restricted Investment
unless immediately after giving effect to such action:
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Note Purchase Agreement/Flow International Corporation
(i) the aggregate amount of Restricted Investments (valued
immediately after such action) would not exceed 20% of Consolidated
Total Capitalization as of the end of the most recent fiscal quarter;
and
(ii) no Default or Event of Default would exist.
(b) INVESTMENTS OF SUBSIDIARIES. Each Person which becomes
a Subsidiary of the Company after the date of the Closing will be deemed to
have made, on the date such Person becomes a Subsidiary of the Company, all
Restricted Investments of such Person in existence on such date. Investments
in any Person that ceases to be a Subsidiary of the Company after the date of
the Closing (but in which the Company or another Subsidiary continues to
maintain an Investment) will be deemed to have been made on the date on which
such Person ceases to be a Subsidiary of the Company.
(c) DEFINITIONS. The term "RESTRICTED INVESTMENTS" means all
Investments except the following:
(a) property to be used in the ordinary course of business of
the Company and its Subsidiaries;
(b) current assets arising from the sale of goods and services
in the ordinary course of business of the Company and its
Subsidiaries;
(c) Investments in one or more Subsidiaries or any Person that
concurrently with such Investment becomes a Subsidiary;
(d) Investments existing on the date of the Closing and
disclosed in Schedule 6.15;
(e) Investments in United States Governmental Securities,
PROVIDED that such obligations mature within 365 days from the date of
acquisition thereof;
(f) Investments in certificates of deposit or banker's
acceptances issued by an Acceptable Bank, PROVIDED that such
obligations mature within 365 days from the date of acquisition
thereof;
(g) Investments in commercial paper given the highest rating by
a credit rating agency of recognized national standing and maturing
not more than 270 days from the date of creation thereof;
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(h) Investments in Repurchase Agreements; and
(i) Investments in tax-exempt obligations of any state of the
United States of America, or any municipality of any such state, in
each case rated "AA" or better by S&P, "Aa2" or better by Moody's or
an equivalent rating by any other credit rating agency of recognized
national standing, PROVIDED that such obligations mature within 365
days from the date of acquisition thereof.
For purposes of this Agreement, an Investment shall be valued at the lesser of
(i) cost and (ii) the value at which such Investment is to be shown on the books
of the Company and its Subsidiaries in accordance with GAAP. As of any date,
the calculation of the value of any Investment which is outstanding or which is
to be made shall be determined in U.S. Dollars and any Investment which is
stated to be payable in a currency other than U.S. Dollars shall be determined
in U.S. Dollars using the exchange rate with respect to such currency as of such
date.
As used in this definition of "Restricted Investments":
"ACCEPTABLE BANK" means any bank or trust company (i) which is
organized under the laws of the United States of America or any State
thereof, (ii) which has capital, surplus and undivided profits
aggregating at least $500,000,000, and (iii) whose long-term unsecured
debt obligations (or the long-term unsecured debt obligations of the
bank holding company owning all of the capital stock of such bank or
trust company) shall have been given a rating of "A" or better by
S&P, "A2" or better by Moody's or an equivalent rating by any other
credit rating agency of recognized national standing.
"ACCEPTABLE BROKER-DEALER" means any Person other than a natural
person (i) which is registered as a broker or dealer pursuant to the
Exchange Act and (ii) whose long-term unsecured debt obligations shall
have been given a rating of "A" or better by S&P, "A2" or better by
Moody's or an equivalent rating by any other credit rating agency of
recognized national standing.
"MOODY'S" means Moody's Investors Service, Inc.
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Note Purchase Agreement/Flow International Corporation
"REPURCHASE AGREEMENT" means any written agreement
(a) that provides for (i) the transfer of one or more
United States Governmental Securities in an aggregate principal
amount at least equal to the amount of the Transfer Price
(defined below) to the Company or any of its Subsidiaries from an
Acceptable Bank or an Acceptable Broker-Dealer against a transfer
of funds (the "Transfer Price") by the Company or such Subsidiary
to such Acceptable Bank or Acceptable Broker-Dealer, and (ii) a
simultaneous agreement by the Company or such Subsidiary, in
connection with such transfer of funds, to transfer to such
Acceptable Bank or Acceptable Broker-Dealer the same or
substantially similar United States Governmental Securities for a
price not less than the Transfer Price plus a reasonable return
thereon at a date certain not later than 365 days after such
transfer of funds,
(b) in respect of which the Company or such Subsidiary
shall have the right, whether by contract or pursuant to
applicable law, to liquidate such agreement upon the occurrence
of any default thereunder, and
(c) in connection with which the Company or such
Subsidiary, or an agent thereof, shall have taken all action
required by applicable law or regulations to perfect a Lien in
such United States Governmental Securities.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
"UNITED STATES GOVERNMENTAL SECURITY" means any direct obligation
of, or obligation guaranteed by, the United States of America, or any
agency controlled or supervised by or acting as an instrumentality of
the United States of America pursuant to authority granted by the
Congress of the United States of America, so long as such obligation
or guarantee shall have the benefit of the full faith and credit of
the United States of America which shall have been pledged pursuant to
authority granted by the Congress of the United States of America.
