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.
$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
TABLE OF CONTENTS
Section Page
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
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
Page ii
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
Page iii
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
Page iv
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
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.
"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
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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.
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"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
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
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
"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
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
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
"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.
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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
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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
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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.
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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.
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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
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.
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(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
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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
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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
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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
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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
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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
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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
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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.
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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.
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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.
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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
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
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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
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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.
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(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
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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
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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
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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).
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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
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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
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
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.
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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
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
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
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
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
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
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
[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
[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
[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
[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
[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
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.