<PAGE>
                                                                   EXHIBIT 10.16


                SECOND AMENDMENT TO CREDIT AND SECURITY AGREEMENT

         This Amendment, dated as of February 8, 2002, is made by and between
VARI-L COMPANY, INC., a Colorado corporation (the "Borrower"), and WELLS FARGO
BUSINESS CREDIT, INC., a Minnesota corporation (the "Lender").

                                    Recitals

         The Borrower and the Lender are parties to a Credit and Security
Agreement dated as of June 28, 2001 (the "Original Credit Agreement"), as
amended by the First Amendment to Credit and Security Agreement dated as of
September 17, 2001 (as so amended, the "Credit Agreement"). Capitalized terms
used in these recitals have the meanings given to them in the Credit Agreement
unless otherwise specified.

         The Borrower has requested that certain amendments be made to the
Credit Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.

         NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, it is agreed as follows:

         1. Capitalized terms used in this Amendment which are defined in the
Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein. In addition, Section 1.1 of the Credit Agreement is
amended by adding or amending, as the case may be, the following definitions:

                  "Availability" means the difference of (i) the Borrowing Base
         and (ii) the sum of (A) the outstanding principal balance of the
         Revolving Note and (B) the L/C Amount.

                  "Borrowing Base" means, at any time the lesser of:

                  (a) the Maximum Line; or

                  (b) subject to change from time to time in the Lender's sole
         discretion, upon three (3) business days notice to the Borrower, the
         sum of:

                           (i) 80% of Eligible Accounts, plus

                           (ii) the lesser of (A) 0.00% (zero percent) of
         Eligible Inventory or (B) $0.00 (zero dollars).

                  "Collateral" means all of the Borrower's Accounts,
         Receivables, chattel paper, deposit accounts, documents, Equipment,
         General Intangibles, goods, instruments, Inventory, Investment
         Property, letter-of-credit rights, letters of credit, all sums on
         deposit in any Collateral Account, and any items in any




<PAGE>

         Lockbox; together with (i) all substitutions and replacements for and
         products of any of the foregoing; (ii) in the case of all goods, all
         accessions; (iii) all accessories, attachments, parts, equipment and
         repairs now or hereafter attached or affixed to or used in connection
         with any goods; (iv) all warehouse receipts, bills of lading and other
         documents of title now or hereafter covering such goods; (v) all
         collateral subject to the lien of any Security Document; (vi) any
         money, or other assets of the Borrower that now or hereafter come into
         the possession, custody, or control of the Lender; (vii) all sums on
         deposit in the Special Account; and (viii) proceeds of any and all of
         the foregoing.

                  "Commitment" means the Lender's commitment to make Advances
         to, and to cause the Issuer to issue Letters of Credit for the account
         of, the Borrower pursuant to Article II.

                  "Issuer" means the issuer of any Letter of Credit.

                  "L/C Amount" means the sum of (i) the aggregate face amount of
         any issued and outstanding Letters of Credit and (ii) the unpaid amount
         of the Obligation of Reimbursement.

                  "L/C Application" means an application and agreement for
         letters of credit in a form acceptable to the Issuer and the Lender.

                  "Letter of Credit" has the meaning specified in Section 2.17.

                  "Loan Documents" means this Agreement, the Notes, the Security
         Documents and any L/C Application.

                  "Maximum Line" means $4,000,000, unless said amount is reduced
         pursuant to Section 2.10, in which event it means the amount to which
         said amount is reduced.

                  "Obligation of Reimbursement" has the meaning specified in
         Section 2.19(a).

                  "Obligations" means each Note, the Obligation of Reimbursement
         and each and every other debt, liability and obligation of every type
         and description which the Borrower may now or at any time hereafter owe
         to the Lender, whether such debt, liability or obligation now exists or
         is hereafter created or incurred, whether it arises in a transaction
         involving the Lender alone or in a transaction involving other
         creditors of the Borrower, and whether it is direct or indirect, due or
         to become due, absolute or contingent, primary or secondary, liquidated
         or unliquidated, or sole, joint, several or joint and several, and
         including all indebtedness of the Borrower arising under any Loan
         Document or guaranty between the Borrower and the Lender, whether now
         in effect or hereafter entered into.



