Document:

<PAGE>

                                  Exhibit 10.01

          $100,000,000 Credit Agreement among SAF Funding Corporation,
   as Borrower, the Lenders named therein, and KeyBank National Association,
          as Administrative Agent, Lead Arranger and Sole Book Runner,
                            dated November 12, 2003.

<PAGE>

                                  $100,000,000

                                CREDIT AGREEMENT

                                      among

                            SAF FUNDING CORPORATION,
                                  as Borrower,

                           THE LENDERS NAMED THEREIN,

                          KEYBANK NATIONAL ASSOCIATION,
           as Administrative Agent, Lead Arranger and Sole Book Runner

                          Dated as of November 12, 2003

<PAGE>

                                TABLE OF CONTENTS

Section Page

<TABLE>
<S>                                                                                                                  <C>
ARTICLE I             DEFINITIONS...............................................................................      1

ARTICLE II            THE CREDITS...............................................................................     10

         2.1      Commitment....................................................................................     10

         2.2      Required Payments; Termination................................................................     10

         2.3      Ratable Loans.................................................................................     10

         2.4      Types of Advances.............................................................................     10

         2.5      Commitment Fee; Reductions in Aggregate Commitment; Mandatory Reductions in
                  Aggregate Commitment; Mandatory Prepayments...................................................     10

         2.6      Minimum Amount of Each Advance................................................................     11

         2.7      Optional Principal Payments...................................................................     11

         2.8      Method of Selecting Types and Interest Periods for New Advances...............................     11

         2.9      Conversion and Continuation of Outstanding Advances...........................................     12

         2.10     Changes in Interest Rate, etc.................................................................     12

         2.11     Rates Applicable After Default................................................................     13

         2.12     Method of Payment.............................................................................     13

         2.13     Noteless Agreement; Evidence of Indebtedness..................................................     13

         2.14     Telephonic Notices............................................................................     14

         2.15     Interest Payment Dates; Interest and Fee Basis................................................     14

         2.16     Notification of Advances, Interest Rates, Prepayments and Commitment Reductions...............     14

         2.17     Lending Installations.........................................................................     15

         2.18     Non-Receipt of Funds by the Agent.............................................................     15

         2.19     Extension of Commitment Termination Date......................................................     15

ARTICLE III           YIELD PROTECTION; TAXES...................................................................     17

         3.1      Yield Protection..............................................................................     17

         3.2      Changes in Capital Adequacy Regulations.......................................................     17

         3.3      Availability of Types of Advances.............................................................     18

         3.4      Funding Indemnification.......................................................................     18

         3.5      Taxes.........................................................................................     18

         3.6      Lender Statements; Survival of Indemnity......................................................     20
</TABLE>

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
ARTICLE IV            CONDITIONS PRECEDENT......................................................................     20

         4.1      Conditions to Effectiveness...................................................................     20

         4.2      Each Advance..................................................................................     22

ARTICLE V             REPRESENTATIONS AND WARRANTIES............................................................     22

         5.1      Corporate Existence...........................................................................     22

         5.2      Financial Condition...........................................................................     23

         5.3      Litigation....................................................................................     23

         5.4      No Breach.....................................................................................     23

         5.5      Action........................................................................................     23

         5.6      Approvals.....................................................................................     24

         5.7      Taxes.........................................................................................     24

         5.8      Use of Credit.................................................................................     24

         5.9      Special Purpose Company.......................................................................     24

         5.10     Capitalization................................................................................     24

         5.11     ERISA.........................................................................................     24

         5.12     Investment Company............................................................................     24

         5.13     True and Complete Disclosure..................................................................     24

ARTICLE VI            COVENANTS.................................................................................     25

         6.1      Financial Statements, Etc.....................................................................     25

         6.2      Litigation....................................................................................     26

         6.3      Existence, Etc................................................................................     26

         6.4      Limited Purpose Company.......................................................................     26

         6.5      Use of Proceeds...............................................................................     27

         6.6      Modifications of Certain Documents............................................................     27

ARTICLE VII           DEFAULTS..................................................................................     27

         7.1      Payment.......................................................................................     27

         7.2      Representations and Warranties................................................................     27

         7.3      Other Covenants...............................................................................     28

         7.4      Insolvency....................................................................................     28

         7.5      Voluntary Proceedings.........................................................................     28

         7.6      Involuntary Proceedings.......................................................................     28

         7.7      Change of Control.............................................................................     28
</TABLE>

                                    Page ii
<PAGE>

<TABLE>
<S>                                                                                                                  <C>
         7.8      Failure of Liens..............................................................................     28

         7.9      Put Event.....................................................................................     29

ARTICLE VIII          ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES............................................     29

         8.1      Acceleration..................................................................................     29

         8.2      Amendments....................................................................................     29

ARTICLE IX            GENERAL PROVISIONS........................................................................     30

         9.1      Survival of Representations...................................................................     30

         9.2      Governmental Regulation.......................................................................     30

         9.3      Headings......................................................................................     30

         9.4      Entire Agreement..............................................................................     30

         9.5      Several Obligations; Benefits of this Agreement...............................................     30

         9.6      Expenses; Indemnification.....................................................................     31

         9.7      Numbers of Documents..........................................................................     31

         9.8      Accounting....................................................................................     31

         9.9      Severability of Provisions....................................................................     31

         9.10     Nonliability of Lenders.......................................................................     31

         9.11     Confidentiality...............................................................................     32

         9.12     Nonreliance...................................................................................     32

         9.13     Disclosure....................................................................................     32

ARTICLE X             THE AGENT.................................................................................     32

         10.1     Appointment; Nature of Relationship...........................................................     32

         10.2     Powers........................................................................................     33

         10.3     General Immunity..............................................................................     33

         10.4     No Responsibility for Loans, Recitals, etc....................................................     33

         10.5     Action on Instructions of Lenders.............................................................     33

         10.6     Employment of Agents and Counsel..............................................................     34

         10.7     Reliance on Documents; Counsel................................................................     34

         10.8     Agent's Reimbursement and Indemnification.....................................................     34

         10.9     Notice of Default.............................................................................     35

         10.10    Rights as a Lender............................................................................     35

         10.11    Lender Credit Decision........................................................................     35

         10.12    Successor Agent...............................................................................     35
</TABLE>

                                    Page iii

<PAGE>

<TABLE>
<S>                                                                                                                  <C>
         10.13    Agent's Fee...................................................................................     36

         10.14    Delegation to Affiliates......................................................................     36

         10.15    Execution of Pledge and Put Agreements........................................................     36

         10.16    Collateral Releases...........................................................................     36

         10.17    Consents Under Other Loan Documents...........................................................     36

         10.18    Co-Agents, Documentation Agent, Syndication Agent, etc........................................     37

ARTICLE XI            SETOFF; RATABLE PAYMENTS..................................................................     37

         11.1     Setoff........................................................................................     37

         11.2     Ratable Payments..............................................................................     37

ARTICLE XII           BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS.........................................     37

         12.1     Successors and Assigns........................................................................     37

         12.2     Participations................................................................................     38

         12.3     Assignments...................................................................................     39

         12.4     Dissemination of Information..................................................................     40

         12.5     Tax Treatment.................................................................................     40

ARTICLE XIII          NOTICES...................................................................................     41

         13.1     Notices.......................................................................................     41

         13.2     Change of Address.............................................................................     41

ARTICLE XIV           COUNTERPARTS..............................................................................     41

ARTICLE XV            CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL..............................     41

         15.1     CHOICE OF LAW.................................................................................     41

         15.2     CONSENT TO JURISDICTION.......................................................................     42

         15.3     WAIVER OF JURY TRIAL..........................................................................     42

ARTICLE XVI           NO RECOURSE...............................................................................     42
</TABLE>

                                    Page iv
<PAGE>

SCHEDULES

Schedule 1     Commitments

EXHIBITS

Exhibit A      Opinion
Exhibit B      Compliance Certificate
Exhibit C      Form of Assignment
Exhibit D      Money Transfer Instructions
Exhibit E      Note

                                     Page v

<PAGE>

                                CREDIT AGREEMENT

         This Agreement, dated as of November 12, 2003, is among SAF Funding
Corporation, a Delaware corporation, the Lenders and KeyBank National
Association, a national banking association having its principal office in
Cleveland, Ohio, as Agent. The parties hereto agree as follows:

                                   RECITALS:

         A.       The Borrower has requested that the Lenders and the Agent make
available to the Borrower a term loan facility.

         B.       Subject to the terms and conditions hereinafter set forth, the
Lenders and the Agent have granted such request.

         NOW, THEREFORE, in consideration of the mutual covenants and
undertakings herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Borrower, the
Lenders and the Agent hereby agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         As used in this Agreement:

         "ABR Advance" means an Advance which, except as otherwise provided in
Section 2.11, bears interest at the Alternate Base Rate.

         "Advance" means a borrowing by the Borrower hereunder, (a) advanced by
the Lenders on the same Borrowing Date, or (b) converted or continued by the
Lenders on the same date of conversion or continuation, consisting, in either
case, of the aggregate amount of the several Advances of the same Type and, in
the case of LIBOR Advances, for the same Interest Period.

         "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 10% 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, by contract or otherwise.

         "Agent" means KeyBank in its capacity as contractual administrative
representative of the Lenders pursuant to Article X, and not in its individual
capacity as a Lender, and any successor Agent appointed pursuant to Article X.

<PAGE>

         "Aggregate Commitment" means the aggregate of the Commitments of all
the Lenders, as reduced from time to time pursuant to the terms hereof.

         "Agreement" means this credit agreement, as it may be amended or
modified and in effect from time to time.

         "Agreement Accounting Principles" means generally accepted accounting
principles as in effect from time to time, applied in a manner consistent with
that used in preparing the financial statements referred to in Section 5.2.

         "Alternate Base Rate" means, for any day, a rate of interest per annum
equal to the higher of (a) the Prime Rate for such day and (b) the sum of the
Federal Funds Effective Rate for such day plus one-half (0.50%) per annum.

         "Applicable Margin" shall mean, with respect to any LIBOR Advance, (a)
one percent (1%) per annum from the date of such LIBOR Advance to but not
including the first anniversary of such LIBOR Advance, (b) one and one-fourth
percent (1.25%) per annum from the first anniversary of such LIBOR Advance to
but not including the third anniversary of such LIBOR Advance, and (c) one and
one-half percent (1.50%) per annum from and after the third anniversary of such
LIBOR Advance.

         "Arranger" means KeyBank, and its successors, in its capacity as Lead
Arranger and Sole Book Runner.

         "Article" means an article of this Agreement unless another document is
specifically referenced.

         "Authorized Officer" means any of the President, the Treasurer or any
Vice President of the Borrower, acting singly.

         "Basic Documents" shall mean, collectively, the Loan Documents, the
Preferred Stock Certificates and the Standby Purchase Agreement.

         "Borrower" means SAF Funding Corporation, a Delaware corporation, and
its successors and assigns.

         "Borrowing Date" means a date on which an Advance is made hereunder.

         "Borrowing Notice" is defined in Section 2.8.

         "Business Day" means (a) with respect to any borrowing, payment or rate
selection of LIBOR Advances, a day (other than a Saturday or Sunday) on which
banks generally are open in Cleveland and New York for the conduct of
substantially all of their commercial lending activities, interbank wire
transfers can be made on the Fedwire system and dealings in United States
dollars are carried on in the London interbank market and (b) for all other
purposes, a day (other than a Saturday or Sunday) on which banks generally are
open in Cleveland for the

                                       2
<PAGE>

conduct of substantially all of their commercial lending activities and
interbank wire transfers can be made on the Fedwire system.

         "Capital Lease Obligations" shall mean, for any Person, all obligations
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required
to be classified and accounted for as a capital lease on a balance sheet of such
Person under Agreement Accounting Principles, and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with Agreement Accounting Principles.

         "Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.

         "Commitment" means, (a) for each Lender, the obligation of such Lender
to make Loans not exceeding the amount set forth on Schedule 1 hereto and (b)
with respect to each Person which becomes a Lender after the Effective Date, the
amount specified for such Person on the signature page of any assignment that
has become effective pursuant to Section 12.3.2, in each case as such amount may
be modified from time to time pursuant to the terms hereof.

         "Commitment Termination Date" means November 10, 2004, or any later
date as may be specified as the Commitment Termination Date in accordance with
Section 2.19 or any earlier date on which the Aggregate Commitment is reduced to
zero or otherwise terminated pursuant to the terms hereof.

         "Company Pledge Agreement" shall mean a Pledge and Security Agreement
of even date herewith between the Borrower and the Agent, as the same shall be
modified and supplemented and in effect from time to time.

         "Conversion/Continuation Notice" is defined in Section 2.9.

         "Default" means an event described in Article VII.

         "Dividend Payment" shall mean dividends (in cash, Property or
obligations) on, or other payments or distributions on account of, or the
setting apart of money for a sinking or other analogous fund for, or the
purchase, redemption, retirement or other acquisition of, any shares of any
class of stock of the Borrower or of any warrants, options or other rights to
acquire the same (or to make any payments to any Person, such as "phantom stock"
payments, where the amount thereof is calculated with reference to the fair
market or equity value of the Borrower), but excluding dividends payable solely
in shares of common stock of the Borrower.

         "Effective Date" means November 12, 2003.

         "Equity Rights" shall mean, with respect to any Person, any
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or securities
convertible into, any additional shares of capital stock of any class, or
partnership or other ownership interests of any type in, such Person.

                                       3
<PAGE>

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.

         "ERISA Affiliate" shall mean any corporation or trade or business that
is a member of any group of organizations (a) described in Section 414(b) or (c)
of the Code of which the Borrower is a member and (b) solely for purposes of
potential liability under Section 302(c)(11) of ERISA and Section 412(c)(11) of
the Code and the lien created under Section 302(f) of ERISA and Section 412(n)
of the Code, described in Section 414(m) or (o) of the Code of which the
Borrower is a member.

         "Excluded Taxes" means, in the case of each Lender or applicable
Lending Installation and the Agent, taxes imposed on its overall net income, and
franchise taxes imposed on it, by (a) the jurisdiction under the laws of which
such Lender or the Agent is incorporated or organized or (b) the jurisdiction in
which the Agent's or such Lender's principal executive office or such Lender's
applicable Lending Installation is located. The Borrower has no obligation to
pay Excluded Taxes.

         "Exhibit" refers to an exhibit to this Agreement, unless another
document is specifically referenced.

         "Existing Credit Agreement" means the Amended and Restated Credit
Agreement dated November 16, 2001 among the Borrower, various lenders
thereunder, Bank One, N.A, as Agent, and others, as amended.

         "Facility Termination Date" means the date which is the fifth
anniversary of the Commitment Termination Date.

         "Federal Funds Effective Rate" means, for any day, an interest rate per
annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published for such day (or, if such day is not a
Business Day, for the immediately preceding Business Day) by the Federal Reserve
Bank of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations at approximately 10:00 a.m.
(Cleveland time) on such day on such transactions received by the Agent from
three Federal funds brokers of recognized standing selected by the Agent in its
sole discretion.

         "Guarantee" shall mean a guarantee, an endorsement, a contingent
agreement to purchase or to furnish funds for the payment or maintenance of, or
otherwise to be or become contingently liable under or with respect to, the
Indebtedness, other obligations, net worth, working capital or earnings of any
Person, or a guarantee of the payment of dividends or other distributions upon
the stock or equity interests of any Person, or an agreement to purchase, sell
or lease (as lessee or lessor) Property, products, materials, supplies or
services primarily for the purpose of enabling a debtor to make payment of such
debtor's obligations or an agreement to assure a creditor against loss, and
including, without limitation, causing a bank or other financial institution to
issue a letter of credit or other similar instrument for the benefit of another
Person, but excluding

                                       4
<PAGE>

endorsements for collection or deposit in the ordinary course of business. The
terms "Guarantee" and "Guaranteed" used as a verb shall have a correlative
meaning.

         "Indebtedness" shall mean, for any Person: (a) obligations created,
issued or incurred by such Person for borrowed money (whether by loan, the
issuance and sale of debt securities or the sale of Property to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase
such Property from such Person); (b) obligations of such Person to pay the
deferred purchase or acquisition price of Property or services; (c) Indebtedness
of others secured by a Lien on the Property of such Person, whether or not the
respective Indebtedness so secured has been assumed by such Person; (d)
obligations of such Person in respect of letters of credit or similar
instruments issued or accepted by banks and other financial institutions for
account of such Person; (e) Capital Lease Obligations of such Person; and (f)
Indebtedness of others Guaranteed by such Person.

         "Initial Commitment Termination Date" shall have the meaning assigned
to such term in Section 2.19 hereof.

         "Interest Period" means, with respect to a LIBOR Advance, a period of
three months commencing on a Business Day selected by the Borrower pursuant to
this Agreement. Such Interest Period shall end on the day which corresponds
numerically to such three months thereafter, provided, however, that if there is
no such numerically corresponding day in such third succeeding month, such
Interest Period shall end on the last Business Day of such third succeeding
month. If an Interest Period would otherwise end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding Business
Day, provided, however, that if said next succeeding Business Day falls in a new
calendar month, such Interest Period shall end on the immediately preceding
Business Day.

         "Interest Rate Protection Agreement" shall mean, for any Person, an
interest rate swap, cap or collar agreement or similar arrangement between such
Person and one or more financial institutions providing for the transfer or
mitigation of interest risks either generally or under specific contingencies.
For purposes hereof, the "credit exposure" at any time of any Person under an
Interest Rate Protection Agreement to which such Person is a party shall be
determined at such time in accordance with the standard methods of calculating
credit exposure under similar arrangements as prescribed from time to time by
the Agent, taking into account potential interest rate movements and the
respective termination provisions and notional principal amount and term of such
Interest Rate Protection Agreement.

         "Investment" shall mean, 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 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); (c) the entering into of any Guarantee of,
or other contingent obligation with respect to, Indebtedness or other liability
of any other Person

                                       5
<PAGE>

and (without duplication) any amount committed to be advanced, lent or extended
to such Person; or (d) the entering into of any Interest Rate Protection
Agreement.

         "KeyBank" means KeyBank National Association, a national banking
association having its principal office in Cleveland, Ohio, in its individual
capacity, and its successors.

         "Lenders" means the lending institutions listed on the signature pages
of this Agreement and their respective successors and assigns.

         "Lending Installation" means, with respect to a Lender or the Agent,
the office, branch, subsidiary or affiliate of such Lender or the Agent listed
on the signature pages hereof or on a Schedule or otherwise selected by such
Lender or the Agent pursuant to Section 2.17.

         "LIBOR" shall mean, with respect to any LIBOR Advance for any Interest
Period, the per annum rate of interest, determined by the 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
LIBOR Advance, 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 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 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
LIBOR Advance, 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 LIBOR Advance and for a maturity comparable to the
Interest Period, are offered to KeyBank by prime banks in the London interbank
market.

         "LIBOR Advance" means an Advance which, except as otherwise provided in
Section 2.11, bears interest at the applicable LIBOR-Based Rate.

         "LIBOR-Based Rate" means, with respect to a LIBOR Advance for the
relevant Interest Period, the sum of (a) the quotient of (i) the LIBOR
applicable to such Interest Period, divided by (ii) one minus the Reserve
Requirement (expressed as a decimal) applicable to such Interest Period, plus
(b) the Applicable Margin.

         "Lien" shall mean, with respect to any Property, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
Property. For purposes of this Agreement and the other Loan Documents, a Person
shall be deemed to own subject to a Lien any Property that it has acquired or
holds subject to the interest of a vendor or lessor under any conditional sale
agreement, capital lease or other title retention agreement (other than an
operating lease) relating to such Property.

                                       6
<PAGE>

         "Loan" means, with respect to a Lender, each term loan advanced by such
Lender pursuant to Article II, which Loan, subject to the terms and conditions
of this Agreement, shall consist of ABR Advances and/or LIBOR Advances.

         "Loan Documents" means this Agreement and any Notes issued pursuant to
Section 2.13, the Pledge Agreements and the Put Agreement.

         "Material Adverse Effect" means a material adverse effect on (a) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the Borrower, (b) the ability of the Borrower to perform its
obligations under the Loan Documents to which it is a party, or (c) the validity
or enforceability of any of the Loan Documents or the rights or remedies of the
Agent or the Lenders thereunder.

         "Multiemployer Plan" shall mean a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower and
that is covered by Title IV of ERISA.

         "Non-U.S. Lender" is defined in Section 3.5(d).

         "Note" means any promissory note issued at the request of a Lender
pursuant to Section 2.13 in the form of Exhibit E.

         "Obligations" means all unpaid principal of and accrued and unpaid
interest on Advances, all accrued and unpaid fees and all expenses,
reimbursements, indemnities and other obligations of the Borrower to the Lenders
or to any Lender, the Agent or any indemnified party arising under the Loan
Documents.

         "Other Taxes" is defined in Section 3.5(b).

         "Parent" shall mean Broad Street Contract Services, Inc., a Delaware
corporation.

         "Parent Pledge Agreement" shall mean a Pledge Agreement of even date
herewith between the Parent and the Agent, as the same shall be modified and
supplemented and in effect from time to time.

         "Participants" is defined in Section 12.2.1.

         "Payment Date" means the last Business Day of each March, June,
September and December.

         "Permitted Investments" shall mean: (a) direct obligations of the
United States of America, or of any agency thereof, or obligations guaranteed as
to principal and interest by the United States of America, or of any agency
thereof, in either case maturing not more than 90 days from the date of
acquisition thereof; (b) certificates of deposit issued by any bank or trust
company organized under the laws of the United States of America or any state
thereof and having capital, surplus and undivided profits of at least
$500,000,000, maturing not more than 90 days from the date of acquisition
thereof; and (c) commercial paper rated A-1 or better or P-1 by

                                       7
<PAGE>

Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc., or Moody's Investors Services, Inc., respectively, maturing not more than
90 days from the date of acquisition thereof; in each case so long as the same
(i) provide for the payment of principal and interest (and not principal alone
or interest alone) and (ii) are not subject to any contingency regarding the
payment of principal or interest.

         "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.

         "Plan" shall mean an employee benefit or other plan established or
maintained by the Borrower and that is covered by Title IV of ERISA, other than
a Multiemployer Plan.

         "Pledge Agreements" shall mean the Company Pledge Agreement and the
Parent Pledge Agreement.

         "Preferred Stock" shall mean the Class A Preferred Stock issued from
time to time by State Auto Financial to the Borrower under the Standby Purchase
Agreement.

         "Preferred Stock Certificates" shall mean the certificates evidencing
the Preferred Stock.

         "Prime Rate" means the rate of interest per annum established from time
to time by KeyBank as its so-called "prime" rate (or equivalent rate otherwise
named), whether or not such rate is publicly announced, and changing when and as
said prime rate changes; the Prime Rate may not necessarily be the lowest
interest rate charged by KeyBank for commercial or other extensions of credit.

         "Principal Payment Dates" shall mean, with respect to any Advance, each
of the 2nd, 4th, 6th, 8th, 10th, 12th, 14th, 16th, 18th and 20th Payment Dates
immediately following the making of such Advance.

         "Property" shall mean any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.

         "Purchasers" is defined in Section 12.3.1.

         "Put Agreement" shall mean a Put Agreement of even date herewith
between the State Auto Obligors and the Agent, as the same shall be modified and
supplemented and in effect from time to time.

         "Redemption Value" shall mean, with respect to any Preferred Stock, the
"Redemption Value" for such Preferred Stock set forth in the Preferred Stock
Certificates evidencing such Preferred Stock.

         "Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor thereto
or other regulation or official

                                       8
<PAGE>

interpretation of said Board of Governors relating to reserve requirements
applicable to member banks of the Federal Reserve System.

         "Regulation U" means Regulation U of the Board of Governors of the
Federal Reserve System as from time to time in effect and any successor or other
regulation or official interpretation of said Board of Governors relating to the
extension of credit by banks for the purpose of purchasing or carrying margin
stocks applicable to member banks of the Federal Reserve System.

         "Regulations A, D, U and X" shall mean, respectively, Regulations A, D,
U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified and supplemented and in effect from time
to time.

         "Required Lenders" means Lenders in the aggregate having at least 51%
of the Aggregate Commitment or, if the Aggregate Commitment has been terminated,
Lenders in the aggregate holding at least 51% of the aggregate unpaid principal
amount of the outstanding Advances.

         "Reserve Requirement" means, with respect to an Interest Period, the
maximum aggregate reserve requirement (including all basic, supplemental,
marginal and other reserves) which is imposed under Regulation D on Eurocurrency
liabilities.

         "Schedule" refers to a specific schedule to this Agreement, unless
another document is specifically referenced.

         "Section" means a numbered section of this Agreement, unless another
document is specifically referenced.

         "Standby Purchase Agreement" shall mean the Standby Purchase Agreement
of even date herewith between State Auto Financial and the Borrower, as the same
shall be modified and supplemented and in effect from time to time.

         "State Auto Financial" shall mean State Auto Financial Corporation, an
Ohio corporation.

         "State Auto Mutual" shall mean State Automobile Mutual Insurance
Company, an Ohio mutual insurance company.

         "State Auto Obligors" shall mean State Auto Mutual and State Auto
Financial.

         "State Auto P&C" shall mean State Auto Property and Casualty Insurance
Company, a South Carolina corporation.

         "Subsidiary" of a Person means (i) any corporation more than 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 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.

                                       9
<PAGE>

         "Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings, and any and all liabilities with
respect to the foregoing, but excluding Excluded Taxes and Other Taxes.

