EXHIBIT 10
FOURTH AMENDMENT TO CREDIT AGREEMENT
Dated: June 29, 2002
Parties: StanCorp Financial Group, Inc. ("Borrower")
U.S. Bank National Association ("U.S. Bank")
RECITALS:
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A. U.S. Bank and Borrower have entered into a Credit
Agreement dated June 30, 2000, which has been amended by Amendment to Credit
Agreement dated November 29, 2000, First Amendment to Credit Agreement dated
June 27, 2001, Second Amendment to Credit Agreement dated July 31, 2002, and
Third Amendment to Credit Agreement dated September 25, 2001 (collectively,
"Credit Agreement").
B. The parties wish to modify the Credit Agreement as
set forth herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree to enter into
this Fourth Amendment to Credit Agreement ("Amendment") as follows:
1. All capitalized terms used in this Amendment and not
defined herein shall have the meanings ascribed to those terms in the Credit
Agreement.
2. The definition of "Expiry Date" in Section 1.1 of the
Credit Agreement is deleted and replaced with the following:
"Expiry Date" means August 31, 2002.
3. The effectiveness of this Amendment is subject to
satisfaction of the following conditions precedent prior to or concurrently with
the execution of this Amendment.
3.1 No Event of Default shall have occurred and
be continuing.
3.2 All representations and warranties contained
in the Credit Agreement as amended shall be true and correct as of the date of
execution of this Amendment.
3.3 U.S. Bank shall have received such other
documents and information and Borrower shall have satisfied such additional
requirements as U.S. Bank reasonably requires.
4. Borrower reaffirms the representations and warranties
in the Credit Agreement and in the Loan Documents and acknowledges that except
as amended herein, each such Loan Document remains in full force and effect and
is and shall remain valid and enforceable in accordance with its terms.
Following the execution of this Amendment, references in the Credit Agreement to
the "Agreement" mean the Credit Agreement, as amended previously and by this
Amendment.
5. Under Oregon law, most agreements promises and
commitments made by lenders after October 3, 1989, concerning loans and other
credit extensions which are not for personal, family or household purposes or
secured solely by the borrower's residence must be in writing, express
consideration and be signed by the lender to be enforceable.
Borrower and Guarantors acknowledge receipt of a copy of this
Agreement.
STANCORP FINANCIAL GROUP, INC. U.S. BANK NATIONAL ASSOCIATION
By: /s/ By: /s/
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Title: Title:
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CONSENT AND REAFFIRMATION OF GUARANTY
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Each of the undersigned hereby acknowledges and agrees to all
terms and conditions of the foregoing Fourth Amendment to Credit Agreement,
acknowledges and consents to the execution, delivery and performance by StanCorp
Financial Group, Inc. of this Fourth Amendment to Credit Agreement. In addition,
each of the undersigned Guarantors reaffirms its obligation to U.S. Bank
National Association and agrees that all terms and conditions of the most recent
Guaranty executed by such Guarantor shall remain in full force and effect.
STANDARD INSURANCE COMPANY STANCORP MORTGAGE INVESTORS, LLC
By: /s/ By: /s/
-------------------------------- -------------------------------------
Title: Title:
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Date: Date:
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FIFTH AMENDMENT TO CREDIT AGREEMENT
Dated: July 2, 2002
Parties: StanCorp Financial Group, Inc. ("Borrower")
U.S. Bank National Association ("Bank")
RECITALS:
--------
A. Bank and Borrower have entered into a Credit
Agreement dated June 30, 2000, which has been amended by Amendment to Credit
Agreement dated November 29, 2000, First Amendment to Credit Agreement dated
June 27, 2001, Second Amendment to Credit Agreement dated July 31, 0000, Xxxxx
Xxxxxxxxx to Credit Agreement dated September 25, 2001, and Fourth Amendment to
Credit Agreement dated June 27, 2002 (collectively, "Credit Agreement").
B. The parties wish to modify the Credit Agreement as
set forth herein.
NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree to enter into
this Fifth Amendment to Credit Agreement ("Amendment") as follows:
1. Definitions.
1.1 The following defined terms in Section 1.1
of the Credit Agreement are deleted and replaced with the following:
"Applicable Margin": The percentages set forth below:
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Status of Compliance with Fixed LIBOR Fixed LIBOR Advances Floating LIBOR Floating LIBOR
Covenants in Sections 8.11, Advances During At Any Time Except Advances During Advances At Any Time
9.7, 9.11 and 9.12 Bulge Period During Bulge Period Bulge Period Except During Bulge
Period
----------------------------- ------------------ ------------------------ ------------------- ----------------------
In compliance with all 0.50% 0.40% 0.70% 0.60%
financial covenants
----------------------------- ------------------ ------------------------ ------------------- ----------------------
Out of compliance with any 0.60% 0.50% 0.80% 0.70%
financial covenant
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"Authorized Control Level Risk-Based Capital": Shall have the
meaning set forth on page 27, line 31, column 1 of the most
recent NAIC statement filed by SIC.