                                      -2-

<PAGE>

                  "Revolving Floating Rate" means (i) from the Funding Date to
         and including January 31, 2002, an annual rate equal to the sum of the
         Prime Rate plus one half of one percent (0.50%) and (ii) from February
         1, 2002 to the Termination Date, an annual rate equal to the sum of the
         Prime Rate plus one percent (1.00%); which annual rate shall change
         when and as the Prime Rate changes.

                  "Special Account" means a specified cash collateral account
         maintained by Wells Fargo Bank West N.A. in connection with Letters of
         Credit, as contemplated by Section 2.18.

                  "Term Floating Rate" means (i) from the Funding Date to and
         including January 31, 2002, an annual rate equal to the sum of the
         Prime Rate plus one percent (1.00%) and (ii) from February 1, 2002 to
         the Termination Date, an annual rate equal to the sum of the Prime Rate
         plus two and one half percent (2.50%); which annual rate shall change
         when and as the Prime Rate changes.

         2. Section 2.3 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 2.3 Payment of Term Note. The outstanding principal
         balance of the Term Note shall be due and payable as follows:

                  (a) (i) Beginning on the first day of the month following each
         Term Advance, and on the first day of each month thereafter, to and
         including February 2002, in substantially equal monthly installments
         equal to an amount sufficient to fully amortize the principal balance
         of the Term Note over an assumed term ending on the seventh anniversary
         of the date of each Term Advance and (ii) Beginning on the first day of
         March 2002 and on the first day of each month thereafter, in equal
         monthly installments of $43,434; and

                  (b) On the Termination Date, the entire unpaid principal
         balance of the Term Note, and all unpaid interest accrued thereon,
         shall in any event be due and payable."

         3. Section 2.4 of the Credit Agreement is hereby amended by changing
the dollar amount in romanette (i) of the first paragraph from $1,500,000 to
$0.00 (zero dollars).

         4. Section 2.7 of the Credit Agreement is hereby amended by amending
and restating Section 2.7(b) in its entirety and by adding new Sections 2.7(e)
and (f) to read as follows:

                  "(b) Unused Line Fee. For the purposes of this Section 2.7(b),
         "Unused Amount" means the Maximum Line reduced by outstanding Revolving
         Advances and the outstanding L/C Amount. The Borrower agrees to pay to
         the Lender an unused line fee at the rate of one quarter of one percent
         (0.25%) per annum on the average daily Unused Amount from the date of
         this Agreement to and including



                                      -3-

<PAGE>

         the Termination Date, due and payable monthly in arrears on the first
         day of the month and on the Termination Date.

                  (e) Letter of Credit Fees. The Borrower agrees to pay to the
         Lender on the date of the issuance of each Letter of Credit issued
         hereunder a fully earned and non-refundable Letter of Credit fee equal
         to two and one half percent (2.50%) of the face amount of each Letter
         of Credit issued hereunder, plus any processing and administrative
         fees.

                  (f) Letter of Credit Administrative Fees. The Borrower agrees
         to pay the Lender, on written demand, the administrative fees charged
         by the Issuer in connection with the honoring of drafts under any
         Letter of Credit, amendments thereto, transfers thereof and all other
         activity with respect to the Letters of Credit at the then-current
         rates published by the Issuer for such services rendered on behalf of
         customers of the Issuer generally."

         5. Section 2.9 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 2.9 Increased Costs; Capital Adequacy. If the Lender
         determines at any time that its Return has been reduced as a result of
         any Rule Change, the Lender may so notify the Borrower and require the
         Borrower, beginning fifteen (15) days after such notice, to pay it the
         amount necessary to restore its Return to what it would have been had
         there been no Rule Change. For purposes of this Section 2.9:

                  (a) "Capital Adequacy Rule" means any law, rule, regulation,
         guideline, directive, requirement or request regarding capital
         adequacy, or the interpretation or administration thereof by any
         governmental or regulatory authority, central bank or comparable
         agency, whether or not having the force of law, that applies to any
         Related Lender, including rules requiring financial institutions to
         maintain total capital in amounts based upon percentages of outstanding
         loans, binding loan commitments and letters of credit.

