FLOW INTERNATIONAL CORP
EXHIBIT 10.18
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<TYPE>EX-10.18
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<FILENAME>a2084860zex-10_18.htm
<DESCRIPTION>EXHIBIT 10.18
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<P ALIGN="RIGHT"><FONT SIZE=2><B>Exhibit 10.18  </B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><A
NAME="ks1309_first_amendment_to_note_purchase_agreements"> </A>
<A NAME="toc_ks1309_1"> </A>
<BR></FONT><FONT SIZE=2><B>FIRST AMENDMENT TO NOTE PURCHASE AGREEMENTS    <BR>  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS FIRST AMENDMENT, dated as of December&nbsp;14th, 2001, to the separate Note Purchase Agreements, each dated as of April&nbsp;30, 2001, is by and among
Flow International Corporation, a Washington corporation (the </FONT><FONT SIZE=2><I>"Company"</I></FONT><FONT SIZE=2>), John Hancock Life Insurance Company, John Hancock Variable Life Insurance
Company, Signature 4 Limited and Signature 5 L.P. (collectively, the </FONT><FONT SIZE=2><I>"Noteholders</I></FONT><FONT SIZE=2>"). Capitalized terms used herein without definition shall have the
meanings set forth in the Note Purchase Agreements referred to below (including as amended hereby). </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2><B>R E C I T A L S:  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>A.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2>The Company and the Noteholders have heretofore entered into the separate Note Purchase Agreements, each dated as of
April&nbsp;30, 2001 (the </FONT><FONT SIZE=2><I>"Note Purchase Agreements"</I></FONT><FONT SIZE=2>), under and pursuant to which there are outstanding (a)&nbsp;the Company's 13% Senior
Subordinated Notes, due April&nbsp;30, 2008, in the aggregate principal amount of $35,000,000 (the </FONT><FONT SIZE=2><I>"Notes"</I></FONT><FONT SIZE=2>) and (b)&nbsp;certain Warrants to
purchase common stock of the Company (the </FONT><FONT SIZE=2><I>"Warrants"</I></FONT><FONT SIZE=2>). </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>B.&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=2>The Company and the Noteholders now desire to amend the Note Purchase Agreements in the respects, but only in the
respects, hereinafter set forth. </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOW,
THEREFORE, the Company and the Noteholders, for good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, do hereby agree as follows: </FONT></P>


<P><FONT SIZE=2><B>SECTION&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;AMENDMENTS.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Section&nbsp;1.1.&nbsp;&nbsp;&nbsp;&nbsp;Quarterly Financial Statements.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subclauses (i)&nbsp;and (ii)&nbsp;of
Section&nbsp;7.1(a) of the Note Purchase Agreements are amended by deleting such subclauses in their entirety and inserting in lieu thereof the following: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"(i)&nbsp;&nbsp;&nbsp;&nbsp;a
consolidated balance sheet of the Company and its Subsidiaries, and a consolidating balance sheet of the Company and Fresher Under Pressure,&nbsp;Inc., as at the
end of such quarter, </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;consolidated
statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries, and consolidating statements of income, changes
in shareholders' equity and cash flows of the Company and Fresher Under Pressure,&nbsp;Inc., for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year
ending with such quarter," </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Section&nbsp;1.2.&nbsp;&nbsp;&nbsp;&nbsp;Annual Financial Statements.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Subclauses (i)&nbsp;and (ii)&nbsp;of Section&nbsp;7.1(b)
of the Note Purchase Agreements are amended by deleting such subclauses in their entirety and inserting in lieu thereof the following: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"(i)&nbsp;&nbsp;a
consolidated balance sheet of the Company and its Subsidiaries, and a consolidating balance sheet of the Company and Fresher Under Pressure,&nbsp;Inc., as at the
end of such year, and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;consolidated
statements of income, changes in shareholders' equity and cash flows of the Company and its Subsidiaries, and consolidating statements of income, changes
in shareholders' equity and cash flows of the Company and Fresher Under Pressure,&nbsp;Inc., for such year," </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Section&nbsp;1.3.&nbsp;&nbsp;&nbsp;&nbsp;Funded Debt Ratio.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The first sentence of Section&nbsp;9.7 of the Note Purchase Agreements
is amended by deleting such sentence in its entirety and inserting in lieu thereof the following: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>"Section&nbsp;9.7.&nbsp;&nbsp;&nbsp;&nbsp;Funded Debt Ratio.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;As of the end of each fiscal quarter, the Company shall maintain, on a
consolidated basis, a Funded Debt Ratio of not more than (a)&nbsp;5.00 to 1 as at the fiscal quarters ending April&nbsp;30, 2001 and July&nbsp;31, 2001, (b)&nbsp;6.50 to 1 as at the fiscal
quarters </FONT></P>

