As filed with the Securities and Exchange Commission on March 13, 2006
Registration No. 333-129157
=================================================================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALLSTATE LIFE GLOBAL FUNDING ALLSTATE LIFE INSURANCE COMPANY
(As depositor of the trusts described herein, (As sponsor of the trusts described herein and as
and as issuer of the funding notes described herein) issuer of the funding agreements described herein)
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
Delaware Illinois
(State or other jurisdiction of incorporation or organization) (State or other jurisdiction of incorporation or organization)
Not Applicable 36-2554642
(I.R.S. Employer Identification Number) (I.R.S. Employer Identification Number)
6525 Morrison Boulevard, Suite 318 3100 Sanders Road
Charlotte, NC 28211 Northbrook, IL 60062
(704) 365-0569 (847) 402-5000
(Address, including zip code, and telephone number, including area (Address, including zip code, and telephone number,
code of registrant's principal executive offices) including area code, of registrant's principal
executive offices)
Douglas K. Johnson Michael J. Velotta
President of AMACAR Pacific Corp., Senior Vice President, General Counsel
Administrator of Allstate Life Global Funding and Secretary of Allstate Life Insurance Company
and Allstate Life Global Funding Trusts 3100 Sanders Road
6525 Morrison Boulevard, Suite 318 Northbrook, IL 60062
Charlotte, NC 28211 (847) 402-5000
(704) 365-0569
(Name, address, including zip code, and telephone number, including area code, of
agents for service with respect to the registrants)
Copies to:
John M. Schwolsky Anthony J. Ribaudo
Joseph L. Seiler III Sidley Austin LLP
Vladimir Nicenko One South Dearborn
LeBoeuf, Lamb, Greene & MacRae LLP Chicago, Illinois 60603
125 West 55th Street (312) 853-7000
New York, NY 10019
(212) 424-8000
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
|_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
===================================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Amount to Offering Price Aggregate Offering Registration
Title of Each Class of Securities to be Registered be Registered(1) Per Unit Price(2)(3)(4) Fee(5)
- -----------------------------------------------------------------------------------------------------------------------------------
Secured Medium Term Notes(6)........................ $5,000,000,000 100% $5,000,000,000 $577,265(7)
Funding Notes(8).................................... $5,000,000,000 100% $5,000,000,000 None(8)
Funding Agreements(9)............................... $5,000,000,000 100% $5,000,000,000 None(9)
==================================================================================================================================
(1) Securities in the amount of $1,650,000,000 registered by the registrants
under Registration Statement No. 333-125937 and not previously sold are
consolidated in this registration statement pursuant to Rule 429 under the
Securities Act of 1933. Accordingly, the total amount of securities to be
registered under this registration statement as so consolidated is
$5,000,000,000. The amount of securities being registered represents the
maximum aggregate principal amount of securities which, as of the date of
this filing, are expected to be offered for sale.
(2) Estimated solely for the purpose of determining the amount of the
registration fee pursuant to Rule 457(o) under the Securities Act of 1933.
(3) If any securities are (a) denominated or payable in a foreign or composite
currency or currencies, such principal amount as shall result in an
aggregate initial offering price equivalent to $5,000,000,000, at the time
of initial offering, (b) issued at an original issue discount, such greater
principal amount as shall result in an aggregate initial offering price of
$5,000,000,000, or (c) issued with their principal amount payable at
maturity to be determined with reference to a currency exchange rate or
other index, such principal amount as shall result in an aggregate initial
offering price of $5,000,000,000.
(4) $5,000,000,000 is the estimated maximum aggregate offering price of all the
securities being registered.
(5) The registration fee has been calculated on the basis of the maximum
aggregate offering price of all securities listed in accordance with Rule
457(o) under the Securities Act of 1933.
(6) Each issuance of Secured Medium Term Notes will be made by a newly formed
separate and distinct trust.
(7) Previously paid.
(8) Registered solely pursuant to Rule 140 under the Securities Act of 1933.
Each Funding Note of Allstate Life Global Funding will be purchased by a
separate and distinct trust with the net proceeds from the sale of a
related series of Secured Medium Term Notes issued by such trust. Pursuant
to Rule 457(o) under the Securities Act of 1933, no separate registration
fees are payable in respect of the Funding Notes.
(9) Each Funding Agreement of Allstate Life Insurance Company will be purchased
by Allstate Life Global Funding with the net proceeds from the sale of the
related Funding Notes. Pursuant to Rule 457(o) under the Securities Act of
1933, no separate registration fees are payable in respect of the Funding
Agreements.
------------------
The registrants hereby amend this registration statement on a date
necessary to delay their effectiveness until the registrants file a further
amendment specifically stating that this registration statement will become
effective according to Section 8(a) of the Securities Act of 1933 or until this
registration statement shall become effective on the date the Commission
determines.
==============================================================================
EXPLANATORY NOTE
This registration statement contains:
o two prospectus supplements relating to one or more series of notes (one for
an offering of series of secured medium term notes which are intended to be
offered primarily to institutional investors and the other for an offering
of series of secured medium term notes which are referred to as Allstate
Life(R) CoreNotes(R) in the prospectus supplements and which are intended
to be offered primarily to retail investors) which one or more newly
created separate and distinct Delaware special purpose statutory trusts may
offer from time to time to the public, as well as each related funding note
which may be issued by Allstate Life Global Funding to the issuing trust,
and one or more applicable funding agreements which may be issued by
Allstate Life Insurance Company, and sold to, and deposited into, the
issuing trust by Allstate Life Global Funding; and
o a base prospectus relating to one or more series of secured medium term
notes (including series of Allstate Life(R) CoreNotes(R)) which may be
issued and sold by the trusts to the public, as well as each related
funding note which may be issued by Allstate Life Global Funding to the
issuing trust, and one or more applicable funding agreements which may be
issued by Allstate Life Insurance Company, and sold to, and deposited into,
the issuing trust by Allstate Life Global Funding.
Each offering of a series of notes and the related funding note and funding
agreement(s) made under this registration statement will be made pursuant to:
o the base prospectus and one of the prospectus supplements included in
this registration statement, with the specifications of the applicable series of
notes, and the related funding note and funding agreement(s), set forth in the
applicable pricing supplement; or
o the base prospectus and a newly filed prospectus supplement to the base
prospectus, with the specification of the applicable series of notes, and the
related funding note and funding agreement(s) set forth in such newly filed
prospectus supplement or a pricing supplement.
"Allstate Life(R)" is a registered service mark of Allstate Insurance Company.
"CoreNotes(R)" is a registered service mark of Merrill Lynch & Co., Inc.
Subject to Completion
Preliminary Prospectus Supplement dated March 13, 2006
PROSPECTUS SUPPLEMENT
(To prospectus dated March -, 2006)
$5,000,000,000
Allstate Life Global Funding
Depositor
Secured Medium Term Notes
Due Between Nine Months and 30 Years From the Date of Issue
Issued Through Allstate Life Global Funding Trusts
Secured by
Funding Agreements Issued by
Allstate Life Insurance Company
Sponsor
------------------
Allstate Life Global Funding (the "depositor" or "Global Funding") is a
statutory trust formed under the laws of the State of Delaware. Its primary
purpose is to facilitate the programs for the issuance of one or more series of
secured medium term notes (the "notes"). Each series of notes will be issued by
a newly created separate and distinct Delaware statutory trust (each, a
"trust"). The notes of each series will be secured by one or more funding
agreements (each, a "funding agreement") issued by Allstate Life Insurance
Company ("Allstate Life") and assigned absolutely to, and deposited into, the
issuing trust by Global Funding. Global Funding will be the sole beneficial
owner of each trust that is formed and the depositor of the funding agreements
into the issuing trusts. In connection with each offering of notes, Global
Funding will issue the applicable funding note (each, a "funding note") as more
fully described herein. Allstate Life is the sponsor of the programs.
The notes of each series will represent the obligations of the issuing
entity only and will not represent the obligations of, or interest in, any other
person or entity, including Global Funding, Allstate Life or any of their
respective affiliates. The notes of each series will constitute "asset-backed
securities" within the meaning of Regulation AB under the Securities Act of
1933, as amended.
The specific terms of each series of notes, and the related funding note
and funding agreement(s), will be set forth in a separate prospectus supplement
to this prospectus supplement and the accompanying prospectus (a "pricing
supplement"), which will be prepared in connection with the issuance of such
series of notes, including the information related to the interest rate or
specified rate of return thereof, the distribution frequency and the first
expected distribution date. The form of pricing supplement, which includes
bracketed alternatives that may form part of the structure of an offering of
notes pursuant to the program described in this prospectus supplement and the
accompanying prospectus, is included in this prospectus supplement as Annex A.
You should read this prospectus supplement, the accompanying prospectus and the
applicable pricing supplement carefully before you invest.
The notes of each series:
o will be issued in only one class;
o will have a stated maturity of nine months to 30 years from the date
of issue;
o will have redemption and/or repayment provisions, if applicable,
whether mandatory or at the option of the issuing trust or the holders
of such notes;
o will provide for payments in U.S. dollars or one or more foreign
currencies;
o will be in book-entry or definitive form;
o will bear interest at fixed or floating rates, or bear no interest at
all; unless otherwise specified in the applicable pricing supplement,
each trust will pay interest on the relevant series of notes on a
monthly, quarterly, semiannual or annual basis;
o will be secured by the right, title and interest of the issuing trust
in and to (1) the funding agreement(s) held by that trust, (2) all
proceeds of such funding agreement(s) and (3) all books and records
pertaining to such funding agreement(s); and
o may be sold to United States and foreign institutional and other
investors.
The funding note and funding agreement(s) issued in connection with the
offering of a series of notes will represent the respective obligations of
Global Funding and Allstate Life only and will not represent the obligations of
or the interest in any person other than the respective issuing entity.
Each class of securities offered may have an aggregate principal amount of
up to $5,000,000,000 or the equivalent amount in one or more foreign or
composite currencies.
Investing in these securities involves risks that are described in the
"Risk Factors" section beginning on page S-12.
------------------
Neither the Securities and Exchange Commission, any state securities
commission nor any state insurance commission has approved or disapproved of
these securities or determined if this prospectus supplement, the accompanying
prospectus or any pricing supplement is truthful or complete. Any representation
to the contrary is a criminal offense.
Merrill Lynch & Co.
A.G. Edwards & Sons, Inc.
Banc of America Securities LLC
Barclays Capital
Bear, Stearns & Co. Inc.
Citigroup
Credit Suisse
Deutsche Bank Securities
Goldman, Sachs & Co.
JPMorgan
Lehman Brothers
Morgan Stanley
RBS Greenwich Capital
UBS Investment Bank
Wachovia Securities
------------------
The date of this prospectus supplement is -, 2006.
TABLE OF CONTENTS
Page
Prospectus Supplement
Forward-Looking Statements..............................................................................................S-1
About this Prospectus Supplement and the Pricing Supplements............................................................S-2
Summary.................................................................................................................S-3
Risk Factors...........................................................................................................S-12
Allstate Life Global Funding Trusts....................................................................................S-18
Allstate Life Global Funding...........................................................................................S-18
Allstate Life Insurance Company........................................................................................S-19
Description of the Notes...............................................................................................S-20
Global Clearance and Settlement Procedures.............................................................................S-45
Special Provisions Relating to Foreign Currency Notes..................................................................S-47
Description of the Funding Agreements..................................................................................S-49
United States Federal Income Tax Considerations........................................................................S-50
Plan of Distribution...................................................................................................S-60
Annex A: Form of Pricing Supplement...................................................................................A-1
Prospectus
Forward-Looking Statements................................................................................................1
About this Prospectus.....................................................................................................2
Available Information.....................................................................................................3
Incorporation of Documents by Reference...................................................................................3
Description of Allstate Life Global Funding and the Trusts................................................................5
Description of Allstate Life Insurance Company...........................................................................18
Computation of Ratio of Earnings to Fixed Charges........................................................................19
Use of Proceeds..........................................................................................................19
Description of the Notes.................................................................................................20
Description of the Indentures............................................................................................21
Description of the Funding Notes.........................................................................................32
Description of the Funding Agreements....................................................................................33
Description of the Support and Expenses Agreements.......................................................................39
Description of the Administrative Services Agreements....................................................................40
ERISA Considerations.....................................................................................................41
Plan of Distribution.....................................................................................................44
Legal Opinions...........................................................................................................45
Experts..................................................................................................................45
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The trusts may sell the notes to one or more of the agents referred to
below (collectively, the "Agents") as principals for resale at varying or fixed
offering prices or through the applicable Agent(s) as agents using their
reasonable efforts on behalf of each issuing trust. The trusts may also sell
notes directly to investors without the assistance of any Agent. Unless
otherwise specified in the applicable pricing supplement, any note sold to an
Agent as principal will be purchased by that Agent at a price equal to 100% of
the principal amount thereof less a percentage of the principal amount equal to
the commission applicable to an agency sale of a note of identical maturity.
Unless otherwise specified in the applicable pricing supplement, each trust will
pay a commission to an Agent, ranging from .150% to .875% of the principal
amount of each note, depending upon its stated maturity, sold through that Agent
as its agent.
You should rely on the information contained or incorporated by reference
in this prospectus supplement, the accompanying prospectus and each applicable
pricing supplement. Neither the registrants nor any Agent has authorized anyone
to provide you with different or additional information. If anyone provides you
with different or additional information, you should not rely on it. Neither the
registrants nor any Agent is making an offer to sell the notes in any
jurisdiction where the offer or sale is not permitted. You should not assume
that the information contained or incorporated by reference in this prospectus
supplement, the accompanying prospectus and the applicable pricing supplement is
accurate as of any date other than the date of such document.
FORWARD-LOOKING STATEMENTS
Allstate Life
This prospectus supplement, the accompanying prospectus and each applicable
pricing supplement may include forward-looking statements of Allstate Life.
These forward-looking statements are not statements of historical fact but
rather reflect Allstate Life's current expectations, estimates and predictions
about future results and events. These statements may use words such as "will,"
"should," "likely," "target," "anticipate," "believe," "estimate," "expect,"
"intend," "predict," "project" and similar expressions as they relate to
Allstate Life or its management. When Allstate Life makes forward-looking
statements, Allstate Life is basing them on its management's beliefs and
assumptions, using information currently available to Allstate Life. These
forward-looking statements are subject to risks, uncertainties and assumptions,
including but not limited to, risks, uncertainties and assumptions discussed in
this prospectus supplement, the accompanying prospectus and in each applicable
pricing supplement. Factors that can cause or contribute to these differences
include those described under the heading "Risk Factors" in this prospectus
supplement. Allstate Life undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events, developments or otherwise.
If one or more of these or other risks or uncertainties materialize, or if
Allstate Life's underlying assumptions prove to be incorrect, actual results may
vary materially from what Allstate Life projected. Any forward-looking
statements of Allstate Life you read in this prospectus supplement, the
accompanying prospectus or any pricing supplement reflect Allstate Life's
current views with respect to future events and are subject to these and other
risks, uncertainties and assumptions relating to Allstate Life's operations,
results of operations, growth strategy and liquidity. All subsequent written and
oral forward-looking statements attributable to Allstate Life or individuals
acting on Allstate Life's behalf are expressly qualified in their entirety by
this section. You should specifically consider the factors identified in this
prospectus supplement, the accompanying prospectus and each applicable pricing
supplement which could cause actual results to differ before making an
investment decision.
Global Funding and the Trusts
This prospectus supplement, the accompanying prospectus and each applicable
pricing supplement may include forward-looking statements of Global Funding and
the trusts. These forward-looking statements are subject to risks, uncertainties
and assumptions, including but not limited to, risks, uncertainties and
assumptions discussed in this prospectus supplement, the accompanying prospectus
and in each applicable pricing supplement. Global Funding does not, and the
trusts will not, undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
You should specifically consider the factors identified in this prospectus
supplement, the accompanying prospectus and each applicable pricing supplement
before making an investment decision. The trusts are not entitled to the safe
harbors contained in Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), with respect to forward-looking statements of the
trusts in this prospectus supplement, the accompanying prospectus and each
applicable pricing supplement.
S-1
ABOUT THIS PROSPECTUS SUPPLEMENT AND THE PRICING SUPPLEMENTS
This document is a prospectus supplement and supplements a prospectus which
is part of a registration statement filed with the Securities and Exchange
Commission (the "SEC") by Allstate Life Global Funding and Allstate Life
Insurance Company (the "registrants"). This prospectus supplement provides you
with a general description of the notes that each trust may offer in connection
with the secured medium term notes program and the related funding notes and
funding agreements described in this prospectus supplement and the accompanying
prospectus (this "program") and supplements the description of the notes,
funding notes and funding agreements contained in the accompanying prospectus.
The trusts may sell notes with a total initial public offering price or purchase
price of up to $5,000,000,000 or the equivalent amount in one or more foreign
currencies, less any amount of notes previously issued by the trusts under this
program or pursuant to a separate prospectus supplement that relates to the
Allstate Life(R) CoreNotes(R) program pursuant to which the notes may be offered
by the trusts from time to time primarily to retail investors (the "Allstate
Life(R) CoreNotes(R) program").
The specific terms and conditions of a series of notes and the related
funding note and funding agreement(s) being offered will be contained in a
pricing supplement. A copy of that pricing supplement will be provided to you
along with a copy of this prospectus supplement and the accompanying prospectus.
That pricing supplement also may add, update, supplement or clarify information
in this prospectus supplement and the accompanying prospectus. You should
carefully review such additional, updated, supplemental or clarifying
information contained in the pricing supplement. You should read this prospectus
supplement and the accompanying prospectus and each applicable pricing
supplement together with the additional information that is incorporated by
reference in this prospectus supplement and the accompanying prospectus. That
additional information is described under the heading "Incorporation of
Documents by Reference" in the accompanying prospectus.
In connection with the issuance of any series of notes, the Agents have
reserved the right to appoint one of them to act as a stabilizing agent. Such
appointment will be disclosed in the applicable pricing supplement. In
connection with the issuance of any series of notes, the stabilizing agent or
any person acting on its behalf may over-allot or effect transactions with a
view to supporting the market price of the applicable series of notes at a level
higher than that which might otherwise prevail for a limited period. However,
there is no obligation on the stabilizing agent or any other person acting on
its behalf to do this. Such stabilizing, if commenced, may be discontinued at
any time and must be brought to an end after a limited period. Any such
stabilizing shall be conducted in compliance with all relevant laws, rules and
regulations. For a description of these activities, see "Plan of Distribution."
In this prospectus supplement, references to the "depositor" and "Global
Funding" are to Allstate Life Global Funding. References to the "trusts" are to
Allstate Life Global Funding Trusts. References to an "issuing trust" are to a
trust with respect to the series of notes issued and sold to the public by that
trust. These references are not to Allstate Life Insurance Company. Unless
otherwise specified herein or the context otherwise requires, in this prospectus
supplement, references to "Allstate Life" are to Allstate Life Insurance
Company.
In this prospectus supplement, references to "United States dollars," "U.S.
dollars" or "$" are to lawful currency of the United States of America, and
references to "Euro" are to the currency introduced at the start of the third
stage of the European Economic and Monetary Union pursuant to the Treaty
Establishing the European Community, as amended.
S-2
SUMMARY
This section summarizes certain of the legal and financial terms of the
notes, funding notes and funding agreements that are described in more detail in
"Description of the Notes" and "Description of the Funding Agreements" beginning
on pages S-20 and S-49 of this prospectus supplement, "Description of the
Funding Notes" beginning on page 32 of the accompanying prospectus, and other
information described elsewhere in this prospectus supplement or in the
accompanying prospectus. Final terms of any particular series of notes and the
related funding note and funding agreement(s) will be set at the time of
issuance and will be contained in the applicable pricing supplement. That
pricing supplement may add to, update, supplement or clarify the terms contained
in this summary. In addition, you should read the more detailed information
appearing elsewhere in the accompanying prospectus, this prospectus supplement
and the applicable pricing supplement.
The Trusts...................... Each series of notes will be issued by a newly created separate and distinct Delaware
statutory trust (each, a "trust") formed by Allstate Life Global Funding, as trust
beneficial owner, AMACAR Pacific Corp., as administrator (including any successor, the
"administrator"), and Wilmington Trust Company, as Delaware trustee (including any
successor, the "Delaware trustee"), pursuant to the filing of a certificate of trust and
the execution of a trust agreement. Each trust agreement pursuant to which various trusts
may be formed from time to time to issue notes is referred to in this prospectus
supplement as a "trust agreement." Allstate Life Global Funding will be the sole
beneficial owner of each trust that is formed.
Depositor; Issuer of Funding
Notes........................ Allstate Life Global Funding is a registrant as the depositor of the funding agreements
into the issuing trusts and the issuer of the funding notes.
Sponsor; Issuer of Funding
Agreements................... Allstate Life Insurance Company is the sponsor of the programs and a registrant as the
issuer of the funding agreements.
Allstate Life is not affiliated with any trust. None of Allstate Life or any of its
officers, directors, subsidiaries or affiliates owns any beneficial interest in any trust
nor has any of these persons or entities entered into any agreement with any trust other
than in furtherance of the issuance of notes from time to time as contemplated by this
prospectus supplement and the accompanying prospectus.
None of Allstate Life or any of its officers, directors, subsidiaries or affiliates is
affiliated with Global Funding, the Delaware trustee, the administrator, the indenture
trustee or the funding note indenture trustee.
Purposes of Global Funding and
Trusts....................... The primary purpose of Global Funding is to facilitate the programs for the issuance of
notes, including, in connection with each offering of notes, to issue the applicable
funding note. The primary purpose of each trust is to issue the related series of notes
to the public, which notes will be issued only on the original issue date of such notes
and will be secured by one or more funding agreements issued by Allstate Life, and
assigned absolutely to, and deposited into, the issuing trust by Global Funding. Each
trust will use the net proceeds received from issuing its series of notes to acquire one
or more funding agreements. Each trust will hold the collateral described below
pertaining to its series of notes to fund its obligations under that series of notes.
Each trust will pledge and collaterally assign the funding agreement(s) held in that
trust to the indenture trustee for the benefit of the holders of that trust's series of
notes and any other person for whose benefit the indenture trustee is or will be holding
the applicable collateral.
The notes of each series will represent the obligations of the issuing entity only and
will not represent the obligations of, or interest in, any other person or entity, including
Global Funding, Allstate Life, or any of their respective affiliates. Holders of notes of a
series may only look to the funding agreement(s) and any other collateral held in, or pledged
and collaterally assigned to the indenture trustee by, the issuing trust for payment on
their notes and not to the assets of
S-3
Allstate Life or Global Funding, or the assets held in any other trust.
Delaware Trustee................ Unless otherwise specified in the applicable pricing supplement, Wilmington Trust
Company, a Delaware banking corporation, will be the sole trustee of Global Funding and
each trust. In this prospectus supplement and the accompanying prospectus, references to
"Delaware trustee" (i) with respect to any trust are to Wilmington Trust Company (or
another entity specified in the applicable trust agreement), as Delaware trustee of such
trust (including, in each case, any successor); and (ii) with respect to Global Funding
are to Wilmington Trust Company as Delaware trustee of Global Funding (including any
successor). The Delaware trustee will not be obligated in any way to make payments under
or in respect of any notes, any funding notes or any funding agreements. The Delaware
trustee is not affiliated with Allstate Life or the indenture trustee.
Administrator................... Unless otherwise specified in the applicable pricing supplement, AMACAR Pacific Corp.
will be the administrator of Global Funding and each trust. In this prospectus supplement
and the accompanying prospectus, references to the "administrator" (i) with respect to
any trust are to AMACAR Pacific Corp. (or another entity specified in the applicable
trust agreement), as administrator of such trust (including, in each case, any
successor); and (ii) with respect to Global Funding are to AMACAR Pacific Corp. as
administrator of Global Funding (including any successor). The administrator will not be
obligated in any way to make any payments under or in respect of the notes, any funding
notes or any funding agreements. The administrator is not affiliated with Allstate Life
or the indenture trustee.
Indenture Trustee............... Each series of notes will be issued by the issuing trust pursuant to a separate indenture
(each, an "indenture") to be entered into among the issuing trust and J.P. Morgan Trust
Company, National Association (or another entity specified as indenture trustee in the
applicable indenture), in its capacity as indenture trustee (including any successor, the
"indenture trustee"). The indenture trustee will not be affiliated with the trusts, the
Delaware trustee, the administrator, Global Funding or Allstate Life.
Funding Note Indenture Trustee.. Each funding note will be issued by Global Funding pursuant to a separate funding note
indenture (each, a "funding note indenture") to be entered into among Global Funding and
the other parties specified therein, including J.P. Morgan Trust Company, National
Association (or another entity specified as the funding note indenture trustee in the
applicable funding note indenture), in its capacity as funding note indenture trustee
(including any successor, the "funding note indenture trustee"). The funding note
indenture trustee is not affiliated with the trusts, the Delaware Trustee, the
administrator, Global Funding or Allstate Life.
Servicer........................ Unless otherwise provided in the pricing supplement for a series of notes, pursuant to
each indenture, J.P. Morgan Trust Company, National Association, will perform the
functions of the servicer in respect of the programs.
Diagram of Parties ............. Below is a diagram showing the parties involved in the issuance of notes by each trust.
Funding Agreement(s)
Deposit of Funding Agreement(s)
--- into issuing trust. Funding note --- Security Interest in
| is simultaneously cancelled. | Funding Agreement(s)
| | (held for the benefit
Funding | | of holders)
Agreement(s) | Funding Note |
- ------------------- ----------------- ---------------- --------------
|Allstate Life |---------------> |Allstate Life |------------------>| | ---------------- | Indenture |
|Insurance Company|<-------------- |Global Funding |<----------------- | Issuing Trust| | Trustee |
- ------------------- Note Proceeds ----------------- Note Proceeds ---------------- --------------
^ |
| |
Note
Proceeds Notes
| |
| v
----------------
| |
| Noteholders |
----------------
S-4
Allstate Life Can Issue Its Own
Medium Term Notes and Funding
Agreements Directly to
Investors.................... Allstate Life is able to issue its own medium term notes directly to investors and does
issue funding agreements directly to qualified investors. However, by securing each
trust's notes with one or more of Allstate Life's funding agreements, such trust's notes
are secured by an asset that would have a higher priority in insolvency than unsecured
medium term notes of Allstate Life and, accordingly, may be entitled to receive a higher
investment rating than unsecured medium term notes of Allstate Life. In addition, funding
agreements are very difficult to transfer and have no active secondary market. By
securing each trust's notes with one or more of Allstate Life's funding agreements,
investors may be able to avail themselves of many of the benefits of Allstate Life's
funding agreements while benefiting from the liquidity afforded by each trust's medium
term notes.
Agents.......................... Merrill Lynch, Pierce, Fenner & Smith Incorporated, A.G. Edwards & Sons, Inc., Banc of
America Securities LLC, Barclays Capital Inc., Bear, Stearns & Co. Inc., Citigroup Global
Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., Goldman,
Sachs & Co., Greenwich Capital Markets, Inc., J.P. Morgan Securities Inc., Lehman
Brothers Inc., Morgan Stanley & Co. Incorporated, UBS Securities LLC and Wachovia
Capital Markets, LLC.
Secured Medium Term Notes
Program ..................... This prospectus supplement relates to notes that each trust may issue and sell primarily
to institutional investors under this secured medium term notes program.
Allstate Life(R) CoreNotes(R)
Program...................... Included in the registration statement, of which this prospectus supplement is a part,
is another prospectus supplement relating to notes that may be issued and sold primarily
to retail investors by one or more newly established Delaware statutory trusts under
the related Allstate Life(R) CoreNotes(R) program. The terms of the Allstate Life(R)
CoreNotes(R) are identical in all material respects to the terms of the notes to be sold
under this program, as described in this prospectus supplement, except that the
Allstate Life(R) CoreNotes(R):
o may not be issued as amortizing notes;
o will be denominated in U.S. dollars only;
o will not provide for the payment of additional amounts
relating to any required withholding under any
circumstances; and
o may contain a survivor's option, permitting optional
repayment of notes of a series of notes, subject to
certain limitations, prior to maturity, if requested,
following the death of the beneficial owner of notes of
that series.
Amount of the Notes............. The trusts may collectively issue up to a maximum of $5,000,000,000 of notes, or the
equivalent in one or more foreign or composite currencies, in connection with this
prospectus supplement, less any amount of notes previously issued under this program, the
related Allstate Life(R) CoreNotes(R) program or otherwise under the accompanying prospectus.
Flow of Funds................... All funds deposited with the indenture trustee pursuant to an indenture in respect of
notes of a series, except when an event of default has occurred and is continuing under
the indenture, shall be held in trust in the applicable collection account and applied by
the indenture trustee, in accordance with the provisions of the notes of such series and
the applicable indenture, to the payment through any paying agent, to the persons
entitled
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thereto, of the principal, premium, if any, interest and additional amounts, if
any, for whose payment such money has been deposited with or received by the indenture
trustee. If no event of default with respect to the notes of a series has occurred and
is continuing, the following priority of payments shall apply:
o First: to the payment of principal, any premium and interest, any additional
amounts, and any other amounts then due and owing on the notes of such series,
ratably, without preference or priority of any kind, according to the aggregate
amounts due and payable on such notes;
o Second: to the payment of any other obligations then due and owing with respect
to such series of notes, ratably, without preference or priority of any
kind; and
o Third: to the payment of any remaining balance to the issuing trust for
distribution by the Delaware trustee in accordance with the provisions of the
applicable trust agreement.
Any funds collected by the indenture trustee following an event of default, and during the
continuance thereof, under the applicable indenture in respect of the notes of a series
shall be held in trust in the applicable collection account and be applied in the
following order at the date or dates fixed by the indenture trustee and, in case of the
distribution of such funds on account of principal, any premium and interest and any
other amounts due and owing, upon presentation of the global security or
certificates representing the notes of such series and the notation thereon of the
payment if only partially paid or upon the surrender thereof if fully paid:
o First: to the payment of costs and expenses, includingreasonable
compensation to the indenture trustee and each predecessor indenture trustee
and their respective agents and attorneys and of all expenses and liabilities
incurred, and all advances made, by the indenture trustee and each predecessor
indenture trustee except as those adjudicated in a court of competent jurisdiction
to be the result of any such indenture trustee's negligence or bad faith, in an
aggregate amount of no more than $250,000 for all series of notes outstanding;
o Second: to the payment of principal, any premium and interest, any additional
amounts and any other amounts then due and owing on the notes of such series,
ratably, without preference or priority of any kind, according to the aggregate
amounts due and payable on such notes;
o Third: to the payment of any other obligations then due and owing with respect to
such series of notes, ratably, without preference or priority of any kind; and
o Fourth: to the payment of any remaining balance to the issuing trust for distribution
by the Delaware trustee in accordance with the provisions of the applicable
trust agreement.
All funds and other property received by the Delaware trustee on behalf of the issuing trust in
respect of the applicable collateral will be deposited into the payment account of such trust
and will be distributed by such trust as follows:
o First: to the indenture trustee for the payment of all amounts then due and unpaid
upon the applicable series of notes and any other amounts due and payable
in accordance with the applicable indenture; and
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o Second: upon the final redemption of the applicable series of notes and payment
of any amounts payable in respect thereof, any remaining funds and other property
deposited into the payment account shall be distributed to the Delaware trustee for
distribution as provided below.
In connection with the termination of any trust that is formed and the distribution of all
amounts from the applicable payment account in accordance with the priority described above,
the Delaware trustee will distribute any amounts received in accordance with the second clause of
the immediately preceding paragraph and any other remaining assets of the trust in the
following order of priority:
o First: to pay all expenses and other liabilities owed by the applicable trust; and
o Second: any remaining funds and other property shall be paid to the trust beneficial
owner.
Terms of the Notes:
Status....................... o The notes of a series will represent the unconditional, direct, non-recourse
and unsubordinated obligations of the issuing entity and will rank equally among
themselves.
o Each series of notes may be accelerated in the payment of principal and outstanding
interest if an event of default under the notes of such series occurs. Upon the
occurrence of an event of default, the indenture trustee on behalf of the
holders of notes of such series may only proceed against the collateral held in
the issuing trust.
o The notes of each series are not intended to be insurance contracts,
insurance policies or funding agreements.
o The notes of each series will represent the obligations of the issuing entity only
and will not represent the obligations of, or interest in, any other person or entity,
including Global Funding, Allstate Life or any of their respective affiliates.
o The notes are not guaranteed by any person or entity.
o The notes will not benefit from any insurance guaranty fund coverage or any
similar protection.
Payment of Principal and
Interest..................... o Principal and interest payments, if any, on any series of notes will be
made solely from the proceeds of one or more funding agreements, and any
other collateral, securing such series of notes. Each series of notes may
be interest bearing or non-interest bearing.
o Each series of notes that bears interest may bear interest at either a fixed
rate or a floating rate, or a combination of fixed and floating rates, as specified
in the applicable pricing supplement.
o A trust may issue amortizing notes that pay an amount in respect of both interest
and principal amortized over the life of the notes, if so specified in the
applicable pricing supplement.
o The principal amount of each note (other than amortizing notes) will be
payable on its stated maturity date, repayment date or redemption date, as
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specified in the applicable pricing supplement, at the corporate trust office of
the paying agent or any other place designated by the issuing trust.
o Interest, if any, will be payable on the dates set forth in the applicable pricing
supplement.
Interest Rate................ o Each series of fixed rate notes will bear interest from its date of issue at the rate
stated in the applicable pricing supplement until the principal is paid. Each
series of floating rate notes will bear interest from the date of issue until the
principal is paid at a rate determined by reference to an interest rate or interest
rate formula, which may be adjusted by a spread and/or spread multiplier (each as
more fully described under "Description of the Notes"). The pricing supplement for a
series of floating rate notes will designate one or more of the following base rates,
along with the index maturity for that base rate:
o the CD Rate,
o the CMT Rate,
o the Commercial Paper Rate,
o the Constant Maturity Swap Rate
o the Eleventh District Cost of Funds Rate,
o the Federal Funds Open Rate
o the Federal Funds Rate,
o LIBOR,
o EURIBOR,
o the Prime Rate, or
o the Treasury Rate.
Redemption and Repayment............. o A trust will redeem its series of notes if Allstate Life redeems each funding
agreement securing such series of notes. Except as otherwise specified in the
accompanying prospectus, this prospectus supplement or the applicable
pricing supplement, the funding agreement(s) securing a series of notes will not be
redeemable by Allstate Life, and a series of notes will not be repayable at
the option of the holders prior to its stated maturity date. Unless
otherwise specified in the applicable pricing supplement, the notes will
not be subject to any sinking fund.
Maturities............................ o Each series of notes will mature between nine months and 30 years from its date
of original issuance. Each series of notes will have the same maturity date
as the related funding agreement(s).
Currencies and
Denominations.....................Unless otherwise specified in the applicable pricing supplement, notes of a series will be
denominated in U.S. dollars and will be issued and sold in denominations of $1,000 and
integral multiples of $1,000 in excess thereof. Each funding note and funding agreement
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will be issued in the same currency as the notes of the related series. Each funding
note will be issued in the same denomination as the notes of the applicable
series.
Listing of Notes..................... Unless otherwise specified in the applicable pricing supplement, a series of notes
will not be listed on any securities exchange.
Forms of Notes....................... Each series of notes will be issued in fully registered form and, unless otherwise
specified in the applicable pricing supplement, will be initially represented by one or
more book-entry notes registered in the name of Cede & Co., the nominee of The
Depository Trust Company ("DTC"), as depositary, or in the name of a common depositary for
Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear") or
Clearstream Banking, societe anonyme ("Clearstream Luxembourg"), in each case as depositary
or by one or more definitive notes. Each book-entry note will be held by the indenture
trustee as custodian for the applicable depositary.
Clearing Systems.................... Unless otherwise specified in the applicable pricing supplement, the notes of each series
will be cleared through DTC.
Collateral........................... The notes of a series will be secured by the right, title and interest of the
issuing trust in and to (1) the funding agreement(s) held by that trust, (2) all
proceeds of such funding agreement(s) and (3) all books and records pertaining
to such funding agreement(s). In this prospectus supplement, references to
"other collateral" are to items (2) and (3) above.
Funding Agreements.................. The funding agreements are unsecured obligations of Allstate Life, an Illinois stock
life insurance company. In the event of insolvency of an Illinois insurance company,
claims against the insurer's estate are prioritized pursuant to Section 5/205 of the
Illinois Insurance Code. Under Section 5/205(1)(d) of the Illinois Insurance Code,
claims by "policyholders, beneficiaries, and insureds, under insurance policies,
annuity contracts, and funding agreements" receive payment prior to any
distribution to general creditors not falling within any other priority
class under the Illinois Insurance Code.
The registrants believe that in a properly prepared and presented case in a
delinquency proceeding under Article XIII of the Illinois Insurance Code, 215 ILCS
Section 5/187 et seq.(the "Illinois Liquidation Act"), the timely and properly filed
claims of an owner under the funding agreement (with the possible exception of claims
for Additional Amounts, as discussed below) would be entitled to distribution
pari passu with claims made by other policyholders, beneficiaries, and insureds
under other insurance policies, insurance contracts, annuities and funding agreements
issued by Allstate Life, and the claims of the Illinois Life and Health Insurance
Guaranty Association, and any similar organization in another state, in accordance
with Section 5/205(1)(d) of the Illinois Liquidation Act, and an owner's claims under
the funding agreement should not be recharacterized as other than the claims of a
policyholder, beneficiary, or insured under an insurance policy, insurance contract,
annuity or funding agreement.
The obligations of Allstate Life under any funding agreement will not be guaranteed
by any person or entity.
If a funding agreement so provides, Allstate Life may be required to pay Additional
Amounts (as such term is defined therein) to the indenture trustee as collateral
assignee of the funding agreement. For a discussion regarding payment of Additional
Amounts, see "Description of the Notes--Withholding Tax and Payment of Additional
Amounts." Although such payments could be viewed as a claim under the funding
agreements within the meaning of Section 5/205(1)(d), they may also be argued to be
a separate payment obligation. Therefore, while in a proceeding before a court of
competent jurisdiction the court might find that a claim for an Additional Amount
constitutes a claim under a funding agreement, it also might find that such a
claim is not a claim entitled to the priority afforded by Section 5/205(1)(d).
If a claim for an Additional Amount does not constitute a claim entitled to
the priority afforded by Section 5/205(1)(d), then in a properly prepared
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and presented case any claim for an Additional Amount would be entitled to the same
priority as claims of general creditors of Allstate Life under Section 5/205(1)(g).
With respect to the issuance of any series of the notes, the aggregate amount of
Allstate Life's liabilities that would rank pari passu with each funding agreement
securing such series of notes is disclosed in the financial statements of Allstate
Life contained in Allstate Life's most recent Annual Report on Form 10-K or Quarterly
Report on Form 10-Q filed with the SEC, in each case as of the date of such financial
statements. This amount appears in the Consolidated Statements of Financial Position
as a liability under the line item entitled "Contractholder funds."
Terms of the Funding Notes......... Each trust will use the net proceeds received from the issuance of the related series
of notes to purchase a funding note in definitive form (each, a "funding note")
from Global Funding. Each funding note will have a principal amount equal to the
principal amount of the related series of notes. Each funding note will otherwise
have payment and other terms substantially similar to the related series of notes,
except that each funding note will contain a provision that makes it immediately
cancelable upon the assignment and deposit by Global Funding of the related funding
agreement(s) to the related issuing trust. Such cancellation shall operate
as a redemption and satisfaction of such funding note.
Terms of the Funding
Agreements..................... Global Funding will use the net proceeds received from the sale of the related
funding note to purchase one or more funding agreements issued by Allstate Life.
Global Funding will immediately pledge and collaterally assign each such
funding agreement to the funding note indenture trustee and immediately
thereafter assign absolutely to, and deposit into, the issuing trust each such
funding agreement. The funding agreement(s) will have a principal amount equal to
the principal amount of the related series of notes. The funding agreement(s) will
otherwise have payment and other terms substantially similar to the related
series of notes.
Withholding Tax.................... All amounts due in respect of the notes of a series will be made without any
applicable withholding or deduction for or on account of any present or future taxes,
duties, levies, assessments or other governmental charges of whatever nature
imposed or levied by or on behalf of any governmental authority, unless such
withholding or deduction is required by law. Neither the notes of the applicable
series nor the related funding note or funding agreement(s) will provide for the payment
of additional amounts relating to any required withholding or deduction imposed or
levied on payments in respect of a series of notes or the related funding note or funding
agreement(s). As a result, the risk of any such withholding or deduction, whether or not
as a result of a change in law or otherwise, will be borne by the holders of such series
of notes.
Ratings............................. Unless otherwise indicated in the applicable pricing supplement, it is expected
that each series of notes, and the related funding note and the funding agreement(s)
securing such series of notes will have an issue credit rating of "AA" from Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. ("Standard & Poor's").
It is expected that the program will be rated "Aa2" by Moody's Investors Service, Inc.
("Moody's") and "AA" by Standard & Poor's. If Moody's or Standard & Poor's changes the
program rating, the new program rating will be specified in the applicable pricing
supplement. Notes of a series will be issued under the program only in the event that, at
the time of issuance of such series of notes, at least one nationally recognized rating
agency would assign an investment grade rating to such series of notes, the related
funding note and the funding agreement(s) securing such series of notes.
Fees and Expenses................. Allstate Life and Global Funding entered into an amended and restated support and
expenses agreement dated as of March -, 2006 (the "depositor support agreement").
Pursuant to the depositor support agreement, Allstate Life agreed, among other things,
to pay certain costs and expenses relating to the offering, sale and issuance of
each funding note and certain costs, expenses and taxes of Global Funding.
Pursuant to the depositor
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trust agreement, Allstate Life also agreed to indemnify each service provider of Global
Funding, as well as Global Funding, with respect to certain matters.
In connection with the issuance of a series of notes, Allstate Life and the issuing
trust will enter into a support and expenses agreement (each, a "support agreement").
Under each support agreement, Allstate Life will agree to pay certain costs and expenses
relating to the offering, sale and issuance of the applicable series of notes and
certain costs, expenses and taxes of the issuing trust. Pursuant to each support
agreement, Allstate Life will also agree to indemnify each service provider of the issuing
trust, as well as the issuing trust, with respect to certain matters.
It is anticipated that the indenture trustee fees for this program and the Allstate Life
CoreNotes Program will be approximately $13,000 annually.
Governing Law.................... The notes, each indenture, each funding note and each funding note indenture will
be governed by, and construed in accordance with, the laws of the State of New York. The
depositor trust agreement is, and each trust agreement will be, governed by, and construed
in accordance with, the laws of the State of Delaware. The funding agreements will be
governed by the laws of the State of Illinois.
United States Federal Income
Tax Considerations............ Special tax counsel to Global Funding will render its opinion that under current
law and based on certain facts and assumptions contained in such opinion, for United
States Federal income tax purposes, Global Funding and each trust will be ignored and
that the notes will be classified as indebtedness of Allstate Life. Each holder
and beneficial owner of the notes, by purchase of the notes, agrees to such
treatment. Accordingly, holders of the notes generally will have the same United States
federal income tax consequences from the purchase of the notes as they would had they
purchased a debt obligation issued directly by Allstate Life. Prospective purchasers of the
notes must carefully consider the tax consequences of the ownership and disposition the
notes set forth under "United States Federal Income Tax Considerations."
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RISK FACTORS
Your investment in the notes includes risks. In consultation with your own
financial and legal advisers, you should carefully consider, among other
matters, the following discussion of risks before deciding whether an investment
in the notes is suitable for you. The notes are not an appropriate investment
for you if you do not understand their significant components and/or financial
matters. You should also consult the discussion of risk factors set forth in
Allstate Life's most recent Annual Report on Form 10-K, which is incorporated
into this prospectus supplement and the accompanying prospectus by reference.
Risk Factors Relating to the Depositor and the Trusts
Each trust will have limited resources and therefore its ability to make timely
payments with respect to its series of notes will depend upon Allstate Life
making payments under the relevant funding agreement
The ability of a trust to make timely payments with respect to the related
series of notes is principally dependent upon Allstate Life making the related
payments under each relevant funding agreement. Each trust is a special purpose
statutory trust formed for the purpose of the issuance of the related series of
notes. The obligations under a series of notes will be secured by and payable
solely from the collateral held in the issuing trust. No holder of a series of
notes will have any right to receive payments from the collateral related to any
other series of notes.
The notes of a series will represent the obligations of the issuing entity only
and will not represent the obligations of, or interest in, any other person or
entity, including Global Funding, Allstate Life or any of their respective
affiliates
The notes of a series will represent the obligations of the issuing entity
only and will not represent the obligations of, or interest in, any other person
or entity, including Global Funding, Allstate Life or any of their respective
affiliates. The notes will not be guaranteed by any person or entity. Except
pursuant to the terms of the funding agreement(s) included in the collateral for
each series of notes, none of these entities nor any agent, trustee or
beneficial owner of Global Funding or the trusts, in respect of any trust, is
under any obligation to provide funds or capital to Global Funding or the trusts
or with respect to any series of notes issued by the trusts. The net worth of
Global Funding on the date hereof is approximately $1,000 and is not expected to
increase materially. The net worth of each trust is expected to be minimal.
Global Funding is and the trusts will be special purpose entities and, as of the
date of issue of any series of notes, the issuing trust will have no prior
operating history
Global Funding is and the trusts will be special purpose statutory trusts
organized under the laws of the State of Delaware. Global Funding exists for the
primary purpose of facilitating the programs for the issuance of notes. Each
trust will exist for the exclusive purposes of: issuing and selling one series
of notes to investors; using the net proceeds from the sale of series of notes
to acquire the related collateral, including one or more funding agreements; and
engaging in other activities necessary or incidental thereto. As of the date of
issue of any series of notes, the issuing trust will have, no prior operating
history.
Risk Factors Relating to the Notes
The notes of a series represent non-recourse obligations of the issuing entity
The obligations under the notes of a series represent non-recourse
obligations payable solely from the applicable collateral constituting the
assets of the issuing trust. If any event of default shall occur under any
series of the notes, the rights of the holders of the notes of such series and
the indenture trustee, on behalf of such holders, will be limited to a
proceeding against the applicable collateral. None of such holders or the
indenture trustee will have the right to proceed against the collateral related
to any other series of notes, Global Funding, any other trust or any of Allstate
Life, its officers, directors, affiliates, employees or agents or any of the
trustees, beneficial owners or agents, or any of their respective officers,
directors, affiliates, employees or agents in the case of any judgment in which
there is deficiency remaining after foreclosure of any property included in such
collateral. If an event of default shall have occurred under a series of notes,
the indenture trustee will be entitled to have its fees and expenses paid solely
from the collateral of such series of notes before holders of the notes of such
series receive payment of the amounts then due and owing with respect to their
notes; provided, that such priority of the indenture trustee over the holders of
the notes of a series will be limited to an aggregate amount of no more than
$250,000 for all series of notes. All claims of the holders of a series of notes
in excess of amounts received from the related collateral will be extinguished.
In the absence of an event of default under a funding agreement, the occurrence
of an event of default under the related series of notes will not give rise to
any right to accelerate such applicable funding agreement. In that event,
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it is possible that the obligations under the applicable series of notes may be
accelerated while the obligations of Allstate Life under the applicable funding
agreement(s) would not be similarly accelerated. If this occurs, the indenture
trustee may have no or limited ability to proceed against the applicable funding
agreement(s) and the related collateral and holders of the notes may not be paid
in full, or in a timely manner upon such acceleration. See "Description of the
Indentures--Events of Default" in the accompanying prospectus.
Allstate Life will be the sole obligor under the funding agreements
Since Allstate Life will be the sole obligor under the funding agreements,
the ability of a trust to meet its obligations, and your ability to receive
payments from such trust, with respect to a particular series of notes, will be
principally dependent upon Allstate Life's ability to perform its obligations
under each applicable funding agreement held by the issuing trust. Despite this,
you will have no direct contractual rights against Allstate Life under any such
funding agreement. Pursuant to the terms of each funding agreement, recourse
rights to Allstate Life will belong to the issuing trust, its successors and
permitted assignees. In connection with the offering and sale of a series of
notes, the issuing trust will pledge, collaterally assign and grant a security
interest in the collateral for such series of notes to the indenture trustee on
behalf of the holders of the applicable series of notes and the other persons
identified in the relevant indenture. Recourse to Allstate Life under each such
funding agreement will be enforceable only by the indenture trustee as a secured
party for the benefit of holders of such series of notes and any other person
for whose benefit the indenture trustee is or will be holding the collateral.
Accordingly, if Allstate Life fails to perform its obligations under the
applicable funding agreement(s), your ability to receive payments from the
issuing trust would be materially and adversely affected.
Nonetheless, since Allstate Life is a registrant, purchasers of notes may
be able to proceed directly against Allstate Life to enforce their rights under
the Federal securities laws and their rights under the Federal securities laws
will be no different than if they purchased the underlying funding agreements
directly from Allstate Life.
The notes could be deemed to be participations in the funding agreements or
could otherwise be deemed to be contracts of insurance and holders of the notes
could be found to be acting as insurance agents or brokers
The laws and regulations of each state of the United States and the
District of Columbia (the "covered jurisdictions") contain broad definitions of
the activities that may constitute the conduct of the business of insurance in
such jurisdictions. Because the primary asset of each trust will be one or more
funding agreements issued by Allstate Life, which will be sold to, and deposited
into, the issuing trust by Global Funding, it is possible that a trust's
issuance of notes, Global Funding's issuance of the related funding note or the
performance of the issuing trust's obligations under the notes, including the
payment or prepayment of amounts due under the notes, or the purchase, resale or
assignment of the notes by any investor or any person who acquires the notes
directly or indirectly from such investor
o could be characterized by one or more covered jurisdictions as the
conduct of the business of insurance by Global Funding, the issuing
trust, any such investor or any such other person or
o could otherwise subject Global Funding, the issuing trust, any such
investor or any such other person to regulation under the insurance
laws of one or more covered jurisdictions.
This could, among other effects, require such persons to be subject to
regulatory licensure or other qualifications and levels of compliance that
cannot practically be achieved. Failure to comply with such requirements could
subject any such person to regulatory penalties. In the event Global Funding or
any trust is subject to any such penalties or any other liabilities resulting
from such regulation, the ability of holders to receive payment under the notes
could be materially and adversely affected. In addition, any such failure to
comply or the threat of any such regulation could reduce liquidity with respect
to the notes, prevent an investor from transferring notes and reduce the
marketability and market value of the notes. Therefore, any such regulation or
threat of regulation by any one or more covered jurisdictions could result in an
investor either being unable to liquidate its investment in the notes or, upon
any such liquidation, receiving a value significantly less than the initial
investment in the notes.
The Illinois Department of Insurance has confirmed that it does not
consider the sale of publicly offered funding agreement backed medium term notes
to violate the Illinois Insurance Code. In addition, the Illinois Department of
Insurance has approved the form of funding agreement to be used in connection
with each offering of notes.
Based primarily upon communications with the staff of the insurance
regulatory bodies in most states and the legal advice of LeBoeuf, Lamb, Greene &
MacRae LLP, Allstate Life and Global Funding believe that:
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o the notes should not be subject to regulation as participations in the
funding agreements themselves or otherwise constitute insurance
contracts under the insurance laws of the covered jurisdictions; and
o Global Funding, the trusts and persons selling or purchasing the notes
should not be subject to regulation as doing an insurance business
under the insurance laws of the covered jurisdictions by virtue of
their respective activities in connection with the offer, sale and/or
purchase of the notes.
There are, however, wide variations in the insurance laws of the covered
jurisdictions, subtle nuances in their application, and a general absence of any
consistent pattern of interpretation or enforcement. Insurance regulatory
authorities have broad discretionary powers in administering the insurance laws,
including the authority to modify or withdraw a regulatory interpretation,
impose new rules, and take a position contrary to Allstate Life's. In addition,
state courts are not bound by any regulatory interpretations and could take a
position contrary to Allstate Life's. Consequently, there can be no assurance
that the purchase, resale or assignment of the notes or the funding notes will
not subject the parties to such transaction to regulation or enforcement
proceedings under the insurance laws of one or more covered jurisdictions.
Notes of a series may be redeemed early if the trust becomes obligated to pay
Additional Amounts
If a trust is obligated to withhold or deduct any taxes or pay any
additional amount (as defined in "Description of the Notes--Withholding Tax and
Payment of Additional Amounts") with respect to any payment on the notes of a
series to non-U.S. Holders, or if there is a material probability that the
issuing trust will become obligated to withhold or deduct any such taxes or pay
any additional amount (in the opinion of independent legal counsel selected by
Allstate Life), in each case pursuant to a change in or amendment to any United
States tax laws or any regulation or ruling thereunder or any change in the
position of the Internal Revenue Service regarding the application or
interpretation thereof, then Allstate Life, pursuant to the terms of the
relevant funding agreement(s), may terminate the relevant funding agreement(s).
If Allstate Life terminates the relevant funding agreement(s), the issuing trust
will redeem the particular series of notes by giving not less than 30 nor more
than 75 days' notice. Upon such redemption, the trust will pay holders of such
series of notes the outstanding amounts then due and owing with respect to their
notes. If a trust redeems your notes, you may not be able to invest the
redemption proceeds in a comparable security at an interest rate equal to the
interest rate on your notes being redeemed.
Payments under funding agreements may be insufficient to pay principal and
interest, if any, under the notes
Payments of the principal of and any interest on a series of notes will be
made solely from the payments the issuing trust receives under the applicable
funding agreement(s). Unless otherwise specified in this prospectus supplement
or the applicable pricing supplement, Allstate Life will not pay any Additional
Amounts (as defined in the applicable funding agreement) in respect of a funding
agreement to compensate for any withholding or deduction for or on account of
any present or future taxes, duties, levies, assessments or governmental charges
of whatever nature imposed or levied on payments in respect of a funding
agreement, by or on behalf of any governmental authority and each holder of a
note of the related series of notes will be deemed for all purposes to have
received cash in an amount equal to the portion of such withholding or deduction
that is attributable to such holder's interest in the notes, as equitably
determined by the issuing trust. Under this circumstance, the issuing trust will
not actually pay, or cause to be paid, to such holder all of the amounts which
would have been receivable by such holder in the absence of such taxes, duties,
levies, assessments or other governmental charges.
Redemption may adversely affect your return on the notes
If your notes are redeemable at the option of the issuing trust, it may
choose to redeem your notes at times when prevailing interest rates are
relatively low. In addition, if your notes are subject to mandatory redemption,
the issuing trust may be required to redeem your notes also at times when
prevailing interest rates are relatively low. As a result, you may not be able
to reinvest the redemption proceeds in a comparable security at an interest rate
equal to the interest rate on your notes being redeemed.
There may not be any trading market for your notes; many factors affect the
trading and market value of your notes
Upon issuance, the notes of a series will not have an established trading
market. No assurance can be given that a trading market for your notes will ever
develop or be maintained if developed. In addition to the creditworthiness of
Allstate Life and the issuing trust, many factors affect the trading market for,
and trading value of, your notes. These factors include:
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o the complexity and volatility of the formula applicable to your notes;
o the method of calculating the principal, premium and interest in
respect of your notes;
o the time remaining to the maturity of your notes;
o the outstanding amount of the applicable series of notes;
o any redemption features of your notes;
o the amount of other debt securities linked to the formula applicable
to your notes; and
o the level, direction and volatility of market interest rates
generally.
There may be a limited number of buyers if you decide to sell your notes.
This may affect the price you receive for your notes or your ability to sell
your notes at all. In addition, notes that are designed for specific investment
objectives or strategies often experience a more limited trading market and more
price volatility than those not so designed. You should not purchase notes
unless you understand and know you can bear all of the investment risks
involving your notes.
Foreign currency notes are subject to exchange rate and exchange control risks
If you invest in notes that are denominated and/or payable in a currency
other than U.S. dollars, which are referred to in this prospectus supplement as
"foreign currency notes," you will be subject to significant risks not
associated with an investment in a debt security denominated and payable in U.S.
dollars. These risks include the possibility of material changes in the exchange
rate between U.S. dollars and the applicable foreign currency and the imposition
or modification of exchange controls by the applicable governments. The trusts
will have no control over the factors that generally affect these risks,
including economic, financial and political events and the supply and demand for
the applicable currencies. Moreover, if payments on your foreign currency notes
are determined by reference to a formula containing a multiplier or leverage
factor, the effect of any change in the exchange rates between the applicable
currencies will be magnified. In recent years, exchange rates between certain
currencies have been highly volatile and volatility between these currencies or
with other currencies may be expected in the future. Fluctuations between
currencies in the past are not necessarily indicative, however, of fluctuations
that may occur in the future. Depreciation of your payment currency would result
in a decrease (1) in the equivalent yield in U.S. dollars of your foreign
currency notes, (2) in the U.S. dollar equivalent value of the principal and any
premium payable at maturity or any earlier redemption of your foreign currency
notes and (3) generally, in the U.S. dollar equivalent market value of your
foreign currency notes.
Governmental exchange controls could affect exchange rates and the
availability of the payment currency for your foreign currency notes on a
required payment date. Even if there are no exchange controls, it is possible
that your payment currency will not be available on a required payment date for
circumstances beyond the control of the issuing trust. In these cases the
issuing trust will be allowed to satisfy the obligations in respect of your
foreign currency notes in U.S. dollars.
Ratings of the medium term note program described in this prospectus supplement
and the accompanying prospectus, the Allstate Life(R) CoreNotes(R) program and
each series of notes may not reflect all risks of an investment in the notes
Each series of notes will be rated by at least one nationally recognized
statistical rating organization. The ratings of such notes will primarily
reflect the financial strength of Allstate Life and will change in accordance
with the rating of Allstate Life's financial strength and with any change in the
priority status under Illinois law of funding agreements. Any rating is not a
recommendation to purchase, sell or hold any particular security, including the
notes. Such ratings do not comment as to market price or suitability for a
particular investor. In addition, there can be no assurance that a rating will
be maintained for any given period of time or that a rating will not be lowered
or withdrawn in its entirety. The ratings of the medium term note program
described in this prospectus supplement and the accompanying prospectus, the
Allstate Life(R) CoreNotes(R) program and each series of notes may not reflect
the potential impact of all risks related to structure and other factors on any
trading market for, or trading value of, your notes.
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An increase in market interest rates could result in a decrease in the value of
any notes bearing interest at a fixed rate
If market interest rates increase above the interest rate of notes bearing
interest at a fixed rate, such notes bearing interest at a fixed rate generally
decline in value because debt instruments of the same face value priced at
market interest rates will yield higher income. Consequently, if you purchase
fixed rate notes and market interest rates increase above the fixed interest
rate on the notes you have purchased, the market value of your notes may
decline. No assurance can be given regarding the future level of market interest
rates.
If you purchase discount notes, the amount payable to you upon early redemption,
repayment or acceleration of these notes may be less than the principal amount
(i.e., par) of the notes plus accrued but unpaid interest and premium, if any
If you purchase discount notes, the amount payable to you upon early
redemption, repayment or acceleration of these notes may be less than the
principal amount thereof plus accrued and unpaid interest. The amount payable
will be determined by the formula set forth in this prospectus supplement or the
applicable pricing supplement.
Risk Factors Relating to the Collateral
The funding agreements are unsecured obligations of Allstate Life. If the
funding agreements were not determined to be insurance contracts, they would be
accorded the same priority in an insolvency of Allstate Life as its other
general unsecured obligations
The primary assets of each trust will be one or more funding agreements,
and payments on the notes of a series will principally depend on payments under
each related funding agreement(s). In addition, each trust will grant a security
interest in, pledge and assign as collateral each funding agreement it acquires
with the proceeds from the offering of a series of notes together with the
related collateral to the indenture trustee, for the benefit of the holders of
the notes of such series and any other person for whose benefit the indenture
trustee is or will be holding the collateral, to secure the obligations under
that series of notes.
In the event of insolvency of an Illinois insurance company, claims against
the insurer's estate are prioritized pursuant to Section 5/205 of the Illinois
Insurance Code. Under Section 5/205(1)(d) of the Illinois Insurance Code, claims
by "policyholders, beneficiaries, and insureds, under insurance policies,
annuity contracts, and funding agreements" receive payment prior to any
distribution to general creditors not falling within any other priority class
under the Illinois Insurance Code. The funding agreements are unsecured
obligations of Allstate Life.
Lord, Bissell & Brook LLP, special Illinois insurance regulatory counsel of
Allstate Life, has opined that, subject to the limitations, qualifications and
assumptions set forth in its opinion letter, in a properly prepared and
presented case, (1) in a delinquency proceeding under Article XIII of the
Illinois Insurance Code, 215 ILCS Section 5/187 et seq. (the "Illinois
Liquidation Act"), the timely and properly filed claims of an owner under the
funding agreement (with the possible exception of claims for Additional Amounts,
as discussed below) would be entitled to distribution pari passu with claims
made by other policyholders, beneficiaries, and insureds under other insurance
policies, insurance contracts, annuities and funding agreements issued by
Allstate Life, and the claims of the Illinois Life and Health Insurance Guaranty
Association, and any similar organization in another state, in accordance with
Section 5/205(1)(d) of the Illinois Liquidation Act, and (2) an owner's claims
under the funding agreement should not be recharacterized as other than the
claims of a policyholder, beneficiary, or insured under an insurance policy,
insurance contract, annuity or funding agreement.
In the absence of controlling judicial precedents, the opinion of Lord,
Bissell & Brook LLP is based on a reasoned analysis of Illinois statutes, as
well as application of other states' judicial decisions involving similar or
analogous circumstances, and is subject to the limitations, qualifications and
assumptions set forth in its opinion letter. Investors should note that in the
event of the insolvency of an insurance company, however, the judicial
application of statutes governing the distribution of the insurer's general
assets has typically proceeded on a case-by-case basis.
Additional Amounts may be considered a separate payment obligation and may not
be subject to the same priority as other amounts claimed under the funding
agreements
If a funding agreement so provides, Allstate Life may be required to pay
Additional Amounts (as such term is defined therein) to the indenture trustee as
collateral assignee of the funding agreement. Although such payments could be
viewed as a claim under the funding agreements within the meaning of Section
5/205(1)(d), they may also be argued to be a separate payment obligation.
Therefore, while in a proceeding before a court of competent jurisdiction, the
court might find
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that a claim for an Additional Amount constitutes a claim under a funding
agreement, it also might find that such a claim is not a claim entitled to the
priority afforded by Section 5/205(1)(d). Lord, Bissell & Brook LLP has opined
that if a claim for an Additional Amount does not constitute a claim entitled to
the priority afforded by Section 5/205(1)(d), then in a properly prepared and
presented case any claim for an Additional Amount would be entitled to the same
priority as claims of general creditors of Allstate Life under Section
5/205(1)(g). Accordingly, in the event of the insolvency of Allstate Life, your
claim for any payments of Additional Amounts may be subordinated to claims for
other amounts under the applicable funding agreement.
Changes in Federal tax legislation could adversely affect Allstate Life's
business
Under the Internal Revenue Code of 1986, as amended (the "Code"), United
States Federal income tax payable by policyholders on investment earnings is
deferred during the accumulation period of certain life insurance and annuity
products. Thus, taxes, if any, are payable on income attributable to a
distribution under the contract for the year in which the distribution is made.
This favorable tax treatment may give certain of Allstate Life's products a
competitive advantage over other noninsurance products. On May 28, 2003,
President Bush signed the Jobs and Growth Tax Relief Reconciliation Act of 2003,
which reduces the federal income tax rates applicable to certain dividends and
capital gains realized by individuals. This legislation may lessen the
competitive advantage of certain of Allstate Life's products vis-a-vis other
investments that generate dividend and/or capital gain income. As a result,
demand for certain of Allstate Life's products that offer income tax deferral
may be negatively impacted. Additionally, Congress has from time to time
considered other legislation that would reduce or eliminate the benefits to
policyowners of the deferral of taxation on the accretion of value within
certain insurance products or otherwise affect the taxation of insurance
products and insurance companies. To the extent that the Code is revised to
reduce the tax deferred status of insurance products, or to reduce the taxation
of competing products, all life insurance companies, including Allstate Life,
could be adversely affected.
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ALLSTATE LIFE GLOBAL FUNDING TRUSTS
Each series of notes will be issued by a newly created separate and
distinct trust formed by Global Funding, the administrator and the Delaware
trustee pursuant to the filing of a certificate of trust and the execution of
the applicable trust agreement. Global Funding will be the sole beneficial owner
of each trust that is formed.
After formation, each trust will not engage in any activity other than:
o issuing and selling a single series of notes;
o immediately acquiring a funding note and immediately surrendering such
funding note for cancellation pursuant to its terms in exchange for
one or more funding agreement(s);
o acquiring, holding and maintaining the applicable funding
agreement(s);
o pledging, assigning as collateral and granting a security interest in
the applicable funding agreement(s) to the indenture trustee;
o making payments on the applicable series of notes; and
o engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental to or
connected with those activities.
The principal executive offices of the trusts will be located at Allstate
Life Global Funding Trusts, c/o: AMACAR Pacific Corp., 6525 Morrison Boulevard,
Suite 318, Charlotte, North Carolina 28211. The telephone number will be (704)
365-0569. For more information about the trusts, see "Description of Allstate
Life Global Funding and the Trusts" in the accompanying prospectus.
ALLSTATE LIFE GLOBAL FUNDING
Global Funding is a special purpose statutory trust existing under the laws
of the State of Delaware. The primary purpose of Global Funding is to serve as
depositor for the programs.
Global Funding will not engage in any activity other than:
o beneficially owning the trusts;
o issuing one or more funding notes;
o acquiring one or more funding agreements from Allstate Life;
o pledging, assigning as collateral and granting a security interest in
the applicable funding agreement(s) to the funding note indenture
trustee;
o assigning absolutely the funding agreement(s) to, and depositing such
funding agreement(s) into, the trusts; and
o engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental to or
connected with those activities.
The principal executive offices of Global Funding are located at Allstate
Life Global Funding, c/o: AMACAR Pacific Corp., 6525 Morrison Boulevard, Suite
318, Charlotte, North Carolina 28211. The telephone number is (704) 365-0569.
For more information about Global Funding, see "Description of Allstate Life
Global Funding and the Trusts" in the accompanying prospectus.
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ALLSTATE LIFE INSURANCE COMPANY
Allstate Life was organized in 1957 as a stock life insurance company under
the laws of the State of Illinois. It conducts substantially all of its life
insurance operations directly or through wholly owned United States
subsidiaries. It is a wholly owned subsidiary of Allstate Insurance Company
("AIC"), a stock property-liability insurance company organized under the laws
of the State of Illinois. All of the outstanding stock of AIC is owned by The
Allstate Corporation, a publicly owned holding company incorporated under the
laws of the State of Delaware.
The Allstate Corporation, together with its subsidiaries, is the second
largest personal property and casualty insurer in the United States on the basis
of 2004 statutory premiums earned. Widely known through the "You're In Good
Hands With Allstate(R)" slogan, The Allstate Corporation, through its
subsidiaries, provides insurance products to approximately 17 million households
and has approximately 14,100 exclusive agencies and financial specialists in the
United States and Canada. For more information about Allstate Life, see
"Description of Allstate Life Insurance Company" in the accompanying prospectus.
Allstate Life's principal executive offices are located at 3100 Sanders
Road, Northbrook, Illinois 60062 and its telephone number is (847) 402-5000.