                  (b) "L/C Rule" means any law, rule, regulation, guideline,
         directive, requirement or request regarding letters of credit, or the
         interpretation or administration thereof by any governmental or
         regulatory authority, central bank or comparable agency, whether or not
         having the force of law, that applies to any Related Lender, including
         those that impose taxes, duties or other similar charges, or mandate
         reserves, special deposits or similar requirements against assets of,
         deposits with or for the account of, or credit extended by any Related
         Lender, on letters of credit.

                  (c) "Related Lender" includes (but is not limited to) the
         Lender, any parent of the Lender, any assignee of any interest of the
         Lender hereunder and any participant in the Credit Facility.



                                      -4-

<PAGE>

                  (d) "Return", for any period, means the percentage determined
         by dividing (i) the sum of interest and ongoing fees earned by the
         Lender under this Agreement during such period, by (ii) the average
         capital the Lender is required to maintain during such period as a
         result of its being a party to this Agreement, as determined by the
         Lender based upon its total capital requirements and a reasonable
         attribution formula that takes account of the Capital Adequacy Rules
         and L/C Rules then in effect, costs of issuing or maintaining any
         Advance or Letter of Credit and amounts received or receivable under
         this Agreement or the Note with respect to any Advance or Letter of
         Credit. Return may be calculated for each calendar quarter and for the
         shorter period between the end of a calendar quarter and the date of
         termination in whole of this Agreement.

                  (e) "Rule Change" means any change in any Capital Adequacy
         Rule or L/C Rule occurring after the date of this Agreement, or any
         change in the interpretation or administration thereof by any
         governmental or regulatory authority, but the term does not include any
         changes that at the Funding Date are scheduled to take place under the
         existing Capital Adequacy Rules or L/C Rules or any increases in the
         capital that the Lender is required to maintain to the extent that the
         increases are required due to a regulatory authority's assessment of
         that Lender's financial condition.

                  The initial notice sent by the Lender shall be sent as
         promptly as practicable after the Lender learns that its Return has
         been reduced, shall include a demand for payment of the amount
         necessary to restore the Lender's Return for the quarter in which the
         notice is sent, and shall state in reasonable detail the cause for the
         reduction in its Return and its calculation of the amount of such
         reduction. Thereafter, the Lender may send a new notice during each
         calendar quarter setting forth the calculation of the reduced Return
         for that quarter and including a demand for payment of the amount
         necessary to restore its Return for that quarter. The Lender's
         calculation in any such notice shall be conclusive and binding absent
         demonstrable error."

         6. Section 2.12 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 2.12 Mandatory Prepayment. Without notice or demand,
         if the outstanding principal balance of the Revolving Advances plus the
         L/C Amount shall at any time exceed the Borrowing Base, the Borrower
         shall (i) first, immediately prepay the Revolving Advances to the
         extent necessary to eliminate such excess; and (ii) if prepayment in
         full of the Revolving Advances is insufficient to eliminate such
         excess, pay to the Lender in immediately available funds for deposit in
         the Special Account an amount equal to the remaining excess. Any
         payment received by the Lender under this Section 2.12 or under Section
         2.10 may be applied to the Obligations, in such order and in such
         amounts as the Lender, in its discretion, may from time to time
         determine; provided that any prepayment



                                      -5-

<PAGE>

         under Section 2.10 which the Borrower designates as a partial
         prepayment of the Term Note or the CapEx Note, as the case may be,
         shall be applied to principal installments of the Term Note or the
         CapEx Note, as the case may be, in inverse order of maturity."

         7. The Credit Agreement is hereby amended by adding a new Section 2.17
to read as follows:

         "Section 2.17 Letters of Credit.

