EX-10.1






Exhibit 10.1




August 31, 2009




Cincinnati Financial Corporation

CFC Investment Company

6200 South Gilmore Road

Fairfield, OH 45014-5141

Attention: Steven J. Johnston





			
	     Re:	 	$75,000,000 Committed Line of Credit





Dear Mr. Johnston:




     We are pleased to inform you that PNC Bank, National Association (the “Bank”), has approved
your request for a committed line of credit to CINCINNATI FINANCIAL CORPORATION (“CINF”) and CFC
INVESTMENT COMPANY (“CFC-I” and, with CINF, each individually a “Borrower” and, collectively, the
“Borrowers”) as outlined in the following sections of this letter.


1. Facility and Use of Proceeds. This is a committed revolving line of credit under which
the Borrowers may request and the Bank, subject to the terms and conditions of this letter, will
make advances to the Borrowers from time to time until the Expiration Date, in an amount in the
aggregate at any time outstanding not to exceed $75,000,000 (the “Line of Credit” or the “Loan”).
The “Expiration Date” means August 29, 2010, or such later date as may be designated by the Bank by
written notice to the Borrowers. Advances under the Line of Credit will be used for working
capital or other general business purposes of the Borrowers.



2. Note. The obligation of the Borrowers to repay advances under the Line of Credit shall
be evidenced by a promissory note (the “Note”) in form and content satisfactory to the Bank. The
obligations of the Borrowers hereunder and under the Note shall be joint and several.




     This letter (the “Letter Agreement”), the Note and the other agreements and documents executed
and/or delivered pursuant hereto, as each may be amended, modified, extended or renewed from time
to time, will constitute the “Loan Documents.” Capitalized terms not defined herein (including
Exhibit “A” hereto) shall have the meaning ascribed to them in the Loan Documents.


3. Interest Rate. Interest on the unpaid balance of the Line of Credit advances will be
charged at the rates, and be payable on the dates and times, set forth in the Note.



4. Repayment. Subject to the terms and conditions of this Letter Agreement, the Borrowers
may borrow, repay and reborrow under the Line of Credit until the Expiration Date, on which date
the outstanding principal balance and any accrued but unpaid interest shall be due and payable.
Interest will be due and payable as set forth in the Note, and will be computed on the basis of a
year of 360 days and paid on the actual number of days that principal is outstanding.



5. Covenants. Unless compliance is waived in writing by the Bank, until payment in full of
the Loan and termination of the commitment for the Line of Credit:




 









 








Cincinnati Financial Corporation

CFC Investment Company

August 31, 2009

Page 2




     (a) Each Borrower will promptly submit to the Bank such information as the Bank may reasonably
request relating to such Borrower’s affairs (including but not limited to annual financial
statements for such Borrower).



     (b) Neither Borrower will make or permit any change in its form of organization, the nature of
its business as carried on as of the date of this Letter Agreement or, in the case of CFC-I, its
equity ownership.



     (c) The Borrowers will notify the Bank in writing of the occurrence of any Event of Default or
Unmatured Default.



     (d) The Borrowers will comply with the financial and other covenants included in Exhibit “A”
hereto.


6. Representations and Warranties. To induce the Bank to extend the Loan and upon the
making of each advance to the Borrowers under the Line of Credit, the Borrowers represent and
warrant as follows:




     (a) CINF’s latest consolidated financial statements provided to the Bank are true, complete
and accurate in all material respects and fairly present the financial condition, assets and
liabilities, whether accrued, absolute, contingent or otherwise, and the results of CINF’s
operations on a consolidated basis for the period specified therein. CINF’s financial statements
have been prepared in accordance with Agreement Accounting Principles consistently applied from
period to period subject, in the case of interim statements, to normal year-end adjustments. Since
the date of the latest financial statements provided to the Bank, neither Borrower has suffered any
damage, destruction or loss which has materially adversely affected its business, assets,
operations, financial condition or results of operations.