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DESCRIPTION OF THE NOTES
This section provides a summary description of the material provisions of
the notes. Each series of notes will be issued pursuant to a separate indenture
(each, an "indenture") to be entered into among the issuing trust and the other
parties specified therein, including J.P. Morgan Trust Company, National
Association, or another entity specified therein, as the indenture trustee
(including, in each case, any successor, the "indenture trustee"). The
provisions of the notes are not restated in their entirety and you should read
the actual provisions set forth in the standard indenture terms filed as an
exhibit to the registration statement of which this prospectus supplement and
the accompanying prospectus form a part because those provisions, and not this
description, will define your rights as an owner of an interest in the notes of
a series. The terms and conditions of the notes described in this section will
apply to each series of notes, except that the specific terms of a series of
notes will be added in the applicable pricing supplement and each book-entry or
definitive note (each, a "note certificate") representing the notes of such
series. It is important for you to consider the information contained in this
prospectus supplement, the accompanying prospectus, the applicable indenture,
the applicable pricing supplement and the note certificates in making your
investment decision.
This section describes some technical concepts and occasionally contains
defined terms. You should refer to the standard indenture terms and the forms of
note certificates filed as exhibits to the registration statement to which this
prospectus supplement and the accompanying prospectus relate for the full
description of those concepts and complete definitions of those terms.
General
Indentures
Each trust will issue its series of notes subject to and entitled to the
benefits of a separate indenture. Each indenture will be subject to, qualified
under and governed by, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The aggregate principal amount of notes that may be
authenticated and delivered under each indenture will be unlimited. For a
description of the indentures, see "Description of the Indentures" beginning on
page 21 of the accompanying prospectus.
Collateral
Pursuant to each indenture, the issuing trust will pledge and collaterally
assign each funding agreement held by it to the indenture trustee for the
benefit of the holders of the notes issued by such trust and any other person
for whose benefit the indenture trustee is or will be holding the collateral (as
defined below) for such series of notes. Each series of notes will be secured by
a first priority perfected security interest in the "collateral" for such series
of notes in favor of the indenture trustee, for the benefit of the holders of
the notes of such series and any other person for whose benefit the indenture
trustee is or will be holding the collateral, which will consist of the right,
title and interest of the issuing trust in and to:
o the funding agreement(s) held by the issuing trust;
o all proceeds of the relevant funding agreement(s); and
o all books and records pertaining to the relevant funding agreement(s).
Ranking
The notes of a series will represent the unconditional, direct,
non-recourse and unsubordinated obligations of the issuing entity and will rank
equally among themselves. The notes of a series will represent the obligations
of the issuing entity only and will not represent the obligations of, or
interest in, any other person or entity, including Global Funding, Allstate Life
or any of their respective affiliates.
Pricing Supplement
The pricing supplement relating to the offering of a series of notes will
describe, among other things, the following terms:
o the principal amount and specified currency for the notes;
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o whether the notes are:
o fixed rate notes;
o floating rate notes;
o amortizing notes, meaning that a portion or all of the principal
amount is payable prior to the stated maturity date in accordance
with a schedule or by application of a formula; and/or
o discount notes that do not bear any interest currently or bear
interest at a rate that is below market rates at the time of
issuance;
o the price at which the notes will be issued, which will be expressed
as a percentage of the aggregate principal amount or face amount;
o the original issue date on which the notes will be issued;
o the stated maturity date;
o if the notes are fixed rate notes, the rate per annum at which the
notes will bear any interest and the interest payment date frequency;
o if the notes are floating rate notes, relevant terms such as:
o the interest rate basis or interest rate bases;
o the initial interest rate;
o the interest reset period or the interest reset dates;
o the interest payment dates;
o the index maturity;
o any maximum interest rate;
o the minimum interest rate;
o the spread and/or spread multiplier; and
o any other terms relating to the particular method of calculating
the interest rate for the notes and whether and how the spread
and/or spread multiplier may be changed prior to the stated
maturity date;
o if the notes are amortizing notes, the terms for repayment prior to
the stated maturity date;
o whether the notes may be redeemed by the issuing trust, or repaid at
the option of the holders, prior to the stated maturity date and the
terms of their redemption or repayment, provided that any such
redemption or repayment will be accompanied by the simultaneous
redemption or repayment of the relevant funding agreement(s);
o any special United States federal income tax considerations relating
to the purchase, ownership and disposition of the notes; and
o any other terms of the notes provided in the accompanying prospectus
to be set forth in a pricing supplement or that are otherwise
consistent with the provisions of the indenture under which the notes
will be issued.
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The pricing supplement also may add, update, supplement or clarify
information in this prospectus supplement and the accompanying prospectus. The
form of pricing supplement is included in this prospectus supplement as Annex A.
Pricing Options
Notes that bear interest will either bear interest at fixed or floating
rates, as specified in the applicable pricing supplement. The trusts may also
issue discount notes and amortizing notes, as specified in the applicable
pricing supplement.
Maturities
Each series of notes will mature on a day between nine months and 30 years
from its date of issue (the "stated maturity date"), as specified in the
applicable pricing supplement, unless its principal (or, any installment of its
principal) becomes due and payable prior to the stated maturity date, whether,
as applicable, by the declaration of acceleration of maturity, notice of
redemption at the option of the issuing trust, notice of the registered holder's
option to elect repayment or otherwise (the stated maturity date or any date
prior to the stated maturity date on which the particular series of notes
becomes due and payable, as the case may be, is referred to as the "maturity
date" with respect to the principal of such series of notes repayable on that
date). Each series of notes will mature on or prior to the 30th anniversary of
the date of its original issuance. Each series of notes will have the same
maturity as the related funding agreement(s).
Currency
Unless otherwise specified in the applicable pricing supplement, the notes
of a series will be denominated in, and payments of principal, premium, if any,
and/or interest or other amounts, if any, in respect thereof will be made in,
United States dollars. Each series of notes also may be denominated in, and
payments of principal, premium, if any, and/or interest or other amounts, if
any, in respect thereof may be made in, one or more foreign currencies. See
"Special Provisions Relating to Foreign Currency Notes--Payment of Principal,
Premium, if any, and Interest, if any." The currency in which a particular
series of notes is denominated (or, if that currency is no longer legal tender
for the payment of public and private debts in the country issuing that currency
or, in the case of Euro, in the member states of the European Union that have
adopted the single currency in accordance with the Treaty Establishing the
European Community, as amended by the Treaty on European Union, the currency
which is then legal tender in the related country or in the adopting member
states of the European Union, as the case may be) is referred to as the
"specified currency" with respect to such series of notes.
You will be required to pay for your notes in the specified currency. At
the present time, there are limited facilities in the United States for the
conversion of United States dollars into foreign currencies and vice versa, and
commercial banks do not generally offer non-United States dollar checking or
savings account facilities in the United States. The Agent from or through which
a foreign currency note is purchased may be prepared to arrange for the
conversion of United States dollars into the specified currency in order to
enable you to pay for your foreign currency note, provided that you make a
request to that Agent on or prior to the fifth business day (as defined below)
preceding the date of delivery of the particular foreign currency note, or by
any other day determined by that Agent. Each conversion will be made by an Agent
on the terms and subject to the conditions, limitations and charges as that
Agent may from time to time establish in accordance with its regular foreign
exchange practices. You will be required to bear all costs of exchange in
respect of your foreign currency note. See "Special Provisions Relating to
Foreign Currency Notes."
The issuing trust may (if so specified in the applicable pricing
supplement) without the consent of the holders of any note or coupon,
redenominate all, but not less than all, of the notes of a series on or after
the date on which the member state of the European Union in whose national
currency such notes are denominated has become a participant member in the third
stage of the European economic and monetary union as more fully set out in the
applicable pricing supplement.
Form of Notes; Denominations
The issuing trust will issue each note of a series as a book-entry note
represented by one or more fully registered global securities or as a fully
registered definitive note. Unless otherwise specified in the applicable pricing
supplement, the minimum denominations of each note will be $1,000 and integral
multiples of $1,000 in excess thereof.
Listing of Notes
Unless otherwise specified in the applicable pricing supplement, a series
of notes will not be listed on any securities exchange.
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Payments
The issuing trust will make payments of principal of, and premium, if any,
and interest and other amounts due and owing, if any, on book-entry notes
through the indenture trustee to the account of the depositary or its nominee.
See "--Form of Notes" and "--Clearing Systems." In the case of definitive notes,
payments of principal of, and premium, if any, and interest and other amounts
due and owing, if any, will be made on the maturity date in immediately
available funds upon presentation and surrender thereof (and, in the case of any
repayment on an optional repayment date, upon submission of a duly completed
election form if and as required by the provisions described below) at the
office or agency maintained by the issuing trust for this purpose in the Borough
of Manhattan, The City of New York, currently the paying agency office of the
indenture trustee located at 4 New York Plaza, 1st Floor, New York, New York
10004. The issuing trust will make payments of interest and other amounts due
and owing, if any, on the maturity date of a definitive note to the person to
whom payment of the principal thereof and premium, if any, thereon shall be
made. The issuing trust will make payments of interest and other amounts due and
owing, if any, on a definitive note on any interest payment date (as defined
below) other than the maturity date by check mailed to the address of the
registered holder entitled thereto appearing in the applicable note register.
Notwithstanding the foregoing, the issuing trust will make payments of interest
and other amounts due and owing, if any, on any interest payment date other than
the maturity date to each registered holder of $10,000,000 (or, if the specified
currency is other than United States dollars, the equivalent thereof in the
particular specified currency) or more in aggregate principal amount of
definitive notes (whether having identical or different terms and provisions) by
wire transfer of immediately available funds if the applicable registered holder
has delivered appropriate wire transfer instructions in writing to the indenture
trustee not less than 15 days prior to the particular interest payment date. Any
wire transfer instructions received by the indenture trustee shall remain in
effect until revoked by the applicable registered holder. For special payment
terms applicable to foreign currency notes, see "Special Provisions Relating to
Foreign Currency Notes--Payment of Principal, Premium, if any, and Interest, if
any."
Business Day
"Business day" means any day, other than a Saturday or Sunday, that is
neither a legal holiday nor a day on which commercial banks are authorized or
required by law, regulation or executive order to close in The City of New York;
provided, however, that, with respect to foreign currency notes, the day must
also not be a day on which commercial banks are authorized or required by law,
regulation or executive order to close in the principal financial center (as
defined below) of the country issuing the specified currency (or, if the
specified currency is Euro, the day must also be a TARGET settlement day).
"TARGET settlement day" means a day on which the Trans-European Automated
Real-Time Gross Settlement Express Transfer (TARGET) System is open.
Principal Financial Center
"Principal financial center" means, as applicable:
o the capital city of the country issuing the specified currency; or
o the capital city of the country to which the LIBOR currency relates;
provided, however, that with respect to United States dollars, Australian
dollars, Canadian dollars, Euro, South African rands and Swiss francs, the
"principal financial center" shall be The City of New York, Sydney, Toronto,
London (solely in the case of the LIBOR currency), Johannesburg and Zurich,
respectively.
Registration and Transfer of Notes
Book-entry notes may be transferred or exchanged only through the clearing
systems (described below). Registration of transfer or exchange of definitive
notes of a series will be made at the office or agency maintained by the issuing
trust for this purpose in the Borough of Manhattan, The City of New York, which
is currently the corporate trust office of the indenture trustee. No service
charge will be imposed for any such registration of transfer or exchange of
notes, but the issuing trust may require payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection therewith
(other than certain exchanges not involving any transfer).
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Withholding Tax and Payment of Additional Amounts
All amounts due in respect of the notes will be made without withholding or
deduction for or on account of any present or future taxes, duties, levies,
assessments or other governmental charges of whatever nature imposed or levied
by or on behalf of any governmental authority in the United States having the
power to tax payments on the notes unless the withholding or deduction is
required by law.
Unless otherwise specified in the applicable pricing supplement, a trust
will not pay any additional amounts ("additional amounts") to holders of any
series of notes in the event that any withholding or deduction is so required by
law, regulation or official interpretation thereof, and the imposition of a
requirement to make any such withholding or deduction will not give rise to any
independent right or obligation to redeem the notes of such series.
If a trust so specifies in the applicable pricing supplement, such trust
will pay, or cause to be paid, additional amounts to non-U.S. Holders (as
defined in "United States Federal Income Tax Considerations") to compensate for
any withholding or deduction for or on account of any present or future taxes,
duties, levies, assessments or governmental charges of whatever nature imposed
or levied on payments on the notes of the relevant series by or on behalf of any
governmental authority in the United States having the power to tax, so that the
net amount received by the holders of the notes of such series, after giving
effect to such withholding or deduction, whether or not currently payable, will
equal the amount that would have been received under the notes of such series
were no such deduction or withholding required; provided that no such additional
amounts shall be required for or on account of:
o any tax, duty, levy, assessment or other governmental charge imposed
which would not have been imposed but for a holder or beneficial owner
of one or more of the notes of such series
o having any present or former connection with the United States,
including, without limitation, being or having been a citizen or
resident thereof, or having been present, having been
incorporated in, having engaged in a trade or business or having
(or having had) a permanent establishment or principal office
therein;
o being a controlled foreign corporation (within the meaning of
Section 957(a) of the Code) related (within the meaning of Code
Section 864(d)(4)) to Allstate Life;
o being a bank for United States federal income tax purposes whose
receipt of interest on the notes is described in Section
881(c)(3)(A) of the Code;
o being an actual or constructive owner of 10% or more of the total
combined voting power of all classes of stock of Allstate Life
entitled to vote within the meaning of Section 871(h)(3) of the
Code and Treasury Regulations promulgated thereunder; or
o being subject to backup withholding as of the date of the
purchase by the holder of the notes;
o any tax, duty, levy, assessment or other governmental charge which
would not have been imposed but for the presentation of any note of
the applicable series (where presentation is required) for payment on
a date more than 30 days after the date on which such payment becomes
due and payable or the date on which payment is duly provided for,
whichever occurs later;
o any tax, duty, levy, assessment or other governmental charge which is
imposed or withheld solely by reason of the failure of the beneficial
owner or a holder of notes of a series to comply with certification,
identification or information reporting requirements concerning the
nationality, residence, identity or connection with the United States
of the beneficial owner or a holder of notes of such series, if
compliance is required by statute, by regulation of the United States
Treasury Department, judicial or administrative interpretation, other
law or by an applicable income tax treaty to which the United States
is a party as a condition to exemption from such tax, duty, levy,
assessment or other governmental charge;
o any inheritance, gift, estate, personal property, sales, transfer or
similar tax, duty, levy, assessment, or similar governmental charge;
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o any tax, duty, levy, assessment, or other governmental charge that is
payable otherwise than by withholding from payments in respect of the
notes of such series;
o any tax, duty, levy, assessment or governmental charge imposed by
reason of payments on the notes of such series being treated as
contingent interest described in Section 871(h)(4) of the Code
provided such treatment was described in the applicable pricing
supplement;
o any tax, duty, levy, assessment or governmental charge that would not
have been imposed but for an election by the holder of the notes of
such series, the effect of which is to make one or more payments in
respect of the notes of such series subject to United States federal
income tax or withholding tax provisions; or
o any combination of the items described in the bullets above.
The European Union has adopted a directive regarding the taxation of
savings income. Effective as of July 1, 2005, member states are required to
provide to the tax authorities of other member states details of payments of
interest and other similar income paid by a person to an individual in another
member state, except that Austria, Belgium and Luxembourg will instead impose a
withholding system for a transitional period unless during such period they
elect otherwise. For the avoidance of doubt, should any deduction or withholding
on account of tax be required to be made, or be made, pursuant to such
directive, no additional amounts shall be payable or paid by or on behalf of a
trust.
Security; Non-Recourse Obligations
The notes of a series will represent the obligations of the issuing entity
only and will not represent the obligations of, or interest in, any other person
or entity, Global Funding, Allstate Life or any of their respective affiliates.
The notes of a series will not be guaranteed by any person or entity. The
obligations under each series of notes will be secured by all of the rights and
title of the issuing trust in one or more funding agreements issued by Allstate
Life and other rights and assets included in the applicable collateral held in
the issuing trust.
The issuing trust will, from time to time and upon advice of counsel, at
the trust's expense, execute, deliver, file and record any statement,
assignment, instrument, document, agreement or other paper and take any other
action, (including, without limitation, any filings of financing or continuation
statements) that from time to time may be necessary or desirable, or that the
indenture trustee may reasonably request, in order to create, preserve, perfect,
confirm or validate a security interest or to enable the holder of its series of
notes to obtain the full benefits of the applicable indenture, or to enable the
indenture trustee to exercise and enforce any of its rights, powers and remedies
under the indenture with respect to the applicable collateral. To the extent
permitted by applicable law, the issuing trust authorizes the indenture trustee
to execute and file financing statements or continuation statements without the
trust's signature appearing thereon and will agree that a carbon, photographic,
photostatic or other reproduction of the applicable indenture or of a financing
statement is sufficient as a financing statement. The issuing trust shall pay
the costs of, or incidental to, any recording or filing of any financing or
continuation statements concerning any of the applicable collateral.
Since Allstate Life will be the sole obligor under the funding agreements,
the ability of a trust to meet its obligations, and your ability to receive
payments from such trust, with respect to a particular series of notes, will be
principally dependent upon Allstate Life's ability to perform its obligations
under each applicable funding agreement held by the issuing trust. Despite this,
you will have no direct contractual rights against Allstate Life under any such
funding agreement. Pursuant to the terms of each funding agreement, recourse
rights to Allstate Life will belong to the issuing trust, its successors and
permitted assignees. In connection with the offering and sale of a series of
notes, the issuing trust will pledge, collaterally assign and grant a security
interest in the collateral for such series of notes to the indenture trustee for
the benefit of the holders of the applicable series of notes and any other
person for whose benefit the indenture trustee is or will be holding the
collateral. Accordingly, recourse to Allstate Life under each such funding
agreement will be enforceable only by the indenture trustee as a secured party
for the benefit of holders of such series of notes and any other person for
whose benefit the indenture trustee is or will be holding the collateral.
Nonetheless, since Allstate Life is a registrant, purchasers of notes may
be able to proceed directly against Allstate Life to enforce their rights under
the Federal securities laws and their rights under the Federal securities laws
will be no different than if they purchased the underlying funding agreements
directly from Allstate Life.
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Redemption, Repayment and Repurchase of Notes
Unless otherwise specified in the applicable pricing supplement and
provided for in the applicable funding agreement(s), and except as provided with
respect to an optional tax event redemption, the notes of a series will not be
redeemable, except at the applicable maturity date, when all notes of such
series will be redeemed.
Optional Redemption by the Issuer; No Sinking Fund
If an initial redemption date is specified in the applicable pricing
supplement and provided for in the applicable funding agreement(s), the issuing
trust may redeem the particular series of notes prior to its stated maturity
date at its option on any date on or after that initial redemption date in whole
or from time to time in part in increments of $1,000 or any other integral
multiple of an authorized denomination specified in the applicable pricing
supplement (provided that any remaining principal amount thereof shall be at
least $1,000 or other minimum authorized denomination applicable thereto), at
the applicable redemption price (as defined below), together with unpaid
interest accrued thereon to the date of redemption. "Redemption price," with
respect to a series of notes, means an amount equal to the initial redemption
percentage specified in the applicable pricing supplement (as adjusted by the
annual redemption percentage reduction, if applicable) multiplied by the unpaid
principal amount thereof to be redeemed. The initial redemption percentage, if
any, applicable to a series of notes shall decline at each anniversary of the
initial redemption date by an amount equal to the applicable annual redemption
percentage reduction, if any, until the redemption price is equal to 100% of the
unpaid amount thereof to be redeemed. For a discussion of the redemption of
discount notes, see "--Discount Notes."
No series of notes will be subject to, or entitled to the benefit of, any
sinking fund unless otherwise indicated in the applicable pricing supplement.
The applicable pricing supplement may provide that the notes of a series
may be redeemed by the issuing trust and the terms of such redemption. If so
specified, the issuing trust will give a notice of redemption to each holder of
the notes to be redeemed not less than 30 days nor more than 60 days prior to
the date fixed for redemption.
Each trust may issue a series of notes which may be redeemed by the issuing
trust when 25% or more of the original principal balance of such notes is
outstanding, which are referred to herein as "callable" notes. If a trust issues
a series of callable notes, such trust will include the word "callable" in the
title of such series of notes in the applicable pricing supplement. Unless
otherwise specified in the applicable pricing supplement, such series of notes
will otherwise be subject to the redemption provisions described above.
Repayment at Option of Holder
A series of notes may permit, upon the terms and subject to the limitations
set forth in the applicable pricing supplement, redemption at the option of the
holder or holders of the notes of such series. If one or more series of notes
provides for such optional redemption, the persons designated in the applicable
pricing supplement may require the issuing trust to repay the notes of such
series prior to their stated maturity date in whole or from time to time in part
in increments of $1,000 or any other integral multiple of an authorized
denomination specified in the applicable pricing supplement (provided that any
remaining principal amount thereof shall be at least $1,000 or other minimum
authorized denomination applicable thereto), at a repayment price equal to 100%
of the unpaid principal amount thereof to be repaid, together with unpaid
interest accrued thereon to the date of repayment and any other amounts then due
and owing. Exercise of the repayment option will be irrevocable. For a
discussion of the repayment of discount notes, see "--Discount Notes."
None of the trusts will issue notes that may be repaid at the option of the
holders prior to the stated maturity date if such issuance would cause the
relevant trust to fail to satisfy the applicable requirements for exemption
under Rule 3a-7 under the Investment Company Act of 1940, as amended, and all
applicable rules, regulations and interpretations thereunder.
Only DTC may exercise a repayment option in respect of notes of a series
issued in book-entry form. Accordingly, beneficial owners of notes that desire
to exercise their repayment option, if any, with respect to all or any portion
of such notes, must instruct the participant through which they own their
interest to direct DTC to exercise the repayment option on their behalf by
delivering the duly completed election form to the indenture trustee. In order
to ensure that the election form is received by the indenture trustee on a
particular day, the applicable beneficial owner must so instruct the participant
through which it owns its interest before such participant's deadline for
accepting instructions for that day. Participants may have different deadlines
for accepting instructions from their customers. Accordingly, a beneficial owner
should consult the participant through which it owns its interest in the notes
for the participant's deadline for receiving payment instructions. In
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addition, at the time such instructions are given, each such beneficial owner
will cause such participant to transfer such beneficial owner's interest in the
notes issued in book-entry form, on DTC's records, to the indenture trustee.
Unless otherwise specified in the applicable pricing supplement, the notes
of a series will not provide any holder with the option to have the issuing
trust repay the note on a date or dates specified prior to its maturity date.
Repurchase of Notes
Each trust may purchase some or all notes of a series issued by such trust
in the open market or otherwise at any time, and from time to time, with the
prior written consent of Allstate Life as to both the making of such purchase
and the purchase price to be paid for such notes. If Allstate Life, in its sole
discretion, consents to such purchase of notes by the issuing trust, then such
trust and other parties to the indenture will be obligated to take such actions
as may be necessary or desirable to effect the prepayment of such portion, or
the entirety, of the current Principal Amount (as defined in the applicable
funding agreement) under each applicable funding agreement as may be necessary
to provide for the payment of the purchase price for such notes. Upon such
payment, the Principal Amount under each funding agreement shall be reduced (1)
with respect to any purchase of notes that bear interest at fixed or floating
rates, by an amount equal to the aggregate principal amount of the notes as
purchased (or the portion thereof applicable to such funding agreement) and (2)
with respect to any purchase of notes other than notes that bear interest at
fixed or floating rates, by an amount to be agreed between the issuing trust and
Allstate Life to reflect such prepayment under the funding agreement(s).
Optional Tax Event Redemption
If under the applicable pricing supplement the issuing trust is required at
any time to pay additional amounts or if such trust is obligated to withhold or
deduct any United States taxes with respect to any payment under the notes of
the relevant series or if there is a material probability that the issuing trust
will become obligated to withhold or deduct any such United States taxes or
otherwise pay additional amounts (in the opinion of independent legal counsel
selected by Allstate Life), in each case pursuant to any change in or amendment
to any United States tax laws (or any regulations or rulings thereunder) or any
change in position of the Internal Revenue Service regarding the application or
interpretation thereof (including, but not limited to, Allstate Life's or the
issuing trust's receipt of a written adjustment from the Internal Revenue
Service in connection with an audit) (a "tax event"), then Allstate Life,
pursuant to the terms of the relevant funding agreement(s), may terminate the
relevant funding agreement(s). If Allstate Life terminates the relevant funding
agreement(s), the issuing trust will redeem the particular series of notes for
the outstanding principal of and any accrued but unpaid interest and any other
amounts then due and owing on its series of notes, or such other amount which is
specified in the pricing supplement for such series of notes by giving not more
than 75 days nor less than 30 days prior written notice to the holders of such
series of notes, provided that no such notice of termination may be given
earlier than 90 days prior to the earliest day when the issuing trust would
become obligated to pay such additional amounts were a payment in respect of the
notes of such series then due.
Interest
Each interest-bearing series of notes will bear interest from its date of
issue at the rate per annum, in the case of notes that bear interest at fixed
rates, or pursuant to the interest rate formula, in the case of notes that bear
interest at floating rates, in each case as specified in the applicable pricing
supplement, until the principal thereof is paid. The issuing trust will make
interest payments in respect of the relevant series of notes in an amount equal
to the interest accrued from and including the immediately preceding interest
payment date in respect of which interest has been paid or from and including
the date of issue, if no interest has been paid, to but excluding the applicable
interest payment date or the maturity date, as the case may be (each, an
"interest period").
Interest on each series of notes will be payable in arrears on each
interest payment date and on the maturity date. The first payment of interest on
any series of notes originally issued between a regular interest record date (as
defined below) and the related interest payment date will be made on the
interest payment date immediately following the next succeeding regular interest
record date to the registered holder on the next succeeding regular interest
record date. The "regular interest record date" shall be the fifteenth calendar
day, whether or not a business day, immediately preceding the related interest
payment date.
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Fixed Rate Notes
Interest on each series of notes that bears interest at fixed rates will be
payable on the date(s) specified in the applicable pricing supplement (each, an
"interest payment date" with respect to a series of notes that bears interest at
fixed rates) and on the maturity date. Interest on each series of notes that
bears interest at fixed rates will be computed on the basis of a 360-day year of
twelve 30-day months.
Unless otherwise specified in the applicable pricing supplement, the
interest payment dates for fixed rate notes of a series will be as follows:
Interest Payment Frequency Interest Payment Dates
-------------------------------------- ----------------------------------------------------
Monthly Fifteenth day of each calendar month, beginning in
the first calendar month following the date such
series of notes was issued.
Quarterly Fifteenth day of every third month, beginning in the
third calendar month following the date such
series of notes was issued.
Semiannual Fifteenth day of every sixth month, beginning in the
sixth calendar month following the date such
series of notes was issued.
Annual Fifteenth day of every twelfth month, beginning in
the twelfth calendar month following the date such
series of notes was issued.
Unless otherwise provided in the applicable pricing supplement, any
interest payment date or the maturity date of a series of notes that bears
interest at fixed rates falls on a day that is not a business day, the issuing
trust will make the required payment of principal, premium, if any, and/or
interest or other amounts on the next succeeding business day, and no additional
interest will accrue in respect of the payment made on that next succeeding
business day.
Interest rates that the issuing trust offers on its fixed rate notes may
differ depending upon, among other factors, the aggregate principal amount of
notes purchased in any single transaction. Notes with different variable terms,
other than interest rates, may also be offered concurrently by other trusts to
different investors. Other trusts may change interest rates or formulas and
other terms of notes from time to time, but no change of terms will affect any
note any other trust has previously issued or as to which any other trust has
accepted an offer to purchase.
Floating Rate Notes
Interest on each series of notes that bears interest at floating rates will
be determined by reference to the applicable interest rate basis or interest
rate bases, which may, as described below, include:
o the CD Rate,
o the CMT Rate,
o the Commercial Paper Rate,
o the Constant Maturity Swap Rate,
o the Eleventh District Cost of Funds Rate,
o the Federal Funds Open Rate,
o the Federal Funds Rate,
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o LIBOR,
o EURIBOR,
o the Prime Rate, or
o the Treasury Rate.
The applicable pricing supplement will specify certain terms of the
particular series of notes that bears interest at floating rates, including:
o whether the note that bears interest at floating rates is:
o a "Regular Floating Rate Note,"
o a "Floating Rate/Fixed Rate Note" or
o an "Inverse Floating Rate Note,"
o the fixed rate commencement date, if applicable,
o fixed interest rate, if applicable,
o interest rate basis or bases,
o initial interest rate, if any,
o interest reset dates,
o interest payment dates,
o index maturity,
o maximum interest rate and/or minimum interest rate, if any,
o spread and/or spread multiplier, or
o if one or more of the applicable interest rate bases is LIBOR, the
LIBOR currency and LIBOR page.
The rate derived from the applicable interest rate basis will be determined
in accordance with the related provisions below. The interest rate in effect on
each day will be based on:
o if that day is an interest reset date, the rate determined as of the
interest determination date (as defined below) immediately preceding
that interest reset date, or
o if that day is not an interest reset date, the rate determined as of
the interest determination date immediately preceding the most recent
interest reset date.
The "spread" is the number of basis points (one one-hundredth of a
percentage point) specified in the applicable pricing supplement to be added to
or subtracted from the related interest rate basis or bases applicable to a
series of notes that bears interest at floating rates. The "spread multiplier"
is the percentage specified in the applicable pricing supplement of the related
interest rate basis or bases applicable to a series of notes that bears interest
at floating rates by which the interest rate basis or bases will be multiplied
to determine the applicable interest rate. The "index maturity" is the period to
maturity of the instrument or obligation with respect to which the related
interest rate basis or bases will be calculated.
S-29
Regular Floating Rate Notes
Unless a series of notes that bears interest at floating rates is
designated as a series of Floating Rate/Fixed Rate notes or a series of Inverse
Floating Rate notes, or as having an addendum attached or having
other/additional provisions apply, in each case relating to a different interest
rate formula, such series of notes that bears interest at floating rates will be
a series of Regular Floating Rate notes and will bear interest at the rate
determined by reference to the applicable interest rate basis or bases:
o multiplied by the applicable spread multiplier, if any; and/or
o plus or minus the applicable spread, if any.
Commencing on the first interest reset date, as specified in the relevant
pricing supplement, the rate at which interest on a series of Regular Floating
Rate notes is payable will be reset as of each interest reset date; provided,
however, that the interest rate in effect for the period, if any, from the date
of issue to the first interest reset date will be the initial interest rate.
Floating Rate/Fixed Rate Notes
If a series of notes that bears interest at floating rates is designated as
a series of Floating Rate/Fixed Rate notes, such series of notes that bears
interest at floating rates will bear interest at the rate determined by
reference to the applicable interest rate basis or bases:
o multiplied by the applicable spread multiplier, if any; and/or
o plus or minus the applicable spread, if any.
Commencing on the first interest reset date, the rate at which interest on
a series of Floating Rate/Fixed Rate notes is payable will be reset as of each
interest reset date; provided, however, that:
o the interest rate in effect for the period, if any, from the date of
issue to the first interest reset date will be the initial interest
rate, as specified in the relevant pricing supplement; and
o the interest rate in effect commencing on the fixed rate commencement
date will be the fixed interest rate, if specified in the applicable
pricing supplement, or, if not so specified, the interest rate in
effect on the day immediately preceding the fixed rate commencement
date.
Inverse Floating Rate Notes
If a series of notes that bears interest at floating rates is designated as
a series of Inverse Floating Rate notes, such series of notes that bears
interest at floating rates will bear interest at the fixed interest rate minus
the rate determined by reference to the applicable interest rate basis or bases:
o multiplied by the applicable spread multiplier, if any; and/or
o plus or minus the applicable spread, if any.
provided, however, that interest on a series of Inverse Floating Rate notes will
not be less than zero. Commencing on the first interest reset date, the rate at
which interest on a series of Inverse Floating Rate notes is payable will be
reset as of each interest reset date; provided, further, that the interest rate
in effect for the period, if any, from the date of issue to the first interest
reset date will be the initial interest rate.
Interest Reset Dates
The applicable pricing supplement will specify the dates on which the rate
of interest on a series of notes that bears interest at floating rates will be
reset (each, an "interest reset date"), and the period between interest reset
dates will be the "interest reset period." Unless otherwise specified in the
applicable pricing supplement, the interest reset dates will be, in the case of
a series of notes that bears interest at floating rates which reset:
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o daily--each business day;
o weekly--the Wednesday of each week, with the exception of weekly reset
series of notes that bears interest at floating rates as to which the
Treasury Rate is an applicable interest rate basis, which will reset
the Tuesday of each week;
o monthly--the third Wednesday of each month, with the exception of
monthly reset series of notes that bears interest at floating rates as
to which the Eleventh District Cost of Funds Rate is an applicable
interest rate basis, which will reset on the first calendar day of the
month;
o quarterly--the third Wednesday of every third calendar month,
beginning in the third calendar month following the month in which the
note was issued;
o semiannually--the third Wednesday of the two months specified in the
applicable pricing supplement; and
o annually--the third Wednesday of the month specified in the applicable
pricing supplement; provided, however, that, with respect to any
series of Floating Rate/Fixed Rate notes, the rate of interest thereon
will not reset after the particular fixed rate commencement date.
Unless otherwise provided in the applicable pricing supplement, if any
interest reset date for any series of notes that bears interest at floating
rates would otherwise be a day that is not a business day, the particular
interest reset date will be postponed to the next succeeding business day,
except that in the case of a series of notes that bears interest at floating
rates as to which LIBOR is an applicable interest rate basis and that business
day falls in the next succeeding calendar month, the particular interest reset
date will be the immediately preceding business day.
Interest Determination Dates
The interest rate applicable to a series of notes that bears interest at
floating rates for an interest reset period commencing on the related interest
reset date will be determined by reference to the applicable interest rate basis
as of the particular "interest determination date," which will be:
o with respect to the Federal Funds Open Rate--the related interest
reset date;
o with respect to the Federal Funds Rate and the Prime Rate--the
business day immediately preceding the related interest reset date;
o with respect to the CD Rate, the Commercial Paper Rate, and the CMT
Rate--the second business day preceding the related interest reset
date;
o with respect to the Constant Maturity Swap Rate--the second U.S.
Government Securities business day (as defined below) preceding the
related interest reset date; provided, however, that if, after
attempting to determine the Constant Maturity Swap Rate (as described
below), such rate is not determinable for a particular interest
determination date (the "original interest determination date"), then
such interest determination date shall be the first U.S. Government
Securities business day preceding the original interest determination
date for which the Constant Maturity Swap Rate can be determined as
described below;
o with respect to the Eleventh District Cost of Funds Rate--the last
working day of the month immediately preceding the related interest
reset date on which the Federal Home Loan Bank of San Francisco
publishes the Eleventh District Index (as defined below);
o with respect to LIBOR--the second London banking day (as defined
below) preceding the related interest reset date, unless the
applicable LIBOR currency (as defined below) is pounds sterling, in
which case the interest determination date will be the related
interest reset date, or the applicable LIBOR currency is Euro, in
which case the interest determination date will be the second TARGET
settlement date preceding the applicable interest reset date;
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o with respect to EURIBOR--the second TARGET settlement date preceding
the applicable interest reset date; and
o with respect to the Treasury Rate--the day in the week in which the
related interest reset date falls on which day Treasury Bills (as
defined below) are normally auctioned (i.e., Treasury Bills are
normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the
following Tuesday, except that the auction may be held on the
preceding Friday); provided, however, that if an auction is held on
the Friday of the week preceding the related interest reset date, the
interest determination date will be the preceding Friday.
Unless otherwise provided in the applicable pricing supplement, the
interest determination date pertaining to a series of notes that bears interest
at floating rates the interest rate of which is determined with reference to two
or more interest rate bases will be the latest business day which is at least
two business days before the related interest reset date for the applicable note
that bears interest at floating rates on which each interest reset basis is
determinable.
Calculation Dates
The indenture trustee will be the "calculation agent" for a series of notes
unless otherwise specified in the applicable pricing supplement. The interest
rate applicable to each interest reset period will be determined by the
calculation agent on or prior to the calculation date (as defined below), except
with respect to LIBOR and the Eleventh District Cost of Funds Rate, which will
be determined on the particular interest determination date. Upon request of the
registered holder of a series of notes that bears interest at floating rates,
the calculation agent will disclose the interest rate then in effect and, if
determined, the interest rate that will become effective as a result of a
determination made for the next succeeding interest reset date with respect to
the particular series of notes that bears interest at floating rates. The
"calculation date," if applicable, pertaining to any interest determination date
will be the earlier of:
o the tenth calendar day after the particular interest determination
date or, if such day is not a business day, the next succeeding
business day; or
o the business day immediately preceding the applicable interest payment
date or the maturity date, as the case may be.
Maximum and Minimum Interest Rates
A series of notes that bears interest at floating rates may also have
either or both of the following if specified in the applicable pricing
supplement:
o a maximum numerical limitation, or ceiling, that may accrue during any
interest reset period (a "maximum interest rate"); and
o a minimum numerical limitation, or floor, that may accrue during any
interest reset period (a "minimum interest rate").
In addition to any maximum interest rate that may apply to a series of
notes that bears interest at floating rates, the interest rate on a series of
notes that bears interest at floating rates will in no event be higher than the
maximum rate permitted by New York law, as the same may be modified by United
States law of general application.
Interest Payments
Unless otherwise specified in the applicable pricing supplement or in this
prospectus supplement, interest on each series of notes that bears interest at
floating rates will be payable on the date(s) specified in the accompanying
prospectus under the caption "Description of the Notes--Payment of Interest"
(each, an "interest payment date" with respect to such series of notes that
bears interest at floating rates). Unless the applicable pricing supplement
indicates otherwise, the interest payment dates will be, in the case of a series
of notes that bears interest at floating rates which reset:
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o daily, weekly or monthly--the third Wednesday of each month or on the
third Wednesday of every third calendar month, beginning in the third
calendar month following the date the applicable series of notes was
issued;
o quarterly--the third Wednesday of every third calendar month,
beginning in the third calendar month following the date the
applicable series of notes was issued;
o semiannually--the third Wednesday of the two months of each year
specified in the applicable pricing supplement; and
o annually--the third Wednesday of the month of each year specified in
the applicable pricing supplement.
In addition, the maturity date will also be an interest payment date.
Unless otherwise provided in the applicable pricing supplement, if any
interest payment date other than the maturity date for any series of notes that
bears interest at floating rates would otherwise be a day that is not a business
day, such interest payment date will be postponed to the next succeeding
business day, except that in the case of a series of notes that bears interest
at floating rates as to which LIBOR is an applicable interest rate basis and
that business day falls in the next succeeding calendar month, the particular
interest payment date will be the immediately preceding business day. If the
maturity date of a series of notes that bears interest at floating rates falls
on a day that is not a business day, the issuing trust will make the required
payment of principal, premium, if any, and interest or other amounts on the next
succeeding business day, and no additional interest will accrue in respect of
the payment made on that next succeeding business day.
All percentages resulting from any calculation on notes that bear interest
at floating rates will be rounded to the nearest one hundred-thousandth of a
percentage point, with five one-millionths of a percentage point rounded
upwards. For example, 9.876545% (or .09876545) would be rounded to 9.87655% (or
..0987655). All dollar amounts used in or resulting from any calculation on notes
that bear interest at floating rates will be rounded, in the case of United
States dollars, to the nearest cent or, in the case of a foreign currency, to
the nearest unit (with one-half cent or unit being rounded upwards).
With respect to each series of notes that bears interest at floating rates,
accrued interest is calculated by multiplying the principal amount of such
series of notes that bears interest at floating rates by an accrued interest
factor. The accrued interest factor is computed by adding the interest factor
calculated for each day in the particular interest period. The interest factor
for each day will be computed by dividing the interest rate applicable to such
day by 360, in the case of a series of notes that bears interest at floating
rates as to which the CD Rate, the Commercial Paper Rate, the Eleventh District
Cost of Funds Rate, the Federal Funds Open Rate, the Federal Funds Rate, LIBOR,
EURIBOR or the Prime Rate is an applicable interest rate basis, or by the actual
number of days in the year, in the case of a series of notes that bears interest
at floating rates as to which the CMT Rate or the Treasury Rate is an applicable
interest rate basis. In the case of a series of notes that bears interest at
floating rates as to which the Constant Maturity Swap Rate is the interest rate
basis, the interest factor will be computed by dividing the number of days in
the interest period by 360 (the number of days to be calculated on the basis of
a year of 360 days with 12 30-day months (unless (i) the last day of the
interest period is the 31st day of a month but the first day of the interest
period is a day other than the 30th or 31st day of a month, in which case the
month that includes that last day shall not be considered to be shortened to a
30-day month, or (ii) the last day of the interest period is the last day of the
month of February, in which case the month of February shall not be considered
to be lengthened to a 30-day month)). The interest factor for a series of notes
that bears interest at floating rates as to which the interest rate is
calculated with reference to two or more interest rate bases will be calculated
in each period in the same manner as if only the applicable interest rate basis
specified in the applicable pricing supplement applied.
The calculation agent shall determine the rate derived from each interest
rate basis in accordance with the following provisions.
CD Rate
"CD Rate" means:
(1) the rate on the particular interest determination date for negotiable
United States dollar certificates of deposit having the index maturity
specified in the applicable pricing supplement as published in
H.15(519) (as defined below) under the caption "CDs (secondary
market);" or
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(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date for negotiable United
States dollar certificates of deposit of the particular index maturity
as published in H.15 Daily Update (as defined below), or other
recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "CDs (secondary market);" or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date calculated by the
calculation agent as the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on that interest
determination date, of three leading non-bank dealers in negotiable
United States dollar certificates of deposit in The City of New York
(which may include the Agents or their affiliates) selected by the
calculation agent for negotiable United States dollar certificates of
deposit of major United States money market banks for negotiable
United States certificates of deposit with a remaining maturity
closest to the particular index maturity in an amount that is
representative for a single transaction in that market at that time;
or
(4) if the dealers so selected by the calculation agent are not quoting as
mentioned in clause (3), the CD Rate in effect on the particular
interest determination date; provided that if no CD Rate is then in
effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
"H.15(519)" means the weekly statistical release designated as H.15(519),
or any successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.federalreserve.gov/releases/H15/update, or any successor site or
publication.
CMT Rate
"CMT Rate" means:
(1) if CMT Moneyline Telerate Page 7051 is specified in the applicable
pricing supplement:
(a) the percentage equal to the yield for United States Treasury
securities at "constant maturity" having the index maturity
specified in the applicable pricing supplement as published in
H.15(519) under the caption "Treasury Constant Maturities," as
the yield is displayed on Moneyline Telerate (or any successor
service) on page 7051 (or any other page as may replace the
specified page on that service) ("Moneyline Telerate Page 7051"),
for the particular interest determination date; or
(b) if the rate referred to in clause (a) does not so appear on
Moneyline Telerate Page 7051, the percentage equal to the yield
for United States Treasury securities at "constant maturity"
having the particular index maturity and for the particular
interest determination date as published in H.15(519) under the
caption "Treasury Constant Maturities;" or
(c) if the rate referred to in clause (b) does not so appear in
H.15(519), the rate on the particular interest determination date
for the period of the particular index maturity as may then be
published by either the Federal Reserve System Board of Governors
or the United States Department of the Treasury that the
calculation agent determines to be comparable to the rate which
would otherwise have been published in H.15(519); or
(d) if the rate referred to in clause (c) is not so published, the
rate on the particular interest determination date calculated by
the calculation agent as a yield to maturity based on the
arithmetic mean of the secondary market bid prices at
approximately 3:30 P.M., New York City time, on that interest
determination date of three leading primary United States
government securities dealers in The City of New York (which may
include the Agents or their affiliates) (each, a "reference
dealer"), selected by the calculation agent from five reference
dealers selected by the calculation agent and eliminating the
highest quotation, or, in the event of equality, one of
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the highest and the lowest quotation or, in the event of
equality, one of the lowest, for United States Treasury
securities with an original maturity equal to the particular
index maturity, a remaining term to maturity no more than one
year shorter than that index maturity and in a principal amount
that is representative for a single transaction in the securities
in that market at that time; or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the particular
interest determination date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of the quotations shall be
eliminated; or
(f) if fewer than three prices referred to in clause (d) are provided
as requested, the rate on the particular interest determination
date calculated by the calculation agent as a yield to maturity
based on the arithmetic mean of the secondary market bid prices
as of approximately 3:30 P.M., New York City time, on that
interest determination date of three reference dealers selected
by the calculation agent from five reference dealers selected by
the calculation agent and eliminating the highest quotation or,
in the event of equality, one of the highest and the lowest
quotation or, in the event of equality, one of the lowest, for
United States Treasury securities with an original maturity
greater than the particular index maturity, a remaining term to
maturity closest to that index maturity and in a principal amount
that is representative for a single transaction in the securities
in that market at that time; or
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate on the particular
interest determination date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of the quotations will be
eliminated; or
(h) if fewer than three prices referred to in clause (f) are provided
as requested, the CMT Rate in effect on the particular interest
determination date; provided that if no CMT Rate is then in
effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
(2) if CMT Moneyline Telerate Page 7052 is specified in the applicable
pricing supplement:
(a) the percentage equal to the one-week or one-month, as specified
in the applicable pricing supplement, average yield for United
States Treasury securities at "constant maturity" having the
index maturity specified in the applicable pricing supplement as
published in H.15(519) opposite the caption "Treasury Constant
Maturities," as the yield is displayed on Moneyline Telerate (or
any successor service) (on page 7052 or any other page as may
replace the specified page on that service) ("Moneyline Telerate
Page 7052"), for the week or month, as applicable, ended
immediately preceding the week or month, as applicable, in which
the particular interest determination date falls; or
(b) if the rate referred to in clause (a) does not so appear on
Moneyline Telerate Page 7052, the percentage equal to the
one-week or one-month, as specified in the applicable pricing
supplement, average yield for United States Treasury securities
at "constant maturity" having the particular index maturity and
for the week or month, as applicable, preceding the particular
interest determination date as published in H.15(519) opposite
the caption "Treasury Constant Maturities;" or
(c) if the rate referred to in clause (b) does not so appear in
H.15(519), the one-week or one-month, as specified in the
applicable pricing supplement, average yield for United States
Treasury securities at "constant maturity" having the particular
index maturity as otherwise announced by the Federal Reserve Bank
of New York for the week or month, as applicable, ended
immediately preceding the week or month, as applicable, in which
the particular interest determination date falls; or
(d) if the rate referred to in clause (c) is not so published, the
rate on the particular interest determination date calculated by
the calculation agent as a yield to maturity based on the
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arithmetic mean of the secondary market bid prices at
approximately 3:30 P.M., New York City time, on that interest
determination date of three reference dealers selected by the
calculation agent from five reference dealers selected by the
calculation agent and eliminating the highest quotation, or, in
the event of equality, one of the highest and the lowest
quotation or, in the event of equality, one of the lowest, for
United States Treasury securities with an original maturity equal
to the particular index maturity, a remaining term to maturity no
more than one year shorter than that index maturity and in a
principal amount that is representative for a single transaction
in the securities in that market at that time; or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the particular
interest determination date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of the quotations shall be
eliminated; or
(f) if fewer than three prices referred to in clause (d) are provided
as requested, the rate on the particular interest determination
date calculated by the calculation agent as a yield to maturity
based on the arithmetic mean of the secondary market bid prices
as of approximately 3:30 P.M., New York City time, on that
interest determination date of three reference dealers selected
by the calculation agent from five reference dealers selected by
the calculation agent and eliminating the highest quotation or,
in the event of equality, one of the highest and the lowest
quotation or, in the event of equality, one of the lowest, for
United States Treasury securities with an original maturity
greater than the particular index maturity, a remaining term to
maturity closest to that index maturity and in a principal amount
that is representative for a single transaction in the securities
in that market at the time; or
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate on the particular
interest determination date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of the quotations will be
eliminated; or
(h) if fewer than three prices referred to in clause (f) are provided
as requested, the CMT Rate in effect on that interest
determination date; provided that if no CMT Rate is then in
effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
If two United States Treasury securities with an original maturity greater
than the index maturity specified in the applicable pricing supplement have
remaining terms to maturity equally close to the particular index maturity, the
quotes for the United States Treasury security with the shorter original
remaining term to maturity will be used.
Commercial Paper Rate
"Commercial Paper Rate" means:
(1) the Money Market Yield (as defined below) on the particular interest
determination date of the rate for commercial paper having the index
maturity specified in the applicable pricing supplement as published
in H.15(519) under the caption "Commercial Paper--Nonfinancial;" or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Money
Market Yield of the rate on the particular interest determination date
for commercial paper having the particular index maturity as published
in H.15 Daily Update, or such other recognized electronic source used
for the purpose of displaying the applicable rate, under the caption
"Commercial Paper--Nonfinancial;" or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date calculated by the
calculation agent as the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on
that interest determination date of three leading dealers of United
States dollar commercial paper in The City of New York (which may
include the Agents or their affiliates) selected by the calculation
agent for commercial paper having the particular index maturity placed
for industrial issuers
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whose bond rating is "Aa" by Moody's or the equivalent from another
nationally recognized statistical rating organization; or
(4) if the dealers so selected by the calculation agent are not quoting as
mentioned in clause (3), the Commercial Paper Rate in effect on the
particular interest determination date; provided that if no Commercial
Paper Rate is then in effect, the interest rate that will be effective
as of the next interest reset date will be the initial interest rate.
"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
Money Market Yield = D x 360 x 100
-------------------------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable interest reset period.
Constant Maturity Swap Rate
"Constant Maturity Swap Rate" means:
(1) the rate for U.S. Dollar swaps with the designated maturity specified
in the applicable pricing supplement, expressed as a percentage, which
appears on the Reuters Screen ISDAFIX1 Page as of 11:00 A.M., New York
City time, on the particular interest determination date; or
(2) if the rate referred to in clause (1) does not appear on the Reuters
Screen ISDAFIX1 Page by 2:00 P.M., New York City time, on such
interest determination date, a percentage determined on the basis of
the mid-market semi-annual swap rate quotations provided by the
reference banks (as defined below) as of approximately 11:00 A.M., New
York City time, on such interest determination date, and, for this
purpose, the semi-annual swap rate means the mean of the bid and
offered rates for the semi-annual fixed leg, calculated on a 30/360
day count basis, of a fixed-for-floating U.S. Dollar interest rate
swap transaction with a term equal to the designated maturity
specified in the applicable pricing supplement commencing on the
interest reset date and in a representative amount (as defined below)
with an acknowledged dealer of good credit in the swap market, where
the floating leg, calculated on an Actual/360 day count basis, is
equivalent to USD-LIBOR-BBA with a designated maturity specified in
the applicable pricing supplement. The calculation agent will request
the principal New York City office of each of the reference banks to
provide a quotation of its rate. If at least three quotations are
provided, the rate for that interest determination date will be the
arithmetic mean of the quotations, eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest); or
(3) if such Constant Maturity Swap Rate is not determinable for a
particular interest determination date under clauses (1) and (2)
above, then such interest determination date shall be the first U.S.
Government Securities business day preceding the original interest
determination date for which the Constant Maturity Swap Rate can be
determined under clauses (1) and (2) above.
"U.S. Government Securities business day" means any day except for
Saturday, Sunday, or a day on which The Bond Market Association recommends that
the fixed income departments of its members be closed for the entire day for
purposes of trading in U.S. government securities.
"Representative amount" means an amount that is representative for a single
transaction in the relevant market at the relevant time.
"Reference banks" mean five leading swap dealers in the New York City
interbank market, selected by the calculation agent, after consultation with
Allstate Life.
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Eleventh District Cost of Funds Rate
"Eleventh District Cost of Funds Rate" means:
(1) the rate equal to the monthly weighted average cost of funds for the
calendar month immediately preceding the month in which the particular
interest determination date falls as set forth under the caption "11th
District" on the display on Moneyline Telerate (or any successor
service) on page 7058 (or any other page as may replace the specified
page on that service) ("Moneyline Telerate Page 7058") as of 11:00
A.M., San Francisco time, on that interest determination date; or
(2) if the rate referred to in clause (1) does not so appear on Moneyline
Telerate Page 7058, the monthly weighted average cost of funds paid by
member institutions of the Eleventh Federal Home Loan Bank District
that was most recently announced (the "Eleventh District Index") by
the Federal Home Loan Bank of San Francisco as the cost of funds for
the calendar month immediately preceding that interest determination
date; or
(3) if the Federal Home Loan Bank of San Francisco fails to announce the
Eleventh District Index on or prior to the particular interest
determination date for the calendar month immediately preceding that
interest determination date, the Eleventh District Cost of Funds Rate
in effect on the particular interest determination date; provided that
if no Eleventh District Cost of Funds Rate is then in effect, the
interest rate that will be effective as of the next interest reset
date will be the initial interest rate.
Federal Funds Rate
Federal Funds Open Rate
"Federal Funds Open Rate" means the rate set forth on Moneyline Telerate
Page 5 for an interest reset date underneath the caption "FEDERAL FUNDS" in the
row titled "OPEN". If the rate is not available for an interest reset date, the
rate for that interest reset date shall be the Federal Funds Rate as determined
below.
"Federal Funds Rate" means:
(1) the rate as of the particular interest determination date for United
States dollar federal funds as published in H.15(519) under the
caption "Federal Funds (Effective)" and displayed on Moneyline
Telerate (or any successor service) on page 120 (or any other page as
may replace the specified page on that service) ("Moneyline Telerate
Page 120"); or
(2) if the rate referred to in clause (1) does not so appear on Moneyline
Telerate Page 120 or is not so published by 3:00 P.M., New York City
time, on the related calculation date, the rate as of the particular
interest determination date for United States dollar federal funds as
published in H.15 Daily Update, or such other recognized electronic
source used for the purpose of displaying the applicable rate, under
the caption "Federal Funds (Effective);" or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate as
of the particular interest determination date calculated by the
calculation agent as the arithmetic mean of the rates for the last
transaction in overnight United States dollar federal funds arranged
by three leading brokers of United States dollar federal funds
transactions in The City of New York (which may include the Agents or
their affiliates), selected by the calculation agent prior to 9:00
A.M., New York City time, on the business day following that interest
determination date; or
(4) if the brokers so selected by the calculation agent are not quoting as
mentioned in clause (3), the Federal Funds Rate in effect on the
particular interest determination date; provided that if no Federal
Funds Rate is then in effect, the interest rate that will be effective
as of the next interest reset date will be the initial interest rate.
LIBOR
"LIBOR" means:
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(1) if "LIBOR Moneyline Telerate" is specified in the applicable pricing
supplement or if neither "LIBOR Reuters" nor "LIBOR Moneyline
Telerate" is specified in the applicable pricing supplement as the
method for calculating LIBOR, the rate for deposits in the LIBOR
currency having the index maturity specified in the applicable pricing
supplement, commencing on the related interest reset date, that
appears on the LIBOR page as of 11:00 A.M., London time, on the
particular interest determination date; or
(2) if "LIBOR Reuters" is specified in the applicable pricing supplement,
the arithmetic mean of the offered rates, calculated by the
calculation agent, or the offered rate, if the LIBOR page by its terms
provides only for a single rate, for deposits in the LIBOR currency
having the particular index maturity, commencing on the related
interest reset date, that appear or appears, as the case may be, on
the LIBOR page as of 11:00 A.M., London time, on the particular
interest determination date; or
(3) if fewer than two offered rates appear, or no rate appears, as the
case may be, on the particular interest determination date on the
LIBOR page as specified in clause (1) or (2), as applicable, the rate
calculated by the calculation agent of at least two offered quotations
obtained by the calculation agent after requesting the principal
London offices of each of four major reference banks (which may
include affiliates of the Agents), in the London interbank market to
provide the calculation agent with its offered quotation for deposits
in the LIBOR currency for the period of the particular index maturity,
commencing on the related interest reset date, to prime banks in the
London interbank market at approximately 11:00 A.M., London time, on
that interest determination date and in a principal amount that is
representative for a single transaction in the LIBOR currency in that
market at that time; or
(4) if fewer than two offered quotations referred to in clause (3) are
provided as requested, the rate calculated by the calculation agent as
the arithmetic mean of the rates quoted at approximately 11:00 A.M.,
in the applicable principal financial center, on the particular
interest determination date by three major banks (which may include
affiliates of the Agents), in that principal financial center selected
by the calculation agent for loans in the LIBOR currency to leading
European banks, having the particular index maturity and in a
principal amount that is representative for a single transaction in
the LIBOR currency in that market at that time; or
(5) if the banks so selected by the calculation agent are not quoting as
mentioned in clause (4), LIBOR in effect on the particular interest
determination date; provided that if no LIBOR is then in effect, the
interest rate that will be effective as of the next interest reset
date will be the initial interest rate.
"LIBOR currency" means the currency specified in the applicable pricing
supplement as to which LIBOR shall be calculated or, if no currency is specified
in the applicable pricing supplement, United States dollars.
"LIBOR page" means either:
(1) if "LIBOR Reuters" is specified in the applicable pricing supplement,
the display on the Reuter Monitor Money Rates Service (or any
successor service) on the page specified in the applicable pricing
supplement (or any other page as may replace that page on that
service) for the purpose of displaying the London interbank rates of
major banks for the LIBOR currency; or
(2) if "LIBOR Moneyline Telerate" is specified in the applicable pricing
supplement or neither "LIBOR Reuters" nor "LIBOR Moneyline Telerate"
is specified in the applicable pricing supplement as the method for
calculating LIBOR, the display on Moneyline Telerate (or any successor
service) on the page specified in the applicable pricing supplement
(or any other page as may replace such page on such service) for the
purpose of displaying the London interbank rates of major banks for
the LIBOR currency.
"London banking day" means a day on which commercial banks are open for
business (including dealings in the LIBOR currency) in London.
EURIBOR
"EURIBOR" means, with respect to any interest determination date relating
to a series of EURIBOR notes or a series of notes that bears interest at
floating rates for which the interest rate is determined with reference to
EURIBOR (a "EURIBOR interest determination date"), the rate for deposits in
Euros as sponsored, calculated and published jointly by the
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European Banking Federation and ACI--The Financial Market Association, or any
company established by the joint sponsors for purposes of compiling and
publishing those rates, having the index maturity specified in the applicable
pricing supplement, commencing on the applicable interest reset date, as the
rate appears on Moneyline Telerate, Inc., or any successor service, on page 248
(or any other page as may replace that specified page on the service)
("Moneyline Telerate Page 248") as of 11:00 A.M., Brussels time, on the
applicable EURIBOR interest determination date. If such rate does not appear on
Moneyline Telerate Page 248, or is not so published by 11:00 A.M., Brussels
time, on the applicable EURIBOR interest determination date, such rate will be
calculated by the calculation agent and will be the arithmetic mean of at least
two quotations obtained by the calculation agent after requesting the principal
Euro-zone (as defined below) offices of four major banks in the Euro-zone
interbank market to provide the calculation agent with its offered quotation for
deposits in Euros for the period of the index maturity specified in the
applicable pricing supplement, commencing on the applicable interest reset date,
to prime banks in the Euro-zone interbank market at approximately 11:00 A.M.,
Brussels time, on the applicable EURIBOR interest determination date and in a
principal amount not less than the equivalent of $1 million in Euros that is
representative for a single transaction in Euro in the market at that time. If
fewer than two such quotations are so provided, the rate on the applicable
EURIBOR interest determination date will be calculated by the calculation agent
and will be the arithmetic mean of the rates quoted at approximately 11:00 A.M.,
Brussels time, on such EURIBOR interest determination date by four major banks
in the Euro-zone for loans in Euro to leading European banks, having the index
maturity specified in the applicable pricing supplement, commencing on the
applicable interest reset date and in a principal amount not less than the
equivalent of $1 million in Euros that is representative for a single
transaction in Euros in the market at that time. If the banks so selected by the
calculation agent are not quoting as mentioned above, EURIBOR will be EURIBOR in
effect on the applicable EURIBOR interest determination date; provided that if
no EURIBOR is then in effect, the interest rate that will be effective as of the
next interest reset date will be the initial interest rate.
"Euro-zone" means the region comprised of member states of the European
Union that have adopted the single currency in accordance with the Treaty
Establishing the European Community, as amended by the Treaty on European Union.
Prime Rate
"Prime Rate" means:
(1) the rate on the particular interest determination date as published in
H.15(519) under the caption "Bank Prime Loan;" or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date as published in H.15 Daily
Update, or such other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption "Bank
Prime Loan;" or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date calculated by the
calculation agent as the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters Screen US
PRIME 1 Page (as defined below) as the applicable bank's prime rate or
base lending rate as of 11:00 A.M., New York City time, on that
interest determination date; or
(4) if fewer than four rates referred to in clause (3) are so published by
3:00 P.M., New York City time, on the related calculation date, the
rate on the particular interest determination date calculated by the
calculation agent as the arithmetic mean of the prime rates or base
lending rates quoted on the basis of the actual number of days in the
year divided by a 360-day year as of the close of business on that
interest determination date by three major banks (which may include
affiliates of the Agents) in The City of New York selected by the
calculation agent; or
(5) if the banks so selected by the calculation agent are not quoting as
mentioned in clause (4), the Prime Rate in effect on the particular
interest determination date; provided that if no Prime Rate is then in
effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
"Reuters Screen US PRIME 1 Page" means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the "US PRIME 1" page (or any
other page as may replace that page on that service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
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Treasury Rate
"Treasury Rate" means:
(1) the rate from the auction held on the Treasury Rate interest
determination date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the index maturity specified in the
applicable pricing supplement under the caption "INVESTMENT RATE" on
the display on Moneyline Telerate (or any successor service) on page
56 (or any other page as may replace that page on that service)
("Moneyline Telerate Page 56") or page 57 (or any other page as may
replace that page on that service) ("Moneyline Telerate Page 57"); or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Bond
Equivalent Yield (as defined below) of the rate for the applicable
Treasury Bills as published in H.15 Daily Update, or another
recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "U.S. Government
Securities/Treasury Bills/Auction High;" or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Bond
Equivalent Yield of the auction rate of the applicable Treasury Bills
as announced by the United States Department of the Treasury; or
(4) if the rate referred to in clause (3) is not so announced by the
United States Department of the Treasury, or if the Auction is not
held, the Bond Equivalent Yield of the rate on the particular interest
determination date of the applicable Treasury Bills as published in
H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market;" or
(5) if the rate referred to in clause (4) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date of the applicable Treasury
Bills as published in H.15 Daily Update, or another recognized
electronic source used for the purpose of displaying the applicable
rate, under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market;" or
(6) if the rate referred to in clause (5) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date calculated by the
calculation agent as the Bond Equivalent Yield of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New
York City time, on that interest determination date, of three primary
United States government securities dealers (which may include the
Agents or their affiliates) selected by the calculation agent, for the
issue of Treasury Bills with a remaining maturity closest to the index
maturity specified in the applicable pricing supplement; or
(7) if the dealers so selected by the calculation agent are not quoting as
mentioned in clause (6), the Treasury Rate in effect on the particular
interest determination date; provided that if no Treasury Rate is then
in effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
"Bond Equivalent Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
Bond Equivalent Yield = D x N x 100
-------------------------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis and expressed as a decimal, "N" refers to 365 or 366, as the
case may be, and "M" refers to the actual number of days in the applicable
interest reset period.
Other/Additional Provisions; Addendum
Any provisions with respect to the notes of a series, including the
specification and determination of one or more interest rate bases, the
calculation of the interest rate applicable to a series of notes that bears
interest at floating rates, the
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interest payment dates, the stated maturity date, any redemption or repayment
provisions or any other term relating to the applicable series of notes, may be
modified and/or supplemented as specified under "Other/Additional Provisions" on
the face thereof or in an addendum relating thereto, if so specified on the face
thereof and, in each case, described in the applicable pricing supplement.
Discount Notes
The trusts may from time to time issue series of notes ("discount notes")
that have an issue price (as specified in the applicable pricing supplement)
that is less than 100% of the principal amount thereof (i.e. par) by more than a
percentage equal to the product of 0.25% and the number of full years to the
stated maturity date. A series of discount notes may not bear any interest
currently or may bear interest at a rate that is below market rates at the time
of issuance. The difference between the issue price of a series of discount
notes and par is referred to as the "discount." In the event of redemption,
repayment or acceleration of maturity of a series of discount notes, the amount
payable to the holders of such series of discount notes will be equal to the sum
of:
o the issue price (increased by any accruals of discount) and, in the
event of any redemption of such series of discount notes, if
applicable, multiplied by the initial redemption percentage (as
adjusted by the annual redemption percentage reduction, if
applicable); and
o any unpaid interest accrued on such series of discount notes to the
date of the redemption, repayment or acceleration of maturity, as the
case may be.
For purposes of determining the amount of discount that has accrued as of
any date on which a redemption, repayment or acceleration of maturity occurs for
a series of discount notes, a discount will be accrued using a constant yield
method. The constant yield will be calculated using a 30-day month, 360-day year
convention, a compounding period that, except for the initial period (as defined
below), corresponds to the shortest period between interest payment dates for
the applicable series of discount notes (with ratable accruals within a
compounding period), a coupon rate equal to the initial coupon rate applicable
to the applicable series of discount notes and an assumption that the maturity
of such series of discount notes will not be accelerated. If the period from the
date of issue to the first interest payment date for a series of discount notes
(the "initial period") is shorter than the compounding period for such series of
discount notes, a proportionate amount of the yield for an entire compounding
period will be accrued. If the initial period is longer than the compounding
period, then the period will be divided into a regular compounding period and a
short period with the short period being treated as provided in the preceding
sentence. The accrual of the applicable discount may differ from the accrual of
original issue discount for purposes of the Code, certain series of discount
notes may not be treated as having original issue discount within the meaning of
the Code, and certain series of notes other than discount notes may be treated
as issued with original issue discount for federal income tax purposes. See
"United States Federal Income Tax Considerations."
Amortizing Notes
The trusts may from time to time issue series of notes ("amortizing notes")
with the amount of principal thereof and interest thereon payable in
installments over their terms. Unless otherwise specified in the applicable
pricing supplement, interest on each series of amortizing notes will be computed
on the basis of a 360-day year of twelve 30-day months. Payments with respect to
a series of amortizing notes will be applied first to interest due and payable
thereon and then to the reduction of the unpaid principal amount thereof.
Further information concerning additional terms and provisions of a particular
series of amortizing notes will be specified in the applicable pricing
supplement, including a table setting forth repayment information for such
series of amortizing notes.
Form of Notes
Book-entry notes
When a trust issues notes in book-entry form, it will issue one or more
global securities representing the entire issue of notes. Unless otherwise
specified in the applicable pricing supplement, these certificates will name a
nominee of The Depository Trust Company, New York, New York ("DTC") as the owner
of the notes. DTC maintains a computerized system that will reflect your
ownership of the applicable notes through an account you will maintain with your
broker/dealer, bank, trust company or other representative. If specified in the
applicable pricing supplement, notes of a series may also be issued in
book-entry form and registered in the name of a nominee for Euroclear and
Clearstream Luxembourg. For
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additional information regarding such notes, you should review "Special
Provisions Relating to Foreign Currency Notes" below.
Unless otherwise specified in the applicable pricing supplement, DTC's
nominee will be considered the owner of your notes in the records of the issuing
trust and will be the entity entitled to cast a vote regarding your notes.
However, DTC and the broker/dealers, banks, trust companies and other
representatives that are part of DTC's computerized system are required to
contact you for voting instructions.