</UL>
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ending October&nbsp;31, 2001, January&nbsp;31, 2002 and April&nbsp;30, 2002 and (c)&nbsp;5.00 to 1 as at the fiscal quarters ending July&nbsp;31, 2002 and thereafter." </FONT></P>

</UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>Section&nbsp;1.4.&nbsp;&nbsp;&nbsp;&nbsp;Senior Funded Debt Ratio.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The first sentence of Section&nbsp;9.9 of the Note Purchase
Agreements is amended by deleting such sentence in its entirety and inserting in lieu thereof the following: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><I>"Section&nbsp;9.9.&nbsp;&nbsp;&nbsp;&nbsp;Senior Funded Debt Ratio.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;The Company shall maintain, on a consolidated basis, a Senior
Funded Debt Ratio of not more than (a)&nbsp;3.75 to 1 as at the fiscal quarters ending April&nbsp;30, 2001 and July&nbsp;31, 2001, (b)&nbsp;5.00 to 1 as at the fiscal quarters ending
October&nbsp;31, 2001, January&nbsp;31, 2002 and April&nbsp;30, 2002 and (c)&nbsp;3.50 to 1 as at the fiscal quarters ending July&nbsp;31, 2002 and thereafter." </FONT></P>

</UL>

<P><FONT SIZE=2><B>SECTION&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;CONSENT.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>Section&nbsp;2.1.</I></FONT><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the provisions of Section&nbsp;10.10(a) of the Note Purchase
Agreements to the contrary, the Noteholders hereby agree that, so long as no Default or Event of Default has occurred and is continuing under the Note Purchase Agreements, the Company shall be
permitted to prepay (a)&nbsp;up to 50% of the aggregate principal amount of the senior notes outstanding under the Senior Private Placement Agreement (which the parties hereto agree are outstanding
in the aggregate principal amount of $8,571,286 on the date of this First Amendment) on or prior to January&nbsp;31, 2002 and (b)&nbsp;the remaining balance of such senior notes on or prior to
October&nbsp;31, 2002, all on the terms set forth in the Sixth Amendment to the Senior Private Placement Agreement attached hereto as </FONT> <FONT SIZE=2><I>Exhibit&nbsp;D,</I></FONT><FONT SIZE=2> as in effect on the date of this First Amendment.
</FONT></P>