     (b) There are no actions, suits, proceedings or governmental investigations pending or, to the
knowledge of the Borrowers, threatened against either Borrower which could result in a material
adverse change in its business, assets, operations, financial condition or results of operations
and there is no basis known to either Borrower or its officers, directors or shareholders for any
such action, suit, proceedings or investigation.



     (c) Each Borrower has filed all returns and reports that are required to be filed by it in
connection with any federal, state or local tax, duty or charge levied, assessed or imposed upon
such Borrower or its property, including unemployment, social security and similar taxes and all of
such taxes have been either paid or adequate reserve or other provision has been made therefor,
except for any failure to do so which could not reasonably be expected to cause a Material Adverse
Effect.



     (d) Each Borrower is duly organized, validly existing and in good standing under the laws of
the state of its incorporation and has the power and authority to own and operate its assets and to
conduct its business as now or proposed to be carried on, and is duly qualified, licensed and in
good standing to do business in all jurisdictions where its ownership of property or the nature of
its business requires such qualification or licensing, except for any failure to



 









 





Cincinnati Financial Corporation

CFC Investment Company

August 31, 2009

Page 3



comply with any of the foregoing which could not reasonably be expected to cause a Material
Adverse Effect.




     (e) Each Borrower has full power and authority to enter into the transactions provided for in
this Letter Agreement and has been duly authorized to do so by all necessary and appropriate action
and when executed and delivered by such Borrower, this Letter Agreement and the other Loan
Documents will constitute the legal, valid and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of creditors’ rights generally and
general principles of equity.



     (f) There does not exist any default or violation by either Borrower of or under any of the
terms, conditions or obligations of: (i) its organizational documents; (ii) any indenture,
mortgage, deed of trust, franchise, permit, contract, agreement, or other instrument to which it is
a party or by which it is bound; or (iii) any law, regulation, ruling, order, injunction, decree,
condition or other requirement applicable to or imposed upon such Borrower by any law or by any
governmental authority, court or agency, except for any failure to comply with any of the foregoing
which could not reasonably be expected to cause a Material Adverse Effect.



     (g) The obligations of the Borrowers under this Letter Agreement rank on a pari passu basis
with all other senior Indebtedness of the Borrowers.


7. Fees. Beginning on October 1, 2009 and continuing on the first day of each January,
April, July and October thereafter and on the Expiration Date, the Borrowers shall pay an unused
commitment fee to the Bank, in arrears, at a rate per annum equal to one-quarter of one percent
(0.25%) on the average daily balance of the Line of Credit which is undisbursed during the
preceding quarter (or portion thereof in the case of any payment due on the Expiration Date). The
unused commitment fee shall be computed on the basis of a year of 360 days and paid on the actual
number of days elapsed.



8. Expenses. The Borrowers will reimburse the Bank for the Bank’s out-of-pocket expenses
incurred or to be incurred at any time in conducting UCC, title and other public record searches,
and in filing and recording documents, if any, in the public records. The Borrowers shall also
reimburse the Bank for the Bank’s expenses (including the reasonable fees and expenses of the
Bank’s outside and in-house counsel) in documenting and closing this transaction, in connection
with any amendments, modifications or renewals of the Loan, and in connection with the collection
of all of the Borrowers’ Obligations to the Bank, including but not limited to enforcement actions
relating to the Loan.



9. Other Conditions to Advances. From the initial advance under the Line of Credit, the
Borrowers shall repay in full all amounts due and owing under that certain Amended and Restated
Discretionary Line of Credit Note dated May 1, 2006 from the Borrowers to the Bank, following which
repayment, the related discretionary line of credit shall be cancelled and such Note marked
“cancelled” and returned to the Borrowers.




 









 








Cincinnati Financial Corporation

CFC Investment Company

August 31, 2009

Page 4



10. Additional Provisions. Before the first advance under the Loan, the Borrowers shall
execute and deliver to the Bank the Note, and the other required Loan Documents and such other
instruments and documents as the Bank may reasonably request, such as certified resolutions,
incumbency certificates, opinions of counsel or other evidence of authority. The Bank will not be
obligated to make any advance under the Line of Credit if any Event of Default or Unmatured Default
shall have occurred and be continuing.