Definitive Notes
When a trust issues notes in definitive form, you will receive a note
certificate evidencing your notes. The certificate will name you as the owner of
such notes, unless you choose to have your broker/dealer, bank, trust company or
other representative hold these certificates for you. If your name appears on
the note certificate evidencing your notes, then you will be considered the
owner of your notes for all purposes under the relevant indenture. For example,
if the issuing trust needs to ask the holders of the applicable series of notes
to vote on a proposed amendment to such series of notes, you will be asked to
cast the vote regarding your notes. If you have chosen to have some other entity
hold the note certificates for you, that entity will be considered the owner of
your notes in the records of the issuing trust and will be entitled to cast the
vote regarding your notes. However, this entity is required to contact you for
voting instructions.
Exchanges
Definitive notes cannot be exchanged for book-entry notes. Book-entry notes
can be exchanged for definitive notes only if;
o the depositary notifies the issuing trust that it is unwilling or
unable to continue as depositary for the global securities or the
issuing trust becomes aware that the depositary has ceased to be a
clearing agency registered under the Exchange Act and, in any such
case, such trust fails to appoint a successor to the depositary within
60 calendar days;
o subject to the procedures of DTC, the issuing trust, in its sole
discretion, determines that the notes of the relevant series should no
longer be represented solely by one or more global securities; or
o an event of default has occurred and is continuing with respect to the
relevant series of notes under the applicable indenture and the
maturity of the notes of such series is accelerated in accordance with
the terms of the applicable indenture and the notes of such series.
In these limited circumstances, the issuing trust will issue to you
definitive notes in exchange for the book-entry notes. There will be no service
charge for this exchange, but if a tax or other governmental charge is imposed,
the issuing trust may require you to pay it.
Clearing Systems
Unless otherwise specified in the applicable pricing supplement, each note
will be deposited with, or on behalf of, DTC, as depositary, and registered in
the name of Cede & Co. (DTC's partnership nominee). Investors may elect to hold
interests in the notes through DTC (in the United States) or, if the notes are
eligible, through Clearstream Luxembourg or Euroclear, as operator (the
"Euroclear Operator") of the Euroclear System, if they are participants in such
systems or indirectly through organizations which are participants in such
systems. Clearstream Luxembourg and the Euroclear Operator will hold interests
on behalf of their participants through customers' securities accounts in
Clearstream Luxembourg's and the Euroclear Operator's names, respectively, on
the books of their respective depositaries, which in turn will hold such
interests in customers' securities accounts in the depositaries' names on the
books of the DTC. It is anticipated that Citibank, N.A. will act as depositary
for Clearstream Luxembourg and that The Chase Manhattan Bank will act as
depositary for the Euroclear Operator (in such capacities, the "U.S.
Depositaries").
If so specified in the applicable pricing supplement, notes of a series may
be registered in the name of a nominee for, and deposited with, a common
depositary for Euroclear and Clearstream Luxembourg.
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Clearstream Luxembourg advises that it is incorporated under the laws of
Luxembourg as a professional depositary. Clearstream Luxembourg holds securities
for its participating organizations ("Clearstream Participants") and facilitates
the clearance and settlement of securities transactions between Clearstream
Participants through electronic book-entry changes in accounts of Clearstream
Participants, thereby eliminating the need for physical movement of
certificates. Clearstream Luxembourg provides to Clearstream Participants, among
other things, services for safekeeping, administration, clearance and settlement
of internationally traded securities and securities lending and borrowing.
Clearstream Luxembourg interfaces with domestic markets in several countries. As
a professional depositary, Clearstream Luxembourg is subject to regulation by
the Luxembourg Monetary Institute. Clearstream Participants are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the Agents named in this prospectus
supplement or any applicable pricing supplement. Indirect access to Clearstream
Luxembourg is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
Clearstream Participant either directly or indirectly.
Distributions with respect to the notes held beneficially through
Clearstream Luxembourg will be credited to cash accounts of Clearstream
Participants in accordance with its rules and procedures, to the extent received
by the U.S. Depositary for Clearstream Luxembourg.
The Euroclear Operator advises that Euroclear was created in 1968 to hold
securities for participants of Euroclear ("Euroclear Participants") and to clear
and settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Euroclear includes various other services,
including securities lending and borrowing and interfaces with domestic markets
in several countries. Euroclear is operated by the Euroclear Operator under
contract with Euroclear Clearance Systems S.C., a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for Euroclear on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Agents named in this prospectus supplement or any applicable
pricing supplement. Indirect access to Euroclear is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The Euroclear Operator was granted a banking license by the Belgian Banking
and Finance Commission in 2000, authorizing it to carry out banking activities
on a global basis. It took over operation of Euroclear from the Brussels,
Belgium office of Morgan Guaranty Trust Company of New York on December 31,
2000. Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System, and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawals of securities and
cash from Euroclear, and receipts of payments with respect to securities in
Euroclear. All securities in Euroclear are held on a fungible basis without
attribution of specific certificates to specific securities clearance accounts.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants, and has no record of or relationship with persons
holding through Euroclear Participants.
Distributions with respect to notes held beneficially through Euroclear
will be credited to the cash accounts of Euroclear Participants in accordance
with the Terms and Conditions, to the extent received by the U.S. Depositary for
Euroclear.
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GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
General
Initial settlement for the notes of a series will be made in immediately
available funds. Secondary market trading between DTC Participants will occur in
the ordinary way in accordance with DTC's rules and will be settled in
immediately available funds using DTC's Same-Day Funds Settlement System.
Secondary market trading between Clearstream Participants and/or Euroclear
Participants will occur in the ordinary way in accordance with the applicable
rules and operating procedures of Clearstream Luxembourg and Euroclear and will
be settled using the procedures applicable to conventional eurobonds in
immediately available funds. Cross-market transfers between persons holding
directly or indirectly through DTC on the one hand, and directly or indirectly
through Clearstream Participants or Euroclear Participants, on the other, will
be effected in DTC in accordance with DTC's rules on behalf of the relevant
European international clearing system by its U.S. Depositary. However, such
cross-market transactions will require delivery of instructions to the relevant
European international clearing system by the counterparty in such system in
accordance with its rules and procedures and within its established deadlines
(European time). The relevant European international clearing system will, if
the transaction meets its settlement requirements, deliver instructions to its
U.S. Depositary to take action to effect final settlement on its behalf by
delivering or receiving notes in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Clearstream Participants and Euroclear Participants may not deliver
instructions directly to DTC. Because of time-zone differences, credits of notes
received in Clearstream Luxembourg or Euroclear as a result of a transaction
with a DTC Participant will be made during subsequent securities settlement
processing and will be credited the business day following the DTC settlement
date. Such credits or any transactions in such notes settled during such
processing will be reported to the relevant Euroclear Participants or
Clearstream Participants on such business day. Cash received in Clearstream
Luxembourg or Euroclear as a result of sales of notes by or through a
Clearstream Participant or a Euroclear Participant to a DTC Participant will be
received with value on the DTC settlement date but will be available in the
relevant Clearstream Luxembourg or Euroclear cash account only as of the
business day following settlement in the DTC.
Although the DTC, Clearstream Luxembourg and the Euroclear Operator have
agreed to the foregoing procedures in order to facilitate transfers of notes
among participants in DTC, Clearstream Luxembourg and Euroclear, they are under
no obligation to perform or continue to perform such procedures and such
procedures may be discontinued at any time.
Certain alternative clearance and settlement procedures will apply if the
applicable pricing supplement specifies that notes of a series are denominated
in non-U.S. dollar currencies. Such alternative procedures are described below
under "Special Provisions Relating to Foreign Currency Notes."
Secondary Market Trading
Because the purchaser determines the place of delivery, it is important to
establish at the time of trading of any notes where both the purchaser's and
seller's accounts are located to ensure that settlement can be made on the
desired value date.
Trading between DTC Participants
Secondary market sales of notes held in DTC between DTC participants will
occur in the ordinary way in accordance with DTC rules and will be settled using
the procedures applicable to United States corporate debt obligations.
Trading between Euroclear and/or Clearstream Participants
Secondary market sales of beneficial interests in the notes held through
Euroclear or Clearstream Luxembourg to purchasers that will hold beneficial
interests through Euroclear or Clearstream Luxembourg will be conducted in
accordance with the normal rules and operating procedures of Euroclear and
Clearstream Luxembourg and will be settled using the procedures applicable to
conventional eurobonds.
Trading between DTC Seller and Euroclear/Clearstream Luxembourg Purchaser
When book-entry interests in notes are to be transferred from the account
of a DTC participant to the account of a Euroclear or Clearstream Luxembourg
accountholder, the purchaser must first send instructions to Euroclear or
Clearstream Luxembourg through a participant at least one business day prior to
the settlement date. Euroclear or Clearstream Luxembourg will then instruct its
depositary to receive the notes and make payment for them. On the settlement
date, the
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depositary will make payment to the DTC participant's account and the notes will
be credited to the depositary's account. After settlement has been completed,
DTC will credit the notes to the U.S. Depositary for Euroclear or Clearstream
Luxembourg, as the case may be. Euroclear or Clearstream Luxembourg will credit
the notes, in accordance with its usual procedures, to the participant's
account, and the participant will then credit the purchaser's account. These
securities credits will appear the next day (European time) after the settlement
date. The cash debit from the account of Euroclear or Clearstream Luxembourg
will be back-valued to the value date (which will be the preceding day if
settlement occurs in New York). If settlement is not completed on the intended
value date (i.e., the trade fails), the cash debit will instead be valued at the
actual settlement date. Since the settlement will occur during New York business
hours, a DTC participant selling an interest in the notes can use its usual
procedures for transferring notes to the U.S. Depositary for Euroclear or
Clearstream Luxembourg, as the case may be, for the benefit of Euroclear
Participants or Clearstream Participants. The DTC seller will receive the sale
proceeds on the settlement date. Thus, to the DTC seller, a cross-market sale
will settle no differently than a trade between two DTC Participants.
Trading between a Euroclear or Clearstream Luxembourg Seller and a DTC
Purchaser
Due to time zone differences in their favor, Euroclear participants and
Clearstream Luxembourg participants can use their usual procedures to transfer
notes through the applicable U.S. Depositary to a DTC participant. The seller
must first send instructions to Euroclear or Clearstream Luxembourg through a
participant at least one business day prior to the settlement date. Euroclear or
Clearstream Luxembourg will then instruct its U.S. Depositary to credit the
notes to the DTC participant's account and receive payment. The payment will be
credited in the account of the Euroclear or Clearstream Luxembourg participant
on the following day, but the receipt of the cash proceeds will be back-valued
to the value date (which will be the preceding day if settlement occurs in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the receipt of the cash proceeds will instead be valued at the
actual settlement date.
Although the foregoing sets out the procedures of Euroclear, Clearstream
Luxembourg and DTC in order to facilitate the transfers of interests in the
notes among participants of DTC, Clearstream Luxembourg and Euroclear, none of
Euroclear, Clearstream Luxembourg or DTC is under any obligation to perform or
continue to perform such procedures, and such procedures may be discontinued at
any time. Neither the registrants and the trusts nor any Agent or any paying
agent or any affiliate of any of the above, or any person by whom any of the
above is controlled for the purposes of the Securities Act, will have any
responsibility for the performance by DTC, Euroclear and Clearstream Luxembourg
or their respective direct or indirect participants or accountholders of their
respective obligations under the rules and procedures governing their operations
or for the sufficiency for any purpose of the arrangements described above.
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SPECIAL PROVISIONS RELATING TO FOREIGN CURRENCY NOTES
General
Unless otherwise specified in the applicable pricing supplement, foreign
currency notes will not be sold in, or to residents of, the country issuing the
specified currency. The information set forth in this prospectus supplement is
directed to prospective purchasers who are United States residents. The trusts
and the Agents disclaim any responsibility to advise prospective purchasers who
are residents of countries other than the United States with respect to any
matters that may affect the purchase, holding or receipt of payments of
principal of, and premium, if any, and interest, if any, on, their foreign
currency notes. These purchasers should consult their own financial and legal
advisors with regard to these risks. See "Risk Factors--Risk Factors Relating to
the Notes--Foreign currency notes are subject to exchange rate and exchange
control risks."
Payment of Principal and/or any Premium, if any, Interest and Additional Amounts
Unless otherwise specified in the applicable pricing supplement, each trust
is obligated to make, or cause to be made, payments of principal of, any premium
and interest on, and any additional amounts with respect to a foreign currency
note issued by it in the specified currency. Any amounts so payable by such
trust in the specified currency will be converted by the indenture trustee, or
another entity specified in the applicable indenture, as exchange rate agent
(including, in each case, any successors, the "exchange rate agent") into United
States dollars for payment to the registered holder or holders thereof unless
otherwise specified in the applicable pricing supplement or a registered holder
elects to receive these amounts in the specified currency as provided below.
Unless otherwise specified in the applicable pricing supplement, any United
States dollar amount to be received by the registered holder or holders of a
series of foreign currency notes will be based on the highest bid quotation in
The City of New York received by the exchange rate agent at approximately 11:00
A.M., New York City time, on the second business day preceding the applicable
payment date from three recognized foreign exchange dealers (one of whom may be
the exchange rate agent) selected by the exchange rate agent and approved by the
issuing trust for the purchase by the quoting dealer of the specified currency
for United States dollars for settlement on that payment date in the aggregate
amount of the specified currency payable to the registered holder or holders of
such series of foreign currency notes scheduled to receive United States dollar
payments and at which the applicable dealer commits to execute a contract. All
currency exchange costs will be borne by the relevant registered holder or
holders of such series of foreign currency notes by deductions from any
payments. If three bid quotations are not available, payments will be made in
the specified currency.
Registered holders of foreign currency notes may elect to receive all or a
specified portion of any payment of principal, and/or any interest, premium and
additional amounts in the specified currency by submitting a written request to
the indenture trustee at its corporate trust office in The City of New York on
or prior to the applicable regular interest record date or special interest
record date or at least fifteen calendar days prior to the maturity date, as the
case may be. Such written request may be mailed or hand delivered or sent by
cable, telex or other form of facsimile transmission. Such election will remain
in effect until revoked by written notice delivered to the indenture trustee on
or prior to a regular interest record date or special interest record date or at
least fifteen calendar days prior to the maturity date, as the case may be.
Registered holders of foreign currency notes to be held in the name of a broker
or nominee should contact their broker or nominee to determine whether and how
an election to receive payments in the specified currency may be made.
Unless otherwise specified in the applicable pricing supplement, if the
specified currency is other than United States dollars, an entitlement holder
with respect to a note represented by a global security which elects to receive
payments of principal, and/or any interest, premium and additional amounts in
the specified currency must notify the participant through which it owns its
interest on or prior to the applicable regular interest record date or special
interest record date or at least fifteen calendar days prior to the maturity
date, as the case may be, of its election. The applicable participant must
notify the depositary of such election on or prior to the third business day
after the applicable regular interest record date or at least twelve calendar
days prior to the maturity date, as the case may be, and the depositary will
notify the indenture trustee of that election on or prior to the fifth business
day after the applicable regular interest record date or at least ten calendar
days prior to the maturity date, as the case may be. If complete instructions
are received by the participant from the applicable entitlement holder and
forwarded by the participant to the depositary, and by the depositary to the
indenture trustee, on or prior to such dates, then the applicable entitlement
holder will receive payments in the specified currency.
Notwithstanding anything herein to the contrary, if the specified currency
for a series of foreign currency notes is not available for any required payment
of principal and/or any interest, premium and additional amounts due to the
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imposition of exchange controls or other circumstances beyond the issuing
trust's control, the issuing trust will be entitled to satisfy its obligations
with respect to such series of foreign currency notes by making, or causing to
be made, payments in United States dollars based on the market exchange rate
computed by the exchange rate agent on the second business day prior to the
particular payment date or, if the market exchange rate is not then available,
on the basis of the most recently available market exchange rate.
The "market exchange rate" for a specified currency other than United
States dollars means the noon dollar buying rate in The City of New York for
cable transfers for the specified currency as certified for customs purposes
(or, if not so certified, as otherwise determined) by the Federal Reserve Bank
of New York.
All determinations made by the exchange rate agent shall be at its sole
discretion and shall, in the absence of manifest error, be conclusive for all
purposes and binding on the registered holder or holders of the foreign currency
notes and any applicable entitlement holders.
Judgment Currency
Each trust will indemnify the registered holder of any note issued by it
against any loss incurred as a result of any judgment or order being given or
made for any amount due under the particular note and that judgment or order
requiring payment in a currency (the "judgment currency") other than the
specified currency, and as a result of any variation between:
o the rate of exchange at which the specified currency amount is
converted into the judgment currency for the purpose of that judgment
or order; and
o the rate of exchange at which the registered holder, on the date of
payment of that judgment or order, is able to purchase the specified
currency with the amount of the judgment currency actually received.
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DESCRIPTION OF THE FUNDING AGREEMENTS
Each trust will use the net proceeds from the issuance of its series of
notes to the public to purchase from Global Funding one or more funding
agreements issued by Allstate Life. The funding agreement(s) will have a
principal amount equal to the principal amount of the related series of notes.
The funding agreement(s) will otherwise have payment and other terms
substantially similar to the related series of notes.
The funding agreement(s) may be interest bearing or non-interest bearing
and, if interest bearing, may bear interest at fixed or floating rates. The
calculation of the interest rate, the due dates for payments and other payment
terms of each funding agreement will be determined in the manner substantially
similar to that described above under "Description of the Notes." An amount
equal to the principal amount of the funding agreement plus accrued but unpaid
interest, if any, and accrued discount, if any (in the case of a discount
funding agreement) (other than an amortizing funding agreement) will be payable
on its maturity date. Allstate Life may issue an amortizing funding agreement
that pays an amount in respect of both interest and deposit amount over the life
of the funding agreement. For a more detailed discussion of the funding
agreements, see "Description of the Funding Agreement" in the accompanying
prospectus.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
General
This section provides a discussion of the material United States Federal
income tax consequences of the purchase, ownership and disposition of the notes.
This summary is based upon laws, regulations, rulings and decisions now in
effect, all of which are subject to change (including changes in effective
dates) or possible differing interpretations. This summary deals only with notes
held as capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, partnerships, insurance companies,
regulated investment companies, dealers in securities or currencies, persons
holding notes as a hedge against currency risks or as a position in a "straddle"
for tax purposes, or persons whose functional currency is not the United States
dollar. It also does not deal with holders other than initial purchasers of
notes (except where otherwise specifically noted). Persons considering the
purchase of the notes should consult their own tax advisors concerning the
application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the notes arising under the laws of any other taxing
jurisdiction. This summary does not consider the United States Federal income
tax consequences of the purchase, ownership or disposition of a note by a
partnership. If a partnership holds a note, the tax treatment of a partner will
generally depend upon the status of the partner and the activities of the
partnership. Partnerships holding a note, and partners in a partnership holding
a note, should consult their tax advisors.
As used herein, the term "U.S. Holder" means a beneficial owner of a note
that is for United States Federal income tax purposes:
o a citizen or resident of the United States;
o a corporation (including an entity treated as a corporation for United
States Federal income tax purposes) created or organized in or under
the laws of the United States, any state thereof or the District of
Columbia;
o an estate whose income is subject to United States Federal income tax
regardless of its source; or
o subject to applicable transition rules, a trust if a court within the
United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have
the authority to control all substantial decisions of the trust.
As used in this section, the term "non-U.S. Holder" means a beneficial
owner of a note that is an individual, a corporation, an estate or trust that is
not a U.S. Holder.
Classification of the Issuer and Notes
In the opinion of LeBoeuf, Lamb, Greene & MacRae LLP, special tax counsel
to Global Funding, under current law and based on certain facts and assumptions
contained in such opinion:
o Global Funding and each trust will be ignored for United States
Federal income tax purposes and will not be treated as an association
or a publicly traded partnership taxable as a corporation; and
o the notes will be classified as indebtedness of Allstate Life for
United States Federal income tax purposes.
Allstate Life, Global Funding and each trust agree, and each holder and
beneficial owner of notes by purchasing the notes agrees, for all United States
Federal, state and local income and franchise tax purposes (i) to treat the
notes as indebtedness of Allstate Life, (ii) Global Funding and each trust will
be ignored and will not be treated as an association or a publicly traded
partnership taxable as a corporation and (iii) to not take any action
inconsistent with the treatment described in (i) and (ii) unless otherwise
required by law. The remainder of this discussion assumes the notes are properly
treated as indebtedness of Allstate Life for all United States Federal income
tax purposes.
An opinion of tax counsel is not binding on the Internal Revenue Service
(the "IRS") or the courts, and no ruling on any of the consequences or issues
discussed below will be sought from the IRS. The IRS might assert that each
trust should be treated as a separate grantor trust for United States Federal
income tax purposes, in which case the holders of beneficial interests in the
notes related to such trust would be treated as owning a pro rata undivided
interest in the assets of such trust.
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In such a case, the tax consequences to beneficial owners of the notes would not
be materially different than those described herein. Persons considering the
purchase of notes should consult their own tax advisors about the United States
Federal income tax consequences of an investment in the notes and the
application of United States Federal income tax laws, as well as the laws of any
state, local or foreign taxing jurisdictions, to their particular situations.
U.S. Holders
Payments of Interest
Except as described below, payments of interest on a note generally
will be taxable to a U.S. Holder as ordinary interest income at the time such
payments are accrued or are received (in accordance with the U.S. Holder's
regular method of tax accounting).
Discount Notes
The following summary is a general discussion of the United States Federal
income tax consequences to U.S. Holders of the purchase, ownership and
disposition of notes issued with original issue discount ("discount notes").
For United States Federal income tax purposes, original issue discount
("OID") is the excess of the stated redemption price at maturity of a note over
its issue price, if such excess equals or exceeds a de minimis amount (generally
1/4 of 1% of the note's stated redemption price at maturity multiplied by the
number of complete years to its maturity from its issue date or, in the case of
a note providing for the payment of any amount other than qualified stated
interest (as defined below) prior to maturity, multiplied by the weighted
average maturity of such note). The issue price of each note in an issue of
notes equals the first price at which a substantial amount of such notes has
been sold (ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers). The stated redemption price at maturity of a note is the sum of
all payments provided by the note other than "qualified stated interest"
payments. The term "qualified stated interest" generally means stated interest
that is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate. In addition, if a note
bears interest for one or more accrual periods at a rate below the rate
applicable for the remaining term of such note (e.g., notes with teaser rates or
interest holidays), and if the greater of either the resulting foregone interest
on such note or any "true" discount on such note (i.e., the excess of the note's
stated principal amount over its issue price) equals or exceeds a specified de
minimis amount, then some or all of the stated interest on the note would be
treated as OID rather than qualified stated interest.
Payments of qualified stated interest on a note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a discount note must include OID in income as
ordinary interest for United States Federal income tax purposes as it accrues
under a constant yield method in advance of receipt of the cash payments
attributable to such income, regardless of such U.S. Holder's regular method of
tax accounting. In general, the amount of OID included in income by the initial
U.S. Holder of a discount note is the sum of the daily portions of OID with
respect to such discount note for each day during the taxable year (or portion
of the taxable year) on which such U.S. Holder held such discount note. The
"daily portion" of OID on any discount note is determined by allocating to each
day in any accrual period a ratable portion of the OID allocable to that accrual
period. An "accrual period" may be of any length and the accrual periods may
vary in length over the term of the discount note, provided that each accrual
period is no longer than one year and each scheduled payment of principal or
interest occurs either on the final day of an accrual period or on the first day
of an accrual period. The amount of OID allocable to each accrual period is
generally equal to the difference between:
o the product of the discount note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined
on the basis of compounding at the close of each accrual period and
appropriately adjusted to take into account the length of the
particular accrual period); and
o the amount of any qualified stated interest payments allocable to such
accrual period. The "adjusted issue price" of a discount note at the
beginning of any accrual period is the sum of the issue price of the
discount note plus the amount of OID allocable to all prior accrual
periods minus the amount of any prior payments on the discount note
that were not qualified stated interest payments. Under these rules,
U.S. Holders generally will have to include in income increasingly
greater amounts of OID in successive accrual periods.
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A U.S. Holder who purchases a discount note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the sum of all amounts payable on the discount note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the discount note at an "acquisition premium." Under the acquisition
premium rules, the amount of OID which such U.S. Holder must include in its
gross income with respect to such discount note for any taxable year (or portion
thereof in which the U.S. Holder holds the discount note) will be reduced (but
not below zero) by the portion of the acquisition premium properly allocable to
the period.
Floating Rate Notes
Notes that bear interest at floating rates ("variable notes") are subject
to special rules whereby a variable note will qualify as a "variable rate debt
instrument" if:
o its issue price does not exceed the total noncontingent principal
payments due under the variable note by more than a specified de
minimis amount;
o it provides for stated interest, paid or compounded at least annually,
at current values of, one or more qualified floating rates, a single
fixed rate and one or more qualified floating rates, a single
objective rate, or a single fixed rate and a single objective rate
that is a qualified inverse floating rate; and
o it does not provide for any principal payments which are contingent.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
variable note is denominated. Although a multiple of a qualified floating rate
will generally not itself constitute a qualified floating rate, a variable rate
equal to the product of a qualified floating rate and a fixed multiple that is
greater than .65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than .65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, two or more qualified floating rates that can reasonably be expected
to have approximately the same values throughout the term of the variable note
(e.g., two or more qualified floating rates with values within 25 basis points
of each other as determined on the variable note's issue date) will be treated
as a single qualified floating rate. Notwithstanding the foregoing, a variable
rate that would otherwise constitute a qualified floating rate but which is
subject to one or more restrictions such as a maximum numerical limitation
(i.e., a cap) or a minimum numerical limitation (i.e., a floor) may, under
certain circumstances, fail to be treated as a qualified floating rate unless
such cap or floor is fixed throughout the term of the note. An "objective rate"
is a rate that is not itself a qualified floating rate but which is determined
using a single fixed formula and that is based on objective financial or
economic information. A rate will not qualify as an objective rate if it is
based on information that is within the control of Allstate Life (or a related
party) or that is unique to the circumstances of Allstate Life (or a related
party), such as dividends, profits, or the value of Allstate Life's stock
(although a rate does not fail to be an objective rate merely because it is
based on the credit quality of Allstate Life). A "qualified inverse floating
rate" is any objective rate where such rate is equal to a fixed rate minus a
qualified floating rate, as long as variations in the rate can reasonably be
expected to inversely reflect contemporaneous variations in the qualified
floating rate. In addition, if a variable note provides for stated interest at a
fixed rate for an initial period of one year or less followed by a variable rate
that is either a qualified floating rate or an objective rate and if the
variable rate on the variable note's issue date is intended to approximate the
fixed rate (e.g., the value of the variable rate on the issue date does not
differ from the value of the fixed rate by more than 25 basis points), then the
fixed rate and the variable rate together will constitute either a single
qualified floating rate or objective rate, as the case may be.
If a variable note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
qualifies as a "variable rate debt instrument" and if the interest on such note
is unconditionally payable in cash or property (other than debt instruments of
the issuer) at least annually, then all stated interest on the note will
constitute qualified stated interest and will be taxed accordingly. Thus, a
variable note that provides for stated interest at either a single qualified
floating rate or a single objective rate throughout the term thereof and that
qualifies as a "variable rate debt instrument" will generally not be treated as
having been issued with OID unless the variable note is issued at a "true"
discount (i.e., at a price below the note's stated principal amount) in excess
of a specified de minimis amount. The amount of qualified stated interest and
the amount of OID, if any, that accrues during an accrual period on such a
variable note is determined under the rules applicable to fixed rate debt
instruments by assuming that the variable rate is a fixed rate equal to:
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o in the case of a qualified floating rate or qualified inverse floating
rate, the value, as of the issue date, of the qualified floating rate
or qualified inverse floating rate; or
o in the case of an objective rate (other than a qualified inverse
floating rate), a fixed rate that reflects the yield that is
reasonably expected for the variable note. The qualified stated
interest allocable to an accrual period is the amount of interest
actually paid during such accrual period.
In general, any other variable note that qualifies as a "variable rate debt
instrument" will be converted into an "equivalent" fixed rate debt instrument
for purposes of determining the amount and accrual of OID and qualified stated
interest on the variable note. A variable note is converted into an "equivalent"
fixed rate debt instrument by substituting any qualified floating rate or
qualified inverse floating rate provided for under the terms of the variable
note with a fixed rate equal to the value of the qualified floating rate or
qualified inverse floating rate, as the case may be, as of the variable note's
issue date. Any objective rate (other than a qualified inverse floating rate)
provided for under the terms of the variable note is converted into a fixed rate
that reflects the yield that is reasonably expected for the variable note. In
the case of a variable note that qualifies as a "variable rate debt instrument"
and provides for stated interest at a single fixed rate in addition to either
one or more qualified floating rates or a qualified inverse floating rate, the
fixed rate is initially converted into a qualified floating rate (or a qualified
inverse floating rate, if the variable note provides for a qualified inverse
floating rate). Under such circumstances, the qualified floating rate or
qualified inverse floating rate that replaces the fixed rate must be such that
the fair market value of the variable note as of the variable note's issue date
is approximately the same as the fair market value of an otherwise identical
debt instrument that provides for either the qualified floating rate or
qualified inverse floating rate rather than the fixed rate. Subsequent to
converting the fixed rate into either a qualified floating rate or a qualified
inverse floating rate, the variable note is then converted into an "equivalent"
fixed rate debt instrument in the manner described above.
Once the variable note is converted into an "equivalent" fixed rate debt
instrument pursuant to the foregoing rules, the amount of OID and qualified
stated interest, if any, are determined for the "equivalent" fixed rate debt
instrument by applying the general OID rules to the "equivalent" fixed rate debt
instrument. A U.S. Holder of the variable note will account for such OID and
qualified stated interest as if the U.S. Holder held the "equivalent" fixed rate
debt instrument. Each accrual period appropriate adjustments will be made to the
amount of qualified stated interest or OID assumed to have been accrued or paid
with respect to the "equivalent" fixed rate debt instrument in the event that
such amounts differ from the actual amount of interest accrued or paid on the
variable note during the accrual period.
If the variable note does not qualify as a "variable rate debt instrument"
then the variable note would be treated as a contingent payment debt instrument.
A U.S. Holder of a contingent payment debt instrument is generally required to
include future contingent and noncontingent interest payments in income under
the constant yield method as such interest accrues based on Allstate Life's
determination of the "comparable yield" and the establishment of a "projected
payment schedule" that must produce the comparable yield. The comparable yield
is the yield at which Allstate Life would issue a fixed rated debt instrument
with similar terms and conditions. The projected payment schedule consists of
all stated principal payments and a projected amount and time for each
contingent interest payment. If the actual amount of any contingent payment,
once determined, differs from the projected amounts, appropriate adjustments are
to be made to the amounts required to be included in gross income by the U.S.
Holder. The yield, timing and amounts set forth in the projected payment
schedule are for purposes of computing the OID only and are not assurances by
the trusts with respect to any aspect of the notes. Because U.S. Holders will
generally be bound by Allstate Life's determination of the comparable yield and
by the projected payment schedule for United States Federal income tax purposes,
a U.S. Holder's income inclusions may be accelerated relative to the time
payments under the notes are in fact made. The IRS has authority to disregard a
projected payment schedule it determines to be unreasonable. Any gain recognized
by a U.S. Holder on the sale, exchange, or retirement of a contingent payment
debt instrument will be treated as interest income and all or a portion of any
loss realized could be treated as ordinary loss as opposed to capital loss
(depending upon the circumstances). The United States Federal income tax
treatment of variable notes that are treated as contingent payment debt
instruments will be more fully described in the applicable pricing supplement.
Purchasers of contingent payment debt instruments should carefully examine the
applicable pricing supplement and should consult their own tax advisor with
respect to such notes.
Certain of the notes:
o may be redeemable at the option of the issuing trust prior to their
stated maturity (a "call option"); and/or
o may be repayable at the option of the holder prior to their stated
maturity (a "put option"). Notes containing such features may be
subject to rules that differ from the general rules discussed above.
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Investors intending to purchase notes with such features should consult
their own tax advisors, since the OID consequences will depend, in part, on the
particular terms and features of the purchased notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium) that accrues on a debt
instrument by using the constant yield method applicable to OID, subject to
certain limitations and exceptions.
Short-Term Notes
Notes that have a fixed maturity of one year or less ("short-term notes")
will be treated as having been issued with OID. In general, an individual or
other cash method U.S. Holder is not required to accrue such OID unless the U.S.
Holder elects to do so. If such an election is not made, any gain recognized by
the U.S. Holder on the sale, exchange or maturity of the short-term note will be
ordinary income to the extent of the OID accrued on a straight-line basis, or
upon election under the constant yield method (based on daily compounding),
through the date of sale or maturity, and a portion of the deductions otherwise
allowable to the U.S. Holder for interest on borrowings allocable to the
short-term note will be deferred until a corresponding amount of income is
realized. U.S. Holders who report income for United States Federal income tax
purposes under the accrual method, and certain other holders including banks and
dealers in securities, are required to accrue OID on a short-term note on a
straight-line basis unless an election is made to accrue the OID under a
constant yield method (based on daily compounding).
Market Discount
If a U.S. Holder purchases a note, other than a discount note, for an
amount that is less than its issue price (or, in the case of a subsequent
purchaser, its stated redemption price at maturity) or, in the case of a
discount note, for an amount that is less than its adjusted issue price as of
the purchase date, such U.S. Holder will be treated as having purchased such
note at a "market discount," unless such market discount is less than a
specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a discount note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange, retirement or other disposition of, a note as ordinary
income to the extent of the lesser of:
o the amount of such payment or realized gain; and
o the market discount which has not previously been included in income
and is treated as having accrued on such note at the time of such
payment or disposition.
Market discount will be considered to accrue ratably during the period from
the date of acquisition to the maturity date of the note, unless the U.S. Holder
elects to accrue market discount on the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a note with market discount until the maturity of the note or
certain earlier dispositions, because a current deduction of such holder's "net
direct interest expense" is only allowed to the extent the interest expense
exceeds an allocable portion of market discount. Net direct interest expense is
the excess of interest paid or accrued to purchase or carry the market discount
note over the interest (including OID) includible in the purchaser's gross
income. A U.S. Holder may elect to include market discount in income currently
as it accrues (on either a ratable or semiannual compounding basis), in which
case the rules described above regarding the treatment as ordinary income of
gain upon the disposition of the note, the receipt of certain cash payments and
the deferral of interest deductions will not apply. Generally, such currently
included market discount is treated as ordinary interest for United States
Federal income tax purposes. Such an election will apply to all debt instruments
acquired by the U.S. Holder on or after the first day of the first taxable year
to which such election applies and may be revoked only with the consent of the
IRS.
Premium
If a U.S. Holder purchases a note for an amount that is greater than the
sum of all amounts payable on the note after the purchase date other than
payments of qualified stated interest, such U.S. Holder will be considered to
have purchased the note with "amortizable bond premium" equal in amount to such
excess. A U.S. Holder may elect to amortize such premium
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using a constant yield method over the remaining term of the note and may offset
interest otherwise required to be included in gross income in respect of the
note during any taxable year by the amortized amount of such excess for the
taxable year. However, if the note may be optionally redeemed after the U.S.
Holder acquires it at a price in excess of its stated redemption price at
maturity, special rules would apply which could result in a deferral of the
amortization of some bond premium until later in the term of the note. Any
election to amortize bond premium applies to all taxable debt instruments held
or acquired by the U.S. Holder on or after the first day of the first taxable
year to which such election applies and may be revoked only with the consent of
the IRS.
Disposition of a Note
Except as discussed above, upon the sale, exchange, redemption (including a
redemption in connection with a tax event), retirement or other disposition of a
note, a U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange, retirement (other
than amounts representing accrued and unpaid interest) or other disposition and
such U.S. Holder's adjusted tax basis in the note. A U.S. Holder's adjusted tax
basis in a note generally will equal such U.S. Holder's initial investment in
the note increased by any OID included in income (and accrued market discount,
if any, if the U.S. Holder has included such market discount in income) and
decreased by the amount of any payments, other than qualified stated interest
payments, received and amortizable bond premium taken into account with respect
to such note. Such gain or loss generally will be long-term capital gain or loss
if the note were held for more than one year. Non-corporate taxpayers are
subject to reduced maximum rates on long-term capital gains and are generally
subject to tax at ordinary income rates on short-term capital gains. The
deductibility of capital losses is subject to certain limitations. Prospective
investors should consult their own tax advisors concerning these tax law
provisions.
Notes Denominated or on which Interest is Payable in a Foreign Currency
The following discussion generally describes special rules that apply, in
addition to the rules described above, to notes that are denominated in, or
provide for payments determined by reference to, a currency other than the
United States dollar (referred to as "foreign currency notes"). This discussion
does not, however, describe the tax considerations relating to the purchase,
ownership or disposition of a foreign currency note that is a contingent payment
debt instrument. A general summary of certain federal income tax considerations
relating thereto will be included in the relevant pricing supplement.
Payments of Interest on a Foreign Currency Note
Cash Method
A U.S. Holder who uses the cash method of accounting for United States
Federal income tax purposes and who receives a payment of interest on a foreign
currency note (other than OID or market discount) will be required to include in
income the U.S. dollar value of the foreign currency payment (determined on the
date such payment is received) regardless of whether the payment is in fact
converted to U.S. dollars at that time, and such U.S. dollar value will be the
U.S. Holder's tax basis in such foreign currency.
Accrual Method
A U.S. Holder who uses the accrual method of accounting for United States
Federal income tax purposes, or who otherwise is required to accrue interest
prior to receipt, will be required to include in income the U.S. dollar value of
the amount of interest income (including OID or market discount and reduced by
amortizable bond premium to the extent applicable) that has accrued and is
otherwise required to be taken into account with respect to a foreign currency
note during an accrual period. The U.S. dollar value of such accrued income will
be determined by translating such income at the average rate of exchange for the
accrual period or, with respect to an accrual period that spans two taxable
years, at the average rate for the partial period within the taxable year. A
U.S. Holder may elect, however, to translate such accrued interest income using
the rate of exchange on the last day of the accrual period or, with respect to
an accrual period that spans two taxable years, using the rate of exchange on
the last day of the taxable year. If the last day of an accrual period is within
five business days of the date of receipt of the accrued interest, a U.S. Holder
may translate such interest using the rate of exchange on the date of receipt.
The above election will apply to other debt obligations held by the U.S. Holder
and may not be changed without the consent of the IRS. A U.S. Holder should
consult a tax advisor before making the above election. A U.S. Holder will
recognize exchange gain or loss (which will be treated as ordinary income or
loss) with respect to accrued interest income on the date such income is
received. The amount of ordinary income or loss recognized will equal the
difference, if any, between the U.S. dollar value of the foreign currency
payment received (determined on the date such payment is
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received) in respect of such accrual period and the U.S. dollar value of
interest income that has accrued during such accrual period (as determined
above).
Purchase, Sale and Retirement of Foreign Currency Notes
A U.S. Holder who purchases a foreign currency note with previously owned
foreign currency will recognize ordinary income or loss in an amount equal to
the difference, if any, between such U.S. Holder's tax basis in the foreign
currency and the U.S. dollar fair market value of the foreign currency used to
purchase the foreign currency note, determined on the date of purchase.
Except as discussed above with respect to short-term notes, upon the sale,
exchange, redemption (including a redemption in connection with a tax event) or
retirement of a foreign currency note, a U.S. Holder will recognize taxable gain
or loss equal to the difference between the amount realized on the sale,
exchange or retirement and such U.S. Holder's adjusted tax basis in the foreign
currency note. Such gain or loss generally will be capital gain or loss (except
to the extent of any accrued market discount not previously included in the U.S.
Holder's income) and will be long-term capital gain or loss if at the time of
sale, exchange or retirement the foreign currency note has been held by such
U.S. Holder for more than one year. To the extent the gain realized represents
accrued but unpaid interest, however, such amounts must be taken into account as
interest income, with exchange gain or loss computed as described in "Payments
of Interest in a Foreign Currency" above. If a U.S. Holder receives foreign
currency on such a sale, exchange or retirement the amount realized will be
based on the U.S. dollar value of the foreign currency on the date the payment
is received or the foreign currency note is disposed of (or deemed disposed of
as a result of a material change in the terms of the foreign currency note). In
the case of a foreign currency note that is denominated in foreign currency and
is traded on an established securities market, a cash basis U.S. Holder (or,
upon election, an accrual basis U.S. Holder) will determine the U.S. dollar
value of the amount realized by translating the foreign currency payment at the
spot rate of exchange on the settlement date of the sale. A U.S. Holder's
adjusted tax basis in a foreign currency note will equal the cost of the foreign
currency note to such U.S. Holder, increased by the amounts of any market
discount or OID previously included in income by the U.S. Holder with respect to
such foreign currency note and reduced by any amortized acquisition or other
premium and any principal payments received by the U.S. Holder. A U.S. Holder's
tax basis in a foreign currency note, and the amount of any subsequent
adjustments to such U.S. Holder's tax basis, will be the U.S. dollar value of
the foreign currency amount paid for such foreign currency note, or of the
foreign currency amount of the adjustment, determined on the date of such
purchase or adjustment.
Gain or loss realized upon the sale, exchange or retirement of a foreign
currency note that is attributable to fluctuations in currency exchange rates
will be ordinary income or loss which will not be treated as interest income or
expense. Gain or loss attributable to fluctuations in exchange rates will equal
the difference between the U.S. dollar value of the foreign currency principal
amount of the foreign currency note, determined on the date such payment is
received or the foreign currency note is disposed of, and the U.S. dollar value
of the foreign currency principal amount of the foreign currency note,
determined on the date the U.S. Holder acquired the foreign currency note. Such
foreign currency gain or loss will be recognized only to the extent of the total
gain or loss realized by the U.S. Holder on the sale, exchange or retirement of
the foreign currency note.
Original Issue Discount
In the case of a discount note or short-term note:
o OID is determined in units of the foreign currency;
o accrued OID is translated into U.S. dollars as described in "Payments
of Interest in a Foreign Currency--Accrual Method" above; and
o the amount of foreign currency gain or loss on the accrued OID is
determined by comparing the amount of income received attributable to
the discount (either upon payment, maturity or an earlier
disposition), as translated into U.S. dollars at the rate of exchange
on the date of such receipt, with the amount of OID accrued, as
translated above.
Premium and Market Discount
In the case of a foreign currency note with market discount:
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o market discount is determined in units of the foreign currency;
o accrued market discount taken into account upon the receipt of any
partial principal payment or upon the sale, exchange, retirement or
other disposition of the foreign currency note (other than accrued
market discount required to be taken into account currently) is
translated into U.S. dollars at the exchange rate on such disposition
date (and no part of such accrued market discount is treated as
exchange gain or loss); and
o accrued market discount currently includible in income by a U.S.
Holder for any accrual period is translated into U.S. dollars on the
basis of the average exchange rate in effect during such accrual
period, and the exchange gain or loss is determined upon the receipt
of any partial principal payment or upon the sale, exchange,
retirement or other disposition of the foreign currency note in the
manner described in "Payments of Interest in a Foreign
Currency--Accrual Method" above with respect to computation of
exchange gain or loss on accrued interest.
With respect to a foreign currency note acquired with amortizable bond
premium, such premium is determined in the relevant foreign currency and reduces
interest income in units of the foreign currency. Although not entirely clear, a
U.S. Holder should recognize exchange gain or loss equal to the difference
between the U.S. dollar value of the bond premium amortized with respect to a
period, determined on the date the interest attributable to such period is
received, and the U.S. dollar value of the bond premium determined on the date
of the acquisition of the foreign currency note.
Exchange of Foreign Currencies
A U.S. Holder will have a tax basis in any foreign currency received as
interest or on the sale, exchange or retirement of a foreign currency note equal
to the U.S. dollar value of such foreign currency, determined at the time the
interest is received or at the time of the sale, exchange or retirement. Any
gain or loss realized by a U.S. Holder on a sale or other disposition of foreign
currency (including its exchange for U.S. dollars or its use to purchase foreign
currency notes) will be ordinary income or loss.
Non-U.S. Holders
Payments of interest (including OID, if any) on a note received by a
non-U.S. Holder that does not hold its notes in connection with the conduct of a
trade or business in the United States, will generally not be subject to United
States Federal withholding tax pursuant to the "Portfolio Interest Exemption"
unless:
o the non-U.S. Holder is a direct or indirect 10% or greater shareholder
of Allstate Life;
o the non-U.S. Holder is a controlled foreign corporation related to
Allstate Life;
o the non-U.S. Holder is a bank receiving interest described in section
881(c)(3)(A) of the Code; or
o interest on the note is contingent interest described in section
871(h)(4) of the Code.
To qualify for the Portfolio Interest Exemption from United States Federal
withholding tax, the last United States payor in the chain of payment prior to
payment to a non-U.S. Holder (the "withholding agent") must have received in the
year in which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that:
o is signed by the beneficial owner of the note under penalties of
perjury;
o certifies that such owner is not a U.S. Holder; and
o provides the name and address of the beneficial owner.
The statement may be made on an IRS Form W-8BEN or a substantially similar
form, and the beneficial owner must inform the withholding agent of any change
in the information on the statement within 30 days of such change. If a note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the withholding agent. However, in such a case, the signed statement generally
must be
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accompanied by a copy of the IRS Form W-8BEN or the substitute form provided by
the beneficial owner to the organization or institution.
If a non-U.S. Holder cannot satisfy the requirements for eligibility for
the Portfolio Interest Exemption, interest earned by such non-U.S. Holder will
be subject to United States Federal withholding tax at a 30% rate unless the
non-U.S. Holder provides the withholding agent with a properly executed:
o IRS Form W-8BEN claiming an exemption from or reduction in withholding
under the benefit of a United States income tax treaty; or
o IRS Form W-8ECI stating that interest paid on the note is not subject
to withholding tax because it is effectively connected with the
non-U.S. Holder's conduct of a trade or business in the United States.
Notwithstanding the provision of IRS Form W-8ECI, a non-U.S. Holder that
holds its notes in connection with its conduct of a trade or business in the
United States will be taxed on its notes in the same manner as a U.S. Holder,
and, if such non-U.S. Holder is a foreign corporation, it may also be subject to
a branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to adjustments.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes capital gain upon the sale,
exchange, redemption (including a redemption in connection with a tax event),
retirement or other disposition of a note, provided:
o the gain is not effectively connected with the conduct of a trade or
business in the United States by the non-U.S. Holder; and
o the non-U.S. Holder is not an individual who is present in the United
States for 183 days or more during the taxable year.
Certain other exceptions may be applicable, and a non-U.S. Holder should
consult its tax advisor in this regard.
The notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of Allstate
Life or, at the time of such individual's death, payments in respect of the
notes would have been effectively connected with the conduct by such individual
of a trade or business in the United States. If any portion of the interest
payable on the notes at the time of the individual's death was contingent
interest, then an appropriate portion of the value of the notes would be
includible in the estate of a non-U.S. Holder.
Backup Withholding and Information Reporting
Backup withholding of United States Federal income tax at the applicable
backup withholding rate may apply to payments made in respect of the notes to
registered owners who are not "exempt recipients" and who fail to provide
certain identifying information (such as the registered owner's taxpayer
identification number) in the required manner. Generally, individuals are not
exempt recipients, whereas corporations and certain other entities generally are
exempt recipients. Payments made in respect of the notes to a U.S. Holder must
be reported to the IRS, unless the U.S. Holder is an exempt recipient or
establishes an exemption. Compliance with the identification procedures
described in the preceding section would establish an exemption from backup
withholding for those non-U.S. Holders who are not exempt recipients.
In addition, upon the sale of a note to (or through) a broker, the broker
must withhold at the applicable backup withholding rate, unless either the
broker determines that the seller is a corporation or other exempt recipient or
the seller provides, in the required manner, certain identifying information
and, in the case of a non-U.S. Holder, certifies that such seller is a non-U.S.
Holder (and certain other conditions are met). Such a sale must also be reported
by the broker to the IRS, unless either the broker determines that the seller is
an exempt recipient or the seller certifies its non-U.S. status (and certain
other conditions are met). Certification of the registered owner's non-U.S.
status would be made normally on an IRS Form W-8BEN under penalties of perjury,
although in certain cases it may be possible to submit other documentary
evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
S-58
Opinion Regarding Tax Matters
Prior to the issuance of any notes, Allstate Life will file as an exhibit
to a Current Report on Form 8-K an opinion of legal counsel as described above
regarding the tax treatment of such notes.
S-59
PLAN OF DISTRIBUTION
The notes of a series will be offered to or through one or more of Merrill
Lynch, Pierce, Fenner & Smith Incorporated, A.G. Edwards & Sons, Inc., Banc of
America Securities LLC, Barclays Capital Inc., Bear, Stearns & Co. Inc.,
Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, Deutsche Bank
Securities Inc., Goldman, Sachs & Co., Greenwich Capital Markets, Inc., J.P.
Morgan Securities Inc., Lehman Brothers Inc., Morgan Stanley & Co. Incorporated,
UBS Securities LLC and Wachovia Capital Markets, LLC (collectively, the
"Agents") pursuant to a terms agreement among Global Funding, the issuing trust
and each Agent named therein (each, a "terms agreement") and the distribution
agreement among Global Funding and the Agents named therein, dated as of March
- -, 2006 (the "distribution agreement"). Each terms agreement will incorporate by
reference the terms of the distribution agreement. The Agents, individually or
in a syndicate, may purchase notes, as principal, from a trust for resale to
investors and other purchasers at varying prices relating to prevailing market
prices at the time of resale as determined by the applicable Agent or, if so
specified in the applicable pricing supplement, for resale at a fixed offering
price. However, a trust may agree with an Agent for that Agent to utilize its
reasonable efforts on an agency basis on its behalf to solicit offers to
purchase notes at 100% of the principal amount thereof, unless otherwise
specified in the applicable pricing supplement. Unless otherwise specified in
the applicable pricing supplement, each trust will pay a commission to an Agent,
ranging from .150% to .875% of the principal amount of each note, depending upon
its stated maturity, sold through that Agent as its agent. The notes may be sold
to United States and foreign institutional and other investors.
Subject to the terms of the applicable terms agreement and the distribution
agreement, concurrently with any offering of a series of notes by a trust as
described in this prospectus supplement, other trusts may issue other notes
under this program or the Allstate Life(R) CoreNotes(R) program.
Each trust will use the net proceeds received from the issuance of the
related series of notes to purchase a funding note from Global Funding. Global
Funding will use the net proceeds received from the sale of such funding note to
purchase one or more funding agreements issued by Allstate Life. Global Funding
will immediately assign absolutely to, and deposit into, the issuing trust each
such funding agreement and the related funding note will be cancelled
immediately upon the assignment and deposit by Global Funding of such funding
agreement(s) to and into the issuing trust.
Unless otherwise specified in the applicable pricing supplement, any note
sold to an Agent as principal will be purchased by that Agent at a price equal
to 100% of the principal amount thereof less a percentage of the principal
amount equal to the commission applicable to an agency sale of a note of
identical maturity. An Agent may sell notes it has purchased from a trust as
principal to certain dealers less a concession equal to all or any portion of
the discount received in connection with that purchase. An Agent may allow, and
dealers may reallow, a discount to certain other dealers. After the initial
offering of notes, the offering price, the concession and the reallowance may be
changed.
The offer made hereby may be modified without notice, and each trust may
reject offers in whole or in part (whether placed directly by the issuing trust
or through an Agent). Each Agent will have the right, in its discretion
reasonably exercised, to reject in whole or in part any offer to purchase notes
received by it on an agency basis.
Unless otherwise specified in the applicable pricing supplement, you will
be required to pay the purchase price of your notes in immediately available
funds in the specified currency in The City of New York on the date of
settlement.
Upon issuance, the notes of a series will not have an established trading
market. There can be no assurance that a trading market for your notes will ever
develop or be maintained if developed. Unless otherwise specified in the
applicable pricing supplement, the notes will not be listed on any securities
exchange. The Agents may from time to time purchase and sell notes in the
secondary market, but the Agents are not obligated to do so, and there can be no
assurance that a secondary market for the notes will develop or that there will
be liquidity in the secondary market if one develops. From time to time, the
Agents may make a market in the notes, but the Agents are not obligated to do so
and may discontinue any market-making activity at any time.
In connection with an offering of notes purchased by one or more Agents as
principal on a fixed offering price basis, the applicable Agents will be
permitted to engage in certain transactions that stabilize the price of notes.
These transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of notes. If those Agents create a short
position in notes (i.e., if they sell notes in an amount exceeding the amount
specified in the applicable pricing supplement), they may reduce that short
position by purchasing notes in the open market. In general, purchases of notes
for the purpose of stabilization or to reduce a short position could cause the
price of notes to be higher than it might be in the absence of these type of
purchases.
S-60
Neither Global Funding and the trusts nor any Agent make any representation
or prediction as to the direction or magnitude of any effect that the
transactions described in the immediately preceding paragraph may have on the
price of notes. In addition, neither Global Funding and the trusts nor any Agent
make any representation that the Agents will engage in any such transactions or
that such transactions, once commenced, will not be discontinued without notice.
The Agents participating in the distribution of notes will be
"underwriters," with respect to the notes being distributed by them and the
funding agreements being purchased by the issuing trust, and any discounts or
commissions received by them on the sale or resale of notes may be deemed to be
underwriting discounts and commissions under the Securities Act. The Agents may
be entitled under agreements entered into with a trust, Global Funding and
Allstate Life to indemnification against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the Agents may be required to make in respect of such liabilities.
Global Funding is a statutory issuer of the notes and the funding notes
under the Securities Act, and Allstate Life is the issuer of the funding
agreements under the Securities Act. In addition, under the Securities Act, each
trust is a statutory underwriter of each funding agreement and each funding note
purchased with the proceeds from the issuance of such trust's notes.
J.P. Morgan Trust Company, National Association is affiliated with J.P.
Morgan Securities Inc., which is an Agent. With respect to any series of notes
as to which one or more affiliates of J.P. Morgan Trust Company, National
Association will serve as an Agent, the relevant trust will appoint an eligible
entity other than J.P. Morgan Trust Company, National Association and
unaffiliated with any other Agent participating in the offering of such series
of Notes to serve as indenture trustee.
In the ordinary course of its business, the Agents and their affiliates
have engaged, and may in the future engage, in investment and commercial banking
transactions with Allstate Life and certain of its affiliates.
S-61
ANNEX A
FORM OF PRICING SUPPLEMENT
Filed pursuant to Rule 424(b)[ ]
Registration Statement No. 333-129157
Pricing Supplement No. [ ] Dated [ ]
(To Prospectus dated [ ], and
Prospectus Supplement dated [ ])
CUSIP: [ ]
Allstate Life Global Funding
Secured Medium Term Notes
Issued Through
Allstate Life Global Funding Trust [ ]
The description in this pricing supplement of the particular terms of the
Secured Medium Term Notes offered hereby (the "Notes"), the Funding Agreement(s)
(specified below) issued by Allstate Life Insurance Company ("Allstate Life")
and deposited into Allstate Life Global Funding Trust [ ] (the "Trust") by
Allstate Life Global Funding ("Global Funding") and the Funding Note (specified
below) issued by Global Funding to the Trust supplements the description of the
general terms and provisions of the notes, the funding agreements and the
funding notes set forth in the accompanying prospectus and prospectus
supplement, to which reference is hereby made.
The Notes will represent the obligations of the issuing entity only and
will not represent the obligations of, or interest in, any other person or
entity, including Global Funding, Allstate Life or any of their respective
affiliates. The Notes will constitute asset-backed securities within the meaning
of Regulation AB under the Securities Act of 1933, as amended.
THE NOTES
Principal Amount: [ ] Agent(s) Discount: [ ]
Issue Price: [ ] Original Issue Date: [ ]
Net Proceeds to the Trust: [ ] Stated Maturity Date: [ ]
Specified Currency: [ ]
Interest Payment Dates: [ ] Depositary: [The Depository Trust Company]
Initial Interest Payment Date: [ ]
Regular Record Date: [15 calendar days prior to the Interest Payment Date]
Fiscal Year of Trust (not applicable unless different than as specified in the
prospectus and prospectus supplement): [ ]
Type of Interest Rate: [[ ] Fixed Rate] [[ ] Floating Rate]
Fixed Rate Notes: [[ ] Yes] [[ ] No]. If, Yes,
Interest Rate: [ ]
Floating Rate Notes: [[ ] Yes] [[ ] No]. If, Yes,
Regular Floating Rate Notes: [[ ] Yes] [[ ] No]. If, Yes,
Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Inverse Floating Rate Notes: [[ ] Yes] [[ ] No]. If, Yes,
Fixed Interest Rate: [ ]
Floating Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Floating Rate/Fixed Rate Notes: [[ ] Yes] [[ ] No]. If, Yes,
Floating Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Fixed Interest Rate: [ ]
Fixed Rate Commencement Date: [ ]
Initial Interest Rate, if any: [ ]
Initial Interest Reset Date: [ ]
Interest Rate Basis(es). Check all that apply:
[ ] CD Rate [ ] Federal Funds Rate
[ ] CMT Rate [ ] LIBOR
[ ] Commercial Paper Rate [ ] EURIBOR
[ ] Constant Maturity Swap Rate [ ] Prime Rate
[ ] Eleventh District Cost of Funds Rate [ ] Treasury Rate
[ ] Federal Fund Open Rate
[If LIBOR:]
LIBOR Page: [ ]
[ ] LIBOR Moneyline Telerate: [ ] LIBOR Reuters:
LIBOR Currency: [ ]
[If CMT Rate:]
Designated CMT Moneyline Telerate Page: [ ]
[If CMT Moneyline Telerate Page 7052:] [[ ] Weekly Average]
[[ ] Monthly Average]
Designated CMT Maturity Index: [ ]
Index Maturity: [ ]
Spread (+/-): [ ]
Spread Multiplier: [ ]
Interest Reset Date(s): [ ]
Interest Determination Date(s): [ ]
Maximum Interest Rate, if any: [ ]
A-2
Minimum Interest Rate, if any: [ ]
Calculation Agent, if any: [J.P. Morgan Trust Company, National Association]
Exchange Rate Agent, if any: [ ]
Computation of Interest (not applicable unless different than as specified in
the prospectus and prospectus supplement): [ ]
Day Count Convention (not applicable unless different than as specified in the
prospectus and prospectus supplement): [ ]
Amortizing Notes: [[ ] Yes] [[ ] No]. If, Yes,
Amortizing Schedule: [ ]
Additional/Other Terms: [ ]
Discount Notes: [[ ] Yes] [[ ] No]. If, Yes,
Total Amount of Discount: [ ]
Initial Accrual Period of Discount: [ ]
Additional/Other Terms: [ ]
Redemption Provisions: [[ ] Yes] [[ ] No]. If, Yes,
Initial Redemption Date: [ ]
Initial Redemption Percentage: [ ]
Annual Redemption Percentage Reduction (if any):
[ ]
Redemption: [[ ] In whole only and not in part]
[[ ] May be in whole or in part]
Additional/Other Terms: [ ]
Repayment: [[ ] Yes] [[ ] No]. If, Yes,
Repayment Date(s): [ ]
Repayment Price: [ ]
Repayment: [[ ] In whole only and not in part]
[[ ] May be in whole or in part]
Additional/Other Terms: [ ]
Sinking Fund (not applicable unless specified): [ ]
Additional Amounts to be Paid for Withholding Tax (not applicable unless
specified):
Securities Exchange Listing: [[ ] Yes] [[ ] No]. If Yes, Name of Exchange:
Authorized Denominations: [$1,000]
Ratings:
The Notes issued under the Program are rated "AA" by Standard & Poor's, a division of The Mc-Graw Hill Companies, Inc.
("S&P"). It is anticipated that Moody's Investors Service, Inc. ("Moody's") will rate the Notes "Aa2" on the Original
Issue Date.
Agent(s) Purchasing Notes as Principal: [[ ] Yes] [[ ] No]. If Yes,
Agent(s) Principal Amount
[ ] [ ]
Total: [ ]
A-3
Agent(s) Acting as Agent: [[ ] Yes] [[ ] No]. If Yes,
Agent(s) Principal Amount
[ ] [ ]
Total: [ ]
Additional/Other Terms: [ ]
Special Tax Considerations: [ ]
THE FUNDING AGREEMENT(S)
Funding Agreement Issuer: Allstate Life Insurance Company
Funding Agreement No.: [ ]
Deposit Amount: [ ]
Issue Price: [ ]
Net Deposit Amount: [ ]
Effective Date: [ ]
Specified Currency: [ ]
Interest Payment Dates: [ ]
Initial Interest Payment Date: [ ]
Type of Interest Rate: [[ ] Fixed Rate] [[ ] Floating Rate]
Fixed Rate Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Interest Rate: [ ]
Floating Rate Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Floating Rate Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Inverse Floating Rate Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Fixed Interest Rate: [ ]
Floating Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Floating Rate/Fixed Rate Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Floating Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Fixed Interest Rate: [ ]
Fixed Rate Commencement Date: [ ]
Initial Interest Rate, if any: [ ]
A-4
Initial Interest Reset Date: [ ]
Interest Rate Basis(es). Check all that apply:
[ ] CD Rate
[ ] CMT Rate [ ] Commercial Paper Rate
[ ] Constant Maturity Swap Rate [ ] Eleventh District Cost of Funds Rate
[ ] LIBOR [ ] Federal Funds Open Rate
[ ] EURIBOR [ ] Federal Funds Rate
[ ] Prime Rate [ ] Treasury Rate
[If LIBOR:]
LIBOR Page: [ ]
[ ] LIBOR Moneyline Telerate: [ ] LIBOR Reuters:
LIBOR Currency: [ ]
[If CMT Rate:]
Designated CMT Moneyline Telerate Page: [ ]
[[ ] Weekly Average]
[If CMT Moneyline Telerate Page 7052:] [[ ] Monthly Average]
Designated CMT Maturity Index: [ ]
Index Maturity: [ ]
Spread (+/-): [ ]
Spread Multiplier: [ ]
Interest Reset Date(s): [ ]
Interest Determination Date(s): [ ]
Maximum Interest Rate, if any: [ ]
Minimum Interest Rate, if any: [ ]
Calculation of Interest: [ ]
Day Count Convention: [ ]
Amortizing Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Amortizing Schedule
Additional/Other Terms
Additional/Other Terms: [ ]
A-5
Discount Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Total Amount of Discount: [ ]
Initial Accrual Period of Discount: [ ]
Additional/Other Terms: [ ]
Redemption Provisions: [[ ] Yes] [[ ] No]. If Yes,
Initial Redemption Date: [ ]
Initial Redemption Percentage: [ ]
Annual Redemption Percentage Reduction
(if any): [ ]
Redemption: [[ ] In whole only and not in part]
[[ ] May be in whole or in part]
Additional/Other Terms: [ ]
Repayment: [[ ] Yes] [[ ] No]. If Yes,
Repayment Date(s): [ ]
Repayment Price: [ ]
Repayment: [[ ] In whole only and not in part]
[[ ] May be in whole or in part]
Additional/Other Terms: [ ]
Sinking Fund (not applicable unless specified): [ ]
Additional Amounts to be Paid For Withholding Tax (not applicable
unless specified): [ ]
Ratings:
The Funding Agreements issued under the Program are rated AA by S&P. It is
anticipated that the Funding Agreement(s) will be rated Aa2 by Moody's on the
Original Issue Date.
Additional/Other Terms, if any: [ ]
Special Tax Considerations: [ ]
THE FUNDING NOTE
Funding Note Issuer: Allstate Life Global Funding
Funding Note No.: [ ]
Principal Amount: [ ]
The Funding Note will otherwise have payment and other terms substantially
similar to the Funding Agreement(s) and the Notes, except that the terms of the
Funding Note will provide that it will be cancelled immediately upon the sale
of, and deposit into, the Trust by Global Funding of the Funding Agreement(s).
A-6
===============================================================================
$5,000,000,000
Allstate Life Global Funding
Depositor
Secured Medium Term Notes
Due Between Nine Months and 30 Years From the Date of Issue
Issued Through
Allstate Life Global Funding Trusts
Secured by
Funding Agreements Issued by
Allstate Life Insurance Company
Sponsor
------------------
PROSPECTUS SUPPLEMENT
------------------
Merrill Lynch & Co.
A.G. Edwards & Sons, Inc.
Banc of America Securities LLC
Barclays Capital
Bear, Stearns & Co. Inc.
Citigroup
Credit Suisse
Deutsche Bank Securities
Goldman, Sachs & Co.
JPMorgan
Lehman Brothers
Morgan Stanley
RBS Greenwich Capital
UBS Investment Bank
Wachovia Securities
March -, 2006
===============================================================================
Subject to Completion
Preliminary Prospectus Supplement dated March 13, 2006
PROSPECTUS SUPPLEMENT
(To prospectus dated March -, 2006)
$5,000,000,000
Allstate Life Global Funding
Depositor
Allstate Life(R) CoreNotes(R)
Due Between Nine Months and 30 Years From the Date of Issue
Issued Through Allstate Life Global Funding Trusts
Secured by
Funding Agreements Issued by
Allstate Life Insurance Company
Sponsor
------------------
Allstate Life Global Funding (the "depositor" or "Global Funding") is a
statutory trust formed under the laws of the State of Delaware. Its primary
purpose is to facilitate the programs for the issuance of one or more series of
secured medium term notes, including the Allstate Life(R) CoreNotes(R) (the
"notes"). Each series of notes will be issued by a newly created separate and
distinct Delaware statutory trust (each, a "trust"). The notes of each series
will be secured by one or more funding agreements (each, a "funding agreement")
issued by Allstate Life Insurance Company ("Allstate Life") and assigned
absolutely to, and deposited into, the issuing trust by Global Funding. Global
Funding will be the sole beneficial owner of each trust that is formed and the
depositor of the funding agreements into the issuing trusts. In connection with
each offering of notes, Allstate Life Global Funding will issue the applicable
funding note (each, a "funding note") as more fully described herein. Allstate
Life is the sponsor of the programs.
The notes of each series will represent the obligations of the issuing
entity only and will not represent the obligations of, or interest in, any other
person or entity, including Global Funding, Allstate Life or any of their
respective affiliates. The notes of each series will constitute "asset-backed
securities" within the meaning of Regulation AB under the Securities Act of
1933, as amended.
The specific terms of each series of notes, and the related funding note
and funding agreement(s), will be set forth in a separate prospectus supplement
to this prospectus supplement and the accompanying prospectus (a "pricing
supplement"), which will be prepared in connection with the issuance of such
series of notes, including the information related to the interest rate or
specified rate of return thereof, the distribution frequency and the first
expected distribution date. The form of pricing supplement, which includes
bracketed alternatives that may form part of the structure of an offering of
notes pursuant to the program described in this prospectus supplement and the
accompanying prospectus, is included in this prospectus supplement as Annex B.
You should read this prospectus supplement, the accompanying prospectus and the
applicable pricing supplement carefully before you invest.
The notes of each series:
o will be issued in only one class;
o will have a stated maturity of nine months to 30 years from the date
of issue;
o will have redemption and/or repayment provisions, if applicable,
whether mandatory or at the option of the issuing trust or the holders
of such notes;
o will provide for payments in U.S. dollars;
o will, unless otherwise specified in the applicable pricing supplement,
have a minimum denomination of $1,000 and integral multiples of $1,000
in excess thereof;
o will be in book-entry form;
o will bear interest at fixed or floating rates; unless otherwise
specified in the applicable pricing supplement, each trust will pay
interest on the relevant series of notes on a monthly, quarterly,
semiannual or annual basis;
o will be secured by the right, title and interest of the issuing trust
in and to (1) the funding agreement(s) held by that trust, (2) all
proceeds of such funding agreement(s) and (3) all books and records
pertaining to such funding agreement(s); and
o may be sold in the United States to retail and other investors.
The funding note and funding agreement(s) issued in connection with the
offering of a series of notes will represent the respective obligations of
Global Funding and Allstate Life only and will not represent the obligations of
or the interest in any person other than the respective issuing entity.
