**EXHIBIT 10.1**

 

**Investment Management Agreement**

 

**Between**

 

**ALLSTATEINVESTMENTS, LLC**

 

**And**

 

**ALICREINSURANCE COMPANY**

 

This Agreement made andeffective as of July 1, 2005, between ALLSTATE INVESTMENTS, LLC, aDelaware limited liability company (“ALLSTATE INVESTMENTS”), and ALICREINSURANCE COMPANY, a special purpose financial captive insurance companyorganized under the laws of the State of South Carolina (“ALIC Re”).

 

WITNESSETH:

 

WHEREAS, ALIC Re desiresthat ALLSTATE INVESTMENTS furnish or cause to be furnished certain services andfacilities; and

 

WHEREAS, ALLSTATEINVESTMENTS desires to furnish or cause to be furnished certain services andfacilities subject to the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, it isagreed as follows:

 

**ARTICLE 1**

**INVESTMENTMANAGEMENT SERVICES**

 

1.1                                 Appointment.  ALIC Re hereby engages ALLSTATE INVESTMENTSas the investment manager of the investment assets (the “Trust Assets”)transferred by ALIC Re to The Bank of New York as Trustee (“Trustee”) under theTrust Agreement dated as of July 1, 2005 (the “Trust Agreement”) andgrants ALLSTATE INVESTMENTS the power and authority to advise, manage, anddirect the investment and reinvestment of such assets for the period and on theterms and conditions set forth herein. Such activities shall be conducted subject to and in accordance with theinvestment objectives, restrictions, and strategies set forth in the InvestmentPolicy and Plan (the “Policy”) adopted by the Board of Directors of ALIC Re,and in accordance with such other limitations and guidelines as may beestablished from time to time for such assets by such Board (such investmentobjectives, restrictions, strategies, limitations, and guidelines hereinreferred to collectively as the “Investment Guidelines”); provided, however,that the Policy and the Investment Guidelines shall in all events be inaccordance with the terms and conditions of the Trust Agreement.  ALLSTATE INVESTMENTS hereby

 

----

 

accepts suchresponsibility and agrees during such period to render the services and toassume the obligations herein set forth, all as more fully described in Exhibit A,attached hereto (the “Services”).  ALICRe may from time to time reach agreement with ALLSTATE INVESTMENTS that onlycertain of the listed Services will be provided.

 

1.2                                 Chargesand Expenses.  ALIC Re agrees to payALLSTATE INVESTMENTS a fee for the Services equal to ALLSTATE INVESTMENTS’actual cost of managing the Trust Assets, including the provision of alladministrative, reporting or other services required to manage such assets andprovide the Services.   To the extent anyof ALLSTATE INVESTMENTS’ costs are determined by allocations from ALIC Re, theallocation shall be made in accordance with the general provisions of the NAICexpense classification and allocation guidelines applicable to allinter-company allocations among The Allstate Corporation and its insuranceaffiliates.   All brokerage commissionsand other direct transaction charges payable to third parties shall be inaddition to any fees payable to ALLSTATE INVESTMENTS for Services and may bepaid from the Trust Assets or may be paid by ALLSTATE INVESTMENTS andreimbursed by ALIC Re.

 

1.3                                 Payment.  ALLSTATE INVESTMENTS will charge ALIC Re****for the Services via the monthly expense allocationprocess,****and payments will be through themonthly intercompany settlement process. The process will be completed bypersonnel of ALLSTATE INVESTMENTS and ALIC Re in the most timely and effectivemethod available.

 

**ARTICLE 2**

**MISCELLANEOUSPROVISIONS**

 

2.1                                 Scopeof Services.  The scope of, and themanner in which, ALLSTATE INVESTMENTS provides the Services to ALIC Re shall bereviewed periodically by ALLSTATE INVESTMENTS and ALIC Re.

 

2.2                                 Standardof Performance.  ALLSTATE INVESTMENTSshall discharge its duties hereunder at all times in good faith and with thatdegree of prudence, diligence, care and skill which a prudent person renderingservices as an institutional investment manager would exercise under similarcircumstances.  The provisions of thisAgreement shall not be interpreted to imply any obligation on the part ofALLSTATE INVESTMENTS to observe any standard of care other than as set forth inthis Section 2.2.

