EXHIBIT 10.1

 

November 17, 2008

 

SURPLUS NOTE

 

Allstate Life Insurance Company, a life stock insurance company duly organized
and existing under the laws of the State of Illinois (the “Company”) for value
received hereby promises to pay to Allstate Insurance Company, or its assigns,
the principal sum of $400,000,000.00 (Four Hundred Million Dollars) in cash on
November 17, 2028 and to pay interest thereon semi-annually on the first day of
April and October in each year, commencing April 1, 2009, at the rate of 7.00 %
per annum, until the principal hereof is paid, except that the final payment of
any accrued and unpaid interest shall be concurrent with the payment of
principal.  Interest will be computed on the basis of a 360-day year of twelve
30-day months.  All principal and interest shall be paid at the principal
corporate office of the Company or such other place, which shall be acceptable
to the Company, as the holder hereof shall designate in writing to the Company,
in collected and immediately available funds in lawful money of the United
States of America.  Principal and interest shall be payable on the terms and
conditions set forth below:

 

1.                                       NO PAYMENT OF PRINCIPAL OR INTEREST
SHALL BE PERMITTED ON THIS SURPLUS NOTE WITHOUT THE PRIOR WRITTEN APPROVAL OF
THE DIRECTOR OF INSURANCE OF THE STATE OF ILLINOIS (THE “DIRECTOR”) AND SHALL
ONLY BE MADE OUT OF SURPLUS OF THE COMPANY IN EXCESS OF THE MINIMUM SURPLUS THE
COMPANY IS REQUIRED TO MAINTAIN UNDER SECTION 13 OF THE ILLINOIS INSURANCE CODE
[215 ILCS 5/13].  THE COMPANY COVENANTS THAT IT SHALL USE ITS BEST EFFORTS TO
OBTAIN SUCH APPROVALS ON OR PRIOR TO THE DATE ON WHICH SUCH PRINCIPAL OR
INTEREST SHALL BECOME DUE AND PAYABLE.  IN ADDITION TO AND NOT IN LIEU OF THE
FOREGOING, THE HOLDER OF THIS SURPLUS NOTE SHALL HAVE THE OPTION OF SEEKING SUCH
APPROVALS ITSELF AND, IN SUCH EVENT, THE COMPANY COVENANTS TO COOPERATE FULLY
WITH THE HOLDER OF THIS SURPLUS NOTE IN SEEKING SUCH APPROVALS.

 

2.                                       TO THE EXTENT THAT A PAYMENT OF ALL OR
A PORTION OF THE PRINCIPAL OF THIS SURPLUS NOTE OR INTEREST HEREON IS PROHIBITED
PURSUANT TO THE PROVISIONS OF PARAGRAPH 1 HEREOF, SUCH PROHIBITION SHALL NOT BE
CONSIDERED TO BE A FORGIVENESS OF THE INDEBTEDNESS HEREUNDER, AND INTEREST SHALL
CONTINUE TO BE ACCRUED AND PAID AT THE RATE PROVIDED HEREIN THROUGH THE DATE OF
PAYMENT ON ANY SUCH UNPAID PRINCIPAL (BUT NOT ON INTEREST THE PAYMENT OF WHICH
WAS PROHIBITED PURSUANT TO THE PROVISIONS OF PARAGRAPH 1 HEREOF, DURING THE
PERIOD OF SUCH PROHIBITION), AND PROMPTLY (AND IN NO EVENT LATER THAN 30 DAYS)
AFTER THE REMOVAL OF ANY SUCH PROHIBITION THE COMPANY SHALL MAKE PAYMENT OF ALL
AMOUNTS THEN PAST DUE AND OWING HEREUNDER.

