Exhibit 99.1
FIRST AMENDMENT TO CREDIT
AGREEMENT
THIS FIRST AMENDMENT TO CREDIT
AGREEMENT (this “First Amendment”) is made and entered
into as of the 27th day of March, 2009, by and among:
(i) STATE AUTO FINANCIAL
CORPORATION, an Ohio corporation, and its successors and assigns
(the “Borrower”);
(ii) THE FINANCIAL INSTITUTIONS as
signatory lender parties hereto and their successors and assigns
(collectively, the “Lenders”, with each individually a
“Lender”); and
(iii) KEYBANK NATIONAL ASSOCIATION,
a national banking association, in its capacity as Administrative
Agent for the Lenders under the Credit Agreement (as defined
below), and its successors and assigns (the “Administrative
Agent”).
Recitals :
A. The Borrower, the Lenders, the
Administrative Agent and certain other parties are the parties to
that certain Credit Agreement dated as of July 12, 2007 (the
“Credit Agreement”), pursuant to which, inter
alia , the Lenders agreed, subject to the terms and
conditions thereof, to advance Loans (as this and other capitalized
terms used herein and not otherwise defined herein are defined in
the Credit Agreement) to the Borrower.
B. As of the date hereof, the
aggregate unpaid principal balance of the Revolving Loans is Zero
Dollars ($-0-).
C. The Borrower has requested
certain modifications to the Credit Agreement, and, subject to the
terms and conditions of this First Amendment, the Lenders have
agreed to grant such request.
Agreements
:
NOW, THEREFORE, in consideration of
the foregoing Recitals and the mutual agreements hereinafter set
forth, the Borrower, the Lenders, and the Administrative Agent,
intending to be legally bound, hereby agree as follows:
1. Amendments to Credit
Agreement . Subject to the terms and conditions of this First
Amendment, including, without limitation, Paragraph 2,
below:
(a) The definitions of
“Alternate Base Rate”, “Applicable Rate”,
“Consolidated Net Worth” and “Fiscal Quarter
Increase” in Section 1.01 (Defined Terms) of the Credit
Agreement are amended and restated in their entirety to provide,
respectively, as follows:
“Alternate Base
Rate” means, for
any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Federal Funds
Effective Rate in effect on such day plus one-half percent (0.50%),
and (c) the Adjusted LIBO Rate for an Interest Period of one
month beginning on such day (or if such day is not a Business Day,
the most recent Business Day), plus one percent (1%). Any change in
the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate will be effective from and including
the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
* * *
“Applicable
Rate” means for any
day from and after the First Amendment Effective Date:
(a) with respect to any Revolving
Loan that is a Base Rate Loan, the applicable rate per annum set
forth in the Pricing Schedule in the row opposite the caption
“Base Rate Margin” and in the column corresponding to
the “Pricing Level” that applies for such
day;
(b) with respect to any Revolving
Loan that is a Eurodollar Loan, the applicable rate per annum set
forth in the Pricing Schedule in the row opposite the caption
“Euro-Dollar Margin” and in the column corresponding to
the “Pricing Level” that applies for such day;
and
(c) with respect to the facility
fees payable hereunder, the applicable rate per annum set forth in
the Pricing Schedule in the row opposite the caption
“Facility Fee Rate” and in the column corresponding to
the “Pricing Level” that applies for such
day.
In each case, the “Applicable
Rate” will be based on the Borrower’s Pricing Rating
(as defined in the Pricing Schedule) as of the relevant
determination date; provided that at any time when an Event
of Default has occurred and is continuing, such Applicable Rates
will be those set forth in the Pricing Schedule as “Level V
Pricing”.
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* * *
“Consolidated Net
Worth” means, as at
any date of determination, the result of (a) all Consolidated
Assets (after deducting all applicable reserves and excluding any
re-appraisal or write-up of assets after the date of this
Agreement) as of such date, (b) minus all Consolidated
Liabilities as of such date, but, from and after the First
Amendment Effective Date, and (c) as applicable, plus
Accumulated Other Comprehensive Loss or minus Accumulated
Other Comprehensive Income.
