<PAGE>
Filed Pursuant to
Rule 424(b)(2)
No. 333-61817
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED AUGUST 25, 1998)
[LOGO]
$900,000,000
THE ALLSTATE CORPORATION
7 7/8% SENIOR NOTES DUE 2005
-----------------
INTEREST PAYABLE ON MAY 1 AND NOVEMBER 1
-------------------
THE ALLSTATE CORPORATION MAY, AT ANY TIME, REDEEM THE SENIOR NOTES, IN WHOLE OR
IN PART, AT THE REDEMPTION PRICE DESCRIBED HEREIN.
-------------------
PRICE 99.627% AND ACCRUED INTEREST, IF ANY
-------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
------ ----------- -------
<S> <C> <C> <C>
PER SENIOR NOTE............................... 99.627% .600% 99.027%
TOTAL....................................... $896,643,000 $5,400,000 $891,243,000
</TABLE>
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE UNDERWRITERS EXPECT TO DELIVER THE SENIOR NOTES TO PURCHASERS ON MAY 1,
2000.
-------------------
MORGAN STANLEY DEAN WITTER
DONALDSON, LUFKIN & JENRETTE
LEHMAN BROTHERS
-------------------
CREDIT SUISSE FIRST BOSTON
GOLDMAN, SACHS & CO.
J.P. MORGAN & CO.
SUN TRUST EQUITABLE SECURITIES
<PAGE>
WARBURG DILLON READ LLC
APRIL 26, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Prospectus Supplement
The Allstate Corporation............. S-3
Use of Proceeds...................... S-3
Capitalization....................... S-4
Selected Consolidated Financial
Information........................ S-5
Description of the Senior Notes...... S-6
Underwriting......................... S-11
Legal Opinions....................... S-12
Prospectus
Available Information................ 2
Incorporation of Certain Documents by
Reference.......................... 3
The Allstate Corporation............. 4
The Trusts........................... 4
Ratio of Earnings to Fixed Charges
and Ratio of Earnings to Fixed
Charges and Preferred Stock
Dividends.......................... 5
Use of Proceeds...................... 5
Description of Debt Securities....... 6
Description of Debt Warrants......... 18
Description of Preferred Stock....... 19
Description of Preferred
Securities......................... 20
Description of Preferred Securities
Guarantees......................... 22
Plan of Distribution................. 25
Legal Opinion........................ 26
Experts.............................. 26
</TABLE>
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with information different from that
contained or incorporated by reference in this prospectus supplement and the
accompanying prospectus. We are offering to sell the Senior Notes and are
seeking offers to buy the Senior Notes only in jurisdictions where offers and
sales are permitted. The information contained or incorporated by reference
herein is accurate only as of the date of this prospectus supplement, regardless
of the time of delivery of this prospectus supplement and the accompanying
prospectus or any sale of the Senior Notes.
S-2
<PAGE>
THE ALLSTATE CORPORATION
The Allstate Corporation is a holding company for Allstate Insurance
Company, or AIC. The Allstate Corporation is the nation's largest publicly held
personal lines insurance company. Our main business units include Allstate
Personal Property and Casualty, which provides insurance for more than
14 million households and has approximately 15,500 exclusive agencies in the
U.S. and Canada, and Allstate Life and Savings, which markets a number of life
insurance and savings products under a variety of brands through a number of
channels and is the nation's 17(th) largest life insurance business based on
ordinary life insurance in force. Our Independent Agency Markets unit sells
personal property and casualty insurance through a network of 21,000 independent
agencies across the country.
The Allstate Corporation was incorporated in Delaware on November 5, 1992.
Our executive offices are located at 2775 Sanders Road, Northbrook, Illinois
60062, and at Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware
19801. Our telephone number is (847) 402-5000.
As a holding company with no significant business operations of our own, we
rely on dividends from AIC as the principal source of cash to pay dividends to
our stockholders and to meet our obligations, including the payment of principal
of and any interest on the Senior Notes and our other debt obligations. AIC is
regulated as an insurance company in Illinois. Under Illinois law, AIC may not
pay a dividend without notifying the Illinois Department of Insurance and
providing specified financial information. Furthermore, Illinois law requires
AIC to notify and receive approval from the Director of the Illinois Department
of Insurance for the declaration or payment of any dividend which, together with
other dividends or distributions made within the preceding twelve months,
exceeds the greater of:
- 10% of AIC's statutory surplus as of December 31 of the prior year; or
- AIC's statutory net income for the twelve-month period ending
December 31 of the prior year.
As of December 31, 1998 and 1999, AIC's statutory net income for the prior
twelve-month period was greater than 10% of its year-end statutory surplus. In
the twelve-month period beginning January 1, 1999, AIC paid $2.96 billion in
dividends, the maximum amount allowed under Illinois Insurance Law without the
prior approval of the Illinois Department of Insurance based on 1998 statutory
net income. At any point in time during the period beginning on May 20, 2000 and
continuing through December 31, 2000, AIC will be able to pay $1.96 billion in
dividends, less the amount of dividends paid during the preceding 12 months
measured at that point in time, without the prior approval of the Illinois
Department of Insurance.
The laws of other jurisdictions that generally govern our insurance
subsidiaries contain similar limitations on the payment of dividends; however,
in some jurisdictions the laws may be somewhat more restrictive.
USE OF PROCEEDS
We estimate that the net proceeds from the sale of the Senior Notes will be
approximately $891 million. We will use the net proceeds for general corporate
purposes, including our stock repurchase program and possible acquisitions.
Pending such uses, we will invest the net proceeds in income-producing
securities.
