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 addition, the Secured Party shall have
the right at any time to exchange certificates representing or
evidencing Collateral for certificates of smaller or larger
denominations.
(b)
The Pledgor
agrees to take all other actions which may be necessary under the
laws of the State of Illinois or may be requested by the Secured
Party to protect and perfect the interest of the Secured Party in
the Collateral created hereby and to ensure that such interest is
senior in rank to the claims of any other creditor of the Pledgor
claiming an interest in and to the Collateral, including the filing
of UCC-1 financing statements (including any continuation
statements with respect to such financing statements when
applicable) identifying the Surplus Notes and naming the Pledgor as
debtor and the Secured Party as secured party. The Pledgor
shall deliver to the Secured Party file-stamped copies or other
evidence of such filings. Notwithstanding the agreements set
forth in this Section 1.2, the Pledgor hereby authorizes the
Secured Party to take, and appoints the Secured Party as its
attorney-in-fact for the purpose of taking, any action necessary
under the UCC to perfect, and to maintain the perfection and
priority of, the Secured Party’s interest in the Collateral,
including, without limitation, the filing of any such financing and
continuation statements.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.1
Representations, Warranties
and Covenants as to the Pledgor . The Pledgor hereby
represents, warrants and covenants to the Secured
Party:
(a)
Title to
Collateral . The Surplus Notes and
all of the other Collateral in existence on the date hereof are,
and all Surplus Notes and all of the other Collateral issued
subsequent to the date hereof will be, owned by the Pledgor free
and clear of any lien or encumbrance. The Pledgor has not
(i) filed or consented to the filing with any governmental
authority of any financing statement or analogous document under
the UCC or any other applicable laws covering any Collateral,
(ii) made any assignment to any other person of any interest
in the Collateral or (iii) entered into any security agreement
or similar instrument or arrangement covering all or any part of
the Collateral with any other person, which financing statement or
analogous document, assignment, security agreement or similar
instrument is still in effect.
(b)
Organization
. The
Pledgor is a corporation organized under the laws of the State of
Delaware.
(c)
Principal
Office . The Pledgor maintains
its chief executive office at 42 Read’s Way, Suite 124,
New Castle, Delaware 19720-1642.
(d)
No
Liens . Pledgor is as of the
date hereof, and at the time of any delivery of any Collateral to
the Secured Party pursuant to Article I of this Pledge
Agreement, Pledgor
2
will be, the sole legal and
beneficial owner of the Collateral. All Collateral is on the
date hereof, and will be, so owned by Pledgor free and clear of any
lien except for the lien created by this Pledge
Agreement.
(e)
Due
Authorization . The execution and
delivery to the Secured Party of this Pledge Agreement by the
Pledgor, the delivery to the Secured Party of the Surplus Notes
together with any necessary endorsements, and the consummation of
the transactions provided for in this Pledge Agreement have been
duly authorized by the Pledgor by all necessary corporate action on
its part and this Pledge Agreement constitutes a legal, valid and
binding obligation of the Pledgor, enforceable against the Pledgor
in accordance with its terms, and except in each case as
enforcement may be limited by bankruptcy, insolvency, examination,
suspension of payments, fraudulent transfer, reorganization,
moratorium and other similar laws of general applicability
affecting the enforcement of creditors’ rights generally,
public policy and general principles of equity (regardless of
whether such proceeding is considered in a proceeding in equity or
law).
(f)
No
Conflict . The execution and
delivery of this Pledge Agreement, the delivery of the Collateral,
the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof will not conflict with or result in
the breach of any of the material terms and provisions of,
constitute (with or without notice or lapse of time or both) a
default under, or result in the creation of any lien upon any
property or assets of the Pledgor pursuant to, any indenture,
contract, agreement, mortgage, deed of trust or other instrument to
which the Pledgor is a party or by which it or any of its
properties is bound.
(g)
No
Violation . The execution and
delivery of this Pledge Agreement, the delivery of the Collateral,
the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof will not conflict with or violate
any organizational or governing documents of the Pledgor or any
law, treaty, rule or regulation, or any judgment, order or
decree, or determination of an arbitrator or governmental authority
applicable to or binding upon the Pledgor.
(h)
No
Proceedings . There are no actions
at law, suits in equity or proceedings by or before any
governmental commission, bureau or administrative agency pending
or, to the best knowledge of the Pledgor, threatened against the
Pledgor or any of its assets, that would adversely affect the
ability of the Pledgor to perform its obligations under this Pledge
Agreement.
(i)
No
Authorization Required . Except for such
authorizations or approvals as shall have been obtained prior to
the date hereof, no authorization or approval of any governmental
agency or commission or public or quasi-public body or authority
with jurisdiction over the Pledgor or any of its assets is
necessary for the due execution and delivery of this Pledge
Agreement or for the validity or enforceability hereof.
Section 2.2
Delivery of
Pledged Collateral; Filings.
Pledgor has delivered, or will
deliver, to the Secured Party all certificates representing the
Surplus Notes and has delivered, or will deliver, to the Secured
Party an
3
appropriate UCC-1 financing statement to be
filed with the Secretary of State of the State of Delaware, the
State in which the Pledgor is located, evidencing the lien created
by this Pledge Agreement, and such delivery, filing and pledge of
the Collateral pursuant to this Pledge Agreement will create a
valid and perfected first priority security interest in the
Collateral securin
|