"Commitment": From the Bulge Effective Date through October
15, 2002, One Hundred Fifty Million Dollars ($150,000,000.00)
and at any other time, One Hundred Million Dollars
($100,000,000.00), in either case, as such amount may be
reduced from time to time pursuant to Section 4.4 or Section
10.2; provided, however, that if the context requires,
"Commitment" may also refer to the Bank's commitment to make
Loans and issue Letters of Credit hereunder.
"Expiry Date": May 31, 2003.
"Net Income": Shall have the meaning set forth on page 4, line
35, column 1 of the most recent NAIC statement filed by SIC.
"Net Income to Total Income Percentage": (a) Net Income, plus
the amount of the ceding commission (up to a maximum of
Seventy-Five Million Dollars ($75,000,000.00)) paid by
Borrower for the block of business purchased from Teacher's
Insurance and Annuity Association, divided by (b) the sum of
Total Income plus Realized Capital Gains/Losses, times (c)
100.
"Prior Year Capital and Surplus": Shall have the meaning set
forth on page 3, line 38, column 2 of the NAIC statement filed
by SIC for the year prior to the year reflected in the most
recent NAIC statement filed by SIC.
"Realized Capital Gains/Losses": Shall have the meaning set
forth on page 4, line 34, column 1 of the most recent NAIC
statement filed by SIC.
"Total Adjusted Capital": Shall have the meaning set forth on
page 27, line 30, column 1 of the most recent NAIC statement
filed by SIC.
"Total Income": Shall have the meaning set forth on page 4,
line 9, column 1 of the most recent NAIC statement filed by
SIC.
1.2 The first paragraph of the definition of
Interest Period is hereby deleted and replaced with the following:
For any Fixed LIBOR Advance, the period commencing on the
borrowing date of such Fixed LIBOR Advance or the last day of
the preceding Interest Period for such Fixed LIBOR Advance, as
the case may be, and ending on the numerically corresponding
day one, two,
three or six months thereafter, as selected by the Borrower
pursuant to Section 2.3 or Section 2.4; provided that:
1.3 The following defined terms are hereby added
to Section 1.1 of the Credit Agreement:
"Bulge Effective Date" means the date on which (a) all
conditions to the effectiveness of the Fifth Amendment to
Credit Agreement have been satisfied; (b) Bank has received
such corporate and limited liability company resolutions or
other documents as it requires to evidence the authority of
(i) Borrower to borrow the Loan and Letters of Credit in an
amount of up to $150,000,000, (ii) SMI to guaranty the Loan
and Letters of Credit in an amount of up to $150,000,000, and
(iii) SIC to guaranty all amounts in excess of $20,000,000
with respect to the Loan and Letters of Credit of up to
$150,000,000; (c) Bank has received a fee for the temporary
increase in the Commitment in the amount of Seventy-Five
Thousand Dollars ($75,000); and (d) Borrower has requested an
increase in the Commitment from $100,000,000 to $150,000,000.
"Bulge Period": The period of time commencing on the Bulge
Effective Date and ending on the later of: (a) October 15,
2002; and (b) the date the sum of the outstanding principal
balance of the Note, plus the Letter of Credit Obligations, is
permanently reduced to One Hundred Million Dollars
($100,000,000.00) or less.
2. Interest Rate Options. The first sentence of
paragraph (a) of Section 3.1 of the Credit Agreement is hereby deleted and
replaced with the following:
(a) Interest Rate Options. Interest on each Advance hereunder
shall accrue at one of the following per annum rates selected
by Borrower: (i) upon notice to Bank, the Applicable Margin
plus the one-month LIBOR rate quoted by the Bank from Telerate
Page 3750 or any successor thereto, which shall be that
one-month LIBOR rate in effect and reset each New York banking
day ("Daily Reset LIBOR Rate"; and each such Advance, a
"Floating LIBOR Advance"); or (ii) upon a minimum of two New
York banking days prior notice, the Applicable Margin plus the
one, two, three or six month LIBOR rate quoted by the Bank
from Telerate Page 3750 or any successor thereto (which shall
be the LIBOR rate in effect two New York banking days prior to
commencement of the LIBOR loan advance) ("LIBOR Rate"; and
each such Advance, a "Fixed LIBOR Advance").