         "Transferee" is defined in Section 12.4.

         "Type" means, with respect to any Advance, its nature as an ABR Advance
or a LIBOR Advance.

         "Unmatured Default" means an event which but for the lapse of time or
the giving of notice, or both, would constitute a Default.

         "Wholly-Owned Subsidiary" of a Person means (a) any Subsidiary all of
the outstanding voting securities of which shall at the time be owned or
controlled, directly or indirectly, 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, or (b) any partnership, limited liability company,
association, joint venture or similar business organization 100% of the
ownership interests having ordinary voting power of which shall at the time be
so owned or controlled.

         The foregoing definitions shall be equally applicable to both the
singular and plural forms of the defined terms.

                                   ARTICLE II

                                   THE CREDITS

                  2.1      Commitment. From and including the date of this
Agreement and prior to the Commitment Termination Date, each Lender severally
agrees, on the terms and conditions set forth in this Agreement, to make Loans
to the Borrower (but only for the purpose permitted by Section 6.5 hereof) from
time to time in amounts not to exceed in the aggregate at any one time
outstanding the amount of its Commitment. Loans paid or prepaid may not be
reborrowed. The Commitments to lend hereunder shall expire on the Commitment
Termination Date.

                  2.2      Required Payments; Termination. The Borrower hereby
promises to pay to the Agent for account of each Lender the principal of each
Advance made by such Lender in ten installments payable on the Principal Payment
Dates for such Advance. Each of the first four of such installments shall be
equal to 7.5% of the original principal amount of such Advance, each of the
fifth through the eighth of such installments shall be equal to 10% of the
original principal amount of such Advance, the ninth of such installments shall
be equal to 15% of the original principal amount of such Advance and the tenth
of such installments shall be equal to the entire remaining unpaid principal
balance of such Advance. Any outstanding Advances and all other unpaid
Obligations shall be paid in full by the Borrower on the Facility Termination
Date.

                  2.3      Ratable Loans. Each Advance hereunder shall consist
of Loans made from the several Lenders ratably in proportion to the ratio that
their respective Commitments bear to the Aggregate Commitment.

                                       10
<PAGE>

                  2.4      Types of Advances. The Advances may be ABR Advances
or LIBOR Advances, or a combination thereof, selected by the Borrower in
accordance with Sections 2.8 and 2.9.

                  2.5      Commitment Fee; Reductions in Aggregate Commitment;
Mandatory Reductions in Aggregate Commitment; Mandatory Prepayments. (a) The
Borrower agrees to pay to the Agent for the account of each Lender a commitment
fee of two-tenths of one percent (0.20%) per annum on the daily unused portion
of such Lender's Commitment from the date hereof to and including the Commitment
Termination Date, payable on each Payment Date hereafter and on the Commitment
Termination Date.

                  (b)      The Borrower may permanently reduce the Aggregate
Commitment in whole, or in part ratably among the Lenders in the minimum amount
of $10,000,000 and in multiples of $5,000,000 in excess thereof, upon at least
three Business Days' written notice to the Agent, which notice shall specify the
amount of any such reduction, provided, however, that the amount of the
Aggregate Commitment may not be reduced below the aggregate principal amount of
the outstanding Advances. All accrued commitment fees shall be payable on the
effective date of any termination of the obligations of the Lenders to make
Loans hereunder.

                  (c)      If (i) the Borrower shall sell, assign, transfer or
otherwise dispose of all or any portion of the Preferred Stock, (ii) the Agent
shall sell the Preferred Stock to State Auto Mutual pursuant to the Put
Agreement or (iii) the Preferred Stock shall at any time be repurchased,
redeemed or otherwise retired by State Auto Financial (whether pursuant to the
terms of such Preferred Stock or otherwise), the Borrower shall prepay Loans in
a principal amount equal to the aggregate Redemption Value of the Preferred
Stock so sold, assigned, transferred or otherwise disposed of. In addition, if
the aggregate outstanding principal amount of the Loans shall at any time exceed
either (x) the Aggregate Commitment or (y) the aggregate Redemption Value of the
Preferred Stock issued and outstanding at such time, the Borrower shall prepay
the Loans in an amount equal to such excess. Prepayments of the Loans shall be
applied to the installments of the Loans in the inverse order or the maturities
of the installments thereof.

                  2.6      Minimum Amount of Each Advance. Each LIBOR Advance
shall be in the minimum amount of $10,000,000 (and in multiples of $5,000,000 if
in excess thereof), and each ABR Advance shall be in the minimum amount of
$10,000,000 (and in multiples of $5,000,000 if in excess thereof), provided,
however, that any ABR Advance may be in the amount of the unused Aggregate
Commitment.

                  2.7      Optional Principal Payments. The Borrower may from
time to time pay, without penalty or premium, all outstanding ABR Advances, or,
in a minimum aggregate amount of $10,000,000 or any integral multiple of
$5,000,000 in excess thereof, any portion of the outstanding ABR Advances upon
two Business Days' prior notice to the Agent. The Borrower may from time to time
pay, subject to the payment of any funding indemnification amounts required by
Section 3.4 but without penalty or premium, all outstanding LIBOR Advances, or,
in a minimum aggregate amount of $10,000,000 or any integral multiple of
$5,000,000 in excess thereof, any portion of the outstanding LIBOR Advances upon
three Business Days' prior notice

                                       11
<PAGE>

to the Agent. Principal payments shall be applied to the principal installments
payable under Section 2.2 in the inverse order of maturity.

                  2.8      Method of Selecting Types and Interest Periods for
New Advances. The Borrower shall select the Type of Advance. The Borrower shall
give the Agent irrevocable notice (a "Borrowing Notice") not later than 10:00
a.m. (Cleveland time) at least one Business Day before the Borrowing Date of
each ABR Advance and three Business Days before the Borrowing Date for each
LIBOR Advance, specifying:

                  (a)      the Borrowing Date, which shall be a Business Day, of
such Advance,

                  (b)      the aggregate amount of such Advance, and

                  (c)      the Type of Advance selected.

Not later than noon (Cleveland time) on each Borrowing Date, each Lender shall
make available its Loan or Loans in funds immediately available in Cleveland to
the Agent at its address specified pursuant to Article XIII. The Agent will make
the funds so received from the Lenders available to the Borrower at the Agent's
aforesaid address.

                  2.9      Conversion and Continuation of Outstanding Advances.
ABR Advances shall continue as ABR Advances unless and until such ABR Advances
are converted into LIBOR Advances pursuant to this Section 2.9 or are repaid in
accordance with Section 2.7. Each LIBOR Advance shall continue as a LIBOR
Advance until the end of the then applicable Interest Period therefor, at which
time such LIBOR Advance shall be automatically converted into an ABR Advance
unless (i) such LIBOR Advance is or was repaid in accordance with Section 2.7 or
(ii) the Borrower shall have given the Agent a Conversion/Continuation Notice
(as defined below) requesting that, at the end of such Interest Period, such
LIBOR Advance continue as a LIBOR Advance for another Interest Period. Subject
to the terms of Section 2.6, the Borrower may elect from time to time to convert
all or any part of an ABR Advance into a LIBOR Advance. The Borrower shall give
the Agent irrevocable notice (a "Conversion/Continuation Notice") of each
conversion of an ABR Advance into a LIBOR Advance or continuation of a LIBOR
Advance not later than 10:00 a.m. (Cleveland time) at least three Business Days
prior to the date of the requested conversion or continuation, specifying:

                  (a)      the requested date, which shall be a Business Day, of
such conversion or continuation,

                  (b)      the aggregate amount and Type of the Advance which is
to be converted or continued, and

                  (c)      the amount of such Advance which is to be converted
into or continued as a LIBOR Advance.

                  2.10     Changes in Interest Rate, etc. Each ABR Advance shall
bear interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is automatically converted from a
LIBOR Advance into an ABR Advance pursuant to

                                       12
<PAGE>

Section 2.9, to but excluding the date it is paid or is converted into a LIBOR
Advance pursuant to Section 2.9 hereof, at a rate per annum equal to the
Alternate Base Rate for such day. Changes in the rate of interest on that
portion of any Advance maintained as an ABR Advance will take effect
simultaneously with each change in the Alternate Base Rate. Each LIBOR Advance
shall bear interest on the outstanding principal amount thereof from and
including the first day of the Interest Period applicable thereto to (but not
including) the last day of such Interest Period at the interest rate determined
by the Agent as applicable to such LIBOR Advance based upon the Borrower's
selections under Sections 2.8 and 2.9 and otherwise in accordance with the terms
hereof. No Interest Period may end after the Facility Termination Date. The
Borrower may not request any conversion to or continuation of a LIBOR Advance if
the Interest Period thereof would end after the date of any a mandatory
repayment required pursuant to Section 2.2 unless, after giving effect to such
conversion or continuation, the aggregate unpaid principal amount of any then
outstanding ABR Advances, taken together with the principal amount of any then
outstanding LIBOR Advances having Interest Periods ending on or prior to the
date of such mandatory repayment, shall be at least equal to the amount of such
mandatory repayment.

                  2.11     Rates Applicable After Default. Notwithstanding
anything to the contrary contained in Section 2.8 or 2.9, during the continuance
of a Default or Unmatured Default the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that no
Advance may be made as, converted into or continued as a LIBOR Advance. During
the continuance of a Default the Required Lenders may, at their option, by
notice to the Borrower (which notice may be revoked at the option of the
Required Lenders notwithstanding any provision of Section 8.2 requiring
unanimous consent of the Lenders to changes in interest rates), declare that (a)
each LIBOR Advance shall bear interest for the remainder of the applicable
Interest Period at the rate otherwise applicable to such Interest Period plus 2%
per annum and (b) each ABR Advance shall bear interest at a rate per annum equal
to the Alternate Base Rate in effect from time to time plus 2% per annum,
provided that, during the continuance of a Default under Section 7.4, 7.5 or
7.6, the interest rates set forth in clauses (a) and (b) above shall be
applicable to all Advances without any election or action on the part of the
Agent or any Lender. The exercise and enjoyment by the Lenders of any right
under this Section 2.11 shall not be construed to waive any Default or Unmatured
Default or limit or otherwise affect any right or remedy of the Lenders or the
Agent by reason thereof.

                  2.12     Method of Payment. All payments of the Obligations
hereunder shall be made, without setoff, deduction, or counterclaim, in
immediately available funds to the Agent at the Agent's address specified
pursuant to Article XIII, or at any other Lending Installation of the Agent
specified in writing by the Agent to the Borrower, by noon (Cleveland time) on
the date when due and shall be applied ratably by the Agent among the Lenders.
Each payment delivered to the Agent for the account of any Lender shall be
delivered promptly by the Agent to such Lender in the same type of funds that
the Agent received at its address specified pursuant to Article XIII or at any
Lending Installation specified in a notice received by the Agent from such
Lender. The Agent is hereby authorized to charge the account of the Borrower
maintained with KeyBank for each payment of principal, interest and fees as it
becomes due hereunder.

                                       13
<PAGE>

                  2.13     Noteless Agreement; Evidence of Indebtedness. (a)
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 Advance made by such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.

                  (b)      The Agent shall also maintain accounts in which it
will record (i) the amount of each Advance made hereunder and the Type thereof,
(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 Agent hereunder from the Borrower and each Lender's
share thereof.

                  (c)      The entries maintained in the accounts maintained
pursuant to paragraphs (a) and (b) above shall be prima facie evidence of the
existence and amounts of the Obligations therein recorded; provided, however,
that the failure of the Agent or any Lender to maintain such accounts or any
error therein shall not in any manner affect the obligation of the Borrower to
repay the Obligations in accordance with their terms.

                  (d)      Any Lender may request that its Loans be evidenced by
a promissory note (a "Note"). In such event, the Borrower shall prepare, execute
and deliver to such Lender a Note payable to the order of such Lender in a form
supplied by the Agent. Thereafter, the Loans evidenced by such Note and interest
thereon shall at all times (including after any assignment pursuant to Section
12.3) be represented by one or more Notes payable to the order of the payee
named therein or any assignee pursuant to Section 12.3, except to the extent
that any such Lender or assignee subsequently returns any such Note for
cancellation and requests that such Loans once again be evidenced as described
in paragraphs (a) and (b) above.

                  2.14     Telephonic Notices. The Borrower hereby authorizes
the Lenders and the Agent to extend, convert or continue Advances, effect
selections of Types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Agent or any Lender in good faith
believes to be acting on behalf of the Borrower, it being understood that the
foregoing authorization is specifically intended to allow Borrowing Notices and
Conversion/Continuation Notices to be given telephonically. The Borrower agrees
to deliver promptly to the Agent a written confirmation, if such confirmation is
requested by the Agent or any Lender, of each telephonic notice signed by an
Authorized Officer. If the written confirmation differs in any material respect
from the action taken by the Agent and the Lenders, the records of the Agent and
the Lenders shall govern, absent manifest error.

                  2.15     Interest Payment Dates; Interest and Fee Basis.
Interest accrued on each ABR Advance shall be payable on each Payment Date,
commencing with the first such Payment Date to occur after the date hereof, on
any date on which the ABR Advance is prepaid, whether due to acceleration or
otherwise, and at maturity. Interest accrued on that portion of the outstanding
principal amount of any ABR Advance converted into a LIBOR Advance on a day
other than a Payment Date shall be payable on the date of conversion. Interest
accrued on each LIBOR Advance shall be payable on the last day of its applicable
Interest Period, on any date on which the LIBOR Advance is prepaid, whether by
acceleration or otherwise, and at maturity.

                                       14
<PAGE>

Interest on LIBOR Advances and commitment fees shall be calculated for actual
days elapsed on the basis of a 360-day year. Interest on ABR Advances shall be
calculated for actual days elapsed on the basis of a year of 365 or 366 days, as
the case may be. Interest shall be payable for the day an Advance is made but
not for the day of any payment on the amount paid if payment is received prior
to noon (Cleveland time) at the place of payment. If any payment of principal of
or interest on an Advance shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and, in the case
of a principal payment, such extension of time shall be included in computing
interest in connection with such payment.

                  2.16     Notification of Advances, Interest Rates, Prepayments
and Commitment Reductions. Promptly after receipt thereof, the Agent will notify
each Lender of the contents of each Aggregate Commitment reduction notice,
Borrowing Notice, Conversion/Continuation Notice, and repayment notice received
by it hereunder. The Agent will notify each Lender of the interest rate
applicable to each LIBOR Advance promptly upon determination of such interest
rate and will give each Lender prompt notice of each change in the Alternate
Base Rate.

                  2.17     Lending Installations. Each Lender may book its Loans
at any Lending Installation selected by such Lender and may change its Lending
Installation from time to time. All terms of this Agreement shall apply to any
such Lending Installation and the Advances and any Notes issued hereunder shall
be deemed held by each Lender for the benefit of any such Lending Installation.
Each Lender may, by written notice to the Agent and the Borrower in accordance
with Article XIII, designate replacement or additional Lending Installations
through which Loans will be made by it and for whose account Loan payments are
to be made.

                  2.18     Non-Receipt of Funds by the Agent. Unless the
Borrower or a Lender, as the case may be, notifies the Agent prior to the date
on which it is scheduled to make payment to the Agent of (a) in the case of a
Lender, the proceeds of a Loan or (b) in the case of the Borrower, a payment of
principal, interest or fees to the Agent for the account of the Lenders, that it
does not intend to make such payment, the Agent may assume that such payment has
been made. The Agent may, but shall not be obligated to, make the amount of such
payment available to the intended recipient in reliance upon such assumption. If
such Lender or the Borrower, as the case may be, has not in fact made such
payment to the Agent, the recipient of such payment shall, on demand by the
Agent, repay to the Agent the amount so made available together with interest
thereon in respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent recovers such
amount at a rate per annum equal to (i) in the case of payment by a Lender, the
Federal Funds Effective Rate for such day for the first three days and,
thereafter, the interest rate applicable to the relevant Loan or (ii) in the
case of payment by the Borrower, the interest rate applicable to the relevant
Loan.

                  2.19     Extension of Commitment Termination Date. (a) The
Borrower may, by notice to the Agent (which shall promptly notify the Lenders)
given not less than 60 days and not more than 90 days prior to the initial
Commitment Termination Date (the "Initial Commitment Termination Date"), request
that the Lenders extend the Commitment Termination Date for an additional 364
days from the Initial Commitment Termination Date; provided that in no event may
the Borrower request more than one such extension. Each Lender, acting in its
sole

                                       15
<PAGE>

discretion, shall, by notice (which shall be irrevocable) to the Borrower and
the Agent given no earlier than the date that is 30 days prior to the Initial
Commitment Termination Date (herein, the "Consent Date") and no later than the
date that is three Business Days after the Consent Date, advise the Borrower
whether or not such Lender agrees to such extension; provided that each Lender
that determines not to extend the Commitment Termination Date ("Non-Extending
Lender") shall notify the Agent (which shall notify the Lenders) of such fact
promptly after such determination (but in any event no later than the date that
is three Business Days after the Consent Date) and any Lender that does not
advise the Borrower on or prior to the date that is three Business Days after
the Consent Date that such Lender agrees to such extension shall be deemed to be
a Non-Extending Lender. The election of any Lender to agree to such extension
shall not obligate any other Lender to so agree.

                  (b)      The Borrower may, at any time prior to the Initial
Commitment Termination Date, replace any Non-Extending Lender, by giving not
less than ten Business Days' prior notice to the Agent (which shall promptly
notify such Non-Extending Lender), that it intends to replace such Non-Extending
Lender with respect to its rights and obligations (including, without
limitation, its Commitments) as a "Lender" under this Agreement (collectively,
the "Transferred Interest") with one or more banks or other financial
institutions (including, but not limited to, any other Lender or an affiliate of
any Lender) selected by the Borrower and acceptable to the Agent (each, a
"Replacement Lender"). Upon the Initial Commitment Termination Date (and as a
condition to the extension thereof), (i) the Borrower shall pay or cause to be
paid to such Non-Extending Lender being replaced an amount equal to all fees and
other amounts then owing to such Non-Extending Lender hereunder and under any
other Basic Document in respect of the Transferred Interest (all or a portion of
which amount may constitute consideration for an assignment by such
Non-Extending Lender of all or a portion of the Transferred Interest) and (ii)
such Non-Extending Lender shall assign to each Replacement Lender, pursuant to
an Assignment Agreement substantially in the form of Exhibit C hereto, a portion
of the Transferred Interest specified by the Borrower, whereupon (x) each
Replacement Lender shall become a "Lender" for all purposes of this Agreement
having the Commitments in the amount of such Non-Extending Lender's Commitments
assumed by it and all of the rights and obligations under this Agreement of
"Lender(s)" holding the Transferred Interest and (y) such Non-Extending Lender
shall cease to be responsible or liable for, and shall cease to be entitled to
the rights and benefits of, all or any portion of the Transferred Interest.

                  (c)      If (and only if) the sum of the aggregate amount of
the Commitments of Lenders having agreed so to extend the Initial Commitment
Termination Date on or prior to the Initial Commitment Termination Date plus the
aggregate amount of the Commitments of the Replacement Lenders shall equal or
exceed 50% of the aggregate amount of the Commitments in effect immediately
prior to the Initial Commitment Termination Date, then, effective as of the
Initial Commitment Termination Date, the Initial Commitment Termination Date
shall be extended to the date falling 364 days after the Initial Commitment
Termination Date (except that, if such date is not a Business Day, such
Commitment Termination Date as so extended shall be the next preceding Business
Day); provided that, notwithstanding any such extension pursuant to this Section
2.19, the Commitment of each Non-Extending Lender shall terminate on the Initial
Commitment Termination Date.

                                       16
<PAGE>

                  (d)      Notwithstanding the foregoing clauses (a) through
(c), the extension of the Initial Commitment Termination Date shall not be
effective with respect to any Lender unless:

                           (i)      no Unmatured Default or Default shall have
         occurred and be continuing on each of the date of the notice requesting
         such extension (the "Request Date"), the Consent Date and the Initial
         Commitment Termination Date;

                           (ii)     each of the representations and warranties
         made by the Borrower in Article V hereof shall be true and complete on
         and as of each of the Request Date, the Consent Date and the Initial
         Commitment Termination Date with the same force and effect as if made
         on and as of such date (or, if any such representation or warranty is
         expressly stated to have been made as of a specific date, as of such
         specific date);

                           (iii)    no Loans shall be outstanding on each of the
         Request Date, the Consent Date and the Initial Commitment Termination
         Date; and

                           (iv)     on each of the Request Date and the Initial
         Commitment Termination Date, the Agent shall have received the
         respective certificates required to be delivered by State Auto Mutual
         on such date pursuant to Section 4.20 of the Put Agreement.

                                   ARTICLE III

                             YIELD PROTECTION; TAXES

                  3.1      Yield Protection. If, on or after the date of this
Agreement, the adoption of any law or any governmental or quasi-governmental
rule, regulation, policy, guideline or directive (whether or not having the
force of law), or any change in the interpretation or administration thereof by
any governmental or quasi-governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Lender or applicable Lending Installation with any request or directive
(whether or not having the force of law) of any such authority, central bank or
comparable agency:

                  (a)      subjects any Lender or any applicable Lending
Installation to any Taxes, or changes the basis of taxation of payments (other
than with respect to Excluded Taxes) to any Lender in respect of its LIBOR
Advances, or

                  (b)      imposes or increases or deems applicable any reserve,
assessment, insurance charge, special deposit or similar requirement against
assets of, deposits with or for the account of, or credit extended by, any
Lender or any applicable Lending Installation (other than reserves and
assessments taken into account in determining the interest rate applicable to
LIBOR Advances), or

                  (c)      imposes any other condition the result of which is to
increase the cost to any Lender or any applicable Lending Installation of
making, funding or maintaining its LIBOR

                                       17
<PAGE>

Advances or reduces any amount receivable by any Lender or any applicable
Lending Installation in connection with its LIBOR Advances, or requires any
Lender or any applicable Lending Installation to make any payment calculated by
reference to the amount of LIBOR Advances held or interest received by it, by an
amount deemed material by such Lender,

and the result of any of the foregoing is to increase the cost to such Lender or
applicable Lending Installation of making or maintaining its LIBOR Advances or
Commitment or to reduce the return received by such Lender or applicable Lending
Installation in connection with such LIBOR Advances or Commitment, then, within
15 days of demand by such Lender, the Borrower shall pay such Lender such
additional amount or amounts as will compensate such Lender for such increased
cost or reduction in amount received.

                  3.2      Changes in Capital Adequacy Regulations. If a Lender
determines the amount of capital required or expected to be maintained by such
Lender, any Lending Installation of such Lender or any corporation controlling
such Lender is increased as a result of a Change, then, within 15 days of demand
by such Lender, the Borrower shall pay such Lender the amount necessary to
compensate for any shortfall in the rate of return on the portion of such
increased capital which such Lender determines is attributable to this
Agreement, its Loans or its Commitment to make Loans hereunder (after taking
into account such Lender's policies as to capital adequacy). "Change" means (a)
any change after the date of this Agreement in the Risk-Based Capital Guidelines
or (b) any adoption of or change in any other law, governmental or
quasi-governmental rule, regulation, policy, guideline, interpretation, or
directive (whether or not having the force of law) after the date of this
Agreement which affects the amount of capital required or expected to be
maintained by any Lender or any Lending Installation or any corporation
controlling any Lender. "Risk-Based Capital Guidelines" means (i) the risk-based
capital guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing the
July 1988 report of the Basle Committee on Banking Regulation and Supervisory
Practices Entitled "International Convergence of Capital Measurements and
Capital Standards," including transition rules, and any amendments to such
regulations adopted prior to the date of this Agreement.

                  3.3      Availability of Types of Advances. If any Lender
determines that maintenance of its LIBOR Advances at a suitable Lending
Installation would violate any applicable law, rule, regulation, or directive,
whether or not having the force of law, or if the Required Lenders determine
that (a) deposits of a type and maturity appropriate to match fund LIBOR
Advances are not available or (b) the interest rate applicable to LIBOR Advances
does not accurately reflect the cost of making or maintaining LIBOR Advances,
then the Agent shall suspend the availability of LIBOR Advances and require any
affected LIBOR Advances to be repaid or converted to ABR Advances, subject to
the payment of any funding indemnification amounts required by Section 3.4.

                  3.4      Funding Indemnification. If any payment of a LIBOR
Advance occurs on a date which is not the last day of the applicable Interest
Period, whether because of acceleration, prepayment or otherwise, or a LIBOR
Advance is not made on the date specified by the Borrower for any reason other
than default by the Lenders, the Borrower shall indemnify each Lender for

                                       18
<PAGE>

any loss or cost incurred by it resulting therefrom, including, without
limitation, any loss or cost in liquidating or employing deposits acquired to
fund or maintain such LIBOR Advance.

                  3.5      Taxes. (a) All payments by the Borrower to or for the
account of any Lender or the Agent hereunder or under any Note shall be made
free and clear of and without deduction for any and all Taxes. If the Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to any Lender or the Agent, (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 3.5) such
Lender or the Agent (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower shall
make such deductions, (iii) the Borrower shall pay the full amount deducted to
the relevant authority in accordance with applicable law and (iv) the Borrower
shall furnish to the Agent the original copy of a receipt evidencing payment
thereof within 30 days after such payment is made.

                  (b)      In addition, the Borrower hereby agrees to pay any
present or future stamp or documentary taxes and any other excise or property
taxes, charges or similar levies which arise from any payment made hereunder or
under any Note or from the execution or delivery of, or otherwise with respect
to, this Agreement or any Note ("Other Taxes").

