Exhibit 10(RR)
Amendment No. 2 to
Amended and Restated Put Agreement and Waiver
Among
State Automobile Mutual Insurance Company,
State Auto Financial Corporation, and
Bank One, NA
Dated as of
November 14, 2002
AMENDMENT NO. 2 TO AMENDED AND RESTATED
PUT AGREEMENT AND WAIVER
This Amendment (this "AMENDMENT") is entered into as of November 14,
2002 by and 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
Bank One, NA, 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. The State Auto Obligors and the Agent are parties to a Put Agreement
dated as of November 19, 1999 (as amended and restated by that certain Amended
and Restated Put Agreement dated as of November 16, 2001 and as amended by
Amendment No. 1 to Put Agreement and Waiver dated as of August 28, 2002, the
"PUT AGREEMENT").
B. The State Auto Obligors and the Agent desire to amend the Put
Agreement on the terms and conditions set forth below.
C. Additionally, the State Auto Obligors have requested a waiver of,
and the Agent wishes to waive, certain provisions of the Put Agreement on the
terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:
1. WAIVER. The undersigned Agent hereby waives any breach of Section
4.10(c) of the Put Agreement arising solely out of the failure of State Auto
Mutual to prevent the Premium to Surplus Ratio of State Auto P&C to exceed 2.75
to 1 during the fiscal quarter of State Auto P&C ended September 30, 2002.
2. AMENDMENTS TO PUT AGREEMENT. Upon the satisfaction of each of the
conditions set forth in SECTION 4 below, the Put Agreement shall be amended as
follows:
(a) Section 4.10(a) of the Put Agreement shall be amended and restated
to read as follows:
(a) STATUTORY SURPLUS. State Auto Mutual will not permit its
Statutory Surplus at any time to be less than (a) $637,000,000, 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) $600,000,000, 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 will not permit the Statutory Surplus of State Auto P&C to
be less than (a) the sum of $180,000,000 plus 85% of the net available
proceeds raised from a surplus note issuance by State Auto P&C 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) $170,000,000 plus 80% of the net
available proceeds raised from a surplus note issuance by State auto
P&C 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) Section 4.20(b) of the Put Agreement shall be amended and restated
to read as follows:
(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.
3. REPRESENTATIONS AND WARRANTIES OF STATE AUTO OBLIGORS. Each State
Auto Obligor represents and warrants that:
(a) The execution, delivery and performance by such State Auto Obligor
of this Amendment have been duly authorized by all necessary corporate action
and that this Amendment is a legal, valid and binding obligation of such State
Auto Obligor enforceable against such State Auto Obligor in accordance with its
terms, except as the enforcement thereof may be subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally;
(b) Each of the representations and warranties contained in the Put
Agreement is true and correct in all material respects on and as of the date
hereof as if made on the date hereof 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 was true and correct on and as of
such earlier date;
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(c) No Put Event has occurred and is continuing.
4. EFFECTIVE DATE. SECTION 2 of this Amendment shall become effective
as of November 14, 2002 upon satisfaction of the following conditions:
(a) EXECUTED AMENDMENT. Receipt by the Agent of duly executed
counterparts hereof by State Auto Obligors and the Agent.
(b) OTHER. Satisfaction of the conditions to effectiveness set forth in
Section 3 of that certain Amendment No. 1 to Amended and Restated Credit
Agreement among the Borrower, the Agent and the financial institutions signatory
thereto.
5. REFERENCE TO AND EFFECT UPON THE PUT AGREEMENT.
(a) Except as specifically amended above, the Put Agreement shall
remain in full force and effect and is hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Agent or any Lender
under the Put Agreement or any Loan Document, nor constitute a waiver of any
provision of the Put Agreement or any Loan Document, except as specifically set
forth herein. Upon the effectiveness of this Amendment, each reference in the
Put Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of
similar import shall mean and be a reference to the Put Agreement as amended
hereby.
6. COSTS AND EXPENSES. Each State Auto Obligor hereby affirms its joint
and several obligation under Section 5.3 of the Put Agreement to reimburse the
Agent for all costs, internal charges and out-of-pocket expenses paid or
incurred by the Agent in connection with the preparation, negotiation, execution
and delivery of this Amendment, including but not limited to the reasonable
attorneys' fees and time charges of attorneys for the Agent with respect
thereto.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAWS PROVISIONS)
OF THE STATE OF ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO
NATIONAL BANKS.
8. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purposes.
9. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument.
[signature pages follow]
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IN WITNESS WHEREOF, the parties have executed this Amendment
as of the date and year first above written.
STATE AUTOMOBILE MUTUAL INSURANCE
COMPANY
By: /s/ Steven J. Johnston
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Title: Senior Vice President
---------------------------------
STATE AUTO FINANCIAL CORPORATION
By: /s/ Steven J. Johnston
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Title: Senior Vice President
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BANK ONE, NA, as Agent
By: /s/ Cynthia Priest
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Title: Director
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[TO AMENDMENT NO. 2]