EXHIBIT 10.1
 
CREDIT AGREEMENT
dated as of
November 9, 2005
among
STATE AUTO FINANCIAL CORPORATION
THE LENDERS PARTY HERETO
KEYBANK NATIONAL ASSOCIATION,
as Administrative Agent, Lead Arranger,
Sole Book Runner and Swingline Lender
 

 

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     This CREDIT AGREEMENT is made and entered into as of November 9, 2005 among
STATE AUTO FINANCIAL CORPORATION, the LENDERS party hereto, KEYBANK NATIONAL
ASSOCIATION, as Administrative Agent, Lead Arranger, Sole Book Runner and
Swingline Lender.
Recitals:
     A. The Borrower desires to borrow funds under this Agreement for general
corporate purposes, including liquidity and working capital.
     B. The Lenders are willing to make loans under the terms and conditions set
forth in this Agreement.
Agreements:
     NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
     Section 1.01. Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded upwards, if necessary,
to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period
multiplied by (b) the Statutory Reserve Adjustment.
     “Administrative Agent” means KeyBank National Association, in its capacity
as administrative agent under the Loan Documents, and its successors in such
capacity.
     “Administrative Questionnaire” means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
     “Affiliate” means, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls, or is
Controlled by or under common Control with such specified Person.
     “Agent” means the Administrative Agent.
     “Alternate Base Rate” means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus one-half percent (0.50%). Any change
in the Alternate Base Rate due to a change in the Prime Rate or the Federal
Funds Effective Rate will be effective from and including the effective date of
such change in the Prime Rate or the Federal Funds Effective Rate, respectively.

 

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     “Anti-Terrorism Laws” means any laws relating to terrorism or money
laundering, including Executive Order No. 13224, the USA Patriot Act, the laws
comprising or implementing the Bank Secrecy Act, and the laws administered by
the United States Treasury Department’s Office of Foreign Asset Control (as any
of the foregoing laws may from time to time be amended, renewed, extended, or
replaced).
     “Applicable Insurance Regulatory Authority” means, when used with respect
to any Insurance Subsidiary, the insurance department or similar administrative
authority or agency located in the state in which such Insurance Subsidiary is
domiciled.
     “Applicable Rate” means for any day:
     (a) with respect to any Revolving Loan that is a Eurodollar Loan, the
applicable rate per annum set forth in the Pricing Schedule in the row opposite
the caption “Euro-Dollar Margin” and in the column corresponding to the “Pricing
Level” that applies for such day;
     (b) with respect to the facility fees payable hereunder, the applicable
rate per annum set forth in the Pricing Schedule in the row opposite the caption
“Facility Fee Rate” and in the column corresponding to the “Pricing Level” that
applies for such day;
     In each case, the “Applicable Rate” will be based on the Borrower’s Pricing
Rating (as defined in the Pricing Schedule) as of the relevant determination
date; provided that at any time when an Event of Default has occurred and is
continuing, such Applicable Rates will be those set forth in the Pricing
Schedule as “Level V Pricing”.
     “Arranger” means KeyBank National Association, in its capacity as lead
arranger of the credit facility provided under this Agreement.
     “Assignment” means an assignment and assumption agreement entered into by a
Lender and an assignee (with the consent of any party whose consent is required
by Section 9.04), and accepted by the Administrative Agent, in the form of
Exhibit A or any other form approved by the Administrative Agent.
     “Assumed Reinsurance” means reinsurance assumed by any Insurance Subsidiary
from another Person (other than from another Insurance Subsidiary or Affiliate
of the Borrower).
     “Base Rate”, when used with respect to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
     “Best” means A.M. Best & Co. and its successors and assigns or, if it shall
be dissolved or shall no longer assign ratings to insurance companies, then any
other nationally recognized insurance statistical rating agency designated by
the Administrative Agent.

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     “Blocked Person” has the meaning specified in Section 3.19.
     “Board of Directors” means, the Board of Directors of the Borrower or any
committee thereof duly authorized to act on behalf of such Board of Directors.
     “Borrower” means State Auto Financial Corporation, a Ohio corporation, and
its successors.
     “Borrowing” means Loans of the same Interest Type made, converted or
continued on the same day and, in the case of Eurodollar Loans, as to which the
same Interest Period is in effect. The term “Borrowing” does not apply to a
Swingline Loan.
     “Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.03.
     “Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in Cleveland, Ohio are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
     “Capital Lease Obligations” of any Person means obligations of such Person
to pay rent or other amounts under any lease of (or other arrangement conveying
the right to use real or personal property, or a combination thereof, which
obligations are required under GAAP to be classified and accounted for as
capital leases on a balance sheet of such Person. The amount of such obligations
will be the capitalized amount thereof determined in accordance with GAAP.
     “Ceded Reinsurance” means reinsurance ceded by any Insurance Subsidiary to
any other Person (other than to another Insurance Subsidiary or Affiliate of the
Borrower), other than Surplus Relief Reinsurance.
     “Change in Control” means the occurrence of any of the following:
     (a) at any time that State Auto Mutual owns less than 50% of either the
aggregate ordinary voting power or the aggregate equity value represented by the
issued and outstanding Equity Interests in the Borrower, any “person” (as such
term is used in Sections 13(d) and 14(d) of the Exchange Act), other than State
Auto Mutual, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that for the purposes of this clause
(a) such person shall be deemed to have “beneficial ownership” of all shares
that any such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than any one or more of the following: (i) 30% of the aggregate ordinary voting
power represented by the issued and outstanding Equity Interests in the
Borrower, (ii) 30% of the aggregate equity value represented by the issued and
outstanding Equity Interests in the Borrower, (iii) the percentage then owned by
State Auto Mutual of the aggregate ordinary voting power represented by the
issued and outstanding Equity

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Interests in the Borrower, and (iv) the percentage then owned by State Auto
Mutual of the aggregate equity value represented by the issued and outstanding
Equity Interests in the Borrower;
     (b) individuals who constituted the Board of Directors of the Borrower at
any given time (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Borrower
was approved by (i) a vote of 66-2/3% of the directors of the Borrower then
still in office who were either directors at such time or whose election or
nomination for election was previously so approved or (ii) State Auto Mutual)
cease for any reason to constitute a majority of the Board of Directors then in
office;
     (c) the adoption of a plan relating to the liquidation or dissolution of
the Borrower; or
     (d) the merger (other than a merger permitted under the provisions of
Section 6.03) or consolidation of the Borrower with or into another Person or
the merger of another Person with or into the Borrower, or the sale of all or
substantially all the assets of the Borrower (determined on a Consolidated
basis) to another Person, other than a merger or consolidation transaction in
which holders of Equity Interests representing 100% of the ordinary voting power
represented by the Equity Interests in the Borrower immediately prior to such
transaction (or other securities into which such securities are converted as
part of such merger or consolidation transaction) own directly or indirectly at
least a majority of the ordinary voting power represented by the Equity
Interests in the surviving Person in such merger or consolidation transaction
issued and outstanding immediately after such transaction and in substantially
the same proportion as before the transaction.
     “Change in Law” means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority after
such date or (c) compliance by any Lender (or, for purposes of Section 2.15(b),
by any lending office of such Lender or by such Lender’s holding company, if
any) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after such date.
     “Commitment” means, with respect to each Lender, the commitment, if any, of
such Lender to make Revolving Loans and to acquire participations in Swingline
Loans hereunder, expressed as an amount representing the maximum aggregate
amount of such Lender’s Exposure hereunder, as such commitment may be
(a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 2.05 or Section 9.04. The initial amount of each Lender’s
Commitment is set forth on Schedule 2.01, or in the Assignment pursuant to which
such Lender shall have assumed its initial Commitment, as applicable. The
initial aggregate amount of the Commitments is $100,000,000.
     “Consolidated” means the Borrower and its Subsidiaries, taken as a whole in
accordance with GAAP.

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     “Consolidated Assets” means, as at the date of any determination, the net
book value of all assets of the Borrower and its Subsidiaries as of such date
classified as assets in accordance with GAAP and determined on a Consolidated
basis.
     “Consolidated Liabilities” means, as at any date of determination, all
liabilities of the Borrower and its Subsidiaries as of such date classified as
liabilities in accordance with GAAP and determined on a Consolidated basis.
     “Consolidated Net Worth” means, as at any date of determination, the
remainder of (i) all Consolidated Assets (after deducting all applicable
reserves and excluding any re-appraisal or write-up of assets after the date of
this Agreement) as of such date, minus (ii) all Consolidated Liabilities as of
such date.
     “Control” means possession, directly or indirectly, of the power (a) to
vote 20% or more of any class of voting securities of a Person or (b) to direct
or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
     “Current Redeemable Equity” means any preferred stock or other preferred
Equity Interests, which in either case, is subject to mandatory redemption at
any time prior to the first anniversary of the Maturity Date (as it exists on
any date of determination).
     “Debt” of any Person means, without duplication:
     (a) all obligations of such Person for borrowed money or with respect to
deposits or advances of any kind (other than unspent cash deposits held in
escrow by or in favor of such Person, or in a segregated deposit account
controlled by such Person, in each case in the ordinary course of business to
secure the performance obligations of, or damages owing from, one or more third
parties),
     (b) all obligations of such Person evidenced by bonds, debentures, notes or
similar instruments,
     (c) all obligations of such Person on which interest charges are
customarily paid (other than obligations where interest is levied only on late
or past due amounts).
     (d) all obligations of such Person under conditional sale or other title
retention agreements relating to property acquired by such Person,
     (e) all obligations of such Person in respect of the deferred purchase
price of property or services (excluding current accounts payable incurred in
the ordinary course of business),
     (f) all Debt of others secured by (or for which the holder of such Debt has
an existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the Debt secured
thereby has been assumed,

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     (g) all Guarantees by such Person of Debt of others,
     (h) all Capital Lease Obligations of such Person,
     (i) all unpaid obligations, contingent or otherwise, of such Person as an
account party in respect of letters of credit and letters of guaranty (other
than cash collateralized letters of credit to secure the performance of workers’
compensation, unemployment insurance, other social security laws or regulations,
bids, trade contracts, leases, environmental and other statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature, in each case, obtained in the ordinary course of business),
     (j) all capital stock of such Person which is required to be redeemed or is
redeemable at the option of the holder if certain events or conditions occur or
exist or otherwise, and
     (k) all obligations, contingent or otherwise, of such Person in respect of
bankers’ acceptances.
The Debt of any Person shall include the Debt of any other entity (including any
partnership in which such Person is a general partner) to the extent that such
Person is liable therefor pursuant to law or judicial holding as a result of
such Person’s ownership interest in or other relationship with such entity,
except to the extent that contractual provisions binding on the holder of such
Debt provide that such Person is not liable therefor; provided that Debt shall
not include (i) obligations with respect to insurance policies, annuities,
guaranteed investment contracts and similar products underwritten by, or
Reinsurance Agreements or Retrocession Agreements entered into by, an Insurance
Subsidiary in the ordinary course of its business, (ii) obligations with respect
to Surplus Relief Reinsurance ceded by an Insurance Subsidiary, or
(iii) obligations of the Borrower with respect to the Trust Preferred
Securities.
     “Default” means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
     “Dollars” or “$” refers to lawful money of the United States.
     “Domestic Subsidiary” means each Subsidiary that is not a Foreign
Subsidiary.
     “Effective Date” means the date on which each of the conditions specified
in Section 4.01 is satisfied (or waived in accordance with Section 9.02).
     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, the preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Material or the
effects of the environment on health and safety.

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     “Equity Interests” means (i) shares of capital stock, partnership
interests, membership interests in a limited liability company, beneficial
interests in a trust or other equity ownership interests in a Person or (ii) any
warrants, options or other rights to acquire such shares or interests.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower or any Subsidiary, is treated as a single
employer under Section 4 14(b) or (c) of the Internal Revenue Code or, solely
for purposes of Section 302 of ERISA and Section 412 of the Internal Revenue
Code, is treated as a single employer under Section 414 of the Internal Revenue
Code.
     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a Plan (except an
event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Internal Revenue Code or Section 302 of ERISA), whether or
not waived; (c) the filing pursuant to Section 4 12(d) of the Internal Revenue
Code or Section 3 03(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by the Borrower or
any ERISA Affiliate of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(f) the incurrence by the Borrower or any ERISA Affiliate of any liability with
respect to withdrawal or partial withdrawal from any Plan or Multiemployer Plan;
or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of
any notice, concerning the imposition of Withdrawal Liability or a determination
that a Multiemployer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of Title IV of ERISA.
     “Eurodollar”, when used with respect to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
     “Events of Default” has the meaning specified in Article 7.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended from
time to time.
     “Excluded Taxes” means, with respect to any Lender Party or other recipient
of a payment made by or on account of any obligation of the Borrower hereunder:
     (a) income or franchise taxes imposed on (or measured by) its net income,
receipts, capital or net worth by the United States (or any jurisdiction within
the United States, except to the extent that such jurisdiction within the United
States imposes such taxes solely in connection with such Lender Party’s
enforcement of its rights or exercise of

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its remedies under the Loan Documents), or by the jurisdiction under the laws of
which such recipient is organized or in which its principal office is located
or. in the case of any Lender, in which its applicable lending office is
located;
     (b) any branch profits taxes imposed by the United States or any similar
tax imposed by any other jurisdiction described in clause (a) above; and
     (c) in the case of a Foreign Lender, any withholding tax that (i) is in
effect and would apply to amounts payable to such Foreign Lender at the time
such Foreign Lender becomes a party to this Agreement or designates a new
lending office or (ii) is attributable to such Foreign Lender’s failure to
comply with Section 2.17(e).
Notwithstanding the foregoing, a withholding tax will not be an “Excluded Tax”
to the extent that (A) it is imposed on amounts payable to a Foreign Lender by
reason of an assignment made to such Foreign Lender at the Borrower’s request
pursuant to Section 2.19(b), (B) it is imposed on amounts payable to a Foreign
Lender by reason of any other assignment and does not exceed the amount for
which the assignor would have been indemnified pursuant to Section 2.17(a) or
(C) in the case of designation of a new lending office, it does not exceed the
amount for which such Foreign Lender would have been indemnified if it had not
designated a new lending office.
     “Exposure” means, with respect to any Lender at any time, the sum of
(i) the aggregate outstanding principal amount of such Lender’s Revolving Loans
and (ii) such Lender’s Swingline Exposure at such time.
     “Farmers Casualty” means Farmers Casualty Insurance Company, an Iowa
domiciled property and casualty insurance company, and its successors.
     “Federal Funds Effective Rate” means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of Cleveland, or, if such rate is not so
published on such Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
     “Federal Reserve Board” means the Board of Governors of the Federal Reserve
System of the United States.
     “Financial Officer” means the chief financial officer, treasurer, any
assistant treasurer, the controller or any assistant controller of the Borrower.
     “Financing Transactions” means any one or more of the execution, delivery
and performance by the Borrower of the Loan Documents to which it is to be a
party, and the borrowing of Loans.
     “Fiscal Quarter” means a fiscal quarter of the Borrower.

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     “Fiscal Quarter Increase” means, as to any Fiscal Quarter, the greater of
(a) an amount equal to 50% of the Borrower’s Consolidated net, after tax
earnings (determined in accordance with GAAP) for such Fiscal Quarter and
(b) zero dollars ($0)
     “Fiscal Year” means a fiscal year of the Borrower.
     “Fixed Charge Coverage Ratio” means, as of any date of determination, the
ratio of (a) the sum of (i) the greater of (A) 10% of the aggregate amount of
statutory capital and surplus of each Subsidiary of the Borrower that is engaged
in the insurance business as of the most recently ended calendar year or, if
applicable, of the calendar year then ending on such date of determination
(determined without duplication in accordance with SAP) or (B) the aggregate net
income earned by each Subsidiary of the Borrower that is engaged in the
insurance business for the four fiscal quarter period then ending on such date
of determination (determined without duplication in accordance with SAP), plus
(ii) cash on hand at the Borrower on such date of determination, plus (iii) the
aggregate net income of each Subsidiary of the Borrower that is not engaged in
the insurance business for the four fiscal quarter period then ending on such
date of determination (determined without duplication in accordance with GAAP)
to (b) the sum (determined without duplication) of (i) interest expense (or
deemed interest expense in the case of Capital Lease Obligations) payable on the
Debt of the Borrower and its Subsidiaries on a consolidated basis during the
four fiscal quarter period then ending on such date of determination, plus (ii)
scheduled principal payments (or deemed principal payments in the case of
Capital Lease Obligations) payable on the Debt of the Borrower and its
Subsidiaries on a consolidated basis during the four fiscal quarters immediately
following such date of determination, plus (iii) dividends (or equivalent
payments otherwise named) required to be paid on all Trust Preferred Securities
during the four fiscal quarter period then ending on such date of determination,
plus (iv) the aggregate redemption price of all Trust Preferred Securities that
are subject to mandatory redemption during the four fiscal quarters immediately
following such date of determination.
     “Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction outside the United States.
     “Foreign Subsidiary” means a Subsidiary (which may be a corporation,
limited liability company, partnership or other legal entity) organized under
the laws of a jurisdiction outside the United States, and conducting
substantially all its operations outside the United States.
     “GAAP” means generally accepted accounting principles as in effect from
time to time in the United States, applied on a basis consistent (except for
changes concurred in by the Borrower’s independent public accountants) with the
most recent audited Consolidated financial statements of the Borrower and its
Consolidated Subsidiaries delivered to the Lenders.
     “Governmental Authority” means the government of the United States, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

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     “Guarantee” by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Debt or other debt-like obligations of any other
Person (the “primary obligor”) in any manner, whether directly or indirectly,
and including any obligation of the guarantor, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation or to purchase (or advance or supply funds for the
purchase of) any security for the payment thereof, (b) to purchase or lease
property, securities or services for the purpose of assuring the owner of such
Debt or other obligation of the payment thereof, (c) to maintain working
capital, equity capital or any other financial statement condition or liquidity
of the primary obligor so as to enable the primary obligor to pay such Debt or
other obligation or (d) as an account party in respect of any letter of credit
or letter of guaranty issued to support such Debt or other obligation; provided
that the term “Guarantee” shall not include endorsements for collection or
deposit in the ordinary course of business.
     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos-containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
     “Hedging Agreement” means any interest rate protection agreement, foreign
currency exchange agreement, commodity price protection agreement or other
interest rate, currency exchange rate or commodity price hedging arrangement.
     “Indemnified Taxes” means all Taxes except Excluded Taxes.
     “Insurance Subsidiary” means a Subsidiary that is a regulated insurance
company. As of the date of this Agreement, State Auto P&C, Milbank, Farmers
Casualty, State Auto Ohio, and State Auto National constitute the Insurance
Subsidiaries.
     “Intercompany Pooling Arrangement” means the pooling arrangement among
State Auto Mutual, State Auto P&C, Milbank, State Auto Insurance Company of
Wisconsin, Farmers Casualty, State Auto Ohio and State Auto Florida Insurance
Company pursuant to which (a) State Auto P&C cedes to State Auto Mutual all of
its insurance business, (b) Milbank cedes to State Auto Mutual its property and
casualty insurance business, (c) State Auto Insurance Company of Wisconsin cedes
to State Auto Mutual its property and casualty insurance business, (d) Farmers
Casualty cedes to State Auto Mutual its property and casualty insurance
business, (e) State Auto Ohio cedes to State Auto Mutual its property and
casualty insurance business and (f) State Auto Mutual retains its property and
casualty insurance business, whereupon all such businesses are pooled and a
portion thereof is then ceded from State Auto Mutual to each of State Auto P&C,
Milbank, State Auto Insurance Company of Wisconsin, Farmers Casualty, State Auto
Ohio and State Auto Florida Insurance Company, and the balance thereof is
retained by State Auto Mutual, as such arrangement may be modified and
supplemented and in effect from time to time.

