AMENDMENT NUMBER ONE
TO
CREDIT AGREEMENT
THIS AMENDMENT NUMBER ONE TO CREDIT AGREEMENT (this "Amendment") is made
as of this ______ day of March, 1999 by and among BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, a national banking association, d/b/a SEAFIRST
BANK, and U.S. BANK NATIONAL ASSOCIATION, a national banking association
(each a "Lender"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
national banking association, d/b/a SEAFIRST BANK, as agent for the Lenders
(the "Agent"), and FLOW INTERNATIONAL CORPORATION, a Washington corporation
("Borrower").
RECITALS
A. Lenders, Agent and Borrower are parties to that certain Credit
Agreement dated as of August 31, 1998 (the "Credit Agreement").
B. Borrower has requested, and Lenders and Agent have agreed to amend
the Credit Agreement upon certain terms and conditions contained in this
Amendment.
NOW, THEREFORE, the parties hereto agree as follows:
AGREEMENT
1. DEFINITIONS. Capitalized terms not otherwise defined in this
Amendment shall have the meanings set forth in the Credit Agreement.
2. AMENDMENTS TO CREDIT AGREEMENT. The Credit Agreement is amended as
follows:
a. AMENDMENT TO DEFINITIONS. In Section 1.1, amendments are made
to the definitions as follows:
(1) ABB AUTOCLAVE SYSTEMS. The definition of "ABB Autoclave Systems"
is hereby added as follows:
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"ABB AUTOCLAVE SYSTEMS" means ABB Autoclave Systems Inc., a
Delaware corporation.
(2) ABB PRESSURE SYSTEMS. The definition of "ABB Pressure Systems"
is hereby added as follows:
"ABB PRESSURE SYSTEMS" means ABB Pressure Systems AB, a Swedish
company.
(3) APPLICABLE MARGIN. The definition of "Applicable Margin" is
hereby amended and restated to read as follows:
"APPLICABLE MARGIN" means on any date, with respect to any LIBOR
Loans or Multi-Currency Loans, the rate per annum that is determined
by reference to the following matrix:
Funded Debt Ratio as of the end of the Applicable
previous fiscal quarter Margin
----------------------- ------
Less than 2.0: .75%
Equal to or greater than 2.0:1 and less
than 2.35:1 .90%
Equal to or greater than 2.35:1 and less
than 2.6:1 1.00%
Equal to or greater than 2.60:1 and less
than 3.0:1 1.25%
Equal to or greater than 3.0:1 and less
than 3.5:1 1.50%
Equal to or greater than 3.5:1 1.75%
The Applicable Margin shall be adjusted forty-five (45) days after the
end of each fiscal quarter of Borrower and ninety (90) days after the
end of each fiscal year of Borrower (when compliance with the Funded
Debt Ratio is to be tested); provided, however, in the event that any of
the financial statements or quarterly compliance certificates required
to be delivered pursuant to
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Section 6.9 are not delivered when due, then (a) if such financial
statements and certificates are delivered after the date such financial
statements and certificates were required to be delivered (without
giving effect to any applicable cure period) and the Applicable Margin
increases from that previously in effect as a result of the delivery of
such financial statements, then the Applicable Margin during the period
from the date upon which such financial statements were required to be
delivered (without giving effect to any applicable cure period) until
the date upon which they actually are delivered shall, except as
otherwise provided in clause (c) below, be the Applicable Margin as so
increased; (b) if such financial statements and certificates are
delivered after the date such financial statements and certificates are
required to be delivered (without giving effect to any applicable cure
period) and the Applicable Margin decreases from that previously in
effect as a result of the delivery of such financial statements, then
such decrease in the Applicable Margin shall not become effective until
the date upon which the financial statements and certificates actually
were delivered; and (c) if such financial statements and certificates
are not delivered prior to the expiration of the applicable cure period,
then, effective upon such expiration, for the period from the date upon
which such financial statements and certificates were required to be
delivered (after the expiration of the applicable cure period) until two
(2) Business Days following the date upon which they actually are
delivered, the Applicable Margin shall be 1.75% (175 basis points) (it
being understood that the foregoing shall not limit the rights of Agent
and Lenders under Section 2.7(a)).