S-3
<PAGE>
CAPITALIZATION
The following table sets forth our consolidated short term debt and
capitalization as of March 31, 2000 and as adjusted to give effect to this
offering. The following data should be read in connection with our consolidated
financial statements and notes, which are incorporated by reference.
<TABLE>
<CAPTION>
AS OF MARCH 31, 2000
----------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Short-term debt............................................. $ 249 $ 249
====== ======
The Senior Notes............................................ $ - $ 900
Other long-term debt........................................ 2,186 2,186
Mandatorily redeemable preferred securities of subsidiary
trusts.................................................... 964 964
Common stock and additional capital paid-in................. 2,663 2,663
Unrealized net capital gains................................ 1,529 1,529
Unrealized foreign currency translation adjustments......... (28) (28)
Retained income............................................. 17,160 17,160
Deferred ESOP expense....................................... (216) (216)
Treasury stock.............................................. (4,692) (4,692)
------ ------
Total shareholders' equity.......................... 16,416 16,416
------ ------
Total capitalization................................ $19,566 $20,466
====== ======
</TABLE>
S-4
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following table sets forth selected consolidated statement of operations
and financial position data and other data for the periods indicated. The
financial data for each of the five years in the period ended December 31, 1999
are derived from our audited consolidated financial statements. The financial
data for the three months ended March 31, 2000 and 1999 are derived from our
unaudited condensed consolidated financial statements. The unaudited financial
statements include all adjustments, consisting of normal recurring accruals,
that management considers necessary for a fair presentation of our financial
position and results of operations as of such dates and for such periods. The
results of the three months ended March 31, 2000 are not necessarily indicative
of full year results. The following amounts should be read in conjunction with
the consolidated financial statements and notes thereto contained in our other
filings with the Securities and Exchange Commission available as described under
"Available Information" in the accompanying prospectus.
<TABLE>
<CAPTION>
AS OF OR FOR THE
THREE MONTHS
ENDED MARCH 31, AS OF OR FOR THE YEAR ENDED DECEMBER 31,
-------------------- ----------------------------------------------------
2000 1999 1999 1998 1997 1996 1995
--------- -------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Insurance premiums and contract charges........ $ 6,012 $5,237 $21,735 $20,826 $20,106 $19,702 $18,908
Net investment income.......................... 1,090 971 4,112 3,890 3,861 3,813 3,627
Realized capital gains and losses.............. 184 599 1,112 1,163 982 784 258
------- ------ ------ ------ ------ ------ ------
Total revenues............................... $ 7,286 $6,807 $26,959 $25,879 $24,949 $24,299 $22,793
======= ====== ====== ====== ====== ====== ======
Benefits, claims, expenses and other........... $ 6,498 $5,302 $23,062 $21,221 $20,577 $21,499 $20,531
Gain (loss) on disposition of operations....... -- -- 10 87 62 (131) 159
Income before federal income taxes, dividends
on preferred securities and equity in net
income of unconsolidated subsidiary.......... 788 1,505 3,907 4,745 4,434 2,669 2,421
Income tax expense............................. 216 461 1,148 1,422 1,324 619 573
Dividends on preferred securities of subsidiary
trusts and equity in net income of
unconsolidated subsidiary.................... (11) (9) (39) (29) (5) 25 56
------- ------ ------ ------ ------ ------ ------
Net income..................................... $ 561 $1,035 $2,720 $3,294 $3,105 $2,075 $1,904
======= ====== ====== ====== ====== ====== ======
Per common share data (1):
Net income per share - basic................. $ 0.73 $ 1.27 $ 3.40 $ 3.96 $ 3.58 $ 2.33 $ 2.12
Net income per share - diluted............... $ 0.73 $ 1.27 $ 3.38 $ 3.94 $ 3.56 $ 2.31 $ 2.12
Cash dividends per common share.............. $ 0.17 $ 0.15 $ 0.60 $ 0.54 $ 0.48 $ 0.43 $ 0.39
CONSOLIDATED FINANCIAL POSITION DATA:
Investments.................................... $70,101 $67,519 $69,645 $66,525 $62,548 $58,329 $56,505
Total assets................................... 100,206 89,423 98,119 87,691 80,918 74,508 70,029
Reserve for claims and claims expenses,
contract benefits and contractholder funds... 51,767 45,774 50,610 45,615 44,874 43,789 42,904
Debt:
Short-term................................... 249 327 665 393 199 152 -
Long-term.................................... 2,186 1,353 2,186 1,353 1,497 1,234 1,228
Mandatorily redeemable preferred securities of
subsidiary trusts............................ 964 750 964 750 750 750 -
Shareholders' equity........................... 16,416 17,413 16,601 17,240 15,610 13,452 12,680
OTHER DATA:
Ratio of earnings to fixed charges (2)......... 11.1 27.6 17.2 18.6 19.3 16.5 15.5
Ratio of earnings to fixed charges, including
interest credited to investment
contracts (3)................................ 2.8 5.0 3.4 4.1 4.0 2.9 2.8
</TABLE>
- ------------------------
(1) Per common share data have been restated for the effects of a two-for-one
stock split effective July 1, 1998.
(2) For purposes of this computation, earnings consist of income from continuing
operations before income taxes plus fixed charges. Fixed charges consist of
interest expense, amortization of financing costs, that portion of rental
expense that is representative of the interest factor and dividends on
redeemable preferred securities.
(3) For purposes of this computation, earnings consist of income from continuing
operations before income taxes plus fixed charges. Fixed charges consist of
interest expense (including interest credited to investment contracts),
amortization of financing costs, that portion of rental expense that is
representative of the interest factor and dividends on redeemable preferred
securities.