                  (a) The Lender agrees, on the terms and subject to the
         conditions herein set forth, to cause an Issuer to issue, from the
         Funding Date to the Termination Date, one or more irrevocable standby
         or documentary letters of credit (each, a "Letter of Credit") for the
         Borrower's account by guaranteeing payment of the Borrower's
         obligations or being a co-applicant. The Lender shall have no
         obligation to cause an Issuer to issue any Letter of Credit if the face
         amount of the Letter of Credit to be issued would exceed the lesser of:

                           (i) $250,000 less the L/C Amount, or

                           (ii) Availability.

                  Each Letter of Credit, if any, shall be issued pursuant to a
         separate L/C Application entered into between the Borrower and the
         Lender for the benefit of the Issuer, completed in a manner
         satisfactory to the Lender and the Issuer. The terms and conditions set
         forth in each such L/C Application shall supplement the terms and
         conditions hereof, but if the terms of any such L/C Application and the
         terms of this Agreement are inconsistent, the terms hereof shall
         control.

                  (b) No Letter of Credit shall be issued with an expiry date
         later than the Termination Date in effect as of the date of issuance.

                  (c) Any request to cause an Issuer to issue a Letter of Credit
         shall be deemed to be a representation by the Borrower that the
         conditions set forth in Section 4.2 have been satisfied as of the date
         of the request."

         8. The Credit Agreement is hereby amended by adding a new Section 2.18
to read as follows:

                  "Section 2.18 Special Account. If the Credit Facility is
         terminated for any reason while any Letter of Credit is outstanding,
         the Borrower shall thereupon pay the Lender in immediately available
         funds for deposit in the Special Account an amount equal to the L/C
         Amount. The Special Account shall be an interest bearing account
         maintained for the Lender by Wells Fargo Bank West N.A. Any interest
         earned on amounts deposited in the Special Account shall be credited to
         the Special Account. The Lender may apply amounts on deposit in the
         Special



                                      -6-

<PAGE>

         Account at any time or from time to time to the Obligations in the
         Lender's sole discretion. The Borrower may not withdraw any amounts on
         deposit in the Special Account as long as the Lender maintains a
         security interest therein. The Lender agrees to transfer any balance in
         the Special Account to the Borrower when the Lender is required to
         release its security interest in the Special Account under applicable
         law."

         9. The Credit Agreement is hereby amended by adding a new Section 2.19
to read as follows:

                  "Section 2.19 Payment of Amounts Drawn Under Letters of
         Credit; Obligation of Reimbursement. The Borrower acknowledges that the
         Lender, as co-applicant, will be liable to the Issuer for reimbursement
         of any and all draws under Letters of Credit and for all other amounts
         required to be paid under the applicable L/C Application. Accordingly,
         the Borrower shall pay to the Lender any and all amounts required to be
         paid under the applicable L/C Application, when and as required to be
         paid thereby, and the amounts designated below, when and as designated:

                  (a) The Borrower shall pay to the Lender on the day a draft is
         honored under any Letter of Credit a sum equal to all amounts drawn
         under such Letter of Credit plus any and all reasonable charges and
         expenses that the Issuer or the Lender may pay or incur relative to
         such draw and the applicable L/C Application, plus interest on all such
         amounts, charges and expenses as set forth below (the Borrower's
         obligation to pay all such amounts is herein referred to as the
         "Obligation of Reimbursement").

                  (b) Whenever a draft is submitted under a Letter of Credit,
         the Borrower authorizes the Lender to make a Revolving Advance in the
         amount of the Obligation of Reimbursement and to apply the proceeds of
         such Revolving Advance thereto. Such Revolving Advance shall be
         repayable in accordance with and be treated in all other respects as a
         Revolving Advance hereunder.