                  (c)      The Borrower hereby agrees to indemnify the Agent and
each Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under this
Section 3.5) paid by the Agent or such Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
Payments due under this indemnification shall be made within 30 days of the date
the Agent or such Lender makes demand therefor pursuant to Section 3.6.

                  (d)      Each Lender that is not incorporated under the laws
of the United States of America or a state thereof (each a "Non-U.S. Lender")
agrees that it will, not less than ten Business Days after the date of this
Agreement (or, in the case of a Lender which becomes a party hereto after the
date hereof, on or prior to the date such Lender becomes a party hereto), (i)
deliver to each of the Borrower and the Agent two duly completed copies of
United States Internal Revenue Service Form 1001 or 4224, certifying in either
case that such Lender is entitled to receive payments under this Agreement
without deduction or withholding of any United States federal income taxes, and
(ii) deliver to each of the Borrower and the Agent a United States Internal
Revenue Form W-8 or W-9, as the case may be, and certify that it is entitled to
an exemption from United States backup withholding tax. Each Non-U.S. Lender
further undertakes to deliver to each of the Borrower and the Agent (x) renewals
or additional copies of such form (or any successor form) on or before the date
that such form expires or becomes obsolete, and (y) after the occurrence of any
event requiring a change in the most recent forms so delivered by it, such
additional forms or amendments thereto as may be reasonably requested by the
Borrower or the Agent. All forms or amendments described in the preceding
sentence shall certify that such Lender is entitled to receive payments under
this Agreement without deduction or withholding of any United States federal
income taxes, unless an event (including without limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which

                                       19
<PAGE>

would prevent such Lender from duly completing and delivering any such form or
amendment with respect to it and such Lender advises the Borrower and the Agent
that it is not capable of receiving payments without any deduction or
withholding of United States federal income tax.

                  (e)      For any period during which a Non-U.S. Lender has
failed to provide the Borrower with an appropriate form pursuant to clause (d)
above (unless such failure is due to a change in treaty, law or regulation, or
any change in the interpretation or administration thereof by any governmental
authority, occurring subsequent to the date on which a form originally was
required to be provided), such Non-U.S. Lender shall not be entitled to
indemnification under this Section 3.5 with respect to Taxes imposed by the
United States; provided that, should a Non-U.S. Lender which is otherwise exempt
from or subject to a reduced rate of withholding tax become subject to Taxes
because of its failure to deliver a form required under clause (d), above, the
Borrower shall take such steps as such Non-U.S. Lender shall reasonably request
to assist such Non-U.S. Lender to recover such Taxes.

                  (f)      Any Lender that is entitled to an exemption from or
reduction of withholding tax with respect to payments under this Agreement or
any Note pursuant to the law of any relevant jurisdiction or any treaty shall
deliver to the Borrower (with a copy to the Agent), at the time or times
prescribed by applicable law, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate.

                  (g)      If the U.S. Internal Revenue Service or any other
governmental authority of the United States or any other country or any
political subdivision thereof asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered or properly completed, because such Lender
failed to notify the Agent of a change in circumstances which rendered its
exemption from withholding ineffective, or for any other reason), such Lender
shall indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax, withholding therefor, or otherwise, including penalties and
interest, and including taxes imposed by any jurisdiction on amounts payable to
the Agent under this subsection, together with all costs and expenses related
thereto (including attorneys fees and time charges of attorneys for the Agent,
which attorneys may be employees of the Agent). The obligations of the Lenders
under this Section 3.5(g) shall survive the payment of the Obligations and
termination of this Agreement.

                  3.6      Lender Statements; Survival of Indemnity. To the
extent reasonably possible, each Lender shall designate an alternate Lending
Installation with respect to its LIBOR Advances to reduce any liability of the
Borrower to such Lender under Sections 3.1, 3.2 and 3.5 or to avoid the
unavailability of LIBOR Advances under Section 3.3, so long as such designation
is not, in the judgment of such Lender, disadvantageous to such Lender. Each
Lender shall deliver a written statement of such Lender to the Borrower (with a
copy to the Agent) as to the amount due, if any, under Section 3.1, 3.2, 3.4 or
3.5. Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.
Determination of amounts payable under such Sections in connection with a LIBOR
Advance shall be calculated as though each Lender funded its LIBOR Advance
through the purchase of a deposit of the type

                                       20
<PAGE>

and maturity corresponding to the deposit used as a reference in determining the
LIBOR-Based Rate applicable to such Advance, whether in fact that is the case or
not. Unless otherwise provided herein, the amount specified in the written
statement of any Lender shall be payable on demand after receipt by the Borrower
of such written statement. The obligations of the Borrower under Sections 3.1,
3.2, 3.4 and 3.5 shall survive payment of the Obligations and termination of
this Agreement.

                                   ARTICLE IV

                              CONDITIONS PRECEDENT

                  4.1      Conditions to Effectiveness. The Commitments and the
other agreements of the Lenders and the Agent hereunder shall not become
effective unless the Borrower has, as the case may be, furnished to the Agent
(with sufficient copies for the Lenders) each of the following documents or
caused the following conditions to be satisfied:

                  (a)      This Agreement. This Agreement, duly executed and
delivered by the Borrower, each Lender and the Agent.

                  (b)      Pledge Agreements. The Company Pledge Agreement, duly
executed and delivered by the Borrower and the Agent, and the Parent Pledge
Agreement, duly executed and delivered by the Parent and the Agent, and the
Borrower and the Parent shall have made such filings and taken such other
actions as the Agent shall request to perfect the security interests granted
therein.

                  (c)      Put Agreement. The Put Agreement, duly executed and
delivered by the State Auto Obligors and the Agent.

                  (d)      Standby Purchase Agreement. The Standby Purchase
Agreement, duly executed and delivered by the State Auto Obligors and the
Borrower, with all conditions to the effectiveness of thereof having been
satisfied.

                  (e)      Articles of Incorporation; Good Standing
Certificates. Copies of the articles or certificate of incorporation of the
Borrower and the Parent (each, an "Obligor"), together with all amendments, and
a certificate of good standing, each certified by the appropriate governmental
officer in its jurisdiction of incorporation.

                  (f)      By-Laws; Resolutions. Copies, certified by the
Secretary or Assistant Secretary of each Obligor, of its by-laws and of its
Board of Directors' resolutions and of resolutions or actions of any other body
authorizing the execution of the Loan Documents to which each such Obligor is a
party.

                  (g)      Incumbency Certificate. An incumbency certificate,
executed by the Secretary or Assistant Secretary of each Obligor which shall
identify by name and title and bear the signatures of the Authorized Officers
and any other officers of such Obligor authorized to

                                       21
<PAGE>

sign the Loan Documents to which such Obligor is a party, upon which
certificate the Agent and the Lenders shall be entitled to rely until informed
of any change in writing by the Borrower.

                  (h)      Officer's Certificate. A certificate, signed by the
chief financial officer of the Borrower, stating that upon the effectiveness of
this Agreement no Default or Unmatured Default exists.

                  (i)      Opinion. A written opinion of the Borrower's counsel,
addressed to the Lenders in substantially the form of Exhibit A.

                  (j)      Notes. Any Notes requested by a Lender pursuant to
Section 2.13 payable to the order of each such requesting Lender.

                  (k)      Documents Required by Put Agreement. Each of the
documents required to be delivered by State Auto Mutual pursuant to Sections
4.18(a) through (e) and (g) of the Put Agreement, and all other conditions, if
any, to the effectiveness of the Put Agreement shall have been satisfied.

                  (l)      Existing Credit Agreement. The Existing Credit
Agreement shall have been terminated, and all indebtedness and other obligations
of the Obligors thereunder and under all other documents executed and delivered
in connection therewith shall have been satisfied in full.

                  (m)      Up Front Fee. The Borrower shall have paid to the
Agent, for the benefit of each Lender, the up front fee to which such Lender is
entitled pursuant to the fee letter agreement with KeyBank dated July 10, 2003.

                  (n)      Other Documents. Such other documents as any Lender
or its counsel may have reasonably requested.

                  4.2      Each Advance. The Lenders shall not be required to
make any Advance unless on the applicable Borrowing Date:

                  (a)      There exists no Default or Unmatured Default;

                  (b)      The representations and warranties contained in
Article V and in Article III of the Put Agreement are true and correct as of
such Borrowing Date except to the extent any such representation or warranty is
stated to relate solely to an earlier date, in which case such representation or
warranty shall have been true and correct on and as of such earlier date and,
with respect to the last sentence of Section 5.2, excluding the effect of the
catastrophic event with respect to which such Advance is being requested;

                  (c)      All legal matters incident to the making of such
Advance shall be satisfactory to the Lenders and their counsel;

                  (d)      Concurrently therewith, (i) the Borrower shall
receive Preferred Stock having an aggregate liquidation preference equal to the
aggregate principal amount of such

                                       22
<PAGE>

Advance and shall deliver the same, together with an undated stock power
executed in blank, to the Agent in pledge subject to the Company Pledge
Agreement and (ii) all of the conditions precedent to the purchase of the
Preferred Stock under the Standby Purchase Agreement shall be satisfied (and the
Agent shall receive evidence satisfactory to it that such conditions precedent
shall be so satisfied) or (with the consent of the Agent and each Lender)
waived;

                  (e)      the Agent shall have received each of the documents
required to be delivered by State Auto Mutual pursuant to Section 4.19 of the
Put Agreement; and

                  (f)      with respect to the initial Advance hereunder, the
Agent shall have received the documents required to be delivered by State Auto
Mutual pursuant to Section 4.18(f) of the Put Agreement.

         Each Borrowing Notice with respect to each such Advance shall
constitute a representation and warranty by the Borrower that the conditions
contained in Sections 4.2(a) and (b) have been satisfied. Any Lender may require
a duly completed compliance certificate in substantially the form of Exhibit B
as a condition to making an Advance.

                                   ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Lenders that:

                  5.1      Corporate Existence. The Borrower: (a) is a
corporation, partnership or other entity duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization; (b) has
all requisite corporate or other power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own its assets and
carry on its business as now being or as proposed to be conducted; (c) is
qualified to do business and is in good standing in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary;
and (d) has no Subsidiaries.

                  5.2      Financial Condition. The Borrower has heretofore
furnished to each of the Lenders the balance sheet of the Borrower as at
December 31, 2002 and the related statements of income, retained earnings and
cash flows for the Borrower for the fiscal year ended on such date, with the
opinion thereon of Ernst & Young LLP, and the unaudited balance sheet of the
Borrower as at June 30, 2003 and the related statements of income, retained
earnings and cash flows of the Borrower for the three-month period ended on such
date. All such financial statements present fairly in all material respects the
financial condition of the Borrower as at said dates and the results of its
operations for the fiscal year and three-month period ended on said dates
(subject, in the case of such financial statements as at June 30, 2003, to
normal year-end audit adjustments), all in accordance with Agreement Accounting
Principles. The Borrower does not have on the date hereof and will not have on
the Effective Date any material contingent liabilities, liabilities for taxes,
unusual forward or long-term commitments or unrealized or anticipated losses
from any unfavorable commitments, except as referred to or reflected or

                                       23
<PAGE>

provided for in said pro forma balance sheet as at said date. Since June 30,
2003, there has been no material adverse change in the condition (financial or
otherwise), operations, business or prospects of the Borrower from that set
forth in said financial statements as at said date.

                  5.3      Litigation. There are no legal or arbitral
proceedings, or any proceedings by or before any governmental or regulatory
authority or agency, now pending or (to the knowledge of the Borrower)
threatened against the Borrower or any of its Property.

                  5.4      No Breach. None of the execution and delivery of this
Agreement and the Notes and the other Loan Documents to which it is a party, the
consummation of the transactions herein and therein contemplated or compliance
with the terms and provisions hereof and thereof will conflict with or result in
a breach of, or require any consent under, the charter or by-laws of the
Borrower, or any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any agreement or
instrument to which the Borrower is a party or by which it or any of its
Property is bound or to which it is subject, or constitute a default under any
such agreement or instrument, or (except for the Liens created pursuant to the
Company Pledge Agreement) result in the creation or imposition of any Lien upon
any Property of the Borrower pursuant to the terms of any such agreement or
instrument.

                  5.5      Action. The Borrower has all necessary corporate
power, authority and legal right to execute, deliver and perform its obligations
under each of the Loan Documents to which it is a party; the execution, delivery
and performance by the Borrower of each of the Loan Documents to which it is a
party have been duly authorized by all necessary corporate action on its part
(including, without limitation, any required shareholder approvals); and this
Agreement has been duly and validly executed and delivered by the Borrower and
constitutes, and each of the Loan Documents to which it is a party when executed
and delivered will constitute, its legal, valid and binding obligation,
enforceable against the Borrower in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

                  5.6      Approvals. No authorizations, approvals or consents
of, and no filings or registrations with, any governmental or regulatory
authority or agency, or any securities exchange, are necessary for the
execution, delivery or performance by the Borrower of this Agreement or any of
the other Loan Documents to which it is a party or for the legality, validity or
enforceability hereof or thereof.

                  5.7      Taxes. As of the date hereof, the Borrower has not
been required to file any Federal or other tax returns. As of the date of each
borrowing, the Borrower shall have filed all Federal income tax returns and all
other material tax returns (if any) that are required to be filed by it and will
have paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Borrower. The charges, accruals and reserves on the books of the
Borrower in respect of taxes and other governmental charges are, in the opinion
of the Borrower, adequate.

                                       24
<PAGE>

                  5.8      Use of Credit. No part of the proceeds of any Advance
will be used to buy or carry Margin Stock (as such term is defined in
Regulations U and X) in violation of Regulation U or X. The Preferred Stock does
not constitute Margin Stock (as so defined).

                  5.9      Special Purpose Company. On the date hereof, the
Borrower is not engaged in any business or transaction other than as permitted
by Section 6.4 hereof.

                  5.10     Capitalization. The authorized capital stock of the
Borrower consists, on the date hereof, of an aggregate of 1000 shares of common
stock, no par value, of which 1000 shares are duly and validly issued and
outstanding, each of which shares is fully paid and nonassessable. As of the
date hereof, there are no outstanding Equity Rights with respect to the Borrower
and there are no outstanding obligations of the Borrower to repurchase, redeem,
or otherwise acquire any shares of capital stock of the Borrower nor are there
any outstanding obligations of the Borrower 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.

                  5.11     ERISA. The Borrower does not have any ERISA
Affiliates. The Borrower does not maintain or contribute to any Plan or
Multiemployer Plan.

                  5.12     Investment Company. The Borrower is not, nor after
giving effect to any Advance will it be, an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.

                  5.13     True and Complete Disclosure. The information,
reports, financial statements, exhibits and schedules furnished in writing by
the Borrower to the Agent or any Lender in connection with the negotiation,
preparation or delivery of this Agreement and the other Loan Documents or
included herein or therein or delivered pursuant hereto or thereto, when taken
as a whole do not contain any untrue statement of material fact or omit to state
any material fact necessary to make the statements herein or therein, in light
of the circumstances under which they were made, not misleading. All written
information furnished after the date hereof by the Borrower to the Agent and the
Lenders in connection with this Agreement and the other Loan Documents and the
transactions contemplated hereby and thereby will be true, complete and accurate
in every material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or certified.
There is no fact known to the Borrower that could have a Material Adverse Effect
that has not been disclosed herein, in the other Loan Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to the Agent for use in connection with the transactions contemplated
hereby or thereby.

                                       25
<PAGE>

                                   ARTICLE VI

                                    COVENANTS

         During the term of this Agreement, unless the Required Lenders shall
otherwise consent in writing:

                  6.1      Financial Statements, Etc. The Borrower shall deliver
to each of the Lenders:

                  (a)      as soon as available and in any event within 45 days
after the end of each quarterly fiscal period of each fiscal year of the
Borrower, statements of income, retained earnings and cash flows of the Borrower
for such period and for the period from the beginning of the respective fiscal
year to the end of such period, and the related balance sheet of the Borrower as
at the end of such period, setting forth in each case in comparative form the
corresponding figures for the corresponding periods in the preceding fiscal
year, accompanied by a certificate of a senior officer of the Borrower, which
certificate shall state that said financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower in accordance with Agreement Accounting Principles, as at the end of,
and for, such period (subject to normal year-end audit adjustments);

                  (b)      promptly after the Borrower knows or has reason to
believe that any Unmatured Default or Default has occurred, a notice of such
Unmatured Default or Default stating that such notice is a "Notice of Default"
and describing the same in reasonable detail and, together with such notice or
as soon thereafter as possible, a description of the action that the Borrower
has taken or proposes to take with respect thereto;

                  (c)      promptly after its receipt thereof, copies of all
written notices, requests, directions, instructions or other communications
received by the Borrower from any State Auto Obligor under the Standby Purchase
Agreement or otherwise; and

                  (d)      from time to time such other information regarding
the financial condition, operations, business or prospects of the Borrower as
any Lender or the Agent may reasonably request.

The Borrower shall furnish to each Lender, at the time it furnishes each set of
financial statements pursuant to paragraph (a) above, a certificate of a senior
officer of the Borrower to the effect that no Unmatured Default or Default has
occurred and is continuing (or, if any Unmatured Default or Default has occurred
and is continuing, describing the same in reasonable detail and describing the
action that the Borrower has taken or proposes to take with respect thereto).

                  6.2      Litigation. The Borrower shall promptly give to each
Lender notice of all legal or arbitral proceedings, and of all proceedings by or
before any governmental or regulatory authority or agency, and any material
development in respect of such legal or other proceedings, affecting the
Borrower.

                                       26
<PAGE>

                  6.3      Existence, Etc. The Borrower shall:

                  (a)      preserve and maintain its legal existence and all of
its material rights, privileges, licenses and franchises;

                  (b)      comply in all material respects with the requirements
of all applicable laws, rules, regulations and orders of governmental or
regulatory authorities;

                  (c)      pay and discharge all taxes, assessments and
governmental charges or levies imposed on it or on its income or profits or on
any of its Property prior to the date on which penalties attach thereto, except
for any such tax, assessment, charge or levy the payment of which is being
contested in good faith and by proper proceedings and against which adequate
reserves are being maintained;

                  (d)      maintain all of its Properties used or useful in its
business in good working order and condition, ordinary wear and tear excepted;

                  (e)      keep adequate records and books of account, in which
complete entries will be made in accordance with Agreement Accounting
Principles; and

                  (f)      permit representatives of any Lender or the Agent,
during normal business hours, to examine, copy and make extracts from its books
and records, to inspect any of its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably requested by such Lender
or the Agent (as the case may be).

                  6.4      Limited Purpose Company. Notwithstanding anything
herein to the contrary, the Borrower shall not:

                  (a)      create, incur, assume or have outstanding any
Indebtedness or other liabilities or obligations except for obligations under or
in respect of the Loan Documents;

                  (b)      own any Property except for the Preferred Stock and
dividends thereon;

                  (c)      enter into any transaction of merger, consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution);

                  (d)      create, incur or permit to exist any Lien (other than
the Lien created by the Company Pledge Agreement) on or in respect of, or
convey, sell, lease, assign, transfer or otherwise dispose of, any of its
Property;

                  (e)      make or hold any Investment, except operating deposit
accounts with banks and Permitted Investments;

                  (f)      declare or make any Dividend Payment at any time;

                  (g)      enter into any transaction (including, without
limitation, the purchase or sale of any Property or service) with, or make any
payment or transfer to, any Affiliate except in

                                       27
<PAGE>

the ordinary course of business and pursuant to the reasonable requirements of
the Borrower's business and upon fair and reasonable terms no less favorable to
the Borrower than the Borrower would obtain in a comparable arms-length
transaction with a Person which is not an Affiliate;

                  (h)      create or acquire any Subsidiaries; or

                  (i)      otherwise engage in any business or transaction other
than the transactions contemplated by (and consistent with) the Basic Documents
and incidental thereto.

                  6.5      Use of Proceeds. The Borrower shall use the proceeds
of the Loans hereunder solely to finance the purchase from State Auto Financial
of the Preferred Stock under the Standby Purchase Agreement (in compliance with
all applicable legal and regulatory requirements) but only in connection with
loss claims and/or adjustment expenses in the aggregate in excess of
$120,000,000 arising from a single catastrophic loss event, as more fully
provided in paragraph (d) of Article III of the Standby Purchase Agreement;
provided, that neither the Agent nor any Lender shall have any responsibility as
to the use of any of such proceeds; and provided, further, that the proceeds of
the Loans hereunder shall not be used to finance the purchase of Preferred
Shares in respect of catastrophic loss claims and/or adjustment expenses under
war-risk, terrorism, hijacking, governmental confiscation or expropriation
insurance coverage.

                  6.6      Modifications of Certain Documents. The Borrower
shall not consent to any modification, supplement or waiver of any of the
provisions of, or assignment of any rights or obligations of any other Person
under, any Basic Document without the prior consent of the Agent (with the
approval of the Required Lenders).

                                  ARTICLE VII

                                    DEFAULTS

         The occurrence of any one or more of the following events shall
constitute a Default:

                  7.1      Payment. The Borrower shall default in the payment
when due (whether at stated maturity or upon mandatory or optional prepayment)
of any principal of or interest on any Advance, any fee or any other amount
payable by it hereunder or under any other Loan Document to which it is a party;
or

                  7.2      Representations and Warranties. Any representation,
warranty or certification made or deemed made herein or in any other Loan
Document to which the Borrower or the Parent is a party (or in any modification
or supplement hereto or thereto) by the Borrower or the Parent, or any
certificate furnished to any Lender or the Agent pursuant to the provisions
hereof or thereof, shall prove to have been false or misleading as of the time
made or furnished in any material respect; or

                                       28
<PAGE>

                  7.3      Other Covenants. The Borrower shall default in the
performance of any of its obligations under any of Sections 6.4, 6.5 or 6.6
hereof; the Borrower or the Parent shall default in the performance of any of
its obligations under the Company Pledge Agreement or the Parent Pledge
Agreement, as the case may be; or the Borrower or the Parent shall default in
the performance of any of its other obligations in this Agreement or any other
Loan Document to which it is a party and such default shall continue unremedied
for a period of 30 or more days after the occurrence of such default; or

                  7.4      Insolvency. The Borrower or the Parent shall admit in
writing its inability to, or be generally unable to, pay its debts as such debts
become due; or

                  7.5      Voluntary Proceedings. The Borrower or the Parent
shall (a) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee, examiner or liquidator of itself
or of all or a substantial part of its Property, (b) make a general assignment
for the benefit of its creditors, (c) commence a voluntary case under the
Bankruptcy Code, (d) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, liquidation, dissolution,
arrangement or winding-up, or composition or readjustment of debts, (e) fail to
controvert in a timely and appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under the Bankruptcy Code or
(f) take any corporate action for the purpose of effecting any of the foregoing;
or

                  7.6      Involuntary Proceedings. A proceeding or case shall
be commenced, without the application or consent of the Borrower or the Parent,
in any court of competent jurisdiction, seeking (a) its reorganization,
liquidation, dissolution, arrangement or winding-up, or the composition or
readjustment of its debts, (b) the appointment of a receiver, custodian,
trustee, examiner, liquidator or the like of the Borrower or the Parent or of
all or any substantial part of its respective Property or (c) similar relief in
respect of the Borrower or the Parent under any law relating to bankruptcy,
insolvency, reorganization, winding-up, or composition or adjustment of debts,
and such proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and continue
unstayed and in effect, for a period of 60 or more days, or an order for relief
against the Borrower shall be entered in an involuntary case under the
Bankruptcy Code; or

                  7.7      Change of Control. The Parent shall fail to own and
control, beneficially (free and clear of all Liens other than Liens created
pursuant to the Basic Documents), 100% of the capital stock issued by the
Borrower (irrespective of whether or not at the time securities or other
ownership interests issued by the Borrower or any other class or classes might
have voting power by reason of the happening of any contingency); or

                  7.8      Failure of Liens. The Liens created by the Pledge
Agreements shall at any time not constitute valid and perfected Liens on the
collateral intended to be covered thereby (to the extent perfection by filing,
registration, recordation or possession is required herein or therein) in favor
of the Agent, free and clear of all other Liens, or, except for expiration in
accordance with its terms, either Pledge Agreement shall for whatever reason be
terminated or cease to be in full force and effect, or the enforceability
thereof shall be contested by the Borrower or the Parent; or

                                       29
<PAGE>

                  7.9      Put Event. A Put Event under, and as defined in, the
Put Agreement.

                                  ARTICLE VIII

                 ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

                  8.1      Acceleration. If any Default described in Section
7.4, 7.5 or 7.6 occurs with respect to the Borrower, the obligations of the
Lenders to make Loans hereunder shall automatically terminate, and the
Obligations shall immediately become due and payable without any election or
action on the part of the Agent or any Lender. If any other Default occurs, the
Required Lenders (or the Agent with the consent of the Required Lenders) may
terminate or suspend the obligations of the Lenders to make Loans hereunder, or
declare the Obligations to be due and payable, or both, whereupon the
Obligations shall become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which the Borrower hereby
expressly waives.

         If, within 30 days after acceleration of the maturity of the
Obligations or termination of the obligations of the Lenders to make Loans
hereunder as a result of any Default (other than any Default as described in
Section 7.4, 7.5 or 7.6 with respect to the Borrower) and before any judgment or
decree for the payment of the Obligations due shall have been obtained or
entered, the Required Lenders (in their sole discretion) shall so direct, the
Agent shall, by notice to the Borrower, rescind and annul such acceleration
and/or termination.