 

2.3                                 Booksand Records.  Upon reasonable notice,and during normal business hours, ALIC Re shall be entitled to, at its ownexpense, inspect records that pertain to the computation of charges for theServices.  ALLSTATE INVESTMENTS shall atall times maintain correct and complete books, records and accounts of allServices.  ALIC Re shall have unconditionalright of ownership of any records prepared on its behalf under thisAgreement.  ALLSTATE INVESTMENTS shallmaintain and make available for review by any regulator having jurisdictionover ALIC Re, documentation showing the calculation of all such charges.  ALIC Re may request a review of such chargesfor the

 

2

----

 

Services and such reviewwill occur promptly thereafter.

 

2.4                                 Liabilityof ALLSTATE INVESTMENTS.  In theabsence of ALLSTATE INVESTMENTS’ willful or negligent misconduct (or thewillful or negligent misconduct of its officers, directors, agents, employees,controlling persons, shareholders, and any other person or entity affiliatedwith ALLSTATE INVESTMENTS or retained by it to perform or assist in theperformance of its obligations under this Agreement), neither ALLSTATEINVESTMENTS nor any of its officers, directors, employees or agents shall besubject to liability to ALIC Re for any act or omission in the course of, orconnected with, rendering the Services hereunder.

 

2.5                                 IndependentContractor.  ALLSTATE INVESTMENTSshall for all purposes be deemed to be an independent contractor.  All persons performing duties hereunder atall times during the term of this Agreement shall be under the supervision andcontrol of ALLSTATE INVESTMENTS and shall not be deemed employees of ALIC Re asa result of this Agreement and the Services provided hereunder. ALLSTATEINVESTMENTS shall have no power or authority to bind ALIC Re or to assume orcreate an obligation or responsibility, express or implied, on behalf of ALICRe, nor shall it represent to anyone that it has such power or authority,except as expressly provided in this Agreement. Nothing in this Agreement shall be deemed to create a partnershipbetween or among the parties, whether for purposes of taxation or otherwise.

 

2.6                                 Assignment.  ALLSTATE INVESTMENTS shall not assign itsobligations or rights under this Agreement without the written consent of ALICRe.   ALLSTATE INVESTMENTS may terminatethis Agreement in its entirety, and ALIC Re may cancel its participation in thearrangements under this Agreement, each by giving six months written notice tothe other party to this Agreement; provided, however, that in the event thatALIC Re ceases to be an affiliate of ALLSTATE INVESTMENTS, this Agreement shallterminate immediately.  Under nocircumstances will the initial term, or any renewal term, of this Agreementexceed five (5) years.

 

2.7                                 Notices.  All communications provided for hereunder shallbe in writing, and if to ALIC Re, mailed or delivered to ALIC Re at its officeat the address listed in ALIC Re’s Statutory Annual Statement Blank, Attention:Secretary or addressed to any party at the address such party may hereafterdesignate by written notice to the other parties.

 

2.8                                 CounterpartSignatures. This Agreement may be executed by the parties hereto in anynumber of counterparts, and by each of the parties hereto in separatecounterparts, each of which counterparts, when so executed and delivered, shallbe deemed to be an original, but all such counterparts shall togetherconstitute but one and the same instrument.

 

3

----

 

IN WITNESS WHEREOF, theparties hereto have caused this Agreement to be signed as of the day and yearabove written.

