Execution Copy
AMENDMENT NO. 2
DATED AS OF JANUARY 17, 1997
TO CREDIT AGREEMENT
DATED AS OF JULY 19, 1996
THIS AMENDMENT NO. 2 TO CREDIT AGREEMENT ("AMENDMENT") is made as of this
17th day of January, 1997 by and among VARLEN CORPORATION, (the "BORROWER"), the
financial institutions parties thereto as lenders (the "LENDERS"), THE FIRST
NATIONAL BANK OF CHICAGO, as Agent (the "AGENT") under that certain Credit
Agreement dated as of July 19, 1996 by and among the Borrower, the Lenders and
the Agent as amended by Amendment No. 1 thereto dated as of October 15, 1996 (as
so amended, the "CREDIT AGREEMENT"). Capitalized terms used herein and not
otherwise defined herein shall have the meaning given to them in the Credit
Agreement.
WITNESSETH
WHEREAS, the Borrower, the Lenders and the Agent are parties to the Credit
Agreement; and
WHEREAS, the Borrower has requested certain amendments to the Credit
Agreement;
WHEREAS, the Borrower, the Lenders and the Agent have agreed to further
amend the Credit Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Lenders and the Agent have agreed to the following amendments to the Credit
Agreement.
1. AMENDMENT TO CREDIT AGREEMENT. Effective as of January 19, 1997, and
subject to the satisfaction of the conditions precedent set forth in Section 2
below, SECTION 2.5 of the Credit Agreement is hereby amended to delete the final
sentence thereof in its entirety and to substitute the following therefor:
ON JANUARY 19, 1997, THE APPLICABLE MARGIN SHALL BE BASED UPON THE
BORROWER'S STATUS AS OF NOVEMBER 2, 1996 CALCULATED ON A PRO FORMA BASIS AS
THOUGH THE CASH RECEIVED FROM BORROWER'S SALE OF ITS RAIL LINK SUBSIDIARY
HAD BEEN CONCLUDED PRIOR TO SUCH TIME, WHICH APPLICABLE MARGIN SHALL REMAIN
IN EFFECT UNTIL ADJUSTED PURSUANT TO THE PROVISIONS OF THIS SECTION 2.5 SET
FORTH ABOVE.
2. CONDITIONS OF EFFECTIVENESS. This Amendment shall not become
effective unless (a) this Amendment shall have been executed by the Borrower,
the Agent and each of the Lenders on or before January 17, 1997.
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower hereby
represents and warrants as follows:
(a) This Amendment and the Credit Agreement as previously executed and as
amended hereby, constitute legal, valid and binding obligations of the Borrower,
enforceable against it in accordance with their terms (except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditor's rights generally).
(b) Upon the effectiveness of this Amendment, the Borrower hereby
reaffirms all covenants, representations and warranties made in the Credit
Agreement and the other Loan Documents to the extent the same are not amended
hereby, agrees that all such covenants, representations and warranties shall be
deemed to have been remade as of the effective date of this Amendment.
(c) There exists no Default or Unmatured Default.
(d) The Pro Forma Computation of the Leverage Ratio as of November 2, 1996
attached hereto as EXHIBIT A constitutes a true and accurate calculation of the
Borrower's Leverage Ratio as of such date calculated on a pro forma basis as
though the cash received from the Borrower's sale of its Rail Link subsidiary
had been concluded prior to such time.
4. REFERENCE TO THE EFFECT ON THE CREDIT AGREEMENT; SUBSTITUTION OF NOTES.
(a) Upon the effectiveness of Section 1 hereof, on and after the date
hereof, each reference in the Credit Agreement to "this Credit Agreement,"
"hereunder," "hereof," "herein" or words of like import shall mean and be a
reference to the Credit Agreement as amended hereby.
(b) Except as specifically amended above, the Credit Agreement and all
other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall not,
except as expressly provided herein, operate as a waiver of any right, power of
remedy of the Agent or the Lenders, nor constitute a waiver of any provision of
the Credit Agreement or any other documents, instruments and agreements executed
and/or delivered in connection therewith.
5. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS)
-2-
OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS
APPLICABLE TO NATIONAL BANKS.
6. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart. This Agreement shall be effective when it has been executed by the
Borrower, the Agent and each of the Lenders and each such party has notified the
Agent by facsimile or telephone that it has taken such action.
---- Remainder of this page intentionally blank -----
-3-
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and
year first above written.
VARLEN CORPORATION,
AS THE BORROWER
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------
Title:
---------------------------------
THE FIRST NATIONAL BANK OF CHICAGO,
INDIVIDUALLY AND AS AGENT
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Title: Managing Director
---------------------------------
▇▇▇▇▇▇ TRUST AND SAVINGS BANK
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Print Name:
-----------------------------
Title:
---------------------------------
Signature Page to Varlen Amendment No. 2
NATIONSBANK, N.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Vice President
---------------------------------
NATIONSBANK, N.A.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------
Title: VICE PRESIDENT
---------------------------------
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Title: Vice President
---------------------------------
Signature Page to Varlen Amendment No. 2
VARLEN CORPORATION
PROFORMA COMPUTATION OF THE LEVERAGE RATIO
AS OF NOVEMBER 2, 1996
PROFORMA
LEVERAGE CASH FROM LEVERAGE
RATIO @ THE SALE OF RATIO @
11/2/96 RAIL LINK 11/2/96
-------- ---------- --------
TOTAL DEBT 193,625 193,625
CASH IN EXCESS OF $1.5 MILLION (1,392) (9,000) (10,392)
-------- ----------- --------
TOTAL (A) 192,233 (9,000) 183,233
-------- ----------- --------
-------- ----------- --------
EARNINGS BEFORE INTEREST AND TAXES 46,580 46,580
DEPRECIATION 17,069 17,069
AMORTIZATION 4,621 4,621
-------- ----------- --------
EBITDA(B) 68,270 0 68,270
-------- ----------- --------
-------- ----------- --------
LEVERAGE RATIO (A)/(B) 2.68
--------
--------
MARGIN LEVEL III
--------
--------
