EXHIBIT 10.2

 

 

 

SURPLUS NOTE PURCHASE AGREEMENT

 

Between

 

ALLSTATE LIFE INSURANCE COMPANY,

as Seller

 

and

 

KENNETT CAPITAL, INC.,

as Purchaser

 

Dated as of August 1, 2005

 

 

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

ARTICLE I

DEFINITIONS

1

 

 

 

 

Section 1.01

Definitions

1

 

 

 

 

Section 1.02

Other Definitional Provisions

3

 

 

 

 

ARTICLE II

PURCHASE AND SALE OF SURPLUS NOTES

3

 

 

 

 

Section 2.01

Purchase and Sale of Surplus Notes

3

 

 

 

 

Section 2.02

Delivery and Payment

3

 

 

 

 

Section 2.03

Forms of Kennett Notes

3

 

 

 

 

ARTICLE III

TERMS AND CONDITIONS OF REPAYMENT OF KENNETT NOTES; MATURITY

3

 

 

 

 

Section 3.01

Interest

3

 

 

 

 

Section 3.02

Principal

3

 

 

 

 

Section 3.03

Payments by the Purchaser

3

 

 

 

 

Section 3.04

Prepayment

4

 

 

 

 

ARTICLE IV

REGISTRATION OF KENNETT NOTES; TRANSFER AND EXCHANGE

4

 

 

 

 

Section 4.01

Kennett Note Register

4

 

 

 

 

Section 4.02

Exchanges and Transfers

4

 

 

 

 

ARTICLE V

EVENTS OF DEFAULT

5

 

 

 

 

Section 5.01

Events of Default

5

 

 

 

 

Section 5.02

Remedies Upon an Event of Default

5

 

 

 

 

ARTICLE VI

MISCELLANEOUS

5

 

 

 

 

Section 6.01

Notices

5

 

 

 

 

Section 6.02

Amendments, Waivers.

5

 

 

 

 

Section 6.03

Successors and Assigns; Third Party Beneficiaries

6

 

 

 

 

Section 6.04

Severability

6

 

 

 

Section 6.05

Binding Effect

6

 

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Section 6.06

GOVERNING LAW; CONSENT TO JURISDICTION

6

 

 

 

 

Section 6.07

Execution in Counterparts

6

 

 

 

 

Section 6.08

Entire Agreement

6

 

 

 

 

Section 6.09

Headings

6

 

 

 

 

SCHEDULES AND EXHIBITS

 

 

 

 

 

Schedule I

Notice Information

 

Exhibit A

Form of Kennett Note

 

 

ii

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This SURPLUS NOTE PURCHASE AGREEMENT, dated as of August 1, 2005, is made by and
between Allstate Life Insurance Company, a life insurance company domiciled in
Illinois (together with its successors and assigns, the “Seller”), and Kennett
Capital, Inc., a corporation organized under the laws of the State of Delaware
(together with its successors and assigns, the “Purchaser”).

 

RECITALS

 

WHEREAS, the Seller desires to sell to the Purchaser on the date hereof and from
time to time hereafter, and the Purchaser desires to purchase from the Seller,
surplus notes (the “Surplus Notes”) issued by ALIC Reinsurance Company (the
“Issuer”) in an aggregate principal amount up to $750,000,000 (the “Authorized
Principal Amount”); and

 

WHEREAS, as consideration for the sale of the Surplus Notes the Seller shall
receive one or more notes (the “Kennett Notes”) from the Purchaser with an
aggregate principal amount equal to the aggregate principal amount of the
Surplus Notes, which shall not exceed the Authorized Principal Amount;

 

NOW, THEREFORE, for full and fair consideration, the parties hereto agree as
follows:

 

ARTICLE I
DEFINITIONS

 

SECTION 1.01                                DEFINITIONS.  THE FOLLOWING
CAPITALIZED TERMS SHALL HAVE THE FOLLOWING MEANINGS:

 

“Agreement” means this Surplus Note Purchase Agreement, as the same may from
time to time be amended, supplemented or otherwise modified in accordance with
the terms hereof.