 

3.                                       THE COMPANY COVENANTS THAT IF:

 

(A)                                  DEFAULT IS MADE IN THE PAYMENT OF ANY
INSTALLMENT OF INTEREST ON THIS SURPLUS NOTE WHEN SUCH INTEREST BECOMES DUE AND
PAYABLE AND SUCH DEFAULT CONTINUES FOR A PERIOD OF 30 DAYS, OTHER THAN TO THE
EXTENT SUCH INTEREST PAYMENT IS PROHIBITED PURSUANT TO PARAGRAPH 1 HEREOF, OR

 

(B)                                 DEFAULT IS MADE IN THE PAYMENT OF THE
PRINCIPAL OF THIS SURPLUS NOTE WHEN SUCH PRINCIPAL BECOMES DUE AND PAYABLE,
OTHER THAN TO THE EXTENT THAT SUCH PRINCIPAL

 

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PAYMENT IS PROHIBITED PURSUANT TO PARAGRAPH 1 HEREOF,

 

THE COMPANY WILL, UPON DEMAND BY THE HOLDER OF THIS SURPLUS NOTE, AND SUBJECT TO
THE PROVISIONS OF PARAGRAPH 1 HEREOF, PAY TO IT THE WHOLE AMOUNT OF THE
PRINCIPAL OF THIS SURPLUS NOTE, PLUS ACCRUED INTEREST, WITH INTEREST UPON THE
OVERDUE PRINCIPAL AND, TO THE EXTENT THAT PAYMENT OF SUCH INTEREST SHALL BE
LEGALLY ENFORCEABLE, UPON OVERDUE INSTALLMENTS OF INTEREST (EXCLUDING INTEREST
PAYMENTS PROHIBITED PURSUANT TO PARAGRAPH 1 HEREOF), AT THE RATE BORNE BY THIS
SURPLUS NOTE; AND, IN ADDITION THEREOF, SUCH FURTHER AMOUNT AS SHALL BE
SUFFICIENT TO COVER THE COSTS AND EXPENSES OF COLLECTION, INCLUDING REASONABLE
ATTORNEYS’ FEES.

 

4.                                       IN THE EVENT OF THE LIQUIDATION OF THE
COMPANY, THE CLAIMS UNDER THIS SURPLUS NOTE SHALL BE PAID OUT OF ANY ASSETS
REMAINING AFTER THE PAYMENT OF ALL POLICY OBLIGATIONS AND ALL OTHER LIABILITIES
BUT BEFORE DISTRIBUTION OF ASSETS TO SHAREHOLDERS; PROVIDED, HOWEVER, THAT THE
CLAIMS OF THE HOLDER OF THIS SURPLUS NOTE SHALL NOT BE SUBORDINATED TO THE
CLAIMS OF THE HOLDER OF ANY OTHER SUCH SURPLUS NOTE.

 

5.                                       SUBJECT TO THE PROVISIONS OF PARAGRAPH
1 HEREOF, PAYMENTS OF PRINCIPAL AND INTEREST ON THIS SURPLUS NOTE MAY BE REPAID
OR PREPAID, IN WHOLE AT ANY TIME OR IN PART FROM TIME TO TIME, WITHOUT PREMIUM
OR PENALTY AND WITH INTEREST TO THE DATE OF PAYMENT ONLY.

 

6.                                       EXCEPT FOR THE EVENTS DESCRIBED IN
PARAGRAPHS 1 AND 4 ABOVE, NO PROVISION OF THIS SURPLUS NOTE SHALL ALTER OR
IMPAIR THE OBLIGATION OF THE COMPANY, WHICH IS ABSOLUTE AND UNCONDITIONAL, TO
PAY THE PRINCIPAL OF AND INTEREST ON THIS SURPLUS NOTE AT THE TIMES, PLACE AND
RATE, AND IN THE COIN OR CURRENCY, HEREIN PRESCRIBED.  NO PROVISION OF THIS
SURPLUS NOTE SHALL EXTINGUISH ULTIMATE LIABILITY FOR THE PAYMENT OF PRINCIPAL
AND INTEREST HEREUNDER.