                  8.2      Amendments. Subject to the provisions of this Article
VIII, the Required Lenders (or the Agent with the consent in writing of the
Required Lenders) and the Borrower may enter into agreements supplemental hereto
for the purpose of adding or modifying any provisions to the Loan Documents or
changing in any manner the rights of the Lenders or the Borrower hereunder or
waiving any Default hereunder; provided, however, that no such supplemental
agreement shall, without the consent of all of the Lenders:

                  (a)      Extend the final maturity of any Loan or postpone any
regularly scheduled payment of principal of any Loan or forgive all or any
portion of the principal amount thereof, or reduce the rate or extend the time
of payment of interest or fees thereon.

                  (b)      Reduce the percentage specified in the definition of
Required Lenders.

                  (c)      Amend Section 2.19 or, except as expressly provided
in Section 2.19, extend the Commitment Termination Date.

                  (d)      Extend the Facility Termination Date, or reduce the
amount or extend the payment date for, the mandatory payments required under
Section 2.2, or increase the amount of the Aggregate Commitment or of the
Commitment of any Lender hereunder, or permit the Borrower to assign its rights
under this Agreement.

                  (e)      Amend this Section 8.2.

                                       30
<PAGE>

                  (f)      Release, or agree to subordinate the Lenders' Liens
with respect to, all or substantially all of the Collateral.

No amendment of any provision of this Agreement relating to the Agent shall be
effective without the written consent of the Agent. The Agent may waive payment
of the fee required under Section 12.3.2 without obtaining the consent of any
other party to this Agreement.

                  (g)      Preservation of Rights. No delay or omission of the
Lenders or the Agent to exercise any right under the Loan Documents shall impair
such right or be construed to be a waiver of any Default or an acquiescence
therein, and the making of an Advance notwithstanding the existence of a Default
or the inability of the Borrower to satisfy the conditions precedent to such
Advance shall not constitute any waiver or acquiescence. Any single or partial
exercise of any such right shall not preclude other or further exercise thereof
or the exercise of any other right, and no waiver, amendment or other variation
of the terms, conditions or provisions of the Loan Documents whatsoever shall be
valid unless in writing signed by the Lenders required pursuant to Section 8.2,
and then only to the extent in such writing specifically set forth. All remedies
contained in the Loan Documents or by law afforded shall be cumulative and all
shall be available to the Agent and the Lenders until the Obligations have been
paid in full.

                                   ARTICLE IX

                               GENERAL PROVISIONS

                  9.1      Survival of Representations. All representations and
warranties of the Borrower contained in this Agreement shall survive the making
of the Advances herein contemplated.

                  9.2      Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, no Lender shall be obligated to
extend credit to the Borrower in violation of any limitation or prohibition
provided by any applicable statute or regulation.

                  9.3      Headings. Section headings in the Loan Documents are
for convenience of reference only, and shall not govern the interpretation of
any of the provisions of the Loan Documents.

                  9.4      Entire Agreement. The Loan Documents embody the
entire agreement and understanding among the Borrower, the Agent and the Lenders
and supersede all prior agreements and understandings among the Borrower, the
Agent and the Lenders relating to the subject matter thereof other than the fee
letter described in Section 10.13.

                  9.5      Several Obligations; Benefits of this Agreement. The
respective obligations of the Lenders hereunder are several and not joint and no
Lender shall be the partner or agent of any other (except to the extent to which
the Agent is authorized to act as such). The failure of any Lender to perform
any of its obligations hereunder shall not relieve any other Lender from any of
its obligations hereunder. This Agreement shall not be construed so as to

                                       31
<PAGE>

confer any right or benefit upon any Person other than the parties to this
Agreement and their respective successors and assigns, provided, however, that
the parties hereto expressly agree that the Arranger shall enjoy the benefits of
the provisions of Sections 9.6, 9.10 and 10.11 to the extent specifically set
forth therein and shall have the right to enforce such provisions on its own
behalf and in its own name to the same extent as if it were a party to this
Agreement.

                  9.6      Expenses; Indemnification. (a) The Borrower shall
reimburse the Agent and the Arranger for any costs, internal charges and
out-of-pocket expenses (including reasonable attorneys' fees and time charges of
attorneys for the Agent, which attorneys may be employees of the Agent) paid or
incurred by the Agent or the Arranger in connection with the preparation,
negotiation, execution, delivery, syndication, review, amendment, modification,
and administration of the Loan Documents. The Borrower also agrees to reimburse
the Agent, the Arranger and the Lenders for any costs, internal charges and
out-of-pocket expenses (including attorneys' fees and time charges of attorneys
for the Agent, the Arranger and the Lenders, which attorneys may be employees of
the Agent, the Arranger or the Lenders) paid or incurred by the Agent, the
Arranger or any Lender in connection with the collection and enforcement of the
Loan Documents.

                  (a)      The Borrower hereby further agrees to indemnify the
Agent, the Arranger, each Lender, their respective affiliates, and each of their
directors, officers and employees against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all expenses of litigation or preparation therefor whether or not the Agent, the
Arranger, any Lender or any affiliate is a party thereto) which any of them may
pay or incur arising out of or relating to this Agreement, the other Loan
Documents, the transactions contemplated hereby or the direct or indirect
application or proposed application of the proceeds of any Loan hereunder except
to the extent that they are determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the party seeking indemnification. The obligations of the
Borrower under this Section 9.6 shall survive the termination of this Agreement.

                  9.7      Numbers of Documents. All statements, notices,
closing documents, and requests hereunder shall be furnished to the Agent with
sufficient counterparts so that the Agent may furnish one to each of the
Lenders.

                  9.8      Accounting. Except as provided to the contrary
herein, all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles.

                  9.9      Severability of Provisions. Any provision in any Loan
Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.

                  9.10     Nonliability of Lenders. The relationship between the
Borrower on the one hand and the Lenders and the Agent on the other hand shall
be solely that of borrower and

                                       32
<PAGE>

lender. Neither the Agent, the Arranger nor any Lender shall have any fiduciary
responsibilities to the Borrower. Neither the Agent, the Arranger nor any Lender
undertakes any responsibility to the Borrower to review or inform the Borrower
of any matter in connection with any phase of the Borrower's business or
operations. The Borrower agrees that neither the Agent, the Arranger nor any
Lender shall have liability to the Borrower (whether sounding in tort, contract
or otherwise) for losses suffered by the Borrower in connection with, arising
out of, or in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from which
recovery is sought. Neither the Agent, the Arranger nor any Lender shall have
any liability with respect to, and the Borrower hereby waives, releases and
agrees not to sue for, any special, indirect or consequential damages suffered
by the Borrower in connection with, arising out of, or in any way related to the
Loan Documents or the transactions contemplated thereby.

                  9.11     Confidentiality. The Agent and each Lender agrees to
hold any confidential information which it may receive from the Borrower
pursuant to this Agreement in confidence, except for disclosure (a) to its
Affiliates and to other Lenders and their respective Affiliates, so long as such
Affiliate or other Lender agrees to be bound by the provisions of this Section,
(b) to legal counsel, accountants, and other professional advisors to such
Lender or to a Transferee, (c) to regulatory officials, (d) to any Person as
requested pursuant to or as required by law, regulation, or legal process, (e)
to any Person in connection with any legal proceeding to which such Lender is a
party, (f) to such Lender's direct or indirect contractual counterparties in
swap agreements or to legal counsel, accountants and other professional advisors
to such counterparties, and (g) permitted by Section 12.4.

                  9.12     Nonreliance. Each Lender hereby represents that it is
not relying on or looking to any margin stock (as defined in Regulation U of the
Board of Governors of the Federal Reserve System) for the repayment of the Loans
provided for herein.

                  9.13     Disclosure. The Borrower and each Lender hereby (a)
acknowledge and agree that KeyBank and/or its Affiliates from time to time may
hold investments in, make other loans to or have other relationships with the
Borrower and its Affiliates, and (b) waive any liability of KeyBank or such
Affiliate of KeyBank to the Borrower or any Lender, respectively, arising out of
or resulting from such investments, loans or relationships other than
liabilities arising out of the gross negligence or willful misconduct of KeyBank
or its Affiliates.

                                   ARTICLE X

                                   THE AGENT

                  10.1     Appointment; Nature of Relationship. KeyBank is
hereby appointed by each of the Lenders as its contractual representative
(herein referred to as the "Agent") hereunder and under each other Loan
Document, and each of the Lenders irrevocably authorizes the Agent

                                       33
<PAGE>

to act as the contractual representative of such Lender with the rights and
duties expressly set forth herein and in the other Loan Documents. The Agent
agrees to act as such contractual representative upon the express conditions
contained in this Article X. Notwithstanding the use of the defined term
"Agent," it is expressly understood and agreed that the Agent shall not have any
fiduciary responsibilities to any Lender by reason of this Agreement or any
other Loan Document and that the Agent is merely acting as the contractual
representative of the Lenders with only those duties as are expressly set forth
in this Agreement and the other Loan Documents. In its capacity as the Lenders'
contractual representative, the Agent (a) does not hereby assume any fiduciary
duties to any of the Lenders, (b) is a "representative" of the Lenders within
the meaning of Section 9-105 of the Uniform Commercial Code and (c) is acting as
an independent contractor, the rights and duties of which are limited to those
expressly set forth in this Agreement and the other Loan Documents. Each of the
Lenders hereby agrees to assert no claim against the Agent on any agency theory
or any other theory of liability for breach of fiduciary duty, all of which
claims each Lender hereby waives.

                  10.2     Powers. The Agent shall have and may exercise such
powers under the Loan Documents as are specifically delegated to the Agent by
the terms of each thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the Lenders, or
any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Agent.

                  10.3     General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower, the
Lenders or any Lender for any action taken or omitted to be taken by it or them
hereunder or under any other Loan Document or in connection herewith or
therewith except to the extent such action or inaction is determined in a final
non-appealable judgment by a court of competent jurisdiction to have arisen from
the gross negligence or willful misconduct of such Person.

                  10.4     No Responsibility for Loans, Recitals, etc. Neither
the Agent nor any of its directors, officers, agents or employees shall be
responsible for or have any duty to ascertain, inquire into, or verify (a) any
statement, warranty or representation made in connection with any Loan Document
or any borrowing hereunder; (b) the performance or observance of any of the
covenants or agreements of any obligor under any Loan Document, including,
without limitation, any agreement by an obligor to furnish information directly
to each Lender; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered solely to the Agent; (d) the
existence or possible existence of any Default or Unmatured Default; (e) the
validity, enforceability, effectiveness, sufficiency or genuineness of any Loan
Document or any other instrument or writing furnished in connection therewith;
(f) the value, sufficiency, creation, perfection or priority of any Lien in any
collateral security; or (g) the financial condition of the Borrower or any
guarantor of any of the Obligations or of any of the Borrower's or any such
guarantor's respective Subsidiaries. The Agent shall have no duty to disclose to
the Lenders information that is not required to be furnished by the Borrower to
the Agent at such time, but is voluntarily furnished by the Borrower to the
Agent (either in its capacity as Agent or in its individual capacity).

                                       34
<PAGE>

                  10.5     Action on Instructions of Lenders. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
and under any other Loan Document in accordance with written instructions signed
by the Required Lenders, and such instructions and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders. The Lenders
hereby acknowledge that the Agent shall be under no duty to take any
discretionary action permitted to be taken by it pursuant to the provisions of
this Agreement or any other Loan Document unless it shall be requested in
writing to do so by the Required Lenders. The Agent shall be fully justified in
failing or refusing to take any action hereunder and under any other Loan
Document unless it shall first be indemnified to its satisfaction by the Lenders
pro rata against any and all liability, cost and expense that it may incur by
reason of taking or continuing to take any such action.

                  10.6     Employment of Agents and Counsel. The Agent may
execute any of its duties as Agent hereunder and under any other Loan Document
by or through employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities received by it or
its authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning the contractual arrangement between the
Agent and the Lenders and all matters pertaining to the Agent's duties hereunder
and under any other Loan Document.

                  10.7     Reliance on Documents; Counsel. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.

                  10.8     Agent's Reimbursement and Indemnification. The
Lenders agree to reimburse and indemnify the Agent ratably in proportion to
their respective Commitments (or, if all Commitments have been terminated, in
proportion to their Commitments immediately prior to such termination) (a) for
any amounts not reimbursed by the Borrower for which the Agent is entitled to
reimbursement by the Borrower under the Loan Documents, (b) for any other
expenses incurred by the Agent on behalf of the Lenders, in connection with the
preparation, execution, delivery, administration and enforcement of the Loan
Documents (including, without limitation, for any expenses incurred by the Agent
in connection with any dispute between the Agent and any Lender or between two
or more of the Lenders) and (c) for any liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind and nature whatsoever which may be imposed on, incurred by or
asserted against the Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the
transactions contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Agent in connection with any dispute
between the Agent and any Lender or between two or more of the Lenders), or the
enforcement of any of the terms of the Loan Documents or of any such other
documents, provided that (i) no Lender shall be liable for any of the foregoing
to the extent any of the foregoing is found in a final non-appealable judgment
by a court of competent jurisdiction to have resulted from the gross negligence
or willful misconduct of the Agent and (ii) any indemnification required
pursuant to Section 3.5(g) shall, notwithstanding the provisions of this Section
10.8, be paid by

                                       35
<PAGE>

the relevant Lender in accordance with the provisions thereof. The obligations
of the Lenders under this Section 10.8 shall survive payment of the Obligations
and termination of this Agreement.

                  10.9     Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Unmatured Default
hereunder unless the Agent has received written notice from a Lender or the
Borrower referring to this Agreement describing such Default or Unmatured
Default and stating that such notice is a "notice of default". In the event that
the Agent receives such a notice, the Agent shall give prompt notice thereof to
the Lenders.

                  10.10    Rights as a Lender. In the event the Agent is a
Lender, the Agent shall have the same rights and powers hereunder and under any
other Loan Document with respect to its Commitment and its Loans as any Lender
and may exercise the same as though it were not the Agent, and the term "Lender"
or "Lenders" shall, at any time when the Agent is a Lender, unless the context
otherwise indicates, include the Agent in its individual capacity. The Agent and
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person. The Agent, in its
individual capacity, is not obligated to remain a Lender.

                  10.11    Lender Credit Decision. Each Lender acknowledges that
it has, independently and without reliance upon the Agent, the Arranger or any
other Lender and based on the financial statements prepared by the Borrower and
such other documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement and the other Loan
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent, the Arranger or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement and the other Loan Documents.

                  10.12    Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower, such resignation
to be effective upon the appointment of a successor Agent or, if no successor
Agent has been appointed, forty-five days after the retiring Agent gives notice
of its intention to resign. The Agent may be removed at any time with or without
cause by written notice received by the Agent from the Required Lenders, such
removal to be effective on the date specified by the Required Lenders. Upon any
such resignation or removal, the Required Lenders shall have the right to
appoint, on behalf of the Borrower and the Lenders, a successor Agent. If no
successor Agent shall have been so appointed by the Required Lenders within
thirty days after the resigning Agent's giving notice of its intention to
resign, then the resigning Agent may appoint, on behalf of the Borrower and the
Lenders, a successor Agent. Notwithstanding the previous sentence, the Agent may
at any time without the consent of the Borrower or any Lender, appoint any of
its Affiliates which is a commercial bank as a successor Agent hereunder. If the
Agent has resigned or been removed and no successor Agent has been appointed,
the Lenders may perform all the duties of the Agent

                                       36
<PAGE>

hereunder and the Borrower shall make all payments in respect of the Obligations
to the applicable Lender and for all other purposes shall deal directly with the
Lenders. No successor Agent shall be deemed to be appointed hereunder until such
successor Agent has accepted the appointment. Any such successor Agent shall be
a commercial bank having capital and retained earnings of at least $100,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the resigning or removed Agent. Upon
the effectiveness of the resignation or removal of the Agent, the resigning or
removed Agent shall be discharged from its duties and obligations hereunder and
under the Loan Documents. After the effectiveness of the resignation or removal
of an Agent, the provisions of this Article X shall continue in effect for the
benefit of such Agent in respect of any actions taken or omitted to be taken by
it while it was acting as the Agent hereunder and under the other Loan
Documents. In the event that there is a successor to the Agent by merger, or the
Agent assigns its duties and obligations to an Affiliate pursuant to this
Section 10.12, then the term "Prime Rate" as used in this Agreement shall mean
the prime rate, base rate or other analogous rate of the new Agent.

                  10.13    Agent's Fee. The Borrower agrees to pay to the Agent,
for its own account, the fees agreed to by the Borrower and the Agent pursuant
to that certain letter agreement dated July 10, 2003, or as otherwise agreed
from time to time.

                  10.14    Delegation to Affiliates. The Borrower and the
Lenders agree that the Agent may delegate any of its duties under this Agreement
to any of its Affiliates. Any such Affiliate (and such Affiliate's directors,
officers, agents and employees) which performs duties in connection with this
Agreement shall be entitled to the same benefits of the indemnification, waiver
and other protective provisions to which the Agent is entitled under Articles IX
and X.

                  10.15    Execution of Pledge and Put Agreements. The Lenders
hereby empower and authorize the Agent to execute and deliver to the Borrower on
their behalf the Pledge Agreements and all related financing statements and any
financing statements, agreements, documents or instruments as shall be necessary
or appropriate to effect the purposes of the Pledge Agreements. Each Lender
hereby approves the terms of the Put Agreement and agrees to be bound thereby
including, without limitation, Section 5.11(b) of the Put Agreement and
authorizes and directs the Agent to enter into the Put Agreement on behalf of
such Lender.

                  10.16    Collateral Releases. The Lenders hereby empower and
authorize the Agent to execute and deliver to the Borrower on their behalf any
agreements, documents or instruments as shall be necessary or appropriate to
effect any releases of collateral which shall be permitted by the terms hereof
or of any other Loan Document or which shall otherwise have been approved by the
Required Lenders (or, if required by the terms of Section 8.2, all of the
Lenders) in writing.

                  10.17    Consents Under Other Loan Documents. Except as
otherwise provided in Section 8.2 hereof with respect to this Agreement, the
Agent may, with the prior consent of the Required Lenders (but not otherwise),
consent to any modification, supplement or waiver under any of the other Loan
Documents or the Standby Purchase Agreement, provided that without the prior
written consent of each Lender, the Agent shall not (except as provided herein
or in the

                                       37
<PAGE>

other Loan Documents) terminate any Loan Document, release either State Auto
Obligor from its liability under the Put Agreement, release any collateral or
otherwise terminate any Lien under any Loan Document providing for collateral
security, agree to additional obligations being secured by such collateral
security (unless the Lien for such additional obligation shall be junior to the
Lien in favor of the other obligations secured by such Loan Document) or modify,
supplement or waive any provision in Section 3 of the Standby Purchase
Agreement.

                  10.18    Co-Agents, Documentation Agent, Syndication Agent,
etc. Neither any of the Lenders identified in this Agreement as the
Documentation Agent or the Syndication Agent shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Lenders as such. Without limiting the foregoing, none of
such Lenders shall have or be deemed to have a fiduciary relationship with any
Lender. Each Lender hereby makes the same acknowledgments with respect to such
Lenders as it makes with respect to the Agent in Section 10.11.

                                   ARTICLE XI

                            SETOFF; RATABLE PAYMENTS

                  11.1     Setoff. In addition to, and without limitation of,
any rights of the Lenders under applicable law, if the Borrower becomes
insolvent, however evidenced, or any Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or not
collected or available) and any other Indebtedness at any time held or owing by
any Lender or any Affiliate of any Lender to or for the credit or account of the
Borrower may be offset and applied toward the payment of the Obligations owing
to such Lender, whether or not the Obligations, or any part thereof, shall then
be due.

                  11.2     Ratable Payments. If any Lender, whether by setoff or
otherwise, has payment made to it upon its Loans (other than payments received
pursuant to Section 2.19(b), 3.1, 3.2, 3.4 or 3.5) in a greater proportion than
that received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Loans held by the other Lenders so that after such
purchase each Lender will hold its ratable proportion of Loans. If any Lender,
whether in connection with setoff or amounts which might be subject to setoff or
otherwise, receives collateral or other protection for its Obligations or such
amounts which may be subject to setoff, such Lender agrees, promptly upon
demand, to take such action necessary such that all Lenders share in the
benefits of such collateral ratably in proportion to their Loans. In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.

                                       38
<PAGE>

                                  ARTICLE XII

                BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS

                  12.1     Successors and Assigns. The terms and provisions of
the Loan Documents shall be binding upon and inure to the benefit of the
Borrower and the Lenders and their respective successors and assigns, except
that (a) the Borrower shall not have the right to assign its rights or
obligations under the Loan Documents and (b) any assignment by any Lender must
be made in compliance with Section 12.3. The parties to this Agreement
acknowledge that clause (b) of this Section 12.1 relates only to absolute
assignments and does not prohibit assignments creating security interests,
including, without limitation, any pledge or assignment by any Lender of all or
any portion of its rights under this Agreement and any Note to a Federal Reserve
Bank; provided, however, that no such pledge or assignment creating a security
interest shall release the transferor Lender from its obligations hereunder
unless and until the parties thereto have complied with the provisions of
Section 12.3. The Agent may treat the Person which made any Loan or which holds
any Note as the owner thereof for all purposes hereof unless and until such
Person complies with Section 12.3; provided, however, that the Agent may in its
discretion (but shall not be required to) follow instructions from the Person
which made any Loan or which holds any Note to direct payments relating to such
Loan or Note to another Person. Any assignee of the rights to any Loan or any
Note agrees by acceptance of such assignment to be bound by all the terms and
provisions of the Loan Documents. Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the owner of the rights to any Loan (whether or not a Note has been
issued in evidence thereof), shall be conclusive and binding on any subsequent
holder or assignee of the rights to such Loan.

                  12.2     Participations.

                           12.2.1. Permitted Participants; Effect. Any Lender
         may, in the ordinary course of its business and in accordance with
         applicable law, at any time sell to one or more banks or other entities
         ("Participants") participating interests in any Loan owing to such
         Lender, any Note held by such Lender, any Commitment of such Lender or
         any other interest of such Lender under the Loan Documents. In the
         event of any such sale by a Lender of participating interests to a
         Participant, such Lender's obligations under the Loan Documents shall
         remain unchanged, such Lender shall remain solely responsible to the
         other parties hereto for the performance of such obligations, such
         Lender shall remain the owner of its Loans and the holder of any Note
         issued to it in evidence thereof for all purposes under the Loan
         Documents, all amounts payable by the Borrower under this Agreement
         shall be determined as if such Lender had not sold such participating
         interests, and the Borrower and the Agent shall continue to deal solely
         and directly with such Lender in connection with such Lender's rights
         and obligations under the Loan Documents.

                           12.2.2. Voting Rights. Each Lender shall retain the
         sole right to approve, without the consent of any Participant, any
         amendment, modification or waiver of any

                                       39
<PAGE>

         provision of the Loan Documents other than any amendment, modification
         or waiver with respect to any Loan or Commitment in which such
         Participant has an interest which forgives principal, interest or fees
         or reduces the interest rate or fees payable with respect to any such
         Loan or Commitment, extends the Facility Termination Date, postpones
         any date fixed for any regularly-scheduled payment of principal of, or
         interest or fees on, any such Loan or Commitment, releases any
         guarantor of any such Loan or releases all or substantially all of the
         collateral, if any, securing any such Loan.

                           12.2.3. Benefit of Setoff. The Borrower agrees that
         each Participant shall be deemed to have the right of setoff provided
         in Section 11.1 in respect of its participating interest in amounts
         owing under the Loan Documents to the same extent as if the amount of
         its participating interest were owing directly to it as a Lender under
         the Loan Documents, provided that each Lender shall retain the right of
         setoff provided in Section 11.1 with respect to the amount of
         participating interests sold to each Participant. The Lenders agree to
         share with each Participant, and each Participant, by exercising the
         right of setoff provided in Section 11.1, agrees to share with each
         Lender, any amount received pursuant to the exercise of its right of
         setoff, such amounts to be shared in accordance with Section 11.2 as if
         each Participant were a Lender.

                  12.3     Assignments.

                           12.3.1. Permitted Assignments. Any Lender may, in the
         ordinary course of its business and in accordance with applicable law,
         at any time assign to one or more banks or other entities
         ("Purchasers") all or any part of its rights and obligations under the
         Loan Documents. Such assignment shall be substantially in the form of
         Exhibit C or in such other form as may be agreed to by the parties
         thereto. The consent of the Borrower and the Agent shall be required
         prior to an assignment becoming effective with respect to a Purchaser
         which is not a Lender or an Affiliate thereof; provided, however, that
         if a Default has occurred and is continuing, the consent of the
         Borrower shall not be required. Such consent shall not be unreasonably
         withheld or delayed. Each such assignment with respect to a Purchaser
         which is not a Lender or an Affiliate thereof shall (unless each of the
         Borrower and the Agent otherwise consents) be in an amount not less
         than the lesser of (a) $5,000,000 or (b) the remaining amount of the
         assigning Lender's Commitment (calculated as at the date of such
         assignment) or outstanding Loans (if the applicable Commitment has been
         terminated).