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Note Purchase Agreement/Flow International Corporation
11.12. TAX CONSOLIDATION.
The Company will not consent to or permit the filing of or be a
party to any consolidated income tax return on behalf of itself or any of its
Subsidiaries with any Person (other than a consolidated income tax return of the
Company and its own Subsidiaries).
12. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Section 8.1(d), or in Sections 11.1 through
11.11, inclusive; or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 12) and such default is
not remedied within 30 days after the earlier of (i) a Responsible
Officer obtaining actual knowledge of such default and (ii) the
Company receiving written notice of such default from any holder of a
Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this paragraph (d) of Section
12); or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this
Agreement or in any writing furnished in connection with the
transactions contemplated hereby proves to have been false or
incorrect in any material respect on the date as of which made; or
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(f) (1) the Company or any Subsidiary is in default (as principal
or as guarantor or other surety) in the payment of any principal of or
premium or make-whole amount or interest on any Indebtedness that is
outstanding in an aggregate principal amount of at least $100,000
beyond any period of grace provided with respect thereto, or (ii) the
Company or any Subsidiary is in default in the performance of or
compliance with any term of any evidence of any Indebtedness in an
aggregate outstanding principal amount of at least $100,000 or of any
mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition
such Indebtedness has become, or has been declared (or one or more
Persons are entitled to declare such Indebtedness to be), due and
payable before its stated maturity or before its regularly scheduled
dates of payment, or (iii) as a consequence of the occurrence or
continuation of any event or condition (other than the passage of time
or the right of the holder of Indebtedness to convert such
Indebtedness into equity interests), (x) the Company or any Subsidiary
has become obligated to purchase or repay Indebtedness before its
regular maturity or before its regularly scheduled dates of payment in
an aggregate outstanding principal amount of at least $100,000, or (y)
one or more Persons have the right to require the Company or any
Subsidiary so to purchase or repay such Indebtedness; or
(g) the Company or any Subsidiary (i) is generally not paying,
or admits in writing its inability to pay, its debts as they become
due, (ii) files, or consents by answer or otherwise to the filing
against it of, a petition for relief or reorganization or arrangement
or any other petition in bankruptcy, for liquidation or to take
advantage of any bankruptcy, insolvency, reorganization, moratorium or
other similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of
its Subsidiaries, a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, or constituting an order for relief or approving
a petition for
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relief or reorganization or any other petition in bankruptcy or for
liquidation or to take advantage of any bankruptcy or insolvency law
of any jurisdiction, or ordering the dissolution, winding-up or
liquidation of the Company or any of its Subsidiaries, or any such
petition shall be filed against the Company or any of its Subsidiaries
and such petition shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $250,000 (which are not paid or fully covered
by insurance and the liability of the insurer is not being challenged
or questioned) are rendered against one or more of the Company and its
Subsidiaries and which judgments are not, within 60 days after entry
thereof, bonded, discharged or stayed pending appeal, or are not
discharged within 60 days after the expiration of such stay; or
(j) the Company or any Subsidiary shall fail to perform or
observe any agreement or covenant contained in any of the Security
Documents, or any Subsidiary shall fail to perform or observe any
agreement or covenant contained in the Subsidiary Guaranty Agreement;
or
(k) any Lien created by any Security Document shall cease to be
a valid and enforceable Lien or any such Lien shall cease to be a
perfected Lien (other than Liens which have been released by the Bank
Agent in accordance with the provisions of the Intercreditor
Agreement); or
(l) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted
proceedings under ERISA section 4042 to terminate or appoint a trustee
to administer any Plan or the PBGC shall have notified the Company or
any ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA)
under all Plans, determined in accordance with Title IV of ERISA,
shall exceed $100,000, (iv) the Company or any ERISA Affiliate shall
have incurred or is reasonably expected to incur any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) the
Company or any ERISA Affiliate withdraws from any Multiemployer Plan,
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or (vi) the Company or any Subsidiary establishes or amends
any employee welfare benefit plan that provides post-employ-
ment welfare benefits in a manner that would increase the
liability of the Company or any Subsidiary thereunder; and
any such event or events described in clauses (i) through
(vi) above, either individually or together with any other
such event or events, could reasonably be expected to have a
Material Adverse Effect.