Each class of securities offered may have an aggregate principal amount of
up to $5,000,000,000.
Investing in these securities involves risks that are described in the
"Risk Factors" section beginning on page S-12.
------------------
Neither the Securities and Exchange Commission, any state securities
commission nor any state insurance commission has approved or disapproved of
these securities or determined if this prospectus supplement, the accompanying
prospectus or any pricing supplement is truthful or complete. Any representation
to the contrary is a criminal offense.
------------------
Merrill Lynch & Co.
------------------
The date of this prospectus supplement is -, 2006.
"Allstate Life(R)" is a registered service mark of Allstate Insurance Company.
"CoreNotes(R)" is a registered service mark of Merrill Lynch & Co., Inc.
TABLE OF CONTENTS
Page
Prospectus Supplement
Forward-Looking Statements..............................................................................................S-1
About this Prospectus Supplement and the Pricing Supplements............................................................S-2
Summary.................................................................................................................S-3
Risk Factors...........................................................................................................S-12
Allstate Life Global Funding Trusts....................................................................................S-18
Allstate Life Global Funding...........................................................................................S-18
Allstate Life Insurance Company........................................................................................S-19
Description of the Notes...............................................................................................S-20
Description of the Funding Agreements..................................................................................S-42
United States Federal Income Tax Considerations........................................................................S-43
Plan of Distribution...................................................................................................S-50
Annex A: Survivor Option Repayment Election Form......................................................................A-1
Annex B: Form of Pricing Supplement...................................................................................B-1
Prospectus
Forward-Looking Statements................................................................................................1
About this Prospectus.....................................................................................................2
Available Information.....................................................................................................3
Incorporation of Documents by Reference...................................................................................3
Description of Allstate Life Global Funding and the Trusts................................................................5
Description of Allstate Life Insurance Company...........................................................................16
Computation of Ratio of Earnings to Fixed Charges........................................................................17
Use of Proceeds..........................................................................................................17
Description of the Notes.................................................................................................18
Description of the Indentures............................................................................................19
Description of the Funding Notes.........................................................................................30
Description of the Funding Agreements....................................................................................31
Description of the Support and Expenses Agreements.......................................................................37
Description of the Administrative Services Agreements....................................................................38
ERISA Considerations.....................................................................................................39
Plan of Distribution.....................................................................................................42
Legal Opinions...........................................................................................................43
Experts..................................................................................................................43
------------------
Each trust may sell its notes to the Purchasing Agent referred to below as
principal for resale at a fixed offering price specified in the applicable
pricing supplement or at varying prices. Each trust may also explicitly agree
with the Purchasing Agent that it will use its reasonable efforts as agent on
behalf of the issuing trust to solicit offers to purchase notes of the
applicable series from that trust at 100% of the principal amount thereof,
unless otherwise specified in the applicable pricing supplement. Unless
otherwise specified in the applicable pricing supplement, any note sold to the
Purchasing Agent as principal will be purchased by the Purchasing Agent at a
price equal to 100% of the principal amount thereof less a percentage of the
principal amount equal to the commission applicable to an agency sale of a note
of identical maturity. Unless otherwise specified in the applicable pricing
supplement, each trust will pay a commission to the Purchasing Agent, ranging
from .125% to 2.50% of the principal amount of each applicable note, depending
upon its stated maturity, for each note purchased from the issuing trust by the
Purchasing Agent as its agent.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement, the accompanying prospectus and any
pricing supplement. Neither of the registrants nor the Purchasing Agent has
authorized anyone to provide you with different or additional information. If
anyone provides you with different or additional information, you should not
rely on it. Neither of the registrants nor the Purchasing Agent is making an
offer to sell notes in any jurisdiction where the offer or sale is not
permitted. You should not assume that the information contained in this
prospectus supplement, the accompanying prospectus or the applicable pricing
supplement is accurate as of any date other than the date of such document.
Updated information will be provided in the future as explained under
"Incorporation of Documents by Reference" in the accompanying prospectus.
FORWARD-LOOKING STATEMENTS
Allstate Life
This prospectus supplement, the accompanying prospectus and each applicable
pricing supplement may include forward-looking statements of Allstate Life.
These forward-looking statements are not statements of historical fact but
rather reflect Allstate Life's current expectations, estimates and predictions
about future results and events. These statements may use words such as "will,"
"should," "likely," "target," "anticipate," "believe," "estimate," "expect,"
"intend," "predict," "project" and similar expressions as they relate to
Allstate Life or its management. When Allstate Life makes forward-looking
statements, Allstate Life is basing them on its management's beliefs and
assumptions, using information currently available to Allstate Life. These
forward-looking statements are subject to risks, uncertainties and assumptions,
including but not limited to, risks, uncertainties and assumptions discussed in
this prospectus supplement, the accompanying prospectus and in each applicable
pricing supplement. Factors that can cause or contribute to these differences
include those described under the heading "Risk Factors" in this prospectus
supplement. Allstate Life undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events, developments or otherwise.
If one or more of these or other risks or uncertainties materialize, or if
Allstate Life's underlying assumptions prove to be incorrect, actual results may
vary materially from what Allstate Life projected. Any forward-looking
statements of Allstate Life you read in this prospectus supplement, the
accompanying prospectus or any pricing supplement reflect Allstate Life's
current views with respect to future events and are subject to these and other
risks, uncertainties and assumptions relating to Allstate Life's operations,
results of operations, growth strategy and liquidity. All subsequent written and
oral forward-looking statements attributable to Allstate Life or individuals
acting on Allstate Life's behalf are expressly qualified in their entirety by
this section. You should specifically consider the factors identified in this
prospectus supplement, the accompanying prospectus and each applicable pricing
supplement which could cause actual results to differ before making an
investment decision.
Global Funding and the Trusts
This prospectus supplement, the accompanying prospectus and each applicable
pricing supplement may include forward-looking statements of Global Funding and
the trusts. These forward-looking statements are subject to risks, uncertainties
and assumptions, including but not limited to, risks, uncertainties and
assumptions discussed in this prospectus supplement, the accompanying prospectus
and in each applicable pricing supplement. Global Funding does not, and the
trusts will not, undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
You should specifically consider the factors identified in this prospectus
supplement, the accompanying prospectus and each applicable pricing supplement
before making an investment decision. The trusts are not entitled to the safe
harbors contained in Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), with respect to forward-looking statements of the
trusts in this prospectus supplement, the accompanying prospectus and each
applicable pricing supplement.
S-1
ABOUT THIS PROSPECTUS SUPPLEMENT AND THE PRICING SUPPLEMENTS
This document is a prospectus supplement and supplements a prospectus which
is part of a registration statement filed with the Securities and Exchange
Commission (the "SEC") by Allstate Life Global Funding and Allstate Life
Insurance Company (the "registrants"). This prospectus supplement provides you
with a general description of the notes. The trusts may sell notes in various
offerings up to an aggregate initial offering price of $5,000,000,000, less any
amount of notes previously issued by the trusts under this program or pursuant
to a separate prospectus supplement that relates to the Allstate Life Global
Funding secured medium term note program. References in this prospectus
supplement to "notes" are to the Allstate Life(R) CoreNotes(R) offered by this
prospectus supplement.
This prospectus supplement and the information incorporated by reference in
it may update, supplement or clarify the information in the accompanying
prospectus. You will also receive a pricing supplement with the prospectus
supplement. The pricing supplement will contain the specific description of the
notes offered at the time and the terms on which the notes are offered. That
pricing supplement also may add, update, supplement or clarify information in
this prospectus supplement and the accompanying prospectus. You should carefully
review such additional, updated, supplemental or clarifying information
contained in the pricing supplement.
It is important for you to read and consider all of the information
contained in this prospectus supplement and the accompanying prospectus, as well
as in the applicable pricing supplement relating to the particular offering of
notes, in making your decision to invest in notes. You should also read and
consider the information in the documents referred to in "Incorporation of
Documents by Reference" in the accompanying prospectus.
In this prospectus supplement, references to the "depositor" and "Global
Funding" are to Allstate Life Global Funding. References to the "trusts" are to
Allstate Life Global Funding Trusts. References to an "issuing trust" are to a
trust with respect to the series of notes issued and sold to the public by that
trust. These references are not to Allstate Life Insurance Company. Unless
otherwise specified herein or the context otherwise requires, in this prospectus
supplement, references to "Allstate Life" are to Allstate Life Insurance
Company. References to "Purchasing Agent" are to Merrill Lynch, Pierce, Fenner &
Smith Incorporated.
In this prospectus supplement, references to "United States dollars," "U.S.
dollars" or "$" are to lawful currency of the United States of America.
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SUMMARY
This section summarizes certain of the legal and financial terms of the
notes, funding notes and funding agreements that are described in more detail in
"Description of the Notes" and "Description of the Funding Agreements" beginning
on pages S-20 and S-42 of this prospectus supplement, "Description of the
Funding Notes" beginning on page 32 of the accompanying prospectus, and other
information described elsewhere in this prospectus supplement or in the
accompanying prospectus. You should read the more detailed information appearing
elsewhere in the accompanying prospectus, this prospectus supplement and the
applicable pricing supplement relating to the particular offering of notes.
The Trusts...................... Each series of notes will be issued by a newly created separate and distinct Delaware
statutory trust (each, a "trust") formed by Allstate Life Global Funding, as trust
beneficial owner, AMACAR Pacific Corp., as administrator (including any successor, the
"administrator"), and Wilmington Trust Company, as Delaware trustee (including any
successor, the "Delaware trustee"), pursuant to the filing of a certificate of trust and
the execution of a trust agreement. Each trust agreement pursuant to which various trusts
may be formed from time to time to issue notes is referred to in this prospectus
supplement as a "trust agreement." Allstate Life Global Funding will be the sole
beneficial owner of each trust that is formed.
Depositor; Issuer of Funding
Notes......................... Allstate Life Global Funding is a registrant as the depositor of the funding agreements
into the issuing trusts and the issuer of the funding notes.
Sponsor; Issuer of Funding
Agreements................... Allstate Life Insurance Company is the sponsor of the programs and a registrant as the
issuer of the funding agreements.
Allstate Life is not affiliated with any trust. None of Allstate Life or any of its
officers, directors, subsidiaries or affiliates owns any beneficial interest in any trust
nor has any of these persons or entities entered into any agreement with any trust other
than in furtherance of the issuance of notes from time to time as contemplated by this
prospectus supplement and the accompanying prospectus.
None of Allstate Life or any of its officers, directors, subsidiaries or affiliates is
affiliated with Global Funding, the Delaware trustee, the administrator, the indenture
trustee or the funding note indenture trustee.
Purposes of Global Funding and
Trusts....................... The primary purpose of Global Funding is to facilitate the programs for the issuance of
notes, including, in connection with each offering of notes, to issue the applicable
funding note. The primary purpose of each trust is to issue the related series of notes
to the public, which notes will be issued only on the original issue date of such notes
and will be secured by one or more funding agreements issued by Allstate Life, and
assigned absolutely to, and deposited into, the issuing trust by Global Funding. Each
trust will use the net proceeds received from issuing its series of notes to acquire one
or more funding agreements. Each trust will hold the collateral described below
pertaining to its series of notes to fund its obligations under that series of notes.
Each trust will pledge and collaterally assign the funding agreement(s) held in that
trust to the indenture trustee for the benefit of the holders of that trust's series of
notes and any other person for whose benefit the indenture trustee is or will be holding
the applicable collateral.
The notes of each series will represent the obligations of the issuing entity only and
will not represent the obligations of, or interest in, any other person or entity, including
Global Funding, Allstate Life, or any of their respective affiliates. Holders of notes of a
series may only look to the funding agreement(s) and any other collateral held in, or pledged
and collaterally assigned to the indenture trustee by, the issuing trust for payment on
their notes and not to the assets of Allstate Life or Global Funding, or the assets held in
any other trust.
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Delaware Trustee................ Unless otherwise specified in the applicable pricing supplement, Wilmington Trust
Company, a Delaware banking corporation, will be the sole trustee of Global Funding and
each trust. In this prospectus supplement and the accompanying prospectus, references to
"Delaware trustee" (i) with respect to any trust are to Wilmington Trust Company (or
another entity specified in the applicable trust agreement), as Delaware trustee of such
trust (including, in each case, any successor); and (ii) with respect to Global Funding
are to Wilmington Trust Company as Delaware trustee of Global Funding (including any
successor). The Delaware trustee will not be obligated in any way to make payments under
or in respect of any notes, any funding notes or any funding agreements. The Delaware
trustee is not affiliated with Allstate Life or the indenture trustee.
Administrator................... Unless otherwise specified in the applicable pricing supplement, AMACAR Pacific Corp.
will be the administrator of Global Funding and each trust. In this prospectus supplement
and the accompanying prospectus, references to the "administrator" (i) with respect to
any trust are to AMACAR Pacific Corp. (or another entity specified in the applicable
trust agreement), as administrator of such trust (including, in each case, any
successor); and (ii) with respect to Global Funding are to AMACAR Pacific Corp. as
administrator of Global Funding (including any successor). The administrator will not be
obligated in any way to make any payments under or in respect of the notes, any funding
notes or any funding agreements. The administrator is not affiliated with Allstate Life
or the indenture trustee.
Indenture Trustee............... Each series of notes will be issued by the issuing trust pursuant to a separate indenture
(each, an "indenture") to be entered into among the issuing trust and J.P. Morgan Trust
Company, National Association, (or another entity specified as indenture trustee in the
applicable indenture) in its capacity as indenture trustee (including any successor, the
"indenture trustee"). The indenture trustee will not be affiliated with the trusts, the
Delaware trustee, the administrator, Global Funding or Allstate Life.
Funding Note Indenture
Trustee....................... Each funding note will be issued by Global Funding pursuant to a separate funding note
indenture (each, a "funding note indenture") to be entered into among Global Funding and
the other parties specified therein, including J.P. Morgan Trust Company, National
Association, (or another entity specified as funding note indenture trustee in the
applicable funding note indenture) in its capacity as funding note indenture trustee
(including any successor, the "funding note indenture trustee"). The funding note
indenture trustee is not affiliated with the trusts, the Delaware Trustee, the
administrator, Global Funding or Allstate Life.
Servicer........................ Unless otherwise provided in the pricing supplement for a series of notes, pursuant to
each indenture, J.P. Morgan Trust Company, National Association will perform the
functions of the servicer in respect of the programs.
Diagram of Parties.............. Below is a diagram showing the parties involved in the issuance of notes by each trust.
Funding Agreement(s)
Deposit of Funding Agreement(s)
--- into issuing trust. Funding note --- Security Interest in
| is simultaneously cancelled. | Funding Agreement(s)
| | (held for the benefit
Funding | | of holders)
Agreement(s) | Funding Note |
- ------------------- ----------------- ---------------- --------------
|Allstate Life |---------------> |Allstate Life |------------------>| | ---------------- | Indenture |
|Insurance Company|<-------------- |Global Funding |<----------------- | Issuing Trust| | Trustee |
- ------------------- Note Proceeds ----------------- Note Proceeds ---------------- --------------
^ |
| |
Note
Proceeds Notes
| |
| v
----------------
| |
| Noteholders |
----------------
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Allstate Life Can Issue Its Own
Medium Term Notes and Funding
Agreements Directly to
Investors.................... Allstate Life is able to issue its own medium term notes directly to investors and does
issue funding agreements directly to qualified investors. However, by securing each
trust's notes with one or more of Allstate Life's funding agreements, such trust's notes
are secured by an asset that would have a higher priority in insolvency than unsecured
medium term notes of Allstate Life and, accordingly, may be entitled to receive a higher
investment rating than unsecured medium term notes of Allstate Life. In addition, funding
agreements are very difficult to transfer and have no active secondary market. By
securing each trust's notes with one or more of Allstate Life's funding agreements,
investors may be able to avail themselves of many of the benefits of Allstate Life's
funding agreements while benefiting from the liquidity afforded by each trust's medium
term notes.
Title Allstate Life(R) CoreNotes(R)
Purchasing Agent Merrill Lynch, Pierce, Fenner & Smith Incorporated.
Allstate Life(R) CoreNotes(R)
Program...................... This prospectus supplement relates to one or more series of notes that one or Delaware
special purpose statutory trusts that may be formed from time to time may issue and sell
primarily to retail investors under this Allstate Life(R) CoreNotes(R) program.
Allstate Life(R) CoreNotes(R) will be offered from time to time to the public, with payment
of principal of, any premium and interest on,and any other amounts due and owing with
respect to, the Allstate Life(R) CoreNotes(R) to be secured by one or more applicable
funding agreements issued by Allstate Life and sold to, and deposited into, the issuing
trust by Global Funding.
Secured Medium Term Notes
Program...................... Included in the registration statement, of which this prospectus supplement is a part,
is another prospectus supplement relating to series of notes that may be issued and sold
primarily to institutional investors by one or more newly established Delaware statutory
trusts under the related secured medium term notes program. The terms of the secured
medium term notes are identical in all material respects to the terms of the notes
to be sold under this program, as described in this prospectus supplement, except that
the secured medium term notes:
o may be issued as amortizing notes;
o may be denominated in one or more foreign currencies;
o will not contain a survivor's option, permitting optional repayment of notes of
a series, subject to certain limitations, prior to maturity, if requested, following
the death of the beneficial owner of notes of that series; and
o may contain a provision providing for the redemption of the notes if Allstate Life is
required to pay additional amounts on the related funding agreements pursuant to the
applicable pricing supplement and Allstate Life exercises its right to redeem the
funding agreements.
Amount of the Notes............. Up to $5,000,000,000 of notes less any amount of notes previously issued under this
program, the related secured medium term note program or otherwise under the accompanying
prospectus.
Flow of Funds................... All funds deposited with the indenture trustee pursuant to an indenture in respect of
notes of a series, except when an event of default has occurred and is continuing under
the indenture, shall be held in trust in the applicable collection account and applied by
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the indenture trustee, in accordance with the provisions of the notes of such series and
the applicable indenture, to the payment through any paying agent, to the persons
entitled thereto, of the principal, premium, if any, interest and additional amounts, if
any, for whose payment such money has been deposited with or received by the indenture
trustee. If no event of default with respect to the notes of a series has occurred and
is continuing, the following priority of payments shall apply:
o First: to the payment of principal, any premium and interest, any additional
amounts, and any other amounts then due and owing on the notes
of such series, ratably, without preference or priority
of any kind, according to the aggregate amounts due and payable on such notes;
o Second: to the payment of any other obligations then due and owing with respect
to such series of notes, ratably, without preference or priority of any kind; and
o Third: to the payment of any remaining balance to the issuing trust for
distribution by the Delaware Trustee in accordance with the provisions of
the applicable trust agreement.
Any funds collected by the indenture trustee following an event of default, and during the
continuance thereof, under the applicable indenture in respect of the notes of a series
shall be held in trust in the applicable collection account and be applied in the
following order at the date or dates fixed by the indenture trustee and, in case of the
distribution of such funds on account of principal, any premium and interest and any
other amounts due and owing, upon presentation of the global security or
certificates representing the notes of such series and the notation thereon of the
payment if only partially paid or upon the surrender thereof if fully paid:
o First: to the payment of costs and expenses, including reasonable compensation
to the indenture trustee and each predecessor indenture trustee and their respective
agents and attorneys and of all expenses and liabilities incurred, and all advances
made, by the indenture trustee and each predecessor indenture trustee except as those
adjudicated in a court of competent jurisdiction to be the result of any such
indenture trustee's negligence or bad faith, in an aggregate amount of no more than
$250,000 for all series of notes outstanding;
o Second: to the payment of principal, any premium and interest, any additional
amounts and any other amounts then due and owing on the notes of such series, ratably,
without preference or priority of any kind, according to the aggregate amounts due and
payable on such notes;
o Third: to the payment of any other obligations then due and owing with respect to such
series of notes, ratably, without preference or priority
of any kind; and
o Fourth: to the payment of any remaining balance to the issuing trust for distribution
by the Delaware Trustee in accordance with the provisions of the applicable trust
agreement.
All funds and other property received by the Delaware trustee on behalf of the issuing
trust in respect of the applicable collateral will be deposited into the payment account of
such trust and will be distributed by such trust as follows:
o First: to the indenture trustee for the payment of all amounts then due and
unpaid upon the applicable series of notes and any other amounts due and
S-6
payable, in accordance with the applicable indenture; and
o Second: upon the final redemption of the applicable series of notes and payment of
any amounts payable in respect thereof, any remaining funds and other property
deposited into the payment account shall be distributed to the Delaware trustee for
distribution as provided below.
In connection with the termination of any trust that is formed and the distribution of
all amounts from the applicable payment account in accordance with the priority
described above, the Delaware trustee will distribute any amounts received in accordance
with the second clause of the immediately preceding paragraph and any other remaining
assets of the trust in the following order of priority:
o First: to pay all expenses and other liabilities owed by the applicable trust;
and
o Second: any remaining funds and other property shall be paid to the trust
beneficial owner.
Terms of the Notes:
Status....................... o The notes of a series will represent the unconditional, direct, non-recourse and
unsubordinated obligations of the issuing entity and will rank equally among
themselves.
o Each series of notes may be accelerated in the payment of principal and outstanding
interest if an event of default under the notes of such series occurs. Upon the
occurrence of an event of default, the indenture trustee on behalf of
the holders of notes of such series may only proceed against the collateral held in the
issuing trust.
o The notes of each series are not intended to be insurance contracts, insurance policies
or funding agreements.
o The notes of each series will represent the obligations of the issuing entity only
and will not represent the obligations of, or interest in, any other person or entity,
including Global Funding, Allstate Life or any of their respective affiliates.
o The notes are not guaranteed by any person or entity.
o The notes will not benefit from any insurance guaranty fund coverage or any similar
protection.
Interest Rate................ o Each series of fixed rate notes will bear interest from its date of issue at the
rate stated in the applicable pricing supplement until the principal is
paid. Each series of floating rate notes will bear interest from the date
of issue until the principal is paid at a rate determined by reference to
an interest rate or interest rate formula, which may be adjusted by a
spread and/or spread multiplier (each as more fully described under
"Description of the Notes"). The pricing supplement for a series of
floating rate notes will designate one or more of the following base rates,
along with the index maturity for that base rate:
o the CD Rate,
o the CMT Rate,
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o the Commercial Paper Rate,
o the Constant Maturity Swap Rate
o the Federal Funds Open Rate
o the Federal Funds Rate,
o LIBOR,
o the Prime Rate, or
o the Treasury Rate.
o Interest on each note will be payable either monthly, quarterly, semiannually or
annually on each interest payment date and at maturity or, if applicable, earlier
redemption or repayment, and will be computed on the basis of a 360-day year of twelve
30-day months, unless otherwise specified in the pricing supplement.
Principal.................... o The principal amount of each note will be payable on its stated maturity date
specified in the applicable pricing supplement, unless earlier redeemed or
repaid in accordance with its terms.
Redemption................... Unless otherwise specified in the applicable pricing supplement:
o the notes will not be redeemable prior to maturity; and
o the notes will not be subject to any sinking fund.
Maturities................... o Each series of notes will mature between nine months and 30 years from its date
of original issuance. Each series of notes will have the same maturity date
as the related funding agreement(s).
Survivor's Option............ A series of notes may contain a provision (which is referred to as the "survivor's
option") permitting optional repayment of notes of that series prior to maturity, if
requested, following the death of the beneficial owner of notes of that series, so long
as the notes were held by the beneficial owner or the estate of the beneficial owner for
a period beginning at least six months immediately prior to such death. Your notes may
not be repaid in this manner unless the pricing supplement for your series of notes
provides for the survivor's option. If the pricing supplement for your series of notes
provides for the survivor's option, the funding agreement securing your series of notes
will contain a provision which will allow the issuing trust to tender the funding
agreement in whole or in part to Allstate Life. An issuing trust's ability to tender
funding agreements related to its series of notes that contains a survivor's option,
however, will be subject to certain limitations set by Allstate Life. As a result, your
right to exercise the survivor's option is subject to limits set by Allstate Life with
respect to the relevant funding agreement. Allstate Life has the discretionary right to
limit the aggregate principal amount of:
o all funding agreements securing all outstanding series of notes issued under the
Allstate Life(R) CoreNotes(R) program as to which exercises of any put option
by any issuing trust shall be accepted by Allstate Life in any calendar
year to an amount equal to the greater of $2,000,000 or 2% of the aggregate
principal amount of all funding agreements securing all outstanding series
of notes issued under the Allstate Life(R) CoreNotes(R) program as of the end
of the most recent calendar year or such other greater amount as determined
in accordance with the applicable funding agreement and set forth in the
S-8
applicable pricing supplement;
o the funding agreements securing the notes of a series as to which exercises of any put
option by the applicable trust attributable to notes as to which the survivor's
option has been exercised by the authorized representative of any individual deceased
beneficial owner to $250,000 in any calendar year or such other greater amount as
determined in accordance with the applicable funding agreement and set forth
in the applicable pricing supplement; and
o the funding agreements securing a series of notes as to which exercises of any put
option by the applicable trust attributable to notes as to which the survivor's option
has been exercised shall be accepted in any calendar year to an amount as set forth in
the applicable funding agreement and the applicable pricing supplement.
Additional details on the survivor's option are described in the section titled
"Description of the Notes--Survivor's Option" on page S-36.
Currency and Denominations...... Notes will be denominated in U.S. dollars. Unless otherwise specified in the applicable
pricing supplement, notes will be issued and sold in denominations of $1,000 and integral
multiples of $1,000 in excess thereof.
Listing of Notes................ Unless otherwise specified in the applicable pricing supplement, a series of notes will
not be listed on any securities exchange.
Forms of Notes.................. Book-entry through the facilities of The Depository Trust Company ("DTC"), except as
otherwise described under "Description of the Notes--Book-Entry Notes."
Collateral...................... The notes of a series will be secured by the right, title and interest of the issuing
trust in and to (1) the funding agreement(s) held by that trust, (2) all proceeds of such
funding agreement(s) and (3) all books and records pertaining to such funding
agreement(s). In this prospectus supplement, references to "other collateral" are to
items (2) and (3) above.
Funding Agreements.............. The funding agreements are unsecured obligations of Allstate Life, an Illinois stock life
insurance company. In the event of insolvency of an Illinois insurance company, claims
against the insurer's estate are prioritized pursuant to Section 5/205 of the Illinois
Insurance Code. Under Section 5/205(1)(d) of the Illinois Insurance Code, claims by
"policyholders, beneficiaries, and insureds, under insurance policies, annuity contracts,
and funding agreements" receive payment prior to any distribution to general creditors
not falling within any other priority class under the Illinois Insurance Code.
The registrants believe that in a properly prepared and presented case in a delinquency
proceeding under Article XIII of the Illinois Insurance Code, 215 ILCS Section 5/187 et
seq. (the "Illinois Liquidation Act"), the timely and properly filed claims of an owner
under the funding agreement (with the possible exception of claims for Additional
Amounts, as discussed below) would be entitled to distribution pari passu with claims
made by other policyholders, beneficiaries, and insureds under other insurance policies,
insurance contracts, annuities and funding agreements issued by Allstate Life, and the
claims of the Illinois Life and Health Insurance Guaranty Association, and any similar
organization in another state, in accordance with Section 5/205(1)(d) of the Illinois
Liquidation Act, and an owner's claims under the funding agreement should not be
recharacterized as other than the claims of a policyholder, beneficiary, or insured under
an insurance policy, insurance contract, annuity or funding agreement.
The obligations of Allstate Life under any funding agreement will not be guaranteed by
any person or entity.
S-9
If a funding agreement so provides, Allstate Life may be required to pay Additional
Amounts (as such term is defined therein) to the indenture trustee as collateral assignee
of the funding agreement. For a discussion regarding payment of Additional Amounts, see
"Description of the Notes--Withholding Tax; No Payment of Additional Amounts." Although
such payments could be viewed as a claim under the funding agreements within the
meaning of Section 5/205(1)(d), they may also be argued to be a separate payment
obligation. Therefore, while in a proceeding before a court of competent jurisdiction the
court might find that a claim for an Additional Amount constitutes a claim under a
funding agreement, it also might find that such a claim is not a claim entitled to the
priority afforded by Section 5/205(1)(d). If a claim for an Additional Amount does not
constitute a claim entitled to the priority afforded by Section 5/205(1)(d), then in a
properly prepared and presented case any claim for an Additional Amount would be
entitled to the same priority as claims of general creditors of Allstate Life under
Section 5/205(1)(g).
With respect to the issuance of any series of the notes, the aggregate amount of Allstate Life's
liabilities that would rank pari passu with each funding agreement securing such series
of notes is disclosed in the financial statements of Allstate Life contained in
Allstate Life's most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q
filed with the SEC, in each case as of the date of such financial statements. This
amount appears in the Consolidated Statements of Financial Position as a liability under
the line item entitled "Contractholder funds."
Terms of the Funding Notes...... Each trust will use the net proceeds received from the issuance of the related series of
notes to purchase a funding note in definitive form (each, a "funding note") from Global
Funding. Each funding note will have a principal amount equal to the principal amount of
the related series of notes. Each funding note will otherwise have payment and other
terms substantially similar to the related series of notes, except that each funding note
will contain a provision that makes it immediately cancelable upon the assignment and
deposit by Global Funding of the related funding agreement(s) to the related issuing
trust. Such cancellation shall operate as a redemption and satisfaction of such funding
note.
Terms of the Funding
Agreements.................... Global Funding will use the net proceeds received from the sale of the related funding
note to purchase one or more funding agreements issued by Allstate Life. Global
Funding will immediately pledge and collaterally assign each such funding
agreement to the funding note indenture trustee and immediately thereafter assign
absolutely to, and deposit into, the issuing trust each such funding agreement. The
funding agreement(s) will have a principal amount equal to the principal amount of the
related series of notes. The funding agreement(s) will otherwise have payment and
other terms substantially similar to the related series of notes.
Withholding Tax................. All amounts due in respect of the notes of a series will be made without any applicable
withholding or deduction for or on account of any present or future taxes, duties,
levies, assessments or other governmental charges of whatever nature imposed or levied by
or on behalf of any governmental authority, unless such withholding or deduction is
required by law. Unless otherwise specified in the applicable pricing supplement, neither
the notes of the applicable series nor the related funding note or funding agreement(s)
will provide for the payment of additional amounts relating to any required withholding
or deduction imposed or levied on payments in respect of a series of notes or the related
funding note or funding agreement(s). As a result, unless otherwise specified in the
applicable pricing supplement, the risk of any such withholding or deduction, whether or
not as a result of a change in law or otherwise, will be borne by the holders of such
series of notes.
Ratings......................... Unless otherwise indicated in the applicable pricing supplement, it is expected that each
series of notes, and the related funding note and the funding agreement(s) securing such
series of notes will have an issue credit rating of "AA" from Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc. ("Standard & Poor's"). It is
expected that the program will be rated "Aa2" by Moody's Investors Service, Inc.
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("Moody's") and "AA" by Standard & Poor's.
If Moody's or Standard & Poor's changes the program rating, the new program rating will be
specified in the applicable pricing supplement. Notes of a series will be issued under the
program only in the event that, at the time of issuance of such series of notes, at least one
nationally recognized rating agency would assign an investment grade rating to such series of
notes, the related funding note and the funding agreement(s) securing such series of notes.
Fees and Expenses............... Allstate Life and Global Funding entered into an amended and restated support and
expenses agreement dated as of March -, 2006 (the "depositor support agreement").
Pursuant to the depositor support agreement, Allstate Life agreed, among other things, to
pay certain costs and expenses relating to the offering, sale and issuance of each
funding note and certain costs, expenses and taxes of Global Funding. Pursuant to the
depositor trust agreement, Allstate Life also agreed to indemnify each service provider
of Global Funding, as well as Global Funding, with respect to certain matters.
In connection with the issuance of a series of notes, Allstate Life and the issuing trust
will enter into a support and expenses agreement (each, a "support agreement"). Under
each support agreement, Allstate Life will agree to pay certain costs and expenses
relating to the offering, sale and issuance of the applicable series of notes and certain
costs, expenses and taxes of the issuing trust. Pursuant to each support agreement,
Allstate Life will also agree to indemnify each service provider of the issuing trust, as
well as the issuing trust, with respect to certain matters.
It is anticipated that the indenture trustee fees for this program and the Secured Medium Term
Notes Program will be approximately $13,000 annually.
Governing Law................... The notes, each indenture, each funding note and each funding note indenture will be
governed by, and construed in accordance with, the laws of the State of New York. The
depositor trust agreement is, and each trust agreement will be, governed by, and
construed in accordance with, the laws of the State of Delaware. The funding agreements
will be governed by the laws of the State of Illinois.
United States Federal Income
Tax Considerations............ Special tax counsel to Global Funding will render its opinion that under current law and
based on certain facts and assumptions contained in such opinion, for United States
Federal income tax purposes, Global Funding and each trust will be ignored and that the
notes will be classified as indebtedness of Allstate Life. Each holder and beneficial
owner of the notes, by purchase of the notes, agrees to such treatment. Accordingly,
holders of the notes generally will have the same United States federal income tax
consequences from the purchase of the notes as they would had they purchased a debt
obligation issued directly by Allstate Life. Prospective purchasers of the notes must
carefully consider the tax consequences of the ownership and disposition the notes set
forth under "United States Federal Income Tax Considerations."
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RISK FACTORS
Your investment in the notes includes risks. In consultation with your own
financial and legal advisers, you should carefully consider, among other
matters, the following discussion of risks before deciding whether an investment
in the notes is suitable for you. The notes are not an appropriate investment
for you if you do not understand their significant components and/or financial
matters. You should also consult the discussion of risk factors set forth in
Allstate Life's most recent Annual Report on Form 10-K, which is incorporated
into this prospectus supplement and the accompanying prospectus by reference.
Risk Factors Relating to the Depositor and the Trusts
Each trust will have limited resources and therefore its ability to make timely
payments with respect to its series of notes will depend upon Allstate Life
making payments under the relevant funding agreement
The ability of a trust to make timely payments with respect to the related
series of notes is principally dependent upon Allstate Life making the related
payments under each relevant funding agreement. Each trust is a special purpose
statutory trust formed for the purpose of the issuance of the related series of
notes. The obligations under a series of notes will be secured by and payable
solely from the collateral held in the issuing trust. No holder of a series of
notes will have any right to receive payments from the collateral related to any
other series of notes.
The notes of a series will represent the obligations of the issuing entity
only and will not represent the obligations of, or interest in, any other person
or entity, including Global Funding, Allstate Life or any of their respective
affiliates
The notes of a series will represent the obligations of the issuing entity
only and will not represent the obligations of, or interest in, any other person
or entity, including Global Funding, Allstate Life or any of their respective
affiliates. The notes will not be guaranteed by any person or entity. Except
pursuant to the terms of the funding agreement(s) included in the collateral for
each series of notes, none of these entities nor any agent, trustee or
beneficial owner of Global Funding or the trusts, in respect of any trust, is
under any obligation to provide funds or capital to Global Funding or the trusts
or with respect to any series of notes issued by the trusts. The net worth of
Global Funding on the date hereof is approximately $1,000 and is not expected to
increase materially. The net worth of each trust is expected to be minimal.
Global Funding is and the trusts will be special purpose entities and, as of the
date of issue of any series of notes, the issuing trust will have, no prior
operating history
Global Funding is and the trusts will be special purpose statutory trusts
organized under the laws of the State of Delaware. Global Funding exists for the
primary purpose of facilitating the programs for the issuance of notes. Each
trust will exist for the exclusive purposes of: issuing and selling one series
of notes to investors; using the net proceeds from the sale of series of notes
to acquire the related collateral, including one or more funding agreements; and
engaging in other activities necessary or incidental thereto. As of the date of
issue of any series of notes, the issuing trust will have, no prior operating
history.
Risk Factors Relating to the Notes
The notes of a series represent non-recourse obligations of the issuing entity
The obligations under the notes of a series represent non-recourse
obligations payable solely from the applicable collateral constituting the
assets of the issuing trust. If any event of default shall occur under any
series of the notes, the rights of the holders of the notes of such series and
the indenture trustee, on behalf of such holders, will be limited to a
proceeding against the applicable collateral. None of such holders or the
indenture trustee will have the right to proceed against the collateral related
to any other series of notes, Global Funding, any other trust or any of Allstate
Life, its officers, directors, affiliates, employees or agents or any of the
trustees, beneficial owners or agents, or any of their respective officers,
directors, affiliates, employees or agents in the case of any judgment in which
there is deficiency remaining after foreclosure of any property included in such
collateral. If an event of default shall have occurred under a series of notes,
the indenture trustee will be entitled to have its fees and expenses paid solely
from the collateral of such series of notes before holders of the notes of such
series receive payment of the amounts then due and owing with respect to their
notes; provided, that such priority of the indenture trustee over the holders of
the notes of a series will be limited to an aggregate amount of no more than
$250,000 for all series of notes. All claims of the holders of a series of notes
in excess of amounts received from the related collateral will be extinguished.
In the absence of an event of default under a funding agreement, the occurrence
of an event of default under the related series of notes will not give rise to
any right to accelerate such applicable funding agreement. In that event, it is
possible that the obligations under the applicable series of notes may be
accelerated while the obligations of Allstate Life
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under the applicable funding agreement(s) would not be similarly accelerated. If
this occurs, the indenture trustee may have no or limited ability to proceed
against the applicable funding agreement(s) and the related collateral and
holders of the notes may not be paid in full, or in a timely manner upon such
acceleration. See "Description of the Indentures--Events of Default" in the
accompanying prospectus.
Allstate Life will be the sole obligor under the funding agreements
Since Allstate Life will be the sole obligor under the funding agreements,
the ability of a trust to meet its obligations, and your ability to receive
payments from such trust, with respect to a particular series of notes, will be
principally dependent upon Allstate Life's ability to perform its obligations
under each applicable funding agreement held by the issuing trust. Despite this,
you will have no direct contractual rights against Allstate Life under any such
funding agreement. Pursuant to the terms of each funding agreement, recourse
rights to Allstate Life will belong to the issuing trust, its successors and
permitted assignees. In connection with the offering and sale of a series of
notes, the issuing trust will pledge, collaterally assign and grant a security
interest in the collateral for such series of notes to the indenture trustee on
behalf of the holders of the applicable series of notes and the other persons
identified in the relevant indenture. Recourse to Allstate Life under each such
funding agreement will be enforceable only by the indenture trustee as a secured
party for the benefit of holders of such series of notes and any other person
for whose benefit the indenture trustee is or will be holding the collateral.
Accordingly, if Allstate Life fails to perform its obligations under the
applicable funding agreement(s), your ability to receive payments from the
issuing trust would be materially and adversely affected.
Nonetheless, since Allstate Life is a registrant, purchasers of notes may
be able to proceed directly against Allstate Life to enforce their rights under
the Federal securities laws and their rights under the Federal securities laws
will be no different than if they purchased the underlying funding agreements
directly from Allstate Life.
The notes could be deemed to be participations in the funding agreements or
could otherwise be deemed to be contracts of insurance and holders of the notes
could be found to be acting as insurance agents or brokers
The laws and regulations of each state of the United States and the
District of Columbia (the "covered jurisdictions") contain broad definitions of
the activities that may constitute the conduct of the business of insurance in
such jurisdictions. Because the primary asset of each trust will be one or more
funding agreements issued by Allstate Life, which will be sold to, and deposited
into, the issuing trust by Global Funding, it is possible that a trust's
issuance of notes, Global Funding's issuance of the related funding note or the
performance of the issuing trust's obligations under the notes, including the
payment or prepayment of amounts due under the notes, or the purchase, resale or
assignment of the notes by any investor or any person who acquires the notes
directly or indirectly from such investor;
o could be characterized by one or more covered jurisdictions as the
conduct of the business of insurance by Global Funding, the issuing
trust, any such investor or any such other person or
o could otherwise subject Global Funding, the issuing trust, any such
investor or any such other person to regulation under the insurance
laws of one or more covered jurisdictions.
This could, among other effects, require such persons to be subject to
regulatory licensure or other qualifications and levels of compliance that
cannot practically be achieved. Failure to comply with such requirements could
subject any such person to regulatory penalties. In the event Global Funding or
any trust is subject to any such penalties or any other liabilities resulting
from such regulation, the ability of holders to receive payment under the notes
could be materially and adversely affected. In addition, any such failure to
comply or the threat of any such regulation could reduce liquidity with respect
to the notes, prevent an investor from transferring notes and reduce the
marketability and market value of the notes. Therefore, any such regulation or
threat of regulation by any one or more covered jurisdictions could result in an
investor either being unable to liquidate its investment in the notes or, upon
any such liquidation, receiving a value significantly less than the initial
investment in the notes.
The Illinois Department of Insurance has confirmed that it does not
consider the sale of publicly offered funding agreement backed medium term notes
to violate the Illinois Insurance Code. In addition, the Illinois Department of
Insurance has approved the form of funding agreement to be used in connection
with each offering of notes.
Based primarily upon communications with the staff of the insurance
regulatory bodies in most states and the legal advice of LeBoeuf, Lamb, Greene &
MacRae LLP, Allstate Life and Global Funding believe that:
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o the notes should not be subject to regulation as participations in the
funding agreements themselves or otherwise constitute insurance
contracts under the insurance laws of the covered jurisdictions; and
o Global Funding, the trusts and persons selling or purchasing the notes
should not be subject to regulation as doing an insurance business
under the insurance laws of the covered jurisdictions by virtue of
their respective activities in connection with the offer, sale and/or
purchase of the notes.
There are, however, wide variations in the insurance laws of the covered
jurisdictions, subtle nuances in their application, and a general absence of any
consistent pattern of interpretation or enforcement. Insurance regulatory
authorities have broad discretionary powers in administering the insurance laws,
including the authority to modify or withdraw a regulatory interpretation,
impose new rules, and take a position contrary to Allstate Life's. In addition,
state courts are not bound by any regulatory interpretations and could take a
position contrary to Allstate Life's. Consequently, there can be no assurance
that the purchase, resale or assignment of the notes or the funding notes will
not subject the parties to such transaction to regulation or enforcement
proceedings under the insurance laws of one or more covered jurisdictions.
Payments under funding agreements may be insufficient to pay principal and
interest, if any, under the notes
Payments of the principal of and any interest on a series of notes will be
made solely from the payments the issuing trust receives under the applicable
funding agreement(s). Unless otherwise specified in this prospectus supplement
or the applicable pricing supplement, Allstate Life will not pay any Additional
Amounts (as defined in the applicable funding agreement) in respect of a funding
agreement to compensate for any withholding or deduction for or on account of
any present or future taxes, duties, levies, assessments or governmental charges
of whatever nature imposed or levied on payments in respect of a funding
agreement, by or on behalf of any governmental authority and each holder of a
note of the related series of notes will be deemed for all purposes to have
received cash in an amount equal to the portion of such withholding or deduction
that is attributable to such holder's interest in the notes, as equitably
determined by the issuing trust. Under this circumstance, the issuing trust will
not actually pay, or cause to be paid, to such holder all of the amounts which
would have been receivable by such holder in the absence of such taxes, duties,
levies, assessments or other governmental charges.
Redemption may adversely affect your return on the notes
If your notes are redeemable at the option of the issuing trust, it may
choose to redeem your notes at times when prevailing interest rates are
relatively low. In addition, if your notes are subject to mandatory redemption,
the issuing trust may be required to redeem your notes also at times when
prevailing interest rates are relatively low. As a result, you may not be able
to reinvest the redemption proceeds in a comparable security at an interest rate
equal to the interest rate on your notes being redeemed.
There may not be any trading market for your notes; many factors affect the
trading and market value of your notes
Upon issuance, the notes of a series will not have an established trading
market. No assurance can be given that a trading market for your notes will ever
develop or be maintained if developed. In addition to the creditworthiness of
Allstate Life and the issuing trust, many factors affect the trading market for,
and trading value of, your notes. These factors include:
o the time remaining to the maturity of your notes;
o the outstanding amount of the applicable series of notes;
o any redemption features of your notes; and
o the level, direction and volatility of market interest rates
generally.
There may be a limited number of buyers if you decide to sell your notes.
This may affect the price you receive for your notes or your ability to sell
your notes at all. In addition, notes that are designed for specific investment
objectives or strategies often experience a more limited trading market and more
price volatility than those not so designed. You should not purchase notes
unless you understand and know you can bear all of the investment risks
involving your notes.
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Ratings of this Allstate Life(R) CoreNotes(R) program described in this
prospectus supplement and the accompanying prospectus, the related medium term
note program and each series of notes may not reflect all risks of an investment
in the notes
Each series of notes will be rated by at least one nationally recognized
statistical rating organization. The ratings of such notes will primarily
reflect the financial strength of Allstate Life and will change in accordance
with the rating of Allstate Life's financial strength and with any change in the
priority status under Illinois law of funding agreements. Any rating is not a
recommendation to purchase, sell or hold any particular security, including the
notes. Such ratings do not comment as to market price or suitability for a
particular investor. In addition, there can be no assurance that a rating will
be maintained for any given period of time or that a rating will not be lowered
or withdrawn in its entirety. The ratings of this Allstate Life(R) CoreNotes(R)
program described in this prospectus supplement and the accompanying prospectus,
the related medium term note program and each series of notes may not reflect
the potential impact of all risks related to structure and other factors on any
trading market for, or trading value of, your notes.
Any survivor's option may be subject to certain limitations
Under the Allstate Life(R) CoreNotes(R) program, Allstate Life has the
discretionary right to limit the aggregate principal amount of:
o all funding agreements securing all outstanding series of notes as to
which exercises of any put option by any issuing trust shall be
accepted by Allstate Life in any calendar year to an amount equal to
the greater of $2,000,000 or 2% of the aggregate principal amount of
all funding agreements securing all outstanding series of notes issued
under the Allstate Life(R) CoreNotes(R) program as of the end of the
most recent calendar year or such other greater amount as determined
in accordance with the applicable funding agreement(s) and set forth
in the applicable pricing supplement;
o the funding agreement(s) securing the notes of a series as to which
exercises of any put option by the applicable trust attributable to
notes as to which the survivor's option has been exercised by the
authorized representative of any individual deceased beneficial owner
to $250,000 in any calendar year or such other greater amount as
determined in accordance with the applicable funding agreement(s) and
set forth in the applicable pricing supplement; and
o the funding agreement(s) securing a series of notes as to which
exercises of any put option by the applicable trust shall be accepted
in any calendar year to an amount as set forth in the applicable
funding agreement(s) and the applicable pricing supplement.
In any such event, each trust shall similarly be required to limit the
aggregate principal amount of notes as to which exercises of the survivor's
option shall be accepted by it. Accordingly, no assurance can be given that the
exercise of the survivor's option for a desired amount will be accepted as to
any series of notes or in any single calendar year.
An increase in market interest rates could result in a decrease in the value of
any notes bearing interest at a fixed rate
If market interest rates increase above the interest rate of notes bearing
interest at a fixed rate, such notes bearing interest at a fixed rate generally
decline in value because debt instruments of the same face value priced at
market interest rates will yield higher income. Consequently, if you purchase
fixed rate notes and market interest rates increase above the fixed interest
rate on the notes you have purchased, the market value of your notes may
decline. No assurance can be given regarding the future level of market interest
rates.
If you purchase discount notes, the amount payable to you upon early redemption,
repayment or acceleration of these notes may be less than the principal amount
(i.e., par) of the notes plus accrued but unpaid interest and premium, if any
If you purchase discount notes, the amount payable to you upon early
redemption, repayment or acceleration of these notes may be less than the
principal amount thereof plus accrued and unpaid interest. The amount payable
will be determined by the formula set forth in this prospectus supplement or the
applicable pricing supplement.
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Risk Factors Relating to the Collateral
The funding agreements are unsecured obligations of Allstate Life. If the
funding agreements were not determined to be insurance contracts, they would be
accorded the same priority in an insolvency of Allstate Life as its other
general unsecured obligations
The primary assets of each trust will be one or more funding agreements,
and payments on the notes of a series will principally depend on payments under
each related funding agreement(s). In addition, each trust will grant a security
interest in, pledge and assign as collateral each funding agreement it acquires
with the proceeds from the offering of a series of notes together with the
related collateral to the indenture trustee, for the benefit of the holders of
the notes of such series and any other person for whose benefit the indenture
trustee is or will be holding the collateral, to secure the obligations under
that series of notes.
In the event of insolvency of an Illinois insurance company, claims against
the insurer's estate are prioritized pursuant to Section 5/205 of the Illinois
Insurance Code. Under Section 5/205(1)(d) of the Illinois Insurance Code, claims
by "policyholders, beneficiaries, and insureds, under insurance policies,
annuity contracts, and funding agreements" receive payment prior to any
distribution to general creditors not falling within any other priority class
under the Illinois Insurance Code. The funding agreements are unsecured
obligations of Allstate Life.
In a properly prepared and presented case in a delinquency proceeding under
Article XIII of the Illinois Insurance Code, 215 ILCS Section 5/187 et seq. (the
"Illinois Liquidation Act"), the timely and properly filed claims of an owner
under the funding agreement (with the possible exception of claims for
Additional Amounts, as discussed below) would be entitled to distribution pari
passu with claims made by other policyholders, beneficiaries, and insureds under
other insurance policies, insurance contracts, annuities and funding agreements
issued by Allstate Life, and the claims of the Illinois Life and Health
Insurance Guaranty Association, and any similar organization in another state,
in accordance with Section 5 /205(1)(d) of the Illinois Liquidation Act, and an
owner's claims under the funding agreement should not be recharacterized as
other than the claims of a policyholder, beneficiary, or insured under an
insurance policy, insurance contract, annuity or funding agreement.
In the absence of controlling judicial precedents, the opinion of Lord,
Bissell & Brook LLP is based on a reasoned analysis of Illinois statutes, as
well as application of other states' judicial decisions involving similar or
analogous circumstances, and is subject to the limitations, qualifications and
assumptions set forth in its opinion letter. Investors should note that in the
event of the insolvency of an insurance company, however, the judicial
application of statutes governing the distribution of the insurer's general
assets has typically proceeded on a case-by-case basis.
Additional Amounts may be considered a separate payment obligation and may not
be subject to the same priority as other amounts claimed under the funding
agreements
If a funding agreement so provides, Allstate Life may be required to pay
Additional Amounts (as such term is defined therein) to the indenture trustee as
collateral assignee of the funding agreement. Although such payments could be
viewed as a claim under the funding agreements within the meaning of Section
5/205(1)(d), they may also be argued to be a separate payment obligation.
Therefore, while in a proceeding before a court of competent jurisdiction, the
court might find that a claim for an Additional Amount constitutes a claim under
a funding agreement, it also might find that such a claim is not a claim
entitled to the priority afforded by Section 5 /205(1)(d). Lord, Bissell & Brook
LLP has opined that if a claim for an Additional Amount does not constitute a
claim entitled to the priority afforded by Section 5/205(1)(d), then in a
properly prepared and presented case any claim for an Additional Amount would be
entitled to the same priority as claims of general creditors of Allstate Life
under Section 5/205(1)(g). Accordingly, in the event of the insolvency of
Allstate Life, your claim for any payments of Additional Amounts may be
subordinated to claims for other amounts under the applicable funding agreement.
Changes in Federal tax legislation could adversely affect Allstate Life's business
Under the Internal Revenue Code of 1986, as amended (the "Code"), United
States Federal income tax payable by policyholders on investment earnings is
deferred during the accumulation period of certain life insurance and annuity
products. Thus, taxes, if any, are payable on income attributable to a
distribution under the contract for the year in which the distribution is made.
This favorable tax treatment may give certain of Allstate Life's products a
competitive advantage over other noninsurance products. On May 28, 2003,
President Bush signed the Jobs and Growth Tax Relief Reconciliation Act of 2003,
which reduces the federal income tax rates applicable to certain dividends and
capital gains realized by individuals. This legislation may lessen the
competitive advantage of certain of Allstate Life's products vis-a-vis other
investments that generate dividend and/or capital gain income. As a result,
demand for certain of Allstate Life's products that offer income tax
S-16
deferral may be negatively impacted. Additionally, Congress has from time to
time considered other legislation that would reduce or eliminate the benefits to
policyowners of the deferral of taxation on the accretion of value within
certain insurance products or otherwise affect the taxation of insurance
products and insurance companies. To the extent that the Code is revised to
reduce the tax deferred status of insurance products, or to reduce the taxation
of competing products, all life insurance companies, including Allstate Life,
could be adversely affected.
S-17
ALLSTATE LIFE GLOBAL FUNDING TRUSTS
Each series of notes will be issued by a newly created separate and
distinct trust formed by Global Funding, the administrator and the Delaware
trustee pursuant to the filing of a certificate of trust and the execution of
the applicable trust agreement. Global Funding will be the sole beneficial owner
of each trust that is formed.
After formation, each trust will not engage in any activity other than:
o issuing and selling a single series of notes;
o immediately acquiring a funding note and immediately surrendering such
funding note for cancellation pursuant to its terms in exchange for
one or more funding agreement(s);
o acquiring, holding and maintaining the applicable funding
agreement(s);
o pledging, assigning as collateral and granting a security interest in
the applicable funding agreement(s) to the indenture trustee;
o making payments on the applicable series of notes; and
o engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental to or
connected with those activities.
The principal executive offices of the trusts will be located at Allstate
Life Global Funding Trusts, c/o: AMACAR Pacific Corp., 6525 Morrison Boulevard,
Suite 318, Charlotte, North Carolina 28211. The telephone number will be (704)
365-0569. For more information about the trusts, see "Description of Allstate
Life Global Funding and the Trusts" in the accompanying prospectus.
ALLSTATE LIFE GLOBAL FUNDING
Global Funding is a special purpose statutory trust existing under the laws
of the State of Delaware. The primary purpose of Global Funding is to serve as
depositor for the programs.
Global Funding will not engage in any activity other than:
o beneficially owning the trusts;
o issuing one or more funding notes;
o acquiring one or more funding agreements from Allstate Life;
o pledging, assigning as collateral and granting a security interest in
the applicable funding agreement(s) to the funding note indenture
trustee;
o assigning absolutely the funding agreement(s) to, and depositing such
funding agreement(s) into, the trusts; and
o engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental to or
connected with those activities.
The principal executive offices of Global Funding are located at Allstate
Life Global Funding, c/o: AMACAR Pacific Corp., 6525 Morrison Boulevard, Suite
318, Charlotte, North Carolina 28211. The telephone number is (704) 365-0569.
For more information about Global Funding, see "Description of Allstate Life
Global Funding and the Trusts" in the accompanying prospectus.
S-18
ALLSTATE LIFE INSURANCE COMPANY
Allstate Life was organized in 1957 as a stock life insurance company under
the laws of the State of Illinois. It conducts substantially all of its life
insurance operations directly or through wholly owned United States
subsidiaries. It is a wholly owned subsidiary of Allstate Insurance Company
("AIC"), a stock property-liability insurance company organized under the laws
of the State of Illinois. All of the outstanding stock of AIC is owned by The
Allstate Corporation, a publicly owned holding company incorporated under the
laws of the State of Delaware.
The Allstate Corporation, together with its subsidiaries, is the second
largest personal property and casualty insurer in the United States on the basis
of 2004 statutory premiums earned. Widely known through the "You're In Good
Hands With Allstate(R)" slogan, The Allstate Corporation, through its
subsidiaries, provides insurance products to approximately 17 million households
and has approximately 14,100 exclusive agencies and financial specialists in the
United States and Canada. For more information about Allstate Life, see
"Description of Allstate Life Insurance Company" in the accompanying prospectus.
Allstate Life's principal executive offices are located at 3100 Sanders
Road, Northbrook, Illinois 60062 and its telephone number is (847) 402-5000.
S-19
DESCRIPTION OF THE NOTES
This section provides a summary description of the material provisions of
the notes. Each series of notes will be issued pursuant to a separate indenture
(each, an "indenture") to be entered into among the issuing trust and the other
parties specified therein, including J.P. Morgan Trust Company, National
Association, or another entity specified therein as the indenture trustee in the
indenture (including, in each case, any successor, the "indenture trustee"). The
provisions of the notes are not restated in their entirety and you should read
the actual provisions set forth in the standard indenture terms filed as an
exhibit to the registration statement of which this prospectus supplement and
the accompanying prospectus form a part because those provisions, and not this
description, will define your rights as an owner of an interest in the notes of
a series. The terms and conditions of the notes described in this section will
apply to each series of notes, except that the specific terms of a series of
notes will be added in the applicable pricing supplement and each book-entry
(each, a "note certificate") representing the notes of such series. It is
important for you to consider the information contained in this prospectus
supplement, the accompanying prospectus, the applicable indenture, the
applicable pricing supplement and the note certificates in making your
investment decision.
This section describes some technical concepts and occasionally contains
defined terms. You should refer to the standard indenture terms and the forms of
note certificates filed as exhibits to the registration statement to which this
prospectus supplement and the accompanying prospectus relate for the full
description of those concepts and complete definitions of those terms.
General
Indentures
Each trust will issue its series of notes subject to and entitled to the
benefits of a separate indenture. Each indenture will be subject to, qualified
under and governed by, the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"). The aggregate principal amount of notes that may be
authenticated and delivered under each indenture will be unlimited. For a
description of the indentures, see "Description of the Indentures" beginning on
page 21 of the accompanying prospectus.
Collateral
Pursuant to each indenture, the issuing trust will pledge and collaterally
assign each funding agreement held by it to the indenture trustee for the
benefit of the holders of the notes issued by such trust and any other person
for whose benefit the indenture trustee is or will be holding the collateral (as
defined below) for such series of notes. Each series of notes will be secured by
a first priority perfected security interest in the "collateral" for such series
of notes in favor of the indenture trustee, for the benefit of the holders of
the notes of such series and any other person for whose benefit the indenture
trustee is or will be holding the collateral, which will consist of the right,
title and interest of the issuing trust in and to:
o the funding agreement(s) held by the issuing trust;
o all proceeds of the relevant funding agreement(s); and
o all books and records pertaining to the relevant funding agreement(s).
Ranking
The notes of a series will represent the unconditional, direct,
non-recourse and unsubordinated obligations of the issuing entity and will rank
equally among themselves. The notes of a series will represent the obligations
of the issuing entity only and will not represent the obligations of, or
interest in, any other person or entity, including Global Funding, Allstate Life
or any of their respective affiliates.
Pricing Supplement
The pricing supplement relating to the offering of a series of notes will
describe, among other things, the following terms of the notes, including:
o the principal amount of the notes;
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o whether the notes are:
o fixed rate notes;
o floating rate notes, and/or discount notes that do not bear any
interest currently or bear interest at a rate that is below
market rates at the time of issuance;
o the price at which the notes will be issued, which will be expressed
as a percentage of the aggregate principal amount or face amount;
o the original issue date on which the notes will be issued;
o the stated maturity date;
o if the notes are fixed rate notes, the rate per annum at which the
notes will bear any interest and the interest payment date frequency;
o if the notes are floating rate notes, relevant terms such as: the
interest rate basis or interest rate bases, the initial interest rate,
the interest reset period or the interest reset dates, the interest
payment dates, the index maturity, any maximum interest rate, the
minimum interest rate, the spread and/or spread multiplier, and any
other terms relating to the particular method of calculating the
interest rate for the notes and whether and how the spread and/or
spread multiplier may be changed prior to the stated maturity date;
o whether the authorized representative of the beneficial owner of a
beneficial interest in the notes will have the right to seek repayment
upon the death of the beneficial owner as described under
"--Survivor's Option" on page S-36;
o whether the notes may be redeemed by the issuing trust, or repaid at
the option of the holders, prior to the stated maturity date and the
terms of their redemption or repayment, provided that any such
redemption or repayment will be accompanied by the simultaneous
redemption or repayment of the relevant funding agreement(s);
o any special United States federal income tax considerations relating
to the purchase, ownership and disposition of the notes; and
o any other terms of the notes provided in the accompanying prospectus
to be set forth in a pricing supplement or that are otherwise
consistent with the provisions of the indenture under which the notes
will be issued.
The pricing supplement also may add, update, supplement or clarify
information in this prospectus supplement and the accompanying prospectus. The
form of pricing supplement is included in this prospectus supplement as Annex B.
Pricing Options
Notes that bear interest will be fixed rate notes or floating rate notes,
or a combination of fixed rate and floating rate, as specified in the applicable
pricing supplement. The trusts may also issue discount notes, as specified in
the applicable pricing supplement.
Maturities
Each series of notes will mature on a day between nine months and 30 years
from its date of original issuance. Each series of notes will have the same
maturity date as the related funding agreement(s). The principal or any
installment of principal may mature prior to the stated maturity date if, for
example, there is a declaration of acceleration of maturity, a notice of
redemption at the option of the issuing trust or an election to exercise the
survivor's option.
Currency
The notes of each series will be denominated in, and payments of principal,
premium, if any, and/or interest, if any, and any other amounts in respect of
the notes will be made in, U.S. dollars.
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Form of Notes; Denominations
The issuing trust will issue each note of a series as a book-entry note
represented by one or more fully registered global securities, except as
contemplated under "--Book-Entry Notes." Unless otherwise specified in the
applicable pricing supplement, the minimum denominations of each note will be
$1,000 and integral multiples of $1,000 in excess thereof.
Listing of Notes
Unless otherwise specified in the applicable pricing supplement, a series
of notes will not be listed on any securities exchange.
Transfers and Exchanges
Book-entry notes may be transferred or exchanged only through DTC. See
"--Book-Entry Notes." No service charge will be imposed for any such
registration of transfer or exchange of notes, but the issuing trusts may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection therewith (other than certain exchanges
not involving any transfer).
Payments of Principal and Interest
The issuing trust will make payments of principal of, and premium, if any,
interest on, if any, and other amounts due and owing with respect to, book-entry
notes through the indenture trustee to DTC or its nominee. See "--Book-Entry
Notes." Payments of principal of, and premium on, if any, interest on, if any,
and other amounts due and owing with respect to, definitive notes will be made
at maturity in immediately available funds upon presentation and surrender of
the definitive note (and, in the case of the exercise of the survivor's option,
upon submission of a properly completed election form if required) at the office
or agency maintained by the issuing trust for this purpose in the Borough of
Manhattan, The City of New York. The issuing trust will make payments of
interest, if any, on and any other amounts due and owing with respect to, a
definitive note at maturity to the person to whom the issuing trust pays the
principal. The issuing trust will make any payments of interest on a definitive
note on an interest payment date other than the date of maturity by check mailed
to the address of the record date registered holder as it appears in the
security register. Notwithstanding the foregoing, the issuing trust will make
any payments of interest on an interest payment date other than the date of
maturity to each record date registered holder of $10,000,000 or more in
principal amount of definitive notes with the same interest payment date
(whether those notes otherwise have identical or different terms and provisions)
by wire transfer of immediately available funds if the registered holder has
delivered appropriate wire transfer instructions in writing to the indenture
trustee not less than 15 days prior to the relevant interest payment date. Any
wire transfer instructions received by the indenture trustee shall remain in
effect until revoked by the registered holder.
If any interest payment date or the maturity date of a note falls on a day
that is not a business day, the issuing trust will make the required payment on
the next business day and no additional interest will accrue for that period.
"Business day" means any day, other than a Saturday or Sunday, that is neither a
legal holiday nor a day on which commercial banks are authorized or required by
law, regulation or executive order to close in The City of New York.
Payments of Principal and Interest
Notes of a series may bear interest at a fixed interest rate ("fixed rate
notes") or at a floating interest rate ("floating rate notes").
Fixed Rate Notes
Each series of fixed rate notes will bear interest at a fixed rate from and
including its date of issue or from and including the most recent interest
payment date as to which interest has been paid or made available for payment
until the principal is paid or made available for payment. The applicable
pricing supplement will specify the fixed interest rate per annum applicable to
each note and the frequency with which interest is payable. Interest, including
interest for any partial period, will be computed on the basis of a 360-day year
of twelve 30-day months. Each payment of interest, including interest to be paid
at maturity, will include interest to, but excluding, the date that the interest
payment is due.
Interest on notes that bear interest at fixed rates will be payable in
arrears on each interest payment date to the registered holder at the close of
business on the record date except that interest, if any, due at maturity will
be paid to the
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person to whom the principal of the note is paid. Unless otherwise specified in
the applicable pricing supplement, the record date will be the day that is
fifteen calendar days preceding the applicable interest payment date, whether or
not a business day. Unless otherwise specified in the applicable pricing
supplement, the interest payment dates for fixed rate notes will be as follows:
Interest Payment Frequency Interest Payment Dates
-------------------------------------- -----------------------------------------------------
Monthly Fifteenth day of each calendar month, beginning in
the first calendar month following the date such
series of notes was issued.
Quarterly Fifteenth day of every third month, beginning in the
third calendar month following the date such
series of notes was issued.
Semiannual Fifteenth day of every sixth month, beginning in the
sixth calendar month following the date such
series of notes was issued.
Annual Fifteenth day of every twelfth month, beginning in
the twelfth calendar month following the date such
series of notes was issued.
Unless otherwise provided in the applicable pricing supplement, any
interest payment date or the maturity date of a series fixed rate notes falls on
a day that is not a business day, the issuing trust will make the required
payment of principal, premium, if any, and/or interest or other amounts on the
next succeeding business day, and no additional interest will accrue in respect
of the payment made on that next succeeding business day.
Interest rates that the issuing trust offers on the fixed rate notes may
differ depending upon, among other factors, the aggregate principal amount of
notes purchased in any single transaction. Notes with different variable terms,
other than interest rates, may also be offered concurrently by other trusts to
different investors. Other trusts may change interest rates or formulas and
other terms of notes from time to time, but no change of terms will affect any
note any other trust has previously issued or as to which any other trust has
accepted an offer to purchase.
Floating Rate Notes
Interest on each series of floating rate notes will be determined by
reference to the applicable interest rate basis or interest rate bases, which
may, as described below, include:
o the CD Rate,
o the CMT Rate,
o the Commercial Paper Rate,
o the Constant Maturity Swap Rate,
o the Federal Funds Open Rate,
o the Federal Funds Rate,
o LIBOR,
o the Prime Rate, or
o the Treasury Rate.
S-23
The rate derived from the applicable interest rate basis will be determined
in accordance with the related provisions below. The interest rate in effect on
each day will be based on:
o if that day is an interest reset date, the rate determined as of the
interest determination date (as defined below) immediately preceding
that interest reset date; or
o if that day is not an interest reset date, the rate determined as of
the interest determination date immediately preceding the most recent
interest reset date.
The "spread" is the number of basis points (one one-hundredth of a
percentage point) specified in the applicable pricing supplement to be added to
or subtracted from the related interest rate basis or interest rate bases
applicable to a series of notes that bears interest at floating rates. The
"spread multiplier" is the percentage specified in the applicable pricing
supplement of the related interest rate basis or interest rate bases applicable
to a series of notes that bears interest at floating rates by which the interest
rate basis or interest rate bases will be multiplied to determine the applicable
interest rate. The "index maturity" is the period to maturity of the instrument
or obligation with respect to which the related interest rate basis or interest
rate bases will be calculated.
Regular Floating Rate Notes
Unless a series of floating rate notes is designated as a series of
Floating Rate/Fixed Rate, or as having an addendum attached or having
other/additional provisions apply, in each case relating to a different interest
rate formula, such series of notes that bears interest at floating rates will be
a series of Regular Floating Rate notes and will bear interest at the rate
determined by reference to the applicable interest rate basis or interest rate
bases:
o multiplied by the applicable spread multiplier, if any; and/or
o plus or minus the applicable spread, if any.
Commencing on the first interest reset date, as specified in the relevant
pricing supplement, the rate at which interest on a series of regular floating
rate notes is payable will be reset as of each interest reset date; provided,
however, that the interest rate in effect for the period, if any, from the date
of issue to the first interest reset date will be the initial interest rate.