     Prior to execution of the final Loan Documents, the Bank may terminate this Letter Agreement
if a material adverse change occurs with respect to either Borrower or any other person or entity
connected in any way with the Loan, or if the Borrowers fail to comply with any of the terms and
conditions of this Letter Agreement, or if the Bank reasonably determines that any of the
conditions cannot be met.



     This Letter Agreement is governed by the laws of State of Ohio. No modification, amendment or
waiver of any of the terms of this Letter Agreement, nor any consent to any departure by the
Borrowers therefrom, will be effective unless made in a writing signed by the party to be charged,
and then such waiver or consent shall be effective only in the specific instance and for the
purpose for which given. When accepted, this Letter Agreement and the other Loan Documents will
constitute the entire agreement between the Bank and the Borrowers concerning the Loan, and shall
replace all prior understandings, statements, negotiations and written materials relating to the
Loan.



     The Bank will not be responsible for any damages, consequential, incidental, special, punitive
or otherwise, that may be incurred or alleged by any person or entity, including the Borrowers, as
a result of this Letter Agreement, the other Loan Documents, the transactions contemplated hereby
or thereby, or the use of proceeds of the Loan.



     EACH BORROWER AND THE BANK IRREVOCABLY WAIVE ANY AND ALL RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE ARISING OUT OF THIS LETTER AGREEMENT, THE
OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED IN ANY OF SUCH DOCUMENTS AND ACKNOWLEDGE
THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.



     If and when a loan closing occurs, this Letter Agreement (as the same may be amended from time
to time) shall survive the closing and will serve as our loan agreement throughout the term of the
Loan.



     To accept these terms, please sign the enclosed copy of this Letter Agreement as set forth
below and the Loan Documents and return them to the Bank no later than August 31, 2009, or this
Letter Agreement may be terminated at the Bank’s option without liability or further obligation of
the Bank.



	 	 	 	 	 
	 	Very truly yours,



PNC BANK, NATIONAL ASSOCIATION

 	 
	 	By:  	/S/ Joseph C. Richardson
 	 
	 	 	Joseph C. Richardson 	 
	 	 	Senior Vice President 	 
	 




 









 





ACCEPTANCE




     With the intent to be legally bound hereby, the above terms and conditions are hereby agreed
to and accepted as of this 31st day of 

August, 2009.



	 	 	 	 	 
	 	BORROWERS:


CINCINNATI FINANCIAL CORPORATION

 	 
	 	By:	/S/ Steven J. Johnston
 	 
	 	Name:	Steven J. Johnston 	 
	 	Title:	Chief Financial Officer 	 
	 
	 	CFC INVESTMENT COMPANY

 	 
	 	By:	/S/ Steven J. Johnston
 	 
	 	Name:	Steven J. Johnston 	 
	 	Title:	Chief Financial Officer 	 
	 




 









 








EXHIBIT A

TO LETTER AGREEMENT

DATED AUGUST 31, 2009




A. FINANCIAL REPORTING COVENANTS:





     (1) The Borrowers will deliver to the Bank:



          (a) Within forty-five (45) days each Fiscal Quarter-end, consolidated and consolidating
unaudited financial statements of CINF prepared in accordance with Agreement Accounting Principles,
including a balance sheet and statements of income and surplus, certified by the chief financial
officer of CINF as fairly representing CINF’s consolidated financial condition as of the end of and
for such period.




          (b) Within one hundred twenty (120) days of the end of each Fiscal Year, consolidated and
consolidating audited financial statements of CINF prepared on the accrual basis in accordance with
Agreement Accounting Principles containing a balance sheet, statements of income and surplus,
statements of source and use of funds and reconciliation of capital accounts, along with the
unqualified opinion of independent public accountants satisfactory to the Bank in its reasonable
discretion, that such financial statements comply with Agreement Accounting Principles and fairly
and accurately represent the financial condition of CINF and its Subsidiaries. Such financial
statements shall be accompanied by copies of any management letters to CINF from such accountants.