 

“Authorized Principal Amount” has the meaning specified in the first WHEREAS
clause in the recitals hereof.

 

“Business Day” means any day other than a Saturday or a Sunday or any day on
which banking institutions in Chicago, Illinois, are authorized or obligated by
law, regulation or executive order to be closed.

 

“Event of Default” has the meaning specified in Section 5.01 hereof.

 

“Holder” means, with respect to any Kennett Note, the Person in whose name such
Kennett Note is registered in the Kennett Note Register.

 

“Interest Payment Date” means each December 1 and June 1, commencing December 1,
2005, provided that if such day is not a Business Day, the next succeeding
Business Day.

 

“Interest Period” means, with respect to any Kennett Note, (a) in the case of
the initial interest period with respect to such Kennett Note, the period from,
and including, the date such Kennett Note was issued to the Seller to, but
excluding, the immediately following Payment Date, (b) thereafter, the period
from, and including, the preceding Payment Date to, but excluding, the next
succeeding Payment Date, and (c) in the case of the final interest period with
respect to such Kennett Note, the period from, and including, the preceding
Payment Date to, but excluding, the Maturity Date.

 

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“Interest Rate” means, with respect to each Kennett Note, the yield calculated
as the sum of (a) the 10 Year CMT Rate, as set forth in the corresponding
Surplus Notes, plus (b) such spread as set forth in the corresponding Surplus
Notes less 20 basis points.

 

“Issuer” has the meaning specified in the first WHEREAS clause in the recitals
hereof.

 

“Kennett Note Register” has the meaning specified in Section 4.01 hereof.

 

“Kennett Notes” has the meaning specified in the second WHEREAS clause in the
recitals hereof.

 

“Maturity Date” means, with respect to a Kennett Note, the date on which all
outstanding unpaid principal on such Kennett Note becomes due and payable,
whether at the Stated Maturity Date or by acceleration pursuant to Section 5.02.

 

“Payment Date” means any Interest Payment Date or Maturity Date.

 

“Person” means an individual, corporation (including a business trust),
partnership, limited liability company, joint venture, association, joint stock
company, trust (including any beneficiary thereof), unincorporated association
or government or any agency or political subdivision thereof.

 

“Purchaser” has the meaning specified in the introduction to this Agreement.

 

“Record Date” means the date on which the Holders of any Kennett Note entitled
to receive a payment with respect to principal or interest on the next
succeeding Payment Date are determined, such date as to any Payment Date being
five (5) Business Days prior to such Payment Date.

 

“Seller” has the meaning specified in the introduction to this Agreement.

 

“Series” means a series of Surplus Notes all having the same maturity date and
terms authorized by the Issuer by or pursuant to a particular board resolution
duly adopted by the Issuer’s board of directors authorizing corporate action by
the Issuer.

 

“Series 2005-A Notes” means Surplus Notes of the Issuer in the principal amount
of $50,000, 000 denominated as Series 2005-A Notes issued on July 1, 2005.

 

“Series 2005-B Notes” means Surplus Notes of the Issuer in the principal amount
of $50,000,000 denominated as Series 2005-B Notes issued on July 1, 2005.

 

“Stated Maturity Date” means, with respect to each Kennett Note, the thirtieth
(30th) anniversary of the issuance date of such Kennett Note, provided such date
is a Business Day.

 

“Surplus Notes” has the meaning specified in the first WHEREAS clause in the
recitals hereof.

 

“10 Year CMT Rate” means the 10 Year Constant Maturity Treasury Yield, and shall
be recalculated every ten years on the anniversary date of the first Interest
Payment Date for each Series of Surplus Notes.

 

“10 Year Constant Maturity Treasury Yield” means the ten year Constant Maturity
Treasury Yield as reported in the Wall Street Journal.

 

2

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SECTION 1.02                                OTHER DEFINITIONAL PROVISIONS.