                           12.3.2. Effect; Effective Date. Upon (a) delivery to
         the Agent of an assignment, together with any consents required by
         Section 12.3.1, and (b) payment of a $3,500 fee to the Agent for
         processing such assignment (unless such fee is waived by the Agent),
         such assignment shall become effective on the effective date specified
         in such assignment. The assignment shall contain a representation by
         the Purchaser to the effect that none of the consideration used to make
         the purchase of the Commitment and Loans under the applicable
         assignment agreement constitutes "plan assets" as defined under ERISA
         and that the rights and interests of the Purchaser in and under the
         Loan Documents will not be "plan assets" under ERISA. On and after the
         effective date of

                                       40
<PAGE>

         such assignment, such Purchaser shall for all purposes be a Lender
         party to this Agreement and any other Loan Document executed by or on
         behalf of the Lenders and shall have all the rights and obligations of
         a Lender under the Loan Documents, to the same extent as if it were an
         original party hereto, and no further consent or action by the
         Borrower, the Lenders or the Agent shall be required to release the
         transferor Lender with respect to the percentage of the Aggregate
         Commitment and Loans assigned to such Purchaser. Upon the consummation
         of any assignment to a Purchaser pursuant to this Section 12.3.2, the
         transferor Lender, the Agent and the Borrower shall, if the transferor
         Lender or the Purchaser desires that its Loans be evidenced by Notes,
         make appropriate arrangements so that new Notes or, as appropriate,
         replacement Notes are issued to such transferor Lender and new Notes
         or, as appropriate, replacement Notes, are issued to such Purchaser, in
         each case in principal amounts reflecting their respective Commitments,
         as adjusted pursuant to such assignment.

                  12.4     Dissemination of Information. The Borrower authorizes
each Lender to disclose to any Participant or Purchaser or any other Person
acquiring an interest in the Loan Documents by operation of law (each a
"Transferee") and any prospective Transferee any and all information in such
Lender's possession concerning the creditworthiness of the Borrower and its
Subsidiaries, including without limitation any information contained in any
Reports; provided that each Transferee and prospective Transferee agrees to be
bound by Section 9.11 of this Agreement.

                  12.5     Tax Treatment. If any interest in any Loan Document
is transferred to any Transferee which is organized under the laws of any
jurisdiction other than the United States or any State thereof, the transferor
Lender shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 3.5(d).

                                  ARTICLE XIII

                                     NOTICES

                  13.1     Notices. Except as otherwise permitted by Section
2.14 with respect to borrowing notices, all notices, requests and other
communications to any party hereunder shall be in writing (including electronic
transmission, facsimile transmission or similar writing) and shall be given to
such party: (a) in the case of the Borrower or the Agent, at its address or
facsimile number set forth on the signature pages hereof, (b) in the case of any
Lender, at its address or facsimile number set forth on Schedule 1 hereto or (c)
in the case of any party, at such other address or facsimile number as such
party may hereafter specify for the purpose by notice to the Agent and the
Borrower in accordance with the provisions of this Section 13.1. Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given by mail, 72
hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid, or (iii) if given by any other means,
when

                                       41
<PAGE>

delivered (or, in the case of electronic transmission, received) at the address
specified in this Section; provided that notices to the Agent under Article II
shall not be effective until received.

                  13.2     Change of Address. The Borrower, the Agent and any
Lender may each change the address for service of notice upon it by a notice in
writing to the other parties hereto.

                                   ARTICLE XIV

                                  COUNTERPARTS

         This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one agreement, and any of the parties
hereto may execute this Agreement by signing any such counterpart. This
Agreement shall be effective when it has been executed by the Borrower, the
Agent and the Lenders and each party has notified the Agent by facsimile
transmission or telephone that it has taken such action.

                                   ARTICLE XV

          CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL

                  15.1     CHOICE OF LAW. THE LOAN DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF OHIO, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE
TO NATIONAL BANKS.

                  15.2     CONSENT TO JURISDICTION. THE BORROWER HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES
FEDERAL OR OHIO STATE COURT SITTING IN CLEVELAND, OHIO IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS, AND THE BORROWER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR ANY
LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER
JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER AGAINST THE AGENT OR ANY
LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN CLEVELAND, OHIO.

                                       42
<PAGE>

                  15.3     WAIVER OF JURY TRIAL. THE BORROWER, THE AGENT AND
EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR
OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN
DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

                                   ARTICLE XVI

                                   NO RECOURSE

         The obligations of the Borrower and the Parent under the Loan Documents
shall be satisfied solely from the Preferred Stock and the stock required to be
pledged to the Agent and the Lenders under the Parent Pledge Agreement and the
proceeds thereof. Moreover, no recourse shall be had for any obligation owing to
any Lender or the Administrative Agent under any Loan Document or for the
payment of any fee due to any Lender or the Agent under any Loan Document or any
other obligation or claim arising out of or based upon any Loan Document against
any stockholder, employee, officer, director, affiliate or incorporator of the
Borrower, the Parent or Lord Securities Corporation based on their status as
such or their actions in connection therewith, except to the extent resulting
from the fraud or willful misconduct of such stockholder, employee, officer,
director, affiliate or incorporator, as the case may be. The provisions of this
Article XVI shall survive the termination of any or all Loan Documents and, with
respect to any Lender or the Agent, the resignation or replacement thereof.

                            [signature pages follow]

                                       43
<PAGE>

         IN WITNESS WHEREOF, the Borrower, the Lenders and the Agent have
executed this Agreement as of the date first above written.

                                      BORROWER

                                      SAF FUNDING CORPORATION

                                      By: /s/ Jill A. Gordon
                                          ------------------

                                      Title: Vice President

                                      Address: c/o Lord Securities Corporation
                                      48 Wall Street, 27th Floor
                                      New York, New York 10005
                                      Attention:  Jill A. Gordon,
                                      Vice President

                                      Telephone: (212) 346-9000
                                      Facsimile: (212) 346-9012

                                      AGENT

                                      KEYBANK NATIONAL ASSOCIATION,
                                      as Agent

                                      By: /s/ Mary K. Young
                                          -----------------

                                      Title: Vice President

                                      Address: 127 Public Square
                                       Mail Code: OH-01-27-0606
                                      Cleveland, Ohio  44114
                                      Attention: Mary K. Young,
                                         Vice President

                                      Telephone: (216) 689-4443
                                      Facsimile: (216) 689-4981

<PAGE>

                                      LENDERS

                                      KEYBANK NATIONAL ASSOCIATION,
                                      as Lender

                                      By: /s/ Mary K. Young
                                          -----------------

                                      Title: Vice President

                                      Address: 127 Public Square
                                       Mail Code: OH-01-27-0606
                                      Cleveland, Ohio  44114
                                      Attention:  Mary K. Young,
                                        Vice President

                                      Telephone: (216) 689-4443
                                      Facsimile: (216) 689-4981

<PAGE>

                          [Lender Signatures Continued]

                                    THE HUNTINGTON NATIONAL BANK

                                    By: /s/ Frederick G. Hadley
                                        -----------------------

                                    Title: Senior Vice President

                                    Address: 41 South High Street, HC 0810
                                                 Columbus, Ohio  43215
                                                 Attention: Nancy J. Cracolice,
                                                           Vice President

                                    Telephone: (614) 480-4401
                                    Facsimile: (614) 480-5791

<PAGE>

                          [Lender Signatures Continued]

                                   FIFTH THIRD BANK (CENTRAL OHIO)

                                   By: /s/ Kristie L. Nicolosi
                                       -----------------------

                                   Title: Assistant Vice President

                                   Address: 21 East State Street, 7th Floor
                                             Columbus, Ohio  43215
                                             Attention: Kristie L. Nicolosi,
                                                        Assistant Vice President

                                   Telephone: (614) 744-7588
                                   Facsimile: (614) 744-7606

<PAGE>

                          [Lender Signatures Continued]

                                      NATIONAL CITY BANK

                                      By: /s/ Michael Kelly
                                          -----------------

                                      Title: Vice President
                                             --------------

                                      Address: 155 East Broad Street
                                                       Columbus, Ohio  43251
                                                       Attention: Michael Kelly,
                                                                  Vice President

                                      Telephone: (614) 463-8608
                                      Facsimile: (614) 463-6770

<PAGE>

                          [Lender Signatures Continued]

                                      BANK ONE, NA

                                      By: /s/ Thomas A. Kiepura
                                          ---------------------

                                      Title: Director

                                      Address: 1 Bank One Plaza
                                                   Mail Code IL1-0325
                                                   Chicago, Illinois  60670
                                                   Attention: Thomas A. Kiepura,
                                                              Director

                                      Telephone: (312) 325-3195
                                      Facsimile: (312) 325-3190

<PAGE>

                          [Lender Signatures Continued]

                                      PARK NATIONAL BANK

                                      By: /s/ Thomas J. Button
                                          --------------------

                                      Title: Senior Vice President

                                      Address: 140 East Town Street, Suite 1010
                                                Columbus, Ohio  43215
                                                Attention: Thomas J. Button,
                                                           Senior Vice President

                                      Telephone: (614) 228-0283
                                      Facsimile: (614) 228-0205

<PAGE>

               LIST OF SCHEDULES AND EXHIBITS TO CREDIT AGREEMENT

         The following is a list of the schedules and exhibits to the foregoing
Credit Agreement which have not been filed with this Form 8-K:

SCHEDULES

Schedule 1--Commitments: This schedule sets forth the maximum amount of the
total Loan each Lender is obligated to make to Borrower under the Credit
Agreement.

EXHIBITS

Exhibit A--Form of opinion of the Borrower's counsel.

Exhibit B--Form of compliance certificate to be completed by Borrower as a
condition to making an Advance.

Exhibit C--Form of assignment whereby any Lender may assign to one or more
banks or other entities all or any part of its rights and obligations under the
Loan Documents.

Exhibit D--No Exhibit D was included in the Credit Agreement.

Exhibit E--Form of promissory note from Borrower.<PAGE>

                                  Exhibit 10.02

         Put Agreement among State Automobile Mutual Insurance Company,
       State Auto Financial Corporation, and KeyBank National Association,
                       as Agent, dated November 12, 2003.

<PAGE>

                                  PUT AGREEMENT

                                      among

                   STATE AUTOMOBILE MUTUAL INSURANCE COMPANY,

                        STATE AUTO FINANCIAL CORPORATION,

                                       and

                          KEYBANK NATIONAL ASSOCIATION,
                                    as Agent

                          Dated as of November 12, 2003

<PAGE>

                                  PUT AGREEMENT

         This Put Agreement, dated as of November 12, 2003, is among State
Automobile Mutual Insurance Company, a mutual insurance company duly organized
and validly existing under the laws of the State of Ohio ("State Auto Mutual"),
State Auto Financial Corporation, a corporation duly organized and validly
existing under the laws of the State of Ohio ("State Auto Financial" and,
together with State Auto Mutual, the "State Auto Obligors"), and KeyBank
National Association, as agent (in such capacity, together with its successors
in such capacity, the "Agent") for the Lenders party to the Credit Agreement
referred to below.

                                    RECITALS:

                  A.       SAF Funding Corporation (the "Borrower"), the lenders
party thereto from time to time (the "Lenders") and the Agent have entered into
that certain Credit Agreement, of even date herewith (as hereafter amended, the
"Credit Agreement").

                  B.       To induce the Lenders to enter into the Credit
Agreement, the State Auto Obligors have agreed to enter into this Put Agreement.

                  NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree to amend and restate the Existing Put Agreement as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  1.1      Definitions and Accounting Terms. Capitalized terms
used but not defined herein shall have the respective meanings, assigned to such
terms in the Credit Agreement. In addition, as used herein, the following terms
shall have the following meanings (all terms defined in this Section 1.1 or in
other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa):

                  "Affiliate" shall mean any Person that directly or indirectly
controls, or is under common control with, or is controlled by, State Auto
Mutual. As used in this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall mean
possession, directly or indirectly, of power to direct or cause the direction of
management or policies (whether through ownership of securities or partnership
or other ownership interests, by contract or otherwise), provided that, in any
event, any Person that owns directly or indirectly securities having 5% or more
of the voting power for the election of directors or other governing body of a
corporation or 5% or more of the partnership or other ownership interests of any
other Person (other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person. Notwithstanding the
foregoing, (a) no individual shall be an Affiliate solely by reason of his or
her being a director, officer or employee

                                       44
<PAGE>

of State Auto Mutual or any of its Subsidiaries and (b) State Auto Mutual and
its Subsidiaries shall not be deemed to be Affiliates of one another.

                  "Agreement Accounting Principles" means generally accepted
accounting principles as in effect from time to time, consistently applied.

                  "Applicable Insurance Regulatory Authority" shall mean, when
used with respect to any Insurance Entity, the insurance department or similar
administrative authority or agency located in the State in which such Insurance
Entity is domiciled.

                  "Assumed Reinsurance" shall mean reinsurance assumed by any
Insurance Entity from another Person (other than from another Insurance Entity).

                  "Capital Expenditures" shall mean, for any period,
expenditures (including, without limitation, the aggregate amount of Capital
Lease Obligations incurred during such period) made by State Auto Mutual or any
of its Subsidiaries to acquire or construct fixed assets, plant and equipment
(including renewals, improvements and replacements, but excluding repairs)
during such period computed in accordance with Agreement Accounting Principles.

                  "Ceded Reinsurance" shall mean reinsurance ceded by any
Insurance Entity to any other Person (other than to another Insurance Entity),
other than Surplus Relief Reinsurance.

                  "Default" (without limiting the generality and effect of the
first sentence of this Section 1.1) shall have the meaning assigned to such term
in the Credit Agreement.

                  "Environmental Claim" shall mean, with respect to any Person,
any written or oral notice, claim, demand or other communication (collectively,
a "claim") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (a) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law. The term "Environmental Claim" shall
include, without limitation, any claim by any governmental authority for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and any claim by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence of Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.

                  "Environmental Laws" shall mean any and all present and future
Federal, state, local and foreign laws, rules or regulations, and any orders or
decrees, in each case as now or hereafter in effect, relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or toxic or hazardous substances or wastes into the indoor or outdoor
environment, including, without limitation, ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata, or otherwise relating to the
manufacture, processing,

                                       2
<PAGE>

distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or toxic or hazardous substances or wastes.

                  "Equity Public Offering" shall mean a public issuance or sale
by State Auto Mutual or any of its Material Subsidiaries after the Effective
Date pursuant to a registration statement filed under the Securities Act of
1933, as amended, of any common stock.

                  "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.

                  "ERISA Affiliate" shall mean any corporation or trade or
business that is a member of any group of organizations (a) described in Section
414(b) or (c) of the Code of which State Auto Mutual is a member and (b) solely
for purposes of potential liability under Section 302(c)(11) of ERISA and
Section 412(c)(11) of the Code and the lien created under Section 302(f) of
ERISA and Section 412(n) of the Code, described in Section 414(m) or (o) of the
Code of which State Auto Mutual is a member.

                  "Excluded Taxes" means, in the case of each Lender or
applicable Lending Installation and the Agent, taxes imposed on its overall net
income, and franchise taxes imposed on it, by (a) the jurisdiction under the
laws of which such Lender or the Agent is incorporated or organized or (b) the
jurisdiction in which the Agent's or such Lender's principal executive office or
such Lender's applicable Lending Installation is located.

                  "Farmers Casualty" means Farmers Casualty Insurance Company,
=an Iowa domiciled property and casualty insurance company.

                  "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 State
Auto Financial which 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 State Auto
Financial which 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 State Auto Financial on such
date of determination, plus (iii) the aggregate net income of each Subsidiary of
State Auto Financial which 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 Agreement Accounting Principles) to (b)
the sum (determined without duplication) of (i) interest payments payable on the
Indebtedness of State Auto Financial and its Subsidiaries on a consolidated
basis during the four fiscal quarter period then ending on such date of
determination, plus (ii) scheduled principal amortization payments payable on
the Indebtedness of State Auto Financial 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

                                       3
<PAGE>

price of all Trust Preferred Securities that are subject to mandatory redemption
during the four fiscal quarters immediately following such date of
determination.

                  "Hazardous Material" shall mean, collectively, (a) any
petroleum or petroleum products, flammable materials, explosives, radioactive
materials, asbestos, urea formaldehyde foam insulation, and transformers or
other equipment that contain polychlorinated biphenyls ("PCB's"), (b) any
chemicals or other materials or substances that are now or hereafter become
defined as or included in the definition of "hazardous substances", "hazardous
wastes", "hazardous materials", "extremely hazardous wastes", "restricted
hazardous wastes", "toxic substances", "toxic pollutants", "contaminants",
"pollutants" or words of similar import under any Environmental Law and (c) any
other chemical or other material or substance, exposure to which is now or
hereafter prohibited, limited or regulated under any Environmental Law.

                  "Indebtedness" shall mean, for any Person: (a) obligations
created, issued or incurred by such Person for borrowed money (whether by loan,
the issuance and sale of debt securities or the sale of Property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such Property from such Person); (b) obligations of such Person to
pay the deferred purchase or acquisition price of Property or services, other
than trade accounts payable (other than for borrowed money) arising, and accrued
expenses incurred, in the ordinary course of business so long as such trade
accounts payable are payable within 90 days of the date the respective goods are
delivered or the respective services are rendered; (c) Indebtedness of others
secured by a Lien on the Property of such Person, whether or not the respective
indebtedness so secured has been assumed by such Person; (d) obligations of such
Person in respect of letters of credit or similar instruments issued or accepted
by banks and other financial institutions for account of such Person; (e)
Capital Lease Obligations of such Person; and (f) Indebtedness of others
Guaranteed by such Person; provided that Indebtedness 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 Entity in the ordinary
course of its business, (ii) obligations with respect to Surplus Relief
Reinsurance ceded by an Insurance Entity and (iii) obligations of State Auto
Financial with respect to the Trust Preferred Securities.

                  "Insurance Entity" shall mean, collectively, State Auto Mutual
and the Subsidiaries of State Auto Mutual licensed to underwrite property and
casualty insurance.

                  "Intercompany Pooling Arrangement" shall mean the pooling
arrangement among State Auto Mutual, State Auto P&C, Milbank, State Auto
Insurance of Wisconsin, Farmers Casualty, State Auto Insurance of Ohio and State
Auto Florida 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 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 Insurance of 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 of Wisconsin, Farmers Casualty,
State Auto Insurance of Ohio

                                       4
<PAGE>

and State Auto Florida 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.

                  "Interest Rate Protection Agreement" shall mean, for any
Person, an interest rate swap, cap or collar agreement or similar arrangement
between such Person and one or more financial institutions providing for the
transfer or mitigation of interest risks either generally or under specific
contingencies. For purposes hereof, the "credit exposure" at any time of any
Person under an Interest Rate Protection Agreement to which such Person is a
party shall be determined at such time in accordance with the standard methods
of calculating credit exposure under similar arrangements as prescribed from
time to time by the Agent, taking into account potential interest rate movements
and the respective termination provisions and notional principal amount and term
of such Interest Rate Protection Agreement.

                  "Investment" shall mean, 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, Indebtedness 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 Interest Rate Protection Agreement.

                  "License" shall have the meaning assigned to such term in
Section 3.17 hereof.

                  "Material Adverse Effect" shall mean a material adverse effect
on (a) the Property, business, operations, financial condition, prospects,
liabilities or capitalization of State Auto Mutual and its Subsidiaries taken as
a whole, (b) the ability of State Auto Mutual to perform its obligations under
this Agreement, (c) the validity or enforceability of any of the Basic Documents
or (d) the rights and remedies of the Lenders and the Agent under any of the
Basic Documents.

                  "Material Subsidiary" shall mean, as at any time, any of State
Auto Financial, State Auto P&C, Milbank, State Auto National Insurance Company,
and any other Subsidiary of State Auto Mutual that holds, directly or
indirectly, more than 5% of the consolidated assets of State Auto Mutual and its
Subsidiaries at such time or that accounts for more than 5% of the consolidated
revenues of State Auto Mutual and its Subsidiaries at such time.

                  "Milbank" shall mean Milbank Insurance Company, a South Dakota
domiciled property and casualty insurance company.

                                       5
<PAGE>

                  "Multiemployer Plan" shall mean a multiemployer plan defined
as such in Section 3(37) of ERISA to which contributions have been made by State
Auto Mutual or any ERISA Affiliate and that is covered by Title IV of ERISA.

                  "NAIC" shall mean the National Association of Insurance
Commissioners and any successor thereto.

                  "Net Available Proceeds" shall mean, with respect to any
Equity Public Offering, the aggregate amount of all cash received by State Auto
Mutual and its Material Subsidiaries in respect of such Equity Public Offering
net of reasonable expenses incurred by State Auto Mutual and its Material
Subsidiaries in connection therewith.

                  "Obligations" shall have the meaning assigned to such term in
Section 2.4 hereof.

                  "Other Taxes" is defined in Section 2.7(b).

                  "PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions under ERISA.

                  "Placed Debt" is defined in Section 4.7(d).

                  "Plan" shall mean an employee benefit or other plan
established or maintained by State Auto Mutual or any ERISA Affiliate and that
is covered by Title IV of ERISA, other than a Multiemployer Plan.

                  "Pledged Stock" shall mean the Preferred Stock pledged
pursuant to the Company Pledge Agreement to the Agent for the benefit of the
Lenders and all related rights in connection therewith.

                  "Premium to Surplus Ratio" shall mean, with respect to any
Person as at any date of determination thereof, the ratio (determined with
respect to such Person and its Subsidiaries in accordance with SAP) of (a) net
premiums written during the four consecutive calendar quarters ending on or most
recently ended prior to such date of determination to (b) Statutory Surplus as
at the last day of the calendar quarter ending on or most recently ended prior
to such date of determination.

                  "Put Event" shall mean one or more of the following events
shall have occurred and be continuing:

                  (a)      a Default;

                  (b)      either State Auto Obligor shall default in the
         payment when due of any amount payable by it hereunder;

                  (c)      State Auto Financial shall default in the payment
         when due of any amount payable by it under the Standby Purchase
         Agreement;

                                       6
<PAGE>

                  (d)      State Auto Mutual or any of its Material Subsidiaries
         shall default in the payment when due of any principal of or interest
         on any of its other Indebtedness aggregating $5,000,000 or more; or any
         event specified in any note, agreement, indenture or other document
         evidencing or relating to any such Indebtedness shall occur if the
         effect of such event is to cause, or (with the giving of any notice or
         the lapse of time or both) to permit the holder or holders of such
         Indebtedness (or a trustee or agent on behalf of such holder or
         holders) to cause, such Indebtedness to become due, or to be prepaid in
         full (whether by redemption, purchase, offer to purchase or otherwise),
         prior to its stated maturity or to have the interest rate thereon reset
         to a level so that securities evidencing such Indebtedness trade at a
         level specified in relation to the par value thereof; or State Auto
         Mutual or any of its Material Subsidiaries shall default in the payment
         when due of any amount aggregating $10,000,000 or more under any
         Interest Rate Protection Agreement; or State Auto Mutual or any of its
         Material Subsidiaries shall default under any Interest Rate Protection
         Agreement if the effect of such default is to cause, or (with the
         giving of any notice or the lapse of time or both) to permit,
         termination or liquidation payment or payments by State Auto Mutual or
         any of its Material Subsidiaries aggregating $5,000,000 or more to
         become due;

                  (e)      any representation, warranty or certification made or
         deemed made herein or in any other Basic Document (or in any
         modification or supplement hereto or thereto) by either State Auto
         Obligor party thereto, or any certificate furnished to any Lender or
         the Agent pursuant to the provisions hereof or thereof, shall prove to
         have been false or misleading as of the time made or furnished in any
         material respect;

                  (f)      State Auto Mutual shall default in the performance of
         any of its obligations under any of Sections 4.5 through 4.9 or 4.12
         through 4.17 hereof, or State Auto Financial shall default in the
         performance of any of its obligations under the Standby Purchase
         Agreement;

                  (g)      either State Auto Obligor shall default in the
         performance of any of its other obligations under this Agreement (that
         is, obligations under this Agreement other than those described in any
         of clauses (b), (e) and (f), above) and such default shall continue
         unremedied for a period of 30 or more days after the occurrence of such
         default;

                  (h)      State Auto Mutual or any of its Material Subsidiaries
         shall admit in writing its inability to, or be generally unable to, pay
         its debts as such debts become due;

                  (i)      State Auto Mutual or any of its Material Subsidiaries
         shall (i) apply for or consent to the appointment of, or the taking of
         possession by, a receiver, custodian, trustee, examiner or liquidator
         of itself or of all or a substantial part of its Property, (ii) make a
         general assignment for the benefit of its creditors, (iii) commence a
         voluntary case under the Bankruptcy Code, (iv) file a petition seeking
         to take advantage of any other law relating to bankruptcy, insolvency,
         reorganization, liquidation, dissolution, arrangement or winding-up, or
         composition or readjustment of debts, (v) fail to controvert in a
         timely and appropriate manner, or acquiesce in writing to, any petition
         filed against it

                                       7
<PAGE>

         in an involuntary case under the Bankruptcy Code or (vi) take any
         corporate action for the purpose of effecting any of the foregoing;