 

 
|   | **Allstate Investments, LLC** |                   |
|--------|-------------------------------|------------------------|
|   |                          |                   |
|   | By:                           | /s/ Eric A. Simonson   |   |
|   | Name:                         | Eric A. Simonson       |   |
|   | Title:                        | Chairman of the Board, |   |
|   |                          | President and Chief    |   |
|   |                          | Investment Officer     |   |
|   | Date:                         | 7/8/05                 |   |
|   |                          |                   |
|   |                          |                   |
|   | **ALIC Reinsurance Company**  |                   |
|   |                          |                   |
|   | By:                           | /s/ John C. Pintozzi   |   |
|   | Name:                         | John C. Pintozzi       |   |
|   | Title:                        | Chairman of the Board  |   |
|   |                          | and President          |   |
|   | Date:                         | 7/8/05                 |   |
|   |                          |                   |
|   |                          |                   |
|   |                          |                   |
|        |                               |                        |  |  |  |  |

 

4

----

 

Exhibit A

**INVESTMENTSERVICES**

 

A.                                   Appointment. This Exhibit A details theServices to be provided by ALLSTATE INVESTMENTS pursuant to the InvestmentManagement Agreement between ALLSTATE INVESTMENTS and ALIC Re to which this Exhibit Ais attached.  For purposes of this Exhibit A,the trust account created under the Trust Agreement will be referred to as the “Account”.

 

B.                                     ALLSTATEINVESTMENTS as Agent.  ALLSTATEINVESTMENTS shall be granted and shall exercise full investment discretion andauthority to direct the Trustee in buying, selling or otherwise disposing of ormanaging the Trust Assets and in the performance of the services renderedhereunder, and shall do so as ALIC Re’s agent only, subject to ALLSTATEINVESTMENTS’ adherence to the Policies and Investment Guidelines.  ALIC Re hereby authorizes ALLSTATE INVESTMENTSto exercise all such powers with respect to the Trust Assets as may benecessary or appropriate for the performance by ALLSTATE INVESTMENTS of itsobligations under this Agreement, subject to the supervision of the Board ofDirectors of ALIC Re (the “Board”), and any limitations contained herein.

 

C.                                     InvestmentAdvisory Services.  In furtherance ofthe foregoing, and in carrying out its obligations to manage the investment andreinvestment of the Trust Assets, ALLSTATE INVESTMENTS shall, as appropriateand consistent with the Investment Guidelines:

 

(a) perform researchand obtain and evaluate such information relating to the economics, industries,businesses, markets, new investment structures, techniques, practices, andfinancial data as ALLSTATE INVESTMENTS deems appropriate in the discharge ofits duties under this Agreement;  (b) consultwith and furnish to the Board recommendations with respect to overallinvestment strategies for the Trust Assets; (c) seek out and implement specific investment opportunities,consistent with such overall investment strategies approved by the Board,including making and carrying out day-to-day decisions to acquire or dispose ofpermissible investments and managing the investment of the Trust Assets; (d) regularlyreport to the Board with respect to the implementation of investment strategiesand any other activities in connection with management of the Trust Assets,including furnishing to the Board, within 45 days after the end of eachquarter, a report concerning investment activity during the quarter; (e) maintainall required accounts, records, memoranda, instructions or authorizationsrelating to the acquisition or disposition the Trust Assets; (f) determinethe securities to be purchased or sold by the Trustee and direct the Trustee toplace orders either directly with the issuer, with any broker-dealer orunderwriter that specializes in the securities for which the order is made, orwith any other broker or dealer that ALLSTATE INVESTMENTS selects; and (g) performthe services hereunder in a manner consistent with investment objectives andpolicies of ALIC Re as detailed in the respective Investment Guidelines, asamended from time to time, and in compliance, as appropriate,

 

A-1

----

 

with the applicableprovisions of the insurance laws and regulations of ALIC Re’s domicile, asamended, and any other applicable laws.

 

D.                                    Allocationof Brokerage.  ALLSTATE INVESTMENTSis authorized in its sole discretion to select the brokers or dealers that willexecute the purchases and sales of securities for the Account.  In making such selection, ALLSTATEINVESTMENTS shall use its best efforts to obtain for the Account the mostfavorable net price and execution available, taking into account allappropriate factors, including price, dealer spread or commission, if any, andsize and difficulty of the transaction. If, in the judgment of ALLSTATE INVESTMENTS, ALIC Re would be benefitedby supplemental investment research, ALLSTATE INVESTMENTS is authorized, butnot obligated, to select brokers or dealers on the basis of researchinformation, materials, or services they could furnish to ALLSTATE INVESTMENTSfor potential use in supplementing ALLSTATE INVESTMENTS’ own information and inmaking investment decisions for the Account. The expenses of ALLSTATE INVESTMENTS and the charges to ALIC Re may notnecessarily be reduced as a result of receipt of such supplemental information.  Subject to the above requirements, nothingshall prohibit ALLSTATE INVESTMENTS from selecting brokers or dealers withwhich it or ALIC Re is affiliated.