 

(A)                 ALL TERMS DEFINED IN THIS AGREEMENT SHALL HAVE THE DEFINED
MEANINGS WHEN USED IN ANY CERTIFICATE OR OTHER DOCUMENT MADE OR DELIVERED
PURSUANT HERETO.

 

(B)                THE WORDS “HEREOF,” “HEREIN” AND “HEREUNDER” AND WORDS OF
SIMILAR IMPORT WHEN USED IN THIS AGREEMENT SHALL REFER TO THIS AGREEMENT AS A
WHOLE AND NOT TO ANY PARTICULAR PROVISION OF THIS AGREEMENT; AND SECTION AND
SUBSECTION REFERENCES CONTAINED IN THIS AGREEMENT ARE REFERENCES TO SECTIONS OR
SUBSECTIONS IN OR TO THIS AGREEMENT UNLESS OTHERWISE SPECIFIED.

 

ARTICLE II
PURCHASE AND SALE OF SURPLUS NOTES

 

SECTION 2.01                                PURCHASE AND SALE OF SURPLUS NOTES. 
UPON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH IN THIS AGREEMENT, AND IN
RELIANCE ON THE COVENANTS AND AGREEMENTS HEREIN SET FORTH, ON THE DATE HEREOF,
THE SELLER SHALL SELL AND THE PURCHASER MAY PURCHASE THE SERIES 2005-A NOTES AND
THE SERIES 2005-B NOTES OF THE ISSUER.  FROM TIME TO TIME FROM AND AFTER THE
DATE HEREOF, THE SELLER MAY, ON TEN (10) BUSINESS DAYS’ NOTICE TO THE PURCHASER,
OFFER TO SELL TO THE PURCHASER, AND THE PURCHASER MAY PURCHASE, ADDITIONAL
SERIES OF SURPLUS NOTES AS MAY BE PURCHASED BY SELLER FROM THE ISSUER, UP TO THE
AUTHORIZED PRINCIPAL AMOUNT.  AS SECURITY FOR THE PERFORMANCE OF THE PURCHASER’S
OBLIGATIONS UNDER THIS AGREEMENT, THE PARTIES HERETO SHALL, CONCURRENT WITH THIS
AGREEMENT, ENTER INTO A PLEDGE AND SECURITY AGREEMENT WHEREIN PURCHASER GRANTS A
PLEDGE OF AND SECURITY INTEREST IN THE PURCHASER’S RIGHT, TITLE AND INTEREST IN
THE SURPLUS NOTES AND THE OTHER COLLATERAL IDENTIFIED THEREIN.

 

SECTION 2.02                                DELIVERY AND PAYMENT.  THE SELLER
SHALL DELIVER THE SERIES 2005-A NOTES AND THE SERIES 2005-B NOTES TO THE
PURCHASER ON THE DATE HEREOF.  AGAINST DELIVERY OF THE SERIES 2005-A NOTES, THE
SERIES 2005-B NOTES OR ANY ADDITIONAL SERIES OF SURPLUS NOTES, THE PURCHASER
SHALL TRANSFER TO A SELLER KENNETT NOTES WITH AN AGGREGATE PRINCIPAL AMOUNT
EQUAL TO THE AGGREGATE PRINCIPAL AMOUNT OF SUCH SURPLUS NOTES.

 

SECTION 2.03                                FORMS OF KENNETT NOTES.  THE KENNETT
NOTES SHALL BE ISSUED SUBSTANTIALLY IN THE FORM OF THE KENNETT NOTE ATTACHED AS
EXHIBIT A HERETO AND SHALL BE DULY EXECUTED AND DELIVERED BY THE PURCHASER AS
HEREINAFTER PROVIDED.

 

ARTICLE III
TERMS AND CONDITIONS OF REPAYMENT OF KENNETT NOTES; MATURITY

 

SECTION 3.01                                INTEREST.  THE KENNETT NOTES SHALL
BEAR INTEREST DURING EACH INTEREST PERIOD AT THE INTEREST RATE.  INTEREST SHALL
BE DUE AND PAYABLE ON EACH INTEREST PAYMENT DATE.  INTEREST SHALL BE COMPUTED ON
THE BASIS OF A 360-DAY YEAR COMPRISED OF TWELVE 30-DAY MONTHS.