                  (j)      a proceeding or case shall be commenced, without the
         application or consent of State Auto Mutual or any of its Material
         Subsidiaries, in any court of competent jurisdiction, seeking (i) its
         reorganization, liquidation, dissolution, arrangement or winding-up, or
         the composition or readjustment of its debts, (ii) the appointment of a
         receiver, custodian, trustee, examiner, liquidator or the like of State
         Auto Mutual or such Material Subsidiary or of all or any substantial
         part of its Property or (iii) similar relief in respect of State Auto
         Mutual or such Material Subsidiary under any law relating to
         bankruptcy, insolvency, reorganization, winding-up, or composition or
         adjustment of debts, and such proceeding or case shall continue
         undismissed, or an order, judgment or decree approving or ordering any
         of the foregoing shall be entered and continue unstayed and in effect,
         for a period of 60 or more days; or an order for relief against State
         Auto Mutual or such Material Subsidiary shall be entered in an
         involuntary case under the Bankruptcy Code;

                  (k)      any Applicable Insurance Regulatory Authority shall
         appoint a rehabilitator, receiver, custodian, trustee, conservator or
         liquidator or the like (collectively, a "conservator") for any
         Insurance Entity, or cause possession of all or any substantial portion
         of the property of any Insurance Entity to be taken by any conservator
         (or any Insurance Regulatory Authority shall commence any action to
         effect any of the foregoing);

                  (l)      a final judgment or judgments for the payment of
         money of $10,000,000 or more in the aggregate (exclusive of judgment
         amounts fully covered by insurance where the insurer has admitted
         liability in respect of such judgment) or of $25,000,000 or more in the
         aggregate (regardless of insurance coverage) shall be rendered by one
         or more courts, administrative tribunals or other bodies having
         jurisdiction against State Auto Mutual or any of its Subsidiaries and
         the same shall not be discharged (or provision shall not be made for
         such discharge), or a stay of execution thereof shall not be procured,
         within 30 days from the date of entry thereof and State Auto Mutual or
         the relevant Material Subsidiary shall not, within said period of 30
         days, or such longer period during which execution of the same shall
         have been stayed, appeal therefrom and cause the execution thereof to
         be stayed during such appeal;

                  (m)      an event or condition specified in Section 4.1(j)
         hereof shall occur or exist with respect to any Plan or Multiemployer
         Plan and, as a result of such event or condition, together with all
         other such events or conditions, State Auto Mutual or any ERISA
         Affiliate shall incur or in the opinion of the Required Lenders shall
         be reasonably likely to incur a liability to a Plan, a Multiemployer
         Plan or the PBGC (or any combination of the foregoing) that, in the
         determination of the Required Lenders, would (either individually or in
         the aggregate) have a Material Adverse Effect;

                  (n)      a reasonable basis shall exist for the assertion
         against State Auto Mutual or any of its Subsidiaries, or any
         predecessor in interest of State Auto Mutual or any of its

                                       8
<PAGE>

         Subsidiaries or Affiliates, of (or there shall have been asserted
         against State Auto Mutual or any of its Subsidiaries) an Environmental
         Claim that, in the judgment of the Required Lenders is reasonably
         likely to be determined adversely to State Auto Mutual or any of its
         Subsidiaries, and the amount thereof (either individually or in the
         aggregate) is reasonably likely to have a Material Adverse Effect
         (insofar as such amount is payable by State Auto Mutual or any of its
         Subsidiaries but after deducting any portion thereof that is reasonably
         expected to be paid by other creditworthy Persons jointly and severally
         liable therefor);

                  (o)      during any period of (i) 12 consecutive months if no
         Loans are outstanding or (ii) 25 consecutive months if any Loans are
         outstanding, a majority of the Board of Directors of State Auto Mutual,
         State Auto Financial or State Auto P&C, as the case may be, shall no
         longer be composed of individuals (x) who were members of said Board on
         the first day of such period, (y) whose election or nomination to said
         Board was approved by individuals referred to in clause (x) above
         constituting at the time of such election or nomination at least a
         majority of said Board or (z) whose election or nomination to said
         Board was approved by individuals referred to in clauses (x) and (y)
         above constituting at the time of such election or nomination at least
         a majority of said Board;

                  (p)      except for expiration in accordance with its terms,
         any material provision of this Agreement or the Standby Purchase
         Agreement shall for whatever reason be terminated or cease to be in
         full force and effect without the consent of the Lenders as specified
         in Section 10.17 of the Credit Agreement, or the validity or
         enforceability thereof shall be contested by either State Auto Obligor;

                  (q)      any "person" or "group" of "persons" (within the
         meaning of Section 13(d) of the Securities and Exchange Act of 1934, as
         amended) shall have the power, directly or indirectly, to vote or
         direct the voting of a greater number of the voting capital stock
         issued by State Auto Financial than State Auto Mutual; or State Auto
         Financial shall fail to own and control, beneficially (free and clear
         of all Liens), all of the capital stock issued by State Auto P&C (in
         each case irrespective of whether or not at the time securities or
         other ownership interests issued by State Auto Financial or State Auto
         P&C, as the case may be, or any other class or classes might have
         voting power by reason of the happening of any contingency); or

                  (r)      the rating published by A.M. Best & Co. for (i) State
         Auto Mutual shall be less than (x) "A", at any time prior to the date
         of the occurrence of the catastrophe relating to the initial Loans
         under the Credit Agreement, (y) "B+", at any time during the period
         commencing on the first anniversary of the date of the occurrence of
         such catastrophe to but excluding the fourth anniversary thereof, and
         (z) "A-", at any time thereafter, or (ii) State Auto P&C shall be less
         than "A" at any time prior to the date of the occurrence of such
         catastrophe.

                  "Put Notice" shall mean an instrument executed by the Agent
substantially in the form of Exhibit A hereto.

                                       9
<PAGE>

                  "Put Purchase Date" shall mean the date specified in a Put
Notice as the date on which State Auto Mutual shall purchase all of the Loans or
the Pledged Stock, as specified therein.

                  "Reinsurance Agreement" shall mean any agreement, contract,
treaty or other arrangement providing for Ceded Reinsurance by any Insurance
Entity or any Subsidiary of such Insurance Entity.

                  "Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, including, without limitation,
the movement of Hazardous Materials through ambient air, soil, surface water,
ground water, wetlands, land or subsurface strata.

                  "Retrocession Agreement" shall mean any agreement, contract,
treaty or other arrangement (other than Surplus Relief Reinsurance) whereby any
Insurance Entity or any Subsidiary of such Insurance Entity cedes reinsurance to
other insurers (other than to another Insurance Entity or any of its
Subsidiaries).

                  "Risk-Based Capital Ratio" shall mean, with respect to any
Person as at any date of determination thereof, the ratio of (a) Total Adjusted
Capital (as defined by the NAIC) for such Person as at such date of
determination to (b) Authorized Control Level Risk-Based Capital (as defined by
the NAIC) for such Person as at such date of determination.

                  "SAP" shall mean, with respect to any Insurance Entity, 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 1.2(a) hereof, are to be used in
making the calculations for purposes of determining compliance with this
Agreement.

                  "State Auto Florida" means State Auto Florida Insurance
Company, a Florida corporation.

                  "State Auto Insurance of Ohio" means State Auto Insurance
Company of Ohio, an Ohio corporation.

                  "State Auto Insurance of Wisconsin" means State Auto Insurance
Company of Wisconsin, a Wisconsin domiciled property and casualty insurance
company.

                  "State Auto P&C" shall mean State Auto Property and Casualty
Insurance Company, a South Carolina corporation.

                  "State Auto Pool" shall mean, collectively, State Auto Mutual,
State Auto P&C, Milbank, State Auto Insurance of Wisconsin, Farmers Casualty,
State Auto Insurance of Ohio and State Auto Florida.

                  "Statutory Statement" shall mean, as to any Insurance Entity,
a statement of the condition and affairs of such Insurance Entity, prepared in
accordance with statutory accounting

                                       10
<PAGE>

practices required or permitted by the Applicable Insurance Regulatory
Authority, and filed with the Applicable Insurance Regulatory Authority.

                  "Statutory Surplus" shall mean, as at any date for any
Insurance Entity, the aggregate amount of surplus as regards policyholders
(determined without duplication in accordance with SAP) of such Insurance
Entity.

                  "Surplus Relief Reinsurance" shall mean any transaction in
which any Insurance Entity or any Subsidiary of such Insurance Entity cedes
business under a reinsurance agreement that would be considered a
"financing-type" reinsurance agreement as determined by the independent
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.

                  "Taxes" means any and all present or future taxes, duties,
levies, imposts, deductions, charges or withholdings, and any and all
liabilities with respect to the foregoing, but excluding Excluded Taxes and
Other Taxes.

                  "Tax Sharing Agreement" shall mean any tax sharing or
allocation agreement to which State Auto Mutual or any of its Subsidiaries is a
party and all tax indemnity agreements as to which State Auto Mutual or any of
its Subsidiaries is the beneficiary or obligor.

                  "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
State Auto Financial, provided that the aggregate face amount of all Trust
Preferred Securities does not exceed $25,000,000 at any time.

                  "Wholly Owned Subsidiary" shall mean, 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
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.

                  1.2      Accounting Terms and Determinations.

                  (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 Agent hereunder shall (unless otherwise disclosed to the Agent in writing at
the time of delivery thereof in the manner described in subsection (b) below) be
prepared, in accordance with Agreement Accounting Principals or with statutory
accounting practices applied on a basis consistent with those used in the
preparation of the latest financial statements furnished to the Agent hereunder
(which, prior to the delivery of the first financial statements under Section
4.1 hereof, shall mean the audited, or annual statutory, financial statements as
at December 31, 2000 referred to in Section 3.2 hereof). All calculations made
for the purposes of determining compliance with this Agreement shall (except as
otherwise expressly

                                       11
<PAGE>

provided herein) be made by application of Agreement Accounting Principles 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 Agent pursuant to Section 4.1 hereof (or, prior to the delivery
of the first financial statements under Section 4.1 hereof, used in the
preparation of the audited, or annual statutory, financial statements as at
December 31, 2000 referred to in Section 3.2 hereof) unless (i) State Auto
Mutual 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 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 objection shall not have been made (which,
if objection is made in respect of the first financial statements delivered
under Section 4.1 hereof, shall mean the audited, or annual statutory, financial
statements referred to in Section 3.2 hereof).

                  (b)      State Auto Mutual shall deliver to the Agent at the
same time as the delivery of any annual or quarterly financial statement under
Section 4.1 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 IV hereof, State Auto Mutual
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 II

                                       PUT

                  2.1      Put. At any time after the occurrence and during the
continuance of a Put Event, the Agent may (with the approval of the Required
Lenders but not otherwise), by delivering to State Auto Mutual a Put Notice,
require State Auto Mutual to purchase (a) from each Lender, all (but not less
than all) of such Lender's Loans, Notes and Commitment or (b) from the Agent,
all (but not less than all) of the Pledged Stock. In the event that a Put Event
has occurred and the Agent (with the consent of the Required Lenders) has
elected to deliver a Put Notice, it shall first attempt to require State Auto
Mutual to purchase the Pledged Stock; provided that if the Agent shall not be
able for any reason whatsoever, within five Business Days following the Agent's
issuance of the Put Notice requiring a purchase of the Pledged Stock, to sell
the Pledged Stock to State Auto Mutual as contemplated hereby, it may deliver a
Put Notice requiring the purchase of each Lender's Loans, Notes and Commitments.

                                       12
<PAGE>

                  2.2      Purchase of Loans.

                  (a)      If such Put Notice requires that State Auto Mutual
purchase each Lender's Loans, Notes and Commitment, then, on the Put Purchase
Date specified in such Put Notice (which Put Purchase Date shall be at least
three Business Days after the date of delivery of such Put Notice), (i) State
Auto Mutual shall purchase from each Lender, and each Lender shall sell, assign
and transfer to State Auto Mutual, all of such Lender's Loans, Notes and
Commitment, as specified in such Put Notice and (ii) State Auto Mutual shall pay
to the Agent for account of each Lender an aggregate amount equal to the sum of
(x) the aggregate outstanding principal amount of Loans of such Lender plus (y)
all accrued and unpaid interest thereon to the Put Purchase Date plus (z) all
other amounts then payable to such Lender under the Basic Documents in respect
thereof (including all amounts that would be payable under Section 3.4 of the
Credit Agreement as if such portion of such Lender's Loans were being prepaid on
the Put Purchase Date) (such amounts to be determined by the Agent and notified
in writing by the Agent to State Auto Mutual prior to such Put Purchase Date).
Upon the occurrence of any Put Event referred to in clause (i), (j) or (k) of
the definition of such term in Section 1.1 hereof, State Auto Mutual shall
automatically and without any action (including, without limitation the giving
of notice) on the part of any other Person be required to purchase the entire
principal amount of the Loans then outstanding.

                  (b)      Such sale, assignment and transfer shall be without
recourse to each Lender and without representation and warranty by such Lender,
except that such Lender will represent and warrant to State Auto Mutual that, on
the Put Purchase Date, such Lender is the legal and beneficial owner of such
portion of such Lender's Loans, Notes and Commitment so sold, assigned and
transferred, free and clear of any adverse claim. Upon such sale, assignment and
transfer and to the extent thereof, State Auto Mutual shall have the
obligations, rights and benefits of a "Lender" under the Credit Agreement
holding the Commitment and Loans so sold, assigned and transferred; and each
Lender shall be released from the Commitment so sold, assigned and transferred.

                  2.3      Purchase of Pledged Stock. If such Put Notice
requires that State Auto Mutual purchase the Pledged Stock, then, on the Put
Purchase Date specified in such Put Notice (which Put Purchase Date shall be at
least three Business Days after the date of delivery of such Put Notice), (a)
State Auto Mutual shall purchase from the Agent, and the Agent shall sell,
assign and transfer to State Auto Mutual, the Pledged Stock, (b) State Auto
Mutual shall pay to the Agent, for account of the Lenders, an amount equal to
the aggregate liquidation preference of such Pledged Stock and all accrued but
unpaid dividends thereon (such amount to be determined by the Agent and notified
in writing by the Agent to State Auto Mutual prior to such Put Purchase Date)
and (c) the Agent shall apply such amount to the payment of the Obligations
owing to the Lenders under the Credit Documents.

                  2.4      Obligations Unconditional. The obligations of State
Auto Mutual under Sections 2.1, 2.2, 2.3, 2.5, 2.7 and 5.3 hereof are absolute,
unconditional and irrevocable, irrespective of the value, genuineness, validity,
regularity or enforceability of the obligations of the Borrower or any other
Person under the Credit Agreement, the Notes, the Pledge Agreements or any other
agreement or instrument referred to therein (collectively, the "Obligations"),
or any

                                       13
<PAGE>

substitution, release or exchange of any other guarantee of or security for any
of the Obligations, and, to the fullest extent permitted by applicable law,
irrespective of any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense available to State Auto
Mutual, it being the intent of this Section 2.4 that the obligations of State
Auto Mutual hereunder shall be absolute, unconditional and irrevocable under any
and all circumstances. Without limiting the generality of the foregoing, it is
agreed that the occurrence of any one or more of the following shall not alter
or impair the liability of State Auto Mutual hereunder which shall remain
absolute, unconditional and irrevocable as described above:

                  (a)      at any time or from time to time, without notice to
         State Auto Mutual, the time for any performance of or compliance with
         any of the Obligations shall be extended, or such performance or
         compliance shall be waived;

                  (b)      any of the acts mentioned in any of the provisions of
         the Credit Agreement, the Notes, the Pledge Agreements or any other
         agreement or instrument referred to therein shall be done or omitted;

                  (c)      the maturity of any of the Obligations shall be
         accelerated, or any of the Obligations shall be modified, supplemented
         or amended in any respect, or any right under this Agreement, the
         Notes, the Pledge Agreements or any other agreement or instrument
         referred to therein shall be waived or any guarantee of any of the
         Obligations or any security therefor shall be released or exchanged in
         whole or in part or otherwise dealt with; or

                  (d)      any change in the financial condition (including,
         without limitation, insolvency or bankruptcy) of the Borrower.

State Auto Mutual hereby expressly waives all of the defenses referred to above
and diligence, presentment, demand of payment, protest and all notices
whatsoever (other than the Put Notice), and any requirement that the Agent or
any Lender exhaust any right, power or remedy or proceed against the Borrower
under the Credit Agreement, the Notes, the Pledge Agreements or any other
agreement or instrument referred therein, or against any other Person under any
other guarantee of, or security for, any of the Obligations.

                  2.5      Reinstatement. If for any reason any payment received
by the Agent in respect of any of the Obligations prior to the consummation by
State Auto Mutual of a purchase contemplated by Section 2.2 or 2.3 hereof is
rescinded or must be otherwise restored by any Lender for any reason, whether as
a result of any proceedings in bankruptcy, insolvency or reorganization or
otherwise, following the consummation of such purchase, State Auto shall
purchase from such Lender, and such Lender shall sell, assign and transfer to
State Auto Mutual, all of the right, title and interest of such Lender in and to
the payment so rescinded or otherwise restored, and upon such sale, assignment
and transfer, State Auto Mutual shall pay to such Lender an amount equal to the
payment so rescinded or otherwise restored. State Auto Mutual hereby agrees that
it shall indemnify the Agent and such Lender on demand for all reasonable costs
and expenses (including, without limitation, fees of counsel) incurred by the
Agent or such Lender in connection with such rescission or restoration.

                                       14
<PAGE>

                  2.6      Payments.

                  (a)      Except to the extent otherwise provided herein, all
payments to be made by State Auto Mutual under this Agreement shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to the Agent at an account designated by the Agent to State Auto
Mutual in writing, not later than 12:00 noon (Cleveland time) time on the date
on which such payment shall become due (each such payment made after such time
on such due date to be deemed to have been made on the next succeeding Business
Day).

                  (b)      The Agent may (but shall not be obligated to) debit
the amount of any such payment that is not made by such time to any ordinary
deposit account of State Auto Mutual with the Agent (with notice to State Auto
Mutual), provided that the Agent's failure to give such notice shall not affect
the validity thereof.

                  2.7      Taxes. (a) All payments by State Auto Mutual to or
for the account of any Lender or the Agent hereunder shall be made free and
clear of and without deduction for any and all Taxes. If State Auto Mutual shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder to any Lender or the Agent, (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.7) such Lender or the
Agent (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (ii) State Auto Mutual shall make
such deductions, (iii) State Auto Mutual shall pay the full amount deducted to
the relevant authority in accordance with applicable law and (iv) State Auto
Mutual shall furnish to the Agent the original copy of a receipt evidencing
payment thereof within 30 days after such payment is made.

                  (b)      In addition, State Auto Mutual hereby agrees to pay
any present or future stamp or documentary taxes and any other excise or
property taxes, charges or similar levies which arise from any payment made
hereunder or from the execution or delivery of, or otherwise with respect to,
this Agreement ("Other Taxes").

                  (c)      State Auto Mutual hereby agrees to indemnify the
Agent and each Lender for the full amount of Taxes or Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed on amounts payable under
this Section 2.7) paid by the Agent or such Lender and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto.
Payments due under this indemnification shall be made within 30 days of the date
the Agent or such Lender makes demand therefor.

                  (d)      For any period during which a Lender that is not
incorporated under the laws of the United States of America or a state thereof
(each a "Non-U.S. Lender") has failed to provide the Borrower with an
appropriate form pursuant to Section 3.5(d) of the Credit Agreement (unless such
failure is due to a change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under
this Section 2.7 with respect to Taxes imposed by the United States; provided
that, should a Non-U.S. Lender which is otherwise exempt from or

                                       15
<PAGE>

subject to a reduced rate of withholding tax become subject to Taxes because of
its failure to deliver a form required under Section 3.5(d) of the Credit
Agreement, State Auto Mutual shall take such steps as such Non-U.S. Lender shall
reasonably request to assist such Non-U.S. Lender to recover such Taxes.

                                  ARTICLE III

                         REPRESENTATIONS AND WARRANTIES

                  Each State Auto Obligor represents and warrants (with respect
to itself and its Subsidiaries only) to the Agent and the Lenders that:

                  3.1      Corporate Existence. Each of such State Auto Obligor
and its Material Subsidiaries: (a) is a corporation, partnership or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate or other
power, and has all material governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as now being or
as proposed to be conducted; and (c) is qualified to do business and is in good
standing in all jurisdictions in which the nature of the business conducted by
it makes such qualification necessary and where failure so to qualify could
(either individually or in the aggregate) have a Material Adverse Effect.

                  3.2      Financial Condition.

                  (a)      State Auto Mutual has heretofore furnished to each of
the Lenders consolidated balance sheets of State Auto Financial and its
Subsidiaries as at December 31, 2002 and the related consolidated statements of
income, retained earnings and cash flows of State Auto Financial and its
Subsidiaries for the fiscal year ended on said date, with the opinion thereon of
Ernst & Young LLP, and the unaudited consolidated balance sheets of State Auto
Financial and its Subsidiaries as at June 30, 2003 and the related consolidated
statements of income, retained earnings and cash flows of State Auto Financial
and its Subsidiaries for the three-month period ended on such date. All such
financial statements present fairly in all material respects the consolidated
financial condition of State Auto Financial and its Subsidiaries as at said
dates and the consolidated results of their operations for the fiscal year and
three-month period ended on said dates (subject, in the case of such financial
statements as at June 30, 2003, to normal year-end audit adjustments), all in
accordance with generally accepted accounting principles and practices applied
on a consistent basis. None of State Auto Financial nor any of its Material
Subsidiaries has on the date hereof any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments or 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. Since June
30, 2003, there has been no material adverse change in the consolidated
financial condition, operations, business or prospects taken as a whole of State
Auto Financial and its Subsidiaries from that set forth in said financial
statements as at June 30, 2003.

                                       16
<PAGE>

                  (b)      State Auto Mutual has heretofore furnished to each of
the Lenders the annual Statutory Statement of each Insurance Entity for the
fiscal year ended December 31, 2002, and the quarterly Statutory Statement of
each Insurance Entity for the fiscal quarter ended June 30, 2003, 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 Entity as at, and the results of operations for, the fiscal year
ended December 31, 2002, and fiscal quarter ended June 30, 2003, in accordance
with statutory accounting practices prescribed or permitted by the Applicable
Insurance Regulatory Authority. Since June 30, 2003, there has been no material
adverse change in the consolidated financial condition, operations, business or
prospects taken as a whole of State Auto Mutual from that set forth in said
Statutory Statement as at June 30, 2003.

                  3.3      Litigation. Except as described on Schedule IV
hereto, there are no legal or arbitral proceedings, or any proceedings by or
before any governmental or regulatory authority or agency, now pending or (to
the knowledge such State Auto Obligor) threatened against State Auto Mutual or
any of its Subsidiaries that, if adversely determined could (either individually
or in the aggregate) have a Material Adverse Effect.

                  3.4      No Breach. None of the execution and delivery of this
Agreement and the other Basic Documents to which such State Auto Obligor is a
party, the consummation of the transactions herein and therein contemplated or
compliance with the terms and provisions hereof and thereof (including, without
limitation, issuance of the Preferred Stock) will conflict with or result in a
breach of, or require any consent under, the charter or by-laws (or equivalent
documents) of such State Auto Obligor, or any applicable law or regulation, or
any order, writ, injunction or decree of any court or governmental authority or
agency, or any agreement or instrument to which State Auto Mutual or any of its
Subsidiaries is a party or by which any of them or any of their Property is
bound or to which any of them is subject, or constitute a default under any such
agreement or instrument, or result in the creation or imposition of any Lien
upon any Property of State Auto Mutual or any of its Subsidiaries pursuant to
the terms of any such agreement or instrument.

                  3.5      Action. Such State Auto Obligor has all necessary
corporate power, authority and legal right to execute, deliver and perform its
obligations under each of the Basic Documents to which it is a party and, in the
case of State Auto Financial, to issue the Preferred Stock; the execution,
delivery and performance by such State Auto Obligor of each of the Basic
Documents to which it is a party (and, in the case of State Auto Financial, the
issuance of the Preferred Stock) have been duly authorized by all necessary
corporate action on its part (including, without limitation, any required
shareholder approvals); and this Agreement has been duly and validly executed
and delivered by such State Auto Obligor and constitutes, and each of the other
Basic Documents to which such State Auto Obligor is a party when executed and
delivered will constitute, its legal, valid and binding obligation, enforceable
against such State Auto Obligor in accordance with its terms, except as such
enforceability may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium or similar laws of general applicability affecting the enforcement of
creditors' rights and (b) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).

                                       17
<PAGE>

                  3.6      Approvals. No authorizations, approvals or consents
of, and no filings or registrations with, any governmental or regulatory
authority or agency, or any securities exchange (other than any authorizations,
approvals, consents, filings and registrations heretofore duly made or obtained
and in full force and effect), are necessary for the execution, delivery or
performance by either State Auto Obligor of this Agreement or any of the other
Basic Documents to which it is a party (or, in the case of State Auto Financial,
for the issuance of the Preferred Stock) or for the legality, validity or
enforceability hereof or thereof.

                  3.7      ERISA. Each Plan, and, to the knowledge of the such
State Auto Obligor, each Multiemployer Plan, is in compliance in all material
respects with, and has been administered in all material respects in compliance
with, the applicable provisions of ERISA, the Code and any other Federal or
state law, and no event or condition has occurred and is continuing as to which
State Auto Mutual would be under an obligation to furnish a report to the Agent
under Section 4.1(j) hereof.