(4) APPLICABLE UNUSED FEE PERCENTAGE. The definition of
"Applicable Unused Fee Percentage" is hereby added to read as follows:
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"APPLICABLE UNUSED FEE PERCENTAGE" means, on any date, the rate
per annum that is determined by reference to the following matrix:
Applicable Margin Applicable
----------------- Unused Fee
Percentage
----------
.75% 10 basis
points
.90% 10 basis
points
1.00% 10 basis
points
1.25% 10 basis
points
1.50% 25 basis
points
1.75% 37.5 basis
points
b. AMENDMENT TO SECTION 2.11(c). Section 2.11(c) is hereby amended
and restated as follows:
(c) UNUSED PORTION FEE. Borrower shall pay to Agent for the
account of Lenders in accordance with their Pro Rata Shares an annual
commitment fee in the amount equal to the product of (i) the
Applicable Unused Fee Percentage and (ii) the Unused Portion. As used
herein, "Unused Portion" shall mean $45,000,000 LESS the Total
Utilization until the first borrowing of a Revolving Loan or issuance
of a Letter of Credit hereunder which causes the Total Utilization to
exceed $45,000,000, in which case, "Unused Portion" shall mean
$70,000,000 LESS Total Utilization. Such fee shall accrue as of the
date hereof until the Revolving Facility Maturity Date, be payable
quarterly in arrears and shall be deemed fully earned when due and
non-refundable, in whole or in part, when paid.
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b. AMENDMENT TO SECTION 6.9(a). Section 6.9(a) is hereby amended
and restated as follows:
(a) ANNUAL AUDITED FINANCIAL STATEMENTS. As soon as available
and in any event within ninety (90) days after the end of each fiscal
year of Borrower, the consolidated and consolidating balance sheet of
Borrower and its Subsidiaries as of the end of such fiscal year and
the related consolidated and consolidating statements of income and
the consolidated statement of retained earnings and statement of cash
flows of Borrower and its Subsidiaries for such year, accompanied by
the audit report thereon by independent certified public accountants
selected by Borrower and reasonably satisfactory to Agent (which
reports shall be prepared in accordance with GAAP and shall not be
qualified by reason of restricted or limited examination of any
material portion of the records of Borrower or any Subsidiary and
shall contain no disclaimer of opinion or adverse opinion except such
as Agent in its sole discretion determines to be immaterial);
c. AMENDMENT TO SECTION 6.9(b). Section 6.9(b) is hereby amended
and restated as follows:
(b) QUARTERLY UNAUDITED FINANCIAL STATEMENTS. As soon as available
and in any event within forty-five (45) days after the end of each
fiscal quarter of Borrower, the unaudited consolidated and
consolidating balance sheet of Borrower as of the end of such fiscal
quarter and the unaudited consolidated and consolidating statement of
income and consolidated statement of cash flows of Borrower for the
fiscal year to the end of such fiscal quarter, unless the same has
been provided in the form of Borrower's Form 10Q; accompanied by an
Officer's Certificate of Borrower certifying that (i) such reports
have been prepared in accordance with GAAP consistently applied and
results of operation of Borrower as at the end of and for such fiscal
quarter and that since the previous fiscal year-
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end report referred to in clause (a) there has been no material adverse
change in the financial condition of Borrower and that (ii) as of the
close of such fiscal quarter no Event of Default or Default had occurred
and was continuing;
d. AMENDMENT TO SECTION 6.13. Section 6.13 is hereby amended and
restated as follows:
SECTION 6.13 FUNDED DEBT RATIO. For any four consecutive
fiscal quarters, Borrower shall maintain, on a consolidated basis, a
Funded Debt Ratio of not more than (a) 3.0 to 1 from the date hereof
until the date on which Borrower acquires both ABB Pressure Systems
and ABB Autoclave Systems, (b) 4.0 to 1 on and after the date on which
Borrower acquires both ABB Pressure Systems and ABB Autoclave Systems
through and including October 30, 1999, (c) 3.50 to 1 from October 31,
1999 through and including April 29, 2000, (d) 3.25 to 1 from April
30, 2000 through and including October 30, 2000, and (e) 3.0 to 1 from
October 31, 2000 and thereafter. As used herein "Funded Debt Ratio"
shall mean the quotient obtained by dividing (a) the sum of Funded
Debt by (b) EBITDA, PLUS, in the event that Borrower has acquired any
Subsidiaries during the immediately preceding four fiscal quarters of
Borrower, the EBITDA of such Subsidiaries from the first day of the
immediately preceding four fiscal quarters through the date of
acquisition of each Subsidiary, EXCEPT, HOWEVER,the EBITDA of ABB
Pressure Systems and ABB Autoclave Systems for the fiscal quarters
ending prior to the fiscal quarter ending July 31, 1999. "Funded
Debt" shall mean all interest bearing liabilities of Borrower,
including capitalized lease obligations. "EBITDA" shall mean pre-tax
net income (or pre-tax net loss), PLUS, the sum of (i) interest
expense, (ii) depreciation expense, (iii) depletion expense, and
(iv) amortization expense.
e. AMENDMENT TO SECTION 6.14. Section 6.14 is hereby amended and
restated as follows:
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SECTION 6.14. MINIMUM NET WORTH. Borrower shall maintain, on a
consolidated basis, as at the end of each fiscal quarter, an excess of
total tangible assets over total liabilities of Borrower equal to or
greater than the then applicable Minimum Net Worth. "Minimum Net
Worth" shall mean $27,000,000, PLUS cumulative quarterly increases
equal to fifty percent (50%) of Borrower's net income, excluding any
adjustments thereto for losses, calculated as of April 30, 1999.