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     “Interest Election” means an election by the Borrower to change or continue
the Interest Type of a Borrowing in accordance with Section 2.07.
     “Interest Payment Date” means (a) with respect to any Base Rate Loan, the
last day of each calendar quarter, (b) with respect to any Swingline Loan, the
day on which such Loan is required to be repaid and (c) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, if such Interest Period is longer than three
months, each day during such Interest Period that occurs at intervals of three
months’ duration after the first day of such Interest Period.
     “Interest Period” means, with respect to any Eurodollar Borrowing, the
period beginning on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter, as the Borrower may elect; provided that (a) if any Interest Period
would end on a day other than a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless such next succeeding
Business Day would fall in the next calendar month, in which case such Interest
Period shall end on the next preceding Business Day and (b) any Interest Period
that commences on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the last calendar month of
such Interest Period) shall end on the last Business Day of the last calendar
month of such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be deemed to be the effective date of the most recent conversion or continuation
of such Borrowing.
     “Interest Type”, when used with respect to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended
from time to time.
     “Investment” means, for any Person: (a) the acquisition (whether for cash,
Property, services or securities or otherwise) of capital stock, bonds, notes,
debentures, partnership or other ownership interests or other securities of any
other Person or any agreement to make any such acquisition (including, without
limitation, any “short sale” or any sale of any securities at a time when such
securities are not owned by the Person entering into such sale); (b) the making
of any deposit with, or advance, loan or other extension of credit or capital
contribution to, any other Person (including the purchase of Property from
another Person subject to an understanding or agreement, contingent or
otherwise, to resell such Property to such Person), but excluding any such
advance, loan or extension of credit having a term not exceeding 90 days arising
in connection with the sale of inventory or supplies by such Person in the
ordinary course of business; (c) the entering into of any Guarantee of, or other
contingent obligation with respect to, Debt or other liability of any other
Person and (without duplication) any amount committed to be advanced, lent or
extended to such Person; or (d) the entering into of any Hedging Agreement.
     “Lender Affiliate” means, (a) with respect to any Lender, (i) an Affiliate
of such Lender or (ii) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making,

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purchasing, holding or otherwise investing in bank loans and similar extensions
of credit in the ordinary course of its business and is administered or managed
by such Lender or an Affiliate of such Lender and (b) with respect to any Lender
that is a fund which invests in bank loans and similar extensions of credit, any
other fund that invests in bank loans and similar extensions of credit and is
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
     “Lender Parties” means the Lenders and the Administrative Agent.
     “Lenders” means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to an Assignment or Section 2.05,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment. Unless the context requires otherwise, the term “Lenders” includes
the Swingline Lender.
     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, the per annum rate of interest, determined by the
Administrative Agent in accordance with its usual procedures (which
determination shall be conclusive and binding absent manifest error) as of
approximately 11:00 A.M. (London time) two (2) Business Days prior to the
beginning of such Interest Period pertaining to such Eurodollar Borrowing,
appearing on page 3750 of the Dow Jones Telerate Service (or any successor to or
substitute page of such Service, or any successor to or substitute for such
Service providing rate quotations comparable to those currently provided on such
page of such Service, as determined by the Administrative Agent from time to
time for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) as the rate in the London interbank
market for dollar deposits in immediately available funds with a maturity
comparable to such Interest Period. In the event that such a rate quotation is
not available for any reason, then the rate shall be the rate, determined by the
Administrative Agent as of approximately 11:00 A.M. (London time) two
(2) Business Days prior to the beginning of such Interest Period pertaining to
such Eurodollar Borrowing, to be the average (rounded upwards, if necessary, to
the nearest one sixteenth of one percent (1/16th of 1%)) of the per annum rates
of interest at which dollar deposits in immediately available funds,
approximately equal in principal amount to such Eurodollar Borrowing and for a
maturity comparable to the Interest Period, are offered to KeyBank National
Association by prime banks in the London interbank market.
     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
     “Like-Kind Exchange” means the disposition of property in exchange for
similar property or for cash proceeds in a transaction qualifying as a like-kind
exchange pursuant to Section 1031 of the Internal Revenue Code of 1986 (or any
successor provision).

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     “Loan Documents” means this Agreement, any promissory note issued by the
Borrower pursuant to Section 2.09(e) and any certificate required to be
delivered by the Borrower pursuant to Article 2 or Article 5.
     “Loans” means loans made by the Lenders to the Borrower pursuant to this
Agreement. Unless the context requires otherwise, the term “Loans” includes
Swingline Loans.
     “Long-Term Debt” means any Debt that, in accordance with GAAP, constitutes
(or, when incurred, constituted) a long-term liability.
     “Material Adverse Effect” means a material adverse effect on (a) the
business, operations, properties, assets, financial condition, prospects,
contingent liabilities or material agreements of the Borrower and its
Subsidiaries taken as a whole, (b) the ability of the Borrower to perform any of
its obligations under any Loan Document or (c) the rights of or benefits
available to any Lender Party under, or the validity or enforceability of, any
Loan Document.
     “Material Debt” means Debt (other than obligations in respect of the Loans)
or obligations in respect of one or more Hedging Agreements, of any one or more
of the Borrower and its Subsidiaries in an aggregate principal amount exceeding
$15,000,000. For purposes of determining Material Debt, the “principal amount”
of the obligations of the Borrower or any Subsidiary in respect of any Hedging
Agreement at any time will be the maximum aggregate amount (after giving effect
to any netting agreements) that the Borrower or such Subsidiary would be
required to pay if such Hedging Agreement were terminated at such time.
     “Material Insurance Subsidiary” means a Material Subsidiary that is also an
Insurance Subsidiary. As of the date of this Agreement, State Auto P&C, Milbank,
and State Auto National constitute the Material Insurance Subsidiaries.
     “Material Subsidiary” means a Subsidiary that holds, directly or
indirectly, more than 5% of the Consolidated assets of the Borrower and its
Subsidiaries at such time or that accounts for more than 5% of the consolidated
revenues of the Borrower and its Subsidiaries at such time, in each instance
determined in accordance with GAAP.
     “Maturity Date” means the Revolving Availability Termination Date.
     “Milbank” means Milbank Insurance Company, a South Dakota domiciled
property and casualty insurance company, and its successors.
     “Minimum Net Worth” means, for any Fiscal Quarter, the minimum Consolidated
Net Worth required to be maintained by the Borrower as of the end of such Fiscal
Quarter pursuant to Section 6.13.
     “Moody’s” means Moody’s Investors Service, Inc. and its successors and
assigns or, if it shall be dissolved or shall no longer assign credit ratings to
long term debt, then any other nationally recognized statistical rating agency
designated by the Administrative Agent.

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     “Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
     “NAIC” means the National Association of Insurance Commissioners and any
successor thereto.
     “Net Available Proceeds” means, with respect to any Equity Public Offering,
the aggregate amount of all cash received by the Borrower and its Material
Subsidiaries in respect of such Equity Public Offering net of reasonable
expenses incurred by the Borrower and its Material Subsidiaries in connection
therewith.
     “Other Taxes” means any and all present or future recording, stamp,
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
     “Participants” has the meaning specified in Section 9.04(e).
     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
     “Percentage” means, with respect to any Lender, the percentage of the Total
Commitment represented by such Lender’s Commitment. If the Commitments have
terminated or expired, the Percentages will be determined based on the
Commitments most recently in effect, adjusted to give effect to any assignments.
     “Permitted Investments” means any of the following: (i) any investment in
direct obligations of the United States of America or any agency thereof;
(ii) investments in time deposit accounts, certificates of deposit and money
market deposits maturing within 90 days of the date of acquisition thereof
issued by any Lender or a bank or trust company which is organized under the
laws of the United States of America, any State thereof or any foreign country
recognized by the United States of America, and which bank or trust company has
capital, surplus and undivided profits aggregating in excess of $500,000,000 (or
the foreign currency equivalent thereof) and whose long-term debt is rated “A”
(or such similar equivalent rating) or higher by at least one nationally
recognized statistical rating organization (as defined in Rule 436 under the
Exchange Act) or any money market fund sponsored by a registered broker dealer
or mutual fund distributor; (iii) repurchase obligations with a term of not more
than 30 days for underlying securities of the types described in clause
(i) above entered into with a Lender or a bank meeting the qualifications
described in clause (ii) above; (iv) investments in commercial paper, maturing
not more than 90 days after the date of acquisition, issued by a corporation
(other than an Affiliate of the Borrower) organized and in existence under the
laws of the United States of America or any foreign country recognized by the
United States of America with a rating at the times as of which any investment
therein is made of “P-l” (or higher) by Moody’s or “A-1” (or higher) by S&P; (v)
investments in securities with maturities of six months or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States of America, or by any

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political subdivision or taxing authority thereof, and rated at least “A” by S&P
or “A” by Moody’s; and (vi) any other investment permitted by the Applicable
Insurance Regulatory Authority.
     “Permitted Liens” means:
     (a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.05;
     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and
other like Liens imposed by law, arising in the ordinary course of business and
securing obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.05:
     (c) pledges and deposits made in the ordinary course of business in
compliance with workers’ compensation, unemployment insurance and other social
security laws or regulations (including, without limitation, deposits made in
the ordinary course of business to cash collateralize letters of credit
described in the parenthetical in clause (i) of the definition of “Debt”);
     (d) deposits to secure the performance of bids, trade contracts, leases,
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, and Liens imposed by statutory or common law
relating to banker’s liens or rights of setoff or similar rights relating to
deposit accounts, in each case in the ordinary course of business;
     (e) Liens arising under escrows, trusts, custodianships, separate accounts,
funds withheld procedures, and similar deposits, arrangements, or agreements
established with respect to insurance policies, annuities, guaranteed investment
contracts and similar products underwritten by, or Reinsurance Agreements
entered into by, any Insurance Subsidiary in the ordinary course of business;
     (f) deposits with insurance regulatory authorities; and
     (g) easements, zoning restrictions, rights-of-way, licenses, reservations,
minor irregularities of title and similar encumbrances on real property imposed
by law or arising in the ordinary course of business that do not secure any
monetary obligation and do not materially detract from the value of the affected
property or interfere with the ordinary conduct of business of the Borrower or
any Material Subsidiary;
provided that, except as provided in clause (c), above, the term “Permitted
Liens” shall not include any Lien that secures Debt.
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
     “Placed Debt” is defined in Section 6.01.

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     “Plan” means any employee pension benefit plan (except a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the
Internal Revenue Code or Section 302 of ERISA, and in respect of which the
Borrower or any ERISA Affiliate is (or, if such plan were terminated, would
under Section 4069 of ERISA be deemed to be) a “contributing sponsor” as defined
in Section 400 l(a)(13) of ERISA.
     “Prevailing Eastern Time” means “eastern standard time” as defined in 15
USC §263 as modified by 15 USC §260a.
     “Pricing Schedule” means the Pricing Schedule attached hereto.
     “Prime Rate” means, for any day, the rate of interest per annum then most
recently publicly announced by KeyBank National Association as its “prime” rate
(or equivalent rate otherwise named) in effect at its principal office in
Cleveland, Ohio, which prime rate is not necessarily the lowest rate of interest
charged by KeyBank National Association to commercial borrowers. Each change in
the Prime Rate will be effective for purposes hereof from and including the date
such change is publicly announced as being effective.
     “Rating Agency” means each of S&P and Moody’s.
     “Register” has the meaning specified in Section 9.04(c).
     “Reinsurance Agreement” means any agreement, contract, treaty or other
arrangement providing for Ceded Reinsurance by any Insurance Subsidiary or any
Subsidiary of such Insurance Subsidiary.
     “Regulation U” means Regulation U of the Board of Governors of the Federal
Reserve System, as in effect from time to time.
     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and its Affiliates.
     “Required Lenders” means, at any time, Lenders having aggregate Exposures
and unused Commitments representing more than 50% of the sum of all Exposures
and unused Commitments at such time.
     “Restricted Payment” means any dividend or other distribution (whether in
cash, securities or other property) with respect to any Equity Interest in the
Borrower, or any payment (whether in cash, securities or other property) or
incurrence of an obligation by the Borrower or any of its Subsidiaries,
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any Equity
Interest in the Borrower.

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     “Retrocession Agreement” means any agreement, contract, treaty or other
arrangement (other than Surplus Relief Reinsurance) whereby any Insurance
Subsidiary or any Subsidiary of such Insurance Subsidiary cedes reinsurance to
other insurers (other than to another Insurance Subsidiary or any of its
Subsidiaries).
     “Revolving Availability” means on any date an amount equal to the Total
Commitment Amount on such date, minus the Total Outstanding Amount on such date.
     “Revolving Availability Period” means the period from and including the
Effective Date to but excluding the Revolving Availability Termination Date (or,
if earlier, the date on which all outstanding Commitments terminate).
     “Revolving Availability Termination Date” means November 9, 2010 (or if
such date is not a Business Day with respect to Eurodollar Loans, the next
preceding day that is a Business Day with respect to Eurodollar Loans).
     “Revolving Loan” means a Loan made pursuant to Section 2.02.
      “Sale-Leaseback Transaction” has the meaning specified in Section 6.07.
     “SAP” means, with respect to any Insurance Subsidiary, the accounting
procedures and practices prescribed or permitted by the Applicable Insurance
Regulatory Authority, applied on a basis consistent with those that, in
accordance with the last sentence of Section 1.04 hereof, are to be used in
making the calculations for purposes of determining compliance with this
Agreement.
     “S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and its successors and assigns or, if it shall be dissolved or
shall no longer assign credit ratings to long term debt, then any other
nationally recognized statistical rating agency designated by the Administrative
Agent.
     “SEC” means the United States Securities and Exchange Commission.
     “Senior Debt Rating” means a rating of the Borrower’s senior long-term debt
which is not secured or supported by a guarantee, letter of credit or other form
of credit enhancement; provided that if a Senior Debt Rating by a Rating Agency
is required to be at or above a specified level and such Rating Agency shall
have changed its system of classifications after the date hereof, the
requirement will be met if the Senior Debt Rating by such Rating Agency is at or
above the new rating which most closely corresponds to the specified level under
the old rating system; and provided further that the Senior Debt Rating in
effect on any date is that in effect at the close of business on such date.
     “State Auto Ohio” means State Auto Insurance Company of Ohio, an Ohio
corporation, and its successors.
     “State Auto Mutual” means State Automobile Mutual Insurance Company, a
mutual insurance company duly organized and validly existing under the laws of
the State of Ohio.

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     “State Auto National” means State Auto National Insurance Company, an Ohio
corporation, and its successors.
     “State Auto P&C” means State Auto Property and Casualty Insurance Company,
a South Carolina corporation, and its successors.
     “Statutory Reserve Adjustment” means a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Federal Reserve Board to which the Administrative Agent is
subject with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board). Such
reserve percentages will include those imposed pursuant to such Regulation D.
Eurodollar Loans will be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve
Adjustment will be adjusted automatically on and as of the effective date of any
change in any applicable reserve percentage.
     “Statutory Statement” means, as to any Insurance Subsidiary, a statement of
the condition and affairs of such Insurance Subsidiary, prepared in accordance
with statutory accounting practices required or permitted by the Applicable
Insurance Regulatory Authority, and filed with the Applicable Insurance
Regulatory Authority.
     “Statutory Surplus” means, as at any date for any Insurance Subsidiary, the
aggregate amount of surplus as regards policyholders (determined without
duplication in accordance with SAP) of such Insurance Subsidiary.
     “subsidiary” means, with respect to any Person (the “parent”) at any date,
(a) any corporation, limited liability company, partnership or other entity the
accounts of which would be consolidated with those of the parent in the parent’s
consolidated financial statements if such financial statements were prepared in
accordance with GAAP as of such date and (b) any other corporation, limited
liability company, partnership or other entity (i) of which securities or other
ownership interests (x) representing more than 50% of the ordinary voting power
or, in the case of a partnership, more than 50% of the general partnership
voting interests or (y) otherwise having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions, are, as of such date, owned, controlled or held, or (ii) that is
otherwise Controlled (pursuant to clause (b) of the definition of “Control”) as
of such date, by the parent and/or one or more of its subsidiaries.
     “Subsidiary” means any subsidiary of the Borrower.
     “Surplus Relief Reinsurance” means any transaction in which any Insurance
Subsidiary or any Subsidiary of such Insurance Subsidiary cedes business under a
reinsurance agreement that would be considered a “financing-type” reinsurance
agreement as determined by the independent

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certified public accountants of State Auto Mutual in accordance with principles
published by the Financial Accounting Standards Board or the Second Edition of
the AICPA Audit Guide for Stock Life Insurance Companies (pp. 91-92), as the
same may be revised from time to time.
     “Swingline Exposure” means, at any time, the aggregate outstanding
principal amount of the Swingline Loans at such time. The Swingline Exposure of
any Lender at any time will be its Percentage of the total Swingline Exposure at
such time.
     “Swingline Lender” means KeyBank National Association, in its capacity as
the lender of Swingline Loans hereunder.
     “Swingline Loan” means a Loan made pursuant to Section 2.04.
     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
     “Total Capitalization” means, at any date, the aggregate of, without
duplication, (i) Consolidated Debt of the Borrower, of the type described in any
or all of clauses (a), (b), (c), (d), (e) and (h) of the definition of “Debt”,
on such date and (ii) Consolidated Net Worth of the Borrower, on such date.
     “Total Commitment” means, at any date, the aggregate of the Commitments of
all Lenders at such date.
     “Total Outstanding Amount” means, at any date, the aggregate Exposures of
all Lenders at such date.
     “Trust Preferred Securities” means mandatorily redeemable preferred
securities (a) issued by one or more Delaware business trusts (including,
without limitation, STFC Capital Trust 1) and (b) guaranteed by the Borrower,
provided that the aggregate face amount of all Trust Preferred Securities does
not exceed $25,000,000 at any time.
     “United States” means the United States of America.
     “USA Patriot Act” means the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001,
Public Law 107-56, as the same has been, or shall hereafter be, renewed,
extended, amended or replaced.
     “Withdrawal Liability” means liability to a Multiemployer Plan as a result
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
     “Wholly Owned Subsidiary” means, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors’ qualifying shares) are directly or indirectly owned or

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controlled by such Person or one or more Wholly Owned Subsidiaries of such
Person or by such Person and one or more Wholly Owned Subsidiaries of such
Person.
     Section 1.02. Classification of Loans and Borrowings. For purposes of this
Agreement, Loans and Borrowings may be classified by Interest Type (e.g., a
“Eurodollar Loan” or a “Eurodollar Borrowing”).
     Section 1.03. Terms Generally. The definitions of terms herein (including
those incorporated by reference to another document) apply equally to the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun includes the corresponding masculine, feminine and neuter
forms. The words “include”, “includes”and “including”shall be deemed to be
followed by the phrase “without limitation” .The word “will”shall be construed
to have the same meaning and effect as the word “shall” .Unless the context
requires otherwise, (a) any definition of or reference to any agreement,
instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person’s successors and
assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the word
“property” shall be construed to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.
     Section 1.04. Accounting Terms; Changes in GAAP.
     (a) Except as otherwise expressly provided herein, all accounting terms
used herein shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the
Administrative Agent hereunder shall (unless otherwise disclosed to the
Administrative Agent in writing at the time of delivery thereof in the manner
described in subsection (b) below) be prepared, in accordance with GAAP or with
statutory accounting practices applied on a basis consistent with those used in
the preparation of the latest financial statements furnished to the
Administrative Agent hereunder (which, prior to the delivery of the first
financial statements under Section 5.01 hereof, shall mean the audited, or
annual statutory, financial statements as at December 31, 2004 referred to in
Section 3.04 hereof). All calculations made for the purposes of determining
compliance with this Agreement shall (except as otherwise expressly provided
herein) be made by application of GAAP or with statutory accounting practices
applied on a basis consistent with those used in the preparation of the latest
annual or quarterly financial statements furnished to the Administrative Agent
pursuant to Section 5.01 hereof (or, prior to the delivery of the first
financial statements under Section 5.01 hereof, used in the preparation of the
audited, or annual statutory, financial statements as at December 31, 2004
referred to in Section 3.04 hereof) unless (i) the Borrower shall have objected
to determining such compliance on such basis at the time of delivery of such
financial statements or (ii) the Required Lenders (through the Administrative
Agent) shall so object in writing within 30 days after delivery of such
financial statements, in either of which events such calculations shall be made
on a basis consistent with those used in the preparation of the latest financial
statements as to which such