S-5
<PAGE>
DESCRIPTION OF THE SENIOR NOTES
WE HAVE SUMMARIZED PROVISIONS OF THE SENIOR NOTES BELOW. THIS SUMMARY
SUPPLEMENTS AND REPLACES (IF INCONSISTENT WITH) THE DESCRIPTION OF DEBT
SECURITIES AND THE GENERAL TERMS AND PROVISIONS OF DEBT SECURITIES UNDER THE
CAPTION "DESCRIPTION OF DEBT SECURITIES" IN THE ACCOMPANYING PROSPECTUS.
GENERAL
The Senior Notes will be issued under an indenture dated as of December 16,
1997, as amended by a third supplemental indenture dated as of July 23, 1999 and
as supplemented by the fifth supplemental indenture dated as of May 1, 2000,
with respect to the issuance of the Senior Notes, and as supplemented between us
and State Street Bank and Trust Company, as trustee.
The Senior Notes will initially be limited to a total principal amount of
$900,000,000. We may, without the consent of the holders of the Senior Notes,
issue additional Senior Notes having the same interest rate, maturity date and
other terms as described in this prospectus supplement and in the accompanying
prospectus. Any additional Senior Notes, together with the Senior Notes offered
by this prospectus supplement, will constitute a single series of Senior Notes
under the indenture. No additional Senior Notes may be issued if an event of
default under the indenture has occurred and is continuing with respect to the
Senior Notes.
The Senior Notes will mature on May 1, 2005 and will bear interest at 7 7/8%
per annum. Interest on the Senior Notes will accrue from May 1, 2000. The Senior
Notes provide that we will:
- pay interest semiannually on May 1 and November 1 of each year,
commencing November 1, 2000,
- pay interest to the person in whose name a Senior Note is registered at
the close of business on April 15 or October 15 preceding the interest
payment date,
- compute interest on the basis of a 360-day year consisting of twelve
30-day months,
- make payments on the Senior Notes at the offices of the trustee, and
- either make payments by wire transfer for Senior Notes held in
book-entry form or by check mailed to the address of the person entitled
to the payment as it appears on the register of the Senior Notes.
We will issue the Senior Notes only in fully registered form, without
coupons, in denominations of $1,000 and any integral multiple of $1,000. The
Senior Notes will not be subject to any sinking fund.
RANKING
The Senior Notes will be senior unsecured obligations of The Allstate
Corporation and will rank equally in right of payment with all of our other
senior unsecured and unsubordinated indebtedness. The Senior Notes will rank
senior to any subordinated indebtedness.
S-6
<PAGE>
OPTIONAL REDEMPTION
The Senior Notes are redeemable, in whole or in part, at any time at a
redemption price equal to the greater of:
- 100% of the principal amount of the Senior Notes to be redeemed; or
- as determined by an Independent Investment Banker, the sum of the
present values of the remaining scheduled payments of principal and
interest on the Senior Notes to be redeemed (not including any portion
of such payments of interest accrued to the date of redemption)
discounted to the redemption date on a semiannual basis (assuming a
360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus 20 basis points.
plus, in either of the above cases, accrued and unpaid interest thereon to the
redemption date.
"Adjusted Treasury Rate" means, with respect to any redemption date:
- the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" published by the Board of
Governors of the Federal Reserve System (or any successor publication
which is published weekly by the Board of Governors of the Federal
Reserve System and which establishes yields on actively traded United
States Treasury securities adjusted to constant maturity) under the
caption "Treasury Constant Maturities," for the maturity corresponding
to the Comparable Treasury Issue. If no maturity is within three months
before or after the Remaining Life, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Adjusted Treasury Rate shall be interpolated
or extrapolated from such yields on a straight line basis, rounding to
the nearest month; or
- if such release (or any successor release) is not published during the
week preceding the calculation date or does not contain such yields, the
rate per annum equal to the semiannual equivalent yield to maturity of
the Comparable Treasury Issue, calculated using a price for the
Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for such redemption date.
The Adjusted Treasury Rate shall be calculated on the third business day
preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the securities to be redeemed that would be used, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such securities ("Remaining Life").
"Comparable Treasury Price" means (1) the average of five Reference Treasury
Dealer Quotations for such redemption date, after excluding the highest and
lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.
S-7
<PAGE>
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by us.
"Reference Treasury Dealer" means:
- each of Morgan Stanley & Co. Incorporated, Donaldson, Lufkin & Jenrette
Securities Corporation and Lehman Brothers Inc. and their respective
successors; provided, however, that if any of the foregoing shall cease
to be a primary U.S. Government securities dealer in New York City (a
"Primary Treasury Dealer"), we shall substitute therefor another Primary
Treasury Dealer; and
- any two other Primary Treasury Dealer selected by us.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Independent Investment Banker, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Independent Investment Banker at 5:00 p.m., New York
City Time, on the third business day preceding such redemption date.
We will mail a notice of redemption at least 30 days but not more than
60 days before the redemption date to each holder of the Senior Notes to be
redeemed. If less than all of the Senior Notes are to be redeemed, the trustee
will select, by such method as it will deem fair and appropriate, including pro
rata or by lot, the securities to be redeemed in whole or in part.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the Senior Notes or portions
thereof called for redemption.
DEFEASANCE
The defeasance and covenant defeasance provisions of the indenture described
under the caption "Description of Debt Securities - Defeasance and Covenant
Defeasance" in the accompanying prospectus will apply to the Senior Notes.
NOTICES
We will mail notices and communications to the holder's address shown on the
register of the Senior Notes.