                  3.8      Taxes. State Auto Mutual and its Subsidiaries are
members of an affiliated group of corporations filing consolidated returns for
Federal income tax purposes, of which State Auto Mutual is the "common parent"
(within the meaning of Section 1504 of the Code) of such group. State Auto
Mutual 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 State Auto Mutual or any of its Material Subsidiaries. The charges,
accruals and reserves on the books of State Auto Mutual and its Material
Subsidiaries in respect of taxes and other governmental charges are, in the
opinion of State Auto Mutual, adequate. State Auto Mutual 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, other than
(i) a waiver by State Auto Mutual in the ordinary course of its business of the
statute of limitations relating to the payment of Federal income taxes for the
year 1999 until September 17, 2004, and (ii) a waiver by State Auto Financial in
the ordinary course of its business of the statute of limitations relating to
the payment of Federal income taxes for the year 1999 until July 6, 2004.

                  3.9      Investment Company Act. Neither State Auto Mutual nor
any of its Subsidiaries is an "investment company", or a company "controlled" by
an "investment company", within the meaning of the Investment Company Act of
1940, as amended.

                  3.10     Public Utility Holding Company Act. Neither State
Auto Mutual nor any of its Subsidiaries is a "holding company" or an "affiliate"
of a "holding company" or a "subsidiary company" of a "holding company", within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

                  3.11     Material Agreements and Liens.

                  (a)      Part A of Schedule I hereto 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 Indebtedness or any extension of credit (or commitment for any
extension of credit) to, or guarantee by, State Auto Mutual or any of its

                                       18
<PAGE>

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 I.

                  (b)      Part B of Schedule I hereto is a complete and correct
list of each Lien securing Indebtedness 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 State Auto Mutual or
any of its Subsidiaries, and the aggregate Indebtedness 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 I.

                  3.12     Environmental Matters. Each of State Auto Mutual 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 State Auto Mutual 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 approved thereunder, except to the extent
failure to comply therewith would not (either individually or in the aggregate)
have a Material Adverse Effect.

                  3.13     Capitalization. The authorized capital stock of State
Auto Financial 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 October 20, 2003) 39,344,009 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. Upon issuance,
each share of Class A Preferred Stock will benefit from the Terms and Conditions
of Class A Preferred Stock attached to form of Class A Preferred Stock
Certificate attached to the Standby Purchase Agreement as Exhibit A. As of the
date hereof, 67% 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 for this Agreement and the Standby Purchase Agreement and as set forth in
Part A of Schedule III hereto, there are no outstanding Equity Rights with
respect to State Auto Financial and (ii) except as set forth in Part B of
Schedule III hereto, there are no outstanding obligations of State Auto
Financial or any of its Subsidiaries to repurchase, redeem, or otherwise acquire
any shares of capital stock of State Auto Financial nor are there any
outstanding obligations of State Auto Financial 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
State Auto Financial or any of its Subsidiaries.

                                       19
<PAGE>

                  3.14     Subsidiaries, Etc.

                  (a)      Set forth in Part A of Schedule II hereto is a
complete and correct list of all Subsidiaries of State Auto Mutual on the date
hereof and a specification of which of such Subsidiaries are Insurance Entities
and which are Material Subsidiaries.

                  (b)      Set forth in Part B of Schedule II hereto is a
complete and correct list of all Investments (other than (x) Investments
disclosed in Part A of said Schedule II hereto and any other Investments
existing as of the date hereof permitted under Section 4.9 hereof and (y)
Guarantees of Indebtedness the aggregate principal or face amount of which
Indebtedness is less than $5,000,000) held by State Auto Mutual or any of its
Subsidiaries in any Person on the date hereof and, for each such Investment, (i)
the identity of the Person or Persons holding such Investment and (ii) the
nature of such Investment. Except as disclosed in Part B of Schedule II hereto,
each of State Auto Mutual and its Subsidiaries owns, free and clear of all
Liens, all such Investments.

                  3.15     True and Complete Disclosure. The information,
reports, financial statements, exhibits and schedules furnished in writing by or
on behalf of the State Auto Obligors to the Agent or any Lender in connection
with the negotiation, preparation or delivery of this Agreement and the other
Basic Documents or included herein or therein or delivered pursuant hereto or
thereto, when taken as a whole do not contain any untrue statement of material
fact or omit to state any material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading. All written information furnished after the date hereof by State
Auto Mutual and its Subsidiaries to the Agent and the Lenders in connection with
this Agreement and the other Basic Documents and the transactions contemplated
hereby and thereby will be true, complete and accurate in every material
respect, or (in the case of projections) based on reasonable estimates, on the
date as of which such information is stated or certified. There is no fact known
to either State Auto Obligor that could have a Material Adverse Effect that has
not been disclosed herein, in the other Basic Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to the Agent for use in connection with the transactions contemplated
hereby or thereby.

                  3.16     No Reliance. State Auto Mutual has made,
independently and without reliance upon the 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 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.

                  3.17     Insurance Licenses. Schedule T to the most recent
Statutory Statement of each Insurance Entity described in Section 3.2(b) hereof
lists, as of the date hereof, all of the jurisdictions in which each of the
Insurance Entities 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 Entity is in compliance in all material respects
with each license held by it. No License (to the extent

                                       20
<PAGE>

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 each State Auto Obligor no such suspension
or revocation has been threatened by any licensing authority except in any such
case where such proceedings would not have a Material Adverse Effect.

                                   ARTICLE IV

                         COVENANTS OF STATE AUTO MUTUAL

                  State Auto Mutual covenants and agrees with the Agent that, so
long as any Obligations are outstanding or any Commitments are in effect:

                  4.1      Financial Statements Etc. State Auto Mutual shall
deliver to the Agent (with sufficient copies for each of the Lenders):

                  (a)      as soon as available and in any event within 45 days
         after the end of each quarterly fiscal period of each fiscal year of
         State Auto Financial, consolidated statements of income, retained
         earnings and cash flows of State Auto Financial and its Subsidiaries
         for such period and for the period from the beginning of the respective
         fiscal year to the end of such period, and the related consolidated
         balance sheets of State Auto Financial and its Subsidiaries as at the
         end of such period, setting forth in each case in comparative form the
         corresponding consolidated figures for the corresponding periods in the
         preceding fiscal year (except that, in the case of balance sheets, such
         comparison shall be to the last day of the prior fiscal year),
         accompanied by a certificate of a senior financial officer of State
         Auto Financial, which certificate shall state that said consolidated
         financial statements present fairly in all material respects the
         consolidated financial condition and results of operations of State
         Auto Financial and its Subsidiaries in accordance with generally
         accepted accounting principles, consistently applied, as at the end of,
         and for, such period (subject to normal year-end audit adjustments);

                  (b)      as soon as available and in any event within 90 days
         after the end of each fiscal year of State Auto Financial, consolidated
         statements of income, retained earnings and cash flows of State Auto
         Financial and its Subsidiaries for such fiscal year and the related
         consolidated balance sheets of State Auto Financial and its
         Subsidiaries as at the end of such fiscal year, setting forth in each
         case in comparative form the corresponding consolidated figures for the
         preceding fiscal year, and accompanied by an opinion thereon of
         independent certified public accountants of recognized national
         standing, which opinion shall state that said consolidated financial
         statements present fairly in all material respects the consolidated
         financial condition and results of operations of State Auto Financial
         and its Subsidiaries as at the end of, and for, such fiscal year in
         accordance with generally accepted accounting principles;

                  (c)      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 Insurance Entity, its quarterly Statutory Statement for

                                       21
<PAGE>

         such quarterly fiscal period, together with the opinion thereon of a
         senior financial officer of such Insurance Entity stating that such
         Statutory Statement presents the financial condition of such Insurance
         Entity for such quarterly fiscal period in accordance with statutory
         accounting practices required or permitted by the Applicable Insurance
         Regulatory Authority;

                  (d)      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 Insurance Entity, the annual Statutory
         Statement of such Insurance Entity for such year, together with (i) the
         opinion thereon of a senior financial officer of such Insurance Entity
         stating that said annual Statutory Statement presents the financial
         condition of such Insurance Entity 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
         Insurance Entity in respect of future policyholder benefits as at the
         end of such fiscal year (as shown on such Statutory Statement);

                  (e)      within 180 days after the end of each fiscal year of
         each Insurance Entity, the report of Ernst & Young LLP (or other
         independent certified public accountants of recognized national
         standing) on the annual Statutory Statements delivered pursuant to
         Section 4.1(d) hereof;

                  (f)      promptly upon their becoming available, copies of all
         registration statements and regular periodic reports, if any, that
         State Auto Mutual or any of its Material Subsidiaries shall have filed
         with the Securities and Exchange Commission (or any governmental agency
         substituted therefor) or any national securities exchange;

                  (g)      promptly upon the mailing thereof to the
         policyholders of State Auto Mutual generally and to the shareholders of
         State Auto Financial, copies of all financial statements, reports and
         proxy statements so mailed;

                  (h)      promptly after State Auto Mutual receives the results
         of a triennial examination by the NAIC of the financial condition and
         operations of State Auto Mutual and/or any of its Material
         Subsidiaries, a copy thereof;

                  (i)      promptly following the delivery or receipt by State
         Auto Mutual or any of its Material 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 State Auto Mutual or any of its Material Subsidiaries, a
         copy thereof;

                  (j)      as soon as possible, and in any event within ten days
         after either State Auto Obligor knows or has reason to believe that any
         of the events or conditions specified below with respect to any Plan or
         Multiemployer Plan has occurred or exists, a statement signed by a
         senior financial officer of State Auto Mutual setting forth details
         respecting such event or condition and the action, if any, that State
         Auto Mutual or its ERISA

                                       22
<PAGE>

         Affiliate proposes to take with respect thereto (and a copy of any
         report or notice required to be filed with or given to the PBGC by
         State Auto Mutual or an ERISA Affiliate with respect to such event or
         condition):

                           (i)      any reportable event, as defined in Section
                  4043(c) of ERISA and the regulations issued thereunder, with
                  respect to a Plan, as to which the PBGC has not by regulation
                  waived the requirement of Section 4043(a) of ERISA that it be
                  notified within 30 days of the occurrence of such event
                  (provided that a failure to meet the minimum funding standard
                  of Section 412 of the Code or Section 302 of ERISA, including,
                  without limitation, the failure to make on or before its due
                  date a required installment under Section 412(m) of the Code
                  or Section 302(e) of ERISA, shall be a reportable event
                  regardless of the issuance of any waivers in accordance with
                  Section 412(d) of the Code); and any request for a waiver
                  under Section 412(d) of the Code for any Plan;

                           (ii)     the distribution under Section 4041 of ERISA
                  of a notice of intent to terminate any Plan or any action
                  taken by State Auto Mutual or an ERISA Affiliate to terminate
                  any Plan;

                           (iii)    the institution by the PBGC of proceedings
                  under Section 4042 of ERISA for the termination of, or the
                  appointment of a trustee to administer, any Plan, or the
                  receipt by State Auto Mutual or any ERISA Affiliate of a
                  notice from a Multiemployer Plan that such action has been
                  taken by the PBGC with respect to such Multiemployer Plan;

                           (iv)     the complete or partial withdrawal from a
                  Multiemployer Plan by State Auto Mutual or any ERISA Affiliate
                  that results in liability under Section 4201 or 4204 of ERISA
                  (including the obligation to satisfy secondary liability as a
                  result of a purchaser default) or the receipt by State Auto
                  Mutual or any ERISA Affiliate of notice from a Multiemployer
                  Plan that it is in reorganization or insolvency pursuant to
                  Section 4241 or 4245 of ERISA or that it intends to terminate
                  or has terminated under Section 4041A of ERISA;

                           (v)      the institution of a proceeding by a
                  fiduciary of any Multiemployer Plan against State Auto Mutual
                  or any ERISA Affiliate to enforce Section 515 of ERISA, which
                  proceeding is not dismissed within 30 days; and

                           (vi)     the adoption of an amendment to any Plan
                  that, pursuant to Section 401(a)(29) of the Code or Section
                  307 of ERISA, would result in the loss of tax-exempt status of
                  the trust of which such Plan is a part if State Auto Mutual or
                  an ERISA Affiliate fails to timely provide security to the
                  Plan in accordance with the provisions of said Sections;

                  (k)      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;

                                       23
<PAGE>

                  (l)      promptly, notice of any denial of coverage,
         litigation, or arbitration arising out of any Reinsurance Agreements to
         which any Insurance Entity is a party which denial, litigation or
         arbitration involves $5,000,000 or more;

                  (m)      promptly after either State Auto Obligor knows or has
         reason to believe that any Put Event (or any event that with notice or
         lapse of time or both would become a Put Event) has occurred, a notice
         of such Put Event (or such event) describing the same in reasonable
         detail and, together with such notice or as soon thereafter as
         possible, a description of the action that State Auto Mutual has taken
         or proposes to take with respect thereto;

                  (n)      at the time it furnishes each set of financial
         statements pursuant to paragraph (a) or (b) above, a certificate
         (substantially in the form of Exhibit C hereto) of a senior financial
         officer of State Auto Mutual (i) to the effect that no Put Event (or
         any event that with notice or lapse of time or both would become a Put
         Event) has occurred and is continuing (or, if any Put Event (or any
         such event) has occurred and is continuing, describing the same in
         reasonable detail and describing the action that State Auto Mutual has
         taken or proposes to take with respect thereto) and (ii) setting forth
         in reasonable detail the computations necessary to determine whether
         the State Auto Obligors are in compliance with Section 4.10 hereof as
         of the end of the respective quarterly fiscal period or fiscal year;

                  (o)      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 Indebtedness in
         replacement or exchange thereof, a copy of such amendment or agreement;
         and

                  (p)      from time to time such other information regarding
         the financial condition, operations, business or prospects of State
         Auto Mutual or any of its Subsidiaries (including, without limitation,
         any Plan or Multiemployer Plan and any reports or other information
         required to be filed under ERISA) as the Agent may reasonably request.

                  4.2      Litigation. State Auto Mutual shall promptly give to
the Agent (with sufficient copies for each Lender) notice of all legal or
arbitral proceedings, and of all proceedings by or before any governmental or
regulatory authority or agency, and any material development in respect of such
legal or other proceedings, affecting State Auto Mutual or any of its
Subsidiaries, except proceedings that, if adversely determined, would not
(either individually or in the aggregate) have a Material Adverse Effect.

                  4.3      Existence. Etc. State Auto Mutual shall:

                  (a)      and shall cause each of its Material Subsidiaries to,
         preserve and maintain its legal existence and all of its material
         rights, privileges, licenses and franchises (provided that nothing in
         this Section 4.3 shall prohibit any transaction expressly permitted
         under Section 4.5 hereof);

                                       24
<PAGE>

                  (b)      and shall cause each of its Subsidiaries to, comply
         with the requirements of all applicable laws, rules, regulations and
         orders of governmental or regulatory authorities if failure to comply
         with such requirements could (either individually or in the aggregate)
         have a Material Adverse Effect;

                  (c)      and shall cause each of its Material Subsidiaries to,
         pay and discharge all taxes, assessments and governmental charges or
         levies imposed on it or on its income or profits or on any of its
         Property prior to the date on which penalties attach thereto, except
         for any such tax, assessment, charge or levy the payment of which is
         being contested in good faith and by proper proceedings and against
         which adequate reserves are being maintained;

                  (d)      and shall cause each of its Material Subsidiaries to,
         keep adequate records and books of account, in which complete entries
         shall be made in accordance with generally accepted accounting
         principles (or, in the case of an Insurance Entity, statutory
         accounting principles) consistently applied; and

                  (e)      and shall cause each of its Material Subsidiaries to,
         permit representatives of any Lender or the Agent, during normal
         business hours, to examine, copy and make extracts from its books and
         records, to inspect any of its Properties, and to discuss its business
         and affairs with its officers, all to the extent reasonably requested
         by such Lender or the Agent (as the case may be).

                  4.4      Insurance. State Auto Mutual shall, and shall cause
each of its Material Subsidiaries to, maintain insurance with financially sound
and reputable insurance companies, and with respect to Property and risks of a
character usually maintained by corporations engaged in the same or similar
business similarly situated, against loss, damage and liability of the kinds and
in the amounts customarily maintained by such corporations (including general
liability insurance, director's and officer's liability insurance, property
insurance and worker's compensation insurance), provided that, nothing in this
Section 4.4 shall be deemed to require State Auto Mutual or any of its Material
Subsidiaries to enter into any Reinsurance Agreement and provided, further, that
State Auto Mutual 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.

                  4.5      Prohibition of Fundamental Changes.

                  (a)      State Auto Mutual 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)      State Auto Mutual 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 4.9 hereof, and Capital Expenditures.

                                       25
<PAGE>

                  (c)      State Auto Mutual 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)      Notwithstanding the foregoing provisions of this
Section 4.5:

                  (i)      any Subsidiary of State Auto Mutual may be merged or
         consolidated with or into: (x) State Auto Mutual if State Auto Mutual
         shall be the continuing or surviving corporation or (y) any other such
         Subsidiary; provided that (A) if any such transaction (other than a
         transaction described in clause (B) below) shall be between a
         Subsidiary and a Wholly Owned Subsidiary, the Wholly Owned Subsidiary
         shall be the continuing or surviving corporation and (B) if any such
         transaction shall be between State Auto Financial and any other such
         Subsidiary, State Auto Financial shall be the surviving corporation;

                  (ii)     any Material Subsidiary of State Auto Mutual may
         sell, lease, transfer or otherwise dispose of any or all of its
         Property (upon voluntary liquidation or otherwise) to State Auto Mutual
         or a Wholly Owned Subsidiary of State Auto Mutual;

                  (iii)    State Auto Mutual may merge or consolidate with or
         acquire any other Person if (w) in the case of a merger or
         consolidation, State Auto Mutual is the surviving corporation, (x)
         after giving effect thereto, no Put Event (and no event that with
         notice or lapse of time or both would constitute a Put Event) would
         exist hereunder, (y) the business activity engaged in by such other
         Person would be permitted under Section 4.13 hereof if such other
         Person were a Subsidiary of State Auto Mutual prior to such merger or
         consolidation and (z) 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 (iii)
         after the date hereof (other than any such merger, consolidation or
         acquisition financed solely with Net Available Proceeds) shall be less
         than $250,000,000; and

                  (iv)     any Material Subsidiary of State Auto Mutual may
         merge or consolidate with or acquire any other Person if (w) in the
         case of a merger or consolidation, the surviving corporation is a
         Wholly Owned Subsidiary of State Auto Mutual; provided, that in the
         case of any merger or consolidation involving State Auto Financial, the
         surviving corporation is State Auto Financial, (x) after giving effect
         thereto, no Put Event (and no event that with notice or lapse of time
         or both would constitute a Put Event) would exist hereunder, (y) the
         business activity engaged in by such other Person would be permitted
         under Section 4.13 hereof if such other Person were a Subsidiary of
         State Auto Mutual prior to such merger or consolidation and (z) 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 $100,000,000.

                                       26
<PAGE>

                  4.6      Limitation on Liens. State Auto Mutual shall not, nor
shall it permit any of its Material Subsidiaries to, create, incur, assume or
suffer to exist any Lien upon any of its Property, whether now owned or
hereafter acquired, except:

                  (a)      Liens in existence on the date hereof and listed in
         Part B of Schedule I hereto;

                  (b)      Liens imposed by any governmental authority for
         taxes, assessments or charges not yet due or that are being contested
         in good faith and by appropriate proceedings if adequate reserves with
         respect thereto are maintained on the books of State Auto Mutual or the
         affected Material Subsidiaries, as the case may be, in accordance with
         Agreement Accounting Principles (or, in the case of any Insurance
         Entity, SAP);

                  (c)      carriers', warehousemen's, mechanics', materialmen's,
         repairmen's or other like Liens arising in the ordinary course of
         business that are not overdue for a period of more than 30 days or that
         are being contested in good faith and by appropriate proceedings and
         Liens securing judgments but only to the extent for an amount and for a
         period not resulting in a Put Event under clause (l) of the definition
         of "Put Event" in Section 1.1 hereof;

                  (d)      pledges or deposits under worker's compensation,
         unemployment insurance and other social security legislation;

                  (e)      deposits to secure the performance of bids, trade
         contracts (other than for Indebtedness), leases, statutory obligations,
         surety and appeal bonds, performance bonds and other obligations of a
         like nature incurred in the ordinary course of business;

                  (f)      easements, rights-of-way, restrictions and other
         similar encumbrances incurred in the ordinary course of business and
         encumbrances consisting of zoning restrictions, easements, licenses,
         restrictions on the use of Property or minor imperfections in title
         thereto that do not in any case materially detract from the value of
         the Property subject thereto or interfere with the ordinary conduct of
         the business of State Auto Mutual or any of its Material Subsidiaries;

                  (g)      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 Entity in the ordinary course of business;

                  (h)      deposits with insurance regulatory authorities;

                  (i)      Liens on Property of any corporation that becomes a
         Subsidiary of State Auto Mutual after the date hereof, provided that
         such Liens are in existence at the time such corporation becomes a
         Subsidiary of State Auto Mutual and were not created in anticipation
         thereof;

                                       27
<PAGE>

                  (j)      Liens upon real and/or tangible personal Property
         acquired after the date hereof (by purchase, construction or otherwise)
         by State Auto Mutual or any of its Material Subsidiaries, each of which
         Liens either (i) existed on such Property before the time of its
         acquisition and was not created in anticipation thereof or (ii) was
         created solely for the purpose of securing Indebtedness representing,
         or incurred to finance, refinance or refund, the cost (including the
         cost of construction) of such Property; provided that (x) no such Lien
         shall extend to or cover any Property of State Auto Mutual or such
         Material Subsidiary other than the Property so acquired and
         improvements thereon and (y) the principal amount of Indebtedness
         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
         State Auto Mutual) of such Property at the time it was acquired (by
         purchase, construction or otherwise); and

                  (k)      additional Liens upon real and/or personal Property
         created after the date hereof, provided that the aggregate Indebtedness
         secured thereby and incurred on and after the date hereof shall not
         exceed $15,000,000 in the aggregate at any one time outstanding.

                  4.7      Indebtedness. State Auto Mutual shall not, nor shall
it permit any of its Material Subsidiaries to, create, incur or suffer to exist
any Indebtedness except:

                  (a)      Indebtedness created pursuant hereto;

                  (b)      Indebtedness outstanding on the date hereof and
         listed in Part A of Schedule I hereto;

                  (c)      Indebtedness of Material Subsidiaries of State Auto
         Mutual to State Auto Mutual or to other Material Subsidiaries of State
         Auto Mutual;

                  (d)      Indebtedness not greater than $100,000,000 in
         principal amount incurred after November 1, 2003 and no later than
         December 31, 2003 by State Auto Financial 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
         disclosed to the Agent and the Lenders prior to the Effective Date (the
         "Previously Disclosed Terms"), and any Indebtedness, not greater than
         $100,000,000 in principal amount and otherwise on terms not more
         restrictive on or otherwise less favorable to State Auto Financial in
         any material respect than the Previously Disclosed Terms, in exchange
         therefor, whether or not the notes, debentures or other instruments
         evidencing such exchange Indebtedness 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 Indebtedness
         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, State Auto
         Financial in any material respect than the Previously Disclosed Terms);
         and

                                       28
<PAGE>

                  (e)      additional Indebtedness of State Auto Mutual and its
         Material Subsidiaries (including, without limitation, Capital Lease
         Obligations and other Indebtedness secured by Liens permitted under
         Sections 4.6(j) or 4.6(k) hereof) up to but not exceeding $15,000,000
         in the aggregate at any one time outstanding as to all such
         Indebtedness described in this Section 4.7(e).

                  4.8      Sale/Leaseback Transactions. State Auto Mutual shall
not, nor shall it permit any of its Material Subsidiaries to, enter into any an
arrangement with any Person (other than State Auto Mutual or any of its Material
Subsidiaries) providing for the leasing to State Auto Mutual 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 State Auto Mutual or such Material
Subsidiary to such Person or to any other Person (other than State Auto Mutual
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 Statutory Surplus of State Auto Mutual at such time. For purposes of this
Section 4.8, "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 State Auto
Mutual 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.

                  4.9      Investments.

                  (a)      State Auto Mutual 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 II hereto, (ii) operating deposit accounts with banks,
(iii) Permitted Investments, (iv) Investments by State Auto Mutual and its
Material Subsidiaries in State Auto Mutual and its Subsidiaries, (v) Interest
Rate Protection Agreements, provided that, without limiting the obligation of
State Auto Mutual under Section 4.12 hereof, when entering into any Interest
Rate Protection 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
Interest Rate Protection Agreements (excluding the Interest Rate Protection
Agreement being entered into pursuant to Section 4.12 hereof) shall not exceed
$10,000,000, and (vi) Investments of Insurance Entities not prohibited by clause
(b) of this Section 4.9.

                  (b)      State Auto Mutual shall not permit any Insurance
Entity 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 Entity 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 4.9(b), 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 Entity prepared in accordance with
SAP.

                                       29
<PAGE>

                  4.10     Certain Financial Covenants.

                  (a)      Statutory Surplus. State Auto Mutual shall not permit
its Statutory Surplus at any time to be less than (a) $775,000,000, at any time
prior to the occurrence of a catastrophe giving rise to Loans being outstanding
under the Credit Agreement (provided that no Loans are outstanding at such time)
and (b) $730,000,000, at any time during the period from and including the date
of occurrence of a catastrophe giving rise to Loans being outstanding under the
Credit Agreement to but excluding the date all Loans shall have been required to
be repaid in full pursuant to the terms of the Credit Agreement. State Auto
Mutual shall not permit the Statutory Surplus of State Auto P&C to be less than
(a) $242,000,000, at any time prior to the occurrence of a catastrophe giving
rise to Loans being outstanding under the Credit Agreement (provided that no
Loans are outstanding at such time) and (b) $228,000,000, at any time during the
period from and including the date of occurrence of a catastrophe giving rise to
Loans being outstanding under the Credit Agreement to but excluding the date all
Loans shall have been required to be repaid in full pursuant to the terms of the
Credit Agreement.