<P><FONT SIZE=2><B>SECTION&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  </B></FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To induce the Noteholders to execute and deliver this First Amendment, the Company represents and warrants to the Noteholders (which representations and
warranties shall survive the execution and delivery of this First Amendment) that: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;this
First Amendment has been duly authorized, executed and delivered by the Company and constitutes the legal, valid and binding obligation, contract and agreement of
the Company enforceable
against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting
creditors' rights generally; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;the
execution, delivery and performance by the Company of this First Amendment (i)&nbsp;does not require the consent or approval of any governmental or regulatory body
or agency, and (ii)&nbsp;will not (A)&nbsp;violate (1)&nbsp;any provision of law, statute, rule or regulation or its certificate of incorporation or bylaws, (2)&nbsp;any order of any court or
any rule, regulation or order of any other agency or government binding upon it, or (3)&nbsp;any provision of any material indenture, agreement or other instrument to which it is a party or by which
its properties or assets are or may be bound, or (B)&nbsp;result in a breach or constitute (alone or with due notice or lapse of time or both) a default under any indenture, agreement or other
instrument referred to in clause&nbsp;(ii)(A)(3) of this clause&nbsp;(b); </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;as
of the date hereof and after giving effect to this First Amendment, no Default or Event of Default has occurred which is continuing; and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;attached
hereto as </FONT><FONT SIZE=2><I>Exhibit&nbsp;A, Exhibit&nbsp;B, Exhibit&nbsp;C</I></FONT><FONT SIZE=2> and </FONT> <FONT SIZE=2><I>Exhibit&nbsp;D</I></FONT><FONT SIZE=2>, respectively, are true, correct and complete copies of the following:
</FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Amendment
Number Three to the Senior Credit Agreement dated as of July&nbsp;31, 2001 (attached as </FONT><FONT SIZE=2><I>Exhibit&nbsp;A</I></FONT><FONT SIZE=2>); </FONT></P>

</UL>
</UL>
<P ALIGN="CENTER"><FONT SIZE=2>2</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;Amendment
Number Four to the Senior Credit Agreement dated on or about the date of this First Amendment (attached as </FONT> <FONT SIZE=2><I>Exhibit&nbsp;B</I></FONT><FONT SIZE=2>); </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;the
Fifth Amendment to the Senior Private Placement Agreement dated as of July&nbsp;31, 2001 (attached as </FONT> <FONT SIZE=2><I>Exhibit&nbsp;C</I></FONT><FONT SIZE=2>); and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;the
Sixth Amendment to the Senior Private Placement Agreement dated on or about the date of this First Amendment (attached as </FONT> <FONT SIZE=2><I>Exhibit&nbsp;D</I></FONT><FONT SIZE=2>). </FONT></P>

</UL>
</UL>

<P><FONT SIZE=2><B>SECTION&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This First Amendment shall not become effective until, and shall become effective when: </FONT></P>

<UL>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;executed
counterparts of this First Amendment, duly executed by the Company and the holders of at least 51% in aggregate principal amount of outstanding Notes, shall
have been delivered to the Noteholders; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;the
Noteholders shall have received (i)&nbsp;a fully executed copy of Amendment Number Four to the Senior Credit Agreement, and (ii)&nbsp;a fully executed copy of
the Sixth Amendment to the Senior Private Placement Agreement; </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;the
representations and warranties of the Company set forth in </FONT><FONT SIZE=2><B>Section&nbsp;3 </B></FONT><FONT SIZE=2>hereof shall be true and correct on and
with respect to the effective date hereof and the execution and delivery by the Company of this First Amendment shall constitute the certification by the Company of the same; and </FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;each
Noteholder shall have received, and the Company hereby agrees to pay to each Noteholder, an amendment and consent fee equal to 0.15% of the aggregate principal
amount of the outstanding Notes held by such Noteholder as of the date of this First Amendment, such fee to be paid by wire transfer of immediately available funds in the manner provided in
Schedule&nbsp;A to the Note Purchase Agreements. The Company's agreement to pay such fees shall constitute an obligation to be performed by the Company under the Note Purchase Agreements for
purposes of Section&nbsp;12(d) thereof. </FONT></P>

</UL>

<P><FONT SIZE=2>Upon
satisfaction of all of the foregoing, this First Amendment shall become effective. </FONT></P>