THE TRUSTEE; PAYING AGENTS AND TRANSFER AGENTS
State Street Bank and Trust Company is the trustee under the indenture. The
trustee and its affiliates also perform certain commercial banking services for
us for which they receive customary fees. The trustee will be the paying agent
and transfer agent for the Senior Notes.
BOOK-ENTRY DELIVERY AND SETTLEMENT
We will issue the Senior Notes in the form of one or more permanent global
notes in definitive, fully registered, book-entry form. The global notes will be
deposited with or on behalf of The Depository Trust Company, or DTC, and
registered in the name of Cede & Co., as nominee of DTC, or will remain in the
custody of the trustee in accordance with the FAST Balance Certificate Agreement
between DTC and the trustee.
S-8
<PAGE>
DTC has advised us as follows:
- 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 under Section 17A of the Securities
Exchange Act of 1934
- DTC holds securities that its participants deposit with DTC and
facilitates the settlement among participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in participants'
accounts, thereby eliminating the need for physical movement of
securities certificates
- Direct participants include securities brokers and dealers, 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, Inc. and the National
Association of Securities Dealers, Inc.
- Access to the DTC 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 participants are on file with the
SEC
We have provided the following descriptions of the operations and procedures
of DTC solely as a matter of convenience. These operations and procedures are
solely within the control of DTC and are subject to change by them from time to
time. None of The Allstate Corporation, the underwriters nor the trustee takes
any responsibility for these operations or procedures, and you are urged to
contact DTC or its participants directly to discuss these matters.
We expect that under procedures established by DTC:
- Upon deposit of the global notes with DTC or its custodian, DTC will
credit on its internal system the accounts of direct participants
designated by the underwriters with portions of the principal amounts of
the global notes.
- Ownership of the Senior Notes will be shown on, and the transfer of
ownership thereof will be effected only through, records maintained by
DTC or its nominee, with respect to interests of direct participants,
and the records of direct and indirect participants, with respect to
interests of persons other than participants.
The laws of some jurisdictions require that purchasers of securities take
physical delivery of those securities in definitive form. Accordingly, the
ability to transfer interests in the Senior Notes represented by a global note
to those persons may be limited. In addition, because DTC can act only on behalf
of its participants, who in turn act on behalf of persons who hold interests
through participants, the ability of a person having an interest in Senior Notes
represented by a global note to pledge or transfer those interests to persons or
entities that do not participate in DTC's system, or otherwise to take actions
in respect of such interest, may be affected by the lack of a physical
definitive security in respect of such interest.
S-9
<PAGE>
So long as DTC or its nominee is the registered owner of a global note, DTC
or that nominee will be considered the sole owner or holder of the Senior Notes
represented by that global note for all purposes under the indenture and under
the Senior Notes. Except as provided below, owners of beneficial interests in a
global note will not be entitled to have Senior Notes represented by that global
note registered in their names, will not receive or be entitled to receive
physical delivery of certificated Senior Notes and will not be considered the
owners or holders thereof under the indenture or under the Senior Notes for any
purpose, including with respect to the giving of any direction, instruction or
approval to the trustee. Accordingly, each holder owning a beneficial interest
in a global note must rely on the procedures of DTC and, if that holder is not a
direct or indirect participant, on the procedures of the participant through
which that holder owns its interest, to exercise any rights of a holder of
Senior Notes under the indenture or the global note.
Neither The Allstate Corporation nor the trustee will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of Senior Notes by DTC, or for maintaining, supervising
or reviewing any records of DTC relating to the Senior Notes.
Payments on the Senior Notes represented by the global notes will be made to
DTC or its nominee, as the case may be, as the registered owner thereof. We
expect that DTC or its nominee, upon receipt of any payment on the Senior Notes
represented by a global note, will credit participants' accounts with payments
in amounts proportionate to their respective beneficial interests in the global
note as shown in the records of DTC or its nominee. We also expect that payments
by participants to owners of beneficial interests in the global note held
through such participants will be governed by standing instructions and
customary practice as is now the case with securities held for the accounts of
customers registered in the names of nominees for such customers. The
participants will be responsible for those payments.
Payments on the Senior Notes represented by the global notes will be made in
immediately available funds. Transfers between participants in DTC will be
effected in accordance with DTC rules and will be settled in immediately
available funds.
CERTIFICATED NOTES
We will issue certificated Senior Notes to each person that DTC identifies
as the beneficial owner of the Senior Notes represented by the global notes upon
surrender by DTC of the global notes if:
- DTC notifies us that it is no longer willing or able to act as a
depository for the global notes, and we have not appointed a successor
depository within 90 days of that notice;
- An event of default has occurred and is continuing, and DTC requests the
issuance of certificated Senior Notes; or
- We determine not to have the Senior Notes represented by a global note.
Neither The Allstate Corporation nor the trustee will be liable for any
delay by DTC, its nominee or any direct or indirect participant in identifying
the beneficial owners of the related Senior Notes. The Allstate Corporation and
the trustee may conclusively rely on, and will be protected in relying on,
instructions from DTC or its nominee for all purposes, including with respect to
the registration and delivery, and the respective principal amounts, of the
Senior Notes to be issued.
S-10
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions set forth in the underwriting
agreement, dated April 26, 2000, the underwriters named below have severally
agreed to purchase, and we have agreed to sell to them, severally, the
respective principal amount of the Senior Notes set forth opposite their
respective names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF
NAME SENIOR NOTES
---- -------------------
<S> <C>
Morgan Stanley & Co. Incorporated........................... $360,000,000
Donaldson, Lufkin & Jenrette Securities Corporation......... 90,000,000
Lehman Brothers Inc......................................... 90,000,000
Credit Suisse First Boston Corporation...................... 72,000,000
Goldman, Sachs & Co......................................... 72,000,000
J.P. Morgan Securities Inc.................................. 72,000,000
Sun Trust Equitable Securities.............................. 72,000,000
Warburg Dillon Read LLC..................................... 72,000,000
------------
Total................................................. $900,000,000
============
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to pay for and accept delivery of the Senior Notes are subject to,
among other things, the approval of certain legal matters by their counsel and
certain other conditions. The underwriters are obligated to take and pay for all
the Senior Notes if any are taken.