* * *
“Fiscal Quarter
Increase” means, as
to any Fiscal Quarter, the greater of (a) an amount equal to
30% of the Borrower’s Consolidated net, after tax earnings
(determined in accordance with GAAP) for such Fiscal Quarter and
(b) zero dollars ($0).
(b) The definition of “SAM
Credit Agreement” in Section 1.01 (Defined Terms) of the
Credit Agreement is deleted in its entirety
(c) The following new defined terms
are added to Section 1.01 (Defined Terms) of the Credit
Agreement in the appropriate alphabetical order:
“Accumulated Other
Comprehensive Income” or “Accumulated Other Comprehensive
Loss” means, as at any date of determination, the amount
of Consolidated accumulated other comprehensive income (or loss),
as applicable, of the Borrower and its Subsidiaries, as reflected
on the balance sheet of the Borrower as of such date in accordance
with GAAP.
* * *
“First Amendment Effective
Date” has the
meaning specified in the First Amendment to this Agreement dated as
of March 27, 2009.
(d) Effective as of the First
Amendment Effective Date (defined below), the aggregate amount of
the Commitments shall be reduced permanently from $200,000,000 to
$100,000,000, and the last sentence of the definition of
“Commitment” in Section 1.01 (Defined Terms) of
the Credit Agreement is hereby amended and restated in its entirety
to provide: “The aggregate amount of the Commitments as of
the First Amendment Effective Date is
$100,000,000.”
(e) Section 2.13(a) (Interest)
of the Credit Agreement is amended and restated in its entirety to
provided as follows:
(a) The Loans comprising each Base
Rate Borrowing shall bear interest for each day at the Alternate
Base Rate, plus the Applicable Rate.
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(f) Clause (i)(B) of
Section 2.13(d) (Interest) of the Credit Agreement is amended
and restated in its entirety to provided as follows:
(B) in the case of any other amount,
2% plus the Alternate Base Rate, plus the Applicable Rate for Base
Rate Loans;
(g) Clause (viii) of
Section 6.04 (Investments, Loans, Advances, Guarantees and
Acquisitions) is amended and restated in its entirety to provide as
follows:
(viii) loans advanced by the
Borrower and its Material Subsidiaries to State Auto Mutual and its
subsidiaries (that are not the Borrower or its Subsidiaries) so
long as the aggregate unpaid principal balance of all such loans
under this clause (viii) does not at any time exceed
$75,000,000.
(h) Section 6.12 (Consolidated
Net Worth) is amended and restated in its entirety to provide as
follows:
Section 6.12. Consolidated
Net Worth. The Borrower shall not permit its Consolidated Net
Worth (a) as of the end of the Fiscal Quarter ending
December 31, 2008, to be less than $720,619,575, (b) as
of the end of the Fiscal Quarter ending March 31, 2009, to be
less than $675,000,000 and (c) as of the end of any Fiscal
Quarter thereafter, to be less than an amount equal to (i) the
Minimum Net Worth for the immediately preceding Fiscal Quarter,
plus (ii) the Fiscal Quarter Increase for such
immediately preceding Fiscal Quarter.
(i) The following words and phrase
references are deleted from clause (g) of Article 7 of the
Credit Agreement: “(i) an “Event of Default”
occurs under the SAM Credit Agreement or (ii)”.
(j) The existing Pricing Schedule is
deleted and replaced in its entirety by the first amended and
restated the Pricing Schedule attached as Attachment 1 hereto,
which hereby replaces the existing Pricing Schedule to the Credit
Agreement.
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(k) The amount of each
Lender’s Commitment as of the First Amendment Effective Date
is set forth on the amended and restated Schedule 2.01 attached as
Attachment 2 hereto, which hereby replaces the existing Schedule
2.01 to the Credit Agreement.
2. Amendment Effective Date;
Conditions Precedent . The amendments set forth in Paragraph 1,
above
