EXHIBIT 10.1

 

August 29, 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
August 29, 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 7.50 %
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 PAYMENT IS PROHIBITED PURSUANT TO PARAGRAPH 1 HEREOF,

 

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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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