                  (c) If a draft is submitted under a Letter of Credit when the
         Borrower is unable, because a Default Period exists or for any other
         reason, to obtain a Revolving Advance to pay the Obligation of
         Reimbursement, the Borrower shall pay to the Lender on demand and in
         immediately available funds, the amount of the Obligation of
         Reimbursement together with interest, accrued from the date of the
         draft until payment in full at the Default Rate. Notwithstanding the
         Borrower's inability to obtain a Revolving Advance for any reason, the
         Lender is irrevocably authorized, in its sole discretion, to make a
         Revolving Advance in an amount sufficient to discharge the Obligation
         of Reimbursement and all accrued but unpaid interest thereon.



                                      -7-

<PAGE>

                  (d) The Borrower's obligation to pay any Revolving Advance
         made under this Section 2.19, shall be evidenced by the Revolving Note
         and shall bear interest as provided in Section 2.6."

         10. The Credit Agreement is hereby amended by adding a new Section 2.20
to read as follows:

                  "Section 2.20 Obligations Absolute. The Borrower's obligations
         arising under Section 2.19 shall be absolute, unconditional and
         irrevocable, and shall be paid strictly in accordance with the terms of
         Section 2.19, under all circumstances whatsoever, including (without
         limitation) the following circumstances:

                  (a) any lack of validity or enforceability of any Letter of
         Credit or any other agreement or instrument relating to any Letter of
         Credit (collectively the "Related Documents");

                  (b) any amendment or waiver of or any consent to departure
         from all or any of the Related Documents;

                  (c) the existence of any claim, setoff, defense or other right
         which the Borrower may have at any time, against any beneficiary or any
         transferee of any Letter of Credit (or any persons or entities for whom
         any such beneficiary or any such transferee may be acting), or other
         person or entity, whether in connection with this Agreement, the
         transactions contemplated herein or in the Related Documents or any
         unrelated transactions;

                  (d) any statement or any other document presented under any
         Letter of Credit proving to be forged, fraudulent, invalid or
         insufficient in any respect or any statement therein being untrue or
         inaccurate in any respect whatsoever;

                  (e) payment by or on behalf of the Issuer under any Letter of
         Credit against presentation of a draft or certificate which does not
         strictly comply with the terms of such Letter of Credit; or

                  (f) any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing."

         11. Section 4.1 of the Credit Agreement is hereby amended by amending
and restating the introductory paragraph in Section 4.1 and by amending and
restating Section 4.1(r) to read as follows:

                  "Section 4.1 Conditions Precedent to the Initial Revolving,
         Term and CapEx Advances and Letter of Credit. The Lender's obligation
         to make the initial Revolving, Term and CapEx Advances or to cause any
         Letters of Credit to be issued hereunder shall be subject to the
         condition precedent that the Lender shall have received all of the
         following, each in form and substance satisfactory to the Lender:



                                      -8-


<PAGE>

                  (r) Payment of the fees and commissions due through the date
         of the initial Advance or Letter of Credit under Section 2.7 and
         expenses incurred by the Lender through such date and required to be
         paid by the Borrower under Section 9.6, including all legal expenses
         incurred through the date of this Agreement."

         12. Section 4.2 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 4.2 Conditions Precedent to All Advances and Letters
         of Credit. The Lender's obligation to make each Advance and to cause
         each Letter of Credit to be issued shall be subject to the further
         conditions precedent that on such date:

                  (a) the representations and warranties contained in Article V
         are correct on and as of the date of such Advance or issuance of a
         Letter of Credit as though made on and as of such date, except to the
         extent that such representations and warranties relate solely to an
         earlier date; and

                  (b) no event has occurred and is continuing, or would result
         from such Advance or issuance of a Letter of Credit which constitutes a
         Default or an Event of Default."