 

SECTION 3.02                                PRINCIPAL.  THE PRINCIPAL OF EACH
KENNETT NOTE SHALL BE DUE AND PAYABLE ON THE STATED MATURITY DATE.

 

SECTION 3.03                                PAYMENTS BY THE PURCHASER.

 

(A)                 ON ANY PAYMENT DATE, THE PURCHASER SHALL PAY IN ACCORDANCE
WITH THE TERMS OF THIS AGREEMENT: (I) ALL ACCRUED BUT UNPAID INTEREST ON THE
KENNETT NOTES AND (II) ANY PRINCIPAL PAYMENTS DUE WITH RESPECT TO THE KENNETT
NOTES, IF ANY.

 

3

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(B)                ANY INTEREST OR PRINCIPAL THAT HAS NOT BEEN PAID WHEN DUE
SHALL ACCRUE INTEREST AT A RATE PER ANNUM EQUAL TO THE INTEREST RATE FROM AND
INCLUDING, FOR EACH SUCH AMOUNT, THE PAYMENT DATE THEREFOR, UP TO BUT EXCLUDING
THE DATE ON WHICH EACH SUCH AMOUNT IS ACTUALLY PAID.

 

(C)                 ALL PAYMENTS REQUIRED TO BE MADE BY THE PURCHASER WITH
RESPECT TO THIS ARTICLE III SHALL BE MADE:  (I) BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS AND/OR THE TRANSFER OF MARKETABLE SECURITIES (VALUED AT THEIR
FAIR MARKET VALUE) NOT LATER THAN 1:00 P.M., CHICAGO TIME, AND (II) TO THE
ACCOUNT OF THE SELLER, OR TO SUCH OTHER ACCOUNT AS THE SELLER MAY HAVE MOST
RECENTLY DESIGNATED IN WRITING FOR SUCH PURPOSE BY NOTICE TO THE PURCHASER.

 

(D)                THE PURCHASER AND ANY AGENT OF THE PURCHASER MAY TREAT THE
PERSON IN WHOSE NAME ANY KENNETT NOTE IS REGISTERED ON THE KENNETT NOTE REGISTER
AS THE OWNER OF SUCH KENNETT NOTE ON THE APPLICABLE RECORD DATE FOR THE PURPOSE
OF RECEIVING PAYMENTS OF PRINCIPAL AND INTEREST ON SUCH KENNETT NOTE AND ON ANY
OTHER DATE FOR ALL OTHER PURPOSES WHATSOEVER (WHETHER OR NOT SUCH PAYMENT IS
OVERDUE), AND NEITHER THE PURCHASER NOR ANY AGENT OF THE PURCHASER SHALL BE
AFFECTED BY NOTICE TO THE CONTRARY.

 

SECTION 3.04                                PREPAYMENT.  THE PURCHASER MAY
PREPAY THE KENNETT NOTES, IN PART OR IN FULL, IRRESPECTIVE OF WHETHER THE ISSUER
HAS PREPAID ANY AMOUNTS WITH RESPECT TO THE SURPLUS NOTES.  IN ADDITION, THE
PURCHASER SHALL PREPAY PRINCIPAL AND ACCRUED INTEREST ON THE KENNETT NOTES TO
THE EXTENT THAT THE ISSUER PREPAYS OR REDEEMS THE SURPLUS NOTES, SUCH PREPAYMENT
TO BE MADE WITHIN THREE (3) BUSINESS DAYS OF PREPAYMENT OR REDEMPTION OF THE
SURPLUS NOTES AND IN THE MANNER SPECIFIED IN SECTION 3.03(C).