 

E.                                      Serviceto Other Clients.  ALIC Reacknowledges that ALLSTATE INVESTMENTS may perform services for clients otherthan ALIC Re that are similar to the services to be performed pursuant to thisAgreement, and that ALLSTATE INVESTMENTS is free to do so provided that itsservices pursuant to this Agreement are not in any way impaired.  ALIC Re agrees that ALLSTATE INVESTMENTS mayprovide investment advice to any of its other clients that may differ fromadvice given to ALIC Re, or take action with respect to assets owned by it orits other clients that may differ from the action taken with respect to theAccount, so long as ALLSTATE INVESTMENTS, to the extent reasonable andpracticable, allocates investment opportunities to each account managed by iton a fair and equitable basis relative to ALLSTATE INVESTMENTS’ otherclients.  It is understood that ALLSTATEINVESTMENTS shall have no obligation to purchase or sell, or to recommend forpurchase or sale for the Account, any security that ALLSTATE INVESTMENTS, itsaffiliates, employees or agents may purchase or sell for its or their ownaccounts or for the account of any other client, if, in the opinion of ALLSTATEINVESTMENTS, such transaction or investment appears unsuitable, impractical orundesirable for the Account.  It isagreed that ALLSTATE INVESTMENTS may use any supplemental investment researchobtained for the benefit of ALIC Re in providing investment advice to its otherclients or its own accounts.  Conversely,such supplemental information obtained by the placement of business forALLSTATE INVESTMENTS or other entities advised by ALLSTATE INVESTMENTS will beconsidered by and may be useful to ALLSTATE INVESTMENTS in carrying out itsobligations to ALIC Re.

 

F.                                      Allocationof Trades.  It is acknowledged thatsecurities held in the Account may also be held by separate investment accountsor other funds for which

 

A-2

----

 

ALLSTATE INVESTMENTS mayact as a manager.  If purchases or salesof securities for ALIC Re or other entities for which ALLSTATE INVESTMENTS actsas investment manager arise for consideration at or about the same time, ALICRe agrees that ALLSTATE INVESTMENTS may make transactions in such securities,insofar as feasible, for the respective entities in a manner deemed equitableto all.  To the extent that transactionson behalf of more than one client of ALLSTATE INVESTMENTS during the sameperiod may increase the demand for securities being purchased or the supply ofsecurities being sold, ALIC Re recognizes that there may be an adverse effecton price.

 

It is agreed that, onoccasions when ALLSTATE INVESTMENTS deems the purchase or sale of a security tobe in the best interests of an Allstate affiliate as well as other accounts orcompanies, it may, to the extent permitted by applicable laws and regulations,but will not be obligated to, aggregate the securities to be so sold orpurchased for such Allstate affiliate with those to be sold or purchased forother accounts or companies in order to obtain favorable execution and lowerbrokerage commissions.  In that event,allocation of the securities purchased or sold, as well as the expensesincurred in the transaction, will be made by ALLSTATE INVESTMENTS in the mannerit considers to be most equitable and consistent with its obligations to suchAllstate affiliate and to such other accounts or companies.  ALIC Re recognizes that in some cases thisprocedure may adversely affect the size of the position obtainable for ALIC Re.