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objection shall not have been made (which, if objection is made in respect of
the first financial statements delivered under Section 5.01 hereof, shall mean
the audited, or annual statutory, financial statements referred to in
Section 3.04 hereof).
     (b) The Borrower shall deliver to the Administrative Agent at the same time
as the delivery of any annual or quarterly financial statement under
Section 5.01 hereof (i) a description in reasonable detail of any material
variation between the application of accounting principles, or statutory
accounting practices, employed in the preparation of such statement and the
application of accounting principles, or statutory accounting practices,
employed in the preparation of the next preceding annual or quarterly financial
statements as to which no objection has been made in accordance with the last
sentence of subsection (a) above and (ii) reasonable estimates of the difference
between such statements arising as a consequence thereof.
     (c) To enable the ready and consistent determination of compliance with the
covenants set forth in Article 6 hereof, the Borrower shall not change the last
day of its fiscal year from December 31, or the last days of the first three
fiscal quarters in each of its fiscal years from March 31, June 30 and
September 30 of each year, respectively.
ARTICLE 2
THE CREDITS
     Section 2.01. Commitments. (a) Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolving Loans to the Borrower from
time to time during the Revolving Availability Period in an aggregate principal
amount that will not at any time result in (A) such Lender’s Exposure exceeding
its Commitment or (B) the Total Outstanding Amount exceeding the Total
Commitment then in effect. Within the foregoing limits and subject to the terms
and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans.
     (b) The Commitments of the Lenders are several, i.e., the failure of any
Lender to make any Loan required to be made by it shall not relieve any other
Lender of its obligations hereunder, and no Lender shall be responsible for any
other Lender’s failure to make Loans as and when required hereunder.
     Section 2.02. Revolving Loans. (a) Each Revolving Loan shall be made as
part of a Borrowing consisting of Loans of the same Interest Type made by the
Lenders ratably in accordance with their respective Commitments, as the Borrower
may request (subject to Section 2.14) in accordance herewith. Each Lender at its
option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan. Any exercise of such option shall
not affect the Borrower’s obligation to repay such Loan as provided herein.
     (b) At the beginning of each Interest Period for any Eurodollar Borrowing,
the aggregate amount of such Borrowing shall be an integral multiple of
$5,000,000 and not less than $10,000,000. When each Base Rate Borrowing is made,
the aggregate amount of such Borrowing shall be an integral multiple of
$5,000,000 and not less than $10,000,000; provided that a Base

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Rate Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the Commitments. Borrowings of more than one Interest Type may be
outstanding at the same time; provided that there shall not at any time be more
than a total of four (4) Eurodollar Borrowings outstanding.
     (c) Notwithstanding any other provision hereof, the Borrower will not be
entitled to request, or to elect to convert or continue, any Eurodollar
Borrowing if the Interest Period requested with respect thereto would end after
the Maturity Date.
     Section 2.03. Requests to Borrow Revolving Loans. To request a Revolving
Borrowing, the Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m.,
Prevailing Eastern Time, three Business Days before the date of the proposed
Borrowing or (b) in the case of a Base Rate Borrowing, not later than
11:00 a.m., Prevailing Eastern Time, on the date of the proposed Borrowing. Each
such telephonic Borrowing Request shall be irrevocable and shall be confirmed
promptly by hand delivery or telecopy to the Administrative Agent of a written
Borrowing Request in a form approved by the Administrative Agent and signed by
the Borrower. Each such telephonic and written Borrowing Request shall specify
the following information in compliance with Section 2.02:
     (i) the aggregate amount of such Borrowing;
     (ii) the date of such Borrowing, which shall be a Business Day;
     (iii) whether such Borrowing is to be a Base Rate Borrowing or a Eurodollar
Borrowing;
     (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to
be applicable thereto, which shall be a period contemplated by the definition of
“Interest Period”; and
     (v) the location and number of the Borrower’s account to which funds are to
be disbursed, which shall comply with the requirements of Section 2.06.
     If no election as to the Interest Type of a Borrowing is specified, the
requested Borrowing will be a Base Rate Borrowing. If no Interest Period with
respect to a requested Eurodollar Borrowing is specified, the Borrower will be
deemed to have selected an Interest Period of one month’s duration. Promptly
after it receives a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender as to the details of such
Borrowing Request and the amount of such Lender’s Loan to be made pursuant
thereto.
     Section 2.04. Swingline Loans. (a) Subject to the terms and conditions set
forth herein, the Swingline Lender agrees to make Swingline Loans to the
Borrower from time to time during the Revolving Availability Period, in each
case in an amount that (i) is an integral multiple of $5,000,000 and not less
than $10,000,000, (ii) will not result in the aggregate outstanding principal

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amount of all Swingline Loans exceeding $15,000,000 and (iii) will not result in
the Total Outstanding Amount exceeding the Total Commitment then in effect;
provided that the Swingline Lender will not be required to make a Swingline Loan
to refinance an outstanding Swingline Loan. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow,
prepay and reborrow Swingline Loans.
     (b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy or
email transmission), not later than 3:00 p.m., Prevailing Eastern Time, on the
proposed date of borrowing. Each such notice shall be irrevocable and shall
specify the requested date (which shall be a Business Day) and amount of the
requested Swingline Loan. The Administrative Agent shall promptly advise the
Swingline Lender of any such notice received from the Borrower. The Swingline
Lender shall make each Swingline Loan available to the Borrower by means of a
credit to the Borrower’s general deposit account with the Swingline Lender by
5:00 p.m., Prevailing Eastern Time, on the requested date of such Swingline
Loan. Each Swingline Loan shall bear interest at the rate specified in
Section 2.13(c).
     (c) The Borrower unconditionally promises to pay to the Swingline Lender
the then unpaid principal amount of each Swingline Loan on the earlier of the
Maturity Date and the thirtieth day after such Swingline Loan is made; provided
that, unless the Swingline Lender otherwise expressly agrees in writing, on each
day that a Borrowing of Revolving Loans is made, the Borrower shall repay all
Swingline Loans that were outstanding when such Borrowing was requested.
     (d) The Borrower will have the right at any time to prepay any Swingline
Loan in full or in part in an amount that is an integral multiple of $1,000,000
and not less than $5,000,000. The Borrower shall notify the Swingline Lender and
the Administrative Agent, by telephone (confirmed by telecopy or email
transmission), of the date and amount of any such prepayment not later than
noon, Prevailing Eastern Time, on the date of prepayment. Each such prepayment
shall be made directly to the Swingline Lender and shall be accompanied by
accrued interest on the amount prepaid.
     (e) The Swingline Lender may, by written notice given to the Administrative
Agent not later than 3:00 p.m., Prevailing Eastern Time, on any Business Day,
require the Lenders to acquire participations on such Business Day in all or a
portion of the Swingline Loans then outstanding. Such notice shall specify the
aggregate amount of Swingline Loans in which Lenders will participate. Promptly
after it receives such notice, the Administrative Agent shall notify each Lender
as to the details thereof and such Lender’s Percentage of such aggregate amount
of Swingline Loans. Each Lender agrees, upon receipt of such notification, to
pay to the Administrative Agent, for the account of the Swingline Lender, such
Lender’s Percentage of such aggregate amount of Swingline Loans. Each Lender’s
obligation to acquire participations in Swingline Loans pursuant to this
subsection is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a Default
or any reduction or termination of the Commitments, and each payment by a Lender
to acquire such participations shall be made without any offset, abatement,
withholding or reduction whatsoever. Each Lender shall comply with its
obligation under this subsection by wire transfer of immediately available
funds, in the same manner as provided in Section 2.06 with respect to Loans made
by

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such Lender (and Section 2.06(b) shall apply, mutatis mutandis, to the payment
obligations of the Lenders under this subsection), and the Administrative Agent
shall promptly pay to the Swingline Lender the amounts so received by it from
the Lenders. The Administrative Agent shall notify the Borrower of any
participations in Swingline Loans acquired pursuant to this subsection, and
thereafter payments in respect of such Swingline Loans shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from the Borrower (or any other party on behalf of the
Borrower) in respect of a Swingline Loan after the Swingline Lender receives the
proceeds of a sale of participations therein shall be promptly remitted to the
Administrative Agent, which shall promptly remit any such amounts received by it
to the Lenders that shall have made payments pursuant to this subsection and to
the Swingline Lender, as their interests may appear. The purchase of
participations in Swingline Loans pursuant to this subsection will not relieve
the Borrower of any default in the payment thereof.
     Section 2.05. Optional Increase in Commitments. At any time prior to the
date that is thirty days prior to the Revolving Availability Termination Date,
if no Default shall have occurred and be continuing (or would result after
giving effect thereto), the Borrower, may, if it so elects, increase the
aggregate amount of the Commitments (each such increase to be in an aggregate
amount that is an integral multiple of $5,000,000 and not less than
$10,000,000), either by designating a financial institution not theretofore a
Lender to become a Lender (such designation to be effective only with the prior
written consent of the Administrative Agent and the Swingline Lender, which
consent will not be unreasonably withheld or delayed, and only if such financial
institution accepts a Commitment in an aggregate amount that is an integral
multiple of $5,000,000 and not less than $10,000,000), or by agreeing with an
existing Lender that such Lender’s Commitment shall be increased. Upon execution
and delivery by the Borrower and such Lender or other financial institution of
an instrument (a “Commitment Acceptance”) in form reasonably satisfactory to the
Administrative Agent, such existing Lender shall have a Commitment as therein
set forth or such other financial institution shall become a Lender with a
Commitment as therein set forth and all the rights and obligations of a Lender
with such a Commitment hereunder; provided:
     (a) that the Borrower shall provide prompt notice of such increase to the
Administrative Agent, who shall promptly notify the Lenders;
     (b) that the Borrower shall have delivered to the Administrative Agent a
copy of the Commitment Acceptance;
     (c) that the amount of such increase, together with all other increases in
the aggregate amount of the Commitments pursuant to this Section 2.05 since the
date of this Agreement, does not exceed $25,000,000;
     (d) that, before and after giving effect to such increase, the
representations and warranties of the Borrower contained in Article 3 of this
Agreement shall be true and correct; and
     (e) that the Administrative Agent shall have received such evidence
(including an opinion of Borrower’s counsel) as it may reasonably request to
confirm the Borrower’s due

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authorization of the transactions contemplated by this Section 2.05 and the
validity and enforceability of the obligations of the Borrower resulting
therefrom.
     On the date of any such increase, the Borrower shall be deemed to have
represented to the Administrative Agent and the Lenders that the conditions set
forth in clauses (a) through (e) above have been satisfied.
     Upon any increase in the aggregate amount of the Commitments pursuant to
this Section 2.05:
     (x) within five Domestic Business Days, in the case of any Base Rate
Borrowings then outstanding, and at the end of the then current Interest Period
with respect thereto, in the case of any Eurodollar Borrowings then outstanding,
the Borrower shall prepay such Borrowing in its entirety and, to the extent the
Borrower elects to do so and subject to the conditions specified in Article 4,
the Borrower shall reborrow Loans from the Lenders in proportion to their
respective Commitments after giving effect to such increase, until such time as
all outstanding Loans are held by the Lenders in such proportion; and
     (y) each existing Lender whose Commitment has not increased pursuant to
this Section 2.05 (each, a “Non-increasing Lender”) shall be deemed, without
further action by any party hereto, to have sold to each Lender whose Commitment
has been assumed or increased under this Section 2.05 (each, an “Increased
Commitment Lender”), and each Increased Commitment Lender shall be deemed,
without further action by any party hereto, to have purchased from each
Non-Increasing Lender, a participation (on the terms specified in
Section 2.04(e) respectively) in each Swingline Loan in which such
Non-Increasing Lender has acquired a participation in an amount equal to such
Increased Commitment Lender’s Percentage thereof, until such time as all
Swingline Exposures are held by the Lenders in proportion to their respective
Commitments after giving effect to such increase.
     Section 2.06. Funding of Revolving Loans. (a) Each Lender making a
Revolving Loan hereunder shall wire the principal amount thereof in immediately
available funds, by 1:00 p.m., Prevailing Eastern Time, on the proposed date of
such Loan, to the account of the Administrative Agent most recently designated
by it for such purpose by notice to the Lenders. The Administrative Agent shall
make such funds available to the Borrower by promptly crediting the amounts so
received, in like funds, to an account of the Borrower maintained with the
Administrative Agent in Cleveland, Ohio and designated by the Borrower in the
applicable Borrowing Request.
     (b) Unless the Administrative Agent receives notice from a Lender before
the proposed date of any Borrowing that such Lender will not make its share of
such Borrowing available to the Administrative Agent, the Administrative Agent
may assume that such Lender has made such share available on such date in
accordance with Section 2.06(a) and may, in reliance on such assumption, make a
corresponding amount available to the Borrower. In such event, if a Lender has
not in fact made its share of such Borrowing available to the Administrative
Agent, such Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand

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such corresponding amount with interest thereon, for each day from and including
the day such amount is made available to the Borrower to but excluding the date
of payment to the Administrative Agent, at (i) in the case of such Lender, the
greater of the Federal Funds Effective Rate and a rate reasonably determined by
the Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable
to Base Rate Loans. If such Lender pays such amount to the Administrative Agent,
such amount shall constitute such Lender’s Loan included in such Borrowing.
     Section 2.07. Interest Elections. (a) Each Borrowing of Revolving Loans
initially shall be of the Interest Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower
may elect to convert such Borrowing to a different Interest Type or, in the case
of a Eurodollar Borrowing, to continue such Borrowing for one or more additional
Interest Periods, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.
     (b) To make an election pursuant to this Section, the Borrower shall notify
the Administrative Agent thereof by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were requesting
that a Borrowing of the Interest Type resulting from such election be made on
the effective date of such election. Each such telephonic Interest Election
shall be irrevocable and shall be confirmed promptly by hand delivery, telecopy
or e-mail transmission to the Administrative Agent of a written Interest
Election in a form approved by the Administrative Agent and signed by the
Borrower.
     (c) Each telephonic and written Interest Election shall specify the
following information in compliance with Section 2.02 and subsection (e) of this
Section:
     (i) the Borrowing to which such Interest Election applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to clauses (iii) and (iv) below shall be
specified for each resulting Borrowing);
     (ii) the effective date of the election made pursuant to such Interest
Election, which shall be a Business Day;
     (iii) whether the resulting Borrowing is to be a Base Rate Borrowing or a
Eurodollar Borrowing; and
     (iv) if the resulting Borrowing is to be a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such election,
which shall be a period contemplated by the definition of “Interest Period”.
     If an Interest Election requests a Eurodollar Borrowing but does not
specify an Interest Period, the Borrower will be deemed to have selected an
Interest Period of one month’s duration.

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     (d) Promptly after it receives an Interest Election, the Administrative
Agent shall advise each Lender as to the details thereof and such Lender’s
portion of each resulting Borrowing.
     (e) if the Borrower fails to deliver a timely Interest Election with
respect to a Eurodollar Borrowing before the end of an Interest Period
applicable thereto, such Borrowing (unless repaid) will be converted to a Base
Rate Borrowing at the end of such Interest Period. Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing, (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing and
(ii) each Eurodollar Borrowing (unless repaid) will be converted to a Base Rate
Borrowing at the end of the Interest Period applicable thereto on the date of
such notice.
     Section 2.08. Termination or Reduction of Commitments. (a) Unless
previously terminated, the Commitments will terminate on the Revolving
Availability Termination Date.
     (b) The Borrower may at any time terminate, or from time to time reduce,
the Commitments; provided that (i) the amount of each reduction of the
Commitments shall be an integral multiple of $1,000,000 and not less than
$5,000.000 and (ii) the Borrower shall not terminate or reduce the Commitments
if, after giving effect thereto and to any concurrent prepayment of Revolving
Loans pursuant to Section 2.10, the total Exposures would exceed the total
Commitments and (iii) the Borrower shall not reduce the Commitments if, after
giving effect thereto, the outstanding Commitments would be less than
$50,000,000.
     (c) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under Section 2.08(b), at least one Business
Day before the effective date of such termination or reduction, specifying such
election and the effective date thereof. Promptly after it receives any such
notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Borrower pursuant to this Section will be
irrevocable; provided that any such notice terminating the Commitments may state
that it is conditioned on the effectiveness of other credit facilities, in which
case such notice may be revoked by the Borrower (by notice to the Administrative
Agent on or before the specified effective date) if such condition is not
satisfied. Any termination or reduction of the Commitments will be permanent and
will be made ratably among the Lenders in accordance with their respective
Commitments.
     Section 2.09. Payment at Maturity; Evidence of Debt. (a) The Borrower
unconditionally promises to pay to the Administrative Agent on the Maturity
Date, for the account of each Lender, the then unpaid principal amount of such
Lender’s Revolving Loans.
     (b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time.