 

ARTICLE IV
REGISTRATION OF KENNETT NOTES; TRANSFER AND EXCHANGE

 

SECTION 4.01                                KENNETT NOTE REGISTER.  THE
PURCHASER SHALL KEEP A REGISTER (THE “KENNETT NOTE REGISTER”) AT ITS OFFICE IN
NORTHBROOK, ILLINOIS, IN WHICH IT SHALL PROVIDE FOR THE REGISTRATION OF THE
KENNETT NOTES AND THE REGISTRATION OF TRANSFERS OF THE KENNETT NOTES.   SUCH
KENNETT NOTE REGISTER SHALL BE IN WRITTEN FORM OR IN ANY OTHER FORM CAPABLE OF
BEING CONVERTED INTO WRITTEN FORM WITHIN A REASONABLE TIME.  UPON SURRENDER FOR
REGISTRATION OF TRANSFER OF ANY KENNETT NOTE AT THE OFFICE OF THE PURCHASER AND
IN COMPLIANCE WITH THE RESTRICTIONS SET FORTH IN ANY LEGEND APPEARING ON ANY
KENNETT NOTE, THE PURCHASER SHALL EXECUTE AND DELIVER, IN THE NAME OF THE
DESIGNATED TRANSFEREE OR TRANSFEREES, ONE OR MORE NEW KENNETT NOTES OF ANY
AUTHORIZED DENOMINATION AND OF LIKE TERMS.

 

SECTION 4.02                                EXCHANGES AND TRANSFERS.  AT THE
OPTION OF ANY HOLDER, KENNETT NOTES MAY BE EXCHANGED FOR ONE OR MORE KENNETT
NOTES, OF ANY AUTHORIZED DENOMINATION AND OF LIKE TERMS, UPON SURRENDER OF THE
KENNETT NOTES TO BE EXCHANGED AT THE OFFICE OF THE PURCHASER OR SUCH OTHER
OFFICE AS THE PURCHASER MAY DESIGNATE FOR SUCH PURPOSES.  WHENEVER ANY KENNETT
NOTE IS SURRENDERED FOR EXCHANGE, THE PURCHASER SHALL EXECUTE AND DELIVER THE
KENNETT NOTE THAT THE HOLDER MAKING THE EXCHANGE IS ENTITLED TO RECEIVE.  ANY
KENNETT NOTES ISSUED UPON ANY REGISTRATION OF TRANSFER OR EXCHANGE OF A KENNETT
NOTE SHALL BE THE VALID OBLIGATIONS OF THE PURCHASER, EVIDENCING THE SAME DEBT,
AND ENTITLED TO THE SAME BENEFITS UNDER THIS AGREEMENT, AS THE KENNETT NOTE
SURRENDERED UPON SUCH REGISTRATION OF TRANSFER OR EXCHANGE.  EVERY KENNETT NOTE
PRESENTED OR SURRENDERED FOR REGISTRATION OF TRANSFER OR EXCHANGE SHALL BE DULY
ENDORSED, OR BE ACCOMPANIED BY A WRITTEN INSTRUMENT OF TRANSFER IN FORM
SATISFACTORY TO THE PURCHASER DULY EXECUTED BY THE HOLDER THEREOF OR ITS
ATTORNEY DULY AUTHORIZED IN WRITING.  NO SERVICE CHARGE SHALL BE MADE TO A
PURCHASER FOR ANY REGISTRATION OF TRANSFER OR EXCHANGE OF A KENNETT NOTE, BUT
THE PURCHASER MAY

 

4

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REQUIRE PAYMENT OF A SUM SUFFICIENT TO COVER THE EXPENSES OF DELIVERY (IF ANY)
NOT MADE BY REGULAR MAIL OR ANY TAX OR OTHER GOVERNMENTAL CHARGE PAYABLE IN
CONNECTION THEREWITH.