The underwriters propose initially to offer part of the securities to the
public at the public offering prices set forth on the cover page hereof and in
part to certain dealers at prices that represent a concession not in excess of
.350% of the principal amount of the Senior Notes. Any underwriter may allow,
and such dealers may reallow, a concession not in excess of .250% of the
principal amount of the Senior Notes to certain other dealers. After the initial
offering of the Senior Notes, the offering price and other selling terms may
from time to time be varied by the underwriters.
The Senior Notes are new issues of securities with no established trading
market. The underwriters have advised us that they intend to make a market in
the Senior Notes but are not obligated to do so and may discontinue market
making at any time without notice. Therefore, the liquidity of the trading
market for the Senior Notes may be low.
In order to facilitate the offering of the Senior Notes, the underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Senior Notes. Specifically, the underwriters may over-allot in
connection with this offering, creating short positions in the Senior Notes for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Senior Notes, the underwriters may bid for, and purchase, Senior
Notes in the open market. Finally, the underwriters may reclaim selling
concessions allowed to an underwriter or dealer for distributing Senior Notes in
this offering, if the underwriters repurchase previously distributed securities
in transactions that cover syndicate short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of the Senior Notes above independent market levels. The
underwriters are not required to engage in these activities, and may end any of
these activities at any time.
S-11
<PAGE>
We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act of 1933.
The underwriters or their affiliates have provided, and may in the future
continue to provide, investment banking and other financial services, including
the provision of credit facilities, for us or our affiliates in the ordinary
course of business for which they have received and will receive customary
compensation.
LEGAL OPINIONS
The validity of the Senior Notes will be passed upon for The Allstate
Corporation by Michael J. McCabe, Vice President and General Counsel of The
Allstate Corporation, and Kirkland & Ellis, a partnership including professional
corporations, Chicago, Illinois. Certain legal matters will be passed upon for
the underwriters by LeBoeuf, Lamb, Greene & MacRae, L.L.P., a limited liability
partnership including professional corporations. Kirkland & Ellis has from time
to time represented, and continues to represent, certain of the underwriters on
other legal matters. LeBoeuf, Lamb, Greene, & MacRae, L.L.P. has from time to
time represented, and continues to represent, The Allstate Corporation on other
legal matters. Mr. McCabe is a full-time employee and officer of The Allstate
Corporation and owns 295,164 shares of its common stock as of March 31, 2000,
265,044 of which were subject to option.
S-12
<PAGE>
PROSPECTUS
$2,000,000,000
THE ALLSTATE CORPORATION
DEBT SECURITIES, DEBT WARRANTS AND PREFERRED STOCK
------------------------------
ALLSTATE FINANCING III ALLSTATE FINANCING V
ALLSTATE FINANCING IV ALLSTATE FINANCING VI
PREFERRED SECURITIES
FULLY AND UNCONDITIONALLY GUARANTEED BY
THE ALLSTATE CORPORATION
------------------------------
The Allstate Corporation, a Delaware corporation (the "Company"), may offer,
from time to time, (i) its unsecured debt securities, which may be either senior
debt securities ("Senior Debt Securities") or subordinated debt securities
("Subordinated Debt Securities" and, together with the Senior Debt Securities,
the "Debt Securities"), consisting of debentures, notes and/or other unsecured
evidences of indebtedness, (ii) Warrants to purchase Debt Securities (the "Debt
Warrants") and (iii) shares of its Preferred Stock, par value $1.00 per share
(the "Preferred Stock"). Unless otherwise specified in a Prospectus Supplement,
the Senior Debt Securities, when issued, will be unsecured and will rank on a
parity with all other unsecured and unsubordinated indebtedness of the Company.
The Subordinated Debt Securities, when issued, will be subordinated in right of
payment to all Senior Indebtedness (as hereinafter defined) of the Company.
Allstate Financing III, Allstate Financing IV, Allstate Financing V and
Allstate Financing VI (each, an "Allstate Trust"), each a statutory business
trust formed under the laws of the State of Delaware, may offer, from time to
time, preferred securities, representing undivided beneficial interests in the
assets of the respective Allstate Trust ("Preferred Securities"). The Company
will be the owner of the Common Securities (as hereinafter defined and, together
with the Preferred Securities, the "Trust Securities") of each Allstate Trust.
The payment of periodic cash distributions ("distributions") with respect to
Preferred Securities of each of the Allstate Trusts out of moneys held by each
of the Allstate Trusts, and payment on liquidation, redemption or otherwise with
respect to such Preferred Securities, will be guaranteed by the Company to the
extent described herein (each a "Preferred Securities Guarantee"). See
"Description of Preferred Securities Guarantees." Unless otherwise specified in
a Prospectus Supplement, the Company's obligations under the Preferred
Securities Guarantees will be subordinate and junior in right of payment to all
other liabilities of the Company and rank PARI PASSU with the most senior
preferred stock, if any, issued from time to time by the Company. Subordinated
Debt Securities may be issued and sold from time to time in one or more series
to an Allstate Trust, or a trustee of such Allstate Trust, in connection with
the investment of the proceeds from the offering of Trust Securities of such
Allstate Trust. The Subordinated Debt Securities purchased by an Allstate Trust
may be subsequently distributed pro rata to holders of Preferred Securities and
Common Securities in connection with the dissolution of such Allstate Trust as
may be described in an accompanying Prospectus Supplement. The Preferred
Securities Guarantees, when taken together with the Company's obligations under
the Subordinated Debt Securities, the Indenture related thereto and the
Declaration of Trust, including its obligations to pay costs, expenses, debts
and liabilities of the Allstate Trusts (other than with respect to the Trust
Securities), will provide a full and unconditional guarantee on a subordinated
basis by the Company of payments due on the Preferred Securities. The Debt
Securities, Debt Warrants, Preferred Stock and the Preferred Securities and the
related Preferred Securities Guarantees are collectively called the
"Securities."