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     (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Interest Type thereof and
each Interest Period (if any) applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender’s share thereof.
     (d) The entries made in the accounts maintained pursuant to subsections
(b) and (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that any failure by any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not affect the Borrower’s obligation to repay the Loans in
accordance with the terms of this Agreement.
     (e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. Thereafter, the Loans evidenced by
such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory
notes in such form payable to the order of the payee named therein (or, if such
promissory note is a registered note, to such payee and its registered assigns).
     Section 2.10. Optional and Mandatory Prepayments. (a) Optional Prepayments.
The Borrower will have the right at any time to prepay any Borrowing in whole or
in part, subject to the provisions of this Section and Section 2.16.
     (b) Mandatory Prepayments. If at any date the Total Outstanding Amount
exceeds the Total Commitment calculated as of such date, then not later than the
next succeeding Business Day, the Borrower shall be required to prepay the Loans
in an amount equal to such excess until the Total Outstanding Amount does not
exceed the Total Commitment.
     (c) Allocation of Prepayments. Before any optional or mandatory prepayment
of Borrowings hereunder, the Borrower shall select the Borrowing or Borrowings
to be prepaid and shall specify such selection in the notice of such prepayment
pursuant to Section 2.10(f).
     (d) Partial Prepayments. Each partial prepayment of a Borrowing shall be in
an amount that would be permitted under Section 2.02(b) for a Borrowing of the
same Interest Type, except as needed to apply fully the required amount of a
mandatory prepayment. Each partial prepayment of a Borrowing shall be applied
ratably to the Loans included in such Borrowing.
     (e) Accrued Interest. Each prepayment of a Borrowing shall be accompanied
by accrued interest to the extent required by Section 2.11 or Section 2.13.
     (f) Notice of Prepayments. The Borrower shall notify the Administrative
Agent by telephone (confirmed by telecopy or e-mail transmission) of any
prepayment of any Borrowing hereunder (i) in the case of a Eurodollar Borrowing,
not later than noon, Prevailing Eastern Time,

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three Business Days before the date of prepayment and (ii) in the case of a Base
Rate Borrowing, not later than noon, Prevailing Eastern Time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Borrowing or portion thereof to be
prepaid and, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment; provided that, if a notice of
optional prepayment is given in connection with a conditional notice of
termination of the Commitments as contemplated by Section 2.08(c), then such
notice of prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.08(c). Promptly after it receives any such notice, the
Administrative Agent shall advise the Lenders of the contents thereof.
     Section 2.11. Change in Control. (a) If a Change in Control of the Borrower
shall occur, the Borrower shall, within one Business Day after the occurrence
thereof, give the Administrative Agent notice thereof, and the Administrative
Agent shall promptly notify each Lender thereof. Such notice shall describe in
reasonable detail the facts and circumstances giving rise thereto and the date
of such Change in Control and each Lender may, by notice to the Borrower and the
Administrative Agent (a “Termination Notice”) given not later than ten days
after the date of such Change of Control, terminate its Commitment, which shall
be terminated, and declare any Loans made by it (together with accrued interest
thereon) and any other amounts payable hereunder for its account to be, and such
Loans and such amounts shall become, due and payable, in each case on the day
following delivery of such Termination Notice (or if such day is not a Business
Day, the next succeeding Business Day), without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower.
     (b) If the Commitment of any Lender is terminated pursuant to this Section
at a time when any Swingline Loan is outstanding, then (i) such Lender shall
remain responsible to the Swingline Lender with respect to such Swingline Loan
to the same extent as if its Commitment had not terminated and (ii) the Borrower
shall pay to such Lender an amount in immediately available funds (which funds
shall be held as collateral pursuant to arrangements satisfactory to such
Lender) equal to such Lender’s Percentage of the aggregate outstanding principal
amount of such Swingline Loan at such time.
     Section 2.12. Fees. (a) The Borrower shall pay to the Administrative Agent
for the account of each Lender a facility fee, which shall accrue during the
Revolving Availability Period at the Applicable Rate on the average daily amount
of the Commitment of such Lender, whether used or unused, during the period from
and including the Effective Date to the date on which such Commitment
terminates. Such facility fee shall be payable in arrears on the last day of
each calendar month in respect of the month then ending and on the earlier date
on which the Commitment of such Lender shall be terminated or assigned in whole.
     (b) The Borrower shall pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon by
the Borrower and the Administrative Agent.
     (d) All fees payable hereunder shall be computed on the basis of a year of
360 days and will be payable for the actual number of days elapsed and shall be
paid on the dates due, in immediately available funds, to the Administrative
Agent for distribution, in the case of facility

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fees and utilization fees, to the Lenders entitled thereto. Fees paid shall not
be refundable under any circumstances.
     Section 2.13. Interest. (a) The Loans comprising each Base Rate Borrowing
shall bear interest for each day at the Alternate Base Rate.
     (b) The Loans comprising each Eurodollar Borrowing shall bear interest for
each Interest Period in effect for such Borrowing at the Adjusted LIBO Rate for
such Interest Period, plus the Applicable Rate.
     (c) Each Swingline Loan shall bear interest for each day at the rate per
annum equal to (i) the rate determined by the Swingline Lender to be its cost of
funds in respect of such Swingline Loan, plus (ii) plus the Applicable Rate for
Eurodollar Borrowings then in effect.
     (d) Notwithstanding the foregoing, (i) if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (A) in the case of overdue principal of any Loan, 2% plus the
rate that otherwise would be applicable to such Loan as provided in the
provisions of this Section or (B) in the case of any other amount, 2% plus the
Alternate Base Rate; and (ii) upon notice to the Borrower from the
Administrative Agent upon and during the continuance of an Event of Default, and
continuing for so long as an Event of Default exists (but without duplication of
the interest accruing pursuant to clause (i), above), interest on the Loans
shall bear interest, after as well as before judgment, at a rate per annum equal
to 2% plus the rate that otherwise would be applicable to such Loan as provided
in the preceding subsections of this Section.
     (e) Interest accrued on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and upon termination of the Commitments;
provided that (i) interest accrued pursuant to Section 2.13(d) shall be payable
on demand, (ii) upon any repayment of any Loan (except a prepayment of a Base
Rate Revolving Loan before the end of the Revolving Availability Period),
interest accrued on the principal amount repaid shall be payable on the date of
such repayment and (iii) upon any conversion of a Eurodollar Loan before the end
of the current Interest Period there for, interest accrued on such Loan shall be
payable on the effective date of such conversion.
     (f) All interest hereunder will be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate will be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case will be payable for the actual number of days elapsed (including the
first day but excluding the last day). Each applicable Alternate Base Rate or
Adjusted LIBO Rate shall be determined by the Administrative Agent, and its
determination thereof will be conclusive absent manifest error.
     Section 2.14. Alternate Rate of Interest. If before the beginning of any
Interest Period for a Eurodollar Borrowing:

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     (i) the Dow Jones Telerate Service is no longer quoting rates for LIBO
Rates and there is no substitute or successor thereto as provided in
Section 1.01, and if deposits in dollars in the applicable amounts are not being
offered by KeyBank National Association in the London interbank market for such
Interest Period; or
     (ii) Lenders having 50% or more of the aggregate principal amount of the
Loans to be included in such Borrowing advise the Administrative Agent that the
Adjusted LIBO Rate for such Interest Period, after giving effect to
Section 2.15, will not adequately and fairly reflect the cost to such Lenders of
making or maintaining such Loans for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any interest
Election that requests the conversion of any Borrowing to, or continuation of
any Borrowing as, a Eurodollar Borrowing will be ineffective and (ii) if any
Borrowing Request requests a Eurodollar Borrowing, such Borrowing will be made
as a Base Rate Borrowing.
     Section 2.15. Increased Costs. (a) If any Change in Law shall:
     (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or
credit extended by, any Lender (except any such reserve requirement reflected in
the Adjusted LIBO Rate); or
     (ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make Eurodollar Loans) or to increase the cost to such Lender or
to reduce any amount received or receivable by such Lender hereunder (whether of
principal, interest or otherwise), then the Borrower shall pay to such Lender
such additional amount or amounts as will compensate it for such additional cost
incurred or reduction suffered.
     (b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such
Lender’s capital or on the capital of such Lender’s holding company, if any, as
a consequence of this Agreement or the Loans made by such Lender, to a level
below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s
policies and the policies of such Lender’s holding company with respect to
capital adequacy), then from time to time following receipt of the certificate
referred to in subsection (c) of this Section, the Borrower shall pay to such
Lender such additional amount or amounts as will compensate it or its holding
company for any such reduction suffered.

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     (c) A certificate of a Lender setting forth the amount or amounts necessary
to compensate it or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section shall be delivered to the Borrower and
shall be rebuttably presumed to be correct. Each such certificate shall contain
a representation and warranty on the part of the Lender to the effect that such
Lender has complied with its obligations pursuant to Section 2.19 hereof in an
effort to eliminate or reduce such amount. The Borrower shall pay such Lender
the amount shown as due on any such certificate within 10 days after receipt
thereof.
     (d) Failure or delay by any Lender to demand compensation pursuant to this
Section will not constitute a waiver of its right to demand such compensation;
provided that the Borrower will not be required to compensate a Lender pursuant
to this Section for any increased cost or reduction incurred more than 180 days
before it notifies the Borrower of the Change in Law giving rise to such
increased cost or reduction and of its intention to claim compensation therefor.
However, if the Change in Law giving rise to such increased cost or reduction is
retroactive, then the 180-day period referred to above will be extended to
include the period of retroactive effect thereof.
     Section 2.16. Break Funding Payments. If (a) any principal of any
Eurodollar Loan is repaid on a day other than the last day of an Interest Period
applicable thereto (including as a result of an Event of Default), (b) any
Eurodollar Loan is converted on a day other than the last day of an Interest
Period applicable thereto, (c) the Borrower fails to borrow, convert, continue
or prepay any Revolving Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under
Section 2.10(1) and is revoked in accordance therewith), or (d) any Eurodollar
Loan is assigned on a day other than the last day of an Interest Period
applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then the Borrower shall compensate each Lender for its loss, cost
and expense attributable to such event. In the case of a Eurodollar Loan, such
loss, cost and expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest that would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the end of the then
current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, the Interest Period that would have begun on the date of
such failure), over (ii) the amount of interest that would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the beginning of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
     Section 2.17. Taxes. (a) All payments by the Borrower under the Loan
Documents shall be made free and clear of and without deduction or withholding
for any Indemnified Taxes or Other Taxes; provided that, if the Borrower shall
be required to deduct or withhold any Indemnified Taxes or Other Taxes from such
payments, then (i) the sum payable will be increased as necessary so that, after
all required deductions and withholdings (including deductions applicable to
additional sums payable under this Section) are made, each relevant Lender Party

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receives an amount equal to the sum it would have received had no such
deductions or withholdings been made, (ii) the Borrower shall make such
deductions or withholdings and (iii) the Borrower shall pay the full amount
deducted or withheld to the relevant Governmental Authority in accordance with
applicable law.
     (b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
     (c) The Borrower shall indemnify each Lender Party, within 10 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by such Lender Party with respect to any payment by or obligation of
the Borrower under the Loan Documents (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties, interest and reasonable expenses arising therefrom
or with respect thereto (unless such penalties, interest or expenses arise by
reason of the gross negligence or willful misconduct of such Lender), whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of any such payment delivered to the Borrower by a Lender Party on its own
behalf, or by the Administrative Agent on behalf of a Lender Party, shall be
conclusive absent manifest error. If the Borrower has indemnified any Lender
Party pursuant to this Section 2.17(c), such Lender Party shall take such steps
as the Borrower shall reasonably request (at the Borrower’s expense) to assist
the Borrower in recovering the Indemnified Taxes or Other Taxes and any
penalties or interest attributable thereto; provided that no Lender Party shall
be required to take any action pursuant to this Section 2.17(c) unless, in the
reasonable judgment of such Lender Party, such action (i) would not subject such
Lender Party to any unreimbursed cost or expense and (ii) would not otherwise be
disadvantageous to such Lender Party.
     (d) As soon as practicable after the Borrower pays any Indemnified Taxes or
Other Taxes to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent.
     (e) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the laws of the United States, or any treaty to which
the United States is a party, with respect to payments under this Agreement
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate. If any such Foreign Lender becomes subject to any Tax because it
fails to comply with this subsection as and when prescribed by applicable law,
the Borrower shall take such steps (at such Foreign Lender’s expense) as such
Foreign Lender shall reasonably request to assist such Foreign Lender to recover
such Tax.
     (f) The provisions of this Section 2.17 shall survive the termination of
this Agreement and repayment of the Loans.

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     Section 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-Offs.
(a) The Borrower shall make each payment required to be made by it under the
Loan Documents (whether of principal, interest or fees, or amounts payable under
Section 2.15, 2.16 or 2.17(c) or otherwise) before the time expressly required
under the relevant Loan Document for such payment (or, if no such time is
expressly required, before noon, Prevailing Eastern Time), on the date when due,
in immediately available funds, without set-off or counterclaim. Any amount
received after such time on any day may, in the discretion of the Administrative
Agent, be deemed to have been received on the next succeeding Business Day for
purposes of calculating interest thereon. All such payments shall be made to the
Administrative Agent at its offices at 127 Public Square, 6th Floor, Cleveland,
Ohio 44114 (or such other address as may from time to time be designated by the
Administrative Agent to the Borrower in writing), except payments to be made
directly to the Swingline Lender as expressly provided herein and except that
payments pursuant to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly
to the Persons entitled thereto and payments pursuant to other Loan Documents
shall be made to the Persons specified therein. The Administrative Agent shall
distribute any such payment received by it for the account of any other Person
to the appropriate recipient promptly alter receipt thereof. Unless otherwise
specified herein, if any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment will be extended to the next
succeeding Business Day and, if such payment accrues interest, interest thereon
will be payable for the period of such extension. All payments under each Loan
Document shall be made in dollars.
     (b) If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (i) first, to pay interest and
fees then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of interest and fees then due to such parties, and
(ii) second, to pay principal then due hereunder, ratably among the Lenders in
accordance with the amounts of principal then due.
     (c) If any Lender shall, by exercising any right of set-off or counterclaim
or otherwise, obtain payment in respect of any principal of or interest on any
of its Loans or any of its participations in Swingline Loans resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
Loans and participations in Swingline Loans and accrued interest thereon than
the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in Swingline Loans of other Lenders to the extent
necessary so that the benefit of all such payments shall be shared by the
Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans and participations in Swingline
Loans; provided that (i) if any such participations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations
shall be rescinded and the purchase price restored to the extent of such
recovery, without interest, and (ii) the provisions of this subsection shall not
apply to any payment made by the Borrower pursuant to and in accordance with the
express terms of this Agreement or any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans to any assignee or participant, other than to the Borrower or any
Subsidiary or Affiliate thereof (as to which the provisions of this subsection
shall apply). The Borrower consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing

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arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
     (d) Unless, before the date on which any payment is due to the
Administrative Agent for the account of one or more Lender Parties hereunder,
the Administrative Agent receives from the Borrower notice that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance on such assumption, distribute to each relevant Lender Party the amount
due to it. In such event, if the Borrower has not in fact made such payment,
each Lender Party severally agrees to repay to the Administrative Agent
forthwith on demand the amount so distributed to such Lender Party with interest
thereon, for each day from and including the day such amount is distributed to
it to but excluding the day it repays the Administrative Agent, at the greater
of the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.
     (e) If any Lender fails to make any payment required to be made by it
pursuant to Section 2.04(e), 2.06(b), 2.18(d) or 9.03(c), the Administrative
Agent may, in its discretion (notwithstanding any contrary provision hereof),
apply any amounts thereafter received by the Administrative Agent for the
account of such Lender to satisfy such Lender’s obligations under such Sections
until all such unsatisfied obligations are fully paid.
     Section 2.19. Lender’s Obligation to Mitigate; Replacement of Lenders.
(a) If any Lender requests compensation under Section 2.15, or if the Borrower
is required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 2.17, then such
Lender shall use all commercially reasonable efforts to mitigate or eliminate
the amount of such compensation or additional amount, including without
limitation, by designating a different lending office for funding or booking its
Loans hereunder or by assigning its rights and obligations hereunder to another
of its offices, branches or affiliates; provided that no Lender shall be
required to take any action pursuant to this Section 2.19(a) unless, in the
reasonable judgment of such Lender, such designation or assignment or other
action (i) would eliminate or reduce amounts payable pursuant to Section 2.15 or
2.17, as the case may be, in the future, (ii) would not subject such Lender to
any unreimbursed cost or expense and (iii) would not otherwise be
disadvantageous to such Lender in any material respect. The Borrower shall pay
all reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.
     (b) If any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17,
or if any Lender defaults in its obligation to fund Loans hereunder, then the
Borrower may, at its sole expense and effort, upon notice to such Lender and the
Administrative Agent, require such Lender to assign, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
its interests, rights and obligations under this Agreement (including, without
limitation, participations in Swingline Loans) to an assignee that shall assume
such obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the prior
written

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consent of the Administrative Agent (and, if a Commitment is being assigned, the
Swingline Lender), which consents shall not unreasonably be withheld, (ii) such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and participations in Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under
Section 2.15 or payments required to be made pursuant to Section 2.17, such
assignment will result in a material reduction in such compensation or payments.
A Lender shall not be required to make any such assignment if, prior thereto, as
a result of a waiver by such Lender or otherwise, the circumstances entitling
the Borrower to require such assignment cease to apply.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
     The Borrower represents and warrants to the Lender Parties that:
     Section 3.01. Organization; Powers. The Borrower and each of its Material
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where failures
to do so, in the aggregate, could not reasonably be expected to result in a
Material Adverse Effect, is qualified to do business in, and is in good standing
in, every jurisdiction where such qualification is required.
     Section 3.02. Authorization; Enforceability. The Financing Transactions to
be entered into by the Borrower are within its corporate, limited liability
company or similar company powers and have been duly authorized by all necessary
corporate, limited liability company (or similar) action and, if required,
stockholder or equity holder action. This Agreement has been duly executed and
delivered by the Borrower and constitutes, and each other Loan Document to which
the Borrower is to be a party, when executed and delivered by the Borrower, will
constitute, a legal, valid and binding obligation of the Borrower, as the case
may be, in each case enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.
     Section 3.03. Governmental Approvals; No Conflicts. The Financing
Transactions and the use of the proceeds thereof (a) do not require any consent
or approval of, registration or filing with, or other action by, any
Governmental Authority, except such as have been obtained or made and are in
full force and effect, (b) will not violate any applicable law or regulation or
the charter, by-laws, limited liability company agreement or other
organizational documents of the Borrower or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon the Borrower or any of its
properties, or give rise to a right thereunder to require the Borrower to make
any payment, where such default or

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payment reasonably can be expected to have a Material Adverse Effect and
(d) will not result in the creation or imposition of any Lien on any property of
the Borrower.
     Section 3.04. Financial Statements; No Material Adverse Change. (a) The
Borrower has heretofore furnished to the Lenders (i) the audited Consolidated
balance sheet of the Borrower and its Subsidiaries as of December 31, 2004 and
the related Consolidated statements of income and cash flows for the Fiscal Year
then ended, reported on by Ernst & Young LLP, independent public accountants,
and (ii) the unaudited Consolidated balance sheet of the Borrower and its
Subsidiaries as of September 30, 2005 and the related Consolidated statements of
income and cash flows for the Fiscal Quarter then ended and for the portion of
the Fiscal Year then ended, all certified by the Borrower’s chief financial
officer. Such financial statements present fairly, in all material respects, the
Consolidated financial position of the Borrower and its Subsidiaries as of such
dates and its Consolidated results of operations and cash flows for such periods
in accordance with GAAP, subject to normal year-end adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.
None of the Borrower or any of its Material Subsidiaries has on the date hereof
any material contingent liabilities, material liabilities for taxes, material
unusual forward or long-term commitments or material unrealized or anticipated
losses from any unfavorable commitments, except as referred to or reflected or
provided for in said balance sheets as at said dates.
     (b) Since December 31, 2004, and as of the Effective Date, there has been
no material adverse change in the business, operations, properties, assets,
financial condition, prospects, contingent liabilities or material agreements of
the Borrower and its Subsidiaries, taken as a whole.
     (c) The Borrower has heretofore furnished to each of the Lenders the annual
Statutory Statement of each Insurance Subsidiary for the fiscal year ended
December 31, 2004, and the quarterly Statutory Statement of each Insurance
Subsidiary for the fiscal quarter ended September 30, 2005, in each case as
filed with the Applicable Insurance Regulatory Authority. All such Statutory
Statements present fairly in all material respects the financial condition of
each Insurance Subsidiary as at, and the results of operations for, the fiscal
year ended December 31, 2004, and fiscal quarter ended September 30, 2005, in
accordance with statutory accounting practices prescribed or permitted by the
Applicable Insurance Regulatory Authority. Since September 30, 2005, there has
been no material adverse change in the Consolidated financial condition,
operations, business or prospects taken as a whole of the Borrower from that set
forth in said Statutory Statements as at September 30, 2005.
     Section 3.05. Insurance Licenses. Schedule T to the most recent Statutory
Statement of each Insurance Subsidiary lists, as of the Effective Date, all of
the jurisdictions in which such Insurance Subsidiary holds active licenses
(including, without limitation, licenses or certificates of authority from
Applicable Insurance Regulatory Authorities), permits or authorizations to
transact insurance and reinsurance business or to act as an insurance agent or
broker (collectively, the “Licenses”). Each Insurance Subsidiary is in
compliance in all material respects with each License held by it. No License (to
the extent material) is the subject of a proceeding for suspension or revocation
or any similar proceedings, there is no sustainable basis for such a suspension
or revocation, and to the knowledge of the Borrower no such suspension or
revocation has been