As used in Section 12(l), the terms "EMPLOYEE BENEFIT PLAN" and
"EMPLOYEE WELFARE BENEFIT PLAN" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
13. REMEDIES ON DEFAULT, ETC.
13.1. ACCELERATION.
(a) If an Event of Default with respect to the
Company described in paragraph (g) or (h) of Section 12 (other
than an Event of Default described in clause (i) of paragraph (g)
or described in clause (vi) of paragraph (g) by virtue of the
fact that such clause encompasses clause (i) of paragraph (g))
has occurred, all the Notes then outstanding shall automatically
become immediately due and payable.
(b) If any other Event of Default has occurred
and is continuing, any holder or holders of more than 25% in
principal amount of the Notes at the time outstanding may at any
time at its or their option, by notice or notices to the Company,
declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in
paragraph (a) or (b) of Section 12 has occurred and is
continuing, any holder or holders of Notes at the time
outstanding affected by such Event of Default may at any time, at
its or their option, by notice or notices to the Company,
declare all the Notes held by it or them to be immediately due
and payable.
Upon any Notes becoming due and payable under this
Section 13.1, whether automatically or by declaration, such Notes
will forthwith mature and the entire unpaid principal amount of
such Notes, plus (x) all accrued and unpaid interest thereon and
(y) the Make-Whole Amount determined in respect of such
principal amount (to the full extent permitted by applicable
law), shall all be immediately due and payable, in each and every
case
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Note Purchase Agreement/Flow International Corporation
without presentment, demand, protest or further notice, all of which are hereby
waived. The Company acknowledges, and the parties hereto agree, that each
holder of a Note has the right to maintain its investment in the Notes free from
repayment by the Company (except as herein specifically provided for) and that
the provision for payment of a Make-Whole Amount by the Company in the event
that the Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of such right
under such circumstances.
13.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is
continuing, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 13.1, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights of such
holder by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.
13.3. RESCISSION.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 13.1, the holders of not less than 76%
in principal amount of the Notes then outstanding, by written notice to the
Company, may rescind and annul any such declaration and its consequences if (a)
the Company has paid all overdue interest on the Notes, all principal of and
Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid
other than by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted by
applicable law) any overdue interest in respect of the Notes, at the Default
Rate, (b) all Events of Default and Defaults, other than non-payment of amounts
that have become due solely by reason of such declaration, have been cured or
have been waived pursuant to Section 18, and (c) no judgment or decree has been
entered for the payment of any monies due pursuant hereto or to the Notes. No
rescission and annulment under this Section 13.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent thereon.
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13.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of
any Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies. No
right, power or remedy conferred by this Agreement or by any Note upon any
holder thereof shall be exclusive of any other right, power or remedy referred
to herein or therein or now or hereafter available at law, in equity, by statute
or otherwise. Without limiting the obligations of the Company under Section 16,
the Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 13, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
14. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
14.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a
register for the registration and registration of transfers of Notes. The name
and address of each holder of one or more Notes, each transfer thereof and the
name and address of each transferee of one or more Notes shall be registered in
such register. Prior to due presentment for registration of transfer, the
Person in whose name any Note shall be registered shall be deemed and treated as
the owner and holder thereof for all purposes hereof, and the Company shall not
be affected by any notice or knowledge to the contrary. The Company shall give
to any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
14.2. TRANSFER AND EXCHANGE OF NOTES.
Upon surrender of any Note at the principal executive office of
the Company for registration of transfer or exchange (and in the case of a
surrender for registration of transfer, duly endorsed or accompanied by a
written instrument of transfer duly executed by the registered holder of such
Note or his attorney duly authorized in writing and accompanied by the address
for notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note.