         13. Section 6.12 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 6.12 Minimum Book Net Worth. The Borrower will
         maintain, during each period described below, its Book Net Worth,
         determined as at the end of each month, at an amount not less than the
         amount set forth opposite such period:

<Table>
<Caption>
            PERIOD                                                      MINIMUM BOOK
                                                                         NET WORTH
<S>                                                                    <C>
The month ending January 31, 2002                                      $ 11,400,000
The month ending February 28, 2002                                     $ 11,400,000
The month ending March 31, 2002                                        $ 11,025,000
The month ending April 30, 2002                                        $ 10,900,000
The month ending May 31, 2002                                          $ 10,650,000
The month ending June 30, 2002 and thereafter                          $ 11,025,000"
</Table>

         14. Section 6.13 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 6.13 Minimum Net Income. The Borrower will achieve
         during each period described below, Net Income of not less than, or a
         Net Loss not greater than (excluding any impact of the settlement of
         the private shareholder class actions settled by



                                      -9-

<PAGE>

         payment by the Borrower of shares of the Borrower), the amount set
         forth opposite such period (number appearing between "()" are
         negative):

<Table>
<Caption>
                                    PERIOD                             MINIMUM NET INCOME
<S>                                                                    <C>
                  The nine months ending March 31, 2002                  ($2,900,000)
                  The twelve months ending June 30, 2002                 ($2,900,000)"
</Table>

         15. Section 6.14 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 6.14 "Intentionally Omitted.""

         16. Section 6.15 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 6.15 New Covenants. On or before June 30, 2002, the
         Borrower and the Lender shall agree on new covenant levels for Section
         6.12, Section 6.13 and Section 7.10 for periods after such date. The
         new covenant levels will be based on the Borrower's projections for
         such periods and shall be no less stringent than the present levels,
         but if the Borrower and the Lender do not agree, the Lender may
         designate the required amounts in its sole discretion and the failure
         by the Borrower to maintain the designated amounts shall constitute an
         Event of Default."

         17. Section 7.10 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:

                  "Section 7.10 Capital Expenditures. The Borrower will not
         incur or contract to incur Unfinanced Capital Expenditures of more than
         (i) $1,000,000 during the period from July 1, 2001 through February 28,
         2002; and (ii) $2,000,000 during the period from July 1, 2001 through
         June 30, 2002."

         18. Section 8.2 of the Credit Agreement is hereby amended by adding a
new Section 8.2(g) to read as follows:

                  "(g) the Lender may make demand upon the Borrower and,
         forthwith upon such demand, the Borrower will pay to the Lender in
         immediately available funds for deposit in the Special Account pursuant
         to Section 2.18 an amount equal to the aggregate maximum amount
         available to be drawn under all Letters of Credit then outstanding,
         assuming compliance with all conditions for drawing thereunder."

         19. Section 9.6 of the Credit Agreement is hereby amended and restated
in its entirety to read as follows:



                                      -10-

<PAGE>

                  "Section 9.6 Costs and Expenses. The Borrower agrees to pay on
         demand all costs and expenses, including (without limitation)
         attorneys' fees, incurred by the Lender in connection with the
         Obligations, this Agreement, the Loan Documents, any Letter of Credit
         and any other document or agreement related hereto or thereto, and the
         transactions contemplated hereby, including without limitation all such
         costs, expenses and fees incurred in connection with the negotiation,
         preparation, execution, amendment, administration, performance,
         collection and enforcement of the Obligations and all such documents
         and agreements and the creation, perfection, protection, satisfaction,
         foreclosure or enforcement of the Security Interest."

         20. Exhibit D of the Credit Agreement is hereby amended and restated in
its entirety and replaced with Exhibit D attached hereto.

         21. No Other Changes. Except as explicitly amended by this Amendment,
all of the terms and conditions of the Credit Agreement shall remain in full
force and effect and shall apply to any advance or letter of credit thereunder.

         22. Amendment Fee. The Borrower shall pay the Lender as of the date
hereof a fully earned, non-refundable fee in the amount of $50,000 in
consideration of the Lender's execution and delivery of this Amendment, and in
full satisfaction of any fees which may have otherwise been due and owing to the
date hereof.

         23. Conditions Precedent. This Amendment shall be effective when the
Lender shall have received an executed original hereof, together with (i)
payment of the fee described in Paragraph 22 and (ii) such other matters as the
Lender may require, each in substance and form acceptable to the Lender in its
sole discretion.