<P><FONT SIZE=2><B>SECTION&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;MISCELLANEOUS.  </B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This First Amendment shall be construed in connection with and as part of the Note Purchase Agreements, and except as modified and expressly amended by this
amendment, all terms, conditions and covenants contained in the Note Purchase Agreements, the Notes and the Warrants are hereby ratified and confirmed and shall be and remain in full force and effect.
The obligations of the Company under the Note Purchase Agreements, the Notes and the Warrants shall not be released, discharged or in any way affected by (a)&nbsp;any exercise or nonexercise of any
right, remedy, power or privilege under or in respect of the Note Purchase Agreements, the Notes or the Warrants or applicable law, including, without limitation, any waiver, consent, extension,
indulgence or other action or inaction in respect thereof; or (b)&nbsp;any other act or thing or omission or delay to do any other act or thing which could operate as or be deemed to be a discharge
of the Company as a matter of law, other
than payment in full of all obligations under the Note Purchase Agreements and the Notes and performance under the Warrants. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this amendment may refer to the Note Purchase Agreements
without making specific reference to this amendment, but nevertheless all such references shall be deemed to include this amendment unless the context otherwise requires. </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>3</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
First Amendment may be executed in any number of counterparts, each executed counterpart constituting an original, but all together only one agreement. </FONT></P>


<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>This First Amendment shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Washington,
excluding choice-of-law principles of the law of such State that would require the application of the laws of a jurisdiction other than such State.</B></FONT></P>

<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT
SIZE=2><B>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.</B></FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>4</FONT></P>

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<P><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Company and the Noteholders have caused this First Amendment to be executed, all as of the day and year first above written. </FONT></P>

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<TD COLSPAN=2><FONT SIZE=2>THE COMPANY:</FONT></TD>
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FLOW INTERNATIONAL CORPORATION</FONT></TD>
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&nbsp;</FONT></TD>
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By</FONT></TD>
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Michael R. O'Brien</FONT></TD>
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<TD WIDTH="47%"><FONT SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=2><I>Chief Financial Officer</I></FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2>5</FONT></P>

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JOHN HANCOCK LIFE INSURANCE COMPANY</FONT></TD>
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By</FONT></TD>
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<TD COLSPAN=2><FONT SIZE=2>JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY</FONT></TD>
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&nbsp;</FONT></TD>
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By</FONT></TD>
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<TD COLSPAN=2><FONT SIZE=2>SIGNATURE 4 LIMITED</FONT></TD>
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By John Hancock Life Insurance Company, as Portfolio Adviser</FONT></TD>
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By</FONT></TD>
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<TD COLSPAN=2><FONT SIZE=2>SIGNATURE 5 L.P.</FONT></TD>
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By John Hancock Life Insurance Company, as Portfolio Adviser</FONT></TD>
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By</FONT></TD>
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<P ALIGN="CENTER"><FONT SIZE=2>6</FONT></P>

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<A NAME="page_ks1309_1_7"> </A>
<P ALIGN="CENTER"><FONT SIZE=2><B>ATTACHMENTS  </B></FONT></P>

<P><FONT SIZE=2>Exhibit&nbsp;A&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;Amendment
Number Three to Senior Credit Agreement </FONT></P>


<P><FONT SIZE=2>Exhibit&nbsp;B&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;Amendment
Number Four to Senior Credit Agreement </FONT></P>

<P><FONT SIZE=2>Exhibit&nbsp;C&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;Fifth
Amendment to Senior Private Placement Agreement </FONT></P>

<P><FONT SIZE=2>Exhibit&nbsp;D&nbsp;&nbsp;&nbsp;&nbsp;&#151;&nbsp;&nbsp;&nbsp;&nbsp;Sixth
Amendment to Senior Private Placement Agreement </FONT></P>

<P ALIGN="CENTER"><FONT SIZE=2>7</FONT></P>

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<P><br><A NAME="02SEA1308_4">QuickLinks</A><br></P><!-- TOC_BEGIN -->
<FONT SIZE=2><A HREF="#toc_ks1309_1">FIRST AMENDMENT TO NOTE PURCHASE AGREEMENTS</A></FONT><BR>
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