          (c) Accompanying the deliverables required by Sections 1(a) and 1(b), unaudited quarterly and
annual financial statements of CFC-I prepared in accordance with Agreement Accounting Principles,
including a balance sheet and statements of income and surplus, certified by the chief financial
officer of CFC-I as fairly representing CFC-I’s consolidated financial condition as of the end of
and for such period.




          (d) Promptly upon their becoming available, a copy of each annual statutory filing required to
be made by The Cincinnati Insurance Company and The Cincinnati Life Insurance Company, each a
direct or indirect wholly-owned subsidiary of CINF, to any state regulatory agency.




          (e) Promptly upon their becoming available, a copy of each financial statement, report, notice
or proxy statement sent by either Borrower to stockholders generally and of each regular report and
any registration statement or prospectus, filed by either Borrower with the Securities and Exchange
Commission or any other United States federal or state securities exchange, securities trading
system or with any United States national stock exchange and one copy of each periodic report filed
by either Borrower with any other similar regulatory authority, in all cases without duplication;
provided, however, that the Borrowers shall not be obliged to provide to the Bank
routine reports which are required to be provided to any of the above-listed entities concerning
the management of employee benefit plans, including, without limitation, stock purchases or the
exercise of stock options made under any such employee benefit plan.




 









 





B. FINANCIAL COVENANTS:




     (1) Minimum Consolidated Net Worth. CINF will maintain at all times a Consolidated
Net Worth of at least the sum of:



          (a) $5,446,400,000, plus




          (b) the sum of 50% of Consolidated Net Income for each Fiscal Quarter ending after December
31, 2006 (but only to the extent that, in the case of any such Fiscal Quarter, Consolidated Net
Income for such Fiscal Quarter is at least $1.00).




     Minimum Consolidated Net Worth shall be calculated net of unrealized gains or losses in CINF’s
or any of its Subsidiaries’ portfolio of debt and equity investments.



     (2) Maximum Consolidated Leverage Ratio. CINF and its Subsidiaries shall have, at the
end of each Fiscal Quarter, a Consolidated Leverage Ratio as of the last day of such Fiscal Quarter
and for the 12-month period then ended of not more than 0.20 to 1.0.



     As used herein:



          “Affiliate” of any Person means any other Person directly or indirectly controlling,
controlled by or under common control with such Person. A Person shall be deemed to control
another Person if the controlling Person owns 20% or more of any class of voting securities (or
other ownership interests) of the controlled Person or possesses, directly or indirectly, the power
to direct or cause the direction of the management or policies of the controlled Person, whether
through ownership of stock or other ownership interests, by contract or otherwise.




          “Agreement Accounting Principles” means generally accepted accounting principles, applied in a
manner consistent with that used in preparing the financial statements referred to in Section 6(a)
of this Letter Agreement.




          “Capitalized Lease” of a Person means any lease of Property by such Person as lessee which
would be capitalized on a balance sheet of such Person prepared in accordance with Agreement
Accounting Principles.




          “Capitalized Lease Obligations” of a Person means the amount of the obligations of such Person
under Capitalized Leases which would be shown as a liability on a balance sheet of such Person
prepared in accordance with Agreement Accounting Principles.




          “Consolidated Funded Indebtedness” means at any time (a) the aggregate dollar amount of
Indebtedness of CINF and its Subsidiaries which has actually been funded and is outstanding,
whether or not such amount is due or payable, at such time, and (b) all reimbursement obligations
under outstanding letters of credit which (i) may be presented, or (ii) have been presented and
have not yet been paid; all calculated for CINF and its Subsidiaries on a consolidated basis as of
such time.




 









 








          “Consolidated Indebtedness” means at any time the Indebtedness of CINF and its Subsidiaries
calculated on a consolidated basis as of such time.




          “Consolidated Leverage Ratio” shall mean the ratio of Consolidated Funded Indebtedness to the
sum of Consolidated Indebtedness and shareholders’ equity reflected on the financial statements
provided pursuant to Section A of Exhibit A to this Letter Agreement.