Floating Rate/Fixed Rate Notes
If a series of notes that bears interest at floating rates is designated as
a series of Floating Rate/Fixed Rate notes, such series of notes that bears
interest at floating rates will bear interest at the rate determined by
reference to the applicable interest rate basis or interest rate bases:
o multiplied by the applicable spread multiplier, if any; and/or
o plus or minus the applicable spread, if any.
Commencing on the first interest reset date, the rate at which interest on
a series of Floating Rate/Fixed Rate notes is payable will be reset as of each
interest reset date; provided, however, that:
o the interest rate in effect for the period, if any, from the date of
issue to the first interest reset date will be the initial interest
rate, as specified in the relevant pricing supplement; and
o the interest rate in effect commencing on the fixed rate commencement
date will be the fixed interest rate, if specified in the applicable
pricing supplement, or, if not so specified, the interest rate in
effect on the day immediately preceding the fixed rate commencement
date.
Interest Reset Dates
The applicable pricing supplement will specify the dates on which the rate
of interest on a series of notes that bears interest at floating rates will be
reset (each, an "interest reset date"), and the period between interest reset
dates will be the "interest reset period." Unless otherwise specified in the
applicable pricing supplement, the interest reset dates will be, in the case of
a series of floating rate notes which reset:
S-24
o daily--each business day;
o weekly--the Wednesday of each week, with the exception of weekly reset
series of notes that bears interest at floating rates as to which the
Treasury Rate is an applicable interest rate basis, which will reset
the Tuesday of each week;
o monthly--the third Wednesday of each month;
o quarterly--the third Wednesday of every third calendar month,
beginning in the third calendar month following the month in which the
note was issued;
o semiannually--the third Wednesday of the two months specified in the
applicable pricing supplement; and
o annually--the third Wednesday of the month specified in the applicable
pricing supplement; provided, however, that, with respect to any
series of Floating Rate/Fixed Rate notes, the rate of interest thereon
will not reset after the particular fixed rate commencement date.
Unless otherwise provided in the applicable pricing supplement, if any
interest reset date for any series of notes that bears interest at floating
rates would otherwise be a day that is not a business day, the particular
interest reset date will be postponed to the next succeeding business day,
except that in the case of a series of notes that bears interest at floating
rates as to which LIBOR is an applicable interest rate basis and that business
day falls in the next succeeding calendar month, the particular interest reset
date will be the immediately preceding business day.
Interest Determination Dates
The interest rate applicable to a series of notes that bears interest at
floating rates for an interest reset period commencing on the related interest
reset date will be determined by reference to the applicable interest rate basis
as of the particular "interest determination date," which will be:
o with respect to the Federal Funds Open Rate--the related interest
reset date;
o with respect to the Federal Funds Rate and the Prime Rate--the
business day immediately preceding the related interest reset date;
o with respect to the CD Rate, the Commercial Paper Rate, and the CMT
Rate--the second business day preceding the related interest reset
date;
o with respect to the Constant Maturity Swap Rate--the second U.S.
Government Securities business day (as defined below) preceding the
related interest reset date; provided, however, that if, after
attempting to determine the Constant Maturity Swap Rate (as described
below), such rate is not determinable for a particular interest
determination date (the "original interest determination date"), then
such interest determination date shall be the first U.S. Government
Securities business day preceding the original interest determination
date for which the Constant Maturity Swap Rate can be determined as
described below;
o with respect to LIBOR--the second London banking day preceding the
related interest reset date; and
o with respect to the Treasury Rate--the day of the week in which the
related interest reset date falls on which day Treasury Bills (as
defined below) are normally auctioned (i.e., Treasury Bills are
normally sold at auction on Monday of each week, unless that day is a
legal holiday, in which case the auction is normally held on the
following Tuesday, except that the auction may be held on the
preceding Friday); provided, however, that if an auction is held on
the Friday of the week preceding the related interest reset date, the
interest determination date will be the preceding Friday.
Unless otherwise provided in the applicable pricing supplement, the
interest determination date pertaining to a series of floating rate notes that
bears interest at floating rates the interest rate of which is determined with
reference to two or more interest rate bases will be the latest business day
which is at least two business days before the related interest reset date for
the applicable note that bears interest at floating rates on which each interest
reset basis is determinable.
S-25
Calculation Dates
The indenture trustee will be the "calculation agent" for a series of notes
unless otherwise specified in the applicable pricing supplement. The interest
rate applicable to each interest reset period will be determined by the
calculation agent on or prior to the calculation date (as defined below), except
with respect to LIBOR, which will be determined on the particular interest
determination date. Upon request of the registered holder of a series of
floating rate notes, the calculation agent will disclose the interest rate then
in effect and, if determined, the interest rate that will become effective as a
result of a determination made for the next succeeding interest reset date with
respect to the particular series of floating rate notes. The "calculation date,"
if applicable, pertaining to any interest determination date will be the earlier
of:
o the tenth calendar day after the particular interest determination
date or, if such day is not a business day, the next succeeding
business day; or
o the business day immediately preceding the applicable interest payment
date or the maturity date, as the case may be.
Maximum and Minimum Interest Rates
A series of notes that bears interest at floating rates may also have
either or both of the following if specified in the applicable pricing
supplement:
o a maximum numerical limitation, or ceiling, that may accrue during any
interest reset period (a "maximum interest rate"); and
o a minimum numerical limitation, or floor, that may accrue during any
interest reset period (a "minimum interest rate").
In addition to any maximum interest rate that may apply to a series of
floating rate notes, the interest rate on a series of floating rate notes will
in no event be higher than the maximum rate permitted by New York law, as the
same may be modified by United States law of general application.
Interest Payments
Unless otherwise specified in the applicable pricing supplement, interest
on each series of notes that bears interest at floating rates will be payable on
the date(s) as set forth below (each, an "interest payment date" with respect to
such series of notes that bears interest at floating rates). Unless otherwise
specified in the applicable pricing supplement, the record date will be the day
that is 15 calendar days preceding the applicable interest payment date, whether
or not a business day. Unless otherwise specified in the applicable pricing
supplement, the interest payment dates will be, in the case of a series of
floating rate notes which reset:
o daily, weekly or monthly--the third Wednesday of each month or on the
third Wednesday of every third calendar month, beginning in the third
calendar month following the date the applicable series of notes was
issued;
o quarterly--the third Wednesday of every third calendar month,
beginning in the third calendar month following the date the
applicable series of notes was issued;
o semiannually--the third Wednesday of the two months of each year
specified in the applicable pricing supplement; and
o annually--the third Wednesday of the month of each year specified in
the applicable pricing supplement.
In addition, the maturity date will also be an interest payment date.
Unless otherwise provided in the applicable pricing supplement, if any
interest payment date other than the maturity date for any series of floating
rate notes would otherwise be a day that is not a business day, such interest
payment date will be postponed to the next succeeding business day, except that
in the case of a series of floating rate notes as to which LIBOR is an
applicable interest rate basis and that business day falls in the next
succeeding calendar month, the particular interest
S-26
payment date will be the immediately preceding business day. If the maturity
date of a series of floating rate notes falls on a day that is not a business
day, the issuing trust will make the required payment of principal, premium, if
any, and interest or other amounts on the next succeeding business day, and no
additional interest will accrue in respect of the payment made on that next
succeeding business day.
All percentages resulting from any calculation on floating rates will be
rounded to the nearest one hundred-thousandth of a percentage point, with five
one-millionths of a percentage point rounded upwards. For example, 9.876545% (or
..09876545) would be rounded to 9.87655% (or .0987655). All dollar amounts used
in or resulting from any calculation on floating rates will be rounded to the
nearest cent.
With respect to each series of floating rate notes, accrued interest is
calculated by multiplying the principal amount of such series of floating rate
notes by an accrued interest factor. The accrued interest factor is computed by
adding the interest factor calculated for each day in the particular interest
period. The interest factor for each day will be computed by dividing the
interest rate applicable to such day by 360, in the case of a series of floating
rate notes as to which the CD Rate, the Commercial Paper Rate, the Federal Funds
Open Rate, the Federal Funds Rate, LIBOR or the Prime Rate is an applicable
interest rate basis, or by the actual number of days in the year, in the case of
a series of floating rate notes as to which the CMT Rate or the Treasury Rate is
an applicable interest rate basis. In the case of a series of notes that bears
interest at floating rates as to which the Constant Maturity Swap Rate is the
interest rate basis, the interest factor will be computed by dividing the number
of days in the interest period by 360 (the number of days to be calculated on
the basis of a year of 360 days with 12 30-day months (unless (i) the last day
of the interest period is the 31st day of a month but the first day of the
interest period is a day other than the 30th or 31st day of a month, in which
case the month that includes that last day shall not be considered to be
shortened to a 30-day month, or (ii) the last day of the interest period is the
last day of the month of February, in which case the month of February shall not
be considered to be lengthened to a 30-day month)). The interest factor for a
series of floating rate notes as to which the interest rate is calculated with
reference to two or more interest rate bases will be calculated in each period
in the same manner as if only the applicable interest rate basis specified in
the applicable pricing supplement applied.
The calculation agent shall determine the rate derived from each interest
rate basis in accordance with the following provisions.
CD Rate
"CD Rate" means:
(1) the rate on the particular interest determination date for negotiable
United States dollar certificates of deposit having the index maturity
specified in the applicable pricing supplement as published in
H.15(519) (as defined below) under the caption "CDs (secondary
market);" or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date for negotiable United
States dollar certificates of deposit of the particular index maturity
as published in H.15 Daily Update (as defined below), or other
recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "CDs (secondary market);" or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date calculated by the
calculation agent as the arithmetic mean of the secondary market
offered rates as of 10:00 A.M., New York City time, on that interest
determination date, of three leading non-bank dealers in negotiable
United States dollar certificates of deposit in The City of New York
(which may include the Purchasing Agent or its affiliates) selected by
the calculation agent for negotiable United States dollar certificates
of deposit of major United States money market banks for negotiable
United States certificates of deposit with a remaining maturity
closest to the particular index maturity in an amount that is
representative for a single transaction in that market at that time;
or
(4) if the dealers so selected by the calculation agent are not quoting as
mentioned in clause (3), the CD Rate in effect on the particular
interest determination date; provided that if no CD Rate is then in
effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
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"H.15(519)" means the weekly statistical release designated as H.15(519),
or any successor publication, published by the Board of Governors of the Federal
Reserve System.
"H.15 Daily Update" means the daily update of H.15(519), available through
the world-wide-web site of the Board of Governors of the Federal Reserve System
at http://www.federalreserve.gov/releases/H15/update, or any successor site or
publication.
CMT Rate
"CMT Rate" means:
(1) if CMT Moneyline Telerate Page 7051 is specified in the applicable
pricing supplement:
(a) the percentage equal to the yield for United States Treasury
securities at "constant maturity" having the index maturity
specified in the applicable pricing supplement as published in
H.15(519) under the caption "Treasury Constant Maturities," as
the yield is displayed on Moneyline Telerate (or any successor
service) on page 7051 (or any other page as may replace the
specified page on that service) ("Moneyline Telerate Page 7051"),
for the particular interest determination date; or
(b) if the rate referred to in clause (a) does not so appear on
Moneyline Telerate Page 7051, the percentage equal to the yield
for United States Treasury securities at "constant maturity"
having the particular index maturity and for the particular
interest determination date as published in H.15(519) under the
caption "Treasury Constant Maturities;" or
(c) if the rate referred to in clause (b) does not so appear in
H.15(519), the rate on the particular interest determination date
for the period of the particular index maturity as may then be
published by either the Federal Reserve System Board of Governors
or the United States Department of the Treasury that the
calculation agent determines to be comparable to the rate which
would otherwise have been published in H.15(519); or
(d) if the rate referred to in clause (c) is not so published, the
rate on the particular interest determination date calculated by
the calculation agent as a yield to maturity based on the
arithmetic mean of the secondary market bid prices at
approximately 3:30 P.M., New York City time, on that interest
determination date of three leading primary United States
government securities dealers in The City of New York (which may
include the Purchasing Agent or its affiliates) (each, a
"reference dealer"), selected by the calculation agent from five
reference dealers selected by the calculation agent and
eliminating the highest quotation, or, in the event of equality,
one of the highest and the lowest quotation or, in the event of
equality, one of the lowest, for United States Treasury
securities with an original maturity equal to the particular
index maturity, a remaining term to maturity no more than one
year shorter than that index maturity and in a principal amount
that is representative for a single transaction in the securities
in that market at that time; or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the particular
interest determination date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of the quotations shall be
eliminated; or
(f) if fewer than three prices referred to in clause (d) are provided
as requested, the rate on the particular interest determination
date calculated by the calculation agent as a yield to maturity
based on the arithmetic mean of the secondary market bid prices
as of approximately 3:30 P.M., New York City time, on that
interest determination date of three reference dealers selected
by the calculation agent from five reference dealers selected by
the calculation agent and eliminating the highest quotation or,
in the event of equality, one of the highest and the lowest
quotation or, in the event of equality, one of the lowest, for
United States Treasury securities with an original maturity
greater than the particular index maturity, a remaining term to
maturity closest to that index maturity and in a principal amount
that is representative for a single transaction in the securities
in that market at that time; or
S-28
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate on the particular
interest determination date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of the quotations will be
eliminated; or
(h) if fewer than three prices referred to in clause (f) are provided
as requested, the CMT Rate in effect on the particular interest
determination date; provided that if no CMT Rate is then in
effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
(2) if CMT Moneyline Telerate Page 7052 is specified in the applicable
pricing supplement:
(a) the percentage equal to the one-week or one-month, as specified
in the applicable pricing supplement, average yield for United
States Treasury securities at "constant maturity" having the
index maturity specified in the applicable pricing supplement as
published in H.15(519) opposite the caption "Treasury Constant
Maturities," as the yield is displayed on Moneyline Telerate (or
any successor service) (on page 7052 or any other page as may
replace the specified page on that service) ("Moneyline Telerate
Page 7052"), for the week or month, as applicable, ended
immediately preceding the week or month, as applicable, in which
the particular interest determination date falls; or
(b) if the rate referred to in clause (a) does not so appear on
Moneyline Telerate Page 7052, the percentage equal to the
one-week or one-month, as specified in the applicable pricing
supplement, average yield for United States Treasury securities
at "constant maturity" having the particular index maturity and
for the week or month, as applicable, preceding the particular
interest determination date as published in H.15(519) opposite
the caption "Treasury Constant Maturities;" or
(c) if the rate referred to in clause (b) does not so appear in
H.15(519), the one-week or one-month, as specified in the
applicable pricing supplement, average yield for United States
Treasury securities at "constant maturity" having the particular
index maturity as otherwise announced by the Federal Reserve Bank
of New York for the week or month, as applicable, ended
immediately preceding the week or month, as applicable, in which
the particular interest determination date falls; or
(d) if the rate referred to in clause (c) is not so published, the
rate on the particular interest determination date calculated by
the calculation agent as a yield to maturity based on the
arithmetic mean of the secondary market bid prices at
approximately 3:30 P.M., New York City time, on that interest
determination date of three reference dealers selected by the
calculation agent from five reference dealers selected by the
calculation agent and eliminating the highest quotation, or, in
the event of equality, one of the highest and the lowest
quotation or, in the event of equality, one of the lowest, for
United States Treasury securities with an original maturity equal
to the particular index maturity, a remaining term to maturity no
more than one year shorter than that index maturity and in a
principal amount that is representative for a single transaction
in the securities in that market at that time; or
(e) if fewer than five but more than two of the prices referred to in
clause (d) are provided as requested, the rate on the particular
interest determination date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of the quotations shall be
eliminated; or
(f) if fewer than three prices referred to in clause (d) are provided
as requested, the rate on the particular interest determination
date calculated by the calculation agent as a yield to maturity
based on the arithmetic mean of the secondary market bid prices
as of approximately 3:30 P.M., New York City time, on that
interest determination date of three reference dealers selected
by the calculation agent from five reference dealers selected by
the calculation agent and eliminating the highest quotation or,
in the event of equality, one of the highest and the lowest
quotation or, in the event of equality, one of the lowest, for
United States Treasury securities with an original maturity
greater than the particular index maturity, a remaining term to
maturity closest to that index
S-29
maturity and in a principal amount that is representative for a
single transaction in the securities in that market at the time;
or
(g) if fewer than five but more than two prices referred to in clause
(f) are provided as requested, the rate on the particular
interest determination date calculated by the calculation agent
based on the arithmetic mean of the bid prices obtained and
neither the highest nor the lowest of the quotations will be
eliminated; or
(h) if fewer than three prices referred to in clause (f) are provided
as requested, the CMT Rate in effect on that interest
determination date; provided that if no CMT Rate is then in
effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
If two United States Treasury securities with an original maturity greater
than the index maturity specified in the applicable pricing supplement have
remaining terms to maturity equally close to the particular index maturity, the
quotes for the United States Treasury security with the shorter original
remaining term to maturity will be used.
Commercial Paper Rate
"Commercial Paper Rate" means:
(1) the Money Market Yield (as defined below) on the particular interest
determination date of the rate for commercial paper having the index
maturity specified in the applicable pricing supplement as published
in H.15(519) under the caption "Commercial Paper--Nonfinancial;" or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Money
Market Yield of the rate on the particular interest determination date
for commercial paper having the particular index maturity as published
in H.15 Daily Update, or such other recognized electronic source used
for the purpose of displaying the applicable rate, under the caption
"Commercial Paper--Nonfinancial;" or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date calculated by the
calculation agent as the Money Market Yield of the arithmetic mean of
the offered rates at approximately 11:00 A.M., New York City time, on
that interest determination date of three leading dealers of United
States dollar commercial paper in The City of New York (which may
include the Purchasing Agent or its affiliates) selected by the
calculation agent for commercial paper having the particular index
maturity placed for industrial issuers whose bond rating is "Aa" by
Moody's or the equivalent from another nationally recognized
statistical rating organization; or
(4) if the dealers so selected by the calculation agent are not quoting as
mentioned in clause (3), the Commercial Paper Rate in effect on the
particular interest determination date; provided that if no Commercial
Paper Rate is then in effect, the interest rate that will be effective
as of the next interest reset date will be the initial interest rate.
"Money Market Yield" means a yield (expressed as a percentage) calculated
in accordance with the following formula:
Money Market Yield = D x 360 x 100
-------------------------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal, and "M" refers to the actual
number of days in the applicable interest reset period.
Constant Maturity Swap Rate
"Constant Maturity Swap Rate" means:
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(1) the rate for U.S. Dollar swaps with the designated maturity specified
in the applicable pricing supplement, expressed as a percentage, which
appears on the Reuters Screen ISDAFIX1 Page as of 11:00 A.M., New York
City time, on the particular interest determination date; or
(2) if the rate referred to in clause (1) does not appear on the Reuters
Screen ISDAFIX1 Page by 2:00 P.M., New York City time, on such
interest determination date, a percentage determined on the basis of
the mid-market semi-annual swap rate quotations provided by the
reference banks (as defined below) as of approximately 11:00 A.M., New
York City time, on such interest determination date, and, for this
purpose, the semi-annual swap rate means the mean of the bid and
offered rates for the semi-annual fixed leg, calculated on a 30/360
day count basis, of a fixed-for-floating U.S. Dollar interest rate
swap transaction with a term equal to the designated maturity
specified in the applicable pricing supplement commencing on the
interest reset date and in a representative amount (as defined below)
with an acknowledged dealer of good credit in the swap market, where
the floating leg, calculated on an Actual/360 day count basis, is
equivalent to USD-LIBOR-BBA with a designated maturity specified in
the applicable pricing supplement. The calculation agent will request
the principal New York City office of each of the reference banks to
provide a quotation of its rate. If at least three quotations are
provided, the rate for that interest determination date will be the
arithmetic mean of the quotations, eliminating the highest quotation
(or, in the event of equality, one of the highest) and the lowest
quotation (or, in the event of equality, one of the lowest); or
(3) if such Constant Maturity Swap Rate is not determinable for a
particular interest determination date under clauses (1) and (2)
above, then such interest determination date shall be the first U.S.
Government Securities business day preceding the original interest
determination date for which the Constant Maturity Swap Rate can be
determined under clauses (1) and (2) above.
"U.S. Government Securities business day" means any day except for
Saturday, Sunday, or a day on which The Bond Market Association recommends that
the fixed income departments of its members be closed for the entire day for
purposes of trading in U.S. government securities.
"Representative amount" means an amount that is representative for a single
transaction in the relevant market at the relevant time.
"Reference banks" mean five leading swap dealers in the New York City
interbank market, selected by the calculation agent, after consultation with
Allstate Life.
Federal Funds Open Rate
"Federal Funds Open Rate" means the rate set forth on Moneyline Telerate
Page 5 for an interest reset date underneath the caption "FEDERAL FUNDS" in the
row titled "OPEN". If the rate is not available for an interest reset date, the
rate for that interest reset date shall be the Federal Funds Rate as determined
below.
Federal Funds Rate
"Federal Funds Rate" means:
(1) the rate as of the particular interest determination date for United
States dollar federal funds as published in H.15(519) under the
caption "Federal Funds (Effective)" and displayed on Moneyline
Telerate (or any successor service) on page 120 (or any other page as
may replace the specified page on that service) ("Moneyline Telerate
Page 120"); or
(2) if the rate referred to in clause (1) does not so appear on Moneyline
Telerate Page 120 or is not so published by 3:00 P.M., New York City
time, on the related calculation date, the rate as of the particular
interest determination date for United States dollar federal funds as
published in H.15 Daily Update, or such other recognized electronic
source used for the purpose of displaying the applicable rate, under
the caption "Federal Funds (Effective);" or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate as
of the particular interest determination date calculated by the
calculation agent
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as the arithmetic mean of the rates for the last transaction in
overnight United States dollar federal funds arranged by three leading
brokers of United States dollar federal funds transactions in The City
of New York (which may include the Agents or their affiliates),
selected by the calculation agent prior to 9:00 A.M., New York City
time, on the business day following that interest determination date;
or
(4) if the brokers so selected by the calculation agent are not quoting as
mentioned in clause (3), the Federal Funds Rate in effect on the
particular interest determination date; provided that if no Federal
Funds Rate is then in effect, the interest rate that will be effective
as of the next interest reset date will be the initial interest rate.
LIBOR
"LIBOR" means:
(1) if "LIBOR Moneyline Telerate" is specified in the applicable pricing
supplement or if neither "LIBOR Reuters" nor "LIBOR Moneyline
Telerate" is specified in the applicable pricing supplement as the
method for calculating LIBOR, the rate for deposits in the LIBOR
currency having the index maturity specified in the applicable pricing
supplement, commencing on the related interest reset date, that
appears on the LIBOR page as of 11:00 A.M., London time, on the
particular interest determination date; or
(2) if "LIBOR Reuters" is specified in the applicable pricing supplement,
the arithmetic mean of the offered rates, calculated by the
calculation agent, or the offered rate, if the LIBOR page by its terms
provides only for a single rate, for deposits in the LIBOR currency
having the particular index maturity, commencing on the related
interest reset date, that appear or appears, as the case may be, on
the LIBOR page as of 11:00 A.M., London time, on the particular
interest determination date; or
(3) if fewer than two offered rates appear, or no rate appears, as the
case may be, on the particular interest determination date on the
LIBOR page as specified in clause (1) or (2), as applicable, the rate
calculated by the calculation agent of at least two offered quotations
obtained by the calculation agent after requesting the principal
London offices of each of four major reference banks (which may
include affiliates of the Purchasing Agent), in the London interbank
market to provide the calculation agent with its offered quotation for
deposits in the LIBOR currency for the period of the particular index
maturity, commencing on the related interest reset date, to prime
banks in the London interbank market at approximately 11:00 A.M.,
London time, on that interest determination date and in a principal
amount that is representative for a single transaction in the LIBOR
currency in that market at that time; or
(4) if fewer than two offered quotations referred to in clause (3) are
provided as requested, the rate calculated by the calculation agent as
the arithmetic mean of the rates quoted at approximately 11:00 A.M.,
in the applicable principal financial center, on the particular
interest determination date by three major banks (which may include
affiliates of the Purchasing Agent), in that principal financial
center selected by the calculation agent for loans in the LIBOR
currency to leading European banks, having the particular index
maturity and in a principal amount that is representative for a single
transaction in the LIBOR currency in that market at that time; or
(5) if the banks so selected by the calculation agent are not quoting as
mentioned in clause (4), LIBOR in effect on the particular interest
determination date; provided that if no LIBOR is then in effect, the
interest rate that will be effective as of the next interest reset
date will be the initial interest rate.
"LIBOR currency" means United States dollars.
"LIBOR page" means either:
(1) if "LIBOR Reuters" is specified in the applicable pricing supplement,
the display on the Reuter Monitor Money Rates Service (or any
successor service) on the page specified in the applicable pricing
supplement (or any other page as may replace that page on that
service) for the purpose of displaying the London interbank rates of
major banks for the LIBOR currency; or
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(2) if "LIBOR Moneyline Telerate" is specified in the applicable pricing
supplement or neither "LIBOR Reuters" nor "LIBOR Moneyline Telerate"
is specified in the applicable pricing supplement as the method for
calculating LIBOR, the display on Moneyline Telerate (or any successor
service) on the page specified in the applicable pricing supplement
(or any other page as may replace such page on such service) for the
purpose of displaying the London interbank rates of major banks for
the LIBOR currency.
"London banking day" means a day on which commercial banks are open for
business (including dealings in the LIBOR currency) in London.
Prime Rate
"Prime Rate" means:
(1) the rate on the particular interest determination date as published in
H.15(519) under the caption "Bank Prime Loan;" or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date as published in H.15 Daily
Update, or such other recognized electronic source used for the
purpose of displaying the applicable rate, under the caption "Bank
Prime Loan;" or
(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date calculated by the
calculation agent as the arithmetic mean of the rates of interest
publicly announced by each bank that appears on the Reuters Screen US
PRIME 1 Page (as defined below) as the applicable bank's prime rate or
base lending rate as of 11:00 A.M., New York City time, on that
interest determination date; or
(4) if fewer than four rates referred to in clause (3) are so published by
3:00 P.M., New York City time, on the related calculation date, the
rate calculated by the calculation agent as the particular interest
determination date calculated by the calculation agent as the
arithmetic mean of the prime rates or base lending rates quoted on the
basis of the actual number of days in the year divided by a 360-day
year as of the close of business on that interest determination date
by three major banks (which may include affiliates of the Purchasing
Agent) in The City of New York selected by the calculation agent; or
(5) if the banks so selected by the calculation agent are not quoting as
mentioned in clause (4), the Prime Rate in effect on the particular
interest determination date; provided that if no Prime Rate is then in
effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
"Reuters Screen US PRIME 1 Page" means the display on the Reuter Monitor
Money Rates Service (or any successor service) on the "US PRIME 1" page (or any
other page as may replace that page on that service) for the purpose of
displaying prime rates or base lending rates of major United States banks.
Treasury Rate
"Treasury Rate" means:
(1) the rate from the auction held on the Treasury Rate interest
determination date (the "Auction") of direct obligations of the United
States ("Treasury Bills") having the index maturity specified in the
applicable pricing supplement under the caption "INVESTMENT RATE" on
the display on Moneyline Telerate (or any successor service) on page
56 (or any other page as may replace that page on that service)
("Moneyline Telerate Page 56") or page 57 (or any other page as may
replace that page on that service) ("Moneyline Telerate Page 57"); or
(2) if the rate referred to in clause (1) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Bond
Equivalent Yield (as defined below) of the rate for the applicable
Treasury Bills as published in H.15 Daily Update, or another
recognized electronic source used for the purpose of displaying the
applicable rate, under the caption "U.S. Government
Securities/Treasury Bills/Auction High;" or
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(3) if the rate referred to in clause (2) is not so published by 3:00
P.M., New York City time, on the related calculation date, the Bond
Equivalent Yield of the auction rate of the applicable Treasury Bills
as announced by the United States Department of the Treasury; or
(4) if the rate referred to in clause (3) is not so announced by the
United States Department of the Treasury, or if the Auction is not
held, the Bond Equivalent Yield of the rate on the particular interest
determination date of the applicable Treasury Bills as published in
H.15(519) under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market;" or
(5) if the rate referred to in clause (4) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date of the applicable Treasury
Bills as published in H.15 Daily Update, or another recognized
electronic source used for the purpose of displaying the applicable
rate, under the caption "U.S. Government Securities/Treasury
Bills/Secondary Market;" or
(6) if the rate referred to in clause (5) is not so published by 3:00
P.M., New York City time, on the related calculation date, the rate on
the particular interest determination date calculated by the
calculation agent as the Bond Equivalent Yield of the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 P.M., New
York City time, on that interest determination date, of three primary
United States government securities dealers (which may include the
Purchasing Agent or its affiliates) selected by the calculation agent,
for the issue of Treasury Bills with a remaining maturity closest to
the index maturity specified in the applicable pricing supplement; or
(7) if the dealers so selected by the calculation agent are not quoting as
mentioned in clause (6), the Treasury Rate in effect on the particular
interest determination date; provided that if no Treasury Rate is then
in effect, the interest rate that will be effective as of the next
interest reset date will be the initial interest rate.
"Bond Equivalent Yield" means a yield (expressed as a percentage)
calculated in accordance with the following formula:
Bond Equivalent Yield = D x N x 100
-------------------------------------
360 - (D x M)
where "D" refers to the applicable per annum rate for Treasury Bills quoted on a
bank discount basis and expressed as a decimal, "N" refers to 365 or 366, as the
case may be, and "M" refers to the actual number of days in the applicable
interest reset period.
Discount Notes
The trusts may from time to time issue series of notes ("discount notes")
that have an issue price (as specified in the applicable pricing supplement)
that is less than 100% of the principal amount thereof (i.e. par) by more than a
percentage equal to the product of 0.25% and the number of full years to the
stated maturity date. A series of discount notes may not bear any interest
currently or may bear interest at a rate that is below market rates at the time
of issuance. The difference between the issue price of a series of discount
notes and par is referred to as the "discount." In the event of redemption,
repayment or acceleration of maturity of a series of discount notes, the amount
payable to the holders of such series of discount notes will be equal to the sum
of:
o the issue price (increased by any accruals of discount) and, in the
event of any redemption of such series of discount notes, if
applicable, multiplied by the initial redemption percentage (as
adjusted by the annual redemption percentage reduction, if
applicable); and
o any unpaid interest accrued on such series of discount notes to the
date of the redemption, repayment or acceleration of maturity, as the
case may be.
For purposes of determining the amount of discount that has accrued as of
any date on which a redemption, repayment or acceleration of maturity occurs for
a series of discount notes, a discount will be accrued using a constant yield
method. The constant yield will be calculated using a 30-day month, 360-day year
convention, a compounding period that, except for the initial period (as defined
below), corresponds to the shortest period between interest payment dates for
the applicable series of discount notes (with ratable accruals within a
compounding period), a coupon rate equal to the initial
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coupon rate applicable to the applicable series of discount notes and an
assumption that the maturity of such series of discount notes will not be
accelerated. If the period from the date of issue to the first interest payment
date for a series of discount notes (the "initial period") is shorter than the
compounding period for such series of discount notes, a proportionate amount of
the yield for an entire compounding period will be accrued. If the initial
period is longer than the compounding period, then the period will be divided
into a regular compounding period and a short period with the short period being
treated as provided in the preceding sentence. The accrual of the applicable
discount may differ from the accrual of original issue discount for purposes of
the Code, certain series of discount notes may not be treated as having original
issue discount within the meaning of the Code, and certain series of notes other
than discount notes may be treated as issued with original issue discount for
federal income tax purposes. See "United States Federal Income Tax
Considerations."
Withholding Tax; No Payment of Additional Amounts
All amounts due in respect of the notes of a series will be made without
withholding or deduction for or on account of any present or future taxes,
duties, levies, assessments or other governmental charges of whatever nature
imposed or levied by or on behalf of any governmental authority in the United
States having the power to tax on payments on the notes unless the withholding
or deduction is required by law. An issuing trust will not pay any additional
amounts to holders of any series of notes in the event that any withholding or
deduction is so required by law, regulation or official interpretation thereof,
and the imposition of a requirement to make any such withholding or deduction
will not give rise to any independent right or obligation to redeem the notes of
such series.
Security; Non-Recourse Obligations
The notes of a series will represent the obligations of the issuing entity
only and will not represent the obligations of, or interest in, any other person
or entity, Global Funding, Allstate Life or any of their respective affiliates.
The obligations under each series of notes will be secured by all of the rights
and title of the issuing trust in one or more funding agreements issued by
Allstate Life and other rights and assets included in the applicable collateral
held in the issuing trust.
The issuing trust will, from time to time and upon advice of counsel, at
the trust's expense, execute, deliver, file and record any statement,
assignment, instrument, document, agreement or other paper and take any other
action, (including, without limitation, any filings of financing or continuation
statements) that from time to time may be necessary or desirable, or that the
indenture trustee may reasonably request, in order to create, preserve, perfect,
confirm or validate a security interest or to enable the holder of its series of
notes to obtain the full benefits of the applicable indenture, or to enable the
indenture trustee to exercise and enforce any of its rights, powers and remedies
under the indenture with respect to the applicable collateral. To the extent
permitted by applicable law, the issuing trust authorizes the indenture trustee
to execute and file financing statements or continuation statements without the
trust's signature appearing thereon and will agree that a carbon, photographic,
photostatic or other reproduction of the applicable indenture or of a financing
statement is sufficient as a financing statement. The issuing trust shall pay
the costs of, or incidental to, any recording or filing of any financing or
continuation statements concerning any of the applicable collateral.
Since Allstate Life will be the sole obligor under the funding agreements,
the ability of a trust to meet its obligations, and your ability to receive
payments from such trust, with respect to a particular series of notes, will be
principally dependent upon Allstate Life's ability to perform its obligations
under each applicable funding agreement held by the issuing trust. Despite this,
you will have no direct contractual rights against Allstate Life under any such
funding agreement. Pursuant to the terms of each funding agreement, recourse
rights to Allstate Life will belong to the issuing trust, its successors and
permitted assignees. In connection with the offering and sale of a series of
notes, the issuing trust will pledge, collaterally assign and grant a security
interest in the collateral for such series of notes to the indenture trustee for
the benefit of the holders of the applicable series of notes and any other
person for whose benefit the indenture trustee is or will be holding the
collateral. Accordingly, recourse to Allstate Life under each such funding
agreement will be enforceable only by the indenture trustee as a secured party
for the benefit of holders of such series of notes and any other person for
whose benefit the indenture trustee is or will be holding the collateral.
Nonetheless, since Allstate Life is a registrant, purchasers of notes may
be able to proceed directly against Allstate Life to enforce their rights under
the Federal securities laws and their rights under the Federal securities laws
will be no different than if they purchased the underlying funding agreements
directly from Allstate Life.
Survivor's Option
The "survivor's option" is a provision in a note pursuant to which the
issuing trust agrees to repay that note in whole or in part prior to maturity,
if requested, following the death of the beneficial owner of the note, so long
as the note was held
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by the beneficial owner for a period of at least six months prior to the death
of the beneficial owner. Unless otherwise specified in the applicable pricing
supplement, the estate of the deceased beneficial owner of a note will be
eligible to exercise the survivor's option.
Subject to the limitations described below, upon the valid exercise of the
survivor's option, the proper tender of that note for repayment and the tender
and acceptance of that portion of the funding agreement(s) related to such note,
the issuing trust will repay any of its notes pursuant to the survivor's option
by or on behalf of a person that has the legal authority to act on behalf of the
note's deceased owner. Unless otherwise specified in the applicable pricing
supplement, the repurchase price will be 100% of the unpaid principal amount
plus accrued interest to, but excluding, the date of repayment.
Unless otherwise set forth in the applicable pricing supplement for your
series of notes, the funding agreement(s) securing your series of notes will
contain a provision which will allow the issuing trust to tender the funding
agreement(s) in whole or in part to Allstate Life. An issuing trust's ability to
tender the funding agreement(s) related to a series of notes that contain a
survivor's option will be subject to certain limitations set by Allstate Life.
As a result, your right to exercise the survivor's option is subject to limits
set by Allstate Life with respect to the relevant funding agreement(s). Allstate
Life has the discretionary right to limit the aggregate principal amount of:
o all funding agreements securing all outstanding series of notes issued
under the Allstate Life(R) CoreNotes(R) program as to which exercises
of any put option by any issuing trust shall be accepted by Allstate
Life in any calendar year to an amount equal to the greater of
$2,000,000 or 2% of the aggregate principal amount of all funding
agreements securing all outstanding series of notes issued under the
Allstate Life(R) CoreNotes(R) program as of the end of the most recent
calendar year or such other greater amount as determined in accordance
with the applicable funding agreement(s) and set forth in the
applicable pricing supplement;
o the funding agreement(s) securing the notes as to which exercises of
any put option by the applicable trust attributable to notes as to
which the survivor's option has been exercised by the authorized
representative of any individual deceased beneficial owner to $250,000
in any calendar year or such other greater amount as determined in
accordance with the applicable funding agreement(s) and set forth in
the applicable pricing supplement; and
o the funding agreement(s) securing a series of notes as to which
exercises of any put option by the applicable trust shall be accepted
in any calendar year to an amount as set forth in the applicable
funding agreement(s) and the applicable pricing supplement.
In any such event, each trust shall similarly be required to limit the
aggregate principal amount of notes as to which exercises of the survivor's
option shall be accepted by it.
In addition, the exercise of the survivor's option will not be permitted
for a principal amount less than $1,000 or if such exercise will result in a
note with a principal amount of less than $1,000 to remain outstanding. All
other questions, other than with respect to the right to limit the aggregate
principal amount of notes subject to the survivor's option that will be accepted
as to any series of notes or in any calendar year, regarding the eligibility or
validity of any exercise of the survivor's option will be determined by the
administrator of the issuing trust, in its sole discretion, which determination
will be final and binding on all parties. The indenture trustee, upon written
request by the authorized representative of the deceased beneficial owner of
notes, will request the administrator to provide the status of the remaining
program and series limitations for such calendar year on the exercise of any
survivor's option.
The issuing trust will accept elections to exercise the survivor's option
in the order received by the administrator of the issuing trust. Notes that are
not repaid in any calendar year due to the application of the limits described
above will be treated as though they had been tendered on the first day of the
following calendar year in the order in which they were originally tendered.
Subject to the limitations described above, notes accepted for repayment will be
repaid on the first interest payment date that occurs 20 or more calendar days
after the date of acceptance.
If repayment of a note submitted for repayment pursuant to a valid exercise
of the survivor's option is not accepted or is to be delayed, the administrator
of the issuing trust will deliver a written notice by first-class mail to the
depositary that states the reason that repayment of that particular note has not
been accepted or will be delayed.
A valid exercise of the survivor's option may not be withdrawn.
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To exercise the survivor's option with respect to a book-entry note, the
deceased owner's authorized person must provide the following items to the DTC
"participant" through which the relevant beneficial interest is owned (for a
discussion of DTC and its participants, see "--About the Depositary"):
o a written instruction to the participant to notify DTC of the
authorized person's desire to obtain a payment pursuant to the
exercise of the survivor's option;
o appropriate evidence (a) that the person has authority to act on
behalf of the deceased owner, (b) of the death of the beneficial
owner, (c) that the deceased was the beneficial owner of the notes at
the time of death and (d) that the beneficial owner acquired the
interest in the note at least six months prior to the date of death of
such beneficial owner;
o if the beneficial interest in the relevant note is held by a nominee
of the deceased owner, a certificate from the nominee attesting to the
deceased owner's ownership of a beneficial interest in that note;
o a written request for repayment signed by the authorized person for
the deceased owner with signature guaranteed by a member firm of a
registered national securities exchange or of the National Association
of Securities Dealers, Inc. or a commercial bank or trust company
having an office or correspondent in the United States;
o if applicable, a properly executed assignment or endorsement;
o tax waivers and any other instruments or documents reasonably required
to establish the validity of the ownership of the beneficial interest
in the related note and the claimant's entitlement to payment; and
o any additional information reasonably required to document the
ownership or authority to exercise the survivor's option and to cause
the repayment of the related note.
In turn, on the basis of this information, the participant will be required
to deliver to the indenture trustee a properly completed repayment election form
to exercise the survivor's option, together with evidence satisfactory to the
indenture trustee from the participant stating that it represents the deceased
owner of the beneficial interest in the relevant note. The indenture trustee
will then deliver these items to the administrator of the issuing trust and will
provide the administrator of the issuing trust with any additional information
(after receipt from the participant) the administrator may request in connection
with such exercise.
Apart from Allstate Life's discretionary right to limit the principal
amount of funding agreements securing notes as to which exercises of any put
option by the issuing trusts attributable to notes to which the survivor's
option may be exercised in any calendar year as described above, the
administrator will determine all other questions regarding the eligibility or
validity of any exercise of the survivor's option. The administrator's
determination will be final and binding on all parties.
The death of a person owning a note in joint tenancy or tenancy by the
entirety with another or others will be treated as the death of the owner of
that note, and the entire principal amount so owned will be eligible for
repayment.
The death of a person owning a note by tenancy in common will be treated as
the death of the owner of that note only with respect to the deceased owner's
interest in the note held by tenancy in common. However, if a note is held by
husband and wife as tenants in common, the death of either spouse will be
treated as the death of the owner of the note and the entire principal amount so
owned will be eligible for repayment.
The death of a person who was a lifetime beneficiary of a trust that owns a
note will be treated as the death of the owner of the note to the extent of that
person's interest in the trust. The death of a person who was a tenant by the
entirety or joint tenant in a tenancy which is the beneficiary of a trust that
owns a note will be treated as the death of the owner of the note. The death of
an individual who was a tenant in common in a tenancy which is the beneficiary
of a trust that owns a note will be treated as the death of the owner of the
note only with respect to the deceased person's beneficial interest in the note,
unless a husband and wife are the tenants in common, in which case the death of
either will be treated as the death of the owner of the note.
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The death of a person who, during his or her lifetime, was entitled to
substantially all of the beneficial interests of ownership of a note will be
treated as the death of the owner of the note if the beneficial interest can be
established to the administrator's satisfaction. This will be done in typical
cases of nominee ownership, such as ownership under the Uniform Transfers of
Gifts to Minors Act, community property or other joint ownership arrangements
between a husband and wife and lifetime custodial and trust arrangements.
The applicable participant will be responsible for disbursing payments
received from the indenture trustee to the authorized person for the deceased
owner.
Annex A to this prospectus supplement is the repayment election form for
use by DTC participants in exercising the survivor's option. Copies of this form
may be obtained from the administrator at AMACAR Pacific Corp., 6525 Morrison
Blvd., Suite 318, Charlotte, NC 28211 (telephone (704) 365-0569, facsimile (704)
365-1632).
Redemption, Repayment and Repurchase of Notes
Unless otherwise specified in the applicable pricing supplement, the notes
of a series will not be redeemable, except at the applicable maturity date, when
all notes of such series will be redeemed.
Optional Redemption by the Issuer; No Sinking Fund
If an initial redemption date is specified in the applicable pricing
supplement and provided for in the applicable funding agreement(s), the issuing
trust may redeem the particular series of notes prior to its stated maturity
date at its option on any date on or after that initial redemption date in whole
or from time to time in part in increments of $1,000 or any other integral
multiple of an authorized denomination specified in the applicable pricing
supplement (provided that any remaining principal amount thereof shall be at
least $1,000 or other minimum authorized denomination applicable thereto), at
the applicable redemption price (as defined below), together with unpaid
interest accrued thereon to the date of redemption. "Redemption price," with
respect to a series of notes, means an amount equal to the initial redemption
percentage specified in the applicable pricing supplement (as adjusted by the
annual redemption percentage reduction, if applicable) multiplied by the unpaid
principal amount thereof to be redeemed. The initial redemption percentage, if
any, applicable to a series of notes shall decline at each anniversary of the
initial redemption date by an amount equal to the applicable annual redemption
percentage reduction, if any, until the redemption price is equal to 100% of the
unpaid amount thereof to be redeemed. For a discussion of the redemption of
discount notes, see "--Discount Notes."
No series of notes will be subject to, or entitled to the benefit of, any
sinking fund unless otherwise indicated in the applicable pricing supplement.
The applicable pricing supplement may provide that the notes of a series
may be redeemed by the issuing trust and the terms of such redemption. If so
specified, the issuing trust will give a notice of redemption to each holder of
the notes to be redeemed not less than 30 days nor more than 60 days prior to
the date fixed for redemption.
Each trust may issue a series of notes which may be redeemed by the issuing
trust when 25% or more of the original principal balance of such notes is
outstanding, which are referred to herein as "callable" notes. If a trust issues
a series of callable notes, such trust will include the word "callable" in the
title of such series of notes in the applicable pricing supplement. Unless
otherwise specified in the applicable pricing supplement, such series of notes
will otherwise be subject to the redemption provisions described above.
Repayment at Option of Holder
Except for the survivor's option, the notes of a series will not provide
any holder with the option to have the issuing trust repay the note on a date or
dates specified prior to its maturity date. If the applicable pricing supplement
specifies that a particular series of notes will have a survivor's option, the
relevant funding agreement will provide for such pre-payment of amounts due
under the notes.
None of the trusts will issue notes that may be repaid at the option of the
holders prior to the stated maturity date if such issuance would cause the
relevant trust to fail to satisfy the applicable requirements for exemption
under Rule 3a-7 under the Investment Company Act of 1940, as amended, and all
applicable rules, regulations and interpretations thereunder.
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Repurchase of Notes
Each trust may purchase some or all notes of a series issued by such trust
in the open market or otherwise at any time, and from time to time, with the
prior written consent of Allstate Life as to both the making of such purchase
and the purchase price to be paid for such notes. If Allstate Life, in its sole
discretion, consents to such purchase of notes by the issuing trust, then such
trust, the indenture trustee and Allstate Life will be obligated to take such
actions as may be necessary or desirable to effect the prepayment of such
portion, or the entirety, of the current Principal Amount (as defined in the
applicable funding agreement) under each applicable funding agreement as may be
necessary to provide for the payment of the purchase price for such notes. Upon
such payment, the Principal Amount under each funding agreement shall be reduced
by an amount equal to the aggregate principal amount of the notes as purchased
(or the portion thereof applicable to such funding agreement).
Other/Additional Provisions; Addendum
Any provisions with respect to the notes of a series, including the
specification and determination of one or more interest rate bases, the
calculation of the interest rate applicable to a series of notes that bears
interest at floating rates, the interest payment dates, the stated maturity
date, any redemption or repayment provisions or any other term relating to the
applicable series of notes, may be modified and/or supplemented as specified
under "Other/Additional Provisions" on the face thereof or in an addendum
relating thereto, if so specified on the face thereof and, in each case,
described in the applicable pricing supplement.
Book-Entry Notes
Each trust will establish a depositary arrangement with the DTC with
respect to the book-entry notes, the terms of which are summarized below.
All book-entry notes having the same terms will be represented by one or
more global securities. Each global security will be deposited with, or on
behalf of, DTC and will be registered in the name of DTC or its nominee. No
global security may be transferred or exchanged except by DTC or a nominee of
DTC to DTC or to another nominee of DTC, or by DTC or another nominee of DTC to
a successor of DTC or a nominee of a successor to DTC. So long as DTC or its
nominee is the registered holder of a global security, DTC or its nominee will
be the sole owner of the related book-entry notes for all purposes under the
indenture. Except as otherwise provided below, the beneficial owners of the
book-entry notes will not be entitled to receive definitive notes and will not
be considered the registered holders of the book-entry notes for any purpose
under the indenture and no global security representing book-entry notes will be
exchangeable or transferable. As a result, to exercise any rights of a
registered holder under the indenture a beneficial owner must rely on the
procedures of DTC and, if the beneficial owner is not a participant, on the
procedures of the participant or participants through which the beneficial owner
owns its interest. The laws of some jurisdictions require that some purchasers
of securities take physical delivery of securities in definitive form. These
laws may limit the ability to transfer beneficial interests in book-entry notes.
Each global security representing book-entry notes will be exchangeable for
definitive notes only if:
o subject to the procedures of DTC, the issuing trust notifies the
indenture trustee that the issuing trust wishes in its sole discretion
to exchange the global security for definitive notes;
o an event of default on the notes of that series has occurred and not
been cured; or
o DTC notifies the issuing trust that it is unwilling or unable to
continue as a clearing system for the global securities, or it ceases
to be a clearing agency registered under the Exchange Act and, in
either case, a successor clearing system is not appointed by the
issuing trust within 60 days after receiving the notice from DTC or
becoming aware that DTC is no longer registered.
If any of these events occurs, the issuing trust will print and deliver
definitive notes. Definitive notes issued under these circumstances will be
registered in the names of the beneficial owners of the related global
securities as provided to the indenture trustee by the participants identified
by DTC.
About the Depositary
The following is based on information furnished by DTC:
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DTC will act as securities depository for the book-entry notes. The
book-entry notes will be issued as fully registered securities in the name of
Cede & Co. (DTC's nominee) or another name requested by DTC. One fully
registered global security will be issued for each issue of book-entry notes in
the aggregate principal amount of that issue and will be deposited with, or on
behalf of, DTC. If the aggregate principal amount of any issue exceeds DTC's
limit for a single global security, then the global securities will be issued in
the form of one or more global securities having a principal amount equal to
DTC's limit and an additional global security representing any remaining
principal amount.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities that its direct participants deposit with it. DTC also
facilitates the settlement among direct participants of transactions in
deposited securities, such as transfers and pledges, through electronic
computerized book-entry changes in direct participants' accounts. This
eliminates the need for physical movement of securities certificates. DTC's
direct participants include securities brokers and dealers (including the
Purchasing Agent), banks, trust companies, clearing corporations and other
organizations. DTC is owned by a number of its direct participants and by the
New York Stock Exchange, Inc., the American Stock Exchange LLC and NASD. Access
to DTC's system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a direct participant, either directly or indirectly. The rules
applicable to DTC and its direct and indirect participants are on file with the
SEC.
Under DTC's system, purchases of book-entry notes must be made by or
through direct participants, which will receive a credit for the book-entry
notes on DTC's records. The ownership interest of the actual purchaser is in
turn recorded on the records of the direct and indirect participants. Beneficial
owners will not receive written confirmation from DTC of their purchase, but are
expected to receive written confirmations providing details of the transaction,
as well as periodic statements of their holdings, from the direct or indirect
participants through which they entered into the transaction. Transfers of
ownership interests in book-entry notes are accomplished by entries made on the
books of the direct and indirect participants acting on behalf of the beneficial
owners. Beneficial owners will not receive definitive notes unless use of the
book-entry system is discontinued as described above.
To facilitate subsequent transfers, all global securities representing the
book-entry notes deposited with, or on behalf of, DTC will be registered in the
name of DTC's nominee, Cede & Co., or any other name that DTC requests. The
deposit of global securities with, or on behalf of, DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the book-entry notes; DTC's records
reflect only the identity of the direct participants to whose accounts the
book-entry notes are credited, which may or may not be the beneficial owners.
DTC's participants are responsible for keeping account of their holdings on
behalf of their customers.
Conveyance of notices and other communications from DTC to direct
participants, from direct participants to indirect participants and from direct
participants and indirect participants to beneficial owners are governed by
arrangements among them and are subject to statutory and regulatory
requirements.
Neither DTC nor Cede & Co. will consent or vote with respect to global
securities. Under its usual procedures, DTC mails an omnibus proxy to a company
as soon as possible after a record date. The omnibus proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
book-entry notes are credited on the record date (identified in a listing
attached to the omnibus proxy).
The issuing trust will make payments on the global securities in
immediately available funds to Cede & Co. or any other nominee named by DTC.
DTC's practice is to credit direct participants' accounts on the applicable
payment date in accordance with their respective holdings shown on DTC's records
unless DTC has reason to believe that it will not receive payment on that date.
Payments by participants to beneficial owners are governed by standing
instructions and customary practices and are subject to statutory and regulatory
requirements. The issuing trust and the trustee are responsible only for making
payments to DTC, DTC is responsible for disbursing those payments to its direct
participants and the direct participants (and any indirect participants) are
solely responsible for disbursing those payments to the beneficial owners.
Any redemption notices will be sent to Cede & Co. If less than all of the
book-entry notes having the same terms are being redeemed, DTC's current
practice is to determine by lot the amount of the interest of each direct
participant in those notes to be redeemed.
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A beneficial owner must give notice of any election to have its book-entry
notes repaid through its participant to the trustee. Delivery of the book-entry
notes will be effected by causing the relevant direct participant to transfer
the relevant part of its interest in the global securities to the trustee on
DTC's records.
DTC may discontinue providing its services as securities depository with
respect to a series of notes at any time by giving reasonable notice to the
issuing trust or the indenture trustee. If the issuing trust does not obtain a
successor securities depository, it will print and deliver definitive notes of
such series.
The issuing trust may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). If the issuing
trust does so, it will print and deliver definitive notes.
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DESCRIPTION OF THE FUNDING AGREEMENTS
Each trust will use the net proceeds from the issuance of its series of
notes to the public to purchase from Global Funding one or more funding
agreements issued by Allstate Life. The funding agreement(s) will have a
principal amount equal to the principal amount of the related series of notes.
The funding agreement(s) will otherwise have payment and other terms
substantially similar to the related series of notes. The funding agreement(s)
may be interest bearing or non-interest bearing and, if interest bearing, may
bear interest at fixed or floating rates. The calculation of the interest rate,
the due dates for payments and other payment terms on the funding agreement will
be determined in the manner substantially similar to that described above under
"Description of the Notes." An amount equal to the principal amount of the
funding agreement plus accrued but unpaid interest, if any, and accrued
discount, if any (in the case of a discount funding agreement) will be payable
on its maturity date, as specified in the applicable pricing supplement.
The funding agreement(s) will have a principal amount equal to the
principal amount of the related series of notes. The funding agreement(s) will
otherwise have payment and other terms substantially similar to the related
series of notes. For a more detailed discussion of the funding agreements, see
"Description of the Funding Agreement" in the accompanying prospectus.
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UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
This section provides a discussion of the material United States Federal
income tax consequences of the purchase, ownership and disposition of the notes.
This summary is based upon laws, regulations, rulings and decisions now in
effect, all of which are subject to change (including changes in effective
dates) or possible differing interpretations. This summary deals only with notes
held as capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, partnerships, insurance companies,
regulated investment companies, dealers in securities or currencies, persons
holding notes as a hedge against currency risks or as a position in a "straddle"
for tax purposes, or persons whose functional currency is not the United States
dollar. It also does not deal with holders other than initial purchasers of
notes (except where otherwise specifically noted). Persons considering the
purchase of the notes should consult their own tax advisors concerning the
application of United States Federal income tax laws to their particular
situations as well as any consequences of the purchase, ownership and
disposition of the notes arising under the laws of any other taxing
jurisdiction. This summary does not consider the United States Federal income
tax consequences of the purchase, ownership or disposition of a note by a
partnership. If a partnership holds a note, the tax treatment of a partner will
generally depend upon the status of the partner and the activities of the
partnership. Partnerships holding a note, and partners in a partnership holding
a note, should consult their tax advisors.
As used herein, the term "U.S. Holder" means a beneficial owner of a note
that is for United States Federal income tax purposes:
o a citizen or resident of the United States;
o a corporation (including an entity treated as a corporation for United
States Federal income tax purposes) created or organized in or under
the laws of the United States, any state thereof or the District of
Columbia;
o an estate whose income is subject to United States Federal income tax
regardless of its source; or
o subject to applicable transition rules, a trust if a court within the
United States is able to exercise primary supervision over the
administration of the trust and one or more United States persons have
the authority to control all substantial decisions of the trust.
As used in this section, the term "non-U.S. Holder" means a beneficial
owner of a note that is an individual, a corporation, an estate or trust that is
not a U.S. Holder.
Classification of the Issuer and Notes
In the opinion of LeBoeuf, Lamb, Greene & MacRae LLP, special tax counsel
to Global Funding, under current law and based on certain facts and assumptions
contained in such opinion:
o Global Funding and each trust will be ignored for United States
Federal income tax purposes and will not be treated as an association
or a publicly traded partnership taxable as a corporation; and
o the notes will be classified as indebtedness of Allstate Life for
United States Federal income tax purposes.
Allstate Life, Global Funding and each trust agree, and each holder and
beneficial owner of notes by purchasing the notes agrees, for all United States
Federal, state and local income and franchise tax purposes (i) to treat the
notes as indebtedness of Allstate Life, (ii) Global Funding and each trust will
be ignored and will not be treated as an association or a publicly traded
partnership taxable as a corporation and (iii) to not take any action
inconsistent with the treatment described in (i) and (ii) unless otherwise
required by law. The remainder of this discussion assumes the notes are properly
treated as indebtedness of Allstate Life for all United States Federal income
tax purposes.
An opinion of tax counsel is not binding on the Internal Revenue Service
(the "IRS") or the courts, and no ruling on any of the consequences or issues
discussed below will be sought from the IRS. The IRS might assert that each
trust should be treated as a separate grantor trust for United States Federal
income tax purposes, in which case the holders of beneficial interests in the
notes related to such trust would be treated as owning a pro rata undivided
interest in the assets of such trust. In such a case, the tax consequences to
beneficial owners of the notes would not be materially different than those
described herein. Persons considering the purchase of notes should consult their
own tax advisors about the United States Federal
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income tax consequences of an investment in the notes and the application of
United States Federal income tax laws, as well as the laws of any state, local
or foreign taxing jurisdictions, to their particular situations.
U.S. Holders
Payments of Interest
Except as described below, payments of interest on a note generally will be
taxable to a U.S. Holder as ordinary interest income at the time such payments
are accrued or are received (in accordance with the U.S. Holder's regular method
of tax accounting).
Discount Notes
The following summary is a general discussion of the United States Federal
income tax consequences to U.S. Holders of the purchase, ownership and
disposition of notes issued with original issue discount ("discount notes").
For United States Federal income tax purposes, original issue discount
("OID") is the excess of the stated redemption price at maturity of a note over
its issue price, if such excess equals or exceeds a de minimis amount (generally
1/4 of 1% of the note's stated redemption price at maturity multiplied by the
number of complete years to its maturity from its issue date or, in the case of
a note providing for the payment of any amount other than qualified stated
interest (as defined below) prior to maturity, multiplied by the weighted
average maturity of such note). The issue price of each note in an issue of
notes equals the first price at which a substantial amount of such notes has
been sold (ignoring sales to bond houses, brokers, or similar persons or
organizations acting in the capacity of underwriters, placement agents, or
wholesalers). The stated redemption price at maturity of a note is the sum of
all payments provided by the note other than "qualified stated interest"
payments. The term "qualified stated interest" generally means stated interest
that is unconditionally payable in cash or property (other than debt instruments
of the issuer) at least annually at a single fixed rate. In addition, if a note
bears interest for one or more accrual periods at a rate below the rate
applicable for the remaining term of such note (e.g., notes with teaser rates or
interest holidays), and if the greater of either the resulting foregone interest
on such note or any "true" discount on such note (i.e., the excess of the note's
stated principal amount over its issue price) equals or exceeds a specified de
minimis amount, then some or all of the stated interest on the note would be
treated as OID rather than qualified stated interest.
Payments of qualified stated interest on a note are taxable to a U.S.
Holder as ordinary interest income at the time such payments are accrued or are
received (in accordance with the U.S. Holder's regular method of tax
accounting). A U.S. Holder of a discount note must include OID in income as
ordinary interest for United States Federal income tax purposes as it accrues
under a constant yield method in advance of receipt of the cash payments
attributable to such income, regardless of such U.S. Holder's regular method of
tax accounting. In general, the amount of OID included in income by the initial
U.S. Holder of a discount note is the sum of the daily portions of OID with
respect to such discount note for each day during the taxable year (or portion
of the taxable year) on which such U.S. Holder held such discount note. The
"daily portion" of OID on any discount note is determined by allocating to each
day in any accrual period a ratable portion of the OID allocable to that accrual
period. An "accrual period" may be of any length and the accrual periods may
vary in length over the term of the discount note, provided that each accrual
period is no longer than one year and each scheduled payment of principal or
interest occurs either on the final day of an accrual period or on the first day
of an accrual period. The amount of OID allocable to each accrual period is
generally equal to the difference between:
o the product of the discount note's adjusted issue price at the
beginning of such accrual period and its yield to maturity (determined
on the basis of compounding at the close of each accrual period and
appropriately adjusted to take into account the length of the
particular accrual period); and
o the amount of any qualified stated interest payments allocable to such
accrual period. The "adjusted issue price" of a discount note at the
beginning of any accrual period is the sum of the issue price of the
discount note plus the amount of OID allocable to all prior accrual
periods minus the amount of any prior payments on the discount note
that were not qualified stated interest payments. Under these rules,
U.S. Holders generally will have to include in income increasingly
greater amounts of OID in successive accrual periods.
A U.S. Holder who purchases a discount note for an amount that is greater
than its adjusted issue price as of the purchase date and less than or equal to
the sum of all amounts payable on the discount note after the purchase date
other than payments of qualified stated interest, will be considered to have
purchased the discount note at an "acquisition premium."
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Under the acquisition premium rules, the amount of OID which such U.S. Holder
must include in its gross income with respect to such discount note for any
taxable year (or portion thereof in which the U.S. Holder holds the discount
note) will be reduced (but not below zero) by the portion of the acquisition
premium properly allocable to the period.
Floating Rate Notes
Floating rate notes are subject to special rules whereby a floating rate
note will qualify as a "variable rate debt instrument" if:
o its issue price does not exceed the total noncontingent principal
payments due under the floating rate note by more than a specified de
minimis amount;
o it provides for stated interest, paid or compounded at least annually,
at current values of, one or more qualified floating rates, a single
fixed rate and one or more qualified floating rate, or a single
objective rate; and
o it does not provide for any principal payments which are contingent.
A "qualified floating rate" is any variable rate where variations in the
value of such rate can reasonably be expected to measure contemporaneous
variations in the cost of newly borrowed funds in the currency in which the
floating rate note is denominated. Although a multiple of a qualified floating
rate will generally not itself constitute a qualified floating rate, a variable
rate equal to the product of a qualified floating rate and a fixed multiple that
is greater than .65 but not more than 1.35 will constitute a qualified floating
rate. A variable rate equal to the product of a qualified floating rate and a
fixed multiple that is greater than .65 but not more than 1.35, increased or
decreased by a fixed rate, will also constitute a qualified floating rate. In
addition, two or more qualified floating rates that can reasonably be expected
to have approximately the same values throughout the term of the floating rate
note (e.g., two or more qualified floating rates with values within 25 basis
points of each other as determined on the floating rate note's issue date) will
be treated as a single qualified floating rate. Notwithstanding the foregoing, a
variable rate that would otherwise constitute a qualified floating rate but
which is subject to one or more restrictions such as a maximum numerical
limitation (i.e., a cap) or a minimum numerical limitation (i.e., a floor) may,
under certain circumstances, fail to be treated as a qualified floating rate
unless such cap or floor is fixed throughout the term of the note. An "objective
rate" is a rate that is not itself a qualified floating rate but which is
determined using a single fixed formula and that is based on objective financial
or economic information. A rate will not qualify as an objective rate if it is
based on information that is within the control of Allstate Life (or a related
party) or that is unique to the circumstances of Allstate Life (or a related
party), such as dividends, profits, or the value of Allstate Life's stock
(although a rate does not fail to be an objective rate merely because it is
based on the credit quality of Allstate Life). In addition, if a floating rate
note provides for stated interest at a fixed rate for an initial period of one
year or less followed by a variable rate that is either a qualified floating
rate or an objective rate and if the variable rate on the floating rate note's
issue date is intended to approximate the fixed rate (e.g., the value of the
variable rate on the issue date does not differ from the value of the fixed rate
by more than 25 basis points), then the fixed rate and the variable rate
together will constitute either a single qualified floating rate or objective
rate, as the case may be.
If a floating rate note that provides for stated interest at either a
single qualified floating rate or a single objective rate throughout the term
thereof qualifies as a "variable rate debt instrument" and if the interest on
such note is unconditionally payable in cash or property (other than debt
instruments of the issuer) at least annually, then all stated interest on the
note will constitute qualified stated interest and will be taxed accordingly.
Thus, a floating rate note that provides for stated interest at either a single
qualified floating rate or a single objective rate throughout the term thereof
and that qualifies as a "variable rate debt instrument" will generally not be
treated as having been issued with OID unless the floating rate note is issued
at a "true" discount (i.e., at a price below the note's stated principal amount)
in excess of a specified de minimis amount. The amount of qualified stated
interest and the amount of OID, if any, that accrues during an accrual period on
such a floating rate note is determined under the rules applicable to fixed rate
debt instruments by assuming that the variable rate is a fixed rate equal to:
o in the case of a qualified floating rate, the value, as of the issue
date, of the qualified floating rate; or
o in the case of an objective rate, a fixed rate that reflects the yield
that is reasonably expected for the floating rate note. The qualified
stated interest allocable to an accrual period is the amount of
interest actually paid during such accrual period.
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In general, any other floating rate note that qualifies as a "variable rate
debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of OID and
qualified stated interest on the floating rate note. A floating rate note is
converted into an "equivalent" fixed rate debt instrument by substituting any
qualified floating rate provided for under the terms of the floating rate note
with a fixed rate equal to the value of the qualified floating rate as of the
floating rate note's issue date. Any objective rate provided for under the terms
of the floating rate note is converted into a fixed rate that reflects the yield
that is reasonably expected for the floating rate note. In the case of a
floating rate note that qualifies as a "variable rate debt instrument" and
provides for stated interest at a single fixed rate in addition to either one or
more qualified floating rates or a qualified inverse floating rate, the fixed
rate is initially converted into a qualified floating rate. Under such
circumstances, the qualified floating rate that replaces the fixed rate must be
such that the fair market value of the floating rate note as of the floating
rate note's issue date is approximately the same as the fair market value of an
otherwise identical debt instrument that provides for either the qualified
floating rate rather than the fixed rate. Subsequent to converting the fixed
rate into either a qualified floating rate or a qualified inverse floating rate,
the floating rate note is then converted into an "equivalent" fixed rate debt
instrument in the manner described above.
Once the floating rate note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of OID and qualified
stated interest, if any, are determined for the "equivalent" fixed rate debt
instrument by applying the general OID rules to the "equivalent" fixed rate debt
instrument. A U.S. Holder of the floating rate note will account for such OID
and qualified stated interest as if the U.S. Holder held the "equivalent" fixed
rate debt instrument. Each accrual period appropriate adjustments will be made
to the amount of qualified stated interest or OID assumed to have been accrued
or paid with respect to the "equivalent" fixed rate debt instrument in the event
that such amounts differ from the actual amount of interest accrued or paid on
the floating rate note during the accrual period.