The Securities may be offered as separate series or issuances at an
aggregate initial public offering price not to exceed $2,000,000,000 or, if
applicable, the equivalent thereof in one or more foreign currencies or currency
units, as shall be designated by the Company, in amounts, at prices and on terms
to be determined in light of sale conditions at the time of sale and as set
forth in the applicable Prospectus Supplement.
Certain specific terms of the particular Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement, including, where applicable (i) in the case of Debt Securities, the
title, aggregate principal amount, denominations (which may be in United States
dollars, in any other currency or in composite currencies), maturity,
subordination terms, if any, interest rate, if any (which may be fixed or
variable), and time of payment of any interest, any terms for redemption at the
option of the Company or the holder, any terms for sinking fund payments, any
listing on a securities exchange and the initial public offering price and any
other terms in connection with the offering and sale of such Debt Securities;
(ii) in the case of Debt Warrants, the Debt Securities for which each such Debt
Warrant is exercisable, the exercise price, duration, detachability, and call
provisions; (iii) in the case of Preferred Securities, the designation and
number, liquidation preference per Preferred Security, initial public offering
price, any listing on a securities exchange, distribution rate (or method of
calculation thereof), dates on which distributions shall be payable and dates
from which distributions shall accrue, any voting rights, any redemption,
exchange or sinking fund provisions, any other rights, preferences, privileges,
limitations or restrictions relating to the Preferred Securities and the terms
upon which the proceeds of the sale of the Preferred Securities shall be used to
purchase a specific series of Subordinated Debt Securities of the Company; and
(iv) in the case of Preferred Stock, the specific title, the aggregate amount,
any dividend, liquidation and other rights, any redemption provisions, any
listing on a securities exchange, any sinking fund provisions, the initial
public offering price and any other terms in connection with the offering and
sale of such Preferred Stock.
The Company and/or each of the Allstate Trusts may sell Securities to or
through underwriters or dealers, and also may sell Securities directly to other
purchasers or through agents. See "Plan of Distribution." The accompanying
Prospectus Supplement sets forth the names of any underwriters, dealers or
agents involved in the sale of the Securities in respect of which this
Prospectus is being delivered, the principal amounts, if any, to be purchased by
underwriters, dealers or agents and the compensation, if any, of such
underwriters, dealers or agents.
This Prospectus may not be used to consummate sales of Securities unless
accompanied by a Prospectus Supplement.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------
THE DATE OF THIS PROSPECTUS IS AUGUST 25, 1998
<PAGE>
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS OR THE PROSPECTUS SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS AND THE PROSPECTUS SUPPLEMENT DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES
DESCRIBED IN THIS PROSPECTUS AND THE PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS OR THE PROSPECTUS
SUPPLEMENT NOR ANY SALE MADE HEREUNDER OR THEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF OR THAT THE INFORMATION
CONTAINED OR INCORPORATED BY REFERENCE HEREIN OR THEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF OR THEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities of
the Commission at 450 Fifth Street N.W., Washington, D.C. 20549, Room 1024;
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
and 7 World Trade Center, New York, New York 10048, Suite 1300. Copies of such
materials can also be obtained from the public reference section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission maintains a web site that contains reports, proxy and
information statements and other information. The web site address is
http://www.sec.gov. Reports, proxy statements and other information concerning
the Company can also be inspected at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005, and the Chicago Stock
Exchange Incorporated, 440 South LaSalle Street, Chicago, Illinois 60605.
No separate financial statements of any of the Allstate Trusts have been
included herein. The Company does not consider that such financial statements
would be material to holders of the Preferred Securities because (i) all of the
voting securities of each of the Allstate Trusts will be owned, directly or
indirectly, by the Company, a reporting company under the Exchange Act, (ii)
each of the Allstate Trusts has no independent operations but exists for the
sole purpose of issuing securities representing undivided beneficial interests
in the assets of such Allstate Trust and investing the proceeds thereof in
Subordinated Debt Securities issued by the Company and (iii) the Company's
obligations described herein and in any accompanying Prospectus Supplement under
the Declarations of each Trust, the guarantee issued with respect to Preferred
Securities issued by that Trust, the Subordinated Debt Securities purchased by
that Trust and the related Indenture, taken together, constitute a full and
unconditional guarantee of payments due on the Preferred Securities. See
"Description of Debt Securities" and "Description of Preferred Securities
Guarantees."
The Allstate Trusts are not currently subject to the information reporting
requirements of the Exchange Act. The Allstate Trusts will become subject to
such requirements upon the effectiveness of the Registration Statement, although
they intend to seek and expect to receive exemptions therefrom.