                  (b)      Risk-Based Capital Ratio. State Auto Mutual shall not
permit its Risk-Based Capital Ratio at any time to be less than (a) 5.00 to 1,
at any time prior to the occurrence of a catastrophe giving rise to Loans being
outstanding under the Credit Agreement (provided that no Loans are outstanding
at such time) and (b) 3.00 to 1, at any time during the period from and
including the date of occurrence of a catastrophe giving rise to Loans being
outstanding under the Credit Agreement to but excluding the date all Loans shall
have been required to be repaid in full pursuant to the terms of the Credit
Agreement. State Auto Mutual shall not permit the Risk-Based Capital Ratio of
State Auto P&C to be less than (a) 4.00 to 1, at any time prior to the
occurrence of a catastrophe giving rise to Loans being outstanding under the
Credit Agreement (provided that no Loans are outstanding at such time) and (b)
3.00 to 1, at any time during the period from and including the date of
occurrence of a catastrophe giving rise to Loans being outstanding under the
Credit Agreement to but excluding the date all Loans shall have been required to
be repaid in full pursuant to the terms of the Credit Agreement.

                  (c)      Premium to Surplus. State Auto Mutual shall not
permit its Premium to Surplus Ratio at any time to exceed (i) 2.00 to 1, at any
time prior to the occurrence of a catastrophe giving rise to Loans being
outstanding under the Credit Agreement (provided that no Loans are outstanding
at such time) and (ii) 2.50 to 1, at any time during the period from and
including the date of occurrence of a catastrophe giving rise to Loans being
outstanding under the Credit Agreement to but excluding the date all Loans shall
have been required to be repaid in full pursuant to the terms of the Credit
Agreement. State Auto Mutual shall not permit the Premium to Surplus Ratio of
State Auto P&C to exceed (x) 2.75 to 1 at any time prior to the occurrence of a
catastrophe giving rise to Loans being outstanding under the Credit Agreement
(provided that no Loans are outstanding at such time) and (y) 3.00 to 1, at any
time during the period from and including the date of occurrence of a
catastrophe giving rise to Loans being outstanding under the Credit Agreement to
but excluding the date all Loans shall have been required to be repaid in full
pursuant to the terms of the Credit Agreement. State Auto Mutual shall not
permit the Premium to Surplus Ratio of the State Auto Pool to exceed (x) 2.00 to
1 at any time prior to the occurrence of a catastrophe giving rise to Loans
being outstanding under the Credit Agreement (provided that no Loans are
outstanding at such time) and (y) 2.50 to 1 at any time during the period from

                                       30
<PAGE>

and including the date of occurrence of a catastrophe giving rise to Loans being
outstanding under the Credit Agreement to but excluding the date all Loans shall
have been required to be repaid in full pursuant to the terms of the Credit
Agreement.

                  (d)      Fixed Charge Coverage Ratio. State Auto Financial
shall not permit its Fixed Charge Coverage Ratio, determined as of the end of
each of its fiscal quarters, to be less than 1.00 to 1.00 at any time during the
period from and including the date of occurrence of a catastrophe giving rise to
Loans being outstanding under the Credit Agreement to but excluding the date all
Loans shall have been required to be repaid in full pursuant to the terms of the
Credit Agreement.

                  4.11     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, State Auto Mutual shall
cause each Insurance Entity to comply with the minimum requirements or
guidelines applicable to it as established by the NAIC or such Applicable
Insurance Regulatory Authority.

                  4.12     Interest Rate Protection Agreements. State Auto
Mutual shall within five days after the date of each purchase of Preferred Stock
under the Standby Purchase Agreement, cause State Auto Financial to enter into,
and thereafter maintain in full force and effect, one or more Interest Rate
Protection Agreements with one or more of the Lenders (and/or with a bank or
other financial institution having capital, surplus and undivided profits of at
least $500,000,000), that effectively would enable State Auto Financial (in a
manner satisfactory to the Agent) to protect itself against floating interest
rates as to a notional principal amount at least equal to 100% of the aggregate
Redemption Value of the Preferred Stock for a period of at least five years
measured from the date of the purchase of the Preferred Stock.

                  4.13     Lines of Business. State Auto Mutual 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). It is also understood and
agreed that the foregoing includes State Auto Mutual assuming reinsurance with
premiums in an aggregate amount not to exceed $30,000,000 from third parties.

                  4.14     Ceded Reinsurance. State Auto Mutual shall not, nor
shall it permit any other Insurance Entity to:

                  (a)      enter into any Reinsurance Agreement with any Person
         other than (i) another Insurance Entity, (ii) any Person for which the
         most recently published rating by A.M. Best & Co. is "B+" or higher or,
         if such Person is not rated by A.M. Best & Co., 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

                                       31
<PAGE>

         "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 Agent, provided however, that for purposes
         of the foregoing clause (ii), any "NA" designation shall not be
         considered a rating of A.M. Best & Co.;

                  (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 Entities.

                  (c)      enter into any Surplus Relief Reinsurance except with
         another Insurance Entity; 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 Entities in any
         12-month period.

                  4.15     Transactions with Affiliates. Except as expressly
permitted by this Agreement, State Auto Mutual 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 State Auto Mutual or any of its Material
Subsidiaries and receive reasonable compensation for his or her services in such
capacity and (ii) State Auto Mutual and its Material Subsidiaries may enter into
transactions (other than extensions of credit by State Auto Mutual 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 State
Auto Mutual and its Material Subsidiaries as the monetary or business
consideration that would obtain in a comparable transaction with a Person not an
Affiliate.

                  4.16     Modifications of Certain Documents. State Auto Mutual
shall not, and shall not permit any of its Subsidiaries to, (a) consent to any
modification, supplement or waiver of (i) the charter or by-laws of State Auto
Mutual, (ii) the charter or by-laws of State Auto Financial, (iii) any material
term of any Retrocession Agreement or Reinsurance Agreement relating to property
and catastrophic risk insurance other than the Intercompany Pooling Arrangement
or (iv) without the prior consent of the Agent (with the approval of the
Required Lenders, such approval not to be unreasonably withheld), the
Intercompany Pooling Agreement 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 (b) in any manner alter or change the
preferences, rights or powers of the Preferred Stock or permit State Auto
Financial to issue any additional securities so as to affect adversely the
Preferred Stock.

                                       32
<PAGE>

                  4.17     Indemnity for Certain Costs. State Auto Financial
agrees with the Agent that it shall indemnify the Borrower, promptly upon demand
therefor, for all or any portion of (a) the fees, costs and expenses payable by
the Borrower under Article III of the Credit Agreement including, without
limitation, in the event that interest for any Lender in respect of any period
is computed at the Base Rate, for the excess (if any) of the amount of such
interest computed at the Base Rate for such period over the amount of interest
that would have been payable in respect of such period had such interest been
computed at the relevant Eurodollar Rate for such period and (b) the excess of
interest in respect of any period payable by the Borrower under Section 2.11 of
the Credit Agreement at 2% over the interest in respect of such period that
would have been payable had the relevant Default not occurred. Each of State
Auto Financial, State Auto Mutual and the Agent agrees that the Borrower shall
be a third-party beneficiary of this Agreement.

                  4.18     Delivery of Documents on the Effective Date. Except
with respect to the item set forth in clause (f) (which shall be delivered on or
before the date of the initial Advance under the Credit Agreement), on the
Effective Date, State Auto Mutual shall deliver to the Agent (with sufficient
copies for each Lender) each of the following documents each of which shall be
satisfactory to the Agent in form and substance:

                  (a)      certified copies of the charter and by-laws (or
         equivalent documents) of each State Auto Obligor and of all corporate
         authority for such State Auto Obligor (including, without limitation,
         board of director resolutions and evidence of the incumbency, including
         specimen signatures, of officers) with respect to the execution,
         delivery and performance of such of the Basic Documents to which such
         State Auto Obligor is intended to be a party and each other document to
         be delivered by such State Auto Obligor from time to time in connection
         herewith (and the Agent and each Lender may conclusively rely on such
         certificate until it receives notice in writing from State Auto Mutual
         to the contrary);

                  (b)      a certificate of a senior officer of State Auto
         Mutual, dated the Effective Date, to the effect that (i) no Put Event
         (and no event that with notice or lapse of time or both would become a
         Put Event) shall have occurred and be continuing and (ii) the
         representations and warranties made by the State Auto Obligors in
         Article III hereof shall be true and complete on and as of the
         Effective Date with the same force and effect as if made on and as of
         the Effective Date (or, if any such representation or warranty is
         expressly stated to have been made as of a specific date, as of such
         specific date);

                  (c)      an opinion, dated the Effective Date, of the general
         counsel of each State Auto Obligor, substantially in form of Exhibit B
         hereto and covering such other matters as the Agent or any Lender may
         reasonably request (and each State Auto Obligor hereby instructs such
         counsel to deliver such opinion to the Lenders and the Agent);

                  (d)      certified true, correct and complete copies of all
         Retrocession Agreements and Reinsurance Agreements in effect on the
         Effective Date;

                                       33
<PAGE>

                  (e)      certified true, correct and complete copies of all
         Tax Sharing Agreements in effect on the Effective Date;

                  (f)      evidence that the transactions contemplated by the
         Basic Documents shall have been approved by each Applicable Insurance
         Regulatory Authority with respect to State Auto Mutual; and

                  (g)      such other documents as the Agent or any Lender or
         counsel to KeyBank may reasonably request.

                  4.19     Delivery of Documents on Each Borrowing Date. On the
date of each borrowing by the Borrower under the Credit Agreement (and as a
condition thereto), State Auto Mutual shall deliver to the Agent (with
sufficient copies for each Lender) each of the following documents each of which
shall be satisfactory to the Agent in form and substance:

                  (a)      a certificate of a senior officer of State Auto
         Mutual, dated the date of such borrowing, (1) to the effect that, both
         immediately prior to the making of such Loan and also after giving
         effect thereto and to the intended use thereof, (i) no Put Event (and
         no event that with notice or lapse of time or both would become a Put
         Event) shall have occurred and be continuing and (ii) the
         representations and warranties made by the State Auto Obligors in
         Article III hereof (excluding, in the case of the representation and
         warranty made by the State Auto Obligors in the last sentence of
         clauses (a) and (b) of Section 3.2 hereof, any such change to the
         extent such change results from the catastrophic loss claims and/or
         loss adjustment expenses to which the borrowing by the Borrower under
         the Credit Agreement and related issuance of Preferred Stock relates)
         shall be true and complete on and as of such date of borrowing with the
         same force and effect as if made on and as of such date of borrowing
         (or, if any such representation or warranty is expressly stated to have
         been made as of a specific date, as of such specific date) and (2)
         describing in reasonable detail the catastrophic loss claims and/or
         loss adjustment expenses to which such borrowing relates;

                  (b)      such other documents as the Agent or any Lender or
         counsel to KeyBank may reasonably request (including, without
         limitation, opinions of counsel to the State Auto Obligors relating to
         the issuance of the Preferred Stock in connection with such borrowing).

                  4.20     Delivery of Documents in Connection with the
Extension of the Commitment Termination Date. On each of the "Request Date" and
the "Existing Commitment Termination Date" (in each case as defined in Section
2.19 of the Credit Agreement) State Auto Mutual shall deliver to the Agent (with
sufficient copies for each Lender) each of the following documents each of which
shall be satisfactory to the Agent in form and substance:

                  (a)      a certificate of a senior officer of State Auto
         Mutual, dated such date, to the effect that (i) no Put Event (and no
         event that with notice or lapse of time or both would become a Put
         Event) shall have occurred and be continuing and (ii) the
         representations and warranties made by the State Auto Obligors in
         Article III hereof shall

                                       34
<PAGE>

         be true and complete on and as of such date of borrowing with the same
         force and effect as if made on and as of such date of borrowing (or, if
         any such representation or warranty is expressly stated to have been
         made as of a specific date, as of such specific date); and

                  (b)      a certificate of a senior officer of State Auto
         Mutual, dated such date, to the effect that (i) the "Probable Maximum
         Loss" (as defined below) of the State Auto Obligors for the 250-year
         return period shall not exceed (x) $100,000,000 for earthquake peril,
         (y) $75,000,000 for hurricane peril and (z) $130,000,000 for
         thunderstorm peril and (ii) attached thereto is a true, correct and
         complete copy of the report prepared by the applicable Modelling Firm
         (as defined below) in connection with the calculation referred to in
         the definition of "Probable Maximum Loss" below. For purposes of this
         clause (b), "Probable Maximum Loss" shall mean, for any date, the
         "probable maximum loss" as most recently calculated prior to such date
         by Risk Management Solutions, Inc., Applied Insurance Research, EQECAT
         Inc., Tillinghast (a Towers Perrin Company) or another independent
         modelling firm satisfactory to the Agent (each, a "Modelling Firm") and
         "thunderstorm peril" shall mean peril caused by lightning, straight
         line wind, rain, hail and/or tornado.

                  4.21     Consent to Assignment, etc.

                  (a)      To the extent contemplated by the Company Pledge
         Agreement, or otherwise after and during the continuance of a Default,
         the Agent and any designee or assignee thereof shall be entitled to
         exercise any and all rights of the Borrower under the Standby Purchase
         Agreement and the Pledged Stock in accordance with the terms of the
         Standby Purchase Agreement and such Pledged Stock, and State Auto
         Financial shall comply in all respects with such exercise. Without
         limiting the generality of the foregoing, to the extent contemplated by
         the Company Pledge Agreement, or otherwise after and during the
         continuance of a Default, the Agent and any designee or assignee
         thereof shall have the full right and power to enforce directly against
         State Auto Financial all obligations of State Auto Financial under the
         Standby Purchase Agreement and the Pledged Stock and otherwise to
         exercise all remedies thereunder and to make all demands and give all
         notices and make all requests required or permitted to be made by the
         Borrower under the Standby Purchase Agreement or the Pledged Stock.
         Nothing herein shall require the Agent or such designee or assignee to
         cure any default of the Borrower under the Standby Purchase Agreement
         or to perform any act, duty or obligation of the Borrower under the
         Standby Purchase Agreement, but shall only give them the option so to
         do.

                  (b)      State Auto Financial shall not, without the prior
         written consent of the Agent, (i) cancel, suspend or terminate the
         Standby Purchase Agreement or consent to or accept any such
         cancellation, suspension or termination thereof, (ii) amend, supplement
         or otherwise modify the Standby Purchase Agreement or (iii) petition,
         request or take any other legal or administrative action which seeks,
         or may reasonably be expected, to so rescind, cancel, terminate or
         suspend or amend or modify the Standby Purchase Agreement.

                  (c)      A foreclosure of, or other exercise of remedies
         under, the Company Pledge Agreement or any sale thereunder by the Agent
         or its assignee or designee, whether by judicial

                                       35
<PAGE>

proceedings or under any power of sale contained therein, or any conveyance
from the Borrower to the Agent, the Lenders or any such assignee or designee, in
lieu thereof, shall not require the consent of State Auto Financial.

                  (d)      Upon the exercise by the Agent of any of the remedies
set forth in Section 5.05 of the Company Pledge Agreement, the Agent may assign
its rights and interests and the rights and interests of the Borrower under the
Standby Purchase Agreement and/or the Pledged Stock to any other Person.

                  (e)      State Auto Financial shall not be released from any
of its obligations under the Standby Purchase Agreement or the Pledged Stock
pursuant to any assignment or transfer (including by reason of a merger,
consolidation, sale of substantially all of its assets or otherwise), and shall
not delegate any of its obligations under the Standby Purchase Agreement or the
Pledged Stock, unless the Agent shall have previously consented in writing to
such release or delegation, as the case may be.

                                    ARTICLE V

                                  MISCELLANEOUS

                  5.1      Waiver. No failure on the part of the Agent or any
Lender to exercise and no delay in exercising, and no course of dealing with
respect to, any right, power or privilege under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power
or privilege under this Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.

                  5.2      Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including electronic
transmission, facsimile transmission or similar writing) and shall be given to
such party at its address or facsimile number set forth on the signature pages
hereof or at such other address or facsimile number as such party may hereafter
specify for the purpose by notice to the Agent and the Borrower in accordance
with the provisions of this Section 5.2. Each such notice, request or other
communication shall be effective (a) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, (b) if given by mail, 72 hours after such communication
is deposited in the mails with first class postage prepaid, addressed as
aforesaid, or (c) if given by any other means, when delivered (or, in the case
of electronic transmission, received) at the address specified in this Section.

                  5.3      Expenses; Indemnification. (a) State Auto Mutual and
State Auto Financial jointly and severally agree to reimburse the Agent for any
costs, internal charges and out-of-pocket expenses (including reasonable
attorneys' fees and time charges of attorneys for the Agent, which attorneys may
be employees of the Agent) paid or incurred by the Agent in connection with the
preparation, negotiation, execution, delivery, syndication, review, amendment,
modification, and administration of the Basic Documents. State Auto Mutual and
State Auto Financial also jointly and severally agree to reimburse the Agent and
the Lenders for

                                       36
<PAGE>

any costs, internal charges and out-of-pocket expenses (including attorneys'
fees and time charges of attorneys for the Agent and the Lenders, which
attorneys may be employees of the Agent or the Lenders) paid or incurred by the
Agent or any Lender in connection with the collection and enforcement of the
Loan Documents.

                  (b)      State Auto Mutual and State Auto Financial hereby
jointly and severally agree to indemnify the Agent, each Lender, their
respective affiliates, and each of their directors, officers and employees
against all losses, claims, damages, penalties, judgments, liabilities and
expenses (including, without limitation, all expenses of litigation or
preparation therefor whether or not the Agent any Lender or any affiliate is a
party thereto) which any of them may pay or incur arising out of or relating to
this Agreement, the other Basic Documents, the transactions contemplated hereby
or the direct or indirect application or proposed application of the proceeds of
any Loan except to the extent that they are determined in a final non-appealable
judgment by a court of competent jurisdiction to have resulted from the gross
negligence or willful misconduct of the party seeking indemnification. The
obligations of State Auto Mutual and State Auto Financial under this Section 5.3
shall survive the termination of this Agreement.

                  5.4      Amendments, Etc. Except as otherwise expressly
provided in this Agreement, any provision of this Agreement may be modified or
supplemented only by an instrument in writing signed by each State Auto Obligor
and the Agent (with the consent of the Lenders as specified in Section 10.17 of
the Credit Agreement), and any provision of this Agreement may be waived by the
Agent (with the consent of the Lenders as specified in Section 10.17 of the
Credit Agreement).

                  5.5      Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, provided, that neither State Auto Obligor may
assign any of its rights or obligations hereunder without the prior consent of
the Agent (with the consent of all of the Lenders).

                  5.6      Captions. The captions and section headings appearing
herein are included solely for convenience of reference and are not intended to
affect the interpretation of any provision of this Agreement.

                  5.7      Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.

                  5.8      CHOICE OF LAW. THE BASIC DOCUMENTS (OTHER THAN THOSE
CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS, BUT WITHOUT REGARD TO THE CONFLICT OF LAWS
PROVISIONS) OF THE STATE OF OHIO, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE
TO NATIONAL BANKS.

                  5.9      CONSENT TO JURISDICTION. EACH STATE AUTO OBLIGOR
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR OHIO STATE COURT SITTING IN CLEVELAND, OHIO

                                       37
<PAGE>

IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND
EACH STATE AUTO OBLIGOR HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF
SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND
IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT
IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE AGENT OR
ANY LENDER TO BRING PROCEEDINGS AGAINST ANY STATE AUTO OBLIGOR IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY STATE AUTO OBLIGOR
AGAINST THE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED
TO, OR CONNECTED WITH ANY LOAN DOCUMENT SHALL BE BROUGHT ONLY IN A COURT IN
CLEVELAND, OHIO.

                  5.10     WAIVER OF JURY TRIAL. EACH STATE AUTO OBLIGOR, THE
AGENT AND EACH LENDER HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED THEREUNDER.

                  5.11     Treatment of Certain Information; Confidentiality.

                  (a)      Each State Auto Obligor acknowledges that from time
to time financial advisory, investment banking and other services may be offered
or provided to State Auto Mutual or one or more of its Subsidiaries (in
connection with this Agreement or otherwise) by any Lender or by one or more
subsidiaries or affiliates of such Lender and such State Auto Obligor hereby
authorizes each Lender to share any information delivered to such Lender by or
on behalf of State Auto Mutual and its Subsidiaries pursuant to this Agreement,
or in connection with the decision of such Lender to enter into the Credit
Agreement, to any such subsidiary or affiliate, it being understood that any
such subsidiary or affiliate receiving such information shall be bound by the
provisions of paragraph (b) below as if it were a Lender hereunder. Such
authorization shall survive the termination of this Agreement.

                  (b)      The Agent and each Lender agrees to hold any
confidential information which it may receive from either State Auto Obligor
pursuant to this Agreement in confidence, except for disclosure (i) to its
Affiliates and to other Lenders and their respective Affiliates, so long as such
Affiliate or other Lender agrees to be bound by the provisions of this Section,
(ii) to legal counsel, accountants, and other professional advisors to such
Lender or to a Transferee, (iii) to regulatory officials, (iv) to any Person as
requested pursuant to or as required by law, regulation, or legal process, (v)
to any Person in connection with any legal proceeding to which such Lender is a
party, (vi) to such Lender's direct or indirect contractual counterparties in
swap agreements or to legal counsel, accountants and other professional advisors
to such counterparties, and (vii) permitted by Section 12.4 of the Credit
Agreement.

                                       38
<PAGE>

                  5.12     No Liability. Except as expressly provided herein,
neither the Agent nor any Lender shall be responsible or have any liability for
(a) any statements, warranties or representations made in or in connection with
the Credit Agreement, any other Basic Document or any other instrument or
document furnished pursuant thereto, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, any
other Basic Document or any other instrument or document furnished pursuant
thereto and (b) the financial condition of the Borrower or any other Person or
any other obligation of or the performance or observance by the Borrower, any
other Person or any other obligor of any of their respective obligations under
the Credit Agreement or any other Basic Document or any other instrument or
document furnished pursuant thereto.

                  5.13     Further Assurances. Each State Auto Obligor agrees
that, from time to time upon the written request of the Agent, such State Auto
Obligor shall execute and deliver such further documents and do such other acts
and things as the Lender may reasonably request in order fully to effect the
purposes of this Agreement.

                  5.14     Severability of Provisions. Any provision in any
Basic Document that is held to be inoperative, unenforceable, or invalid in any
jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable, or
invalid without affecting the remaining provisions in that jurisdiction or the
operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Basic Documents are declared
to be severable.

                  5.15     Third-Party Beneficiaries. Each State Auto Obligor
agrees that each Lender shall be a third-party beneficiary of this Agreement and
shall be entitled to enforce its rights hereunder as fully as if it were a party
hereto.

                            [signature page follows]

                                       39
<PAGE>

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

                                   STATE AUTOMOBILE MUTUAL INSURANCE COMPANY

                                   By: /s/ Steven J. Johnston
                                       -------------------------
                                   Title: Senior Vice President

                                   Address for Notices:

                                   State Automobile Mutual Insurance Company
                                   518 East Broad Street
                                   Columbus, Ohio 43215
                                   Attention:  John Lowther, Esq.
                                   Telecopier No.: (614) 464-4911
                                   Telephone No.: (614) 464-5052

                                   STATE AUTO FINANCIAL CORPORATION

                                   By: /s/ Robert H. Moone
                                       -----------------------
                                   Title: Chairman, President, and Chief
                                          Executive Officer

                                   Addresses for Notices:

                                   State Automobile Mutual Insurance Company
                                   518 East Broad Street
                                   Columbus, Ohio 43215
                                   Attention:  John Lowther, Esq.
                                   Telecopier No.: (614) 464-4911
                                   Telephone No.: (614) 464-5052

                                       40
<PAGE>

                                   KEYBANK NATIONAL ASSOCIATION,
                                   AS AGENT

                                   By: /s/ Mary K. Young
                                       ------------------
                                   Title: Vice President

                                   Addresses for Notices:

                                   127 Public Square
                                     Mail Code: OH-01-27-0606
                                   Cleveland, Ohio 44114
                                   Attention: Mary K. Young
                                   Telecopier No.: (216) 689-4443
                                   Telephone No.: (216) 689-4981

                                       41
<PAGE>

                 LIST OF SCHEDULES AND EXHIBITS TO PUT AGREEMENT

         The following is a list of the schedules and exhibits to the foregoing
Put Agreement which have not been filed with this Form 8-K:

EXHIBITS

Exhibit A -- Form of Put Notice to be executed by the Agent.

Exhibit B -- Form of opinion of general counsel of each State Auto Obligor.

Exhibit C -- Form of certificate of senior financial officer of State Auto
             Mutual (i) to the effect that no Put Event (or any event that with
             notice or lapse of time or both would become a Put Event) has
             occurred and is continuing (or, if any Put Event (or any such
             event) has occurred and is continuing, describing the same in
             reasonable detail and describing the action that State Auto Mutual
             has taken or proposes to take with respect thereto) and (ii)
             setting forth in reasonable detail the computations necessary to
             determine whether the State Auto Obligors are in compliance with
             Section 4.10 of the Put Agreement as of the end of the respective
             quarterly fiscal period or fiscal year.

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