If the floating rate note does not qualify as a "variable rate debt
instrument" then the floating rate note would be treated as a contingent payment
debt instrument. A U.S. Holder of a contingent payment debt instrument is
generally required to include future contingent and noncontingent interest
payments in income under the constant yield method as such interest accrues
based on Allstate Life's determination of the "comparable yield" and the
establishment of a "projected payment schedule" that must produce the comparable
yield. The comparable yield is the yield at which Allstate Life would issue a
fixed rated debt instrument with similar terms and conditions. The projected
payment schedule consists of all stated principal payments and a projected
amount and time for each contingent interest payment. If the actual amount of
any contingent payment, once determined, differs from the projected amounts,
appropriate adjustments are to be made to the amounts required to be included in
gross income by the U.S. Holder. The yield, timing and amounts set forth in the
projected payment schedule are for purposes of computing the OID only and are
not assurances by the trusts with respect to any aspect of the notes. Because
U.S. Holders will generally be bound by Allstate Life's determination of the
comparable yield and by the projected payment schedule for United States Federal
income tax purposes, a U.S. Holder's income inclusions may be accelerated
relative to the time payments under the notes are in fact made. The IRS has
authority to disregard a projected payment schedule it determines to be
unreasonable. Any gain recognized by a U.S. Holder on the sale, exchange, or
retirement of a contingent payment debt instrument will be treated as interest
income and all or a portion of any loss realized could be treated as ordinary
loss as opposed to capital loss (depending upon the circumstances). The United
States Federal income tax treatment of floating rate notes that are treated as
contingent payment debt instruments will be more fully described in the
applicable pricing supplement. Purchasers of contingent payment debt instruments
should carefully examine the applicable pricing supplement and should consult
their own tax advisor with respect to such notes.
Certain of the notes:
o may be redeemable at the option of the issuing trust prior to their
stated maturity (a "call option"); and/or
o may be repayable at the option of the holder prior to their stated
maturity (a "put option"). Notes containing such features may be
subject to rules that differ from the general rules discussed above.
Investors intending to purchase notes with such features should consult
their own tax advisors, since the OID consequences will depend, in part, on the
particular terms and features of the purchased notes.
U.S. Holders may generally, upon election, include in income all interest
(including stated interest, acquisition discount, OID, de minimis OID, market
discount, de minimis market discount, and unstated interest, as adjusted by any
amortizable bond premium or acquisition premium) that accrues on a debt
instrument by using the constant yield method applicable to OID, subject to
certain limitations and exceptions.
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Short-Term Notes
Notes that have a fixed maturity of one year or less ("short-term
notes") will be treated as having been issued with OID. In general, an
individual or other cash method U.S. Holder is not required to accrue such OID
unless the U.S. Holder elects to do so. If such an election is not made, any
gain recognized by the U.S. Holder on the sale, exchange or maturity of the
short-term note will be ordinary income to the extent of the OID accrued on a
straight-line basis, or upon election under the constant yield method (based on
daily compounding), through the date of sale or maturity, and a portion of the
deductions otherwise allowable to the U.S. Holder for interest on borrowings
allocable to the short-term note will be deferred until a corresponding amount
of income is realized. U.S. Holders who report income for United States Federal
income tax purposes under the accrual method, and certain other holders
including banks and dealers in securities, are required to accrue OID on a
short-term note on a straight-line basis unless an election is made to accrue
the OID under a constant yield method (based on daily compounding).
Market Discount
If a U.S. Holder purchases a note, other than a discount note, for an
amount that is less than its issue price (or, in the case of a subsequent
purchaser, its stated redemption price at maturity) or, in the case of a
discount note, for an amount that is less than its adjusted issue price as of
the purchase date, such U.S. Holder will be treated as having purchased such
note at a "market discount," unless such market discount is less than a
specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of a discount note, any payment
that does not constitute qualified stated interest) on, or any gain realized on
the sale, exchange, retirement or other disposition of, a note as ordinary
income to the extent of the lesser of:
o the amount of such payment or realized gain; and
o the market discount which has not previously been included in income
and is treated as having accrued on such note at the time of such
payment or disposition.
Market discount will be considered to accrue ratably during the period from
the date of acquisition to the maturity date of the note, unless the U.S. Holder
elects to accrue market discount on the basis of semiannual compounding.
A U.S. Holder may be required to defer the deduction of all or a portion of
the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a note with market discount until the maturity of the note or
certain earlier dispositions, because a current deduction of such holder's "net
direct interest expense" is only allowed to the extent the interest expense
exceeds an allocable portion of market discount. Net direct interest expense is
the excess of interest paid or accrued to purchase or carry the market discount
note over the interest (including OID) includible in the purchaser's gross
income. A U.S. Holder may elect to include market discount in income currently
as it accrues (on either a ratable or semiannual compounding basis), in which
case the rules described above regarding the treatment as ordinary income of
gain upon the disposition of the note, the receipt of certain cash payments and
the deferral of interest deductions will not apply. Generally, such currently
included market discount is treated as ordinary interest for United States
Federal income tax purposes. Such an election will apply to all debt instruments
acquired by the U.S. Holder on or after the first day of the first taxable year
to which such election applies and may be revoked only with the consent of the
IRS.
Premium
If a U.S. Holder purchases a note for an amount that is greater than its
stated redemption price at maturity, such U.S. Holder will generally be
considered to have purchased the note with "amortizable bond premium" equal in
amount to such excess. A U.S. Holder may elect to amortize such premium using a
constant yield method over the remaining term of the note and may offset
interest otherwise required to be included in gross income in respect of the
note during any taxable year by the amortized amount of such excess for the
taxable year. However, if the note may be optionally redeemed after the U.S.
Holder acquires it at a price in excess of its stated redemption price at
maturity, special rules would apply which could result in a deferral of the
amortization of some bond premium until later in the term of the note. Any
election to amortize bond premium applies to all taxable debt instruments held
or acquired by the U.S. Holder on or after the first day of the first taxable
year to which such election applies and may be revoked only with the consent of
the IRS.
S-47
Disposition of a Note
Upon the sale, exchange, redemption, retirement or other disposition of a
note, a U.S. Holder generally will recognize taxable gain or loss equal to the
difference between the amount realized on the sale, exchange, redemption,
retirement or other disposition (other than amounts representing accrued and
unpaid interest, which will constitute ordinary income) and such U.S. Holder's
adjusted tax basis in the note. A U.S. Holder's adjusted tax basis in a note
generally will equal such U.S. Holder's initial investment in the note increased
by any OID included in income (and accrued market discount, if any, if the U.S.
Holder has included such market discount in income) and decreased by the amounts
of any payments, other than qualified stated interest payments, received and the
amortizable bond premium taken into account with respect to such note. Such gain
or loss generally will be long-term capital gain or loss if the note were held
for more than one year. Non-corporate taxpayers are subject to reduced maximum
rates on long-term capital gains and are generally subject to tax at ordinary
income rates on short-term capital gains. The deductibility of capital losses is
subject to certain limitations. Prospective investors should consult their own
tax advisors concerning these tax law provisions.
If a U.S. Holder disposes of only a portion of a note pursuant to a partial
redemption or partial repayment (e.g., pursuant to the survivor's option, if
applicable), such disposition will be treated as a redemption or repayment of a
portion of a debt instrument. The resulting gain or loss would be calculated by
assuming that the original note being tendered consists of two instruments, one
that is retired (or repaid), and one that remains outstanding. The adjusted
issue price, the U.S. Holder's adjusted basis, and the accrued but unpaid OID of
the original note, if any, determined immediately before the disposition, would
be allocated between these two instruments based on the portion of the
instrument that is treated as retired by the redemption or repayment.
Non-U.S. Holders
Payments of interest (including OID, if any) on a note received by a
non-U.S. Holder that does not hold its notes in connection with the conduct of a
trade or business in the United States, will generally not be subject to United
States Federal withholding tax pursuant to the "Portfolio Interest Exemption"
unless:
o the non-U.S. Holder is a direct or indirect 10% or greater shareholder
of Allstate Life;
o the non-U.S. Holder is a controlled foreign corporation related to
Allstate Life;
o the non-U.S. Holder is a bank receiving interest described in section
881(c)(3)(A) of the Code; or
o interest on the note is contingent interest described in section
871(h)(4) of the Code.
To qualify for the Portfolio Interest Exemption from United States Federal
withholding tax, the last United States payor in the chain of payment prior to
payment to a non-U.S. Holder (the "withholding agent") must have received in the
year in which a payment of interest or principal occurs, or in either of the two
preceding calendar years, a statement that:
o is signed by the beneficial owner of the note under penalties of
perjury;
o certifies that such owner is not a U.S. Holder; and
o provides the name and address of the beneficial owner.
The statement may be made on an IRS Form W-8BEN or a substantially similar
form, and the beneficial owner must inform the withholding agent of any change
in the information on the statement within 30 days of such change. If a note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the withholding agent. However, in such a case, the signed statement generally
must be accompanied by a copy of the IRS Form W-8BEN or the substitute form
provided by the beneficial owner to the organization or institution.
If a non-U.S. Holder cannot satisfy the requirements for eligibility for
the Portfolio Interest Exemption, interest earned by such non-U.S. Holder will
be subject to United States Federal withholding tax at a 30% rate unless the
non-U.S. Holder provides the withholding agent with a properly executed:
S-48
o IRS Form W-8BEN claiming an exemption from or reduction in withholding
under the benefit of a United States income tax treaty; or
o IRS Form W-8ECI stating that interest paid on the note is not subject
to withholding tax because it is effectively connected with the
non-U.S. Holder's conduct of a trade or business in the United States.
Notwithstanding the provision of IRS Form W-8ECI, a non-U.S. Holder that
holds its notes in connection with its conduct of a trade or business in the
United States will be taxed on its notes in the same manner as a U.S. Holder,
and, if such non-U.S. Holder is a foreign corporation, it may also be subject to
a branch profits tax equal to 30% of its effectively connected earnings and
profits for the taxable year, subject to adjustments.
Generally, a non-U.S. Holder will not be subject to United States Federal
income taxes on any amount which constitutes capital gain upon the sale,
exchange, redemption, retirement or other disposition of a note, provided:
o the gain is not effectively connected with the conduct of a trade or
business in the United States by the non-U.S. Holder; and
o the non-U.S. Holder is not an individual who is present in the United
States for 183 days or more during the taxable year.
Certain other exceptions may be applicable, and a non-U.S. Holder should
consult its tax advisor in this regard.
The notes will not be includible in the estate of a non-U.S. Holder unless
the individual is a direct or indirect 10% or greater shareholder of Allstate
Life or, at the time of such individual's death, payments in respect of the
notes would have been effectively connected with the conduct by such individual
of a trade or business in the United States. If any portion of the interest
payable on the notes at the time of the individual's death was contingent
interest, then an appropriate portion of the value of the notes would be
includible in the estate of a non-U.S. Holder.
Backup Withholding and Information Reporting
Backup withholding of United States Federal income tax at the applicable
backup withholding rate may apply to payments made in respect of the notes to
registered owners who are not "exempt recipients" and who fail to provide
certain identifying information (such as the registered owner's taxpayer
identification number) in the required manner. Generally, individuals are not
exempt recipients, whereas corporations and certain other entities generally are
exempt recipients. Payments made in respect of the notes to a U.S. Holder must
be reported to the IRS, unless the U.S. Holder is an exempt recipient or
establishes an exemption. Compliance with the identification procedures
described in the preceding section would establish an exemption from backup
withholding for those non-U.S. Holders who are not exempt recipients.
In addition, upon the sale of a note to (or through) a broker, the broker
must withhold at the applicable backup withholding rate of the entire purchase
price, unless either the broker determines that the seller is a corporation or
other exempt recipient or the seller provides, in the required manner, certain
identifying information and, in the case of a non-U.S. Holder, certifies that
such seller is a non-U.S. Holder (and certain other conditions are met). Such a
sale must also be reported by the broker to the IRS, unless either the broker
determines that the seller is an exempt recipient or the seller certifies its
non-U.S. status (and certain other conditions are met). Certification of the
registered owner's non-U.S. status would be made normally on an IRS Form W-8BEN
under penalties of perjury, although in certain cases it may be possible to
submit other documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to a
beneficial owner would be allowed as a refund or a credit against such
beneficial owner's United States Federal income tax provided the required
information is furnished to the IRS.
Opinion Regarding Tax Matters
Prior to the issuance of any notes, Allstate Life will file as an exhibit
to a Current Report on Form 8-K an opinion of legal counsel as described above
regarding the tax treatment of such notes.
S-49
PLAN OF DISTRIBUTION
The notes of a series will be offered to or through Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as Purchasing Agent, pursuant to a terms agreement
among Global Funding, the issuing trust and the Purchasing Agent (each, a "terms
agreement") and the distribution agreement among Global Funding and the Agents
named therein, dated as of March -, 2006 (the "distribution agreement"). Each
terms agreement will incorporate by reference the terms of the distribution
agreement. The Purchasing Agent may purchase notes, as principal, from a trust
for resale to investors at a fixed offering price or at varying prices relating
to prevailing market prices at the time of resale as determined by the
Purchasing Agent. The issuing trust may agree with the Purchasing Agent that the
Purchasing Agent will utilize its reasonable efforts on an agency basis on its
behalf to solicit offers to purchase notes of the applicable series at 100% of
the principal amount thereof, unless otherwise specified in the applicable
pricing supplement. Unless otherwise specified in the applicable pricing
supplement, each trust will pay a commission to the Purchasing Agent, ranging
from .125% to 2.50% of the principal amount of each applicable note, depending
upon its stated maturity, for each note purchased from the issuing trust by the
Purchasing Agent as its agent. The notes may be sold in the United States to
retail, institutional and other investors.
Subject to the terms of the applicable terms agreement and the distribution
agreement, concurrently with any offering of a series of notes by a trust as
described in this prospectus supplement, the issuing trust and the other trusts
may issue other notes under this program or the related secured medium term note
program.
Each trust will use the net proceeds received from the issuance of the
related series of notes to purchase a funding note from Global Funding. Global
Funding will use the net proceeds received from the sale of such funding note to
purchase one or more funding agreements issued by Allstate Life. Global Funding
will immediately assign absolutely to, and deposit into, the issuing trust each
such funding agreement and the related funding note will be cancelled
immediately upon the assignment and deposit by Global Funding of such funding
agreement(s) to and into the issuing trust.
Unless otherwise specified in the applicable pricing supplement, any note
sold to the Purchasing Agent as principal will be purchased by the Purchasing
Agent at a price equal to 100% of the principal amount thereof less a percentage
of the principal amount equal to the commission applicable to an agency sale of
a note of identical maturity. The Purchasing Agent may sell notes it has
purchased from a trust as principal to other NASD dealers in good standing at a
concession. Unless otherwise specified in the applicable pricing supplement, the
concession allowed to any dealer will not, during the distribution of the notes
of a series, be in excess of the concession the Purchasing Agent will receive
from the issuing trust. After the initial offering of notes of a series, the
offering price, the concession and any reallowance may be changed.
The offer made hereby may be modified without notice, and each trust may
reject offers in whole or in part (whether placed directly by an issuing trust
or through the Purchasing Agent). The Purchasing Agent will have the right, in
its discretion reasonably exercised, to reject in whole or in part any offer to
purchase notes received by it on an agency basis.
Unless otherwise specified in the applicable pricing supplement, you will
be required to pay the purchase price of your notes in immediately available
funds in United States dollars in The City of New York on the date of
settlement.
Upon issuance, the notes of a series will not have an established trading
market. There can be no assurance that a trading market for your notes will ever
develop or be maintained if developed. Unless otherwise specified in the
applicable pricing supplement, a series of notes will not be listed on any
securities exchange. The Purchasing Agent may from time to time purchase and
sell notes in the secondary market, but the Purchasing Agent is not obligated to
do so. There can be no assurance that a secondary market for the notes will
develop or that there will be liquidity in the secondary market if one develops.
From time to time, the Purchasing Agent may make a market in the notes, but the
Purchasing Agent is not obligated to do so and may discontinue any market-making
activity at any time.
In connection with an offering of notes purchased by the Purchasing Agent
as principal on a fixed offering price basis, the Purchasing Agent will be
permitted to engage in certain transactions that stabilize the price of notes.
These transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of notes. If the Purchasing Agent creates a
short position in notes (i.e., if it sells notes in an amount exceeding the
amount specified in the applicable pricing supplement), they may reduce that
short position by purchasing notes in the open market. In general, purchases of
notes for the purpose of stabilization or to reduce a short position could cause
the price of notes to be higher than it might be in the absence of these type of
purchases.
Neither Global Funding and the trusts nor the Purchasing Agent make any
representation or prediction as to the direction or magnitude of any effect that
the transactions described in the immediately preceding paragraph may have on
the price of notes. In addition, neither Global Funding and the trusts nor the
Purchasing Agent make any representation that the
S-50
Purchasing Agent will engage in any such transactions or that such transactions,
once commenced, will not be discontinued without notice.
The Purchasing Agent will be an "underwriter," with respect to the notes
being distributed by it and the funding agreements being purchased by the
issuing trust, and any discounts or commissions received by it on the sale or
resale of notes may be deemed to be underwriting discounts and commissions under
the Securities Act. The Purchasing Agent may be entitled under agreements
entered into with a trust, Global Funding and Allstate Life to indemnification
against certain civil liabilities, including liabilities under the Securities
Act, or to contribution with respect to payments that the Purchasing Agent may
be required to make in respect of such liabilities.
Global Funding is a statutory issuer of the notes and the funding notes
under the Securities Act, and Allstate Life is the issuer of the funding
agreements under the Securities Act. In addition, under the Securities Act, each
trust is a statutory underwriter of each funding agreement and each funding note
purchased with the proceeds from the issuance of such trust's notes.
In the ordinary course of its business, the Purchasing Agent and its
affiliates have engaged, and may in the future engage, in investment and
commercial banking transactions with Allstate Life and certain of its
affiliates.
Broker-dealers and securities firms have executed dealer agreements with
the Purchasing Agent and have agreed to market and sell the notes in accordance
with the terms of those agreements and applicable laws and regulations.
The issuing trusts may sell other securities referred to in the
accompanying prospectus, and the amount of notes offered by this prospectus
supplement may be reduced as a result of those sales.
S-51
ANNEX A
REPAYMENT ELECTION FORM
Allstate Life Global Funding
Allstate Life(R) CoreNotes(R)
Cusip Number
To: [Name of trust]
The undersigned financial institution (the "Financial Institution")
represents the following:
o The Financial Institution has received a request for repayment from
the executor or other authorized representative (the "Authorized
Representative") of the deceased beneficial owner listed below (the
"Deceased Beneficial Owner") of Allstate Life(R) CoreNotes(R) (CUSIP
No. ) (the "Notes").
o At the time of his or her death, the Deceased Beneficial Owner owned
Notes in the principal amount listed below.
o The Deceased Beneficial Owner acquired the Notes at least six months
before the date of death of such Deceased Beneficial Owner.
o The Financial Institution currently holds such Notes as a direct or
indirect participant in The Depository Trust Company (the
"Depositary"). The Financial Institution agrees to the following
terms:
o The Financial Institution shall follow the instructions (the
"Instructions") accompanying this Repayment Election Form (this
"Form").
o The Financial Institution shall make all records specified in the
Instructions supporting the above representations available to J.P.
Morgan Trust Company, National Association (the "Trustee") or [Name of
trust] (the "Trust") for inspection and review within five Business
Days of the Trustee's or the Trust's request.
o If the Financial Institution, the Trustee or the Trust, in any such
party's reasonable discretion, deems any of the records specified in
the Instructions supporting the above representations unsatisfactory
to substantiate a claim for repayment, the Financial Institution shall
not be obligated to submit this Form, and the Trustee or Trust may
deny repayment. If the Financial Institution cannot substantiate a
claim for repayment, it shall notify the Trustee immediately.
o Repayment elections may not be withdrawn.
o The Financial Institution agrees to indemnify and hold harmless the
Trustee and the Trust against and from any and all claims,
liabilities, costs, losses, expenses, suits and damages resulting from
the Financial Institution's above representations and request for
repayment on behalf of the Authorized Representative.
o The Notes will be repaid on the first Interest Payment Date to occur
at least 20 calendar days after the date of acceptance of the Notes
for repayment, unless such date is not a business day, in which case
the date of repayment shall be the next succeeding business day.
o Subject to the Trust's rights to limit the aggregate principal amount
of Notes as to which exercises of the survivor's option shall be
accepted in any one calendar year, all questions as to the eligibility
or validity of any exercise of the survivor's option will be
determined by the Trustee, in its sole discretion, which determination
shall be final and binding on all parties.
A-1
REPAYMENT ELECTION FORM
(1) Name of Deceased Beneficial Owner
(2) Date of Death
(3) Name of Authorized Representative Requesting Repayment
(4) Name of Financial Institution Requesting Repayment
(5) Signature of Authorized Representative of Financial Institution
Requesting Repayment
(6) Principal Amount of Requested Repayment
(7) Date of Election
(8) Financial Institution Representative Name: Phone Number: Fax Number:
Mailing Address (no P.O. Boxes):
(9) Wire instructions for payment:
Bank Name:
ABA Number:
Account Name:
Account Number:
Reference (optional):
A-2
TO BE COMPLETED BY THE TRUSTEE:
(A) Election Number*:
(B) Delivery and Payment Date:
(C) Principal Amount:
(D) Accrued Interest:
(E) Date of Receipt of Form by the Trustee:
(F) Date of Acknowledgment by the Trustee:
- ---------------
* To be assigned by the Trustee upon receipt of this Form. An acknowledgement,
in the form of a copy of this document with the assigned Election Number, will
be returned to the party and location designated in item (8) above.
A-3
INSTRUCTIONS FOR COMPLETING REPAYMENT ELECTION FORM AND EXERCISING REPAYMENT
OPTION
Capitalized terms used and not defined herein have the meanings defined in
the accompanying Repayment Election Form.
1. Collect and retain for a period of at least three years (1) satisfactory
evidence of the authority of the Authorized Representative, (2)
satisfactory evidence of death of the Deceased Beneficial Owner, (3)
satisfactory evidence that the Deceased Beneficial Owner beneficially
owned, at the time of his or her death, the Notes being submitted for
repayment, (4) satisfactory evidence that the Notes being submitted for
repayment was acquired by the Deceased Beneficial Owner at least six months
before the date of the death of such Deceased Beneficial Owner, and (5) any
necessary tax waivers. For purposes of determining whether the Notes will
be deemed beneficially owned by an individual at any given time, the
following rules shall apply:
o If a Note (or a portion thereof) is beneficially owned by tenants by
the entirety or joint tenants, the Note (or relevant portion thereof)
will be regarded as beneficially owned by a single owner. Accordingly,
the death of a tenant by the entirety or joint tenant will be deemed
the death of the beneficial owner and the entire principal amount so
owned will become eligible for repayment.
o The death of a person beneficially owning a Note (or a portion
thereof) by tenancy in common will be deemed the death of the
beneficial owner only with respect to the deceased owner's interest in
the Note (or relevant portion thereof) so owned, unless a husband and
wife are the tenants in common, in which case the death of either will
be deemed the death of the beneficial owner and the entire principal
amount so owned will be eligible for repayment.
o A Note (or a portion thereof) beneficially owned by a trust will be
regarded as beneficially owned by each beneficiary of the trust to the
extent of that beneficiary's interest in the trust (however, a trust's
beneficiaries collectively cannot be beneficial owners of more Notes
than are owned by the trust). The death of a beneficiary of a trust
will be deemed the death of the beneficial owner of the Notes (or
relevant portion thereof) beneficially owned by the trust to the
extent of that beneficiary's interest in the trust. The death of an
individual who was a tenant by the entirety or joint tenant in a
tenancy which is the beneficiary of a trust will be deemed the death
of the beneficiary of the trust. The death of an individual who was a
tenant in common in a tenancy which is the beneficiary of a trust will
be deemed the death of the beneficiary of the trust only with respect
to the deceased holder's beneficial interest in the Note, unless a
husband and wife are the tenants in common, in which case the death of
either will be deemed the death of the beneficiary of the trust.
o The death of a person who, during his or her lifetime, was entitled to
substantially all of the beneficial interest in a Note (or a portion
thereof) will be deemed the death of the beneficial owner of that Note
(or relevant portion thereof), regardless of the registration of
ownership, if such beneficial interest can be established to the
satisfaction of the Trustee. Such beneficial interest will exist in
many cases of street name or nominee ownership, custodial
arrangements, ownership by a trustee, ownership under the Uniform
Transfers of Gifts to Minors Act and community property or other joint
ownership arrangements between spouses. Beneficial interest will be
evidenced by such factors as the power to sell or otherwise dispose of
a Note, the right to receive the proceeds of sale or disposition and
the right to receive interest and principal payments on a Note.
2. Indicate the name of the Deceased Beneficial Owner on line (1).
3. Indicate the date of death of the Deceased Beneficial Owner on line (2).
4. Indicate the name of the Authorized Representative requesting repayment on
line (3).
5. Indicate the name of the Financial Institution requesting repayment on line
(4).
6. Affix the authorized signature of the Financial Institution's
representative on line (5). THE SIGNATURE MUST BE MEDALLION SIGNATURE
GUARANTEED.
7. Indicate the principal amount of Notes to be repaid on line (6).
8. Indicate the date this Form was completed on line (7).
A-4
9. Indicate the name, mailing address (no P.O. boxes, please), telephone
number and facsimile-transmission number of the party to whom the
acknowledgment of this election may be sent in item (8).
10. Indicate the wire instruction for payment on line (9).
11. Leave lines (A), (B), (C), (D), (E) and (F) blank.
12. Mail or otherwise deliver an original copy of the completed Form to:
J.P. Morgan Trust Company, National Association
2001 Bryan Street, 9th Floor
Dallas, TX 75201
Attention: Institutional Trust Services
FACSIMILE TRANSMISSIONS OF THE REPAYMENT ELECTION FORM WILL NOT BE
ACCEPTED.
13. If the acknowledgement of the Trustee's receipt of this Form, including the
assigned Election Number, is not received within 10 days of the date such
information is sent to the Trustee, contact the Trustee at J.P. Morgan
Trust Company, National Association, 227 W. Monroe Street, Suite 2600,
Chicago, IL 60606.
For assistance with this Form or any questions relating thereto, please
contact the Trustee at J.P. Morgan Trust Company, National Association, 227 W.
Monroe Street, Suite 2600, Chicago, IL 60606.
A-5
ANNEX B
FORM OF PRICING SUPPLEMENT
Filed pursuant to Rule 424(b)[ ]
Registration Statement No. 333-129157
Pricing Supplement No. [ ] Dated [ ]
(To Prospectus dated [ ], and
Prospectus Supplement dated [ ])
CUSIP: [ ]
Allstate Life Global Funding
Allstate Life(R) CoreNotes(R)
Issued Through
Allstate Life Global Funding Trust [ ]
The description in this pricing supplement of the particular terms of the
Allstate Life(R) CoreNotes(R)offered hereby (the "Notes"), the Funding
Agreement(s) (specified below) issued by Allstate Life Insurance Company
("Allstate Life") and deposited into Allstate Life Global Funding Trust [ ] (the
"Trust") by Allstate Life Global Funding ("Global Funding") and the Funding Note
(specified below) issued by Global Funding to the Trust supplements the
description of the general terms and provisions of the notes, the funding
agreements and the funding notes set forth in the accompanying prospectus and
prospectus supplement, to which reference is hereby made.
The Notes will represent the obligations of the issuing entity only and
will not represent the obligations of, or interest in, any other person or
entity, including Global Funding, Allstate Life or any of their respective
affiliates. The Notes will constitute asset-backed securities within the meaning
of Regulation AB under the Securities Act of 1933, as amended.
THE NOTES
Principal Amount: [ ] Agent(s) Discount: [ ]
Issue Price: [ ] Original Issue Date: [ ]
Net Proceeds to the Trust: [ ] Stated Maturity Date: [ ]
Specified Currency: United States Dollars
Interest Payment Dates: [ ] Depositary: [The Depository Trust Company]
Initial Interest Payment Date: [ ]
Regular Record Date: [15 calendar days prior to the Interest Payment Date]
Fiscal Year of Trust (not applicable unless different than as specified in the
prospectus and prospectus supplement): [ ]
Type of Interest Rate: [[ ] Fixed Rate] [[ ] Floating Rate]
Fixed Rate Notes: [[ ] Yes] [[ ] No]. If, Yes,
Interest Rate: [ ]
Floating Rate Notes: [[ ] Yes] [[ ] No]. If, Yes,
Regular Floating Rate Notes: [[ ] Yes] [[ ] No]. If, Yes,
Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Floating Rate/Fixed Rate Notes: [[ ] Yes] [[ ] No]. If, Yes,
Floating Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Fixed Interest Rate: [ ]
Fixed Rate Commencement Date: [ ]
Initial Interest Rate, if any: [ ]
Initial Interest Reset Date: [ ]
Interest Rate Basis(es). Check all that apply:
[ ] CD Rate [ ] Federal Funds Rate
[ ] CMT Rate [ ] LIBOR
[ ] Commercial Paper Rate [ ] Prime Rate
[ ] Constant Maturity Swap Rate [ ] Treasury Rate
[ ] Federal Funds Open Rate
[If LIBOR:]
LIBOR Page: [ ]
[ ] LIBOR Moneyline Telerate: [ ] LIBOR Reuters:
LIBOR Currency: United States Dollars
[If CMT Rate:]
Designated CMT Moneyline Telerate Page:
[If CMT Moneyline Telerate Page 7052:] [[ ] Weekly Average]
[[ ] Monthly Average]
Designated CMT Maturity Index: [ ]
Index Maturity: [ ]
Spread (+/-): [ ]
Spread Multiplier: [ ]
Interest Reset Date(s): [ ]
Interest Determination Date(s): [ ]
Maximum Interest Rate, if any: [ ]
Minimum Interest Rate, if any: [ ]
Calculation Agent, if any: [J.P. Morgan Trust Company, National Association]
Computation of Interest (not applicable unless different than as specified in
the prospectus and prospectus supplement):
B-2
Day Count Convention (not applicable unless different than as specified in the
prospectus and prospectus supplement):
Discount Notes: [[ ] Yes] [[ ] No]. If, Yes,
Total Amount of Discount: [ ]
Initial Accrual Period of Discount: [ ]
Additional/Other Terms: [ ]
Terms of Survivor's Option: [[ ] Yes] [[ ] No]. If, Yes,
Annual Put Limitation: [ ] As specified in the prospectus and prospectus
supplement; or
[ ] $[ ]
Individual Put Limitation: [ ] As specified in the prospectus and prospectus
supplement; or
[ ] $[ ]
Trust Put Limitation: [ ] $[ ]
Redemption Provisions: [[ ] Yes] [[ ] No]. If, Yes,
Initial Redemption Date: [ ]
Initial Redemption Percentage: [ ]
Annual Redemption Percentage Reduction (if any):
[ ]
Redemption: [[ ] In whole only and not in part]
[[ ] May be in whole or in part]
Additional/Other Terms:
Sinking Fund (not applicable unless specified):
Securities Exchange Listing: [[ ] Yes] [[ ] No]. If Yes, Name of Exchange:
Authorized Denominations: [$1,000]
Ratings:
The Notes issued under the Program are rated "AA" by Standard & Poor's, a division of The Mc-Graw Hill Companies, Inc.
("S&P"). It is anticipated that Moody's Investors Service, Inc. ("Moody's") will rate the Notes "Aa2" on the Original
Issue Date.
Agent(s) Purchasing Notes as Principal: [[ ] Yes] [[ ] No]. If Yes,
Agent(s) Principal Amount
[ ]
Total: [ ]
======================
Agent(s) Acting as Agent: [[ ] Yes] [[ ] No]. If Yes,
Agent(s) Principal Amount
[ ] [ ]
Total: [ ]
Additional/Other Terms: [ ]
Special Tax Considerations: [ ]
B-3
THE FUNDING AGREEMENT(S)
Funding Agreement Issuer: Allstate Life Insurance Company
Funding Agreement No.: [ ]
Deposit Amount: [ ]
Issue Price: [ ]
Net Deposit Amount: [ ]
Effective Date: [ ]
Specified Currency: United States Dollars
Interest Payment Dates: [ ]
Initial Interest Payment Date: [ ]
Type of Interest Rate: [[ ] Fixed Rate] [[ ] Floating Rate]
Fixed Rate Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Interest Rate: [ ]
Floating Rate Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Floating Rate Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Floating Rate/Fixed Rate Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Floating Interest Rate: [ ]
Interest Rate Basis(es): [ ]
Fixed Interest Rate: [ ]
Fixed Rate Commencement Date: [ ]
Initial Interest Rate, if any: [ ]
Initial Interest Reset Date: [ ]
Interest Rate Basis(es). Check all that apply:
[ ] CD Rate [ ] Commercial Paper Rate
[ ] CMT Rate [ ] Eleventh District Cost of Funds Rate
[ ] Constant Maturity Swap Rate [ ] Federal Funds Open Rate
[ ] LIBOR [ ] Federal Funds Rate
[ ] Prime Rate [ ] Treasury Rate
[If LIBOR:]
LIBOR Page: [ ]
[ ] LIBOR Moneyline Telerate: [ ] LIBOR Reuters:
B-4
LIBOR Currency: [ ]
[If CMT Rate:]
Designated CMT Moneyline Telerate Page: [ ]
[[ ] Weekly Average]
[If CMT Moneyline Telerate Page 7052:] [[ ] Monthly Average]
Designated CMT Maturity Index: [ ]
Index Maturity: [ ]
Spread (+/-): [ ]
Spread Multiplier: [ ]
Interest Reset Date(s): [ ]
Interest Determination Date(s): [ ]
Maximum Interest Rate, if any: [ ]
Minimum Interest Rate, if any: [ ]
Calculation of Interest: [ ]
Day Count Convention: [ ]
Additional/Other Terms: [ ]
Discount Funding Agreement: [[ ] Yes] [[ ] No]. If Yes,
Total Amount of Discount: [ ]
Initial Accrual Period of Discount: [ ]
Additional/Other Terms: [ ]
Redemption Provisions: [[ ] Yes] [[ ] No]. If Yes,
Initial Redemption Date: [ ]
Initial Redemption Percentage: [ ]
Annual Redemption Percentage Reduction
(if any): [ ]
Redemption: [[ ] In whole only and not in part]
[[ ] May be in whole or in part]
Additional/Other Terms: [ ]
Repayment: [ ]
Sinking Fund (not applicable unless specified): [ ]
Ratings:
B-5
The Funding Agreements issued under the Program are rated AA by S&P. It is
anticipated that the Funding Agreement(s) will be rated Aa2 by Moody's on the
Original Issue Date.
Additional/Other Terms, if any: [ ]
Special Tax Considerations: [ ]
THE FUNDING NOTE
Funding Note Issuer: Allstate Life Global Funding
Funding Note No.: [ ]
Principal Amount: [ ]
The Funding Note will otherwise have payment and other terms substantially
similar to the Funding Agreement(s) and the Notes, except that the terms of the
Funding Note will provide that it will be cancelled immediately upon the sale
of, and deposit into, the Trust by Global Funding of the Funding Agreement(s).
B-6
==============================================================================
$5,000,000,000
Allstate Life Global Funding
Depositor
Allstate Life(R) CoreNotes(R)
Due Between Nine Months and 30 Years From the Date of Issue
Issued Through
Allstate Life Global Funding Trusts
Secured by
Funding Agreements Issued by
Allstate Life Insurance Company
Sponsor
------------------
PROSPECTUS SUPPLEMENT
------------------
Merrill Lynch & Co.
March -, 2006
"Allstate Life(R)" is a registered service mark of Allstate Insurance Company.
"CoreNotes(R)" is a registered service mark of Merrill Lynch & Co., Inc.
===============================================================================
Subject to Completion
Preliminary Prospectus dated March 13, 2006
PROSPECTUS
$5,000,000,000
Allstate Life Global Funding
Depositor
Secured Medium Term Notes
Allstate Life(R) CoreNotes(R)
Issued Through
Allstate Life Global Funding Trusts
Secured by
Funding Agreemments Issued by
Allstate Life Insurance Company
Sponsor
------------------
Allstate Life Global Funding (the "depositor" or "Global Funding") is a
statutory trust formed under the laws of the State of Delaware. Its primary
purpose is to facilitate the programs for the issuance of one or more series of
secured medium term notes (the "notes"), including, in connection with each
offering of notes, to issue the applicable funding note (each, a "funding
note"), as more fully described herein. Each series of notes will be issued by a
newly created separate and distinct Delaware statutory trust (each, a "trust").
Global Funding will be the sole beneficial owner of each trust that is formed
and the depositor of the funding agreements into the issuing trusts. The notes
may have an aggregate principal amount of up to $5,000,000,000 or the equivalent
amount in one or more foreign or composite currencies.
The notes of each series will represent the obligations of the issuing
entity only and will not represent the obligations of, or interest in, any other
person or entity, including Global Funding, Allstate Life or any of their
respective affiliates. The notes of each series will constitute "asset-backed
securities" within the meaning of Regulation AB under the Securities Act of
1933, as amended.
In connection with the issuance of a series of notes, the issuing trust
will acquire one or more funding agreements issued by Allstate Life Insurance
Company ("Allstate Life"). The notes of a series will be secured by the right,
title and interest of the issuing trust in and to (1) the funding agreement(s)
held by that trust, (2) all proceeds of such funding agreement(s) and (3) all
books and records pertaining to such funding agreement(s). Each series of notes
will be secured by and payable solely out of the assets of the issuing trust,
and holders of such series of notes will have no rights against the assets of
Global Funding or the assets of any other trust.
The notes of a series may be listed on a securities exchange.
Neither the Securities and Exchange Commission, any state securities
commission nor any state insurance commission has approved or disapproved of
these securities or determined if this prospectus, any prospectus supplement or
any pricing supplement is truthful or complete. Any representation to the
contrary is a criminal offense.
The trusts may sell the secured medium term notes referred to herein to one
or more of the agents referred to below (collectively, the "Agents") as
principals for resale at varying or fixed offering prices or through the
applicable Agent(s) as agents using their reasonable efforts on behalf of each
issuing trust. The trusts may also sell secured medium term notes directly to
investors without the assistance of any Agent. Unless otherwise specified in the
applicable pricing supplement, any secured medium term note sold to an Agent as
principal will be purchased by that Agent at a price equal to 100% of the
principal amount thereof less a percentage of the principal amount equal to the
commission applicable to an agency sale of a note of identical maturity. Unless
otherwise specified in the applicable pricing supplement, each trust will pay a
commission to an Agent, ranging from .150% to .875% of the principal amount of
each secured medium term note, depending upon its stated maturity, sold through
that Agent as its agent.
Each trust may sell its Allstate Life(R) CoreNotes(R) to Merrill Lynch,
Pierce, Fenner & Smith Incorporated (the "Purchasing Agent") as principal for
resale at a fixed offering price specified in the applicable pricing supplement
or at varying prices. Each trust may also explicitly agree with the Purchasing
Agent that it will use its reasonable efforts as agent on behalf of the issuing
trust to solicit offers to purchase Allstate Life(R) CoreNotes(R) of the
applicable series from that trust at 100% of the principal amount thereof,
unless otherwise specified in the applicable pricing supplement. Unless
otherwise specified in the applicable pricing supplement, any Allstate Life(R)
CoreNotes(R) sold to the Purchasing Agent as principal will be purchased by the
Purchasing Agent at a price equal to 100% of the principal amount thereof less a
percentage of the principal amount equal to the commission applicable to an
agency sale of a note of identical maturity. Unless otherwise specified in the
applicable pricing supplement, each trust will pay a commission to the
Purchasing Agent, ranging from .125% to 2.50% of the principal amount of the
applicable Allstate Life(R) CoreNotes(R), depending upon the stated maturity,
for all Allstate Life(R) CoreNotes(R) purchased from the issuing trust by the
Purchasing Agent as its agent.
The date of this prospectus is -, 2006.
"Allstate Life(R)" is a registered service mark of Allstate Insurance Company.
"CoreNotes(R)" is a registered service mark of Merrill Lynch & Co., Inc.
FORWARD-LOOKING STATEMENTS
Allstate Life
This prospectus, the applicable accompanying prospectus supplement and each
applicable pricing supplement may include forward-looking statements of Allstate
Life. These forward-looking statements are not statements of historical fact but
rather reflect Allstate Life's current expectations, estimates and predictions
about future results and events. These statements may use words such as "will,"
"should," "likely," "target," "anticipate," "believe," "estimate," "expect,"
"intend," "predict," "project" and similar expressions as they relate to
Allstate Life or its management. When Allstate Life makes forward-looking
statements, Allstate Life is basing them on its management's beliefs and
assumptions, using information currently available to Allstate Life. These
forward-looking statements are subject to risks, uncertainties and assumptions,
including but not limited to, risks, uncertainties and assumptions discussed in
this prospectus supplement, the accompanying prospectus and in each applicable
pricing supplement. Factors that can cause or contribute to these differences
include those described under the heading "Risk Factors" in this prospectus
supplement. Allstate Life undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events, developments or otherwise.
If one or more of these or other risks or uncertainties materialize, or if
Allstate Life's underlying assumptions prove to be incorrect, actual results may
vary materially from what Allstate Life projected. Any forward-looking
statements of Allstate Life you read in this prospectus, the applicable
accompanying prospectus supplement or the applicable pricing supplement reflect
Allstate Life's current views with respect to future events and are subject to
these and other risks, uncertainties and assumptions relating to Allstate Life's
operations, results of operations, growth strategy and liquidity. All subsequent
written and oral forward-looking statements attributable to Allstate Life or
individuals acting on Allstate Life's behalf are expressly qualified in their
entirety by this section. You should specifically consider the factors
identified in this prospectus supplement, the accompanying prospectus and each
applicable pricing supplement which could cause actual results to differ before
making an investment decision.
Global Funding and the Trusts
This prospectus, the accompanying prospectus supplement and each applicable
pricing supplement may include forward-looking statements of Global Funding and
the trusts. These forward-looking statements are subject to risks, uncertainties
and assumptions, including but not limited to, risks, uncertainties and
assumptions discussed in this prospectus, the accompanying prospectus supplement
and in each applicable pricing supplement. Global Funding does not, and the
trusts will not, undertake any obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
You should specifically consider the factors identified in this prospectus,
the accompanying prospectus supplement and each applicable pricing supplement
before making an investment decision. The trusts are not entitled to the safe
harbors contained in Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), with respect to forward-looking statements of the
trusts in this prospectus, the accompanying prospectus supplements and each
applicable pricing supplement.
1
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement filed by Global Funding
and Allstate Life (the "registrants") with the Securities and Exchange
Commission (the "SEC"). Pursuant to the registration statement, the trusts will
be offering, from time to time, up to a total amount of $5,000,000,000, or the
equivalent amount in one or more foreign currencies, in aggregate principal
amount of the notes described in this prospectus. This prospectus provides a
general description of the notes that the trusts may be offering, and additional
descriptions of the related funding notes and funding agreements. The applicable
prospectus supplement will provide additional descriptions of the secured medium
term notes or the Allstate Life(R) CoreNotes(R), as applicable, to be offered by
the trusts, and the related funding notes and funding agreements. Each time a
trust offers to sell notes, it will prepare a separate prospectus supplement to
this prospectus and the applicable prospectus supplement (a "pricing
supplement") that will set forth the specific terms of the applicable series of
notes, and the terms of the related funding note and funding agreement(s). That
pricing supplement also may add, update, supplement or clarify information in
this prospectus and the applicable prospectus supplement. Before you agree to
purchase any notes, you should read this prospectus, the applicable prospectus
supplement and the applicable pricing supplement together with the information
described under the heading "Incorporation of Documents by Reference" on page 3.
For more detail on the terms of the notes, you should read the exhibits filed
with or incorporated by reference in the registration statement.
You should rely on the information contained or incorporated by reference
in this prospectus, the applicable prospectus supplement and the applicable
pricing supplement. Neither the registrants nor any Agent has authorized anyone
to provide you with different or additional information. If anyone provides you
with different or additional information, you should not rely on it. Neither the
registrants nor any Agent is making an offer to sell the notes in any
jurisdiction where the offer or sale is not permitted. You should not assume
that the information contained or incorporated by reference in this prospectus,
the applicable prospectus supplement and the applicable pricing supplement is
accurate as of any date other than the date of such document.
In this prospectus, references to the "depositor" and "Global Funding" are
to Allstate Life Global Funding. References to the "trusts" are to Allstate Life
Global Funding Trusts. References to an "issuing trust" are to a trust with
respect to the series of notes issued and sold to the public by that trust.
These references are not to Allstate Life Insurance Company. In this prospectus,
references to "Allstate Life" are to Allstate Life Insurance Company.
In this prospectus, references to the "United States dollars," "U.S.
dollars" or "$" are to lawful currency of the United States of America, and
references to "Euro" are to the currency introduced at the start of the third
stage of the European Economic and Monetary Union pursuant to the Treaty
Establishing the European Community, as amended.
2
AVAILABLE INFORMATION
This prospectus, which constitutes part of the registration statement
referred to above, does not contain all of the information set forth in the
registration statement. Parts of the registration statement are omitted from
this prospectus in accordance with the rules and regulations of the SEC.
Allstate Life is subject to the informational requirements of the Exchange Act,
and, in accordance with the Exchange Act, Allstate Life files or furnishes
annual, quarterly, special event reports and other information with the SEC.
Each trust formed in connection with the offering of notes will incur
separate reporting obligations under the Exchange Act. As depositor, Global
Funding will file periodic reports with the SEC with respect to each trust
formed under the programs on Form 8-K or Form 10-D, as applicable, and will file
annual reports with respect to each trust on Form 10-K. Global Funding will also
transmit such reports to holders of each applicable series of notes in the
manner and to the extent required by the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
If so required by the applicable rules and regulations of the SEC, and the
interpretations and positions of the SEC staff thereunder, Global Funding will
also be filing or furnishing with the SEC all required reports on its behalf.
As part of the Allstate organization, Allstate Life does not maintain a
company-specific website. All reports and other information filed by Allstate
Life with the SEC are available over the internet at http://www.allstate.com.
(This uniform resource locator (URL) is an inactive textual reference only and
is not intended to incorporate the Allstate website into this prospectus).
Global Funding does not maintain a website. No reports will be made available on
the website of any other party as no such obligation is imposed on any such
party under the programs. You can read and copy any reports or other information
that Global Funding and Allstate Life file at the SEC's public reference room at
Room 1580, 100 F Street, N.E., Washington, D.C. 20549. You can also request
copies of such documents upon payment of a duplicating fee, by writing to the
SEC's public reference room. You can obtain information regarding the public
reference room by calling the SEC at 1-800-SEC-0330. Such filings are available
to the public from commercial document retrieval services and over the internet
at http://www.sec.gov. (This uniform resource locator (URL) is an inactive
textual reference only and is not intended to incorporate the SEC website into
this prospectus).
Pursuant to the terms of the Trust Indenture Act, the indenture trustee
will be required to transmit to holders of each series of notes reports with
respect to certain matters, including any changes to the eligibility and
qualifications, any conflicting interests, any unpaid advances made, and its
actions that materially affect the applicable notes or collateral. These reports
will not be made available on the indenture trustee's website. A copy of each
such report shall, at the time of such transmission to indenture security
holders, be filed with each stock exchange upon which the applicable note may be
listed, and also with the SEC.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows Global Funding and Allstate Life to incorporate by reference
information that Global Funding and Allstate Life file with the SEC into this
prospectus and any accompanying prospectus supplement and pricing supplement,
which means that incorporated documents are considered part of this prospectus
and any accompanying prospectus supplement and pricing supplement. Global
Funding and Allstate Life can disclose important information to you by referring
you to those documents. Information that Global Funding and Allstate Life file
with the SEC will automatically update and supersede information in this
prospectus.
This prospectus and any accompanying prospectus supplement and pricing
supplement incorporate by reference:
o Allstate Life's Annual Report on Form 10-K for the fiscal year ended
December 31, 2005;
3
o all filings made with the SEC by Global Funding as depositor with
respect to the trusts since January 1, 2005 pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act.
This prospectus and any accompanying prospectus supplement and pricing
supplement also incorporate by reference any filings made by Global Funding
(with respect to the trusts or, if required, on its behalf) or Allstate Life
with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this prospectus and prior to the termination of the
offering of the notes. These documents contain important information.
You may request a copy of any documents incorporated by reference in this
prospectus and any accompanying prospectus supplement and pricing supplement
(including any exhibits that are specifically incorporated by reference in
them), at no cost, by writing or telephoning to the following addresses or
telephone numbers:
Allstate Life Global Funding Allstate Life Insurance Company
c/o AMACAR Pacific Corp. 3100 Sanders Road, Suite M3A
6525 Morrison Boulevard Northbrook, Illinois 60062
Suite 318 Attention: Assistant Vice President, Institutional Markets
Charlotte, North Carolina 28211 Tel: (847) 402-5000
Attention: President
Tel: (704) 365-0569
4
DESCRIPTION OF ALLSTATE LIFE GLOBAL FUNDING AND THE TRUSTS
General
Allstate Life Global Funding is a statutory trust formed and existing under
the laws of the State of Delaware pursuant to the trust agreement, dated as of
June 24, 2002, as amended and restated by the Amended and Restated Trust
Agreement dated as of April 27, 2004, as further amended and restated by the
Amended and Restated Trust Agreement dated as of August 16, 2005, and as further
amended and restated by the Amended and Restated Trust Agreement dated as of
March -, 2006 (as the same may be further amended, supplemented, modified,
restated or replaced from time to time, the "depositor trust agreement"),
executed by Wilmington Trust Company as Delaware trustee of Global Funding,
AMACAR Pacific Corp. as administrator of Global Funding and AMACAR Pacific Corp.
as the trust beneficial owner of Global Funding, and the filing of a certificate
of trust (and amendments thereto) with the Secretary of State of the State of
Delaware. You should read the actual documents which are attached as exhibits to
the registration statement of which this prospectus forms a part.
Global Funding has not and will not engage in any activity other than:
o beneficially owning the trusts;
o issuing one or more funding notes;
o acquiring one or more funding agreements from Allstate Life;
o pledging, assigning as collateral and granting a security interest in
the applicable funding agreement(s) to the funding note indenture
trustee;
o assigning absolutely the funding agreement(s) to, and depositing such
funding agreement(s) into, the trusts; and
o engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental to or
connected with those activities.
Global Funding is performing the functions of the depositor under the
programs for the issuance of secured medium term notes and Allstate Life(R)
CoreNotes(R) described in this prospectus and the applicable prospectus
supplements.
Each series of notes will be issued by a newly created separate and
distinct Delaware statutory trust formed by the Delaware trustee of the trust,
the administrator of the trust and Global Funding as the sole beneficial owner
of the trust pursuant to the filing of a certificate of trust and the execution
of the applicable trust agreement.
After formation, each trust will not engage in any activity other than:
o issuing and selling a single series of notes;
o immediately acquiring a funding note and immediately surrendering such
funding note for cancellation pursuant to its terms in exchange for
one or more funding agreement(s);
o acquiring, holding and maintaining the funding agreement(s);
o pledging, assigning as collateral and granting a security interest in
the applicable funding agreement(s) to the indenture trustee;
o making payments on the applicable series of notes; and
o engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental to or
connected with those activities.
The principal executive offices of Global Funding and the trusts will be
located at c/o AMACAR Pacific Corp., 6525 Morrison Boulevard, Suite 318,
Charlotte, North Carolina 28211. The telephone number is (704) 365-0569.
5
Unless otherwise provided in the applicable pricing supplement, the fiscal
year for each trust will end on December 31. The fiscal year for Global Funding
will end on December 31.
Assets and Obligations of Global Funding; Distributions
The only equity contribution to Global Funding is $1,000 invested in Global
Funding by its trust beneficial owner. Each trust will use the net proceeds
received from the issuance of the related series of notes to purchase a funding
note from Global Funding. Global Funding will use the net proceeds received from
the sale of the related funding note to purchase one or more funding agreements
issued by Allstate Life. Pursuant to each funding note indenture, Global Funding
will immediately pledge and collaterally assign each such funding agreement to
and grant a security interest in each such funding agreement and the related
collateral in favor of the funding note indenture trustee. Global Funding will
immediately thereafter assign absolutely to, and deposit into, the applicable
trust each such funding agreement and, in connection with such assignment and
deposit, the relevant funding note will be surrendered for cancellation by or on
behalf of the applicable trust, and will be cancelled by the funding note
indenture trustee, and the pledge and collateral assignment of each funding
agreement to, and the security interest in favor of, the funding note indenture
trustee will be terminated. Such cancellation shall operate as a redemption and
satisfaction of the funding note. Global Funding will be the sole beneficial
owner of each trust that is formed.
Prior to the issue date of each funding note, the Delaware trustee shall
establish the related payment account for Global Funding. The Delaware trustee
and any agent of the Delaware trustee shall have exclusive control and sole
right of withdrawal with respect to each payment account for the purpose of
making deposits in and withdrawals from such payment account in accordance with
the depositor trust agreement. Subject to each funding note indenture, all funds
or other property received by the Delaware trustee on behalf of Global Funding
in respect of any collateral for the applicable funding note will be deposited
in the related payment account. All funds and other property deposited or held
from time to time in a payment account for Global Funding shall be held by the
Delaware trustee in such payment account for the exclusive benefit of the trust
beneficial owner, subject to the security interest in the applicable collateral
in favor of the applicable funding note indenture trustee for the benefit of the
holder of the applicable funding note and any other person for whose benefit
such funding note indenture trustee is or will be holding such collateral, and
for distribution by the Delaware trustee as provided in the depositor trust
agreement, including (and subject to) any priority of payments provided for in
the depositor trust agreement.
All funds and other property deposited into a payment account of Global
Funding shall be distributed by Global Funding as follows:
First: to the applicable funding note indenture trustee, for the payment of
all amounts then due and unpaid upon the applicable funding note and any
other amounts due and payable in accordance with the applicable funding
note indenture; and
Second: upon the final surrender of the applicable funding note and payment
of any amounts payable in respect thereof, any remaining funds and other
property deposited into such payment account shall be distributed to
Delaware trustee of Global Funding for distribution as provided below.
Notwithstanding anything in the depositor trust agreement to the contrary,
the Delaware trustee, on behalf of Global Funding, shall execute a standing
order to each funding note indenture trustee pursuant to which such funding note
indenture trustee, either directly or through an applicable funding note paying
agent, shall distribute all applicable amounts due and unpaid in accordance with
the provisions discussed above; provided, however, that all payments to be made
by Global Funding in connection with the termination of Global Funding as
provided below shall be made by the Delaware trustee on behalf of Global
Funding. For so long as (i) the Delaware trustee, on behalf of Global Funding,
has not rescinded the applicable standing order and (ii) the applicable funding
note indenture trustee, either directly or through an applicable funding note
paying agent, is able to, and does, comply with such standing order, the
Delaware trustee will not be required to establish a separate payment account in
accordance with the provisions discussed above in respect of the applicable
funding note; provided, however, that the Delaware trustee shall establish a
separate payment account to facilitate payments to be made in connection with
the termination of Global Funding as provided below.
6
In connection with the termination of Global Funding and the distribution
of all amounts from each payment account in accordance with the priority
described above, the Delaware trustee will distribute any amounts received in
accordance with the second clause of the second preceding paragraph and any
other remaining assets of Global Funding in the following order of priority:
First: to pay all expenses and other liabilities owed by Global Funding;
and
Second: any remaining funds and other property shall be paid to its trust
beneficial owner.
The Delaware trustee shall deposit in the applicable payment account of
Global Funding, promptly upon receipt, any payments received in respect of any
related collateral. Amounts held in any payment account shall not be invested by
the Delaware trustee.
AMACAR Pacific Corp., as trust beneficial owner of Global Funding, will be
entitled to receive any residual assets of Global Funding upon its liquidation
and dissolution.
Assets and Obligations of the Trusts; Distributions
The notes of a series will represent the unconditional, direct,
non-recourse and unsubordinated obligations of the issuing entity and will rank
equally among themselves. The notes of a series will represent the obligations
of the issuing entity only and will not represent the obligations of, or
interest in, any other person or entity, including Global Funding, Allstate Life
or any of their respective affiliates. Each series of notes will be secured by
and payable solely out of the assets of the issuing trust, and holders of such
series of notes will have no right against the assets of Global Funding or the
assets of any other trust. Any funding agreement and any other collateral
securing the repayment of the obligations under such series of notes will be the
assets of the issuing trust and will not be the assets of Global Funding or the
assets of any other trust. The sole liability of each trust shall be its series
of notes and the sole asset of the trust will be the applicable funding
agreement(s).
On the original issue date of a series of notes, the Delaware trustee shall
establish the payment account for the issuing trust. The Delaware trustee and
any agent of the Delaware trustee shall have exclusive control and sole right of
withdrawal with respect to such payment account for the purpose of making
deposits in and withdrawals from the payment account in accordance with the
applicable trust agreement and the applicable indenture. Subject to the
applicable indenture, all funds or other property received by the Delaware
trustee on behalf of the applicable trust in respect of the applicable
collateral will be deposited in the payment account of the issuing trust. All
funds and other property deposited or held from time to time in the payment
account shall be held by the Delaware trustee in the payment account for the
exclusive benefit of Global Funding, as the trust beneficial owner, subject to
the security interest in the applicable collateral in favor of the indenture
trustee for the benefit of the holders of the applicable series of notes and any
other person for whose benefit the indenture trustee is or will be holding the
applicable collateral, and for distribution by the Delaware trustee as provided
in the applicable trust agreement, including (and subject to) any priority of
payments provided for in the applicable trust agreement.
All funds and other property received by the Delaware trustee on behalf of
the issuing trust in respect of the applicable collateral will be deposited into
the payment account of such trust and will be distributed by such trust as
follows:
First: to the indenture trustee for the payment of all amounts then due and
unpaid upon the applicable series of notes and any other amounts due and
payable, in accordance with the applicable indenture; and
Second: upon the final redemption of the applicable series of notes and
payment of any amounts payable in respect thereof, any remaining funds and
other property deposited into the payment account shall be distributed to
the Delaware trustee for distribution as provided below.
Notwithstanding anything in the trust agreement for an issuing trust to the
contrary, the Delaware trustee, on behalf of the trust, shall execute a standing
order to the indenture trustee pursuant to which the indenture trustee, either
directly or through a paying agent, shall distribute all amounts due and unpaid
in accordance with the provisions discussed above; provided, however, that all
payments to be made by the trust in connection with the termination of the trust
as provided below shall be made by the Delaware trustee on behalf of the trust.
For so long as (i) the Delaware trustee, on behalf of the trust, has not
rescinded the standing order and (ii) the indenture trustee, either directly or
through a paying agent, is able to, and does, comply with the standing order,
the Delaware trustee will not be required to establish a separate payment
account in accordance with the provisions discussed above in respect of the
applicable series of notes; provided, however, that the
7
Delaware trustee shall establish a separate payment account to facilitate
payments made in connection with the termination of the trust as provided below.
In connection with the termination of any trust that is formed and the
distribution of all amounts from the applicable payment account in accordance
with the priority described above, the Delaware trustee will distribute any
amounts received in accordance with the second clause of the second preceding
paragraph and any other remaining assets of the trust in the following order of
priority:
First: to pay all expenses and other liabilities owed by the applicable
trust; and
Second: any remaining funds and other property shall be paid to its trust
beneficial owner.
The Delaware trustee shall deposit in the applicable payment account of the
trust, promptly upon receipt, any payments received with respect to the
applicable collateral. Amounts held in the applicable payment account shall not
be invested by the Delaware trustee.
Global Funding, as trust beneficial owner of each trust that is formed,
will be entitled to receive any residual assets of such trust upon their
liquidation and dissolution.
Bankruptcy Concerns
In each trust agreement, the Delaware trustee, the administrator and the
trust beneficial owner will agree that none of the parties will institute
against the applicable trust any bankruptcy proceeding. Furthermore, in the
depositor trust agreement, the parties will agree that none of them will
institute any bankruptcy proceedings against Global Funding. Also, in each
indenture, the indenture trustee will agree that it will not institute against
the applicable trust or Global Funding any bankruptcy proceeding for payments
due the indenture trustee. However, during an Event of Default under a series of
notes, the indenture trustee (on behalf of the holders of notes of the
applicable series) or the holders of such notes may accelerate payments of
principal and interest under the notes as well as attempt to institute
bankruptcy proceedings against the applicable trust. If a bankruptcy proceeding
is commenced against any trust, Allstate Life and Global Funding do not
anticipate that the assets of such trust will be consolidated with the assets of
any other party. As the sole asset of each trust will be funding agreement(s)
issued by Allstate Life, upon a proceeding for Allstate Life's liquidation,
rehabilitation, conservation or supervision or similar event, an Event of
Default under the notes issued by each trust will occur and the indenture
trustee on behalf of the holders of each series of notes will have a claim
against Allstate Life in such proceeding. No other creditors or policyholders of
Allstate Life or Global Funding should have a claim against the funding
agreement(s) held by each trust or any claims thereunder.
Delaware Trustee of Global Funding and the Trusts
General
Wilmington Trust Company has served as trustee in connection with numerous
registered and unregistered transactions involving the securitization of funding
agreements since 1996.
Allstate Life Global Funding Trusts
Pursuant to each trust agreement, the Delaware trustee will be the sole
trustee of the applicable trust. The Delaware trustee will manage the business
and affairs of each trust in accordance with the Delaware Statutory Trust Act;
provided, however, that the Delaware trustee will undertake to perform only such
duties as are specifically set forth in the applicable trust agreement and as it
may be directed from time to time by the administrator, the trust beneficial
owner and the indenture trustee in accordance with the terms of the applicable
trust agreement and the applicable indenture.
Under each trust agreement, it shall be the duty of the Delaware trustee to
discharge, or cause to be discharged, all of its responsibilities pursuant to
the terms of the applicable trust agreement, or any other documents or
instruments to which it will be a party, and to administer the issuing trust, in
accordance with the provisions of the applicable trust agreement and the other
program documents and any other documents or instruments to which the issuing
trust will be a party. Notwithstanding the foregoing, the Delaware trustee shall
be deemed to have discharged its duties and responsibilities under the
applicable trust agreement and any other documents or instruments to which the
issuing trust is a party to the extent (a) such duties and responsibilities
shall have been performed by the administrator and (b) the administrator is
required or permitted under the
8
applicable trust agreement, under the administrative services agreement or under
any other documents or instruments to which the issuing trust is a party, to
perform such act or discharge such duty of the Delaware trustee or the issuing
trust; provided, however, that the Delaware trustee shall not be held liable for
the default or failure of the administrator to carry out its required
obligations under the trust agreement or thereunder but only to the extent such
obligations are not also required to be carried out by the Delaware trustee.
Under each trust agreement, among other items, the Delaware trustee, on
behalf of the issuing trust, will have the power and authority to:
o execute and deliver on behalf of the issuing trust the notes in
accordance with the applicable trust agreement and the applicable
indenture;
o cause the issuing trust to perform the applicable trust agreement and
to enter into, and to execute, deliver and perform on behalf of the
issuing trust, the documents contained in the series instrument and
the closing instrument for the applicable series of notes, the
distribution agreement, the applicable notes, each applicable funding
agreement and such other certificates, other documents or agreements
as may be necessary, contemplated by or desirable in connection with
the purposes and function of the issuing trust or any of the
above-referenced documents;
o subject to the applicable provisions of the relevant indenture,
receive and maintain custody of each applicable funding agreement and
exercise all of the rights, powers and privileges of an owner or
policyholder of each applicable funding agreement;
o grant to the indenture trustee a security interest in the collateral
for the applicable series of notes and pledge and collaterally assign
the rights, title and interest of the applicable trust in such
collateral to the indenture trustee for the benefit of the holders of
notes of the applicable series and any other person for whose benefit
the indenture trustee is or will be holding the collateral, and seek
release of such security interest upon payment in full of all amounts
required to be paid with respect to the applicable series of notes
pursuant to the terms and conditions of such notes and the applicable
indenture;
o establish the payment account for the applicable trust;
o send notices regarding the applicable notes and the applicable funding
agreement(s) to Allstate Life, the indenture trustee, the rating
agencies, the trust beneficial owner, the applicable agents and any
other person entitled thereto in accordance with the terms of the
applicable notes, the indenture, each applicable funding agreement and
the applicable trust agreement;
o take all actions necessary or appropriate to enable the applicable
trust to comply with the provisions of the trust agreement regarding
income tax treatment;
o after the occurrence of an event of default under the applicable
funding agreement(s) actually known to a responsible officer of the
Delaware trustee, subject to the applicable provisions of the relevant
indenture, take any action as it may from time to time determine
(based solely upon the advice of counsel) is necessary or advisable to
give effect to the terms of the trust agreement and to protect and
conserve the applicable collateral for the benefit of the holders of
the applicable series of notes and any other person for whose benefit
the indenture trustee is or will be holding the collateral and, within
five business days after the occurrence of an event of default under
the applicable funding agreement(s) actually known to a responsible
officer of the Delaware trustee, give notice thereof to the
administrator, the trust beneficial owner and the indenture trustee;
o to the extent permitted by the applicable trust agreement, to
participate in the winding up of the affairs of and liquidation of the
applicable trust and assist with the preparation, execution and filing
of a certificate of cancellation with the Secretary of State of the
State of Delaware;
o subject to the applicable provisions of the applicable indenture, to
take any action and to execute any documents on behalf of the
applicable trust, incidental to the foregoing as the Delaware trustee
may from time to time determine (based on the advice of counsel) is
necessary or advisable to give effect to the terms of the applicable
trust agreement;
9
o execute and file documents with the Secretary of State of the State of
Delaware; and
o accept service of process on behalf of the issuing trust in the State
of Delaware.
Under each trust agreement, the Delaware trustee shall, based on the advice
of counsel, defend against all claims and demands of all persons at any time
claiming any lien on any of the assets of the applicable trust adverse to the
interest of the applicable trust or any holder of the applicable series of
notes, other than the security interest in the collateral granted in favor of
the indenture trustee for the benefit of each holder of the applicable series of
notes and any other person for whose benefit the indenture trustee is or will be
holding the collateral.
With respect to any trust, the Delaware trustee will not be liable under
the applicable trust agreement under any circumstances, except for (i) its own
willful misconduct, bad faith or gross negligence; (ii) its failure to use
ordinary care to disburse funds or (iii) the inaccuracy of any representation or
warranty contained in the applicable trust agreement made by the Delaware
trustee.
The Delaware trustee may resign as Delaware trustee, or the administrator,
acting on behalf of the applicable trust, may, in its sole discretion, remove
the Delaware trustee, in each case upon not less than thirty (30) days' prior
notice to the Delaware trustee, the indenture trustee and each rating agency
then rating the programs or the applicable series of notes. Upon any resignation
or removal of the Delaware trustee, the administrator, acting on behalf of the
applicable trust, shall appoint a successor Delaware trustee. If at any time the
Delaware trustee shall cease to be eligible to serve as trustee under the
applicable trust agreement and shall have not resigned, or if at any time the
Delaware trustee shall become incapable of acting or shall be adjudged bankrupt
or insolvent, or a receiver for the Delaware trustee or for its property shall
be appointed, or any public officer shall take charge or control of the Delaware
trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the administrator may remove the Delaware
trustee.
Any resignation or removal of the Delaware trustee and appointment of a
successor Delaware trustee pursuant to any of the provisions of the applicable
trust agreement shall not become effective until all fees and expenses,
including any indemnity payments, due to the outgoing Delaware trustee have been
paid and until acceptance of appointment by the successor Delaware trustee
pursuant to the applicable trust agreement.
Global Funding
Pursuant to the depositor trust agreement, the Delaware trustee will be the
sole trustee of Global Funding. The Delaware trustee will manage the business
and affairs of Global Funding in accordance with the Delaware Statutory Trust
Act; provided, however, that the Delaware trustee will undertake to perform only
such duties as are specifically set forth in the depositor trust agreement and
as it may be directed from time to time by the administrator or the applicable
trust beneficial owner in accordance with the terms of the depositor trust
agreement.