Additional information regarding the Company and the Securities is contained
in the Registration Statement on Form S-3 (together with all amendments and
exhibits relating thereto, the "Registration Statement"), filed with the
Commission under the Securities Act of 1933, as amended (the "Act"). For further
information pertaining to the Company and the Securities, reference is made to
the Registration Statement, and the exhibits thereto, which may be inspected
without charge at the office of the Commission at 450 Fifth Street N.W.,
Washington, D.C. 20549, and copies thereof may be obtained from the Commission
at prescribed rates. Any statements contained herein concerning the provisions
of any document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission or incorporated by reference herein are not
necessarily complete, and, in each instance, reference is made to
2
<PAGE>
the copy of such document so filed for a more complete description of the matter
involved. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the year ended December 31,
1997, the Company's Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1998 and June 30, 1998, the Company's Proxy Statement dated
March 27, 1998 and the Company's Current Reports on Form 8-K dated January 27,
1998, May 19, 1998 and May 20, 1998 are hereby incorporated in and made a part
of this Prospectus by reference.
All documents filed by the Company 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 Securities shall be deemed to be
incorporated by reference in this Prospectus or in any Prospectus Supplement and
to be part hereof from the date of filing such documents. Any statement
contained in a document, all or a portion of which is incorporated or deemed to
be incorporated by reference herein, or contained in this Prospectus or any
Prospectus Supplement, shall be deemed to be modified or superseded for purposes
of this Prospectus or any Prospectus Supplement to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of the Registration
Statement, this Prospectus or any Prospectus Supplement.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which are incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests should be directed to The Allstate
Corporation, Attention: Investor Relations Department, 3075 Sanders Road,
Northbrook, Illinois 60062, telephone number (847) 402-5000.
3
<PAGE>
THE ALLSTATE CORPORATION
The Company is a holding company for Allstate Insurance Company ("AIC") and
certain other subsidiaries. The Company, through AIC and its other subsidiaries
(collectively, "Allstate"), is engaged in the property-liability insurance and
life insurance businesses. Allstate is the country's second largest personal
property and casualty insurer on the basis of 1997 statutory premiums earned and
is a major life insurer.
The Company was incorporated under Delaware law on November 5, 1992. The
Company's executive offices are located at 2775 Sanders Road, Northbrook,
Illinois 60062, and at Corporation Trust Center, 1209 Orange Street, Wilmington,
Delaware 19801. Its telephone number in Northbrook, Illinois is (847) 402-5000.
As a holding company with no significant business operations of its own, the
Company relies on dividends from AIC, which is domiciled in Illinois, as the
principal source of cash to meet its obligations, including the payment of
principal of (and premium, if any) and any interest on debt obligations of the
Company, and to pay dividends to holders of its capital stock. An
Illinois-domiciled insurer may not pay a dividend without notifying the state
insurance department and providing certain information. In addition, the payment
of dividends by Illinois-domiciled insurers is limited under the insurance
holding company laws, which require notice to and approval by the state
insurance commissioner for the declaration or payment of any dividend, which,
together with other dividends or distributions made within the preceding twelve
months, exceeds the greater of (i) 10% of the insurer's statutory surplus as of
December 31 of the preceding year or (ii) the insurer's net income for the
twelve-month period ending December 31 of the preceding year. The insurance
holding company laws of the other jurisdictions in which AIC's insurance
subsidiaries are domiciled generally contain similar (although in certain
instances somewhat more restrictive) limitations on the payment of dividends.
THE TRUSTS
Each of Allstate Financing III, Allstate Financing IV, Allstate Financing V
and Allstate Financing VI is a statutory business trust formed under Delaware
law pursuant to (i) a separate declaration of trust (each a "Declaration")
executed by the Company, as sponsor for such trust (the "Sponsor") and the
Allstate Trustees (as defined herein) for such trust and (ii) the filing of a
certificate of trust with the Delaware Secretary of State on August 21, 1996 (in
the case of Allstate Financing III and Allstate Financing IV) and on August 14,
1998 (in the case of Allstate Financing V and Allstate Financing VI). Each
Allstate Trust exists for the exclusive purposes of (i) issuing the Preferred
Securities and common securities representing undivided beneficial interests in
the assets of such Trust (the "Common Securities" and, together with the
Preferred Securities, the "Trust Securities"), (ii) investing the gross proceeds
of the Trust Securities in a specific series of Subordinated Debt Securities and
(iii) engaging in only those other activities necessary or incidental thereto.
All of the Common Securities will be directly or indirectly owned by the
Company. The Common Securities will rank PARI PASSU, and payments will be made
thereon pro rata, with the Preferred Securities except that upon an event of
default under the Restated Declaration (as hereinafter defined), the rights of
the holders of the Common Securities to payment in respect of distributions and
payments upon liquidation, redemption and otherwise will be subordinated to the
rights of the holders of the Preferred Securities. Unless otherwise specified in
the applicable Prospectus Supplement, the Company will, directly or indirectly,
acquire Common Securities in an aggregate liquidation amount equal to at least
3% of the total capital of each Allstate Trust. Unless otherwise specified in
the applicable Prospectus Supplement, each Allstate Trust has a term of
approximately 55 years, but may earlier terminate as provided in the Restated
Declaration. Unless otherwise specified in the applicable Prospectus Supplement,
each Allstate Trust's business and affairs will be conducted by the trustees
(the "Allstate Trustees") appointed by the Company, as the direct or indirect
holder of all the Common Securities. The holder of the Common Securities will be
entitled to appoint, remove or replace any of, or increase or reduce the number
of, the Allstate Trustees of an Allstate Trust. The duties and obligations of
4
<PAGE>
the Allstate Trustees shall be governed by the Restated Declaration of such
Allstate Trust. Unless otherwise specified in the applicable Prospectus
Supplement, a majority of the Allstate Trustees (the "Regular Trustees") of each
Allstate Trust will be persons who are employees or officers of or affiliated
with the Company. One Allstate Trustee of each Allstate Trust will be a
financial institution which will be unaffiliated with the Company and which
shall act as property trustee and as indenture trustee for purposes of
compliance with the Trust Indenture Act of 1939 (the "Trust Indenture Act"),
pursuant to the terms set forth in a Prospectus Supplement (the "Property
Trustee"). In addition, unless the Property Trustee maintains a principal place
of business in the State of Delaware, and otherwise meets the requirements of
applicable law, one Allstate Trustee of each Allstate Trust will have its
principal place of business or reside in the State of Delaware (the "Delaware
Trustee"). The Company will pay all fees and expenses related to the Allstate
Trusts and the offering of Trust Securities, the payment of which will be
guaranteed by the Company.