f. AMENDMENT TO SECTION 6.15. Section 6.15 is hereby amended and
restated as follows:
SECTION 6.15 DEBT TO TANGIBLE NET WORTH RATIO. Borrower shall
maintain, on a consolidated basis, as at the end of each fiscal
quarter commencing with the fiscal quarter ending October 31, 1998, a
ratio of Debt to Tangible Net Worth of not more than (a) 1.75 to 1 as
at the fiscal quarters ending October 31, 1998 and January 31, 1999,
(b) 3.50 to 1 as at the fiscal quarters ending April 30, 1999, July
31, 1999, October 31, 1999 and January 31, 2000, (c) 3.25 to 1 as at
the fiscal quarters ending April 30, 2000, July 31, 2000, October 31,
2000 and January 31, 2001, and (d) 2.50 to 1 as at the fiscal quarters
ending April 30, 2001 and thereafter. As used herein, "Debt" shall
mean all liabilities of Borrower as determined and computed in
accordance with GAAP.
3. ACQUISITION OF ABB PRESSURE SYSTEMS AND ABB AUTOCLAVE SYSTEMS.
This Amendment shall be effective as of the date hereof, PROVIDED THAT if
Borrower shall not have completed its acquisition of both ABB Pressure Systems
AB and ABB Autoclave Systems Inc. within ten (10) days of the date of this
Amendment, the original terms and conditions contained in the Credit Agreement
as amended hereby shall remain in full force and effect as if never amended.
4. AMENDMENT FEE. On the date of this Amendment, Borrower shall pay to
Agent, for the account of Lenders, an amendment fee equal to Thirty Seven
Thousand Five Hundred Dollars ($37,500)
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(the "Amendment Fee"). Such fee shall be fully earned upon the execution of
this Amendment and irrevocable upon payment.
5. CONSENT TO ACQUISITION AND WAIVER OF DEFAULT. Agent and Lenders
hereby consent to Borrower's acquisition of ABB Pressure Systems AB, a Swedish
company, and ABB Autoclave Systems Inc., a Delaware corporation, and waive their
respective rights to exercise remedies under the Credit Agreement in respect of
a breach occurring of Borrower's obligations under Sections 6.1 and 7.2 of the
Credit Agreement.
6. CONDITIONS TO EFFECTIVENESS. Notwithstanding anything contained
herein to the contrary, this Amendment shall not become effective until each of
the following conditions is fully and simultaneously satisfied:
a. DELIVERY OF AMENDMENT. Borrower, Agent and each Lender shall
have executed and delivered counterparts of this Amendment to Agent.
b. PAYMENT OF AMENDMENT FEE. Borrower shall have paid the Amendment
Fee to Agent.
c. PAYMENT OF COMMITMENT FEE. Borrower shall have paid the
Commitment Fee pursuant to Section 2.11(b) of the Credit Agreement in an amount
equal to Thirty Seven Thousand Five Hundred Dollars ($37,500).
d. REPRESENTATIONS TRUE; NO DEFAULT. The representations of
Borrower as set forth in Article 5 of the Credit Agreement shall be true on and
as of the date of this Amendment with the same force and effect as if made on
and as of this date. No Event of Default and no event which, with notice or
lapse of time or both, would constitute a Event of Default, shall have occurred
and be continuing or will occur as a result of the execution of this Amendment.
7. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to the Lenders and Agent that each of the representations and
warranties set forth in Article 5 of the Credit Agreement is true and correct in
each case as if made on and as of the date of this Amendment and Borrower
expressly
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agrees that it shall be an additional Event of Default under the Credit
Agreement if any representation or warranty made hereunder shall prove to have
been incorrect in any material respect when made.
8. NO FURTHER AMENDMENT. Except as expressly modified by the terms of
this Amendment, all of the terms and conditions of the Credit Agreement and the
other Loan Documents shall remain in full force and effect and the parties
hereto expressly reaffirm and ratify their respective obligations thereunder.
9. GOVERNING LAW. This Amendment shall be governed by and construed in
accordance with the laws of the State of Washington.
10. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original, and all of which taken
together shall constitute one and the same agreement.
11. ORAL AGREEMENTS NOT ENFORCEABLE.
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE
UNDER WASHINGTON LAW.
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment Number
One to Credit Agreement as of the date first above written.
BORROWER: FLOW INTERNATIONAL CORPORATION
By
---------------------------------
Its
---------------------------
LENDERS: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, d\b\a SEAFIRST
BANK
By
---------------------------------
Its
---------------------------
U.S. BANK NATIONAL ASSOCIATION
By
---------------------------------
Its
---------------------------
AGENT: BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, d\b\a SEAFIRST
BANK
By
---------------------------------
Its
---------------------------
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