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threatened by any Applicable Insurance Regulatory Authority except in any such
case where such proceedings would not have a Material Adverse Effect.
     Section 3.06. Borrower’s Subsidiaries.
     (a) As of the Effective Date, the Borrower has no Subsidiaries, other than
those set forth on Part A of Schedule 3.06. Part A of Schedule 3.06 accurately
identifies the jurisdiction under the laws of which each such Subsidiary is
formed and whether such Subsidiary is or is not, as the case may be, a Material
Subsidiary as of the Effective Date.
     (b) Set forth on Part B of Schedule 3.06 is a complete and correct list of
all Investments (other than (i) Investments disclosed in Part A of said
Schedule 3.06 and any other Investments existing as of the date hereof permitted
under Section 6.04 and (ii) Guarantees of Debt the aggregate principal or face
amount of which Debt is less than $5,000,000) held by the Borrower or any of its
Subsidiaries in any Person on the date hereof and, for each such Investment,
(A) the identity of the Person or Persons holding such Investment and (B) the
nature of such Investment. Except as disclosed in Part B of Schedule 3.06, each
of the Borrower and its Subsidiaries owns, free and clear of all Liens, all such
Investments.
     Section 3.07. Litigation. There is no action, suit, arbitration proceeding
or other proceeding, inquiry or investigation, at law or in equity, before or by
any arbitrator or Governmental Authority pending against the Borrower or any
Material Subsidiary or of which the Borrower or any Material Subsidiary has
otherwise received notice or which, to the knowledge of the Borrower, is
threatened against the Borrower or any Material Subsidiary (i) as to which, but
after giving effect to any applicable insurance claim reserve, there is a
reasonable possibility of an unfavorable decision, ruling or finding which would
reasonably be expected to result in a Material Adverse Effect or (ii) that
involves any of the Loan Documents or the Financing Transactions or the use of
the proceeds thereof.
     Section 3.08. Compliance with Laws and Agreements; Foreign Asset Control
Regulations. (a) The Borrower is in compliance with all laws, regulations and
orders of any Governmental Authority applicable to it or its property (including
(i) all Environmental Laws, (ii) ERISA, (iii) applicable laws, regulations and
orders dealing with intellectual property, and (iv) the Fair Labor Standards Act
and other applicable law dealing with such matters) and all indentures,
agreements and other instruments binding on it or its property, except where
failures to do so, in the aggregate, would not reasonably be expected to result
in a Material Adverse Effect. No Default has occurred and is continuing.
     (b) The Borrower is and will remain in full compliance with all laws and
regulations applicable to it ensuring that no person who owns a controlling
interest in or otherwise controls the Borrower is or shall be (A) listed on the
Specially Designated Nationals and Blocked Person List maintained by the Office
of Foreign Assets Control (“OFAC”). Department of the Treasury, and/or any other
similar lists maintained by OFAC pursuant to any authorizing statute, Executive
Order or regulation or (B) a person designated under Section 1(b), (c) or (d) of
Executive Order No. 13224 (September 23, 2001), any related enabling legislation
or any other similar Executive Orders.

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     Section 3.09. Investment and Holding Company Status. The Borrower is not
(a) an “investment company” or a company “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended or (b) a
“holding company” or “subsidiary company” of a “holding company”, or an
“affiliate” of a “holding company” or of a “subsidiary company” of a “holding
company”, within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
     Section 3.10. Taxes. The Borrower and its Subsidiaries are members of an
affiliated group of corporations filing consolidated returns for Federal income
tax purposes, of which the Borrower is the “common parent” (within the meaning
of Section 1504 of the Code) of such group. The Borrower and its Material
Subsidiaries have filed all Federal income tax returns and all other material
tax returns that are required to be filed by them and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any of its Material Subsidiaries. The charges, accruals and reserves on the
books of the Borrower and its Material Subsidiaries in respect of taxes and
other governmental charges are, in the opinion of the Borrower, adequate. The
Borrower has not given or been requested to give a waiver of the statute of
limitations relating to the payment of any Federal, state, local and foreign
taxes or other impositions.
     Section 3.11. Material Agreements and Liens.
     (a) Part A of Schedule 3.11 is a complete and correct list of each credit
agreement, loan agreement, indenture, purchase agreement, guarantee, letter of
credit or other arrangement providing for or otherwise relating to any Debt or
any extension of credit (or commitment for any extension of credit) to, or
Guarantee by, the Borrower or any of its Subsidiaries, outstanding on the date
hereof the aggregate principal or face amount of which equals or exceeds (or may
equal or exceed) $5,000,000, and the aggregate principal or face amount
outstanding or that may become outstanding under each such arrangement is
correctly described in Part A of said Schedule 3.11.
     (b) Part B of Schedule 3.11 is a complete and correct list of each Lien
securing Debt of any Person outstanding on the date hereof the aggregate
principal or face amount of which equals or exceeds (or may equal or exceed)
$5,000,000 and covering any Property of the Borrower or any of its Subsidiaries,
and the aggregate Debt secured (or that may be secured) by each such Lien and
the Property covered by each such Lien is correctly described in Part B of said
Schedule 3.11.
     Section 3.12. Environmental Matters. Each of the Borrower and its
Subsidiaries has obtained all environmental, health and safety permits, licenses
and other authorizations required under all Environmental Laws to carry on its
business as now being or as proposed to be conducted, except to the extent
failure to have any such permit, license or authorization would not (either
individually or in the aggregate) have a Material Adverse Effect. Each of such
permits, licenses and authorizations is in full force and effect and each of the
Borrower and its Subsidiaries is in compliance with the terms and conditions
thereof, and is also in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any applicable Environmental Law or in any regulation,
code, plan, order, decree, judgment, injunction, notice or demand letter issued,
entered, promulgated or

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approved thereunder, except to the extent failure to comply therewith would not
(either individually or in the aggregate) have a Material Adverse Effect.
     Section 3.13. Capitalization. The authorized capital stock of the Borrower
consists, on the date hereof, of an aggregate of 105,000,000 shares consisting
of (a) 100,000,000 shares of common stock, no par value, of which (as of
November 3, 2005) 40,411,126 shares were duly and validly issued and
outstanding, each of which shares is fully paid and nonassessable, (b) 2,500,000
shares of Class A Preferred Stock, no par value, none of which shares are issued
and outstanding and (c) 2,500,000 shares of Class B Preferred Stock, no par
value, none of which shares are issued and outstanding. As of the date hereof,
65% of such issued and outstanding shares of common stock are owned beneficially
and of record by State Auto Mutual. As of the date hereof, (i) except as set
forth in Part A of Schedule 3.13, there are no outstanding Equity Rights with
respect to the Borrower and (ii) except as set forth in Part B of Schedule 3.13,
there are no outstanding obligations of the Borrower or any of its Subsidiaries
to repurchase, redeem, or otherwise acquire any shares of capital stock of the
Borrower nor are there any outstanding obligations of the Borrower or any of its
Subsidiaries to make payments to any Person, such as “phantom stock” payments,
where the amount thereof is calculated with reference to the fair market value
or equity value of the Borrower or any of its Subsidiaries.
     Section 3.14. No Reliance. The Borrower has made, independently and without
reliance upon the Administrative Agent or any Lender, and based on such
documents and information as it has deemed appropriate, its own decision to
enter into this Agreement and has made (and will continue to make),
independently and without reliance upon the Administrative Agent or any Lender,
and based on such documents and information as it has deemed appropriate (or
shall deem appropriate at the time), its own legal, credit and tax analysis of
the transactions contemplated hereby.
     Section 3.15. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other ERISA Events for which
liability is reasonably expected to occur, would reasonably be expected to
result in a Material Adverse Effect.
     Section 3.16. Regulation U. Neither the Borrower nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U).
     Section 3.17. Disclosure. The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which it is
subject, and all other matters known to it, that, individually or in the
aggregate, would reasonably be expected to result in a Material Adverse Effect.
All of the reports, financial statements, certificates and other written
information (other than projected financial information) that have been made
available by or on behalf of the Borrower to the Arranger, the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder, are complete and
correct in all material respects and do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein not materially misleading in light of the
circumstances under which such statements are made; provided that, with respect
to projected financial information, the Borrower represents only

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that such information was prepared in good faith based on assumptions believed
to be reasonable at the time.
     Section 3.18. Solvency. Immediately after the Financing Transactions to
occur on the Effective Date are consummated and after giving effect to the
application of the proceeds of each Loan made on the Effective Date and after
giving effect to the application of the proceeds of each Loan made on any other
date, (a) the fair value of the assets of the Borrower, at a fair valuation,
will exceed its debts and liabilities, subordinated, contingent or otherwise;
(b) the Borrower will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and
matured; and (c) the Borrower will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now
conducted and proposed to be conducted after the Effective Date.
     Section 3.19. Anti-Terrorism Requirements.
     (a) Neither any Borrower nor any Affiliate of any Borrower, is in violation
in any material respect of any Anti-Terrorism Law or engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose of evading
or avoiding, or attempts to violate, any of the prohibitions set forth in any
Anti-Terrorism Law.
     (b) Neither any Borrower, nor any Affiliate of any Borrower or their
respective agents acting or benefiting in any capacity in connection with the
Loans or other transactions hereunder, is any of the following (each a “Blocked
Person”):
     (i) a Person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order No. 13224;
     (ii) a Person owned or controlled by, or acting for or on behalf of, any
Person that is listed in the annex to, or is otherwise subject to the provisions
of, the Executive Order No. 13224;
     (iii) a Person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;
     (iv) a Person that commits, threatens or conspires to commit or supports
“terrorism” as defined in the Executive Order No. 13224;
     (v) a Person that is named as a “specially designated national” on the most
current list published by the U.S. Treasury Department Office of Foreign Asset
Control at its official website or any replacement website or other replacement
official publication of such list, or

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(vi) a Person who is affiliated or associated with a Person listed above.
     (c) Neither the Borrower or, to the knowledge of the Borrower, any of its
agents acting or benefiting in any capacity in connection with the Loans or
other transactions hereunder, (i) conducts any business or engages in making or
receiving any contribution of funds, goods or services to or for the benefit of
any Blocked Person, or (ii) deals in, or otherwise engages in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order No. 13224.
ARTICLE 4
CONDITIONS
     Section 4.01. Effective Date. The obligations of the Lenders to make Loans
hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 9.02):
     (a) The Administrative Agent shall have received counterparts hereof signed
by the Borrower and each of the Lenders listed on the signature pages hereof
(or, in the case of any party as to which an executed counterpart shall not have
been received, receipt by the Administrative Agent in form satisfactory to it of
facsimile or other written confirmation from such party that it has executed a
counterpart hereof).
     (b) The Administrative Agent shall have received favorable written opinion
addressed to the Administrative Agent and the Lenders and dated the Effective
Date of John R. Lowther, counsel for the Borrower, (i) which opinion is
substantially in the form of Exhibit B and (ii) covering such other matters
relating to the Borrower, the Loan Documents or the Financing Transactions as
the Required Lenders shall reasonably request. The Borrower requests such
counsel to deliver such opinion.
     (c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the Borrower and
its Material Subsidiaries, the authorization for and validity of the Financing
Transactions and any other legal matters relating to the Borrower, its Material
Subsidiaries, the Loan Documents or the Financing Transactions, all in form and
substance satisfactory to the Administrative Agent and its counsel.
     (d) The Administrative Agent shall have received a certificate, dated the
Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
clauses (b), (c) and (d) of Section 4.02.
     (e) The fact that the Required Lenders shall not have notified the
Administrative Agent of their determination that, since December 31, 2004, any
event, development or circumstance has occurred that has had or would reasonably
be expected to have a Material Adverse Effect, other

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than those events, developments and circumstances that have been disclosed to
the Administrative Agent in writing.
     (f) The fact that neither of the Arranger nor the Administrative Agent
shall have become aware of any information or other matter affecting the
Borrower or the Financing Transactions which was in existence prior to the date
of this Agreement and is inconsistent in a material and adverse manner with any
such information or other matter disclosed to them prior to the date of this
Agreement.
     (g) The Borrower shall have paid all fees and other amounts due and payable
to the Lender Parties on or before the Effective Date, including, to the extent
invoiced, all out-of-pocket expenses (including fees, charges and disbursements
of counsel) required to be reimbursed or paid by the Borrower under the Loan
Documents.
     (h) All consents and approvals required to be obtained from any
Governmental Authority or other Person in connection with the Financing
Transactions shall have been obtained and be in full force and effect, except
where failure to obtain such approval or consent would not have a Material
Adverse Effect.
     (i) The Borrower shall have delivered to the Administrative Agent evidence
reasonably satisfactory to the Administrative Agent that the Credit Agreement
among SAF Funding Corporation, various lender parties thereto, and KeyBank
National Association, as agent dated November 12, 2003, the Put Agreement among
the Borrower, State Auto Mutual and KeyBank National Association, as agent, of
even date therewith, and the Standby Purchase Agreement among the Borrower,
State Auto Mutual and SAF Funding Corporation of even date therewith, in each
case as thereafter amended or supplemented, shall have expired or been
terminated and that all of the respective Debt and other obligations of the
Borrower, State Auto Mutual and SAF Funding Corporation thereunder shall have
been paid and satisfied in full.
     (j) The Administrative Agent and the Lenders shall have received from the
Borrower such other certificates and other documents as the Administrative Agent
or any Lender may reasonably have requested, including the promissory note
complying with Section 2.09(e) of any Lender requesting such promissory note.
     Promptly after the Effective Date occurs, the Administrative Agent shall
notify the Borrower and the Lenders thereof, and such notice shall be conclusive
and binding.
     Section 4.02. Conditions to Initial Utilization and Each Subsequent
Utilization. The obligation of each Lender to make a Loan on the occasion of any
Borrowing (including the initial Borrowing), the obligation of the Swingline
Lender to make any Swingline Loan (including the initial Swingline Loan, if such
initial Swingline Loan is made prior to the occasion of the initial Borrowing),
are each subject to receipt of the Borrower’s request therefor in accordance
herewith and to the satisfaction of the following conditions:
     (a) The Effective Date shall have occurred.

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     (b) Immediately after giving effect to such Borrowing or Swingline Loan, as
applicable, no Default shall have occurred and be continuing.
     (c) The representations and warranties of the Borrower set forth in the
Loan Documents shall be true on and as of the date of such Borrowing or
Swingline Loan, as applicable.
     (d) Immediately before and after such Borrowing or Swingline Loan is made,
the Total Outstanding Amount will not exceed the Total Commitment.
     Each Borrowing and each Swingline Loan shall be deemed to constitute a
representation and warranty by the Borrower on the date thereof as to the
matters specified in clauses (b), (c) and (d) of this Section.
ARTICLE 5
AFFIRMATIVE COVENANTS
     Until all the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees and other amounts payable hereunder have
been paid in full, the Borrower covenants and agrees with the Lenders that:
     Section 5.01. Financial Statements and Other Information. The Borrower
shall furnish to the Administrative Agent (for delivery to each Lender):
     (i) as soon as available and in any event within 90 days after the end of
each Fiscal Year, its audited Consolidated balance sheet as of the end of such
Fiscal Year and the related statements of income and cash flows for such Fiscal
Year, setting forth in each case in comparative form the figures for the
previous Fiscal Year, all reported on by Ernst & Young LLP or other independent
public accountants of recognized national standing (without qualification or
exception and without any qualification or exception as to the scope of such
audit) as presenting fairly in all material respects the financial position,
results of operations and cash flows of the Borrower and its Subsidiaries on a
Consolidated basis in accordance with generally accepted auditing standards;
     (ii) as soon as available and in any event within 45 days after the end of
each of the first three Fiscal Quarters of each Fiscal Year, its Consolidated
balance sheet as of the end of such Fiscal Quarter and the related statements of
income and cash flows for such Fiscal Quarter and for the then elapsed portion
of such Fiscal Year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous Fiscal Year, all certified by a Financial
Officer as (A) reflecting all adjustments (which adjustments are normal and
recurring unless otherwise disclosed) necessary for a fair presentation of the
results for the period covered and (B) having been prepared in accordance with
the applicable rules of the SEC;

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     (iii) concurrently with each delivery of financial statements under clause
(i) or (ii) above, a certificate of a Financial Officer (A) certifying as to
whether a Default has occurred and is continuing and, if a Default has occurred
and is continuing, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (B) setting forth reasonably detailed
calculations demonstrating compliance with Section 6.11 and Section 6.12 and
(C) identifying any change(s) in GAAP or in the application thereof that have
become effective since the date of, and have had an effect on, the Borrower’s
most recent audited financial statements referred to in Section 3.04 or
delivered pursuant to this Section (and, if any such change has become
effective, specifying the effect of such change on the financial statements
accompanying such certificate);
     (iv) concurrently with each delivery of financial statements under clause
(i) above, (A) a certificate of the accounting firm that reported on such
financial statements stating whether during the course of their examination of
such financial statements they obtained knowledge of any Default (which
certificate may be limited to the extent required by accounting rules or
guidelines) and (B) a certificate of a Financial Officer identifying any
Subsidiary that has been formed or acquired during the Fiscal Year covered by
such financial statements;
     (v) no later than 5 Business Days after the date on which the executive
officers of the Borrower deliver to the Borrower’s board of directors a
Consolidated budget (consisting of a projected income statement and such other
matters as the executive officers of the Borrower shall from time to time
determine) for any Fiscal Year, a copy of such Consolidated budget, together
with all components thereof and attachments thereto;
     (vi) promptly after the same become publicly available, copies of all
periodic and other material reports and proxy statements filed by the Borrower
or any Material Subsidiary with the SEC, or any Governmental Authority
succeeding to any or all of the functions of the SEC; provided that any
information or document that is required to be furnished by this clause (vi) and
that is filed with the SEC via the EDGAR filing system shall be deemed to be
furnished;
     (vii) promptly upon the effectiveness of any material amendment or
modification of, or any waiver of the rights of the Borrower or any Material
Subsidiary under, the certificate of formation, limited liability company
agreement, certificate of incorporation, by-laws or other organizational
documents of the Borrower or any Material Subsidiary, and
     (vii) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower and its Material Subsidiaries, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably request.
     Section 5.02. Notice of Material Events. The Borrower shall furnish to the
Administrative Agent and each Lender prompt written notice of the following:

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     (a) the occurrence of any Default;
     (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority Applicable Insurance Regulatory
Authority against or affecting the Borrower or any Material Subsidiary that, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect or the filing any other legal or arbitral proceedings, and any
material development in respect of such legal or other proceedings, affecting
the Borrower or any of its Subsidiaries, except proceedings that, if adversely
determined, would not (either individually or in the aggregate) have a Material
Adverse Effect;
     (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liabilities of the Borrower and its Material Subsidiaries in an aggregate amount
exceeding $10,000,000;
     (d) the occurrence of any change in the Borrower’s Senior Debt Ratings by
either of Moody’s and S&P
     (e) at least five Business Days prior to the effectiveness of any amendment
to the terms of the Placed Debt, or the effectiveness of any agreement governing
any Debt in replacement or exchange thereof, a copy of such amendment or
agreement; and
     (f) any other development that results in, or would reasonably be expected
to result in, a Material Adverse Effect.
     Each notice delivered under this Section shall be accompanied by a
statement of a Financial Officer or other executive officer of the Borrower
setting forth the details of the event or development requiring such notice and
any action taken or proposed to be taken with respect thereto.
          Section 5.03. Material Insurance Subsidiary Reporting. The Borrower
shall furnish to the Administrative Agent and each Lender copies of the
following:
     (i) promptly after filing with the Applicable Insurance Regulatory
Authority and in any event within 45 days after the end of each for the first
three quarterly fiscal periods of each fiscal year of each Material Insurance
Subsidiary, its quarterly Statutory Statement for such quarterly fiscal period,
together with the opinion thereon of a senior financial officer of such Material
Insurance Subsidiary stating that such Statutory Statement presents the
financial condition of such Material Insurance Subsidiary for such quarterly
fiscal period in accordance with statutory accounting practices required or
permitted by the Applicable Insurance Regulatory Authority;
     (ii) promptly after filing with the Applicable Insurance Regulatory
Authority and in any event within 90 days after the end of each fiscal year of
each Material Insurance Subsidiary, the annual Statutory Statement of such
Material Insurance Subsidiary for such year, together with (i) the opinion
thereon of a senior financial officer of such Material Insurance Subsidiary
stating that said annual Statutory Statement presents the financial condition of
such Material Insurance