 

ARTICLE V
EVENTS OF DEFAULT

 

SECTION 5.01                                EVENTS OF DEFAULT.  THE OCCURRENCE
OF EITHER OF THE FOLLOWING EVENTS SHALL CONSTITUTE AN “EVENT OF DEFAULT”
HEREUNDER:

 

(A)                 DEFAULT IS MADE IN THE PAYMENT OF ANY INSTALLMENT OF
INTEREST ON THE KENNETT NOTES WHEN SUCH INTEREST BECOMES DUE AND PAYABLE AND
SUCH DEFAULT CONTINUES FOR A PERIOD OF 30 DAYS, OR

 

(B)                DEFAULT IS MADE IN THE PAYMENT OF THE PRINCIPAL OF THE
KENNETT NOTES WHEN SUCH PRINCIPAL BECOMES DUE AND PAYABLE.

 

SECTION 5.02                                REMEDIES UPON AN EVENT OF DEFAULT. 
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, THE SELLER MAY GIVE NOTICE OF SUCH
EVENT OF DEFAULT TO THE PURCHASER AND DEMAND PAYMENT OF THE ENTIRE OUTSTANDING
PRINCIPAL AMOUNT OF SUCH KENNETT NOTES, PLUS ALL ACCRUED BUT UNPAID INTEREST,
PLUS INTEREST ON SUCH OVERDUE PRINCIPAL AND OVERDUE INTEREST AT THE INTEREST
RATE, PLUS SUCH FURTHER AMOUNTS AS SHALL BE NECESSARY TO COVER THE SELLER’S
COSTS AND EXPENSES OF COLLECTION, INCLUDING REASONABLE ATTORNEYS’ FEES.

 

ARTICLE VI
MISCELLANEOUS

 

SECTION 6.01                                NOTICES.  EXCEPT IN THE CASE OF
NOTICES AND OTHER COMMUNICATIONS EXPRESSLY PERMITTED TO BE GIVEN BY TELEPHONE,
ALL NOTICES AND OTHER COMMUNICATIONS PROVIDED FOR HEREIN SHALL BE DELIVERED BY
THE FOLLOWING MEANS:  (I) HAND DELIVERY, (II) OVERNIGHT COURIER SERVICE (E.G.,
FEDEX, AIRBORNE EXPRESS, OR DHL); (III) REGISTERED OR CERTIFIED U.S. MAIL,
POSTAGE PREPAID AND RETURN RECEIPT REQUESTED; OR (IV) FACSIMILE TRANSMISSION.
 IF ANY NOTICE OR OTHER COMMUNICATION PROVIDED FOR HEREIN IS SENT BY ANY PARTY
BY ELECTRONIC E-MAIL IT SHALL NOT BE DEEMED TO HAVE BEEN DELIVERED TO THE
ADDRESSEE IF THE PARTY SENDING SUCH NOTICE OR COMMUNICATION RECEIVES A RESPONSE
FROM THE INTENDED ADDRESSEE THAT HE OR SHE WILL NOT BE ABLE TO RETRIEVE E-MAIL
DUE TO VACATION, OTHER ABSENCE FROM THE OFFICE, SYSTEM FAILURE OR OTHER REASON. 
ALL SUCH NOTICES SHALL BE DELIVERED TO THE PARTIES AS SET FORTH ON SCHEDULE I
HEREOF.  ALL NOTICES AND OTHER COMMUNICATIONS GIVEN TO ANY PARTY HERETO IN
ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
GIVEN ON THE DATE OF RECEIPT.

 

SECTION 6.02                                AMENDMENTS, WAIVERS.

 

(A)                 EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN, NO AMENDMENT
OR WAIVER OF ANY PROVISION OF THIS AGREEMENT SHALL IN ANY EVENT BE EFFECTIVE
UNLESS THE SAME SHALL BE IN WRITING AND SIGNED BY THE PARTIES HERETO.

 

(B)                THE SELLER AND THE PURCHASER MAY AMEND ANY PROVISION OF THIS
AGREEMENT TO EFFECTUATE THE DIVISION OF ANY KENNETT NOTES HELD BY THE SELLER
INTO PAID AND UNPAID PORTIONS AND THE SURRENDER OF THE PAID PORTION.

