EXHIBIT 10.3
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Pledge Agreement") is dated as of
August 1, 2005 and made by and between KENNETT CAPITAL, INC. (the "Pledgor") and
ALLSTATE LIFE INSURANCE COMPANY (the "Secured Party").
W I T N E S S E T H
WHEREAS, the Secured Party and the Pledgor have entered into a Surplus Note
Purchase Agreement dated August 1, 2005 (the "Surplus Note Purchase Agreement"),
under which the Secured Party has agreed to sell, and the Pledgor may purchase
from the Secured Party, certain surplus notes issued by ALIC Reinsurance Company
(the "Issuer"); and
WHEREAS, as security for the payment and performance by the Pledgor of its
obligations under the Surplus Note Purchase Agreement, the Pledgor has agreed to
grant a pledge of and security interest in the Pledgor's right, title and
interest in and to the surplus notes issued by the Issuer and purchased by the
Pledgor (the "Surplus Notes");
NOW, THEREFORE, in consideration of the premises and of the mutual covenants
herein contained, the Pledgor and the Secured Party hereby agree as follows:
ARTICLE I
GRANT OF PLEDGE AND SECURITY INTEREST
SECTION 1.1
GRANT OF SECURITY INTEREST.
TO
SECURE THE PAYMENT IN FULL WHEN DUE BY THE PLEDGOR TO THE SECURED PARTY UNDER
THE SURPLUS NOTE PURCHASE AGREEMENT OF ALL AMOUNTS (INCLUDING FEES, CHARGES AND
EXPENSES) WHICH ACCRUE AND BECOME DUE THEREUNDER AND THE TIMELY PERFORMANCE BY
THE PLEDGOR OF EACH OF ITS OTHER OBLIGATIONS THEREUNDER (COLLECTIVELY, THE
"SECURED OBLIGATIONS"), THE PLEDGOR HEREBY PLEDGES AND GRANTS TO THE SECURED
PARTY A SECURITY INTEREST IN ALL OF THE PLEDGOR'S RIGHT, TITLE AND INTEREST IN,
TO AND UNDER THE FOLLOWING (COLLECTIVELY, THE "COLLATERAL"): (A) THE SURPLUS
NOTES AND ALL CERTIFICATES OR INSTRUMENTS EVIDENCING THE SAME AND ALL PROCEEDS
THEREOF, ALL ACCESSIONS THERETO AND SUBSTITUTIONS THEREFOR; (B) ALL INTEREST,
DISTRIBUTIONS AND OTHER PROCEEDS FROM TIME TO TIME RECEIVED, RECEIVABLE OR
OTHERWISE DISTRIBUTED TO PLEDGOR IN RESPECT OF OR IN EXCHANGE FOR ANY OR ALL OF
THE SURPLUS NOTES; AND (C) ALL "PROCEEDS" (AS SUCH TERM IS DEFINED IN THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF ILLINOIS OR ANY OTHER
RELEVANT JURISDICTION (THE "UCC")) OF ANY OF THE FOREGOING.
SECTION 1.2
PERFECTION OF SECURITY
INTEREST; DELIVERY OF COLLATERAL.
(A)
ALL CERTIFICATES, AGREEMENTS OR INSTRUMENTS
REPRESENTING OR EVIDENCING THE COLLATERAL, TO THE EXTENT NOT PREVIOUSLY
DELIVERED TO THE SECURED PARTY, SHALL IMMEDIATELY UPON RECEIPT THEREOF BY
PLEDGOR BE DELIVERED TO AND HELD BY THE SECURED PARTY PURSUANT TO THE PROVISIONS
HEREOF.
ALL COLLATERAL SHALL BE IN SUITABLE FORM FOR TRANSFER BY DELIVERY OR
SHALL BE
ACCOMPANIED BY DULY EXECUTED INSTRUMENTS OF TRANSFER OR ASSIGNMENT IN BLANK, ALL
IN FORM AND SUBSTANCE SATISFACTORY TO THE SECURED PARTY.
THE SECURED PARTY
SHALL HAVE THE RIGHT, AT ANY TIME UPON THE OCCURRENCE OF AN EVENT OF DEFAULT AND
WITHOUT NOTICE TO PLEDGOR, TO ENDORSE, ASSIGN OR OTHERWISE TRANSFER TO OR TO
REGISTER IN ITS OWN NAME ANY OR ALL OF THE COLLATERAL.
IN