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Subsidiary for such fiscal year in accordance with statutory accounting
practices required or permitted by the Applicable Insurance Regulatory Authority
and (ii) a certificate of a valuation actuary affirming the adequacy of reserves
taken by such Material Insurance Subsidiary in respect of future policyholder
benefits as at the end of such fiscal year (as shown on such Statutory
Statement);
     (iii) within 180 days after the end of each fiscal year of each Material
Insurance Subsidiary, the report of Ernst & Young LLP (or other independent
certified public accountants of recognized national standing) on the annual
Statutory Statements delivered pursuant to clause (ii), above;
     (iv) promptly after any Material Insurance Subsidiary receives the results
of a triennial examination by the NAIC of the financial condition and operations
of such Insurance Subsidiary or any of its Material Subsidiaries, a copy
thereof;
     (v) promptly following the delivery or receipt by the Borrower or any of
its Material Insurance Subsidiaries of any correspondence, notice or report to
or from any Applicable Insurance Regulatory Authority that relates, to any
material extent, to the financial viability of any of its Material Subsidiaries,
a copy thereof;
     (vi) within five Business Days after receipt, notice from any Applicable
Insurance Regulatory Authority of any threatened or actual proceeding for
suspension or revocation of any License or any similar proceeding with respect
to any such License; and
     (vii) promptly, notice of any denial of coverage, litigation, or
arbitration arising out of any Reinsurance Agreements to which any Insurance
Subsidiary is a party which denial, litigation or arbitration involves
$10,000,000 or more.
     Section 5.04. Existence; Conduct of Business. The Borrower shall, and shall
cause each of its Material Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business.
     Section 5.05. Payment of Obligations. The Borrower shall, and shall cause
each of its Material Subsidiaries to, pay all of its Material Debt and other
material obligations, including Tax liabilities, before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending such contest would
not reasonably be expected to result in a Material Adverse Effect.
     Section 5.06. [Reserved].
     Section 5.07. Insurance. The Borrower shall keep itself and all of its
insurable properties, and shall cause each Material Subsidiary to keep itself
and all of its insurable properties, insured at all times to such extent, by
such insurers, and against such hazards and

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liabilities as is customarily carried by prudent businesses of like size and
enterprise; and promptly upon the Administrative Agent’s written request upon
and during the continuance of an Event of Default, the Borrower shall furnish to
the Administrative Agent such information about any such insurance as the
Administrative Agent may from time to time reasonably request; provided that,
nothing in this Section 5.07 shall be deemed to require any of the Borrower’s
Material Subsidiaries to enter into any Reinsurance Agreement and provided,
further, that The Borrower and its Material Subsidiaries may self-insure against
such hazards and risks, and in such amounts as is customary for corporations of
a similar size and in similar lines of business.
     Section 5.08. NAIC Ratio. In the event that the NAIC or any Applicable
Insurance Regulatory Authority shall at any time promulgate any risk-based
capital ratio requirements or guidelines, the Borrower shall cause each Material
Insurance Subsidiary to comply with the minimum requirements or guidelines
applicable to it as established by the NAIC or such Applicable Insurance
Regulatory Authority.
     Section 5.09. Proper Records; Rights to Inspect and Appraise. The Borrower
shall, and shall cause each of its Material Subsidiaries to, keep proper books
of record and account in which complete and correct entries are made of all
transactions relating to its business and activities. The Borrower shall, and
shall cause each of its Material Subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice, to visit and inspect its properties, to examine and make extracts from
its books and records, and to discuss its affairs, finances and condition with
its officers, directors and employees, all at such reasonable times and as often
as reasonably requested, but, other than in exigent circumstances, taking into
account periodic accounting and regulatory compliance demands on the Borrower
and its Subsidiaries.
     Section 5.10. Compliance with Laws.
     (a) The Borrower shall, and shall cause each of its Material Subsidiaries
to, comply with all laws, rules, regulations and orders of any Governmental
Authority (including all Environmental Laws and ERISA and the respective rules
and regulations thereunder) applicable to it or its property, other than such
laws, rules or regulations (a) the validity or applicability of which the
Borrower or any Subsidiary is contesting in good faith by appropriate
proceedings or (b) the failure to comply with which cannot reasonably be
expected to result in a Material Adverse Effect.
     (b) Without limiting the generality of the foregoing, the Borrower and its
Affiliates and agents shall not (i) conduct any business or engage in any
transaction or dealing with any Blocked Person, including the making or
receiving of any contribution of funds, goods or services to or for the benefit
of any Blocked Person, (ii) deal in, or otherwise engage in any transaction
relating to, any property or interests in property blocked pursuant to the
Executive Order No. 13224; or (iii) engage in or conspire to engage in any
transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in the Executive Order
No. 13224, the USA Patriot Act or any other Anti-Terrorism Law. The Borrower
shall deliver to the Lenders any certification or other evidence reasonably
requested from time to time by any Lender in its reasonable discretion,
confirming the Borrower’s compliance with this Section 5.10.

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     Section 5.11. Use of Proceeds. The proceeds of the Revolving Loans and
Swingline Loans will be used only to finance the general corporate purposes of
the Borrower (including, without limitation, liquidity and working capital needs
of the Borrower and its Subsidiaries). No part of the proceeds of any Loan will
be used, directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Federal Reserve Board, including Regulations U and X.
ARTICLE 6
NEGATIVE COVENANTS
     Until all the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees and other amounts payable hereunder have
been paid in full, the Borrower covenants and agrees with the Lenders that:
     Section 6.01. Debt; Certain Equity Securities. (a) The Borrower shall not,
and shall not permit any of its Material Subsidiaries to, create, incur, assume
or permit to exist any Debt, except:
(i) Debt created under the Loan Documents;
(ii) Debt existing on the date hereof (other than Debts that, individually, do
not exceed $1,000,000 in principal amount) and listed in Schedule 6.01;
(iii) Debt of Material Subsidiaries to the Borrower or to other Material
Subsidiaries;
(iv) Debt of $100,000,000 in principal amount incurred on November 13, 2003 by
the Borrower pursuant to a note offering exempt from the registration
requirements of the Securities Act of 1933, as amended (the “Placed Debt”),
which Placed Debt at all times shall be on terms consistent in all material
respects with those previously disclosed to the Administrative Agent and the
Lenders and in effect on the Effective Date (the “Existing Terms”), and any
Debt, not greater than $100,000,000 in principal amount and otherwise on terms
not more restrictive on or otherwise less favorable to the Borrower in any
material respect than the Existing Terms, in exchange therefor, whether or not
the notes, debentures or other instruments evidencing such exchange Debt are
exempt from such registration requirements (without limiting the generality of
the foregoing, it is the intention hereby that the terms of the Placed Debt,
including the effect of any modification thereof, and the terms of any Debt in
exchange or replacement thereof, (i) provide for a final scheduled maturity not
earlier than December 31, 2010 and (ii) otherwise shall not be more restrictive
on, or otherwise less favorable to, the Borrower in any material respect than
the Existing Terms);
(v) additional Debt of the Borrower and its Material Subsidiaries (including,
without limitation, Capital Lease Obligations and other Debt secured by Liens
permitted under Section 6.02 hereof) up to but not exceeding $15,000,000 in the
aggregate at any one time outstanding as to all such Debt described in this
clause (v)

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(vi) Debt secured by the mortgage Lien described in Section 6.02(vi) hereof so
long as the unpaid principal balance thereof does not at any time exceed
$25,000,000; and
(vii) additional unsecured Debt not to exceed $15,000,000 in aggregate principal
amount as to the Borrower and its Subsidiaries on a Consolidated basis.
     (b) The Borrower shall not issue Current Redeemable Equity.
     Section 6.02. Liens. The Borrower shall not, and shall not permit any of
its Material Subsidiaries to, create or permit to exist any Lien on any property
now owned or hereafter acquired by it, or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
     (i) Permitted Liens;
     (ii) any Lien on any property of the Borrower or any Material Subsidiary
existing on the date hereof and listed in Schedule 6.02; provided that (A) such
Lien shall not apply to any other property of the Borrower or any Material
Subsidiary and (B) such Lien shall secure only those obligations which it
secures on the date hereof and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;
     (iii) any Lien existing on any property or asset before the acquisition
thereof by the Borrower or any Material Subsidiary or existing on any property
or asset of any Person that first becomes a Material Subsidiary after the date
hereof before the time such Person becomes a Material Subsidiary; provided that
(A) such Lien is not created in contemplation of or in connection with such
acquisition or such Person becoming a Material Subsidiary, (B) such Lien will
not apply to any other property or asset of the Borrower or any Material
Subsidiary, (C) such Lien will secure only those obligations which it secures on
the date of such acquisition or the date such Person first becomes a Material
Subsidiary, as the case may be, and extensions, renewals and replacements
thereof that do not increase the outstanding principal amount thereof, and
(D) the principal amount of Debt secured by any such Lien shall at no time
exceed 80% of the fair market value (as determined in good faith by a senior
financial officer of the Borrower) of such property at the time it was acquired
(by purchase, construction or otherwise);
     (iv) Liens on fixed or capital assets acquired, constructed or improved by
the Borrower or any Material Subsidiary; provided that (A) the Debt secured by
such Liens is permitted by, as applicable, Section 6.01, (B) such Liens and the
Debt secured thereby are incurred before or within 90 days after such
acquisition or the completion of such construction or improvement, (C) the Debt
secured thereby does not exceed the cost of acquiring, constructing or improving
such fixed or capital assets, and (D) such Liens will not apply to any other
property of the Borrower or any Material Subsidiary;
     (v) Liens to secure a Debt owing to the Borrower

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     (vi) a mortgage Lien securing Debt incurred in connection with the
demolition, infra-structure development and re-construction of premises owned by
the Borrower and known as 525 and 535 Broad Street, Columbus, Ohio; and
     (vii) any Lien arising out of the refinancing, extension, renewal or
refunding of any Debt secured by a Lien permitted by any of clauses (iii), (iv),
(v) or (vi) of this Section; provided that such Debt is not increased (except by
the amount of fees, expenses and premiums required to be paid in connection with
such refinancing, extension, renewal or refunding) and is not secured by any
additional assets.
     Section 6.03. Fundamental Changes.
     (a) The Borrower shall not, nor shall it permit any of its Material
Subsidiaries to, enter into any transaction of merger or consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution).
     (b) The Borrower shall not, nor shall it permit any of its Material
Subsidiaries to, acquire any business or property from, or capital stock of, or
be a party to any acquisition of, any Person except for purchases of inventory
and other property to be sold or used in the ordinary course of business,
Assumed Reinsurance in the ordinary course of business, Investments permitted
under Section 6.04, and capital expenditures in the ordinary course of business.
     (c) the Borrower shall not, nor shall it permit any of its Material
Subsidiaries to, convey, sell, lease, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or a substantial part of its
business or Property, whether now owned or hereafter acquired.
     (d) Neither the Borrower nor any Subsidiary will engage in any business if,
after giving effect to such business, less than one-half of the Borrower’s
Consolidated revenues, determined in accordance with GAAP, would not be derived
from the providing of insurance (including insurance agency) and other financial
services.
Notwithstanding the foregoing provisions of this Section 6.03:
     (i) any Subsidiary of the Borrower may be merged or consolidated with or
into: (A) the Borrower if the Borrower shall be the continuing or surviving
corporation or (B) any other such Subsidiary; provided that if any such
transaction shall be between a Subsidiary and a Wholly Owned Subsidiary, the
Wholly Owned Subsidiary shall be the continuing or surviving corporation;
     (ii) any Material Subsidiary of the Borrower may sell, lease, transfer or
otherwise dispose of any or all of its property (upon voluntary liquidation or
otherwise) to the Borrower or a Wholly Owned Subsidiary of the Borrower;

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     (iii) any Material Subsidiary of the Borrower may merge or consolidate with
or acquire any other Person if, in the case of a merger or consolidation, the
surviving corporation is a Wholly Owned Subsidiary of the Borrower; and
     (iv) the Borrower may merge with another Person, but only so long (A) as
the surviving corporation is the Borrower, (B) after giving effect thereto, no
Default would exist hereunder, (C) the business activity engaged in by such
other Person would be permitted under Section 6.03(b) hereof if such other
Person were a Subsidiary of the Borrower prior to such merger or consolidation
and (D) the aggregate amount of the Statutory Surplus (determined as at the date
of the relevant merger, consolidation or acquisition) of all such other Persons
that have been the subject of any merger, consolidation or acquisition pursuant
to this clause (iv) during any calendar year (other than any such merger,
consolidation or acquisition financed solely with Net Available Proceeds) shall
be less than $250,000,000.
     Section 6.04. Investments, Loans, Advances, Guarantees and Acquisitions.
     (a) The Borrower shall not, nor shall it permit any of its Material
Subsidiaries to, make or permit to remain outstanding any Investments except
(i) Investments outstanding on the date hereof and identified in Part B of
Schedule 3.06, (ii) operating deposit accounts with banks, (iii) Permitted
Investments, (iv) Investments by the Borrower and its Material Subsidiaries in
their respective Subsidiaries, (v) Hedging Agreements, provided that, without
limiting the obligation of the Borrower under Section 6.06, when entering into
any Hedging Agreement that at the time has, or at any time in the future may
give rise to, any credit exposure, the aggregate credit exposure under all
Hedging Agreements shall not exceed $25,000,000, and (vi) Investments of
Insurance Subsidiaries not prohibited by clause (b) of this Section 6.04.
     (b) The Borrower shall not permit any Insurance Subsidiary to make any
Investment if, on the date of which such Investment is made and after giving
effect thereto, the aggregate value of Investments (other than equity
Investments) held by such Insurance Subsidiary that are rated lower than “2” by
the NAIC or are not rated by the NAIC would exceed 5% of the value of total
invested assets. As used in this Section 6.04, the “value” of an Investment
refers to the value of such Investment that would be shown on the most recent
Statutory Statement of the relevant Insurance Subsidiary prepared in accordance
with SAP.
     Section 6.05. Asset Sales. The Borrower shall not, and shall not permit any
of its Material Subsidiaries to, sell, transfer, lease or otherwise dispose of
any property, including any Equity Interest owned by it, nor will any Material
Subsidiary issue any additional Equity Interest in such Subsidiary, except:
     (a) sales of used or surplus equipment and Permitted Investments in the
ordinary course of business;
     (b) Sale-Leaseback Transactions permitted pursuant to Section 6.07; and
     (c) other sales of assets so long as (i) immediately before and after
giving effect thereto, no Default shall have occurred and be continuing, and
(ii) the Senior Debt Rating by each

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Rating Agency immediately following the sale’s becoming known publicly is not
more than one level or category lower than the Senior Debt Rating by such Rating
Agency immediately prior to the sale’s becoming known publicly.
     Section 6.06. Ceded Reinsurance. The Borrower shall not, nor shall it
permit any other Insurance Subsidiary to:
     (a) enter into any Reinsurance Agreement in respect of ceded risk in excess
of $5,000,000 with any Person other than (i) another Insurance Subsidiary,
(ii) any Person for which the most recently published rating by Best is “B+” or
higher or, if such Person is not rated by Best, which has a Statutory Surplus
(or the equivalent thereof) of not less than $100,000,000, (iii) any Person that
posts security under such Reinsurance Agreement in an amount equal to the total
liabilities assumed by such Person, through a letter of credit issued by an
“authorized bank” (as such term is defined by the Applicable Insurance
Regulatory Authority) or cash collateral deposit or (iv) any other reinsurers
acceptable to the Administrative Agent, provided however, that for purposes of
the foregoing clause (ii), any “NA” designation shall not be considered a rating
of Best;
     (b) enter into any Reinsurance Agreement or Reinsurance Agreements with
Lloyd’s of London if the aggregate amount of reinsurance ceded thereby would
exceed 15% of the aggregate premium volume of reinsurance ceded by the Insurance
Subsidiaries.
     (c) enter into any Surplus Relief Reinsurance except with another Insurance
Subsidiary; or
     (d) enter into any Reinsurance Agreement or Reinsurance Agreements if such
Reinsurance Agreements will result in a 20% or more reduction of net premium
volume for the Insurance Subsidiaries in any 12-month period.
     Section 6.07. Sale and Leaseback Transactions. The Borrower shall not, nor
shall it permit any of its Material Subsidiaries to, enter into any an
arrangement with any Person (other than the Borrower or any of its Material
Subsidiaries) providing for the leasing to the Borrower or any of its Material
Subsidiaries for a period of more than five years of any property which has been
or is to be sold or transferred by the Borrower or such Material Subsidiary to
such Person or to any other Person (other than the Borrower or any of its
Material Subsidiaries), to which funds have been or are to be advanced by such
Person on the security of the property subject to such lease (a “Sale-Leaseback
Transaction”) if, after giving effect thereto, the Value (as defined below) of
all Sale/Leaseback Transactions at such time would exceed 10% of the
Consolidated Net Worth of the Borrower at such time. For purposes of this
Section 6.07, “Value” shall mean, with respect to any Sale-Leaseback Transaction
as at any time, the amount equal to the greater of (a) the net proceeds of the
sale or transfer of the property subject to such Sale-Leaseback Transaction and
(b) the fair value, in the opinion of the board of directors of the Borrower of
such property at the time of entering into such Sale-Leaseback Transaction, in
either case divided first by the number of full years of the term of the lease
and then multiplied by the number of full years of such term remaining at the
time of determination, without regard to any renewal or extension options
contained in such lease; provided that all obligations under such sale-leaseback
agreements shall

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constitute Debt for purposes of calculating compliance with the covenants set
forth in this Article 6.
     Section 6.08. Restricted Payments. The Borrower shall not declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so unless, both immediately
before and after giving effect to such Restricted Payment, no Default exists.
     Section 6.09. Transactions with Affiliates. Except as expressly permitted
by this Agreement, the Borrower shall not, nor shall it permit any of its
Material Subsidiaries to, directly or indirectly: (a) make any Investment in an
Affiliate; (b) transfer, sell, lease, assign or otherwise dispose of any
property to an Affiliate; (c) merge into or consolidate with or purchase or
acquire property from an Affiliate; or (d) enter into any other transaction
directly or indirectly with or for the benefit of an Affiliate (including,
without limitation, Guarantees and assumptions of obligations of an Affiliate);
provided that (i) any Affiliate who is an individual may serve as a director,
officer or employee of the Borrower or any of its Material Subsidiaries and
receive reasonable compensation for his or her services in such capacity and
(ii) the Borrower and its Material Subsidiaries may enter into transactions
(other than extensions of credit by the Borrower or any of its Material
Subsidiaries to an Affiliate) providing for the leasing of property, the
rendering or receipt of services or the purchase or sale of inventory and other
property in the ordinary course of business if the monetary or business
consideration arising therefrom would be substantially as advantageous to the
Borrower and its Material Subsidiaries as the monetary or business consideration
that would obtain in a comparable transaction with a Person not an Affiliate (or
in the case of any management agreement and Intercompany Pooling Arrangement
among State Auto Mutual, the Borrower and various Insurance Subsidiaries, that
is approved by the Applicable Insurance Regulatory Authorities).
     Section 6.10. Restrictive Agreements. The Borrower shall not and shall not
permit any of its Material Subsidiaries to, directly or indirectly, enter into
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition on (a) the ability of the Borrower or any Material
Subsidiary to create or permit to exist any Lien on any of its property or
(b) the ability of any Material Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower or any other Material Subsidiary or to
Guarantee Debt of the Borrower or any other Material Subsidiary; provided that
(i) the foregoing shall not apply to restrictions and conditions imposed by law
or by any Loan Document, (ii) the foregoing shall not apply to restrictions and
conditions existing on the date hereof and identified on Schedule 6.10 (but
shall apply to any amendment or modification expanding the scope of, or any
extension or renewal of, any such restriction or condition), (iii) the foregoing
shall not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided that such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, (iv) clause (a) of this Section shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Debt permitted by this Agreement if such restrictions or conditions apply only
to the property securing such Debt and (v) clause (a) of this Section shall not
apply to customary provisions in leases and other contracts restricting the
assignment thereof.