 

(C)                 EACH SUCH AMENDMENT, WAIVER OR CONSENT SHALL BE EFFECTIVE
ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN.  A
FAILURE OR DELAY IN EXERCISING ANY RIGHT, POWER OR PRIVILEGE WITH RESPECT TO
THIS AGREEMENT WILL NOT BE

 

5

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PRESUMED TO OPERATE AS A WAIVER, AND A SINGLE OR PARTIAL EXERCISE OF ANY RIGHT,
POWER OR PRIVILEGE WILL NOT BE PRESUMED TO PRECLUDE ANY SUBSEQUENT OR FURTHER
EXERCISE OF THAT RIGHT, POWER OR PRIVILEGE OR THE EXERCISE OF ANY OTHER RIGHT,
POWER OR PRIVILEGE.

 

SECTION 6.03                                SUCCESSORS AND ASSIGNS; THIRD PARTY
BENEFICIARIES.  THE PROVISIONS OF THIS AGREEMENT SHALL BE BINDING UPON AND INURE
TO THE BENEFIT OF THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS.  THIS
AGREEMENT SHALL NOT BE TRANSFERRED OR ASSIGNED UNDER ANY CIRCUMSTANCES.  NOTHING
IN THIS AGREEMENT, EXPRESSED OR IMPLIED, SHALL BE CONSTRUED TO CONFER UPON ANY
PERSON (OTHER THAN THE PARTIES HERETO AND THEIR RESPECTIVE SUCCESSORS AND
PERMITTED TRANSFEREES) ANY LEGAL OR EQUITABLE RIGHT, REMEDY OR CLAIM UNDER OR BY
REASON OF THIS AGREEMENT.

 

SECTION 6.04                                SEVERABILITY.  ANY PROVISION OF THIS
AGREEMENT HELD TO BE INVALID, ILLEGAL OR UNENFORCEABLE IN ANY JURISDICTION
SHALL, AS TO SUCH JURISDICTION, BE INEFFECTIVE TO THE EXTENT OF SUCH INVALIDITY,
ILLEGALITY OR UNENFORCEABILITY WITHOUT AFFECTING THE VALIDITY, LEGALITY AND
ENFORCEABILITY OF THE REMAINING PROVISIONS HEREOF; AND THE INVALIDITY OF A
PARTICULAR PROVISION IN A PARTICULAR JURISDICTION SHALL NOT INVALIDATE SUCH
PROVISION IN ANY OTHER JURISDICTION.

 

SECTION 6.05                                BINDING EFFECT.  THIS AGREEMENT
SHALL REMAIN IN FULL FORCE AND EFFECT UNTIL SUCH TIME AS ALL OF THE KENNETT
NOTES ISSUED BY THE PURCHASER SHALL HAVE BEEN REPAID IN FULL AND CANCELLED.

 

SECTION 6.06                                GOVERNING LAW; CONSENT TO
JURISDICTION.  THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

 

SECTION 6.07                                EXECUTION IN COUNTERPARTS.  THIS
AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF COUNTERPARTS AND BY DIFFERENT PARTIES
HERETO IN SEPARATE COUNTERPARTS, EACH OF WHICH WHEN SO EXECUTED SHALL BE DEEMED
TO BE AN ORIGINAL AND ALL OF WHICH WHEN TAKEN TOGETHER SHALL CONSTITUTE ONE AND
THE SAME AGREEMENT.  DELIVERY OF AN EXECUTED COUNTERPART OF A SIGNATURE PAGE OF
THIS AGREEMENT BY TELECOPY SHALL BE EFFECTIVE AS DELIVERY OF A MANUALLY EXECUTED
COUNTERPART OF THIS AGREEMENT.

 

SECTION 6.08                                ENTIRE AGREEMENT.  THIS AGREEMENT
CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT
MATTER HEREOF AND SUPERSEDES ANY AND ALL PREVIOUS AGREEMENTS AND UNDERSTANDINGS,
ORAL OR WRITTEN, RELATING TO THE SUBJECT MATTER HEREOF.

