EXHIBIT 10.16
AMENDMENT NO.2 TO LETTER OF CREDIT AGREEMENT
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AMENDMENT NO. 2 (this "Amendment"), dated as of September 28, 1998, under
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the First Amended and Restated Letter of Credit Agreement, dated as of March 14,
1997, among PENNSYLVANIA MANUFACTURERS CORPORATION, a Pennsylvania corporation
(the "Applicant"), the Banks party thereto, FIRST UNION NATIONAL BANK, as
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successor to CoreStates Bank N.A., as Co-Agent, and THE BANK OF NEW YORK, as
Issuing Bank and as agent for the Banks (in such capacity, the "Agent"), as
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amended by Amendment No. 1, dated September 29, 1997 (as so amended, the
"Agreement").
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RECITALS
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A. Capitalized terms used herein which are not defined herein shall have
the respective meanings ascribed thereto in the Agreement.
B. The Applicant desires that the Banks agree to extend the Commitment
and Termination Date by 364 days and make certain other changes to the Agreement
as set forth herein.
C. The Banks signing below agree to such extension subject to the terms
and conditions set forth below.
Accordingly, in consideration of the terms and conditions hereinafter set
forth, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
1. The definition of Applicable Fee Percentage contained in Section 1.1
of the Agreement is amended in its entirety to read as follows:
"Applicable Fee Percentage" means with respect to the Letter of Credit
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Commissions and Commitment Fees (i) with respect to Letter of Credit
Commissions, (x) in the case of each Secured Letter of Credit, 0.325% and
(y) in the case of each Unsecured Letter of Credit, the applicable
percentage based on the Capitalization Ratio calculated as provided below
set forth in the following table under the heading "Applicable Fee
Percentage for Unsecured Letters of Credit" and (ii) with respect to
Commitment Fees, the applicable percentage based on the Capitalization
Ratio calculated as provided below set forth in the following table under
the heading "Commitment Fee Percentage":
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CAPITALIZATION APPLICABLE FEE PERCENTAGE FOR COMMITMENT FEE
RATIO UNSECURED LETTERS OF CREDIT PERCENTAGE
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less than 0.20:1.00 0.350% 0.125%
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greater than or equal to 0.20:1.00 and
less than 0.25:1.00 0.450% 0.150%
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greater than or equal to 0.25:1.00 and
less than 0.30:1.00 0.550% 0.200%
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greater than or equal to 0.30:1.00 0.650% 0.225%
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From the Amendment Effective Date (as defined in Amendment No. 2 to
this Agreement) until reset as set forth below, the Applicable Fee
Percentage shall be based on the Capitalization Ratio as of the last day of
the fiscal quarter ended June 30, 1998. The Applicable Fee Percentage shall
be reset from time to time in accordance with the above table on the day of
the delivery by the Applicant in accordance with Sections 5.1(a) and 5.1(b)
of financial statements together with a Compliance Certificate attaching a
Covenant Compliance Worksheet (reflecting the computation of the
Capitalization Ratio as of the last day of the preceding fiscal quarter,
beginning with the fiscal quarter ending September 30, 1998) that provides
for a change in the Applicable Fee Percentage from that then in effect. If
the Applicant shall fail to deliver a Compliance Certificate attaching a
Covenant Compliance Worksheet within sixty (60) days after the end of each
of the first three fiscal quarters (or one hundred twenty (120) days after
the end of the last fiscal quarter), the Applicable Fee Percentage for
Letter of Credit Commissions and Commitment Fees shall be 0.650% and
0.225%, respectively, for the period from and including the 61st day (the
121st day in the case of the last quarter) after the end of such fiscal
quarter to the date of the delivery by the Applicant to the Administrative
Agent of a Compliance Certificate attaching a Covenant Compliance Worksheet
demonstrating that a different Applicable Fee Percentage is applicable.
