Exhibit 10.40

 

AMENDMENT NO. 2

 

THIS AMENDMENT NO. 2 (the “Amendment No. 2”), dated as of January 13, 2005, to
the Letter of Credit, Reimbursement and Guaranty Agreement, dated as of March 1,
2004 (the “SunTrust Agreement”), by and among SPENCE ENGINEERING COMPANY, INC.,
a Delaware corporation (the “Borrower”), CIRCOR INTERNATIONAL, INC., a Delaware
corporation (the “Guarantor”), and SUNTRUST BANK, a state banking association
organized and existing under the laws of the State of Georgia with its principal
offices located in Atlanta, Georgia (the “Bank”);

 

W I T N E S S E T H:

 

WHEREAS, the Village of Walden Industrial Development Agency (the “Issuer”), has
previously issued its Industrial Development Revenue Refunding Bonds (Spence
Engineering Company, Inc. Project), Series 1994 , in the original aggregate
principal amount of $7 ,500,000 (the “Bonds”) for the purpose of refunding all
or a portion of the $7,500,000 Village of Walden Industrial Development Agency
Industrial Development Revenue Bonds (Spence Engineering Company Project),
Series 1984; and

 

WHEREAS, the Bank has issued its irrevocable Letter of Credit No. F842815, dated
March 3, 2004 with an original expiration date of March 1, 2005, in connection
with the issuance of the Bonds, pursuant to the terms of the SunTrust Agreement;
and

 

WHEREAS, the Borrower, the Guarantor and the Bank now desire to amend the
SunTrust Agreement in certain respects; and

 

WHEREAS, the SunTrust Agreement provides that it may be amended, modified or
discharged upon an agreement in writing of the Borrower, the Guarantor and the
Bank.

 

NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Borrower, the Guarantor and the Bank hereby agree as follows:

 

Section 1. Definitions. Except as otherwise defined in this Amendment No. 2,
terms defined in the SunTrust Agreement are used herein as defined therein.

 

Section 2. Amendments. Subject to the satisfaction of the conditions precedent
specified in Section 4 below, but effective as of the date hereof, the SunTrust
Agreement shall be amended by deleting Section 7.8 in its entirety and replacing
it with the following:

 

Section 7.8 Tangible Net Worth. The Guarantor will not permit its Tangible Net
Worth as of the last day of any fiscal quarter of the Guarantor to be less than
the sum of (a) $98,145,000 plus (b) 50% of Consolidated Net Income for each
fiscal quarter of the Company ending after June 30, 2003 for which Consolidated
Net Income is a positive number.

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Section 3. Representations and Warranties. The Borrower and the Guarantor
represent and warrant to the Bank that the representations and warranties set
forth in Section 7 of the SunTrust Agreement (after giving effect to the
amendment to the SunTrust Agreement provided for by this Amendment No. 2) are
true and complete on the date hereof as if made on and as of the date hereof and
as if each reference in said Section 7 to the “SunTrust Agreement” included
reference to this Amendment No. 2 (or, if any such representation and warranty
is expressly to be made as of a specific date, as of such specific date).

 

Section 4. Conditions Precedent. As provided in Section 2 above, the amendments
to the SunTrust Agreement set forth in said Section 2 shall become effective, as
of the date hereof, upon the satisfaction of the following conditions precedent:

 

(a) Execution by All Parties. This Amendment No. 2 shall have been executed and
delivered by the Borrower, the Guarantor and the Bank.

 

(b) Consummation of Acquisition. The Company shall have consummated the
acquisition of substantially all the capital stock of a California-based
manufacturing corporation for a purchase price in excess of $30,000,000.

 

(c) Goodwill. The acquisition described in (b) above shall have increased the
goodwill, as defined in accordance with Generally Accepted Accounting
Principles, of the Guarantor by more than $20,000,000.

 

Section 5. Expiration. If, in any case, the conditions precedent described in
Section 4 above are not met within 15 days of the date hereof, the Bank shall be
considered to have withdrawn or never given its consent to this Amendment, and
the execution of an officer of the Bank below shall be null and void. In such
event, the SunTrust Agreement shall remain in full effect and enforceable,
according to its terms as of the day prior to the date hereof.

 

Section 6. Miscellaneous. Except as provided herein, the SunTrust Agreement
shall remain unchanged and in full force and effect. This Amendment No. 2 may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may execute
this Amendment No. 2 by signing any such counterpart. The Amendment No. 2 shall
be governed by and construed in accordance with the laws of the State of
Georgia.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be
duly executed and delivered as of the day and the year first written above.

 

BORROWER: SPENCE ENGINEERING COMPANY, INC. By:  

/s/ Kenneth W. Smith

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Title:   Vice President GUARANTOR: CIRCOR INTERNATIONAL, INC. By:  

/s/ Kenneth W. Smith

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Title:   Senior Vice President BANK: SUNTRUST BANK By:  

/s/ Robert Maddox

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Title:   Vice President

 

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