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Note Purchase Agreement/Flow International Corporation
Each such new Note shall be payable to such Person as such holder may request
and shall be substantially in the form of Exhibit 1. Each such new Note shall be
dated and bear interest from the date to which interest shall have been paid on
the surrendered Note or dated the date of the surrendered Note if no interest
shall have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in respect of
any such transfer of Notes. Notes shall not be transferred in denominations of
less than $100,000, PROVIDED that if necessary to enable the registration of
transfer by a holder of its entire holding of Notes, one Note may be in a
denomination of less than $100,000. Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to have
made the representation set forth in Section 7.2.
14.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory
to it of the ownership of and the loss, theft, destruction or mutilation of any
Note (which evidence shall be, in the case of an Institutional Investor, notice
from such Institutional Investor of such ownership and such loss, theft,
destruction or mutilation), and
(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such
Note is, or is a nominee for, an original Purchaser or another holder
of a Note with a minimum net worth of at least $10,000,000, such
Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
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15. PAYMENTS ON NOTES.
15.1. PLACE OF PAYMENT.
Subject to Section 15.2, payments of principal, Make-Whole
Amount, if any, and interest becoming due and payable on the Notes shall be made
in Kent, Washington at the principal office of the Company in such jurisdiction.
The Company may at any time, by notice to each holder of a Note, change the
place of payment of the Notes so long as such place of payment shall be either
the principal office of the Company in such jurisdiction or the principal office
of a bank or trust company in such jurisdiction.
15.2. HOME OFFICE PAYMENT.
So long as you or your nominee shall be the holder of any Note,
and notwithstanding anything contained in Section 15.1 or in such Note to the
contrary, the Company will pay all sums becoming due on such Note for principal,
Make-Whole Amount, if any, and interest by the method and at the address
specified for such purpose below your name in Schedule A, or by such other
method or at such other address as you shall have from time to time specified to
the Company in writing for such purpose, without the presentation or surrender
of such Note or the making of any notation thereon, except that upon written
request of the Company made concurrently with or reasonably promptly after
payment or prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the Company at its
principal executive office or at the place of payment most recently designated
by the Company pursuant to Section 15.1. Prior to any sale or other disposition
of any Note held by you or your nominee you will, at your election, either
endorse thereon the amount of principal paid thereon and the last date to which
interest has been paid thereon or surrender such Note to the Company in exchange
for a new Note or Notes pursuant to Section 14.2. The Company will afford the
benefits of this Section 15.2 to any Institutional Investor that is the direct
or indirect transferee of any Note purchased by you under this Agreement and
that has made the same agreement relating to such Note as you have made in this
Section 15.2.
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16. EXPENSES, ETC.
16.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including the
allocated costs and expenses of your in-house counsel and the reasonable
attorneys' fees of your special counsel and, if reasonably required, local or
other counsel) incurred by you and each Other Purchaser or holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the Notes (whether or not
such amendment, waiver or consent becomes effective), including, without
limitation: (a) the costs and expenses incurred in enforcing or defending (or
determining whether or how to enforce or defend) any rights under this Agreement
or the Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any work-
out or restructuring of the transactions contemplated hereby and by the Notes.
The Company will pay, and will save you and each other holder of a Note harmless
from, all claims in respect of any fees, costs or expenses if any, of brokers
and finders (other than those retained by you).
16.2. SURVIVAL.
The obligations of the Company under this Section 16 will survive
the payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the purchase or
transfer by you of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of you or any
other holder of a Note. All statements contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant to this Agreement
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Note Purchase Agreement/Flow International Corporation
shall be deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between you and the Company and
supersede all prior agreements and understandings relating to the subject matter
hereof.
18. AMENDMENT AND WAIVER.
18.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance
of any term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6, 7 or 22, or any defined term (as it is
used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 13 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 9, 12(a), 12(b), 13, 18 or
21.
18.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this Section 18 to each holder of outstanding Notes promptly following the
date on which it is executed and delivered by, or receives the consent or
approval of, the requisite holders of Notes.
(b) PAYMENT. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or
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Note Purchase Agreement/Flow International Corporation
additional interest, fee or otherwise, or grant any security, to any holder of
Notes as consideration for or as an inducement to the entering into by any
holder of Notes or any waiver or amendment of any of the terms and provisions
hereof unless such remuneration is concurrently paid, or security is
concurrently granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or amendment.