2. Section 2.16 of the Agreement is amended by substituting the phrase
"Applicable Fee Percentage" for "0.1875%" in the third line thereof.
3. Notwithstanding provisions of Section 2.6 to the contrary, each Bank
consents to the extension of the Commitment and Termination Date for 364 days
from the date hereof.
4. Paragraphs 1-3 of this Amendment shall not be effective until the
prior or simultaneous fulfillment of the following conditions: (the "Amendment
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Effective Date"):
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(a) the Agent shall have received this Amendment, duly executed by a duly
authorized officer or officers of the Applicant, the Agent and each
Bank;
(b) the Agent shall have received a certificate of the Secretary or
Assistant Secretary of the Applicant (i) attaching a true and complete
copy of the resolutions of its board of directors authorizing this
Amendment, in form and substance satisfactory to the Agent, (ii)
certifying that its certificate of incorporation and by-laws have not
been amended since March 14, 1997, or, if so, setting forth the same
and (iii) setting forth the incumbency of its officer or officers who
may sign this Amendment, including therein a signature specimen of
such officer or officers;
(c) a favorable opinion of Duane, Morris & Hecksher, counsel for the
Applicant, addressed to the Agent and the Banks, in form and substance
satisfactory to the Agent; and
(d) the Agent shall have received such other documents as it shall
reasonably request.
5. The Applicant hereby (i) reaffirms and admits the validity and
enforceability of the Agreement and the other Credit Documents and all of its
obligations thereunder, (ii) represents and warrants that there exists no
Default or Event of Default immediately after giving effect to this Amendment,
and (iii) represents and warrants that the representations and warranties
contained in the Credit Documents, including the Agreement as amended by this
Amendment (other than the representations and warranties made as of a specific
date), are true and correct in all material respects on and as of the date
hereof.
6. In all other respects, the Agreement and the other Credit Documents
shall remain in full force and effect.
7. This Amendment may be executed in any number of counterparts, each of
which shall be an original and all of which shall constitute one agreement. It
shall not be necessary in making proof of this Amendment to produce or account
for more than one counterpart signed by the party against which enforcement is
sought.
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8. This Amendment is being delivered in and is intended to be performed in
the State of New York and shall be construed and enforceable and be governed by,
the internal laws of the State of New York without regard to principles of
conflict of laws.
[signature pages follow]
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AS EVIDENCE of the agreement by the parties hereto to the terms and
conditions herein contained, each such party has caused the Amendment No. 2 to
the Letter of Credit Agreement to be executed on its behalf.
PENNSYLVANIA MANUFACTURERS
CORPORATION
By:/s/Edward Hochberg
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Name:Edward Hochberg
_______________________________
Title:Vice President
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PENNSYLVANIA MANUFACTURERS CORPORATION
AMENDMENT NO. 2 TO LETTER OF CREDIT AGREEMENT
THE BANK OF NEW YORK, Individually
and as Agent and as Issuing Bank
By:/s/Lizanne T. Eberle
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Name:Lizanne T. Eberle
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Title:Vice President
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PENNSYLVANIA MANUFACTURERS CORPORATION
AMENDMENT NO. 2 TO LETTER OF CREDIT AGREEMENT
FIRST UNION NATIONAL BANK,
Individually and as Co-Agent
By:/s/Thomas L. Stitchberg
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Name:Thomas L. Stitchberg
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Title:Senior Vice President
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PENNSYLVANIA MANUFACTURERS CORPORATION
AMENDMENT NO. 2 TO LETTER OF CREDIT AGREEMENT
FLEET NATIONAL BANK
By:/s/William A. Bagley
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Name:William A. Bagley
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Title:Senior Vice President
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PENNSYLVANIA MANUFACTURERS CORPORATION
AMENDMENT NO. 2 TO LETTER OF CREDIT AGREEMENT
PNC BANK, NATIONAL ASSOCIATION
By:/s/Kirk Seagers
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Name:Kirk Seagers
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Title:Vice President
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