3. Affirmative Covenants. The following is hereby added
to the Credit Agreement as Section 8.11 thereof:
Section 8.11 Performance by SIC.
Cause SIC to comply with the following financial covenants:
(a) Risk-Based Capital Percentage. Maintain a
Risk-Based Capital Percentage that is greater than or equal to
450%, tested annually;
(b) Net Income to Total Income Percentage.
Maintain a Net Income to Total Income Percentage that is
greater than or equal to 3.0%, tested quarterly; and
(c) Gross Change in Capital Surplus Percentage.
Maintain a Gross Change in Capital Surplus Percentage that is
greater than or equal to 0%, tested annually.
4. Negative Covenants.
4.1 Section 9.7 of the Credit Agreement is
deleted and replaced with the following:
Section 9.7 Funded Debt.
Incur, create, issue, assume or suffer to exist Funded Debt in
excess of $400,000,000.00 outstanding at any one time.
4.2 Sections 9.11, 9.12 and 9.13 of the Credit
Agreement are deleted and replaced with the following:
Section 9.11 Borrower's Equity.
Permit the stockholder's equity of the Borrower and its
Subsidiaries on a consolidated basis determined in accordance
with GAAP as of the last day of any fiscal quarter to be less
than $900,000,000.00, but excluding the effect of other
comprehensive income included in or excluded from
stockholder's equity on account of Statement No. 130 of the
Financial Accounting Standards Board and similar accounting
rules.
Section 9.12 SMI's Tangible Net Worth.
Permit the Tangible Net Worth of SMI as of the last day of any
fiscal quarter to be less than $10,000,000.00.
Section 9.13 Investment Policies.
Make any material change in its asset mix as provided for in
its current investment policy.
5. Events of Default.
5.1 Section 10.1(c) of the Credit Agreement is
deleted and replaced with the following:
(c) The Borrower shall fail to comply with Section
8.2 or 8.11 hereof, or any section of Article IX hereof.
5.2 The following is hereby added to the Credit
Agreement as Section 10.1(l) thereof:
(l) Any default or event of default occurs under
or Borrower or any Guarantor fails to pay, perform or comply
with any term, covenant or obligation in (i) any loan
agreement, promissory note or any other agreement, document or
instrument between such Person and Bank; or (ii) any loan
agreement, promissory note or any other document or instrument
binding on such Person which relates to any indebtedness of
Borrower or any Guarantor to any Person other than Bank.
6. Exhibit A. Exhibit A to the Credit Agreement is
replaced with the Exhibit A attached hereto.
7. Defined Terms. All capitalized terms used in this
Amendment and not defined herein shall have the meanings ascribed to those
terms in the Credit Agreement.
8. Conditions Precedent. The effectiveness of this
Amendment and Lender's agreement to make any further Loan advances is subject to
satisfaction of the following conditions precedent prior to or concurrently with
the execution of this Amendment.
8.1 Bank shall have received executed originals
of this Agreement, a Negative Pledge Agreement executed by Borrower, a new Note
and, if required, an opinion letter from Borrower's counsel.
8.2 All terms and conditions of the Registration
Statement to be filed by Borrower with the Securities and Exchange Commission on
July 3, 2002, the Indenture ("Indenture") and Supplemental Indenture relating to
such Registration Statement, each between Borrower and Bank, as Trustee, the
Security or Securities (as defined in the Indenture), and each other document,
instrument and agreement executed by Borrower or any other Person in connection
with or which relates to any of the foregoing, shall be acceptable to Bank.
8.3 Bank shall have received all organizational
documents, resolutions, authorizations and information it may request relating
to the authority for and validity of this Amendment and the other documents and
instruments executed in connection herewith, the due organization, valid
existence, qualification to do business and good standing of the Borrower and
Guarantor and any other related matters, each in form and substance satisfactory
to Bank.
8.4 No Event of Default shall have occurred and be
continuing.
8.5 All representations and warranties contained in the
Credit Agreement as amended shall be true and correct as of the date of
execution of this Amendment.
8.6 Bank shall have received such other documents and
information and Borrower shall have satisfied such additional requirements as
Bank reasonably requires.
9. Reaffirmation. Borrower reaffirms the representations and
warranties in the Credit Agreement and in the Loan Documents and acknowledges
that, except as amended previously or herein, each such Loan Document remains in
full force and effect and is and shall remain valid and enforceable in
accordance with its terms. Following the execution of this Amendment, references
in the Credit Agreement to the "Agreement" mean the Credit Agreement, as amended
previously and by this Amendment.