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     Section 6.11. Ratio of Debt to Capital. The Borrower shall not at any time
permit the ratio of its Consolidated Debt (of the type described in any or all
of clauses (a), (b), (c), (d), (e) and (h) of the definition of “Debt”) to its
Total Capitalization to be greater than 0.30 to 1.
     Section 6.12. Ratings. The Borrower shall not at any time permit or cause
the rating published by Best for any of its Material Insurance Subsidiaries to
be lower than A-; provided that if another insurance statistical rating agency
is substituted for Best pursuant to the definition of “Best”, for the purposes
of this Section 6.12, the equivalent rating category designation of such
substitute insurance rating agency shall be substituted for the A- rating
category designation of Best.
     Section 6.13. Consolidated Net Worth. The Borrower shall not permit its
Consolidated Net Worth (i) as of the end of the Fiscal Year ending December 31,
2005, to be less than $588,400,000 and (ii) as of the end of any Fiscal Quarter
thereafter, to be less than an amount equal to (a) the Fiscal Quarter Increase
for the immediately preceding Fiscal Quarter, plus (b) the Minimum Net Worth for
such immediately preceding Fiscal Quarter.
     Section 6.15. Fixed Charge Coverage Ratio. On any date on which any Loan is
outstanding, the Borrower shall not permit its Fixed Charge Coverage Ratio as of
the end of the Fiscal Quarter most recently ended (or if such date is the last
day of a Fiscal Quarter, as of such date), to be less than 1.00 to 1.00.
     Section 6.16. Amendment of Material Documents. The Borrower shall not, and
shall not permit any of its Material Subsidiaries to, (a) without the prior
written consent of the Required Lenders, amend, modify, supplement or waive any
of its rights under its certificate of formation, limited liability company
agreement, certificate of incorporation, by-laws or other organizational
documents, in each case in any manner that would reasonably be expected to have
a Material Adverse Effect, (b) without the prior written consent of the Required
Lenders (which shall not be unreasonably withheld) any material term of any
Retrocession Agreement or Reinsurance Agreement relating to property and
catastrophic risk insurance other than the Intercompany Pooling Arrangement or
(c) without the prior consent of the Administrative Agent (with the approval of
the Required Lenders, such approval not to be unreasonably withheld), (i) the
Intercompany Pooling Arrangement if such modification, supplement or waiver
would result in the ceding to State Auto Mutual of 70% or more of the
catastrophic loss risk subject to such arrangement or (ii) the terms and
conditions evidencing or governing the Placed Debt.
     Section 6.17. Lines of Business. The Borrower shall not, nor shall it
permit any of its Subsidiaries to, engage to any substantial extent in any line
or lines of business activity other than the business of owning and operating
property and casualty insurance companies as conducted on the date hereof and
businesses related or incidental thereto (it being understood that the
businesses of Strategic Insurance Software, Inc., Stateco Financial Services,
Inc. and 518 Property Management and Leasing, LLC, to the extent conducted as of
the date hereof, are related to the business of owning and operating property
and casualty insurance companies).

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ARTICLE 7
EVENTS OF DEFAULT
     If any of the following events (“Events of Default”) shall occur:
     (a) the Borrower shall fail to pay any principal of any Loan when the same
shall become due, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise;
     (b) the Borrower shall fail to pay when due any interest on any Loan or any
fee or other amount (except an amount referred to in clause (a) above) payable
under any Loan Document, and such failure shall continue unremedied for a period
of five (5) Business Days;
     (c) any representation, warranty or certification made or deemed made by or
on behalf of the Borrower or any Material Subsidiary in or in connection with
any Loan Document or any amendment or modification thereof or waiver thereunder,
or in any report, certificate, financial statement or other document furnished
pursuant to or in connection with any Loan Document or any amendment or
modification thereof or waiver thereunder, shall prove to have been incorrect in
any material respect when made or deemed made;
     (d) the Borrower shall fail to observe or perform any covenant or agreement
contained in Section 5.0l(i), Section 5.0l(ii), Section 5.0l (iii), Section 5.0l
(iv), Section 5.02, Section 5.03 or Section 5.04 or in Article 6;
     (e) the Borrower shall fail to observe or perform any provision of any Loan
Document (other than those failures covered by clauses (a), (b), (c) and (d) of
this Article 7) and such failure shall continue for 15 days after the earlier of
notice of such failure to the Borrower from the Administrative Agent or
knowledge of such failure by an officer of the Borrower;
     (f) the Borrower or any of its Material Subsidiaries shall fail to make a
payment or payments (whether of principal or interest and regardless of amount)
in respect of any Material Debt when the same shall become due, whether at the
due date thereof or at a date fixed for prepayment thereof or otherwise;
     (g) any event or condition occurs that (i) results in any Material Debt
becoming due before its scheduled maturity or (ii) enables or permits (with or
without the giving of notice, the lapse of time or both) the holder or holders
of Material Debt or any trustee or agent on its or their behalf to cause any
Material Debt to become due, or to require the prepayment, repurchase,
redemption or defeasance thereof, before its scheduled maturity or (iii) results
in the termination of or enables one or more banks or financial institutions to
terminate commitments to provide in excess of $15,000,000 aggregate principal
amount of credit to the Borrower or its Material Subsidiaries; provided that, in
the case of any event described in clauses (ii) or (iii) that would permit
Material Debt to be accelerated or would permit termination of such commitments,
as applicable, only after the lapse of a cure period, so long as the Borrower
has notified the Administrative Agent immediately upon occurrence of such event,
such event shall give rise to an Event of Default hereunder upon expiration of
such cure period;

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     (h) an involuntary proceeding shall be commenced or an involuntary petition
shall be filed seeking (i) liquidation, reorganization or other relief in
respect of the Borrower or any of its Material Subsidiaries or its debts, or of
a substantial part of its assets, under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any of its Material
Subsidiaries or for a substantial part of its assets, and, in any such case,
such proceeding or petition shall continue undismissed for 30 days or an order
or decree approving or ordering any of the foregoing shall be entered;
     (i) the Borrower or any of its Material Subsidiaries shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) above, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for any the Borrower or any of its Material Subsidiaries or
for a substantial part of’ its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing;
     (j) the Borrower or any of its Material Subsidiaries shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due;
     (k) one or more judgments for the payment of money, not covered by
insurance, in an aggregate amount exceeding, after giving effect to any
insurance, an amount equal to 3% of the Borrower’s shareholders’ equity, as
reflected on the balance sheet of the Borrower as of the most recent Fiscal
Quarter end, shall be rendered against the Borrower or any of its Material
Subsidiaries and shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall be
legally taken by a judgment creditor to attach or levy upon any asset of the
Borrower or any of its Material Subsidiaries to enforce any such judgment;
     (l) an ERISA Event shall have occurred that, in the opinion of the Required
Lenders, when taken together with all other ERISA Events that have occurred,
would reasonably be expected to result in a Material Adverse Effect; or
     (m) any provision of any Loan Document after delivery thereof shall for any
reason cease to be valid and binding on or enforceable against the Borrower, or
the Borrower shall so state in writing;
then, and in every such event (except an event with respect to the Borrower
described in clause (h) or (i) above), and at any time thereafter during the
continuance of such event, the Administrative Agent may, and at the request of
the Required Lenders shall, by notice to the Borrower, take either or both of
the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and
(ii) declare the Loans then

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outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are waived by the Borrower; and in the case of any event with
respect to the Borrower described in clause (h) or (i) above, the Commitments
shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of the
Borrower accrued hereunder, shall automatically become due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
waived by the Borrower.
ARTICLE 8
THE ADMINISTRATIVE AGENT
     Section 8.01. Appointment and Authorization. Each Lender Party irrevocably
appoints the Administrative Agent as its agent and authorizes the Administrative
Agent to take such actions as agent on its behalf and to exercise such powers as
are delegated to the Administrative Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto.
     Section 8.02. Rights and Powers as a Lender. The Administrative Agent
shall, in its capacity as a Lender, have the same rights and powers as any other
Lender and may exercise or refrain from exercising the same as though it were
not the Administrative Agent. The Administrative Agent and its Affiliates may
accept deposits from, lend money to and generally engage in any kind of business
with the Borrower or any Subsidiary or Affiliate of the Borrower as if it were
not the Administrative Agent hereunder.
     Section 8.03. Limited Duties and Responsibilities. The Administrative Agent
shall not have any duties or obligations except those expressly set forth in the
Loan Documents. Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) the
Administrative Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that the Administrative Agent is
required in writing to exercise by the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02), and (c) except as expressly set forth in the Loan
Documents, the Administrative Agent shall not have any duty to disclose, or be
liable for any failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the
Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) or in the absence of its own gross negligence or
willful misconduct. The Administrative Agent shall be

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deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by the Borrower or a Lender, and
the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with any Loan Document, (ii) the contents of any certificate,
report or other document delivered thereunder or in connection therewith, (iii)
the performance or observance of any of the covenants, agreements or other terms
or conditions set forth in any Loan Document, (iv) the validity, enforceability,
effectiveness or genuineness of any Loan Document or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article 4 or elsewhere in any Loan Document, other than to confirm receipt of
items expressly required to be delivered to the Administrative Agent.
     Section 8.04. Authority to Rely on Certain Writings, Statements and Advice.
The Administrative Agent shall be entitled to rely on, and shall not incur any
liability for relying on, any notice, request, certificate, consent, statement,
instrument, document or other writing believed by it to be genuine and to have
been signed or sent by the proper Person. The Administrative Agent also may rely
on any statement made to it orally or by telephone and believed by it to be made
by the proper Person, and shall not incur any liability for relying thereon. The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.
     Section 8.05. Sub-Agents and Related Parties. The Administrative Agent may
perform any and all its duties and exercise its rights and powers by or through
one or more sub-agents appointed by it. The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. The exculpatory provisions of the
preceding Sections of this Article shall apply to any such sub-agent and to the
Related Parties of the Administrative Agent and any such sub-agent, and shall
apply to activities in connection with the syndication of the credit facilities
provided for herein as well as activities as the Administrative Agent hereunder.
     Section 8.06. Resignation; Successor Agent. Subject to the appointment and
acceptance of a successor Administrative Agent as provided in this Section, the
Administrative Agent may resign at any time by notifying the Lenders and the
Borrower. Upon any such resignation, the Required Lenders shall have the right,
in consultation with the Borrower, to appoint a successor Agent; provided that
consultation with the Borrower shall not be required if an Event of Default
shall have occurred and be continuing. If no successor Administrative Agent
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may, on behalf
of the Lenders, appoint a successor Agent which shall be a bank or financial
institution. Upon acceptance of its appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Administrative Agent, and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed by the Borrower and
such successor Administrative Agent. After any retiring Administrative Agent’s
resignation hereunder as

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Administrative Agent, the provisions of this Article and Section 9.03 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while the retiring Agent was acting as an
Administrative Agent hereunder.
     Section 8.07. Credit Decisions by Lenders. Each Lender acknowledges that it
has, independently and without reliance on the Administrative Agent or any other
Lender Party and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender also acknowledges that it will, independently and without
reliance on the Administrative Agent or any other Lender Party and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
on this Agreement, any other Loan Document or related agreement or any document
furnished hereunder or thereunder.
     Section 8.08. Agent’s Fees. The Borrower shall pay to the Administrative
Agent for its own account fees in the amounts and at the times previously agreed
upon by the Borrower and such Agent.
     Section 8.09 Syndication Agent, Documentation Agent, Etc.. Neither of the
Lead Arranger and the Sole Book Runner in their capacities as such shall have
any duties or responsibilities or incur any liability under this Agreement or
any of the Loan Documents.
     Section 8.10 No Reliance on Administrative Agent’s Customer Identification
Program . Each of the Lenders acknowledges and agrees that neither such Lender
nor any of its Affiliates, participants or assignees, may rely on the
Administrative Agent to carry out such Lender’s, Affiliate’s, participant’s or
assignee’s customer identification program, or other obligations required or
imposed under or pursuant to the USA Patriot Act or the regulations thereunder,
including the regulations contained in 31 CFR 103.121 (as hereafter amended or
replaced, the “CIP Regulations”), or any other anti-terrorism law, including any
programs involving any of the following items relating to or in connection with
any of the Borrower, its Affiliates or its agents, this Agreement, the other
Loan Documents or the transactions hereunder or contemplated hereby: (1) any
identity verification procedures, (2) any record keeping, (3) comparisons with
government lists, (4) customer notices or (5) other procedures required under
the CIP Regulations or such other laws.
ARTICLE 9
MISCELLANEOUS
     Section 9.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
     (a) if to the Borrower, to it at 518 East Broad Street, Columbus, Ohio
43215, Attention of Scott Jones (Facsimile No. (614) 719-0740);

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     (b) if to the Administrative Agent or to the Swingline Lender, to KeyBank
National Association, 127 Public Square, Cleveland, Ohio 44114, Attention of
Mary K. Young (Facsimile No. (216) 689-4981); and
     (c) if to any other Lender, to it at its address (or facsimile number) set
forth in its Administrative Questionnaire.
     Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the Administrative Agent and the
Borrower. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement will be deemed to have been
given on the date of receipt.
     Section 9.02. Waivers; Amendments. (a) No failure or delay by any Lender
Party in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Lender Parties under the Loan Documents are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provision of any Loan Document or consent to any departure by the Borrower
therefrom shall in any event be effective unless the same shall be permitted by
subsection (b) of this Section, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
Without limiting the generality of the foregoing, the making of a Loan shall not
be construed as a waiver of any Default, regardless of whether any Lender Party
had notice or knowledge of such Default at the time.
     (b) No Loan Document or provision thereof may be waived, amended or
modified except, in the case of this Agreement, by an agreement or agreements in
writing entered into by the Borrower and the Required Lenders or, in the case of
any other Loan Document, by an agreement or agreements in writing entered into
by the parties thereto with the consent of the Required Lenders; provided that
no such agreement shall:
     (i) increase the Commitment of any Lender without its written consent;
     (ii) reduce the principal amount of any Loan or reduce the rate of interest
thereon, or reduce any fee payable hereunder, without the written consent of
each Lender Party affected thereby;
     (iii) postpone the maturity of any Loan, or the required date of any
mandatory payment of principal (including without limitation pursuant to
Section 2.10(b), or any date for the payment of any interest or fee payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender Party affected thereby;

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     (iv) change the definition of “Percentage” or change Section 2.18(b) or
2.18(c) in a manner that would alter the pro rata sharing of payments required
thereby, without the written consent of each Lender affected thereby;
     (v) change any provision of this Section or the percentage set forth in the
definition of “Required Lenders” or any other provision of any Loan Document
specifying the number or percentage of Lenders required to take any action
thereunder, without the written consent of each Lender; or
     (vi) increase the aggregate amount of the Commitments by an amount in
excess of $150,000,000, or amend Section 2.05(c) to permit increases in the
aggregate Commitments in excess of an aggregate amount equal to $50,000,000
during the term of this Agreement, without the written consent of the
Administrative Agent and the Required Lenders (it being understood that an
increase in the Commitment of any Lender is subject to clause (i) above); and
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent or the Swingline Lender without
its prior written consent; and provided further that neither a reduction or
termination of Commitments pursuant to Section 2.08 or 2.11, nor an increase in
Commitments pursuant to Section 2.05, constitutes an amendment, waiver or
modification for purposes of this Section 9.02.
     (c) The Administrative Agent may, but shall have no obligation to, from
time to time promulgate revised, replacement Schedules 2.01 (which, upon such
promulgation, absent manifest error, shall become Schedule 2.01 hereto) to
reflect changes in the parties constituting the Lenders and their respective
Commitments pursuant to Assignments and Section 2.05, in each instance without
the necessity of the agreement of the Borrower and the Required Lenders.
     Section 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
pay (i) all reasonable and documented out-of-pocket expenses incurred by the
Arranger, the Administrative Agent and their respective Affiliates, including,
without limitation, the reasonable fees, charges and disbursements of Squire,
Sanders & Dempsey L.L.P., special counsel for the Administrative Agent, in
connection with the syndication of the credit facilities provided for herein,
the preparation and administration of the Loan Documents and any amendments,
modifications or waivers of the provisions thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated) and (ii) all
reasonable out-of-pocket expenses incurred by any Lender Party, including the
fees, charges and disbursements of any counsel for any Lender Party, in
connection with the enforcement or protection of its rights in connection with
the Loan Documents (including its rights under this Section) or the Loans,
including all such reasonable out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of the Loans.
     (b) The Borrower shall indemnify each of the Lender Parties and their
respective Related Parties (each such Person being called an “Indemnitee”)
against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, liabilities and related expenses, including the fees, charges and
disbursements of counsel for any Indemnitee, incurred by or asserted against any
Indemnitee arising out of, in connection with, or as a result of (i) the
execution

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or delivery of any Loan Document or any other agreement or instrument
contemplated hereby, the performance by the parties to the Loan Documents of
their respective obligations thereunder or the consummation of the Financing
Transactions or any other transactions contemplated hereby, (ii) any Loan or the
use of the proceeds therefrom, (iii) any actual or alleged presence or release
of Hazardous Materials on or from any property currently or formerly owned or
operated by the Borrower or any Subsidiary, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that (i) such indemnity shall not be
available to any Indemnitee to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from such
Indemnitee’s gross negligence or willful misconduct; (ii) such indemnity shall
not be available to any Indemnitee for losses, claims, damages, liabilities or
related expenses arising out of a proceeding in which such indemnitee and the
Borrower are adverse parties to the extent that the Borrower prevails on the
merits, as determined by a court of competent jurisdiction (it being understood
that nothing in this Agreement shall preclude a claim or suit by the Borrower
against any Indemnitee for such Indemnitee’s failure to perform any of its
obligations to the Borrower under the Loan Documents); (iii) the Borrower shall
not, in connection with any such proceeding or related proceedings in the same
jurisdiction and in the absence of conflicts of interest, be liable for the fees
and expenses of more than one law firm at any one time for the Indemnitees
(which law firm shall be selected (x) by mutual agreement of the Administrative
Agent and the Borrower or (y) if no such agreement has been reached following
the Administrative Agent’s good faith consultation with the Borrower with
respect thereto, by the Administrative Agent in its sole discretion); (iv) each
Indemnitee shall give the Borrower (x) prompt notice of any such action brought
against such Indemnitee in connection with a claim for which it is entitled to
indemnity under this Section and (y) an opportunity to consult from time to time
with such indemnitee regarding defensive measures and potential settlement; and
(v) the Borrower shall not be obligated to pay the amount of any settlement
entered into without its written consent (which consent shall not be
unreasonably withheld).
     (c) To the extent that the Borrower fails to pay any amount required to be
paid by it to the Administrative Agent or the Swingline Lender under subsection
(a) or (b) of this Section, each Lender severally agrees to pay to such Agent or
the Swingline Lender, as the case may be, such Lender’s pro rata share
(determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense
or indemnified loss, claim, damage, liability or related expense, as the case
may be, was incurred by or asserted against such Agent or the Swingline Lender
in its capacity as such. For purposes hereof, a Lender’s “pro rata share” shall
be determined based on its share of the sum of the total Exposures and unused
Commitments at the time.
     (d) To the extent permitted by applicable law, the Borrower shall not
assert, and it hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Financing Transactions, any Loan or the use of the proceeds thereof.