 

SECTION 6.09                                HEADINGS.  ARTICLE AND
SECTION HEADINGS USED HEREIN ARE FOR CONVENIENCE OF REFERENCE ONLY, ARE NOT PART
OF THIS AGREEMENT AND SHALL NOT AFFECT THE CONSTRUCTION OF, OR BE TAKEN INTO
CONSIDERATION IN INTERPRETING, THIS AGREEMENT.

 

[SIGNATURE PAGE FOLLOWS]

 

6

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the first date
written above.

 

 

ALLSTATE LIFE INSURANCE COMPANY

 

as Seller

 

 

 

By:

/s/ Barry S. Paul

 

 

Name:

Barry S. Paul

 

Title:

Assistant Vice President and Assistant Treasurer

 

 

 

 

 

KENNETT CAPITAL, INC.

 

as Purchaser

 

 

 

By:

/s/ Steven C. Verney

 

 

Name:

Steven C. Verney

 

Title:

Treasurer

 

7

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SCHEDULE I
to
Surplus Note Purchase Agreement between Allstate Life Insurance Company

and Kennett Capital, Inc.

 

NOTICE INFORMATION

 

 

Address for Notices to Seller:

 

Allstate Life Insurance Company

3100 Sanders Road

Northbrook, Illinois  60062

Attention:  Allstate Financial - Chief Financial Officer

Facsimile:  847-326-5052

 

 

Address for Notices to Purchaser:

 

Kennett Capital, Inc.

42 Read’s Way, Suite 124

New Castle Corporate Commons

New Castle, Delaware 19720-1642

Attention:  Executive Vice President

Facsimile:  302-324-5253

 

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EXHIBIT A

 

FORM OF KENNETT NOTE

[ISSUE DATE]

 

Kennett Capital, Inc., a corporation duly organized and existing under the laws
of the State of Delaware (the “Company”), for value received hereby promises to
pay to Allstate Life Insurance Company, or its assigns, the outstanding balance
of the principal sum of [                                                     ]
in cash on [STATED MATURITY DATE], and to pay interest thereon semi-annually on
the first day of December and June in each year, commencing [FIRST INTEREST
DATE], at the rate per annum set forth below, until the principal hereof is paid
in full, except that the final payment of any accrued and unpaid interest shall
be concurrent with the final payment of principal.  The initial per annum rate
of interest will be [         %].  Thereafter, once every ten years beginning on
[DATE (10 years after FIRST INTEREST DATE)], the rate of interest will reset
(effective as of that date) to a per annum rate equal to the then current ten
year Constant Maturity Treasury Yield as reported in the Wall Street Journal
plus [          % (an amount equal to the spread for the corresponding Surplus
Notes purchased by the Purchaser, less 20 basis points)].  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.                                       The Company covenants that if:

 

(a)                                  default is made in the payment of any
installment of interest on this Kennett Note when such interest becomes due and
payable and such default continues for a period of 30 days, or

 

(b)                                 default is made in the payment of the
principal of this Kennett Note when such principal becomes due and payable,

 

the Company will, upon demand by the holder of this Kennett Note, pay to it the
whole amount of the principal of this Kennett Note, plus accrued interest, with
interest upon the overdue principal and upon overdue installments of interest at
the rate borne by this Kennett Note; and, in addition thereof, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including reasonable attorneys’ fees.

 

2.                                       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.

 

3.                                       In the event that any payment of
principal or interest on this Kennett 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 5, “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.

 

4.                                       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

 

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or to which the assets of the Company are transferred must assume the liability
of the Company hereunder.

 

5.                                       This Kennett Note shall be construed in
accordance with, and governed by, the laws of the State of Illinois.

 

IN WITNESS WHEREOF, the Company has caused this Kennett 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.

 

 

 

KENNETT CAPITAL, INC.

 

 

 

 

(CORPORATE SEAL)

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

 

Attest:

 

 

 

 

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