          “Consolidated Net Income” means, for any period, the consolidated net income (or loss) of CINF
and its Subsidiaries for such period determined in accordance with Agreement Accounting Principles;
provided, that there shall be excluded (i) the income (or loss) of any Affiliate of CINF or
other Person (other than a Subsidiary of CINF) in which any Person (other than CINF or any of its
Subsidiaries) has a joint interest, except to the extent of the amount of dividends or other
distributions actually paid to CINF or any of its Subsidiaries by such Affiliate or other Person
during such period; and (ii) the income (or loss) of any Person accrued prior to the date it
becomes a Subsidiary of CINF or is merged into or consolidated with CINF or any of its Subsidiaries
or that Person’s assets are acquired by CINF or any of its Subsidiaries.




          “Consolidated Net Worth” means, as of the date of any determination thereof, the amount of the
shareholders’ equity of CINF and its Subsidiaries as would be shown on the consolidated balance
sheet of CINF and its Subsidiaries determined on a consolidated basis in accordance with Agreement
Accounting Principles.




          “Fiscal Quarter” means any of the quarterly accounting periods of the Borrowers ending on
March 31, June 30, September 30, and December 31 of each year.




          “Fiscal Year” means any of the annual accounting periods of the Borrowers ending on December
31 of each year.




          “Indebtedness” of a Person means such Person’s (i) obligations for borrowed money, (ii)
obligations representing the deferred purchase price of Property or services (other than accounts
payable and accrued expenses arising in the ordinary course of such Person’s business payable on
terms customary in the trade), (iii) obligations, whether or not assumed, secured by Liens against,
or payable out of the proceeds or production from, Property now or hereafter owned or acquired by
such Person, (iv) obligations which are evidenced by notes, acceptances, or other instruments, (v)
obligations of such Person to purchase securities or other Property arising out of or in connection
with the sale of the same or substantially similar securities or Property, (vi) Capitalized Lease
Obligations, and (vii) any other obligation for borrowed money which in accordance with Agreement
Accounting Principles would be shown as a liability on the consolidated balance sheet of such
Person.




          “Lien” means any lien (statutory or other), mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including the interest of a vendor or
lessor under any conditional sale, Capitalized Lease or other title retention agreement).




          “Material Adverse Effect” means a material adverse effect on (i) the business, property,
condition (financial or otherwise) or results of operations of CINF and its Subsidiaries




 









 




taken as a whole, (ii) the inability of either Borrower to perform its obligations under the
Loan Documents to which it is a party, or (iii) the validity or enforceability of any of the Loan
Documents or the rights or remedies of the Bank thereunder.




          “Person” means any natural person, corporation, firm, joint venture, partnership, limited
liability company, association, enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department or instrumentality thereof.




          “Property” of a Person means any and all property, whether real, personal, tangible,
intangible, or mixed, of such Person, or other assets owned or leased.




          “Subsidiary” of a Person means (i) any corporation more than fifty percent (50%) of the
outstanding securities having ordinary voting power of which shall at the time be owned or
controlled, directly or indirectly, by such Person or by one or more of its Subsidiaries or by such
Person and one or more of its Subsidiaries, or (ii) any partnership, limited liability company,
association, joint venture or similar business organization more than fifty percent (50%) of the
ownership interests having ordinary voting power of which shall at the time be so owned or
controlled. Unless otherwise expressly provided, all references herein to a “Subsidiary” means a
Subsidiary of either Borrower.




          “Unmatured Default” means an act, condition or event which, with the passage of time, the
giving of notice or both could reasonably be expected to become an Event of Default.




     All of the above financial covenants shall be computed and determined in accordance with
Agreement Accounting Principles applied on a consistent basis (subject to normal year-end
adjustments).



C. NEGATIVE COVENANTS:




     (1) Neither Borrower will (a) liquidate, or dissolve, or merge or consolidate with any person,
firm, corporation or other entity; provided, however, that a Borrower may merge or
consolidate with (i) the other Borrower or (ii) another wholly-owned Subsidiary of CINF so long as
such Borrower is the surviving entity, or (b) sell, lease, transfer or otherwise dispose of (i) any
of such Borrower’s Subsidiaries or (ii) all or any substantial part of its property or assets,
whether now owned or hereafter acquired.