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     (e) All amounts due under this Section shall be payable within five
Business Days after written demand therefor.
     Section 9.04. Successors and Assigns. (a) The provisions of this Agreement
shall be binding on and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower without such consent shall be null and void).
Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any Person (except the parties hereto, their respective successors and
assigns permitted hereby and, to the extent expressly provided herein, the
Related Parties of the Lender Parties) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
     (b) Any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of any
Commitment it has at the time and any Loans at the time owing to it); provided
that:
     (i) except in the case of an assignment to a Lender or a Lender Affiliate,
each of the Borrower and the Administrative Agent (and, in the case of an
assignment of all or a portion of a Commitment or any Lender’s obligations in
respect of its Swingline Exposure, and the Swingline Lender) must give their
prior written consent to such assignment (which consents shall not be
unreasonably withheld);
     (ii) each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender’s rights and obligations under
this Agreement;
     (iii) unless each of the Borrower and the Administrative Agent otherwise
consent, the amount of the Commitment or Loans of the assigning Lender subject
to each such assignment (determined as of the date on which the relevant
Assignment is delivered to the Administrative Agent) shall not be less than
$10,000,000; provided that this clause (iii) shall not apply to an assignment to
a Lender or a Lender Affiliate or an assignment of the entire remaining amount
of the assigning Lender’s Commitment or Loans;
     (iv) the parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment, together with a processing and recordation
fee of $4,500; provided that only one such fee shall be due in respect of a
simultaneous assignment to more than one Lender Affiliate; and
     (v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent a completed Administrative Questionnaire;
and provided further that any consent of the Borrower otherwise required under
this subsection shall not be required if an Event of Default has occurred and is
continuing. Subject to acceptance and recording thereof pursuant to subsection
(d) of this Section, from and after the effective date specified in each
Assignment the assignee thereunder shall be a party hereto and, to the extent of
the interest assigned by such Assignment, have the rights

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and obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment, be
released from its obligations under this Agreement (and, in the case of an
Assignment covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this subsection shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with subsection (e) of this Section.
     (c) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in Cleveland, Ohio a copy of each
Assignment delivered to it and a register for the recordation of the names and
addresses of the Lenders, their respective Commitments and the principal amounts
of the Loans owing to each Lender pursuant to the terms hereof from time to time
(the “Register”). The entries in the Register shall be conclusive (absent
manifest error), and the parties hereto may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender for all
purposes of this Agreement, notwithstanding notice to the contrary. The Register
shall be available for inspection by any party hereto at any reasonable time and
from time to time upon reasonable prior notice.
     (d) Upon its receipt of a duly completed Assignment executed by an
assigning Lender and an assignee, the assignee’s completed Administrative
Questionnaire (unless the assignee shall already be a Lender hereunder), any
processing and recordation fee referred to in, and payable pursuant to,
subsection (b) of this Section and any written consent to such assignment
required by subsection (b) of this Section, the Administrative Agent shall
accept such Assignment and record the information contained therein in the
Register. No assignment shall be effective for purposes of this Agreement unless
it has been recorded in the Register as provided in this subsection.
     (e) Any Lender may, without the consent of the Borrower or any other Lender
Party, sell participations to one or more banks or other entities
(“Participants”) in all or a portion of such Lender’s rights and obligations
under this Agreement (including all or a portion of its Commitments and the
Loans owing to it); provided that (i) such Lender’s obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower and the other Lender Parties shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in clause (i), (ii), (iii) or (iv) of the first proviso to
Section 9.02(b) that affects such Participant. Subject to subsection (f) of this
Section, each Participant shall be entitled to the benefits of Sections 2.15,
2.16 and 2.17 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to subsection (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.09 as though it were a

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Lender, provided that such Participant agrees to be subject to Section 2.18(c)
as though it were a Lender.
     (f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.17 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.17(e) as
though it were a Lender.
     (g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge or assignment of a security
interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.
     Section 9.05. USA Patriot Act. Each Lender or assignee or participant of a
Lender that is not incorporated under the laws of the United States of America
or a state thereof (and is not excepted from the certification requirement
contained in Section 313 of the USA Patriot Act and the applicable regulations
because it is both (i) an affiliate of a depository institution or foreign bank
that maintains a physical presence in the United States or foreign country, and
(ii) subject to supervision by a banking authority regulating such affiliated
depository institution or foreign bank) shall deliver to the Administrative
Agent the certification, or, if applicable, recertification, certifying that
such Lender is not a “shell” and certifying to other matters as required by
Section 313 of the USA Patriot Act and the applicable regulations: (1) within
ten (10) days after the Effective Date, and (2) as such other times as are
required under the USA Patriot Act.
     Section 9.06. Survival. All covenants, agreements, representations and
warranties made by the Borrower in the Loan Documents and in certificates or
other instruments delivered in connection with or pursuant to the Loan Documents
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of the Loan Documents and the making of
any Loans, regardless of any investigation made by any such other party or on
its behalf and notwithstanding that any Lender Party may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as any principal of or accrued interest on any Loan or any fee or other
amount payable hereunder is outstanding and unpaid or any Commitment has not
expired or terminated. The provisions of Sections 2.15, 2.16, 2.17 and 9.03 and
Article 8 shall survive and remain in full force and effect regardless of the
consummation of the Financing Transactions, the repayment of the Loans, the
expiration or termination of the Commitments or the termination of this
Agreement or any provision hereof.
     Section 9.07. Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This

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Agreement, the other Loan Documents and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof. Except as provided in Section 4.01, this Agreement
(i) will become effective when the Administrative Agent shall have signed this
Agreement and received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto and (ii) thereafter will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy will be effective as delivery of a manually
executed counterpart of this Agreement.
     Section 9.08. Severability. If any provision of any Loan Document is
invalid, illegal or unenforceable in any jurisdiction then, to the fullest
extent permitted by law, (i) such provision shall, as to such jurisdiction, be
ineffective to the extent (but only to the extent) of such invalidity,
illegality or unenforceability, (ii) the other provisions of the Loan Documents
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in favor of the Lender Parties in order to carry out the
intentions of the parties thereto as nearly as may be possible and (iii) the
invalidity, illegality or unenforceability of any such provision in any
jurisdiction shall not affect the validity, legality or enforceability of such
provision in any other jurisdiction.
     Section 9.09. Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower against
any obligations of the Borrower now or hereafter existing hereunder and held by
such Lender, irrespective of whether or not such Lender shall have made any
demand hereunder and although such obligations may be unmatured. The rights of
each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender may have.
     Section 9.10. Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of Ohio.
     (b) The Borrower irrevocably and unconditionally submits, for itself and
its property, to the nonexclusive jurisdiction of the courts of the State of
Ohio sitting in Cuyahoga County and of the United States District Court of the
Northern District of Ohio, and any relevant appellate court, in any action or
proceeding arising out of or relating to any Loan Document, or for recognition
or enforcement of any judgment, and each party hereto irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Ohio state court or, to the
extent permitted by law, in such Federal court. Each party hereto agrees that a
final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in any Loan Document shall affect any right that any
Lender Party may otherwise have to bring any action or proceeding relating to
any Loan Document against the Borrower or its properties in the courts of any
jurisdiction.

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     (c) The Borrower irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to any Loan Document in any court referred to in subsection
(b) of this Section. Each party hereto irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of any
such suit, action or proceeding in any such court.
     (d) Each party hereto irrevocably consents to service of process in the
manner provided for notices in Section 9.01. Nothing in any Loan Document will
affect the right of any party hereto to serve process in any other manner
permitted by law.
     Section 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO ANY LOAN DOCUMENT OR ANY TRANSACTION CONTEMPLATED THEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED. EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
     Section 9.12. Headings. Article and Section headings and the Table of
Contents herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
     Section 9.13. Confidentiality. Each Lender Party agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority, (c) to the extent required by applicable laws or regulations or by
any subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedy hereunder or any suit, action
or proceeding relating to any Loan Document or the enforcement of any right
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any actual or prospective assignee of or
Participant in any of its rights or obligations under this Agreement or (ii) any
actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations, (g) with the consent
of the Borrower or (h) to the extent such Information either (i) becomes
publicly available other than as a result of a breach of this Section or
(ii) becomes available to any Lender Party on a nonconfidential basis from a
source other than the Borrower. For the purposes of this Section, “Information”
means all information received from the Borrower relating to the Borrower or its
business, other than any such information that is available to any Lender Party
on a nonconfidential basis before disclosure

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by the Borrower; provided that, in the case of information received from the
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential.
     Notwithstanding the foregoing, effective from the date of commencement of
discussions concerning the transactions contemplated hereby, the parties hereto
and each of their employees, representatives or other agents may disclose to any
and all Persons, without limitation of any kind, the tax treatment and tax
structure of the transactions contemplated hereby and all materials of any kind
(including opinions or other tax analyses) that have been provided to them
relating to such tax treatment and tax structure.
     Section 9.14. Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts that are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) that may be contracted for, charged or
otherwise received by the Lender holding such Loan in accordance with applicable
law, the rate of interest payable in respect of such Loan hereunder, together
with all Charges payable in respect thereof, shall be limited to the Maximum
Rate and, to the extent lawful, the interest and Charges that would have been
payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such Lender shall have received
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of payment.

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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.

                  STATE AUTO FINANCIAL CORPORATION    
 
           
 
  By:   /s/ Steven J. Johnston    
 
     
 
Steven J. Johnston    
 
      Senior Vice President, Treasurer,    
 
      and Chief Financial Officer    
 
                KEYBANK NATIONAL ASSOCIATION, as         Administrative Agent,
Lead Arranger, Sole Book         Runner and Swingline Lender    
 
           
 
  By:   /s/ Mary K. Young    
 
     
 
Mary K. Young    
 
      Vice President    
 
                LENDERS    
 
                KEYBANK NATIONAL ASSOCIATION,         as Lender    
 
           
 
  By:   /s/ Mary K. Young    
 
     
 
Mary K. Young    
 
      Vice President    
 
                THE HUNTINGTON NATIONAL BANK    
 
           
 
  By:   /s/ John Luehmann    
 
     
 
   
 
  Title:   Vice President    
 
     
 
   
 
                FIFTH THIRD BANK (CENTRAL OHIO)    
 
           
 
  By:   /s/ Christopher D. Jones    
 
     
 
   
 
  Title:   Vice President    
 
     
 
   

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                  NATIONAL CITY BANK    
 
           
 
  By:   /s/ Michael W. Kelley    
 
     
 
   
 
  Title:   Senior Vice President    
 
     
 
   
 
                JPMORGAN CHASE BANK, N.A.    
 
           
 
  By:   /s/ Thomas A. Kiepura    
 
     
 
   
 
  Title:   Vice President    
 
     
 
   

- 71 -

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PRICING SCHEDULE

                                          Pricing Level   Level I   Level II  
Level III   Level IV   Level V
Euro-Dollar Margin
    0.310 %     0.400 %     0.475 %     0.575 %     0.750 %
Facility Fee Rate
    0.090 %     0.100 %     0.125 %     0.175 %     0.250 %

     For purposes of this Schedule, the following terms have the following
meanings:
     “Borrower’s Pricing Rating” means, as of any day, the Senior Debt Rating on
such day of each of Moody’s and S&P; provided that (i) in the event that on any
day the Rating Agencies’ respective Senior Debt Ratings do not all fall into the
same one of the Pricing Categories set forth below, the Borrower’s Pricing
Rating shall the higher of the two Senior Debt Ratings on such day; except that
if the lower of such two Senior Debt Ratings on such day is more than one
Pricing Category lower than the higher of such Senior Debt Ratings, then the
Borrower’s Pricing Rating shall be the Pricing Category that is immediately
above such lower Senior Debt Rating; and (ii) in the event that, on any day,
less than both of the Rating Agencies shall not then have in effect a Senior
Debt Rating, the Pricing Category shall be Pricing Category V. The Pricing
Categories shall be re-determined on each day on which occurs an announcement of
a change in the Senior Debt Rating issued by either Rating Agency.
     “Level I Pricing” applies for any day on which the Pricing Category is I;
“Level II Pricing” applies for any day on which the Pricing Category is II;
“Level III Pricing” applies for any day on which the Pricing Category is III;
“Level IV Pricing” applies for any day on which the Pricing Category is IV; and
“Level V Pricing” applies for any day on which the Pricing Category is V.
     “Pricing Category” means, for any day, the Pricing Category (I, II, II, IV
or V) indicated on the table below that corresponds to the Borrower’s Pricing
Rating on such day:

                      Pricing Category   I   II   III   IV   V
Borrower’s Pricing Rating*
  A2/A or any higher Borrower’s Pricing Rating   A3/A-   Baa1/BBB+   Baa2/BBB  
Baa3/BBB- or any lower Borrower’s Pricing Rating

     “Pricing Level” refers to the determination of which of Level I, Level II,
Level III, Level IV or Level V pricing applies for any day. Pricing Levels are
referred to in ascending order, that is, Level I pricing is the lowest Pricing
Level and Level V pricing is the highest Pricing Level.
 

* If another statistical rating agency is substituted for Moody’s or S&P
pursuant to the definition of “Moody’s” or “S&P”, the equivalent ratings
category designations of such substitute Rating Agency shall be substituted for
the ratings category designations of, as the case may be, Moody’s or S&P set
forth in this table.

 

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EXHIBIT A
ASSIGNMENT AND ACCEPTANCE
     AGREEMENT dated as of                                         ,
                     among [NAME OF ASSIGNOR] (the “Assignor” and [NAME OF
ASSIGNEE] (the “Assignee”).
WHEREAS, this Assignment and Acceptance (the “Agreement”) relates to the Credit
Agreement dated as of November 9, 2005 among State Auto Financial Corporation
(the “Borrower”), the Assignor and the other Lenders party thereto, KeyBank
National Association, as Administrative Agent (the “Administrative Agent”), Lead
Arranger, Sole Book Runner and Swingline Lender (as amended from time to time,
the “Credit Agreement”).
     WHEREAS, as provided under the Credit Agreement, the Assignor has a
Commitment to make Loans to the Borrower and participate in Swingline Loans in
an aggregate principal amount at any time outstanding not to exceed $
                    
     WHEREAS, Loans made to the Borrower by the Assignor under the Credit
Agreement in the aggregate principal amount of $                      are
outstanding at the date hereof;
     WHEREAS, Swingline Loans in the aggregate principal amount of
$                     are outstanding at the date hereof; and
     WHEREAS, the Assignor proposes to assign to the Assignee all of the rights
of the Assignor under the Credit Agreement in respect of a portion of its
Commitment thereunder in an amount equal to $                     (the “Assigned
Amount”), together with a corresponding portion of each of its outstanding Loans
and its Swingline Exposure, and the Assignee proposes to accept such assignment
and assume the corresponding obligations of the Assignor under the Credit
Agreement;
     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements
contained herein, the parties hereto agree as follows:
     SECTION 1. Definitions. All capitalized terms not otherwise defined herein
have the respective meanings set forth in the Credit Agreement.
     SECTION 2. Assignment. The Assignor hereby assigns and sells to the
Assignee all of the rights of the Assignor under the Credit Agreement to the
extent of the Assigned Amount and a corresponding portion of each of its
outstanding Loans and its Swingline Exposure, and the Assignee hereby accepts
such assignment from the Assignor and assumes all of the obligations of the
Assignor under the Credit Agreement to the extent of the Assigned Amount and the
corresponding portion of each of its outstanding Loans and its Swingline
Exposure. Upon the execution and delivery hereof by the Assignor and the
Assignee [and by the Borrower, the Administrative Agent and the Swingline
Lender]1 and the payment of the amounts specified in Section 3 required to be
paid on the date hereof (i) the Assignee shall, as of the date hereof,
 

1   Delete if consent is not required.

 

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succeed to the rights and be obligated to perform the obligations of a Lender
under the Credit Agreement with a Commitment in an amount equal to the Assigned
Amount and shall acquire the rights of the Assignor with respect to a
corresponding portion of each of its outstanding Loans and its Swingline
Exposure and (ii) the Commitment of the Assignor shall, as of the date hereof,
be reduced by the Assigned Amount, and the Assignor shall be released from its
obligations under the Credit Agreement to the extent such obligations have been
assumed by the Assignee. The assignment provided for herein shall be without
recourse to the Assignor.
     SECTION 3. Payments. As consideration for the assignment and sale
contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on the
date hereof in Federal funds the amount heretofore agreed between them.2
Facility fees accrued before the date hereof are for the account of the Assignor
and such fees accruing on and after the date hereof with respect to the Assigned
Amount are for the account of the Assignee. Each of the Assignor and the
Assignee agrees that if it receives any amount under the Credit Agreement which
is for the account of the other party hereto, it shall receive the same for the
account of such other party to the extent of such other party’s interest therein
and promptly pay the same to such other party.
     [SECTION 4. Consent of the Borrower, the Administrative Agent, and the
Swingline Lender. This Agreement is conditioned upon the consent of the
Borrower, the Administrative Agent and the Swingline Lender pursuant to
Section 9.04(b) of the Credit Agreement. The execution of the Agreement by the
Borrower, the Administrative Agent and the Swingline Lender is evidence of this
consent.]3
     SECTION 5. Non-Reliance on Assignor. The Assignor makes no representation
or warranty in connection with, and shall have no responsibility with respect
to, the solvency, financial condition, or statements of the Borrower. or the
validity and enforceability of the Borrower’s obligations under the Credit
Agreement, any note issued thereunder or any Loan Document. The Assignee
acknowledges that it has, independently and without reliance on the Assignor,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis and decision to enter its own independent appraisal of
the business, affairs and financial condition of the Borrower.
     SECTION 6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
     SECTION 7. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.
 

2   Amount should combine principal together with accrued interest and breakage
compensation, if any, to be paid by the Assignee, net of any portion of any
upfront fee to be paid by the Assignor to the Assignee. It may be preferable in
an appropriate case to specify these amounts generically or by formula rather
than as a fixed sum.   3   Delete if consent is not required.

 

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                  [NAME OF ASSIGNOR]    
 
           
 
  By:        
 
     
 
Name:    
 
      Title:    
 
                [NAME OF ASSIGNEE]    
 
           
 
  By:        
 
     
 
Name:    
 
      Title:    
 
            The undersigned consent to the foregoing assignment.    
 
                [STATE AUTO FINANCIAL CORPORATION    
 
           
 
  By:        
 
     
 
Name:    
 
      Title:]4    
 
                [KEYBANK NATIONAL ASSOCIATION,         as Administrative Agent
and Swingline         Lender    
 
           
 
  By:        
 
     
 
Name:    
 
      Title:]5    

 

4   Delete if Borrower’s consent is not required.   5   Delete (or modify as
appropriate) if consent of Administrative Agent, and/or Swingline Lender is not
required.