Under the depositor trust agreement, it shall be the duty of the Delaware
trustee to discharge, or cause to be discharged, all of its responsibilities
pursuant to the terms of the depositor trust agreement, or any other documents
or instruments to which it will be a party, and to administer Global Funding, in
accordance with the provisions of the depositor trust agreement and the other
program documents and any other documents or instruments to which Global Funding
will be a party. Notwithstanding the foregoing, the Delaware trustee shall be
deemed to have discharged its duties and responsibilities under the depositor
trust agreement and any other documents or instruments to which Global Funding
is a party to the extent (a) such duties and responsibilities shall have been
performed by the administrator and (b) the administrator is required or
permitted under the depositor trust agreement, under the depositor
administrative services agreement or under any other documents or instruments to
which Global Funding is a party, to perform such act or discharge such duty of
the Delaware trustee or Global Funding; provided, however, that the Delaware
trustee shall not be held liable for the default or failure of the administrator
to carry out its required obligations under the depositor trust agreement or
thereunder but only to the extent such obligations are not also required to be
carried out by the Delaware trustee.
Under the depositor trust agreement, among other items, the Delaware
trustee, on behalf of the issuing trust, will have the power and authority to:
o execute and deliver on behalf of Global Funding the funding notes and
the amended and restated certificate of trust in accordance with the
depositor trust agreement;
10
o cause Global Funding to perform the depositor trust agreement and to
enter into, and to execute, deliver and perform, the funding notes,
each series instrument and each closing instrument (including all
relevant documents contained in each series instrument and each
closing instrument), the distribution agreement, the depositor name
licensing agreement, the depositor support agreement, the depositor
administrative services agreement, each other program document and
such other certificates, other documents or agreements as may be
necessary, contemplated by or desirable in connection with the
purposes and function of Global Funding or any of the above-referenced
documents;
o receive custody of any funding agreement and exercise on behalf of
Global Funding all of the rights, powers and privileges of an owner or
policyholder of each such funding agreement in accordance with the
terms of such funding agreement and any related documents;
o cause Global Funding to immediately pledge and collaterally assign
each funding agreement to the funding note indenture trustee and to
immediately thereafter assign absolutely to, and deposit into, the
relevant trust the relevant funding agreement(s);
o establish each payment account for Global Funding and a separate
payment account to facilitate payments to the trust beneficial owner;
o send any notices regarding any funding note to Allstate Life, the
rating agencies, the trust beneficial owner of Global Funding and the
applicable agents under the relevant terms agreement in accordance
with the terms of the relevant funding note and the depositor trust
agreement;
o take all actions necessary and appropriate to enable Global Funding to
comply with the provisions of the depositor trust agreement regarding
income tax treatment;
o after the occurrence of an event of default under a funding agreement
actually known to a responsible officer of the Delaware trustee, take
any action as it may from time to time determine (based solely upon
the advice of counsel) is necessary or advisable to give effect to the
terms of the depositor trust agreement (without consideration of the
effect of any such action on any particular trust) and, within five
business days after the occurrence of an event of default under a
funding agreement actually known to a responsible officer of the
Delaware trustee, give notice thereof to the administrator and the
trust beneficial owner;
o to the extent permitted by the depositor trust agreement, to
participate in the winding up of the affairs of and liquidation of
Global Funding and assist with the preparation, execution and filing
of a certificate of cancellation with the Secretary of State of the
State of Delaware;
o to take any action and to execute any documents on behalf of Global
Funding, incidental to the foregoing, as the Delaware trustee may from
time to time determine (based on the advice of counsel) is necessary
or advisable to give effect to the terms of the depositor trust
agreement;
o execute and file documents with the Secretary of State of the State of
Delaware; and
o accept service of process on behalf of Global Funding in the State of
Delaware.
Under the depositor trust agreement, the Delaware trustee shall, based on
the advice of counsel, defend against all claims and demands of all persons at
any time claiming any lien on any of the assets of Global Funding adverse to the
interest of Global Funding or any holder of the applicable funding note.
The Delaware trustee will not be liable under the depositor trust agreement
under any circumstances, except for (i) its own willful misconduct, bad faith or
gross negligence; (ii) its failure to use ordinary care to disburse funds or
(iii) the inaccuracy of any representation or warranty contained in the
applicable trust agreement made by the Delaware trustee.
The Delaware trustee may resign as Delaware trustee, or the administrator,
acting on behalf of Global Funding, may, in its sole discretion, remove the
Delaware trustee, in each case upon not less than thirty (30) days' prior notice
to the Delaware trustee, each funding note indenture trustee, each indenture
trustee and each rating agency then rating the programs or the applicable series
of notes. Upon any resignation or removal of the Delaware trustee, the
administrator, acting on behalf of the trust, shall appoint a successor Delaware
trustee. If at any time the Delaware trustee shall cease to be eligible to serve
11
as trustee under the depositor trust agreement and shall have not resigned, or
if at any time the Delaware trustee shall become incapable of acting or shall be
adjudged bankrupt or insolvent, or a receiver for the Delaware trustee or for
its property shall be appointed, or any public officer shall take charge or
control of the Delaware trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the administrator may remove
the Delaware trustee.
Any resignation or removal of the Delaware trustee and appointment of a
successor Delaware trustee pursuant to any of the provisions of the depositor
trust agreement shall not become effective until all fees and expenses,
including any indemnity payments, due to the outgoing Delaware trustee have been
paid and until acceptance of appointment by the successor Delaware trustee
pursuant to the depositor trust agreement.
Administrator of Global Funding and the Trusts
The Delaware trustee, on behalf of Global Funding, executed the amended and
restated administrative services agreement of Global Funding, dated as of August
16, 2005 (as amended, supplemented, modified, restated or replaced from time to
time, the "depositor administrative services agreement"), with AMACAR Pacific
Corp., in its capacity as the administrator of Global Funding. AMACAR Pacific
Corp. will also be the administrator of each trust pursuant to separate
administrative services agreements. In such capacities the administrator will be
responsible for various administrative functions relating to the business of
Global Funding and the trusts. See "Description of the Administrative Services
Agreements" for a description of the administrative functions for which AMACAR
Pacific Corp. will be responsible.
Beneficial Ownership of Global Funding and the Trusts
Global Funding is beneficially owned by AMACAR Pacific Corp. (the "trust
beneficial owner"). The trust beneficial owner's only interest in Global Funding
is the $1,000 amount invested in Global Funding prior to the issuance of any
notes or any funding notes. No other equity contribution will be made to Global
Funding by any party. The principals of the trust beneficial owner have advised
that it is ultimately owned by several individuals, none of whom are affiliated
with Allstate Life or The Allstate Corporation. The investment by the trust
beneficial owner will not be secured by the collateral relating to any series of
notes.
Global Funding will be the beneficial owner of each trust that is formed.
No equity contribution will be made to any trust by any party.
Negative Covenants of Global Funding
So long as the depositor trust agreement remains in effect, Global Funding
(and the Delaware trustee and the administrator acting on behalf of Global
Funding) shall not undertake any business, activity or transaction except as
expressly provided for or contemplated by the depositor trust agreement or by
any funding note indenture. In particular, Global Funding shall not, except as
otherwise contemplated by the depositor trust agreement or by any funding note
indenture:
o sell, transfer, exchange, assign, lease, convey or otherwise dispose
of any assets held in Global Funding, except for any funding
agreements (as of the date of the depositor trust agreement or
thereafter acquired);
o engage in any business or activity other than in connection with, or
relating to, (A) the performance of the depositor trust agreement and
the execution, delivery and performance of any documents, including
the program documents (other than the depositor trust agreement as set
forth above), relating to the funding notes and the transactions
contemplated thereby and (B) any activities, including entering into
agreements that are necessary, suitable or convenient to accomplish
the purposes of Global Funding specified under "-General";
o incur, directly or indirectly, any debt except for each funding note;
o create, incur, assume or permit any lien or other encumbrance on any
of its properties or assets owned or thereafter acquired, or any
interest therein or the proceeds thereof except for the lien created
pursuant to each funding note indenture;
o amend, modify or fail to comply with any material provision of the
depositor trust agreement, except for any amendment or modification of
the depositor trust agreement expressly permitted under the depositor
trust agreement;
12
o own any subsidiary, except for the issuing trusts, or lend or advance
any funds to, or make any investment in, any person, except in
connection with any funding notes, the depositor administrative
services agreement, the depositor support agreement and any funding
agreement;
o directly or indirectly declare or make any distribution or other
payment to, or redeem or otherwise acquire or retire for value the
interests of, the trust beneficial owner if any amount under the
funding notes or the notes is due and unpaid, or directly or
indirectly redeem or otherwise acquire or retire for value any debt
other than any funding note if any funding note remains outstanding;
o become required to register as an "investment company" under and as
such term is defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act");
o enter into any transaction of merger or consolidation or liquidate or
dissolve itself (or, to the fullest extent permitted by law, suffer
any liquidation or dissolution), or acquire by purchase or otherwise
all or substantially all the business or assets of, or any stock or
other evidence of beneficial ownership of, any person, except for the
issuing trusts;
o take any action that would cause Global Funding not to be either
ignored or treated as a "grantor trust" for United States Federal
income tax purposes;
o have any employees other than the Delaware trustee, the administrator
or any other persons necessary to conduct its business and enter into
transactions contemplated under the program documents;
o have an interest in any bank account other than those accounts
required or permitted under the program documents;
o permit any affiliate, employee or officer of Allstate Life or any
agent of Allstate Life or any agent to be a trustee of Global Funding;
o issue any funding note unless (A) Global Funding has purchased or will
simultaneously purchase the relevant funding agreement(s) from
Allstate Life and (B) Global Funding will grant a security interest
in, pledge and collaterally assign the relevant funding agreement(s)
to the funding note indenture trustee and will immediately thereafter
assign absolutely to and deposit into the relevant trust the relevant
funding agreement(s); and (C) the relevant funding note will thereupon
be surrendered and cancelled by Global Funding immediately upon such
surrender, and such cancellation shall operate as a redemption and
satisfaction of the funding note;
o commingle any of its assets with assets of any of Global Funding's
affiliates, or guarantee any obligation of any of Global Funding's
affiliates;
o (A) permit the validity or effectiveness of any funding note indenture
or the security interest securing the funding note issued pursuant to
any funding note indenture to be impaired, or permit such security
interest to be amended, hypothecated, subordinated, terminated or
discharged, (B) permit any person to be released from any covenants or
obligations under any funding agreement securing any funding note,
except as expressly permitted thereunder, under the applicable funding
note indenture, the depositor trust agreement, or each applicable
funding agreement, (C) create, incur, assume, or permit any lien or
other encumbrance (other than the security interests securing the
funding notes) on any of its properties or assets (whenever acquired),
or any interest therein or the proceeds thereof, or (D) permit a lien
with respect to any collateral not to constitute a valid first
priority perfected security interest in such collateral securing the
related funding note;
o issue any funding note unless Allstate Life has affirmed in writing to
Global Funding that it has made changes to its books and records to
reflect the grant of a security interest in, and the making of an
assignment for collateral purposes of, the relevant funding
agreement(s) by Global Funding to the applicable funding note
indenture trustee in accordance with the terms of such funding
agreement(s) and the applicable funding note indenture and Global
Funding has taken such other steps as may be necessary to cause the
security interest in or assignment for all collateral purposes of, the
applicable collateral to be perfected for purposes of the Uniform
Commercial Code in effect in the State of New York (the "UCC") or
effective against its creditors and subsequent purchasers of such
collateral pursuant to insurance or other state laws; or
13
o make any deduction or withholding from any payment of principal of or
interest on any funding note (other than amounts that may be required
to be withheld or deducted from such payments under the Internal
Revenue Code of 1986, as amended (the "Code"), or any other applicable
tax law) by reason of the payment of any taxes levied or assessed upon
any portion of the related collateral except to the extent specified
in the applicable funding note indenture or the relevant funding note
certificate or supplemental funding note indenture.
Negative Covenants of the Trusts
The trust agreement of each issuing trust will provide that so long as the
trust agreement remains in effect, the trust (and the Delaware trustee and the
administrator acting on behalf of the trust) shall not undertake any business,
activity or transaction except as expressly provided for or contemplated by the
trust agreement or the applicable indenture. In particular, the issuing trust
shall not, except as otherwise contemplated by such trust agreement or the
applicable indenture:
o sell, transfer, exchange, assign, lease, convey or otherwise dispose
of any assets held in the trust (as of the date of the trust agreement
or thereafter acquired), including, without limitation, any portion of
the applicable collateral;
o engage in any business or activity other than in connection with, or
relating to, (A) the performance of the trust agreement and the
execution, delivery and performance of any documents, including the
program documents (other than the trust agreement as set forth above),
relating to the applicable series of notes and the transactions
contemplated thereby, (B) the issuance of the applicable series of
notes pursuant to the applicable indenture and (C) any activities,
including entering into agreements that are necessary, suitable or
convenient to accomplish the purposes of the trust specified therein;
o incur, directly or indirectly, any debt except for the applicable
series of notes;
o amend, modify or fail to comply with any material provision of the
trust agreement, except for any amendment or modification of the trust
agreement expressly permitted under the trust agreement or under the
applicable indenture or the relevant funding agreement(s);
o own any subsidiary or lend or advance any funds to, or make any
investment in, any person, except for an investment in the applicable
funding agreement(s), the applicable funding note or the investment of
any funds of the trust held by the indenture trustee, a paying agent,
the registrar, the Delaware trustee or the administrator as provided
in (or in the documents or agreements contained in) the applicable
series instrument or the applicable closing instrument, or in any
applicable funding agreement;
o directly or indirectly declare or pay a distribution or make any
distribution or other payment, or redeem or otherwise acquire or
retire for value any securities other than the applicable series of
notes, provided that the trust may declare or pay a distribution or
make any distribution or other payment to the trust beneficial owner
in compliance with the trust agreement if the trust has paid or made
provision for the payment of all amounts due to be paid on the
applicable series of notes, and pay all of its debt, liabilities,
obligations and expenses, the payment of which is provided for under
the applicable support agreement;
o become required to register as an "investment company" under and as
such term is defined in the Investment Company Act;
o enter into any transaction of merger or consolidation or liquidate or
dissolve itself (or, to the fullest extent permitted by law, suffer
any liquidation or dissolution), or acquire by purchase or otherwise
all or substantially all the business or assets of, or any stock or
other evidence of beneficial ownership of, any person;
o take any action that would cause the trust not to be either ignored or
treated as a "grantor trust" for United States Federal income tax
purposes;
o have any employees other than the Delaware trustee, the administrator
or any other persons necessary to conduct its business and enter into
transactions contemplated under the program documents;
14
o have an interest in any bank account other than (A) those accounts
contemplated by the program documents, and (B) those accounts
expressly permitted by the indenture trustee; provided that any such
further account or such interest of the trust therein shall be charged
or otherwise secured in favor of the indenture trustee on terms
acceptable to the indenture trustee;
o permit any affiliate, employee or officer of Allstate Life or any
agent of Allstate Life or Agent to be a trustee of the trust;
o issue the applicable series of notes unless Allstate Life has affirmed
in writing to the trust that it has made changes to its books and
records to reflect the grant of a security interest in, and the making
of an assignment for collateral purposes of, the relevant funding
agreement(s) by the trust to the indenture trustee in accordance with
the terms of such funding agreement(s) and the trust has taken such
other steps as may be necessary to cause the security interest in or
assignment for all collateral purposes of, the collateral to be
perfected for purposes of the UCC or effective against its creditors
and subsequent purchasers of the collateral pursuant to insurance or
other state laws;
o make any deduction or withholding from any payment of principal of or
interest on the notes (other than amounts that may be required to be
withheld or deducted from such payments under the Code or any other
applicable tax law) by reason of the payment of any taxes levied or
assessed upon any portion of the collateral except to the extent
specified in the applicable indenture or a note certificate or
supplemental indenture;
o commingle any of its assets with assets of any of the trust's
affiliates, or guarantee any obligation of any of the trust's
affiliates; or
o (A) permit the validity or effectiveness of the applicable indenture
or the security interest securing the applicable series of notes to be
impaired, or permit such security interest to be amended,
hypothecated, subordinated, terminated or discharged, (B) permit any
person to be released from any covenants or obligations under any
funding agreement securing the applicable series of notes, except as
expressly permitted thereunder, under the applicable indenture, the
applicable trust agreement, or each applicable funding agreement, (C)
create, incur, assume, or permit any lien or other encumbrance (other
than the security interest securing the applicable series of notes) on
any of its properties or assets, or any interest therein or the
proceeds thereof, or (D) permit a lien with respect to the applicable
collateral not to constitute a valid first priority perfected security
interest in the collateral securing the applicable series of notes.
Amendments of Depositor Trust Agreement
The depositor trust agreement may be amended from time to time by the
parties thereto by a written instrument executed by each of the parties, in any
way that is not inconsistent with the intent of the depositor trust agreement,
including, without limitation to: (i) cure any ambiguity, (ii) correct,
supplement or modify any provision of the depositor trust agreement that is
inconsistent with another provision of the depositor trust agreement or (iii)
modify, eliminate or add to any provisions of the depositor trust agreement to
the extent necessary to ensure that Global Funding will, at all times, for
United States Federal income tax purposes be either ignored or treated as a
"grantor trust" or to ensure that Global Funding will not be required to
register as an "investment company" under the Investment Company Act and no such
amendment shall require the consent of any other person, except to the extent
specified in the second and third paragraphs below.
So long as any funding note remains outstanding, except as provided in the
two paragraphs immediately following below, any amendment to the depositor trust
agreement that would adversely affect, in any material respect, the terms of any
funding note, other then any amendment of the type contemplated by clause (iii)
of the immediately preceding paragraph, shall require the prior consent of the
holders or holders of a majority of the outstanding principal amount of funding
notes.
So long as any funding note remains outstanding, the depositor trust
agreement may not be amended to (i) change the amount or timing of any payment
of any funding note or (ii) impair the right of the applicable trust to
institute suit for the enforcement of any right for principal and interest or
other distribution without the consent of each affected holder.
The Delaware trustee shall not be required to enter into any amendment to
the depositor trust agreement which adversely affects its own rights, duties or
immunities under the depositor trust agreement.
15
Amendments of Trust Agreements
The trust agreement of each issuing trust will provide that the trust
agreement may be amended from time to time by the Delaware trustee and the
administrator by a written instrument executed by the Delaware trustee and the
administrator, in any way that is not inconsistent with the intent of the trust
agreement, including, without limitation to: (i) cure any ambiguity, (ii)
correct, supplement or modify any provision of the trust agreement that is
inconsistent with another provision of the trust agreement or (iii) modify,
eliminate or add to any provisions of the trust agreement to the extent
necessary to ensure that the trust will, at all times, for United States Federal
income tax purposes be either ignored or treated as a grantor trust or to ensure
that the trust will not be required to register as an investment company under
the Investment Company Act and no such amendment shall require the consent of
any other person, except to the extent specified in the second and third
paragraphs below.
So long as any notes of the applicable series remain outstanding, except as
provided in the two paragraphs immediately following below, any amendment to the
applicable trust agreement that would adversely affect, in any material respect,
the terms of any notes of such series, other than any amendment of the type
contemplated by clause (iii) of the immediately preceding paragraph, shall
require the prior consent of the holders of a majority of the outstanding
principal amount of the notes of the applicable series.
So long as any notes of the applicable series remain outstanding, the
applicable trust agreement may not be amended to (i) change the amount or timing
of any payment of any notes of the applicable series or (ii) impair the right of
any holder thereof to institute suit for the enforcement of any right for
principal and interest or other distribution, in each case without the consent
of each affected holder.
The Delaware trustee shall not be required to enter into any amendment to
any trust agreement which adversely affects its own rights, duties or immunities
under the applicable trust agreement.
Relationships among Global Funding, the Trusts, Allstate Life and Allstate
Insurance Company
The following describes the relationships among Global Funding, the trusts,
Allstate Life and Allstate Insurance Company:
o pursuant to an amended and restated name licensing agreement, dated as
of March -, 2006, Allstate Insurance Company has granted Global
Funding, and in connection with any issuance and sale of notes,
pursuant to a separate name licensing agreement Allstate Insurance
Company will grant the issuing trust, a non-exclusive license to use
the name "Allstate" and other licensed marks as provided therein;
o Allstate Life and Global Funding entered into an amended and restated
support and expenses agreement dated as of March -, 2006, pursuant to
which Allstate Life agreed, among other things, to pay certain costs
and expenses relating to the offering, sale and issuance of each
funding note and certain costs, expenses and taxes incurred by Global
Funding, and to indemnify Global Funding with respect to certain
matters;
o in connection with the issuance of a series of notes, pursuant to a
separate support and expenses agreement, Allstate Life will agree,
among other things, to pay certain costs and expenses relating to the
offering, sale and issuance of the applicable series of notes and
certain costs, expenses and taxes incurred by the issuing trust, and
to indemnify the issuing trust with respect to certain matters; and
o Allstate Life, Global Funding and the applicable issuing trust will
enter into the documents contemplated by the medium term note program
or the Allstate Life(R) CoreNotes(R) program in connection with the
issue and sale of each series of notes.
Except as set forth above, none of The Allstate Corporation, Allstate
Insurance Company, Allstate Life or any of their respective officers, directors,
subsidiaries or affiliates owns or will own any beneficial interest in Global
Funding or any trust nor has any of these persons or entities entered or will
enter into any agreement with Global Funding or any trust.
No trust will be affiliated with Allstate Life.
Neither The Allstate Corporation, Allstate Insurance Company, Allstate Life
nor any of their respective officers, directors, subsidiaries or affiliates
owns, or will own, any beneficial interest in the depositor or the trusts.
16
Neither The Allstate Corporation, Allstate Life nor any of their respective
officers, directors, subsidiaries or affiliates is affiliated with the Delaware
trustee, the trust beneficial owner or the administrator of any trust or Global
Funding, any indenture trustee or any funding note indenture trustee. Neither
The Allstate Corporation, Allstate Insurance Company, Allstate Life nor any of
their respective officers, directors, subsidiaries or affiliates is affiliated
with any beneficial owner of AMACAR Pacific Corp.
Costs and Expenses of Global Funding and the Trusts
Costs and expenses of Global Funding and each trust shall be paid by
Allstate Life pursuant to the applicable support agreement to the extent
provided therein. See "Description of Support and Expenses Agreements."
Records and Financial Statements of Global Funding and the Trusts
Each trust will:
o maintain separate and distinct records; and
o hold and account for its assets separately from the assets of Global
Funding and the assets of the other trusts.
17
DESCRIPTION OF ALLSTATE LIFE INSURANCE COMPANY
Allstate Life Insurance Company is the sponsor of the programs. Allstate
Life was organized in 1957 as a stock life insurance company under the laws of
the State of Illinois. It conducts substantially all of its life insurance
operations directly or through wholly owned United States subsidiaries. It is a
wholly owned subsidiary of Allstate Insurance Company ("AIC"), a stock
property-liability insurance company organized under the laws of the State of
Illinois. All of the outstanding stock of AIC is owned by The Allstate
Corporation, a publicly owned holding company incorporated under the laws of the
State of Delaware.
The Allstate Corporation, together with its subsidiaries, is the second
largest personal property and casualty insurer in the United States on the basis
of 2004 statutory premiums earned. Widely known through the "You're In Good
Hands With Allstate(R)" slogan, The Allstate Corporation, through its
subsidiaries, provides insurance products to approximately 17 million households
and has approximately 14,100 exclusive agencies and financial specialists in the
United States and Canada.
Allstate Life sells life insurance, retirement and investment products to
individual and institutional customers through several distribution channels.
The principal individual products are deferred and immediate fixed annuities,
variable annuities, and interest-sensitive and traditional life insurance. The
principal institutional product is funding agreements backing medium-term notes.
Allstate Life distributes its products to individuals through multiple
intermediary distribution channels, including Allstate exclusive agencies,
independent agents (primarily master brokerage agencies), banks, broker-dealers,
and specialized structured settlement brokers. Allstate Life sells funding
agreements to unaffiliated trusts used to back medium-term notes issued to
institutional and individual investors.
As of December 31, 2005 and December 31, 2004, respectively, Allstate
Life's total invested assets in its general account were $72.76 billion and
$69.69 billion, and total assets were $95.02 billion and $90.40 billion,
respectively. Net income for the years ended December 31, 2005 and 2004 was $417
million and $181 million, respectively.
Since 1999, Allstate Life has participated in five securitization programs
for the issuance of medium term notes secured by funding agreements. The first
program in which Allstate Life participated was a securitization program under
which notes were offered in private placement transactions by a Cayman Islands
limited liability company only to foreign investors, in reliance on Regulation S
under the Securities Act. Under this program, in connection with each offering
of notes, Allstate Life sells a funding agreement to the issuing entity, which
uses the proceeds of the note issuance to pay for the funding agreement and
holds the funding agreement as its principal asset. The notes are secured with a
lien on the funding agreement. Allstate Life makes payments under the funding
agreement which, in turn, are used by the issuing entity to pay interest and
principal when due under the applicable notes.
In September 2000, Allstate Life began participating in a securitization
program (the "GMTN I program") under which a Delaware limited liability company
issued funding agreement-backed medium term notes in private placement
transactions to both "qualified institutional buyers" in the United States in
reliance on Rule 144A under the Securities Act, and to foreign investors. In
addition to the notes, the issuing entity also offered auction market equity
securities ("AMES"). Under the GMTN I program, the future payment stream of
Allstate Life's funding agreements was used to back the issuing entity's
obligations under both the applicable series of notes and the AMES. In addition,
the notes of each series are secured with a lien on each applicable funding
agreement.
Since August 2003, Allstate Life has been participating in an additional
global funding agreement-backed medium term note program (the "GMTN II
program"). The GMTN II structure does not include the AMES feature. Under the
GMTN II program, notes are issued by a Delaware series trust which uses the
proceeds from each offering to acquire from Allstate Life a funding agreement
with pricing terms matching those of the underlying notes. Each funding
agreement is pledged by the issuing entity to the indenture trustee to secure
the issuing entity's obligations under the relevant series of notes.
Since April 2004, Allstate Life has been participating in the programs for
the issuance of secured medium term notes (including the Allstate Life(R)
CoreNotes(R) program) described in this prospectus and the applicable prospectus
supplements.
Under all of the above described securitization programs, Allstate Life is
responsible for certain fees and expenses of, and has certain indemnification
obligations with respect to, each of the issuing entities and their respective
service
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providers. Allstate Life also has certain indemnification obligations for
securities law liabilities to initial purchasers of notes issued under the above
described programs.
As of March 13, 2006, funding agreements having an aggregate principal
amount of $12,291,991,572 have been issued and were outstanding in connection
with the securitization programs described above.
Allstate Life is a "significant obligor" within the meaning of the
applicable SEC regulations. This prospectus and any accompanying prospectus
supplement and pricing supplement incorporate by reference the consolidated
financial statements of Allstate Life and its subsidiaries meeting the
requirements of the applicable SEC regulations for financial statements of
significant obligors.
Allstate Life's principal executive offices are located at 3100 Sanders
Road, Northbrook, Illinois 60062 and its telephone number is (847) 402-5000.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
The following table shows the ratio of earnings to fixed charges for
Allstate Life and its subsidiaries for the periods indicated:
Year Ended December 31,
-----------------------
2005 2004 2003 2002 2001
---- ---- ---- ---- ----
Ratio of earnings to fixed charges(1)(2)(3) 1.3x 1.3x 1.3x 1.2x 1.3x
- ---------------
(1) Allstate Life has authority to issue up to 1,500,000 shares of non-voting
preferred stock, par value $100.00 per share. There are currently 49,230
shares of redeemable preferred stock issued and outstanding. Allstate Life
is obligated to pay a dividend on those preferred shares.
(2) For the purposes of this computation, earnings consist of income from
continuing operations before income taxes and the cumulative effect of
change in accounting principle plus fixed charges. Fixed charges consist of
the interest on indebtedness, interest factor of annual rental expense,
dividends on redeemable preferred securities and interest credited to
contractholder funds.
(3) Allstate Life continues to sell asset accumulation products that credit
interest to the contractholder. This results in a negative impact on the
ratio of earnings to fixed charges because the effect of increases in
interest credited to contractholders more than offsets the effect of the
increases in earnings.
USE OF PROCEEDS
In connection with the issuance and sale of each series of notes, the
issuing trust will use the net proceeds received from the offering of the
applicable series of notes to purchase a funding note from Global Funding.
Global Funding will use the proceeds received from the sale of such funding note
to purchase one or more funding agreements issued by Allstate Life. Allstate
Life intends to use the net proceeds from the sale of each funding agreement to
purchase investment assets.
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DESCRIPTION OF THE NOTES
This prospectus relates to:
o one or more series of secured medium term notes to be offered
primarily to retail investors which are referred to as Allstate
Life(R) CoreNotes(R); and
o one or more series of secured medium term notes to be offered
primarily to institutional investors, which one or more newly created
separate and distinct Delaware special purpose statutory trusts that
may be formed from time to time may offer.
Allstate Life(R) CoreNotes(R) will be offered from time to time to the
public, with payment of principal of, any premium and interest on, and any other
amounts due and owing with respect to, the Allstate Life(R) CoreNotes(R) to be
secured by one or more applicable funding agreements issued by Allstate Life and
assigned absolutely to, and deposited into, the issuing trust by Global Funding.
The terms of the secured medium term notes are identical in all material
respects to the terms of the Allstate Life(R) CoreNotes(R), except that the
secured medium term notes:
o may be issued as amortizing notes;
o may be denominated in one or more foreign currencies;
o will not contain a survivor's option, permitting optional repayment of
notes of a series, subject to certain limitations, prior to maturity,
if requested, following the death of the beneficial owner of notes of
that series; and
o may contain a provision providing for the redemption of the notes if
Allstate Life is required to pay additional amounts on the related
funding agreements pursuant to the applicable pricing supplement and
Allstate Life exercises its right to redeem the funding agreements.
The following is a general description of the terms of the notes. Specific
terms of a series of notes will be provided in the applicable pricing supplement
which will supplement this prospectus and the applicable prospectus supplement.
Notes will be issued in one or more series. The terms of each indenture (as
defined below) will not limit the amount of notes that the relevant trust may
issue. Unless otherwise specified in the applicable prospectus supplement or the
applicable pricing supplement, each series of notes will be secured by one or
more funding agreements relating to that series of notes.
Each trust may issue notes at a discount below their stated principal
amount, bearing no interest or interest at a rate that at the time of issuance
is below market rates.
None of the trusts will issue notes that may be repaid at the option of the
holders prior to the stated maturity date if such issuance would cause the
relevant trust to fail to satisfy the applicable requirements for exemption
under Rule 3a-7 under the Investment Company Act of 1940, as amended, and all
applicable rules, regulations and interpretations thereunder.
Certain federal income tax considerations and other relevant considerations
are described in the applicable prospectus supplement or pricing supplement.
The decision to issue notes to investors and purchase funding agreements or
funding notes (in the case of an issuing trust) issued by Allstate Life (or
Global Funding in the case of funding notes) rests solely with Global Funding or
the issuing trust (in the case of funding notes). Global Funding and the trusts
are under no obligation to Allstate Life or any other person or entity to issue
any notes or purchase any funding agreements.
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DESCRIPTION OF THE INDENTURES
Each series of notes will be issued by a trust pursuant to a separate
indenture (each, an "indenture") to be entered into among the issuing trust and
the other parties specified therein, including J.P. Morgan Trust Company,
National Association ("J.P. Morgan Trust Company") or another entity specified
in the applicable indenture, in its capacity as indenture trustee, (including,
in each case, any successor, the "indenture trustee"). Each indenture will be
subject to and qualified under the Trust Indenture Act. Each indenture will
adopt the standard indenture terms, which are filed as an exhibit to the
registration statement of which this prospectus is a part and are incorporated
into this prospectus by reference.
The following summary highlights some of the provisions included in the
standard indenture terms, but it may not contain all of the information that is
important to you. The standard indenture terms are not restated in their
entirety and you should read the standard indenture terms, which are attached as
an exhibit to the registration statement of which this prospectus forms a part.
Covenants
Under the applicable indenture, the issuing trust will make certain
covenants regarding payment of principal, interest (if any), premium (if any)
and other amounts (if any), maintenance of offices or agencies, holding in trust
money for note payments, protection of the collateral and delivery of an annual
statement as to compliance with conditions, performance of obligations and
adherence to covenants under the applicable indenture. Among other covenants,
the issuing trust will agree, so long as any notes of the applicable series are
outstanding, that such trust will comply with all of its covenants set forth
under "Description of Allstate Life Global Funding and the Trusts--Negative
Covenants of the Trusts".
Non-Petition
Under the applicable indenture in respect of a series of notes, the
indenture trustee, each other party to such indenture and each holder of notes
of such series will covenant and agree that, for a period of one year plus one
day after payment in full of all amounts payable under or in respect of the
applicable indenture and the notes of such series, it will not institute
against, or join any other person in instituting against, the applicable trust
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or
similar law. The immediately preceding sentence shall survive any termination of
the applicable indenture.
Notwithstanding the preceding paragraph, under the applicable indenture in
respect of a series of notes, the indenture trustee and each other party to such
indenture and each holder of notes of such series will covenant and agree that
it will not institute against, or join any other person in instituting against,
the applicable trust any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law, as a result of the failure to pay fees or expenses
pursuant the applicable indenture to any party entitled thereto.
Moreover, under the applicable indenture, each of the indenture trustee and
each other party to such indenture will covenant and agree that it will not
cause an Event of Default as a result of the applicable trust's failure to pay
any fees or expenses to any party entitled thereto under such indenture.
Events of Default
The following will be "Events of Default" with respect to the notes of a
particular series issued pursuant to the applicable indenture:
o default in the payment when due and payable of the principal of, or
any premium on, any note of such series;
o default in the payment when due and payable, of any interest on, or
any additional amounts with respect to, any note of such series and
continuance of such default for a period of five business days;
o any "Event of Default" (as defined in the funding agreement) by
Allstate Life under any funding agreement securing the notes of such
series or any Event of Default (as defined in the applicable funding
note) under the applicable funding note;
o the issuing trust fails to observe or perform any covenant contained
in the notes of such series or in the applicable indenture for a
period of 30 days after the date on which written notice specifying
such failure,
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stating that such notice is a "Notice of Default" thereunder and
demanding that the issuing trust remedy the same, will have been given
by registered or certified mail, return receipt requested, to the
issuing trust by the indenture trustee, or to the issuing trust and
the indenture trustee by the holder or holders of at least 25% in
aggregate principal amount of the outstanding notes of such series
affected thereby;
o the applicable indenture for any reason shall cease to be in full
force and effect or shall be declared null and void, or the indenture
trustee shall fail to have or maintain a validly created and first
priority perfected security interest (or the equivalent thereof) in
the collateral required to secure the notes of such series; or any
person shall successfully claim, as finally determined by a court of
competent jurisdiction, that any lien on such collateral in favor of
the indenture trustee for the benefit of the holders of the notes of
such series and any other person for whose benefit the indenture
trustee is or will be holding the applicable collateral, is void or is
junior to any other lien or that the enforcement thereof is materially
limited because of any preference, fraudulent transfer, conveyance or
similar law;
o an involuntary case or other proceeding shall be commenced against the
issuing trust seeking liquidation, reorganization or other relief with
respect to the issuing trust or its debts under any bankruptcy,
insolvency, reorganization or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of the issuing trust or any
substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60
days; or an order for relief shall be entered against the issuing
trust under the federal bankruptcy laws in effect at the date of the
applicable indenture or thereafter;
o the issuing trust commences a voluntary case or other proceeding
seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency, reorganization
or other similar law or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of the
issuing trust or any substantial part of its property, or consents to
any such relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding commenced
against it, or makes a general assignment for the benefit of
creditors, or fails generally to pay its debts as they become due, or
takes any statutory trust action to authorize any of the foregoing; or
o any other Event of Default provided in any supplemental indenture or
in a note certificate representing the notes of such series.
If one or more Events of Default shall have occurred and be continuing with
respect to the notes of such series, then, and in every such event, unless the
principal of all of the notes of such series shall have already become due and
payable, either the indenture trustee or the holder or holders of not less than
25% in aggregate principal amount of the notes of such series then outstanding
under the applicable indenture by notice in writing to the issuing trust (and to
the indenture trustee if given by such holders), may declare the entire
principal of, and premium (if any), of all the notes of such series and any
interest accrued thereon and any other amounts due and owing with respect
thereto, to be due and payable immediately, and upon any such declaration the
same shall become immediately due and payable; provided that, if any Event of
Default specified in the sixth or seventh bullets above occurs with respect to
the issuing trust, or if any Event of Default specified in the third bullet
above that would cause any funding agreement securing the notes of such series
to become immediately due and payable occurs with respect to Allstate Life, then
without any notice to the issuing trust or any other act by the indenture
trustee or any holder of any notes of such series, the entire principal of, and
premium on (if any), all the notes of such series and the interest accrued
thereon and any other amounts due and owing with respect thereto, shall become
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which will be waived by the issuing trust under the
applicable indenture.
Notwithstanding the previous paragraph, if at any time after the principal
of the notes of such series, any interest accrued thereon and any other amounts
due or owing with respect thereto shall have been so declared due and payable
and before any judgment or decree for the payment of the funds due shall have
been obtained or entered as hereinafter provided, the issuing trust shall pay or
shall deposit with the indenture trustee a sum sufficient to pay all due and
payable interest on all the notes of such series, any interest accrued thereon
and any other amounts due or owing with respect thereto and the principal of and
premium on (if any) any and all notes of such series which shall have become due
and payable otherwise than by acceleration (with interest on such principal and,
to the extent that payment of such interest is enforceable under applicable law,
on overdue interest and any other amounts payable, at the same rate as the rate
of interest specified in the note certificates representing the notes of such
series to the date of such payment or deposit) and such amount as shall be
sufficient to cover reasonable compensation to the indenture trustee and each
predecessor indenture trustee, their respective
22
agents, attorneys and counsel, and all other expenses and liabilities incurred,
and all advances made, by the indenture trustee and each predecessor indenture
trustee except as a result of negligence or bad faith, and if any and all Events
of Default under the applicable indenture, other than the non-payment of the
principal of and premium on (if any) the notes of such series which shall have
become due by acceleration, shall have been cured, waived or otherwise remedied
as provided herein, then and in every such case the applicable holder
representative (as defined below), by written notice to the issuing trust and to
the indenture trustee, may waive all defaults and rescind and annul such
declaration and its consequences, but no such waiver or rescission and annulment
shall extend to or shall affect any subsequent default or shall impair any right
consequent thereon.
Upon the occurrence and during the continuation of an Event of Default, the
claims of the indenture trustee for its fees and expenses will have priority
over the claims of holders of notes of such series with respect to any funds
collected by the indenture trustee during such Event of Default, subject to the
terms of the applicable indenture.
Except in the circumstances described in the third bullet point above, an
Event of Default under the notes of a series will not constitute an event of
default under any related funding agreement. In the absence of a contemporaneous
event of default under any applicable funding agreement, the issuing trust will
probably not have sufficient amounts to pay fully all amounts due to the holders
of the applicable series of notes upon the occurrence of an acceleration event
with respect to such series of notes. In such a case, the indenture trustee,
acting for the benefit of the holders of the applicable series of notes, will be
limited to a proceeding against each applicable funding agreement and the
related collateral. However, because under such circumstances Allstate Life
would not be under any obligation to accelerate its payment obligations under
any such funding agreement, the indenture trustee could only:
o continue to receive scheduled periodic payments under the collateral,
including any applicable funding agreement;
o dispose of the collateral, including any applicable funding agreement,
subject to obtaining the consent of Allstate Life; or
o exercise any combination of the foregoing.
Any such disposition of collateral could be made on unfavorable terms and
result in material losses to the holders of the applicable series of notes.
In addition, in the event of any acceleration under a series of notes, the
amounts of cash received under any applicable funding agreement(s), the
applicable support agreement and any other sources available to the issuing
trust may be insufficient to enable it to satisfy all of its support obligations
and other cash obligations. The failure to have sufficient cash to meet these
obligations could result in insolvency or other circumstances that could result
in material losses to the holders of the applicable series of notes.
Application of Proceeds
Any funds collected by the indenture trustee following an Event of Default,
and during the continuance thereof, under the applicable indenture in respect of
the notes of a series shall be held in trust in the applicable collection
account and be applied in the following order at the date or dates fixed by the
indenture trustee and, in case of the distribution of such funds on account of
principal, any premium and interest and any other amounts due and owing, upon
presentation of the global security or certificates representing the notes of
such series and the notation thereon of the payment if only partially paid or
upon the surrender thereof if fully paid:
First: to the payment of costs and expenses, including reasonable
compensation to the indenture trustee and each predecessor indenture
trustee and their respective agents and attorneys and of all expenses and
liabilities incurred, and all advances made, by the indenture trustee and
each predecessor indenture trustee except as those adjudicated in a court
of competent jurisdiction to be the result of any such indenture trustee's
negligence or bad faith, in an aggregate amount of no more than $250,000
for all series of notes issued under the programs to the extent not paid
pursuant to the applicable support agreement;
Second: to the payment of principal, any premium and interest, any
additional amounts and any other amounts then due and owing on the notes of
such series, ratably, without preference or priority of any kind, according
to the aggregate amounts due and payable on such notes;
23
Third: to the payment of any other Obligations then due and owing with
respect to such series of notes, ratably, without preference or priority of
any kind; and
Fourth: to the payment of any remaining balance to the issuing trust for
distribution by the Delaware trustee in accordance with the provisions of
the applicable trust agreement.
All money deposited with the indenture trustee pursuant to an indenture in
respect of notes of a series, except when an Event of Default has occurred and
is continuing, shall be held in trust in the applicable collection account and
applied by it, in accordance with the provisions of the notes of such series and
the applicable indenture, to the payment through any paying agent, to the
persons entitled thereto, of the principal, premium, if any, interest and
additional amounts, if any, for whose payment such money has been deposited with
or received by the indenture trustee. If no Event of Default with respect to the
notes of a series has occurred and is continuing, the following priority of
payments shall apply:
First: to the payment of principal, any premium and interest, any
additional amounts, and any other amounts then due and owing on the notes
of such series, ratably, without preference or priority of any kind,
according to the aggregate amounts due and payable on such notes;
Second: to the payment of any other Obligations then due and owing with
respect to such series of notes, ratably, without preference or priority of
any kind; and
Third: to the payment of any remaining balance to the issuing trust for
distribution by the Delaware trustee in accordance with the provisions of
the applicable trust agreement.
The indenture trustee may make distributions under an indenture in cash or
in kind or, on a ratable basis, in any combination thereof.
Except as provided in the immediately following paragraph, all funds
received by the indenture trustee shall, until used or applied as provided in
the applicable indenture, be held in trust for the purposes for which they were
received. The indenture trustee (and each of its agents and affiliates) shall
deposit all cash amounts received by it (or any such agents or affiliates) that
are derived from the collateral for the benefit of the holders of the applicable
series of notes in a collection account. Neither the indenture trustee nor any
agent of the applicable trust or the indenture trustee shall be under any
liability for interest on any funds received by it under the applicable
indenture.
Any funds deposited with or paid to the indenture trustee or any paying
agent for the payment of the principal of, any interest or premium on, or any
additional amounts or any other amounts with respect to, any note of a series
and not applied but remaining unclaimed for three years after the date upon
which such principal, interest, premium, additional amounts or any other amount
shall have become due and payable, shall, upon the written request of the
applicable trust and unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property law, be repaid to the
applicable trust by the indenture trustee or such paying agent, and the holder
of any such note shall, unless otherwise required by mandatory provisions of
applicable escheat or abandoned or unclaimed property laws, thereafter look only
to the applicable trust for any payment which such holder may be entitled to
collect, and all liability of the indenture trustee or any paying agent with
respect to such funds shall thereupon cease.
Trust Certificate of Compliance
Under each indenture, the trust will furnish to the indenture trustee on or
before May 15 of each year commencing with the first May 15 following the
issuance of a funding note or any notes, a brief certificate as to its knowledge
of the trust's compliance with all conditions and covenants under the applicable
indenture (which will be determined without regard to any period of grace or
requirement of notice provided under the indenture).
Reports on Assessment of Compliance With Servicing Criteria and Compliance
Statements; Attestation Reports of Registered Public Accounting Firm
In connection with the filing of any annual report on Form 10-K of a trust
filed under the Exchange Act, each of the indenture trustee and each paying
agent (unless the indenture trustee is the only paying agent) shall (a) provide
to Allstate Life, the applicable trust and Global Funding (i) a report required
pursuant to Item 1122(a) of Regulation AB on an assessment of compliance with
the servicing criteria set forth in Item 1122(d) of Regulation AB (each a
"Compliance Report") and (ii) a statement of compliance required pursuant to
Item 1123 of Regulation AB, each of which shall be dated
24
the date of, and shall be filed as an exhibit to, the applicable annual report;
and (b) cause, at the expense of Allstate Life, a registered public accounting
firm to provide to Allstate Life, the applicable trust and Global Funding an
attestation report on the applicable Compliance Report as required pursuant to
Item 1122(b) of Regulation AB, which shall be dated the date of, and shall be
filed as an exhibit to, the applicable Annual Report.
Reports by Indenture Trustee
Within ten days following any distribution made or scheduled to be made on
the notes of a series, including any date specified in the applicable note
certificate(s) or in any supplement to the applicable indenture or the date at
which the notes of such series become due and payable, and only to the extent
the applicable trust is required to file reports under the Exchange Act, the
indenture trustee will deliver to Allstate Life and the holders of the notes of
such series a report regarding such distribution.
Within 60 days after May 15 of each year commencing with the first May 15
following the issuance of the notes of a series, if required by Section 313(a)
of the Trust Indenture Act, the indenture trustee shall transmit, pursuant to
Section 313(c) of the Trust Indenture Act, a brief report dated as of May 15
with respect to any of the events specified in Section 313(a) of the Trust
Indenture Act which may have occurred since the later of the immediately
preceding May 15 and the date of the applicable indenture. The indenture trustee
shall transmit the reports required by Section 313(a) of the Trust Indenture Act
at the time specified therein. The indenture trustee shall comply with Section
313(b) of the Trust Indenture Act. Such reports shall be transmitted in the
manner and to the persons required by Sections 313(c) and 313(d) of the Trust
Indenture Act. A copy of each such report shall, at the time of such
transmission to holders of the notes of such series, be filed by the indenture
trustee with each stock exchange upon which the notes of such series are listed,
with the SEC and the applicable trust. The applicable trust will notify the
indenture trustee whether the notes of such series are listed on any stock
exchange.
Reports by Trust
Pursuant to Section 314(a) of the Trust Indenture Act, each trust shall:
o file, or cause to be filed, with the indenture trustee, within 15 days
after the applicable trust or Global Funding is required to file the
same with the SEC and to the extent available to such trust, copies of
the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the SEC may
from time to time by rules and regulations prescribe) which the
applicable trust or Global Funding may be required to file with the
SEC pursuant to Section 13 or Section 15(d) of the Exchange Act; or,
if such trust is not required to file information, documents or
reports pursuant to either of said Sections, then it shall file, or
cause to be filed, with the indenture trustee and the SEC, in
accordance with rules and regulations prescribed from time to time by
the SEC, such of the supplementary and periodic information, documents
and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a
national securities exchange as may be prescribed form time to time in
such rules and regulations; provided that if, pursuant to any publicly
available interpretations of the SEC, the applicable trust or Global
Funding would not be required to make such filings under Section
314(a) of the Trust Indenture Act, then such trust or Global Funding
shall not be required to make such filings;
o file, or cause to be filed on its behalf, with the indenture trustee
and the SEC, in accordance with rules and regulations prescribed from
time to time by the SEC, such additional information, documents and
reports with respect to compliance by the applicable trust, with the
conditions and covenants of the applicable indenture as may be
required from time to time by such rules and regulations; and
o transmit within 30 days after the filing thereof with the indenture
trustee, in the manner and to the extent provided in Section 313(c) of
the Trust Indenture Act, such summaries of any information, documents
and reports required to be filed by or on behalf of the applicable
trust pursuant to the two immediately preceding paragraphs as may be
required by rules and regulations prescribed from time to time by the
SEC.
Fees and Expenses Payable Out of Cash Flows From Funding Agreements
It is expected that funding agreement(s) securing the obligations of any
issuing trust under a series of notes will constitute the sole source of
payments in respect of the notes of such series. Pursuant to each indenture, any
funds collected
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by the indenture trustee under the applicable series of notes will be applied as
described under "--Application of Proceeds" and used in part to pay certain
costs and expenses as described in the table below:
- ---------------- ----------------- ------------------------------------ ---------------- ----------------- --------------------
Payment of Fees Party Receiving General Purpose Source of Funds Distribution Amount Payable
Fees and Priority
Expenses
- ---------------- ----------------- ------------------------------------ ---------------- ----------------- --------------------
Following Indenture Costs and expenses, including Funds First priority Actual expenses
Event of Trustee reasonable compensation of the collected by (prior to the (in an aggregate
Default indenture trustee, and each the indenture payment of any amount of no more
predecessor indenture trustee and trustee in other amounts, than $250,000 for
their respective agents and respect of the including any all series of
attorneys, and all expenses and applicable amounts due and notes issued under
liabilities incurred, and advances series of notes owing on the the programs)
made, by the indenture trustee and notes of the
each predecessor indenture applicable
trustee, excluding those resulting series)
from negligence or bad faith
- ---------------- ----------------- ------------------------------------ ---------------- ----------------- --------------------
Prior to and Indenture All costs and expenses (including Funds Third priority Actual expenses
Following Trustee attorneys' fees) incurred by the collected by (after the
Event of indenture trustee in realizing on the indenture payment of all
Default the applicable collateral trustee in amounts due and
respect of the owing under the
applicable notes of the
series of notes applicable
series)
- ---------------------------------------------------------------------------------------------------------------------------------
Certain Rights of Holders
The holder or holders of a majority in aggregate principal amount of the
notes of any series at the time outstanding shall have the right to elect a
holder representative ("holder representative") who shall have binding authority
upon all the holders and who shall direct the time, method, and place of
conducting any proceeding for any remedy available to the indenture trustee, or
exercising any trust or power conferred on the indenture trustee by the
applicable indenture, provided that:
o such direction shall not be otherwise than in accordance with law and
the provisions of the applicable indenture; and
o subject to certain limitations, the indenture trustee shall have the
right to decline to follow any such direction if the indenture
trustee, being advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken or if the indenture
trustee in good faith by its board of directors, the executive
committee, or a trust committee of directors or responsible officers
of the indenture trustee shall determine that the action or
proceedings so directed would involve the indenture trustee in
personal liability.
Nothing in an indenture shall impair the right of the indenture trustee in
its discretion to take any action deemed proper by the indenture trustee and
which is not inconsistent with such direction by the holder or holders of notes
of the applicable series.
No holder of any note of any series shall have any right by virtue or by
availing of any provision of the applicable indenture to institute any action or
proceeding at law or in equity or in bankruptcy or otherwise upon or under or
with respect to the applicable indenture, or for the appointment of a trustee,
receiver, liquidator, custodian or other similar official or for any other
remedy under the applicable indenture, unless:
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o such holder has previously given written notice to the indenture
trustee of a continuing Event of Default with respect to such series
of notes;
o the holder or holders of notes representing not less than 25% of the
aggregate principal amount of the outstanding notes of such series
shall have made written request to the indenture trustee to institute
proceedings in respect of such Event of Default in its own name as the
indenture trustee;
o such holder or holders have offered to the indenture trustee indemnity
or security satisfactory to it against the costs, expenses and
liabilities to be incurred in compliance with such request;
o the indenture trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute any such
proceeding; and
o no direction inconsistent with such written request has been given to
the indenture trustee during such 60-day period by the holder or
holders of notes representing at least 66 2/3% of the aggregate
principal amount of the outstanding notes of such series;
it being understood and intended, and being expressly covenanted by each holder
of a note of the relevant series with each other holder of a note of the
relevant series and the indenture trustee, that no holder or holders of notes of
a series shall have any right in any manner whatever by virtue of, or by
availing of, any provision of the applicable indenture to affect, disturb or
prejudice the rights of any other holder of any note of the relevant series or
to obtain or to seek to obtain priority or preference over any other holder of
the relevant series to enforce any right under such indenture, except in the
manner therein provided and for the equal, ratable and common benefit of all the
holders of the notes of the relevant series. For the protection and enforcement
of the provisions described in this paragraph, each holder and the indenture
trustee shall be entitled to such relief as can be given either at law or in
equity.
Notwithstanding any other provisions in the applicable indenture, however,
the right of any holder of any note of the relevant series, which is absolute
and unconditional, to receive payment of the principal of (and premium, if any),
and interest on, if any, and additional amounts with respect to, if any, such
note of the relevant series, on or after the respective due dates expressed in
such note of the relevant series, or to institute suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected without the consent of such holder.
Since Allstate Life and Global Funding are registrants, purchasers of notes
may be able to proceed directly against Allstate Life and Global Funding to
enforce their rights under the Federal securities laws and their rights under
the Federal securities laws will be no different than if they purchased the
underlying funding agreements directly from Allstate Life or the underlying
funding notes directly from Global Funding.
Modifications and Amendments
Modifications and Amendments Without Consent of Holders
The issuing trust and the indenture trustee may from time to time and at
any time enter into an indenture or indentures supplemental to the applicable
indenture for one or more of the following purposes without the consent of any
holders of the applicable series of notes:
o for the issuing trust to convey, transfer, assign, mortgage or pledge
to the indenture trustee as security for the notes of the relevant
series any property or assets;
o to add to the issuing trust's covenants such further covenants,
restrictions, conditions or provisions as the issuing trust and the
indenture trustee shall consider to be for the protection of each
holder of notes of the applicable series, and to make the occurrence,
or the occurrence and continuance, of a default in any such additional
covenants, restrictions, conditions or provisions an Event of Default
permitting the enforcement of all or any of the several remedies
provided in the relevant indenture, as described herein; provided
that, in respect of any such additional covenant, restriction,
condition or provision such supplemental indenture may provide for a
particular period of grace after default (which period may be shorter
or longer than that allowed in the case of other defaults) or may
provide for an immediate enforcement upon such an Event of Default or
may limit the remedies available to the indenture trustee upon such an
Event of Default or may limit the right of the applicable holder
representative to waive such an Event of Default;
27
o to cure any ambiguity or to correct or supplement any provision
contained in the relevant indenture or in any applicable supplemental
indenture or note certificate which may be defective or inconsistent
with any other provision contained in such indenture or in any
applicable supplemental indenture or note certificate; or to make such
other provisions in regard to matters or questions arising under the
relevant indenture or under any applicable supplemental indenture or
note certificate which shall not adversely affect the interests of the
holders in any material respect; or
o to evidence and provide for the acceptance of appointment under the
relevant indenture by a successor indenture trustee with respect to
the notes of the applicable series and to add to or change any of the
provisions of such indenture as shall be necessary to provide for or
facilitate the issuing trust's administration under the applicable
indenture by more than one indenture trustee.
The issuing trust shall advise all rating agencies that are then rating the
medium term note program, the Allstate Life(R) CoreNotes(R) program or the
relevant series of notes of any such supplemental indentures.
Modifications and Amendments With Consent of Holders
With the consent of the holder or holders of not less than 66 (2)/3% in
aggregate principal amount of the outstanding notes of the applicable series,
the issuing trust and the indenture trustee may, from time to time and at any
time, enter into a supplemental indenture for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the relevant indenture or of any applicable supplemental indenture or note
certificate or of modifying in any manner the rights of the holders of notes of
such series; provided, that no such supplemental indenture shall, without the
consent of the holder of each note of such series so affected:
o change the final maturity of such series of notes, or reduce the
principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon, or impair or affect the right of any
holder of notes of such series to institute suit for the payment
thereof or modify any redemption or repayment provisions applicable to
the notes of such series;
o permit the creation of any lien on the collateral or any part thereof
(other than the applicable security interest) or terminate the
applicable security interest as to any part of the collateral, except
as permitted by the applicable indenture; or
o modify the foregoing provisions of the relevant indenture except to
increase the percentage of notes of such series required to approve
any such supplemental indenture.
The issuing trust shall advise all rating agencies that are then rating the
medium term note program, the Allstate Life(R) CoreNotes(R) program or the
relevant series of notes of any such supplemental indentures.
Indenture Trustee
Under each indenture, if an Event of Default with respect to the applicable
series of notes has occurred and is continuing, the indenture trustee is
obligated to exercise such of the rights and powers vested in it by such
indenture, and to use the same degree of care and skill in their exercise, as a
prudent person would exercise or use under the circumstances in the conduct of
his or her own affairs.
Each indenture will provide that, except during the continuance of an Event
of Default, the indenture trustee will undertake to perform such duties and only
such duties with respect to the notes of the applicable series as are
specifically set forth in the applicable indenture. No implied covenants or
obligations shall be read into the applicable indenture against the indenture
trustee.
No provision of an indenture will be construed to relieve the indenture
trustee from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that:
o this paragraph does not limit the effect of the preceding paragraph;
o in the absence of bad faith on its part, the indenture trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the
28
indenture trustee and conforming to the requirements of the applicable
indenture unless a responsible officer (as defined in the applicable
indenture) of the indenture trustee has actual knowledge that such
statements or opinions are false; provided that the indenture trustee
must examine such certificates and opinions to determine whether they
conform to the requirements of the applicable indenture;
o the indenture trustee will not be liable for any error of judgment
made in good faith by a responsible officer of the indenture trustee,
unless it is proved that the indenture trustee was negligent in
ascertaining the pertinent facts;
o the indenture trustee will not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with a
direction of the applicable holder representative relating to the
time, method and place of conducting any proceeding for any remedy
available to the indenture trustee, or exercising any trust or power
conferred upon the indenture trustee, under the applicable indenture
with respect to the notes of the applicable series; and
o no provision of the applicable indenture will require the indenture
trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
thereunder, or in the exercise of any of its rights or powers
thereunder, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
The indenture trustee may resign at any time under any indenture by giving
not less than 90 days' prior written notice thereof to the issuing trust and the
holders of the applicable series of notes. Upon receiving such notice of
resignation, the applicable trust shall promptly cause a successor trustee with
respect to the applicable series to be appointed by written instrument in
duplicate, executed by the applicable trust, one copy of which instrument shall
be delivered to the resigning indenture trustee and one copy to the successor
indenture trustee. If no successor indenture trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning indenture trustee will be permitted to
petition any court of competent jurisdiction for the appointment of a successor
indenture trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and prescribe, appoint a successor indenture trustee.
If at any time:
o the indenture trustee shall cease to be eligible to serve as indenture
trustee under the requirements of the applicable indenture and shall
fail to resign after written request in accordance with the applicable
indenture;
o the indenture trustee shall become incapable of acting with respect to
the applicable series of notes or shall be adjudged as bankrupt or
insolvent, or a receiver or liquidator of the indenture trustee or of
its property shall be appointed, or any public officer shall take
charge or control of the indenture trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation; or
o the indenture trustee shall fail to comply with the obligations
imposed upon it under Section 310(b) of the Trust Indenture Act with
respect to the applicable series of notes after written request
therefor by the issuing trust or any holder of such notes who has been
a bona fide holder of such notes for at least six months;
then, the issuing trust (except upon the occurrence and during the continuation
of an Event of Default) will be permitted to remove the indenture trustee with
respect to the applicable series of notes and appoint a successor indenture
trustee under and in accordance with the applicable indenture.
In addition to the right of petition given to the resigning indenture
trustee under an indenture and the right of removal given to the issuing trust
thereunder as described in the preceding two paragraphs, any holder who has been
a holder of notes of such series for at least six months may, on behalf of
itself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor indenture trustee under the
applicable indenture or the removal of the indenture trustee and the appointment
of a successor indenture trustee under the applicable indenture, as the case may
be.
The applicable holder representative may at any time remove the indenture
trustee with respect to the notes of such series and appoint a successor
indenture trustee with respect to the notes of such series by delivering to the
indenture trustee so removed, to the successor indenture trustee so appointed
and to the issuing trust the evidence required for such action by the relevant
indenture.
29
J.P. Morgan Trust Company, National Association is affiliated with J.P.
Morgan Securities Inc., which is an Agent. With respect to any series of notes
as to which one or more affiliates of J.P. Morgan Trust Company, National
Association will serve as an Agent, the relevant trust will appoint an eligible
entity other than J.P. Morgan Trust Company, National Association and
unaffiliated with any other Agent participating in the offering of such series
of Notes to serve as indenture trustee.
Unless otherwise specified in the applicable pricing supplement, pursuant
to each indenture, J.P. Morgan Trust Company will perform the functions of the
servicer in respect of the programs. J.P. Morgan Trust Company is a national
banking association and wholly owned subsidiary of J.P. Morgan Chase & Co., a
holding company with assets in excess of $1 trillion and operations in more than
50 countries, which operations include investment banking, financial services
for consumers and businesses, financial transaction processing, asset and wealth
management and private equity.
J.P. Morgan Trust Company acts as indenture trustee through the Worldwide
Securities Services division of the Treasury & Securities Services line of
business. JPMorgan Worldwide Securities Services offers a full range of trust
and administrative services for various types of securitization transactions
from its office at 4 New York Plaza, New York, New York 10004 and other offices
worldwide. Asset classes for which JPMorgan Worldwide Securities Services serves
as trustee include residential and commercial mortgages, credit cards, auto
loans, equipment loans and leases, home equity loans, trade receivables,
commercial leases, franchise loans, funding agreement backed note programs and
student loans. JPMorgan Worldwide Securities Services is a provider of
transaction services to 23,500 clients worldwide for more than $4.5 trillion in
global debt. In transactions where J.P. Morgan Trust Company acts as an
independent collateral agent, it maintains separate accounts for the collateral
of each such transaction. J.P. Morgan Trust Company and its predecessors have
served as indenture trustee on transactions involving the securitization of
funding agreements since 1994. J.P. Morgan Trust Company currently acts as
indenture trustee or paying agent for various funding agreement backed note
programs with approximately 169 trusts outstanding as of November 30, 2005.
Meetings of Holders
A meeting of holders of notes of a series will be permitted to be called at
any time and from time to time pursuant to the relevant indenture to make, give
or take any request, demand, authorization, direction, notice, consent, waiver
or other action provided by such indenture to be made, given or taken by such
holders of notes of such series.
Unless otherwise provided in a note certificate representing the notes of a
particular series, the indenture trustee may at any time call a meeting of
holders of notes of such series for any purpose specified in the preceding
paragraph, to be held at such time and at such place in the City of New York or
the city in which the Corporate Trust Office (as defined in the applicable
indenture) is located. Notice of every meeting of holders of notes of such
series, setting forth the time and the place of such meeting and in general
terms the action proposed to be taken at such meeting, must be given not less
than 21 nor more than 180 days prior to the date fixed for the meeting.
Any resolution passed or decision taken at any meeting of holders of notes
of a series duly held in accordance with the relevant indenture will be binding
on all of the holders of notes of such series, whether or not such holders were
present or represented at the meeting.
Nonrecourse Enforcement
Notwithstanding anything to the contrary contained in an indenture or any
relevant note certificate or supplemental indenture, other than as described
below, none of Allstate Life, its officers, directors, affiliates, employees or
agents or any of the trustees of Global Funding or the trusts, beneficial owners
or agents, or any of their respective officers, directors, affiliates, employees
or agents, all of whom are collectively referred to in this prospectus as the
"nonrecourse parties," will be personally liable for the payment of any
principal, interest or any other sums at any time owing under the terms of any
notes. If any Event of Default shall occur with respect to any notes of any
series, the right of the holder or holders of notes of such series and the
indenture trustee for the benefit of such holder or holders in connection with a
claim related to such series of notes will be limited solely to a proceeding
against the relevant collateral.
Neither any such holder or holders nor the indenture trustee for the
benefit of such holder or holders will have the right to proceed against the
nonrecourse parties to enforce the notes of the relevant series (except that to
the extent they exercise their rights, if any, to seize the relevant funding
agreement(s), they may enforce the relevant funding agreement(s) against
Allstate Life) or for any deficiency judgment remaining after foreclosure of any
property included in the relevant collateral.
30
The limitations on the rights of the holders described in the previous two
paragraphs will not in any manner or way constitute or be deemed a release of
the debt or other obligations of the issuing trust evidenced by the notes of the
applicable series or otherwise affect or impair the enforceability against the
assets of the issuing trust of the liens, assignments, rights and security
interests created by the relevant indenture, the relevant collateral or any
other instrument or agreement evidencing, securing or relating to the
indebtedness or the obligations of the issuing trust evidenced by the notes of
the applicable series. The holders of notes of a series are not precluded from
foreclosing upon any property included in the relevant collateral or from any
other rights or remedies in law or in equity against the assets of the issuing
trust.
Since Allstate Life and Global Funding are registrants, purchasers of notes
may be able to proceed directly against Allstate Life and Global Funding to
enforce their rights under the Federal securities laws depending on the
particular facts and circumstances and their rights under the Federal securities
laws will be no different than if they purchased the underlying funding
agreements from Allstate Life or Global Funding.
Notices
All notices regarding notes of a series will be mailed to the registered
owners thereof as their names appear in the applicable note register maintained
by the indenture trustee.
Governing Law; Submission to Jurisdiction
Pursuant to Section 5-1401 of the General Obligations Law of the State of
New York, each indenture and the notes of each series shall (unless specified
otherwise in the applicable pricing supplement) be governed by, and construed in
accordance with, the laws of the State of New York, except as required by
mandatory provisions of law and except to the extent that the validity or
perfection of the ownership of and security interest in the relevant funding
agreements of the issuing trust or remedies under the applicable indenture in
respect thereof may be governed by the laws of a jurisdiction other than the
State of New York. All judicial proceedings brought against a trust or the
indenture trustee arising out of or relating to the relevant indenture, any note
of the applicable series or any portion of the relevant collateral may be
brought in any state or Federal court in the State of New York, provided that
the applicable pricing supplement may specify other jurisdictions as to which
the issuing trust may consent to the nonexclusive jurisdiction of courts with
respect to such series of notes.
31
DESCRIPTION OF THE FUNDING NOTES
Each trust will use the net proceeds received from the issuance of the
related series of notes to purchase a funding note. Global Funding will use the
net proceeds received from the sale of the related funding note to purchase one
or more funding agreements issued by Allstate Life. Pursuant to each funding
note indenture, Global Funding will immediately pledge and collaterally assign
each such funding agreement to and grant a security interest in each such
funding agreement and the related collateral in favor of the funding note
indenture trustee. Global Funding will immediately thereafter assign absolutely
to, and deposit into, the applicable trust each such funding agreement and, in
connection with such assignment and deposit, the relevant funding note will be
surrendered for cancellation by or on behalf of the applicable trust, and will
be cancelled by the funding note indenture trustee, and the pledge and
collateral assignment of each funding agreement to, and the security interest in
favor of, the funding note indenture trustee will be terminated. Such
cancellation will act as a redemption and satisfaction of the funding note.
The funding note will have a principal amount equal to the principal amount
of the related funding agreement(s) and the related series of notes. Each
funding note will otherwise have payment and other terms substantially similar
to the related funding agreement(s) and the related series of notes, except that
the terms of each funding note will provide that it will be cancelled
immediately upon the sale of, and deposit into, the issuing trust by Global
Funding of the related funding agreement(s).
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DESCRIPTION OF THE FUNDING AGREEMENTS
This section provides a summary of the material terms and conditions of the
funding agreements issued under the programs. Specific terms of the funding
agreement(s) issued with respect to a series of notes and the extent to which
these general provisions apply to such funding agreement(s) will be provided in
the applicable prospectus supplement and pricing supplement to this prospectus.
This summary is not complete and you should read the detailed provisions of the
funding agreements. A copy of the form of funding agreement is filed as an
exhibit to the registration statement (of which this prospectus is a part) and
is incorporated into this prospectus by reference.