         24. Representations and Warranties. The Borrower hereby represents and
warrants to the Lender as follows:

                  (a) The Borrower has all requisite power and authority to
         execute this Amendment and to perform all of its obligations hereunder,
         and this Amendment has been duly executed and delivered by the Borrower
         and constitutes the legal, valid and binding obligation of the
         Borrower, enforceable in accordance with its terms.

                  (b) The execution, delivery and performance by the Borrower of
         this Amendment have been duly authorized by all necessary corporate
         action and do not (i) require any authorization, consent or approval by
         any governmental department, commission, board, bureau, agency or
         instrumentality, domestic or foreign, (ii) violate any provision of any
         law, rule or regulation or of any order, writ, injunction or decree
         presently in effect, having applicability to the Borrower, or the
         articles of incorporation or by-laws of the Borrower, or (iii) result
         in a breach of or constitute a default under any indenture or loan or
         credit agreement or any other agreement, lease or instrument to which
         the Borrower is a party or by which it or its properties may be bound
         or affected.



                                      -11-

<PAGE>

                  (c) All of the representations and warranties contained in
         Article V of the Credit Agreement are correct on and as of the date
         hereof as though made on and as of such date, except to the extent that
         such representations and warranties relate solely to an earlier date.

         25. References. All references in the Credit Agreement to "this
Agreement" shall be deemed to refer to the Credit Agreement as amended hereby;
and any and all references in the Security Documents to the Credit Agreement
shall be deemed to refer to the Credit Agreement as amended hereby.

         26. No Waiver. The execution of this Amendment and acceptance of any
documents related hereto shall not be deemed to be a waiver of any Default or
Event of Default under the Credit Agreement or breach, default or event of
default under any Security Document or other document held by the Lender,
whether or not known to the Lender and whether or not existing on the date of
this Amendment.

         27. Release. The Borrower hereby absolutely and unconditionally
releases and forever discharges the Lender, and any and all participants, parent
corporations, subsidiary corporations, affiliated corporations, insurers,
indemnitors, successors and assigns thereof, together with all of the present
and former directors, officers, agents and employees of any of the foregoing,
from any and all claims, demands or causes of action of any kind, nature or
description, whether arising in law or equity or upon contract or tort or under
any state or federal law or otherwise, which the Borrower has had, now has or
has made claim to have against any such person for or by reason of any act,
omission, matter, cause or thing whatsoever arising from the beginning of time
to and including the date of this Amendment, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.

         28. Costs and Expenses. The Borrower hereby reaffirms its agreement
under the Credit Agreement to pay or reimburse the Lender on demand for all
costs and expenses incurred by the Lender in connection with the Loan Documents,
including without limitation all reasonable fees and disbursements of legal
counsel. Without limiting the generality of the foregoing, the Borrower
specifically agrees to pay all fees and disbursements of counsel to the Lender
for the services performed by such counsel in connection with the preparation of
this Amendment and the documents and instruments incidental hereto. The Borrower
hereby agrees that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrower, make a loan to the
Borrower under the Credit Agreement, or apply the proceeds of any loan, for the
purpose of paying any such fees, disbursements, costs and expenses and the fee
required under paragraph 22 hereof.

         29. Miscellaneous. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute one and
the same instrument.



                                      -12-

<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date first written above.


WELLS FARGO BUSINESS CREDIT, INC.           VARI-L COMPANY, INC.


By /s/ TIMOTHY P. ULRICH                    By /s/ RICHARD P. DUTKIEWICZ
  ---------------------------------           ---------------------------------
  Timothy P. Ulrich                           Richard P. Dutkiewicz
  Its:  Vice President                        Its: Vice President of Finance
                                                   and Chief Financial Officer



                                      -13-


<PAGE>




                   EXHIBIT D TO CREDIT AND SECURITY AGREEMENT


                             COMPLIANCE CERTIFICATE



To:               Timothy P. Ulrich
                  Wells Fargo Business Credit, Inc.