     (2) Neither Borrower will, nor will it permit any of its Subsidiaries to, make any Acquisition
other than a Permitted Acquisition. For purposes of this Section, “Acquisition” means any
transaction, or series of transactions, consummated on or after the date of this Letter Agreement,
by which either Borrower or any of its Subsidiaries (a) acquires any going business or all or
substantially all of the assets of any firm, corporation or limited liability company or division
thereof, whether through the purchase of assets, merger or otherwise or (b) directly or indirectly
acquires (in one transaction or as the most recent transaction in a series of transactions) at
least a majority (in number of votes) of the securities of a corporation which have ordinary voting
power for the election of directors (other than securities having such power only by reason of the
happening of a contingency) or a majority (by percentage of voting power) of the outstanding
ownership interests of a partnership or limited liability company; and “Permitted



 









 







Acquisition” means any Acquisition made by either Borrower or any of its Subsidiaries provided
that: (a) as of the date of such Acquisition, no Event of Default shall have occurred and be
continuing or would result from such Acquisition or from the incurrence of any Indebtedness in
connection with such Acquisition; (b) prior to the date of such Acquisition, such Acquisition shall
have been approved by the board of directors of the Person making such Acquisition and, if
applicable, the shareholders of the Person whose stock or assets are being acquired in connection
with such Acquisition and no claim or challenge has been asserted or threatened by any shareholder
or director of such Person which could reasonably be expected to have a material adverse effect on
such Acquisition or a Material Adverse Effect; (c) as of the date of any such Acquisition, all
approvals required in connection with such Acquisition shall have been obtained; and (d) any such
Acquisition is an Acquisition of assets or capital stock or other equity interests of a Person
engaged in any line of business being conducted by either Borrower or any of its Subsidiaries at
the time of such Acquisition.



     (3) Neither Borrower will make or have outstanding any loans or advances to or otherwise
extend credit to any person, firm, corporation or other entity, except in the ordinary course of
business.



     (4) Neither Borrower will grant any Lien on its Property to secure Indebtedness (other than
Liens upon Property securing loans to such Borrower for the purchase price of such Property, in
each case securing amounts which do not exceed the purchase price of the Property subject to such
Liens) (each such Lien, a “Non-Bank Lien”) unless such Borrower concurrently grants to the Bank a
similar first priority Lien, in form and substance satisfactory to the Bank, over the same
Property, which Lien shall rank on a pari passu basis with such Non-Bank Lien and be subject to
documentation, including appropriate intercreditor agreements, satisfactory in form and substance
to the Bank, except for any or all of the following Liens:



          (a) Liens for taxes, assessments or governmental charges or levies on its Property if the same
shall not at the time be delinquent or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings for which adequate reserves shall have been
set aside on its books.




          (b) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ liens, landlord’s
liens, and other similar liens arising in the ordinary course of business which secure payment of
obligations not more than sixty (60) days past due or which are being contested in good faith by
appropriate proceedings and for which adequate reserves shall have been set aside on its books.




          (c) Liens arising out of pledges or deposits under worker’s compensation laws, unemployment
insurance, old age pensions, or other social security retirement benefits or similar legislation.




          (d) Utility easements, building restrictions and such other encumbrances or charges against
real property as are of a nature generally existing with respect to properties of a similar
character and which do not in any material way affect the marketability of the same or interfere
with the use thereof in the business of CINF or its Subsidiaries.




 









 








          (e) Liens existing on the date hereof and extensions, renewals and replacements thereof,
provided that such extension, renewal or replacement Lien shall be limited to the property or asset
covered by the Lien extended, renewed or replaced and that the obligations secured by any such
extension, renewal or replacement Lien shall be in an amount not in excess of the amount or the
obligation secured by the Lien so extended, renewed or replaced.