18.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section
18 applies equally to all holders of Notes and is binding upon them and upon
each future holder of any Note and upon the Company without regard to whether
such Note has been marked to indicate such amendment or waiver. No such
amendment or waiver will extend to or affect any obligation, covenant,
agreement, Default or Event of Default not expressly amended or waived or impair
any right consequent thereon. No course of dealing between the Company and the
holder of any Note nor any delay in exercising any rights hereunder or under any
Note shall operate as a waiver of any rights of any holder of such Note. As
used herein, the term "THIS AGREEMENT" and references thereto shall mean this
Agreement as it may from time to time be amended or supplemented.
18.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
19. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery service
(charges prepaid), or (b) by registered or certified mail with return receipt
requested (postage prepaid), or (c) by a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
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Note Purchase Agreement/Flow International Corporation
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
(iii) if to the Company, to the Company at its address set forth
at the beginning hereof to the attention of Lee M. Andrews, Vice
President - Chief Financial Officer, or at such other address as the
Company shall have specified to the holder of each Note in writing.
Notices under this Section 19 will be deemed given only when actually
received.
20. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may hereafter
be executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 20
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
21. CONFIDENTIAL INFORMATION.
For the purposes of this Section 21, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or any
Subsidiary in connection with the transactions contemplated by or otherwise
pursuant to this Agreement that is proprietary in nature and that was clearly
marked or labeled or otherwise adequately identified when received by you as
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Note Purchase Agreement/Flow International Corporation
being confidential information of the Company or such Subsidiary, PROVIDED that
such term does not include information that (a) was publicly known or otherwise
known to you prior to the time of such disclosure, (b) subsequently becomes
publicly known through no act or omission by you or any person acting on your
behalf, (c) otherwise becomes known to you other than through disclosure by the
Company or any Subsidiary or (d) constitutes financial statements delivered to
you under Section 8.1 that are otherwise publicly available. You will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, PROVIDED that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 21, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation therein (if such Person has agreed in writing prior
to its receipt of such Confidential Information to be bound by the provisions of
this Section 21), (v) any Person from which you offer to purchase any security
of the Company (if such Person has agreed in writing prior to its receipt of
such Confidential Information to be bound by the provisions of this Section 21),
(vi) any federal or state regulatory authority having jurisdiction over you,
(vii) the National Association of Insurance Commissioners or any similar
organization, or any nationally recognized rating agency that requires access to
information about your investment portfolio or (viii) any other Person to which
such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to you, (x) in
response to any subpoena or other legal process, (y) in connection with any
litigation to which you are a party or (z) if an Event of Default has occurred
and is continuing, to the extent you may reasonably determine such delivery and
disclosure to be necessary or appropriate in the enforcement or for the
protection of the rights and remedies under your Notes and this Agreement. Each
holder of a Note, by its acceptance of a Note, will be deemed to have agreed to
be bound by and to be entitled to the benefits of this Section 21 as though it
were a party to this Agreement. On reasonable request by the Company in
connection with the delivery to any holder of a Note of information required to
be delivered to such holder under this Agreement or requested by such holder
(other than a holder that is a party to this Agreement or its nominee), such
holder will enter into an agreement with the Company embodying the provisions of
this Section 21.
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Note Purchase Agreement/Flow International Corporation
22. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates
as the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 7. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 22), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
22), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
23. MISCELLANEOUS.
23.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by
or on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
23.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
23.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining
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Note Purchase Agreement/Flow International Corporation
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by law) not invalidate or
render unenforceable such provision in any other jurisdiction.
23.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any
Person, or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
23.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
each of which shall be an original but all of which together shall constitute
one instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
23.6. GOVERNING LAW.
This Agreement 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.
23.7. STATUTORY NOTICE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT,
OR FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
* * * * *
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Note Purchase Agreement/Flow International Corporation
If you are in agreement with the foregoing, please sign the form
of agreement on the accompanying counterpart of this Agreement and return it to
the Company, whereupon the foregoing shall become a binding agreement between
you and the Company.
Very truly yours,
FLOW INTERNATIONAL CORPORATION
By /s/ Ronald W. Tarrant
--------------------------------------
Name: Ronald W. Tarrant
Title: Chairman, President and
Chief Executive Officer
The foregoing is hereby
agreed to as of the
date thereof
CONNECTICUT GENERAL LIFE INSURANCE COMPANY
By CIGNA Investments, Inc.
By /s/ James G. Schelling
-----------------------------------
Name: James G. Schelling
Title: Managing Director
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Note Purchase Agreement/Flow International Corporation