10. Disclosure. Under Oregon law, most agreements, promises and
commitments made by lenders after October 3, 1989, concerning loans and other
credit extensions which are not for personal, family or household purposes or
secured solely by the borrower's residence must be in writing, express
consideration and be signed by the lender to be enforceable.
Borrower and Guarantors acknowledge receipt of a copy of this
Agreement.
STANCORP FINANCIAL GROUP, INC. U.S. BANK NATIONAL ASSOCIATION
By: /s/ By: /s/
------------------------------- --------------------------------------
Title: Title:
---------------------------- -----------------------------------
CONSENT AND REAFFIRMATION OF GUARANTY
-------------------------------------
Each of the undersigned hereby acknowledges and agrees to all
terms and conditions of the foregoing Fifth Amendment to Credit Agreement, and
acknowledges and consents to the execution, delivery and performance by StanCorp
Financial Group, Inc. of this Fifth Amendment to Credit Agreement ("Fifth
Amendment"). In addition, each of the undersigned Guarantors reaffirms its
obligation to U.S. Bank National Association ("Bank"), agrees that all terms and
conditions of the most recent Guaranty executed by such Guarantor shall remain
in full force and effect and agrees that the indebtedness and obligations
guaranteed by such Guaranty include without limitation the indebtedness of
Borrower to Bank pursuant to the Credit Agreement as amended by the Fifth
Amendment and the Note executed by Borrower in connection with the Fifth
Amendment.
STANDARD INSURANCE COMPANY STANCORP MORTGAGE INVESTORS, LLC
By: /s/ By: /s/
--------------------------------- -----------------------------------
Title: Title:
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Date: Date:
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EXHIBIT A
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PROMISSORY NOTE
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$150,000,000.00 ______________, 2002
FOR VALUE RECEIVED, the undersigned StanCorp Financial Group,
Inc., an Oregon corporation (the "Borrower"), promises to pay to the order of
U.S. Bank National Association (the "Bank"), on the due date or dates determined
under the Credit Agreement hereinafter referred to, the principal sum of One
Hundred Fifty Million Dollars ($150,000,000.00), or if less, the then unpaid
principal amount of the Loan (as such terms are defined in the Credit Agreement)
as may be borrowed by the Borrower from the Bank under the Credit Agreement. All
Loans and all payments of principal shall be recorded by the holder in its
records which records shall be conclusive evidence of the subject matter
thereof, absent manifest error. Notwithstanding any contrary provision hereof,
the sum of the Letter of Credit Obligations (as such term is defined in the
Credit Agreement) plus the unpaid principal balance of this Note shall not
exceed (a) $150,000,000.00 from the Bulge Effective Date (as defined in the
Credit Agreement) through October 15, 2002, or (b) $100,000,000.00 at any other
time.
The Borrower further promises to pay to the order of the Bank
interest on the aggregate unpaid principal amount hereof from time to time
outstanding from the date hereof until paid in full at the rates per annum which
shall be determined in accordance with the provisions of the Credit Agreement.
Accrued interest shall be payable on the dates specified in the Credit
Agreement.
All payments of principal and interest under this Note shall
be made in lawful money of the United States of America in immediately available
funds at the Bank's office at Commercial Loan Services, PD-OR-PL7LD, 000 X.X.
Xxx Xxxxxx, Xxxxxxxx, XX 00000, or at such other place as may be designated by
the Bank to the Borrower in writing.
This Note is the Note referred to in, and evidences
indebtedness incurred under, a Credit Agreement dated as of June 30, 2000
(herein, as it has been and may be amended, modified or supplemented from time
to time, called the "Credit Agreement") among the Borrower and the Bank to which
Credit Agreement reference is made for a statement of the terms and provisions
thereof, including those under which the Borrower is permitted and required to
make prepayments and repayments of principal of such indebtedness and under
which such indebtedness may be declared to be immediately due and payable.
All parties hereto, whether as makers, endorsers or otherwise,
severally waive presentment, demand, protest and notice of dishonor in
connection with this Note.
This Note renews the promissory note executed by Borrower
dated July 31, 2001, in the principal amount of $100,000,000.00, but shall not
be deemed to be in satisfaction of, or to construe a novation of, such note.
This Note is made under and governed by the internal laws of
the State of Oregon.
STANCORP FINANCIAL GROUP, INC.
By:
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Title:
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