General
In connection with the issuance of a series of notes, Global Funding will
use the proceeds received from the issuance and sale of the applicable funding
note to purchase one or more funding agreements issued by Allstate Life. Global
Funding will immediately pledge and collaterally assign each such funding
agreement to the funding note indenture trustee as collateral to secure the
obligations under the applicable series of notes and immediately thereafter
assign absolutely to, and deposit into, the issuing trust each such funding
agreement.
Each such funding agreement will be held separately as collateral by the
indenture trustee for the benefit of the holders of the applicable series of
notes. Each funding agreement will represent Allstate Life's unsecured
obligation. Under the funding agreement(s) securing the obligations of a trust
under its series of notes, the applicable trust shall pay Allstate Life one or
more deposit(s) in an aggregate amount equal to the issue price of the
applicable series of notes plus accrued interest, if any, less any commission or
compensation payments due to any person. Such deposit(s) shall be made in the
currency in which such notes are denominated. Upon receipt of such deposit(s),
Allstate Life shall be obligated to establish one or more general account
records, each of which is referred to as a "funding account", which will
evidence its obligation under the funding agreement(s). Unless otherwise
specified in the applicable pricing supplement, the deposit(s) of such
obligation(s) will be deemed to be equal to the aggregate face amount of the
notes of the applicable series of notes and interest, if any, will accrue on
such balance at such rate and upon such terms as is accruing on the applicable
series of notes. See "Description of the Notes" in the applicable prospectus
supplement. Unless otherwise specified in the applicable pricing supplement, for
each funding agreement securing a series of notes other than discount notes, the
deposits received pursuant to the funding agreement (as specified in the pricing
annex to such funding agreement), less any withdrawals to make payments under
such funding agreement (other than additional amounts, if applicable), plus any
interest accrued pursuant to such funding agreement, all as set forth in the
pricing annex to such funding agreement, is referred to as the "funding account
balance". Unless otherwise specified in the applicable pricing supplement, for
each funding agreement securing a series of notes that are discount notes, the
deposit received pursuant to the funding agreement (as specified in the pricing
annex to such funding agreement), less any withdrawals to make payments under
such funding agreement (other than additional amounts, if applicable), plus any
accrual of discount (determined in accordance with the applicable series of
notes), plus, if applicable, any interest accrued pursuant to such funding
agreement, all as set forth in the pricing annex to such funding agreement, is
referred to as "funding account balance". The obligations of Allstate Life under
each funding agreement will constitute its general account obligations and shall
not be obligations of any of its separate accounts.
Under each funding agreement issued under the program, Allstate Life will
be obligated to make or cause to be made certain payments as are necessary to
permit the issuing trust to meet in full its scheduled payment obligations under
the relevant series of notes. Therefore, the currency of denomination, maturity,
redemption, repayment and interest rate provisions of the funding agreement(s)
issued by Allstate Life to the issuing trust shall be structured so that the
payments made by or at the direction of Allstate Life will enable the issuing
trust to meet its requisite obligations under the relevant series of notes. The
repayment of principal on such funding agreement(s) will occur at the stated
date of maturity of the funding agreement(s), or, under certain circumstances
specified by the terms of the funding agreement(s), at a date or dates prior to
maturity. Amounts received by the issuing trust in respect of interest or
principal on the funding agreement(s) held by it will be applied to all payments
due the holders of notes of the related series of notes. Additional terms of
each applicable funding agreement will be described in the applicable prospectus
supplement and pricing supplement.
A funding agreement is a type of insurance company product in which the
purchaser, usually an institutional investor, pays the insurance company a
deposit and, in turn, receives scheduled payments of principal and interest. The
deposit Allstate Life receives on the issuance of a funding agreement under the
programs will be part of its general account and not allocated to any of its
separate accounts. Allstate Life's general account is the account which contains
all of its assets and liabilities other than those held in its separate
accounts. Separate accounts are segregated accounts which are established for
certain products that Allstate Life sells. A separate account holds assets and
liabilities specifically related to one or more products and segregates these
assets and liabilities from the assets and liabilities of all other separate
accounts and the assets and liabilities of Allstate Life's general account.
Since the deposit made under any funding agreement issued by Allstate Life
33
under the programs will be part of its general account, Allstate Life's
obligations under each such funding agreement will be the obligations of its
general account, rather than the obligations of any separate account. As such,
Allstate Life will invest the proceeds from the sale of funding agreements under
the programs in a portfolio of assets which along with its other general account
assets will be used to meet its contractual obligations under the funding
agreements and its other general account obligations. Allstate Life will earn
the spread differential, if any, between the cost of its obligations under such
funding agreements and the yield on its invested assets.
Allstate Life has established internal procedures to ensure that it
performs all of its payment obligations under the funding agreements. A specific
group of Allstate Life employees will monitor performance of Allstate Life's
payment obligations under the funding agreements and will promptly notify the
indenture trustee in the event it has not timely made payments under any funding
agreement. Under the applicable indenture, the calculation agent will notify
Allstate Life of the amount of interest due on any notes of the applicable
series prior to any interest payment date. Additionally, in the event that
Allstate Life fails timely to make any payment under the applicable funding
agreement(s), the indenture trustee will notify Allstate Life of such failure
and will have the right to enforce the rights of holders of the applicable
series of notes contained in the applicable indenture.
Priority of Funding Agreements
The funding agreements are unsecured obligations of Allstate Life, an
Illinois stock life insurance company. In the event of insolvency of an Illinois
insurance company, claims against the insurer's estate are prioritized pursuant
to Section 5/205 of the Illinois Insurance Code. Under Section 5/205(1)(d) of
the Illinois Insurance Code, claims by "policyholders, beneficiaries, and
insureds, under insurance policies, annuity contracts, and funding agreements"
receive payment prior to any distribution to general creditors not falling
within any other priority class under the Illinois Insurance Code.
In a properly prepared and presented case in a delinquency proceeding under
Article XIII of the Illinois Insurance Code, 215 ILCS Section 5/187 et seq. (the
"Illinois Liquidation Act"), the timely and properly filed claims of an owner
under the funding agreement (with the possible exception of claims for
Additional Amounts, as discussed below) would be entitled to distribution pari
passu with claims made by other policyholders, beneficiaries, and insureds under
other insurance policies, insurance contracts, annuities and funding agreements
issued by Allstate Life, and the claims of the Illinois Life and Health
Insurance Guaranty Association, and any similar organization in another state,
in accordance with Section 5/205(1)(d) of the Illinois Liquidation Act, and an
owner's claims under the funding agreement should not be recharacterized as
other than the claims of a policyholder, beneficiary, or insured under an
insurance policy, insurance contract, annuity or funding agreement.
If a funding agreement so provides, Allstate Life may be required to pay
Additional Amounts (as such term is defined therein) to the indenture trustee as
collateral assignee of the funding agreement. For a discussion regarding payment
of Additional Amounts, see "Description of the Notes--Withholding Tax and
Payment of Additional Amounts." The language of Section 205(1)(d) that
specifically refers to claims under "funding agreements" has not been
interpreted in any Illinois judicial decision. Specifically, there is no
authority addressing whether claims under funding agreements for Additional
Amounts would be accorded priority under Section 205(1)(d) as claims made by
other policyholders, beneficiaries and insureds under other policies, insurance
contracts, annuities and funding agreements. Accordingly, although such payments
could be viewed as a claim under the funding agreements within the meaning of
Section 5/205(1)(d), they may also be argued to be a separate payment
obligation. Therefore, while in a proceeding before a court of competent
jurisdiction the court might find that a claim for an Additional Amount
constitutes a claim under a funding agreement, it also might find that such a
claim is not a claim entitled to the priority afforded by Section 5/205(1)(d).
If a claim for an Additional Amount does not constitute a claim entitled to the
priority afforded by Section 5/205(1)(d), then in a properly prepared and
presented case any claim for an Additional Amount would be entitled to the same
priority as claims of general creditors of Allstate Life under Section
5/205(1)(g).
As insurance contracts under Illinois law, funding agreements rank senior
to unsecured indebtedness of Allstate Life. Therefore, if Allstate Life were to
offer notes directly to investors, holders of such notes would receive an
effectively subordinated obligation because of the relative priority of
insurance contracts and funding agreements over unsecured indebtedness.
With respect to any issuance of the notes of a series, the aggregate amount
of Allstate Life's liabilities that would rank pari passu with each funding
agreement securing such series of notes is disclosed in the financial statements
of Allstate Life contained in Allstate Life's most recent Annual Report on Form
10-K or Quarterly Report on Form 10-Q filed with the SEC, in each case as of the
date of such financial statements. This amount appears in the Consolidated
Statements of Financial Position as a liability under the line item entitled
"Contractholder funds."
34
The statutory authorizations for the uses of funding agreements under the
Illinois Insurance Code (the "Illinois Insurance Code") are severely limited.
The form of funding agreement has been filed with the Illinois Department of
Insurance and has been accepted as a funding agreement that is a type of annuity
contract without life contingency permitted by Section 5/226.1 of the Illinois
Insurance Code. Under that provision, the permitted uses are limited to funding
of: (a) ERISA employee benefit plans, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"); (b) an activity of
an Internal Revenue Code Section 501(c) organization; (c) a program of a
government entity or instrumentality; (d) structured settlement claims; and (e)
a program of an institution with assets in excess of $25,000,000. Thus, the
market for direct sales of funding agreements is very narrow, essentially
limited to large institutional investors under Rule 144A or foreign investors
under Regulation S promulgated under the Securities Act, as amended. Moreover,
in contrast to medium term notes, funding agreements have no secondary market to
provide investors with liquidity or mark-to-market valuation and, therefore, the
funding agreement market is much narrower than the universe of investors who can
purchase medium term notes.
In addition, funding agreements are insurance contracts authorized by
Section 5/226.1 of the Illinois Insurance Code. Only licensed insurance agents
or the issuing insurance company may sell such contracts. Thus, not only is the
market for direct funding agreement sales limited by the specified classes of
buyers, but it is restricted also by the limits on the agency force.
The Illinois Department of Insurance has confirmed that it does not
consider the sale of publicly offered funding agreement backed medium term notes
to violate the Illinois Insurance Code. In addition, the Illinois Department of
Insurance has approved the form of funding agreement to be used in connection
with the medium term note program and the Allstate Life(R) CoreNotes(R) program.
Ratings
The rating by any rating agency of the financial strength of Allstate Life
does not mean that such rating agency will rate a funding agreement or the
related series of notes. However, unless otherwise indicated in the applicable
pricing supplement, each series of notes, the related funding note and the
funding agreement(s) securing such series of notes will have an issue credit
rating of "AA" from Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. ("Standard & Poor's"). We expect the program to be
rated "Aa2" by Moody's Investors Service, Inc. ("Moody's") and "AA" by Standard
& Poor's. If Moody's or Standard & Poor's changes the program rating, the new
program rating will be specified in the applicable pricing supplement. Notes of
a series will be issued under the program only in the event that, at the time of
issuance of such series of notes, at least one nationally recognized rating
agency would assign an investment grade rating to such series of notes, the
related funding note and the funding agreement(s) securing such series of notes.
Insolvency of Allstate Life
In the event of insolvency of an Illinois insurance company, claims against
the insurer's estate are prioritized pursuant to Section 5/205 of the Illinois
Insurance Code. Under Section 5/205(1)(d) of the Illinois Insurance Code, claims
by "policyholders, beneficiaries, and insureds, under insurance policies,
annuity contracts, and funding agreements" receive payment prior to any
distribution to general creditors not falling within any other priority class
under the Illinois Insurance Code. The funding agreements are unsecured
obligations of Allstate Life.
Lord, Bissell & Brook LLP, special Illinois insurance regulatory counsel of
Allstate Life, has opined that, subject to the limitations, qualifications and
assumptions set forth in its opinion letter, in a properly prepared and
presented case, (1) in a delinquency proceeding under Article XIII of the
Illinois Insurance Code, 215 ILCS Section 5/187 et seq. (the "Illinois
Liquidation Act"), the timely and properly filed claims of an owner under the
funding agreement (with the possible exception of claims for Additional Amounts,
as discussed below) would be entitled to distribution pari passu with claims
made by other policyholders, beneficiaries, and insureds under other insurance
policies, insurance contracts, annuities and funding agreements issued by
Allstate Life, and the claims of the Illinois Life and Health Insurance Guaranty
Association, and any similar organization in another state, in accordance with
Section 5 /205(1)(d) of the Illinois Liquidation Act, and (2) an owner's claims
under the funding agreement should not be recharacterized as other than the
claims of a policyholder, beneficiary, or insured under an insurance policy,
insurance contract, annuity or funding agreement.
If a funding agreement so provides, Allstate Life may be required to pay
Additional Amounts (as such term is defined therein) to the indenture trustee as
collateral assignee of the funding agreement. Although such payments could be
viewed as a claim under the funding agreements within the meaning of Section
5/205(1)(d), it may also be argued to be a separate payment obligation.
Therefore, while in a proceeding before a court of competent jurisdiction the
court might find that a claim for an Additional Amount constitutes a claim under
a funding agreement, it also might find that such a claim is
35
not a claim entitled to the priority afforded by Section 5 /205(1)(d). Lord,
Bissell & Brook LLP has opined that if a claim for an Additional Amount does not
constitute a claim entitled to the priority afforded by Section 5/205(1)(d),
then in a properly prepared and presented case any claim for an Additional
Amount would be entitled to the same priority as claims of general creditors of
Allstate Life under Section 5/205(1)(g).
In the absence of controlling judicial precedents, the opinion of Lord,
Bissell & Brook LLP is based on a reasoned analysis of Illinois statutes, as
well as application of other states' judicial decisions involving similar or
analogous circumstances, and is subject to the limitations, qualifications and
assumptions set forth in its opinion letter. Investors should note that in the
event of the insolvency of an insurance company, however, the judicial
application of statutes governing the distribution of the insurer's general
assets has typically proceeded on a case-by-case basis.
The scope of the Lord, Bissell & Brook LLP opinion regarding a liquidation
proceeding with respect to Allstate Life is limited to an Illinois liquidation
proceeding and only those claims that are made in domiciliary proceedings in an
Illinois court. The opinion of Lord, Bissell & Brook LLP recites basic facts
with respect to the funding agreement, the transaction in which the funding
agreement is to be issued and the parties to the transaction, and those facts
are implicitly assumed in connection with the rendering of the opinion.
The assumptions, limitations and qualifications in the opinion include,
without limitation:
o that it is limited to the application of the law of the State of
Illinois;
o that the opinion is rendered solely as of the date thereof;
o that limited documents were reviewed in issuing the opinion and that
no opinion is expressed as to such documents;
o that the funding agreement may be issued with a life contingency;
o that the opinion assumes the veracity and accuracy of the form of the
funding agreement reviewed and the funding agreement's enforceability
under and compliance with applicable laws, as well as the adherence to
the proper legal formalities of and separate corporate distinctions
between Allstate Life and the holders of the notes;
o that there is no Illinois statutory or case law guidance as to the
definition of "annuity contract;" and
o that the terms "policyholders," "beneficiaries" and "insureds" are not
defined in the Illinois Liquidation Act.
Payments under Funding Agreements
Under the terms of each funding agreement securing the obligations under a
series of notes, Allstate Life will be obligated to make payments in the amounts
necessary to permit the issuing trust to meet in full its scheduled payment
obligations under the applicable series of notes.
Unless otherwise specified in the applicable pricing supplement, the
issuing trust will not pay any additional amounts to holders of the notes of a
series in the event that any withholding or deduction for or on account of any
United States taxes or other governmental charges is required. If the applicable
prospectus supplement or the applicable pricing supplement specifies that the
issuing trust will pay additional amounts to holders of the notes of the
applicable series in the event of certain changes in tax law, including the
repeal of the "Portfolio Interest Exemption" from United States Federal
withholding taxes for payments to non-U.S. Holders, the relevant funding
agreement(s) will provide that Allstate Life will make payments to the issuing
trust in the amounts necessary to permit it to pay additional amounts, if any,
required to be paid to holders of the particular series of notes. If the payment
of additional amounts to holders of a particular series of notes is required as
a result of a change in tax law, Allstate Life will be obligated to pay such
additional amounts to the issuing trust under the relevant funding agreement(s).
Events of Default
The following will be "Events of Default" under each funding agreement:
o default in the payment when due and payable of any principal amount
under the funding agreement;
36
o default in the payment of any interest accrued when such amounts
become due and payable, and continuance of such default for a period
of five business days;
o Allstate Life fails, is unable, or Allstate Life admits in writing its
inability, generally to pay its debts as such debts become due; or the
board of directors of Allstate Life adopts any action to approve or
for the purpose of effecting any of the actions referred to in this
paragraph;
o default in the performance or breach of any one or more of the other
covenants of Allstate Life under such funding agreement, and
continuance of such default or breach for a period of 45 days after
there has been given notice thereof to Allstate Life;
o a court having jurisdiction in the premises has entered a decree or
order for relief in respect of Allstate Life in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect in the United States of America or any other
applicable jurisdiction which decree or order is not stayed; or any
other similar relief has been granted under any applicable law;
o an insolvency case has been commenced against Allstate Life under any
applicable bankruptcy, insolvency or other similar law now or
hereafter in effect in the United States of America or any other
applicable jurisdiction and such case shall not have been dismissed or
stayed, in each case within 45 days, or a decree or order of a court
having jurisdiction in the premises for the appointment of a receiver,
liquidator, rehabilitator, conservator, sequestrator, trustee,
custodian or other officer having similar powers over Allstate Life,
or over all or a substantial part of its property, has been entered;
or there has occurred the involuntary appointment of an interim
receiver, trustee or other custodian of Allstate Life, for all or a
substantial part of its property; or a court having jurisdiction in
the premises has entered a decree or order declaring the dissolution
of Allstate Life; or a warrant of attachment, execution or similar
process has been issued against any substantial part of the property
of Allstate Life;
o the Director of the Illinois Department of Insurance or any other
insurance supervisor having jurisdiction over Allstate Life shall have
filed a petition seeking any order under the Illinois Insurance Code
or other applicable insurance law to rehabilitate, liquidate, or
conserve the assets of, or take other similar action with respect to,
Allstate Life; or
o Allstate Life commences a voluntary case or other proceeding seeking
liquidation, dissolution, reorganization or other relief with respect
to itself or its debts under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect in the United States of
America (or any state thereof) or any other applicable jurisdiction,
or seeking the appointment of a receiver, liquidator, rehabilitator,
sequestrator, conservator or other similar officer of Allstate Life or
any substantial part of its property, or consents to the entry of an
order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or consents
to the appointment of or taking possession by a receiver, trustee or
other custodian for all or a substantial part of its property; or
Allstate Life makes any general assignment for the benefit of
creditors.
If one or more Events of Default shall have occurred and be continuing
(other than an Event of Default specified in the third, fourth, fifth, sixth,
seventh and eighth bullets above), the indenture trustee as collateral assignee
of the funding agreement may, by written notice to Allstate Life, declare the
principal of, plus accrued but unpaid interest on and any other amounts then due
and owing with respect to, such funding agreement to be due and payable and such
amounts will become due and payable on the date the written declaration is given
to Allstate Life; provided that if an Event of Default specified in the third,
fourth, fifth, sixth, seventh and eighth bullets above occurs, such amounts will
be automatically and immediately due and payable without any declaration or
other act on the part of the indenture trustee as collateral assignee of the
funding agreement; provided further that, without affecting the obligation of
Allstate Life to repay such amounts, no such repayment shall be made in
preference to other policyholders of Allstate Life.
Representations and Warranties in the Funding Agreement
In each funding agreement, each party will represent and warrant as
follows:
o the representing party has the power to enter into the funding
agreement and to consummate the transactions contemplated thereby;
37
o the funding agreement has been duly authorized, executed and delivered
by the representing party;
o assuming the due authorization, execution and delivery thereof by the
other party thereto, the funding agreement constitutes a legal, valid
and binding obligation of the representing party; and
o the funding agreement is enforceable against the representing party in
accordance with the terms thereof, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights and subject,
as to enforceability, to general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
Restrictions on Transfer
Each funding agreement will contain provisions prohibiting any transfer or
assignment of the funding agreement or any right to receive payments under the
funding agreement without the express written consent of Allstate Life and the
written affirmation of Allstate Life that it has changed its books and records
to reflect the transfer or assignment or right to receive payments under the
funding agreement. In connection with the issuance of a series of notes,
Allstate Life will consent to the sale and deposit of each relevant funding
agreement from the depositor to the issuing trust and the pledge and collateral
assignment of, and the grant of a security interest in, each such funding
agreement to the indenture trustee, and will affirm that it has changed its
books and records to reflect the foregoing.
Termination of Funding Agreements by Allstate Life
If the applicable pricing supplement specifies that the issuing trust will
pay additional amounts to holders of its notes in the event of certain changes
in tax law, including the repeal of the "Portfolio Interest Exemption" from
United States Federal withholding taxes for payments to non-U.S. Holders, the
funding agreement(s) securing such series of notes will provide that Allstate
Life may terminate the relevant funding agreement(s) upon the occurrence of
certain specified tax events. Unless otherwise specified in the applicable
Pricing Supplement, Allstate Life will not be able to unilaterally terminate any
funding agreements under any other circumstances. In order to terminate the
relevant funding agreement(s) in the event of a certain change in tax law,
Allstate Life must give not less than 30 and no more than 75 days prior written
notice to the issuing trust and pay such issuing trust the outstanding principal
of and accrued but unpaid interest, including any additional amounts due and
owing, on the notes of such series or such other amount as is specified in the
applicable pricing supplement for such notes. However, Allstate Life may not
give notice of termination earlier than 90 days prior to the earliest day when
Allstate Life would become obligated to pay any such additional amounts were a
payment in respect of the funding agreement(s) then due.
Governing Law
Each funding agreement will be governed by, and construed in accordance
with, the laws of the State of Illinois without regard to conflict of law
principles.
38
DESCRIPTION OF THE SUPPORT AND EXPENSES AGREEMENTS
Support and Expenses Agreements of the Trusts
This section provides a summary of the material terms and conditions of
each support and expenses agreement to be entered into by Allstate Life and the
applicable issuing trust (each, a "support agreement"). Each support agreement
will incorporate by reference the standard support and expenses agreement terms.
The form of support and expenses agreement is included in the form of series
instrument. This summary is not complete and you should read the detailed
provisions of the standard support and expenses agreement terms, and the
applicable support agreement. Copies of the support and expenses agreement terms
and the form of series instrument have been filed as exhibits to the
registration statement of which this prospectus is a part and are incorporated
into this prospectus by reference.
Under each support agreement, Allstate Life will agree to pay the costs and
expenses relating to the offering, sale and issuance of the applicable series of
notes, including in connection with the acquisition of the applicable funding
agreement(s), and costs, expenses and taxes incurred by the issuing trust other
than certain excluded amounts described below, and to indemnify the indenture
trustee, the Delaware trustee, the administrator and each other service
provider, as well as the issuing trust, with respect to certain matters. No
expenses will be payable from the applicable offering proceeds.
Under each support agreement, Allstate Life will not be obligated to pay
any costs, expenses, taxes or other amounts that are considered excluded
amounts. Excluded amounts include:
o any obligation Global Funding or any trust may have to make any
payment in accordance with the terms of any funding notes or any
notes;
o any obligation or expense of Global Funding or any trust to the extent
that such obligation or expense has actually been paid utilizing funds
available from payments under the applicable funding agreement(s) and
funding notes, as applicable;
o any cost, loss, damage, claim, action, suit, expense, disbursement,
tax, penalty and liability of any kind or nature whatsoever resulting
from or relating to any insurance regulatory or other governmental
authority asserting that:
o the funding notes or the notes are, or are deemed to be,
participations in the funding agreements or contracts of
insurance, or
o the offer, purchase, sale and/or transfer of the funding notes or
the notes and/or the pledge and collateral assignment of, or the
grant of a security interest in, any funding agreement,
constitute the conduct of the business of insurance or
reinsurance in any jurisdiction or require Global Funding, any
trust or any holder to be licensed as an insurer, insurance agent
or broker in any jurisdiction;
o any obligation of Global Funding or any trust to pay additional
amounts to indemnify any holder of the funding notes or the notes
against potential withholding tax liabilities;
o any cost, loss, damage, claim, expense, tax, penalty or liability of
any kind imposed on a service provider to the trust resulting from the
bad faith, misconduct or negligence of such service provider;
o any income taxes or overhead expenses of any service provider; or
o any withholding taxes imposed with respect to payments made under any
funding agreement or any notes, or any obligation to pay additional
amounts.
With respect to any support obligation owed to the Delaware trustee and the
administrator, excluded amounts specified in the third bullet point above shall
not apply.
Support and Expenses Agreement of Global Funding
Allstate Life and Global Funding entered into an amended and restated
support and expenses agreement dated as of March -, 2006 (the "depositor support
agreement"). Pursuant to the depositor support agreement Allstate Life agreed to
pay the costs and expenses relating to the offering, sale and issuance of each
funding note and costs, expenses and taxes
39
incurred by Global Funding other than the excluded amounts (as described under "
- --Support and Expenses Agreements of the Trusts" above). Pursuant to the
depositor trust agreement Allstate Life also agreed to indemnify the indenture
trustee, the Delaware trustee, the administrator and each other service
provider, as well as Global Funding, with respect to certain matters.
Under the depositor trust agreement, Allstate Life will not be obligated to
pay any costs, expenses, taxes or other amounts that are considered excluded
amounts.
DESCRIPTION OF THE ADMINISTRATIVE SERVICES AGREEMENTS
Administrative Services Agreements of the Trusts
This section provides a summary of the material terms and conditions of
each administrative services agreement to be entered into between the
administrator and each trust to be formed in connection with the issuance of a
series of notes (each, an "administrative services agreement"). The form of
administrative services agreement is included in the form of series instrument.
Each administrative services agreement will incorporate by reference the
standard administrative services terms. This summary is not complete and you
should read the detailed provisions of the standard administrative services
terms and the applicable administrative services agreement. Copies of the
standard administrative services terms and the form of series instrument have
been filed as exhibits to the registration statement of which this prospectus is
a part and are incorporated into this prospectus by reference.
Pursuant to each administrative services agreement, the administrator will
perform various financial, statistical, accounting and other services for the
issuing trust, including maintenance of books and records, preparation, upon
request, of amendments to and waivers under certain documents, holding,
maintaining and preserving executed copies of certain documents; upon receipt of
notice, taking certain actions to enforce agreements as to which the issuing
trust is a party, preparing certain documents for signature by the issuing
trust, obtaining services of outside counsel, accountants and/or other outside
service providers, other actions incidental or reasonably necessary to
accomplish the foregoing and certain other actions specifically directed by the
issuing trust. In addition, the administrator will prepare and file with the SEC
and, if necessary, execute, on behalf of the issuing trust such documents,
forms, certifications or filings as may be required by the Exchange Act.
Each administrative services agreement will be governed by, and construed
in accordance with, the laws of the State of New York.
Administrative Services Agreement of Global Funding
Global Funding and the administrator executed the amended and restated
administrative services agreement of Global Funding, dated as of March -, 2006
(as amended, supplemented, modified, restated or replaced from time to time, the
"depositor administrative services agreement").
Pursuant to the depositor administrative services agreement, the
administrator agreed to perform various financial, statistical, accounting and
other services for Global Funding, including maintenance of books and records,
preparation, upon request, of amendments to and waivers under certain documents,
holding, maintaining and preserving executed copies of certain documents; upon
receipt of notice, taking certain actions to enforce agreements as to which
Global Funding is a party, preparing certain documents for signature by Global
Funding, obtaining services of outside counsel, accountants and/or other outside
service providers, other actions incidental or reasonably necessary to
accomplish the foregoing and certain other actions specifically directed by
Global Funding. In addition, the administrator will prepare and file with the
SEC and, if necessary, execute on behalf of Global Funding such documents,
forms, certifications or filings as may be required by the Exchange Act.
The depositor administrative services agreement is governed by, and will be
construed in accordance with, the laws of the State of New York.
40
ERISA CONSIDERATIONS
ERISA imposes certain requirements on "employee benefit plans" (as defined
in Section 3(3) of ERISA) subject to ERISA, including entities such as
collective investment funds whose underlying assets include the assets of such
plans (collectively, "ERISA Plans"), and on those persons who are fiduciaries
with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA's
general fiduciary requirements, including the requirement of investment prudence
and diversification and the requirement that an ERISA Plan's investments be made
in accordance with the documents governing the ERISA Plan. Each fiduciary of an
ERISA Plan should consider the fiduciary standards of ERISA in the context of
the ERISA Plan's particular circumstances before authorizing an investment in
the notes. Accordingly, among other factors, the fiduciary should consider
whether the investment would satisfy the prudence and diversification
requirements of ERISA and would be consistent with the documents and instruments
governing the ERISA Plan.
Under U.S. Department of Labor regulations at 29 C.F.R. 2510.3-101, as in
effect from time to time (the "Plan Asset Regulations"), assets of a trust may
be deemed to be "plan assets" of an ERISA Plan or a "plan" such as an individual
retirement account or a Keogh plan (as defined in Section 4975(e)(1) of the
Code, other than a governmental or church plan described in Section 4975(g)(2)
or (3) of the Code) (together with ERISA Plans, "Plans") for purposes of ERISA
and Section 4975 of the Code if a Plan or a person investing plan assets of a
Plan acquires an equity interest in a trust and none of the exceptions contained
in the Plan Asset Regulations are applicable. An equity interest is defined
under the Plan Asset Regulations as an interest other than an instrument that is
treated as indebtedness under applicable local law and has no substantial equity
features. There is very little pertinent authority on the issue of what
constitutes an equity interest for purposes of the Plan Asset Regulations.
Accordingly, whether the notes would be treated as debt or equity for purposes
of the Plan Asset Regulations is unclear. Since, however, the holders of notes
of a series will have recourse only to the relevant collateral that secures such
series of notes, if the notes were treated as equity interests, the related
funding agreements would be treated as assets of any Plan holding a note.
Even if the notes were treated as equity interests for purposes of the Plan
Asset Regulations, because (a) each trust expects that the funding agreements
will be treated as debt, rather than equity, for federal tax purposes and (b)
the funding agreements should not be deemed to have any substantial equity
features, none of the assets underlying the funding agreements should be treated
as plan assets for purposes of the Plan Asset Regulations. Those conclusions are
based, in part, upon the traditional debt features of the funding agreements,
including the reasonable expectation of purchasers of the notes that the
payments due under the funding agreements will be paid when due, as well as the
absence of conversion rights, warrants and other typical equity features.
Moreover, since the Delaware trustee has no discretionary authority with
respect to the funding agreements, even if the funding agreements are treated as
assets of a Plan holding a note, the Delaware trustee should not be treated as
having acted in a fiduciary capacity with respect to the funding agreements and
the treatment of the funding agreements as plan assets should not, absent other
factors that do not appear to be present, give rise to a violation of the
prohibited transaction rules of ERISA or Section 4975 of the Code.
Therefore, subject to the considerations described herein, the notes are
eligible for purchase by Plans, any entity whose underlying assets include plan
assets by reason of any Plan's investment in the entity ("Plan Asset Entity")
and any person investing plan assets of any Plan.
Section 406 of ERISA and Section 4975 of the Code also prohibit Plans from
engaging in certain transactions involving plan assets with persons who are
"parties in interest" under ERISA or "disqualified persons" under the Code with
respect to such Plans (together, "Parties in Interest"). For example, if either
Global Funding, a trust or Allstate Life is a Party in Interest with respect to
a Plan (either directly or by reason of its ownership of its subsidiaries), the
purchase of the notes of the applicable series by or on behalf of the Plan would
likely be a prohibited transaction under Section 406(a)(1) of ERISA and/or
Section 4975(c)(1) of the Code, unless exemptive relief were available under an
applicable statutory or administrative exemption (see below). A Party in
Interest that engages in a prohibited transaction may be subject to excise taxes
and other penalties and liabilities under ERISA and the Code.
The U.S. Department of Labor has issued five prohibited transaction class
exemptions ("PTCEs") that may provide exemptive relief for direct or indirect
prohibited transactions resulting from the purchase and holding of the notes by
or on behalf of a Plan. Those class exemptions are PTCE 96-23 (for certain
transactions determined by in-house asset managers), PTCE 95-60 (for certain
transactions involving insurance company general accounts), PTCE 91-38 (for
certain transactions involving bank collective investment funds), PTCE 90-1 (for
certain transactions involving insurance company separate accounts) and PTCE
84-14 (for certain transactions determined by independent qualified professional
asset managers). There can be no assurances that any of these class exemptions
or any other exemptions will be available with respect to any
41
particular transaction involving the notes. In addition, a purchaser of the
notes should be aware that even if the conditions specified in one or more of
the above referenced or other exemptions are met, the scope of the exemptive
relief provided by the exemption might not cover all acts which might be
construed as prohibited transactions.
Accordingly, the notes may not be purchased or held by any Plan, any Plan
Asset Entity or any person investing plan assets of any Plan, unless the
purchase and holding of the notes is exempt under PTCE 96-23, 95-60, 91-38,
90-1, 84-14 or similar exemption. Any purchaser of the notes or any interest
therein, including in the secondary market, will be deemed to have represented
that, among other things, either it is not a Plan or other Plan Asset Entity and
is not purchasing the notes on behalf of or with plan assets of any Plan or
other Plan Asset Entity; or its purchase and holding of the notes is exempt
under PTCE 96-23, 95-60, 91-38, 90-1, 84-14 or similar exemption, and that such
representations shall be deemed to be made each day from the date on which the
purchaser purchases through and including the date on which the purchaser
disposes of the notes.
Moreover, the notes may not be purchased or held by any Plan, any Plan
Asset Entity or any person investing plan assets of any Plan if Global Funding,
any trust or any of their respective affiliates (a) have investment or
administrative discretion with respect to the assets of the Plan used to effect
such purchase; (b) have authority or responsibility to give, or regularly give,
investment advice with respect to such assets, for a fee and pursuant to an
agreement or understanding that such advice (1) will serve as a primary basis
for investment decisions with respect to such assets, and (2) will be based on
the particular investment needs of such Plan; or (c) unless PTCE 95-60, 91-38 or
90-1 applies, are an employer maintaining or contributing to such Plan.
Any insurance company proposing to invest assets of its general account in
the notes should consider the implications of the United States Supreme Court's
decision in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings
Bank, 510 U.S. 86, 114 S. Ct. 517 (1993), in which the United States Supreme
Court held that in certain circumstances assets in a life insurance company's
general account are treated as assets of a Plan that owns a policy or other
contract with such insurance company, as well as the effect of Section 401(c) of
ERISA as interpreted by regulations issued by the U.S. Department of Labor in
January 2000.
Due to the complexity of these rules and the penalties that may be imposed
upon persons involved in non-exempt prohibited transactions, it is particularly
important that fiduciaries or other persons considering purchasing notes on
behalf of or with plan assets of any Plan or Plan Asset Entity consult with
their counsel regarding the potential consequences under ERISA and the Code and
the availability of exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1, 84-14
or similar exemption.
Governmental plans (as defined in Section 3(32) of ERISA) and certain
church plans (as defined in Section 3(33) of ERISA), if no election has been
made under Section 410(d) of the Code, while not subject to the fiduciary
responsibility provisions of ERISA or the provisions of Section 4975 of the
Code, may nevertheless be subject to state, local or other federal laws that are
substantially similar to the foregoing provisions of ERISA and the Code such as
Section 503 of the Code. No view is expressed as to whether an investment in the
notes (and any continued holding of the notes), or the operation and
administration of Global Funding or any trust, is appropriate or permissible for
any governmental plan or church plan under Section 503 of the Code, or under any
state, local or other federal law respecting such plan. Any purchaser of the
notes or any interest therein, including in the secondary market, will be deemed
to have represented that, among other things either (a) it is not a government
plan or a church plan or any entity the assets of which are treated as including
assets of such plans and it is not purchasing the notes on behalf of or with
assets of any such plan or entity or (b) its purchase, holding and disposition
of the notes is not in violation of the laws applicable to any such governmental
plan or church plan, and such representations shall be deemed to be made each
day from the date on which the purchaser purchases, through and including the
date on which the purchaser disposes of the notes. Fiduciaries of any such plans
should consult with their counsel before purchasing any notes.
The sale of any notes to a Plan is in no respect a representation by any
party or entity that such an investment meets all relevant legal requirements
with respect to investments by Plans generally or any particular Plan, or that
such an investment is appropriate for Plans generally or any particular Plan.
Notwithstanding the above, with regard to a particular trust, the sale of
notes of the applicable series to Plans, or a person utilizing the plan assets
of Plans, might not be allowed, or might only be allowed subject to certain
additional conditions, in which case the applicable pricing supplement to this
prospectus will disclose the prohibition or such additional conditions.
42
THE EMPLOYEE BENEFIT PLAN CONSIDERATIONS SET FORTH ABOVE ARE ONLY INTENDED
AS A SUMMARY AND MAY NOT BE APPLICABLE DEPENDING UPON A PLAN'S SPECIFIC FACTS
AND CIRCUMSTANCES. PLAN FIDUCIARIES SHOULD CONSULT THEIR OWN ADVISORS WITH
RESPECT TO THE ADVISABILITY OF AN INVESTMENT IN THE NOTES, AND POTENTIALLY
ADVERSE CONSEQUENCES OF SUCH INVESTMENT, INCLUDING WITHOUT LIMITATION THE
POSSIBLE EFFECTS OF CHANGES IN APPLICABLE LAWS.
43
PLAN OF DISTRIBUTION
The trusts will offer the notes from time to time for sale to or through
the agents identified in the applicable prospectus supplement (collectively, the
"Agents"). The trusts may also offer the notes from time to time for sale
directly to investors and other purchasers. The distribution of the notes
offered under this prospectus may occur in one or more transactions at fixed
prices, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices, all of which may change
over time.
Each trust will use the net proceeds received from the issuance of the
related series of notes to purchase a funding note from Global Funding. Each
funding note will be cancelled immediately upon the assignment and deposit by
Global Funding of the related funding agreement(s) to the issuing trust.
Each trust will use the net proceeds received from the issuance of the
related series of notes to purchase a funding note from Global Funding. Global
Funding will use the net proceeds received from the sale of such funding note to
purchase one or more funding agreements issued by Allstate Life. Global Funding
will immediately assign absolutely to, and deposit into, the issuing trust each
such funding agreement and the related funding note will be cancelled
immediately upon the assignment and deposit by Global Funding of such funding
agreement(s) to and into the issuing trust.
In connection with any sale of the notes, the Agents may receive
compensation in the form of discounts, concessions or commissions from the
issuing trust or from purchasers of the notes for whom they may act as agents.
The Agents may sell the notes to or through dealers, and those dealers may
receive compensation in the form of discounts, concessions, or commissions from
the purchasers for whom they may act as agents. Any Agents that participate in
the offering of the notes will be identified and their compensation will be
described in the applicable prospectus supplement or the applicable pricing
supplement. The applicable prospectus supplement or the applicable pricing
supplement will also describe the other terms of the offering, including any
discounts or concessions allowed or reallowed or paid to dealers.
The Agents participating in the distribution of notes will be
"underwriters," with respect to the notes being distributed by them and the
funding agreements being purchased by the issuing trust, and any discounts or
commissions received by them on the sale or resale of notes may be deemed to be
underwriting discounts and commissions under the Securities Act. The Agents may
be entitled under agreements entered into with a trust, Global Funding and
Allstate Life to indemnification against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the Agents may be required to make in respect of such liabilities.
Global Funding is a statutory issuer of the notes and the funding notes
under the Securities Act, and Allstate Life is a statutory issuer of the funding
agreements under the Securities Act.
J.P. Morgan Trust Company, National Association is affiliated with J.P.
Morgan Securities Inc., which is an Agent. With respect to any series of notes
as to which one or more affiliates of J.P. Morgan Trust Company, National
Association will serve as an Agent, the relevant trust will appoint an eligible
entity other than J.P. Morgan Trust Company, National Association and
unaffiliated with any other Agent participating in the offering of such series
of Notes to serve as indenture trustee.
In the ordinary course of its business, the Agents and their affiliates
have engaged, and may in the future engage, in investment and commercial banking
transactions with Allstate Life and certain of its affiliates.
44
LEGAL OPINIONS
Certain matters regarding the notes, funding notes and funding agreements,
and their offering will be passed upon:
o for Allstate Life by Counsel of Allstate Life (as to Illinois law,
including the validity of the funding agreements thereunder);
o for Global Funding and Allstate Life by LeBoeuf, Lamb, Greene & MacRae
LLP (as to New York law and United States Federal securities law,
including the validity of the notes and the funding notes thereunder,
and as to tax law and certain insurance regulatory matters);
o for Global Funding and Allstate Life by Lord, Bissell & Brook LLP (as
to certain Illinois regulatory matters);
o for Global Funding and Wilmington Trust Company by Richards, Layton &
Finger, P.A. (as to Delaware law, including, organization, authority
and certain regulatory matters related to Global Funding, the trusts
and the Delaware Trustee, certain security interest matters, the
enforceability of the trust agreements and the valid issuance of the
notes and the funding notes); and
o for the Agents by Sidley Austin LLP (as to United States Federal
securities law).
LeBoeuf, Lamb, Greene & MacRae LLP has from time to time represented, and
continues to represent, one or more of the Agents. Sidley Austin LLP has from
time to time represented, and continues to represent Allstate Life.
EXPERTS
The consolidated financial statements and the related consolidated
financial statement schedules incorporated in this Prospectus by reference from
the Allstate Life Insurance Company Annual Report on Form 10-K for the year
ended December 31, 2005 have been audited by Deloitte & Touche LLP, an
independent registered public accounting firm, as stated in their report (which
report expresses an unqualified opinion and includes an explanatory paragraph
relating to a change in method of accounting for certain nontraditional
long-duration contracts and for separate accounts in 2004 and changes in the
methods of accounting for embedded derivatives in modified coinsurance
agreements and variable interest entities in 2003), which is incorporated herein
by reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
45
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses to be incurred in
connection with the offering described in this registration statement. Except
for the Securities and Exchange Commission registration fee, all amounts shown
are estimates.
Securities and Exchange Commission registration fee $ 383,060
Fees and expenses of Trustees 50,000
Printing expenses 35,000
Accountant's fees and expenses 25,000
Legal fees and expenses 250,000
Rating Agency fees 400,000
Miscellaneous expenses 50,000
------
$ 1,193,060
Item 15. Indemnification of Directors and Officers.
Allstate Life Insurance Company
Under Section 8.75 of the Illinois Business Corporation Act of 1983,
Allstate Life Insurance Company is empowered, subject to the procedures and
limitations stated therein, to indemnify any person against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with any threatened, pending or
completed action, suit or proceeding to which such person is made a party or
threatened to be made a party by reason of his being or having been a director,
officer, employee or agent of Allstate Life Insurance Company, or serving or
having served at the request of Allstate Life Insurance Company as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise. Section 8.75 further provides that indemnification to
which a person may be entitled under any by-law, agreement, vote of stockholders
or disinterested directors, or otherwise, and that such indemnification to which
a person may be entitled under any bylaw, agreement, vote of stockholders or
disinterested directors, officer, employee or agent of Allstate Life Insurance
Company who has ceased to serve in such capacity, and shall inure to the benefit
of the heirs, executors and administrators of such a person.
Article VI, Section 1 of the by-laws of Allstate Life Insurance Company
provides that Allstate Life Insurance Company will indemnify all of its
directors, former directors, officers and former officers, to the fullest extent
permitted under law, who were or are a party or are threatened to be made party
to any proceeding by reason of the fact that such persons were or are directors
or officers of Allstate Life Insurance Company, against liabilities, expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by them. The indemnity shall not be deemed exclusive of any other rights to
which directors or officers may be entitled by law or under any articles of
incorporation, by-law, agreement, vote of stockholders or disinterested
directors or otherwise. In addition, the indemnity shall inure to the benefit of
the legal representatives of directors and officers or of their estates, whether
such representatives are court appointed or otherwise designated, and to the
benefit of the heirs of such directors and officers. The indemnity shall extend
to and include claims for such payments arising out of any proceeding commenced
or based on actions of such directors and officers taken prior to the
effectiveness of this indemnity; provided that payment of such claims had not
been agreed to or denied by Allstate Life Insurance Company before such date.
Article IV of the by-laws of The Allstate Corporation provides similar rights of
indemnification to all directors, former directors, officers and former officers
of Allstate Life Insurance Company, as a subsidiary of The Allstate Corporation.
The directors and officers of Allstate Life Insurance Company have been
provided liability insurance for certain losses arising from claims or charges
made against them while acting in their capacities as directors or officers of
Allstate Life Insurance Company.
II-1
Allstate Life Global Funding
Pursuant to an amended and restated support and expenses agreement between
Allstate Life Insurance Company and Allstate Life Global Funding to be dated on
or about the date of effectiveness of this registration statement, Allstate Life
Insurance Company will agree to indemnify Wilmington Trust Company as Delaware
trustee and AMACAR Pacific Corp. as administrator of Allstate Life Global
Funding with respect to certain matters related to the performance of such
functions.
Allstate Life Global Funding will agree, pursuant to an amended and
restated administrative services agreement of Allstate Life Global Funding to be
dated on or about the date of effectiveness of this registration statement (the
"depositor administrative services agreement"), to indemnify AMACAR Pacific
Corp., as administrator, and to hold the administrator harmless, from and
against certain losses arising out of, in connection with, or resulting from the
administrator's right and/or performance of the administrator's duties by the
administrator or its agents and employees pursuant to the depositor
administrative services agreement. Allstate Life Global Funding will also agree,
pursuant to an amended and restated indemnity agreement with Wilmington Trust
Company, to indemnify, protect, save and keep harmless Wilmington Trust Company,
as Delaware trustee, and its officers, directors, successors, assigns, legal
representatives, agents, and servants, from and against certain liabilities
relating to or arising out of the amended and restated trust agreement of
Allstate Life Global Funding, to be dated on or about the date of effectiveness
of this registration statement (as the same may be further amended, restated or
modified) or any other agreements to which Allstate Life Global Funding is a
party or to which Allstate Life Global Funding becomes a party.
Item 16. Exhibits.
(a) Exhibits
Exhibit No. Description
1.1* Form of Distribution Agreement.
1.2* Form of Terms Agreement (included in Part E to the Form of Series Instrument filed as Exhibit 4.12).
1.3* Form of Representations and Indemnity Agreement.
3.1 Articles of Amendment to the Articles of Incorporation of Allstate Life Insurance Company dated
December 29, 1999 (incorporated by reference to Form 10 dated April 24, 2002 (File No. 000-31248)).
3.2 By-Laws of Allstate Life Insurance Company, Amended and Restated June 28, 2000 (incorporated by
reference to Form 10 dated April 24, 2002 (File No. 000-31248)).
3.3 Certificate of Trust of Allstate Life Global Funding, dated as of June 24, 2002 (incorporated by
reference to Registration Statement (File No. 333-101424)).
3.4* Amended and Restated Certificate of Trust of Allstate Life Global Funding, dated as of April 20, 2004.
3.5* Form of Certificate of Trust of an Allstate Life Global Funding Trust.
4.1* Form of Amended and Restated Trust Agreement of Allstate Life Global Funding to be entered into by
Wilmington Trust Company, as Delaware Trustee, and AMACAR Pacific Corp., in its capacities as
Administrator and Trust Beneficial Owner.
4.2* Standard Trust Agreement Terms.
4.3* Form of Trust Agreement of each Issuing Trust to be entered into among Wilmington Trust Company,
AMACAR Pacific Corp. and Allstate Life Global Funding (included in Part A to the Form of Series Instrument
filed as Exhibit 4.12).
4.4* Standard Indenture Terms.
II-2
Exhibit No. Description
4.5* Form of Indenture to be entered into between each Issuing Trust and J.P. Morgan Trust Company, National
Association (included in Part G to the Form of Series Instrument filed as Exhibit 4.12 hereto).
4.6* Standard Funding Note Indenture Terms.
4.7* Form of Funding Note Indenture to be entered into between Allstate Life Global Funding and J.P. Morgan
Trust Company, National Association (included in Part H to the Form of Series Instrument filed as
Exhibit 4.12 hereto).
4.8* Form of Global Security for Secured Medium Term Notes Program.
4.9* Form of Definitive Security for Secured Medium Term Notes Program.
4.10* Form of Global Security for Allstate Life(R) CoreNotes(R) Program.
4.11* Form of Definitive Security for Allstate Life(R) CoreNotes(R) Program.
4.12* Form of Series Instrument.
4.13* Form of Closing Instrument.
5.1* Opinion of Counsel of Allstate Life Insurance Company.
5.2* Opinion of LeBoeuf, Lamb, Greene & MacRae LLP.
8* Opinion of LeBoeuf, Lamb, Greene & MacRae LLP, as Tax Counsel.
10.1 Form of Funding Agreement between Allstate Life Insurance Company and Allstate Life Global Funding
(incorporated by reference to Registration Statement (File No. 333-101424)).
10.2* Form of Funding Note related to Secured Medium Term Notes issued under the Allstate Life(R)
CoreNotes(R) Program.
10.3* Form of Funding Note related to Secured Medium Term Notes issued under the Secured Medium Term
Notes Program.
10.4* Form of Amended and Restated Support and Expenses Agreement to be entered into between Allstate
Life Insurance Company and Allstate Life Global Funding.
10.5* Standard Support and Expenses Agreement Terms.
10.6* Form of Support and Expenses Agreement (included in Part C to the Form of Series Instrument filed
as Exhibit 4.12).
10.7* Form of Amended and Restated Administrative Services Agreement to be entered into between Allstate
Life Global Funding and AMACAR Pacific Corp.
10.8* Standard Administrative Services Agreement Terms.
10.9* Form of Administrative Services Agreement of each Issuing Trust to be entered into between each
Issuing Trust and AMACAR Pacific Corp. (included in Part B to the Form of Series Instrument filed as
Exhibit 4.12).
10.10* Form of Amended and Restated Name Licensing Agreement between Allstate Insurance Company and Allstate
Life Global Funding.
10.11* Form of Name Licensing Agreement of each Issuing Trust (included in Part D to the Form of Series Instrument
filed as Exhibit 4.12).
10.12* Standard Name Licensing Agreement Terms.
10.13 Indemnity Agreement, dated as of June 24, 2002, between Allstate Life Global Funding and Wilmington Trust
Company (incorporated by reference to Registration Statement (File No. 333-101424)).
II-3
Exhibit No. Description
10.14 Form of Amended and Restated Indemnity Agreement to be entered into between Allstate Life Global
Funding and Wilmington Trust Company (incorporated by reference to Registration Statement (File
No. 333-112249)).
12 Ratio of Earnings to Fixed Charges of Allstate Life Insurance Company.
23.1 Consent of Independent Registered Public Accounting Firm.
23.2* Consent of Counsel of Allstate Life Insurance Company (included in Exhibit 5.1).
23.3* Consent of LeBoeuf, Lamb, Greene & MacRae LLP.
23.4* Consent of Lord, Bissell & Brook LLP.
23.5* Consent of Richards, Layton & Finger, P.A.
24* Power of Attorney.
25.1* Statement of Eligibility under the Trust Indenture Act of 1939 of J.P. Morgan Trust Company, National
Association as Indenture Trustee under the Indenture.
25.2* Statement of Eligibility under the Trust Indenture Act of 1939 of J.P. Morgan Trust Company, National
Association as Funding Note Indenture Trustee under the Funding Note Indenture.
*Previously filed.
Item 17. Undertakings.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made of
the securities registered hereby, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent post-effective
amendment hereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from low or high end estimated offering
range may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b), if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
Provided, however, That:
(A) The undertakings set forth in paragraphs (i), (ii) and (iii) above do
not apply if the registration statement is on Form S-3 or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by
the registrants pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this registration
statement, or is contained in a form of prospectus filed pursuant to Rule 424(b)
that is part of this registration statement.
(B) Provided, further, however, that the undertakings set forth in
paragraphs (i) and (ii) do not apply if the registration statement is for an
offering of asset-backed securities on Form S-1 or Form S-3, and the information
required to be included in a post-effective amendment is provided pursuant to
Item 1100(c) of Regulation AB.
II-4
(2) That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser, if the registrants are relying on Rule 430(B):
(A) Each prospectus filed by the registrants pursuant to Rule 424(b)(3)
shall be deemed to be part of this registration statement as of the date the
filed prospectus was deemed part of and included in this registration statement;
and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of this registration statement in reliance on Rule
430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x)
for the purpose of providing the information required by section 10(a) of the
Securities Act of 1933 shall be deemed to be part of and included in this
registration statement as of the earlier of the date such form of prospectus is
first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule
430(B), for liability purposes of the issuer and any person that is at the date
an underwriter, such date shall be deemed to be a new effective date of this
registration statement relating to the securities in the registration statement
to which that prospectus relates, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof. Provided ,
however, that no statement made in this registration statement or prospectus
that is part of this registration statement or made in a document incorporated
or deemed incorporated by reference into this registration statement or
prospectus that is part of this registration statement will, as to a purchaser
with a time of contract of sale prior to such effective date, supersede or
modify any statement that was made in this registration statement or prospectus
that was part of this registration statement or made in any such document
immediately prior to such effective date.
(3) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrants undertake that in a primary offering of
securities of the undersigned registrants pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrants will be
sellers to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrants
relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrants or used or referred to by the undersigned
registrants;
(iii) The portion of any other free writing prospectus relating to the
offering containing materials information about the undersigned registrants or
their securities provided by or on behalf of the undersigned registrants; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrants to the purchaser.
(4) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(5) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrants hereby further undertake that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
any annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in this registration
statement shall be
II-5
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrants hereby undertake to file an application for
the purposes of determining eligibility of the trustee to act under Subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Trust
Indenture Act.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions discussed in Item 15 above, or
otherwise, the undersigned registrants have been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Allstate Life of expenses incurred or paid by its director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, Allstate Life will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933 and will
be governed by the final adjudication of such issue.
(e) The undersigned registrants hereby undertake that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 of a third party that is incorporated by reference in the
registration statement in accordance with Item 1100(c)(1) of Regulation AB (17
CFR 229.1100(c)(1)) shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(f) The undersigned registrants hereby undertake to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
Allstate Life Global Funding certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this amendment no. 3 to the registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Charlotte, State of
North Carolina, on March 13, 2006.
ALLSTATE LIFE GLOBAL FUNDING
By: AMACAR Pacific Corp.,
not in its individual capacity,
but solely as administrator
By: /s/ JULIANA C. JOHNSON
--------------------------
Name: Juliana C. Johnson
Title: Chief Financial Officer, Principal Accounting Officer
and Director of AMACAR Pacific Corp.
Pursuant to the requirements of the Securities Act of 1933, this amendment
no. 3 to the registration statement has been signed on behalf of Allstate Life
Global Funding by AMACAR Pacific Corp., not in its individual capacity, but
solely as the administrator, on March 13, 2006 by the following persons solely
in the capacities indicated.
Signature Title
/s/ Douglas K. Johnson Chief Executive Officer and Director of AMACAR Pacific Corp.
- ---------------------- (Principal Executive Officer)
Douglas K. Johnson
/s/ Juliana C. Johnson Chief Financial Officer, Principal Accounting Officer and Director of
- ---------------------- AMACAR Pacific Corp.
Juliana C. Johnson (Principal Financial Officer and Principal Accounting Officer)
/s/ Evelyn Echevarria Vice President, Secretary and Director of AMACAR Pacific Corp.
- ----------------------
Evelyn Echevarria
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Pursuant to the requirements of the Securities Act of 1933, as amended,
Allstate Life Insurance Company certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and has
duly caused this amendment no. 3 to the registration statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Township of
Northfield, and State of Illinois, on March 13, 2006.
ALLSTATE LIFE INSURANCE COMPANY
By: /s/ Casey J. Sylla
---------------------------
Casey J. Sylla, Chairman of the Board, President and Director
Pursuant to the requirements of the Securities Act of 1933, this amendment
no. 3 to the registration statement has been signed on March 13, 2006 by the
following persons in the capacities indicated.
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Signature Title
* Senior Vice President and Director of Allstate Life
- -----------------------
David A. Bird
* Director of Allstate Life
- -----------------------
Danny L. Hale
* Director of Allstate Life
- -----------------------
Edward M. Liddy
* Senior Vice President and Director of Allstate Life
- -----------------------
John C. Lounds
* Senior Vice President and Director of Allstate Life
- -----------------------
Douglas B. Welch
* Group Vice President and Controller of Allstate Life
- -----------------------
Samuel H. Pilch
* Senior Vice President, Chief Financial Officer and Director of Allstate Life
- ----------------------- (Principal Financial Officer)
John C. Pintozzi
* Senior Vice President, Chief Investment Officer and Director of Allstate Life
- -----------------------
Eric A. Simonson
* Senior Vice President and Director of Allstate Life
- -----------------------
Kevin R. Slawin
/s/ CASEY J. SYLLA Chairman of the Board, President and Director of Allstate Life
- ----------------------- (Principal Executive Officer)
Casey J. Sylla
/s/ MICHAEL J. VELOTTA Senior Vice President, General Counsel, Secretary and Director of Allstate Life
- -----------------------
Michael J. Velotta
* Director of Allstate Life
- ------------------------
Thomas J. Wilson, II
*By: /s/ MICHAEL J. VELOTTA
- ---------------------------
Michael J. Velotta
Attorney in fact
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EXHIBIT INDEX
Exhibit No. Description
1.1* Form of Distribution Agreement.
1.2* Form of Terms Agreement (included in Part E to the Form of Series Instrument filed as Exhibit 4.12).
1.3* Form of Representations and Indemnity Agreement.
3.1 Articles of Amendment to the Articles of Incorporation of Allstate Life Insurance Company dated
December 29, 1999 (incorporated by reference to Form 10 dated April 24, 2002 (File No. 000-31248)).
3.2 By-Laws of Allstate Life Insurance Company, Amended and Restated June 28, 2000 (incorporated by
reference to Form 10 dated April 24, 2002 (File No. 000-31248)).
3.3 Certificate of Trust of Allstate Life Global Funding, dated as of June 24, 2002 (incorporated by
reference to Registration Statement (File No. 333-101424)).
3.4* Amended and Restated Certificate of Trust of Allstate Life Global Funding, dated as of April 20, 2004.
3.5* Form of Certificate of Trust of an Allstate Life Global Funding Trust.
4.1* Form of Amended and Restated Trust Agreement of Allstate Life Global Funding to be entered into by
Wilmington Trust Company, as Delaware Trustee, and AMACAR Pacific Corp., in its capacities as
Administrator and Trust Beneficial Owner.
4.2* Standard Trust Agreement Terms.
4.3* Form of Trust Agreement of each Issuing Trust to be entered into among Wilmington Trust Company,
AMACAR Pacific Corp. and Allstate Life Global Funding (included in Part A to the Form of Series
Instrument filed as Exhibit 4.12).
4.4* Standard Indenture Terms.
4.5* Form of Indenture to be entered into between each Issuing Trust and J.P. Morgan Trust Company,
National Association (included in Part G to the Form of Series Instrument filed as Exhibit 4.12 hereto).
4.6* Standard Funding Note Indenture Terms.
4.7* Form of Funding Note Indenture to be entered into between Allstate Life Global Funding and J.P. Morgan
Trust Company, National Association (included in Part H to the Form of Series Instrument filed as
Exhibit 4.12 hereto).
4.8* Form of Global Security for Secured Medium Term Notes Program.
4.9* Form of Definitive Security for Secured Medium Term Notes Program.
4.10* Form of Global Security for Allstate Life(R) CoreNotes(R) Program.
4.11* Form of Definitive Security for Allstate Life(R) CoreNotes(R) Program.
4.12* Form of Series Instrument.
4.13* Form of Closing Instrument.
5.1* Opinion of Counsel of Allstate Life Insurance Company.
5.2* Opinion of LeBoeuf, Lamb, Greene & MacRae LLP.
8* Opinion of LeBoeuf, Lamb, Greene & MacRae LLP, as Tax Counsel.
10.1 Form of Funding Agreement between Allstate Life Insurance Company and Allstate Life Global Funding
(incorporated by reference to Registration Statement (File No. 333-101424)).
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10.2* Form of Funding Note related to Secured Medium Term Notes issued under the Allstate Life(R)
CoreNotes(R) Program.
10.3* Form of Funding Note related to Secured Medium Term Notes issued under the Secured Medium Term
Notes Program.
10.4* Form of Amended and Restated Support and Expenses Agreement to be entered into between Allstate
Life Insurance Company and Allstate Life Global Funding.
10.5* Standard Support and Expenses Agreement Terms.
10.6* Form of Support and Expenses Agreement (included in Part C to the Form of Series Instrument filed as
Exhibit 4.12).
10.7* Form of Amended and Restated Administrative Services Agreement to be entered into between Allstate
Life Global Funding and AMACAR Pacific Corp.
10.8* Standard Administrative Services Agreement Terms.
10.9* Form of Administrative Services Agreement of each Issuing Trust to be entered into between each
Issuing Trust and AMACAR Pacific Corp. (included in Part B to the Form of Series Instrument filed as
Exhibit 4.12).
10.10* Form of Amended and Restated Name Licensing Agreement between Allstate Insurance Company and Allstate
Life Global Funding.
10.11* Form of Name Licensing Agreement of each Issuing Trust (included in Part D to the Form of Series Instrument
filed as Exhibit 4.12).
10.12* Standard Name Licensing Agreement Terms.
10.13 Indemnity Agreement, dated as of June 24, 2002, between Allstate Life Global Funding and Wilmington Trust
Company (incorporated by reference to Registration Statement (File No. 333-101424)).
10.14 Form of Amended and Restated Indemnity Agreement to be entered into between Allstate Life Global Funding
and Wilmington Trust Company (incorporated by reference to Registration Statement (File No. 333-112249)).
12 Ratio of Earnings to Fixed Charges of Allstate Life Insurance Company.
23.1 Consent of Independent Registered Public Accounting Firm.
23.2* Consent of Counsel of Allstate Life Insurance Company (included in Exhibit 5.1).
23.3* Consent of LeBoeuf, Lamb, Greene & MacRae LLP.
23.4* Consent of Lord, Bissell & Brook LLP.
23.5* Consent of Richards, Layton & Finger, P.A.
24* Power of Attorney.
25.1* Statement of Eligibility under the Trust Indenture Act of 1939 of J.P. Morgan Trust Company, National
Association as Indenture Trustee under the Indenture.
25.2* Statement of Eligibility under the Trust Indenture Act of 1939 of J.P. Morgan Trust Company, National
Association as Funding Note Indenture Trustee under the Funding Note Indenture.
*Previously Filed.
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Exhibit 12
ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES
COMPUTATION OF EARNINGS TO FIXED CHARGES RATIO
For the year ended
December 31,
- -------------------------------------------------------------------------------------------------------------------------------
(in millions) 2005 2004 2003 2002 2001
------ ------ ------ ------ ------
1. Income from operations before income taxes and cumulative
effect of changes in accounting principle, after-tax $ 591 $ 545 $ 453 $ 302 $ 553
------ ------ ------ ------ ------
Fixed Charges:
2. Interest on indebtedness $ 6 $ 2 $ 1 $ - $ -
3. Interest factor of annual rental expense - - - 2 4
------ ------ ------ ------ ------
4. Total fixed charges (2+3) $ 6 $ 2 $ 1 $ 2 $ 4
5. Income from operations before income taxes and fixed
charges (1+4) $ 597 $ 547 $ 454 $ 304 $ 557
====== ====== ====== ====== ======
6. Ratio of earnings to fixed charges before dividends
on redeemable preferred securities and interest credited
to contractholder funds (5/4) 99.5 X 273.5 X 454.0 X 152.0 X 139.3 X
====== ====== ====== ====== ======
7. Dividends on redeemable preferred securities - 1 2 3 20
8. Total fixed charges and dividends on redeemable
preferred securities (4+7) $ 6 $ 3 $ 3 $ 5 $ 24
------ ------ ------ ------ ------
9. Income from continuing operations before income taxes,
fixed charges and redeemable preferred securities (1+4+7) $ 597 $ 548 $ 456 $ 307 $ 577
====== ====== ====== ====== ======
10. Ratio of earnings to fixed charges, excluding interest
credited to contractholder funds (A) (9/8) 99.5 X 182.7 X 152.0 X 61.4 X 24.0 X
====== ====== ====== ====== ======
11. Interest credited to contractholder funds $2,340 $1,923 $1,764 $1,691 $1,670
12. Total fixed charges including dividends on redeemable
preferred securities and interest credited to
contractholder funds (8+11) $2,346 $1,926 $1,767 $1,696 $1,694
------ ------ ------ ------ ------
13. Income from continuing operations before income taxes and
fixed charges including interest credited to contractholder
funds (1+12) $2,937 $2,471 $2,220 $1,998 $2,247
====== ====== ====== ====== ======
14. Ratio of earnings to fixed charges (13/12) 1.3 X 1.3 X 1.3 X 1.2 X 1.3 X
====== ====== ====== ====== ======
(A) In this presentation, interest credited to contractholder funds is excluded
to promote transparency and allows users of this exhibit to quantify the
impact of interest credited to contractholder funds on the ratio of
earnings to fixed charges.
Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in this Amendment No. 3 to Registration Statement No. 333-129157 of Allstate Life Global Funding and Allstate Life Insurance Company on Form S-3 of our report dated March 10, 2006 (which report expresses an unqualified opinion and includes an explanatory paragraph relating to a change in method of accounting for certain nontraditional long-duration contracts and for separate accounts in 2004 and changes in the methods of accounting for embedded derivatives in modified coinsurance agreements and variable interest entities in 2003), relating to the consolidated financial statements and financial statement schedules of Allstate Life Insurance Company, appearing in the Annual Report on Form 10-K of Allstate Life Insurance Company for the year ended December 31, 2005, and to the reference to us under the heading "Experts" in the Prospectus, which is part of such Registration Statement. /s/ Deloitte & Touche LLP Chicago, Illinois March 13, 2006
[LETTERHEAD OF LEBOEUF, LAMB, GREEN & MACRAE LLP]
March 13, 2006
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Re: Allstate Life Global Funding
Allstate Life Insurance Company
Amendment No. 3 to Registration Statement on Form S-3
(File No. 333-129157), Filed on October 20, 2005
Ladies and Gentlemen:
On behalf of Allstate Life Global Funding, a statutory trust organized
under the laws of the State of Delaware, and Allstate Life Insurance Company, an
Illinois life insurance company ("Allstate Life"), transmitted herewith for
filing with the Securities and Exchange Commission (the "Commission") is
Amendment No. 3 to the Registration Statement on Form S-3 (File No. 333-129157)
in connection with the registration under the Securities Act of 1933, as amended
(the "Securities Act"), of $5,000,000,000 of: (i) Secured Medium Term Notes (the
"Notes"), (ii) Funding Notes and (iii) Funding Agreements, under two programs
for the issuance of Notes secured by Funding Agreements issued by Allstate Life
(the "Programs"). The Programs have been effective since April 27, 2004
(Registration Statement on Form S-3 (File No. 333-112249) and Registration
Statement on Form S-3 (File No. 333-125937)).
Pursuant to Rule 429 under the Securities Act, $1,650,000,000 of: (i)
Notes, (ii) Funding Notes and (iii) Funding Agreements registered under
Registration Statement No. 333-125937 and not previously sold has been
consolidated into this Registration Statement. The registration fee in the
amount of $577,265 was previously paid.
Please contact me at (212) 424-8710 with any questions.
Very truly yours,
/s/ Vladimir Nicenko
--------------------
Vladimir Nicenko