Date:             __________________, 200__
Subject:          Vari-L Company, Inc.
                  Financial Statements


         In accordance with our Credit and Security Agreement dated as of June
28, 2001, as amended by (i) the First Amendment to Credit and Security Agreement
dated as of September 17, 2001 and (ii) the Second Amendment to Credit and
Security Agreement dated as of February 8, 2002 (as so amended, the "Credit
Agreement"), attached are the financial statements of Vari-L Company, Inc. (the
"Borrower") as of and for ________________, 20__ (the "Reporting Date") and the
year-to-date period then ended (the "Current Financials"). All terms used in
this certificate have the meanings given in the Credit Agreement.

         I certify that the Current Financials have been prepared in accordance
with GAAP, subject to year-end audit adjustments, and fairly present the
Borrower's financial condition and the results of its operations as of the date
thereof.

         Events of Default. (Check one):

         [ ] The undersigned does not have knowledge of the occurrence of a
Default or Event of Default under the Credit Agreement.

         [ ] The undersigned has knowledge of the occurrence of a Default or
Event of Default under the Credit Agreement and attached hereto is a statement
of the facts with respect to thereto.

         I hereby certify to the Lender as follows:

         [ ] The Reporting Date does not mark the end of one of the Borrower's
fiscal quarters, hence I am completing only paragraph __ below.

         [ ] The Reporting Date marks the end of one of the Borrower's fiscal
quarters, hence I am completing all paragraphs below except paragraph __.

         [ ] The Reporting Date marks the end of the Borrower's fiscal year,
hence I am completing all paragraphs below.

<PAGE>


1.       Minimum Book Net Worth. Pursuant to Section 6.12 of the Credit
         Agreement, as of the Reporting Date, the Borrower's Book Net Worth was
         $____________ which [ ] satisfies [ ] does not satisfy the requirement
         that such amount be not less than as set forth in table below:

<Table>
<Caption>
                                                                       MINIMUM BOOK
           PERIOD                                                        NET WORTH
<S>                                                                    <C>
The month ending January 31, 2002                                      $ 11,400,000
The month ending February 28, 2002                                     $ 11,400,000
The month ending March 31, 2002                                        $ 11,025,000
The month ending April 30, 2002                                        $ 10,900,000
The month ending May 31, 2002                                          $ 10,650,000
The month ending June 30, 2002 and thereafter                          $ 11,025,000
</Table>

2.       Minimum Net Income. Pursuant to Section 6.13 of the Credit Agreement,
         the Borrower's Net Income (excluding any impact of the settlement of
         the private shareholder class actions settled by payment by the
         Borrower of shares of the Borrower) for the ________ period ending on
         the Reporting Date, was $____________, which [ ] satisfies [ ] does not
         satisfy the requirement that such amount be not less than, or such loss
         shall not be greater than, $_____________ during such period as set
         forth in table below:

<Table>
<Caption>
                              PERIOD                             MINIMUM NET INCOME
<S>                                                              <C>
            The nine months ending March 31, 2002                  ($2,900,000)
            The twelve months ending June 30, 2002                 ($2,900,000)
</Table>

3.       Capital Expenditures. Pursuant to Section 7.10 of the Credit Agreement,
         for the year-to-date period ending on the Reporting Date, the Borrower
         has expended or contracted to expend during the _____ month period
         ending _________________, for Capital Expenditures, $__________________
         in the aggregate, which [ ] satisfies [ ] does not satisfy the
         requirement that such expenditures not exceed $____________ in the
         aggregate during such period.

4.       Salaries. As of the Reporting Date, the Borrower [ ] is [ ] is not in
         compliance with Section 7.17 of the Credit Agreement concerning
         salaries.

         Attached hereto are all relevant facts in reasonable detail to
evidence, and the computations of the financial covenants referred to above.
These computations were made in accordance with GAAP.

                                         VARI-L COMPANY, INC.


                                         By:
                                            -----------------------------------
                                         Its:    Chief Financial Officer