 

G.                                     Contracts;Authorized Signatories.  ALLSTATEINVESTMENTS shall have the full power, right and authority, as ALIC Re’s agent,in accordance with this Agreement and the Investment Guidelines, to negotiateand apply for and direct the Trustee to enter into, execute, deliver, amend,modify and/or terminate legal documents of every kind and nature relating to orrequired by the investment of the Trust Assets. All such documents will be entered into in the name of the Trustee andall such documents shall be legally binding on the Trustee and ALIC Re. Thosecertain employees and officers of ALLSTATE INVESTMENTS who are authorized toexecute transactions and sign documentation pursuant to the policies andprocedures adopted pursuant to authorization of the ALLSTATE INVESTMENTS’ Boardof Directors, as they may be amended from time to time, shall also beauthorized to the same extent to direct the Trustee to execute transactions andsign documentation on behalf of ALIC Re in connection with transactions enteredinto on behalf of the Account pursuant to this Agreement.

 

H.                                    Compliancewith Legal Requirements.  ALLSTATEINVESTMENTS shall make all reasonable efforts to comply with and cause to becomplied with all applicable laws, rules, and regulations of ALIC Re’sdomicile, and any federal, state or municipal authority governing thisAgreement, the services rendered hereunder, the Account and the assets heldtherein.  Without limiting the foregoing,ALLSTATE INVESTMENTS shall comply with all securities laws and other lawsapplicable to the services provided under this Agreement.

 

I.                                         TransactionProcedures.  The Trust Assets are orwill be held in trust by

 

A-3

----

 

the Trustee pursuant tothe Trust Agreement.  ALLSTATEINVESTMENTS shall not act as trustee or custodian of the Trust Assets and shallnot, under any circumstances, have or be deemed to have ownership, custody orphysical control of any of the Trust Assets. ALLSTATE INVESTMENTS may, however, issue instructions to, andcommunicate with, the Trustee for the Account as may be necessary andappropriate in connection with provision of its services pursuant to thisAgreement.  At the option of ALLSTATEINVESTMENTS, instructions by ALLSTATE INVESTMENTS to the Trustee may be madeorally or by computer, electronic instruction systems or telecommunicationsterminals.  ALLSTATE INVESTMENTS willconfirm that the Trustee has effected such instructions either by access to theTrustee’s computerized identification system or by telephonicconfirmation.  The Trustee will confirmwith ALLSTATE INVESTMENTS receipt of trade instructions orally or by computerfor the Account.  ALLSTATE INVESTMENTSwill instruct all brokers, dealers and counterparties executing orders withrespect to the Trust Assets to forward to ALLSTATE INVESTMENTS copies of allconfirmations.

 

J.                                        Recordkeeping.  ALLSTATE INVESTMENTS shall keep and maintainan accurate and detailed accounting of each transaction concerning the TrustAssets and of all receipts, disbursements, and other transactions relating tothe purchase and sale transactions arising hereunder.  ALLSTATE INVESTMENTS agrees to preserve suchrecords for the greater of (i) six years; (ii) the required periodpursuant to the insurance laws of ALIC Re’s domicile and related regulations;or (iii) such other time period that ALIC Re may from time to timerequest.  ALLSTATE INVESTMENTSacknowledges that all such records shall be the property of ALIC Re and shallbe made available, within five (5) business days of receipt of a writtenrequest, to ALIC Re, its accountants, auditors or other representatives of ALICRe for inspection and/or copying (at ALIC Re’s expense) during regular businesshours.  In addition, ALLSTATE INVESTMENTSshall provide any materials, reasonably related to the investment advisoryservices provided hereunder, as may be reasonably requested in writing by thedirectors or officers of ALIC Re, or as may be required by any governmentalagency with jurisdiction hereunder.

 

ALLSTATE INVESTMENTSfurther agrees to prepare and furnish to ALIC Re and to other personsdesignated by ALIC Re, at such regular intervals and other times as may bespecified by ALIC Re from time to time (i) such balance sheets, income andexpense statements and other financial statements and reports, and (ii) suchother statements, reports and information, in each case, regarding the TrustAssets as ALIC Re shall from time to time reasonably require.

 

In the event oftermination of this Agreement for any reason, all such records or copiesthereof shall be returned promptly to ALIC Re, free from any claim or retentionof rights by ALLSTATE INVESTMENTS.

 

A-4

----