 

7.                                       THE OBLIGATION OF THE COMPANY TO PAY
THIS SURPLUS NOTE SHALL NOT FORM A PART OF THE COMPANY’S LEGAL LIABILITIES UNTIL
AUTHORIZED FOR PAYMENT BY THE DIRECTOR AND SHALL NOT BE A BASIS OF ANY SET OFF,
BUT, UNTIL AUTHORIZED FOR REPAYMENT BY THE DIRECTOR, ALL STATEMENTS PUBLISHED OR
FILED WITH THE DIRECTOR BY THE COMPANY SHALL SHOW THE AMOUNT THEREOF THEN
REMAINING UNPAID AS A SPECIAL SURPLUS ACCOUNT.  THE OBLIGATION OF THE COMPANY
UNDER THIS SURPLUS NOTE MAY NOT BE OFFSET OR BE SUBJECT TO RECOUPMENT WITH
RESPECT TO ANY LIABILITY OR OBLIGATION OWED TO THE COMPANY.

 

8.                                       EACH PAYMENT MADE HEREUNDER WILL BE
CREDITED FIRST TO ACCRUED BUT UNPAID INTEREST, IF ANY, AND THE BALANCE OF SUCH
PAYMENT WILL BE CREDITED TO THE PRINCIPAL AMOUNT HEREOF.

 

9.                                       IN THE EVENT THAT ANY PAYMENT OF
PRINCIPAL OR INTEREST ON THIS SURPLUS NOTE IS SCHEDULED TO BE MADE ON A DAY THAT
IS NOT A BUSINESS DAY, THEN SUCH PAYMENT SHALL BE MADE ON THE NEXT FOLLOWING
BUSINESS DAY AND NO ADDITIONAL INTEREST SHALL ACCRUE AS A RESULT OF PAYMENT ON
SUCH FOLLOWING BUSINESS DAY.  FOR THE PURPOSE OF THIS PARAGRAPH 9, “BUSINESS
DAY” SHALL MEAN ANY DAY THAT IS NOT A SATURDAY, SUNDAY OR ANY OTHER DAY ON WHICH
BANKING INSTITUTIONS IN THE STATE OF ILLINOIS ARE PERMITTED OR REQUIRED BY ANY
APPLICABLE LAW TO CLOSE.

 

10.                                 NO AGREEMENT OR INTEREST SECURING ANY
OBLIGATION OF THE COMPANY, WHETHER EXISTING ON THE DATE OF THIS SURPLUS NOTE OR
SUBSEQUENTLY ENTERED INTO, SHALL APPLY TO OR SECURE THE OBLIGATION OF THE
COMPANY UNDER THIS SURPLUS NOTE.

 

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11.                                 IN THE EVENT THE COMPANY CONSOLIDATES OR
MERGES INTO ANOTHER ENTITY OR TRANSFERS SUBSTANTIALLY ALL OF ITS ASSETS TO
ANOTHER ENTITY, THE ENTITY INTO WHICH THE COMPANY CONSOLIDATES OR MERGES OR TO
WHICH THE ASSETS OF THE COMPANY ARE TRANSFERRED MUST ASSUME THE LIABILITY OF THE
COMPANY HEREUNDER.

 

12.                                 THIS SURPLUS NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF ILLINOIS, INCLUDING
THE PROVISIONS OF SECTION 215 ILCS 5/34.1 OF THE ILLINOIS INSURANCE CODE, AND
APPLICABLE REGULATIONS ISSUED PURSUANT THERETO.

 

IN WITNESS WHEREOF, the Company has caused this Surplus Note to be executed in
its name and attested to by its authorized officer, and its corporate seal to be
hereunto affixed, all as of the date first written above.

 

 

ALLSTATE LIFE INSURANCE COMPANY

 

 

 

 

(CORPORATE SEAL)

 

 

By:

  /s/ John C. Pintozzi

 

  Name:  John C. Pintozzi

 

  Title:   Senior Vice President

 

              and Chief Financial Officer

 

 

 

 

Attest:

  /s/ Susan L. Lees

 

 

  Name: Susan L. Lees

 

 

              Senior Vice President, Secretary

 

 

              and General Counsel

 

 

 

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