The office of the Delaware Trustee for each Allstate Trust in the State of
Delaware is 1 Rodney Square, 920 King Street, Suite 102, Wilmington,
Delaware 19801. The principal place of business of each Allstate Trust is 2775
Sanders Road, Northbrook, Illinois 60062. The telephone number of each Trust in
Northbrook, Illinois is (847) 402-5000.
RATIO OF EARNINGS TO FIXED CHARGES AND
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth the ratio of earnings to fixed charges and
the ratio of earnings to fixed charges and preferred stock dividends for the
Company and its subsidiaries for the periods indicated:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
------------------- ----------------------------------------------------
1998 1997 1997 1996 1995 1994 1993
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges(1)(2).... 22.3x 19.9x 19.3x 16.5x 15.5x 2.5x 8.8x
Ratio of Earnings to Fixed Charges,
including interest credited to
contractholder funds(1)(3)................ 4.5x 3.8x 4.0x 2.9x 2.8x 1.2x 2.1x
</TABLE>
- ------------------------
(1) The Company has authority to issue up to 25,000,000 shares of preferred
stock, par value $1.00 per share; however, there are currently no shares of
preferred stock outstanding and the Company does not have a preferred stock
dividend obligation. Therefore, the Ratio of Earnings to Fixed Charges and
Preferred Stock Dividends is equal to the Ratio of Earnings to Fixed Charges
and is not disclosed separately.
(2) For purposes of this computation, earnings consist of income from continuing
operations before income taxes plus fixed charges. Fixed charges consist of
interest expense, amortization of financing costs, that portion of rental
expense that is representative of the interest factor and dividends on
redeemable preferred securities.
(3) For purposes of this computation, earnings consist of income from continuing
operations before income taxes plus fixed charges. Fixed charges consist of
interest expense (including interest credited to contractholder funds),
amortization of financing costs, that portion of rental expense that is
representative of the interest factor and dividends on redeemable preferred
securities.
USE OF PROCEEDS
Except as may be otherwise set forth in the Prospectus Supplement
accompanying this Prospectus, the net proceeds to the Company from the sale or
sales of the Securities will be used for general corporate purposes. Each
Allstate Trust will invest all proceeds received from the sale of its Trust
Securities in a particular series of Subordinated Debt Securities.
5
<PAGE>
DESCRIPTION OF DEBT SECURITIES
The Debt Securities may be issued from time to time in one or more series.
The particular terms of each series, or of Debt Securities forming a part of a
series, which are offered by a Prospectus Supplement will be described in such
Prospectus Supplement.
The Senior Debt Securities will be issued under an Indenture, entered into
between the Company and State Street Bank and Trust Company, as trustee, dated
December 16, 1997, as may be supplemented by one or more supplemental indentures
(as so supplemented, the "Senior Indenture"). The Subordinated Debt Securities
will be issued under a separate Indenture, entered into between the Company and
State Street Bank and Trust Company, as trustee, dated November 25, 1996, as may
be supplemented by one or more supplemental indentures (as so supplemented, the
"Subordinated Indenture"). The Senior Indenture and the Subordinated Indenture
are sometimes referred to collectively as the "Indentures." The trustees under
the Senior Indenture and under the Subordinated Indenture are referred to herein
as the "Trustees."
The following summaries of certain material provisions of the Senior Debt
Securities, the Subordinated Debt Securities and the Indentures are subject to,
and qualified in their entirety by reference to, all the provisions of the
Indenture applicable to a particular series of Debt Securities, including the
definitions therein of certain terms. Wherever particular Sections, Articles or
defined terms of the Indentures are referred to herein or in a Prospectus
Supplement, it is intended that such Sections, Articles or defined terms shall
be incorporated by reference herein or therein, as the case may be. Unless
otherwise indicated, Section and Article references used herein are applicable
to each Indenture. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the applicable Indenture.
GENERAL
The Indentures provide that Debt Securities in separate series may be issued
thereunder from time to time without limitation as to aggregate principal
amount. The Company may specify a maximum aggregate principal amount for the
Debt Securities of any series. (Section 301) The Debt Securities are to have
such terms and provisions which are not inconsistent with the Indentures,
including as to maturity, principal and interest, as the Company may determine.
Unless otherwise indicated in a Prospectus Supplement, the Senior Debt
Securities will be unsecured obligations of the Company and will rank on a
parity with all other unsecured and unsubordinated indebtedness of the Company.
The Subordinated Debt Securities will be unsecured obligations of the Company,
subordinated in right of payment to the prior payment in full of all Senior Debt
(as defined in the Subordinated Indenture) of the Company as described in the
applicable Prospectus Supplement. The Company's assets consist primarily of the
common stock of AIC and other subsidiaries, and the Company conducts no
substantial business or operations itself. Accordingly, the right of the
Company, and hence the right of the creditors of the Company (including the
Holders of the Debt Securities), to participate in any distribution of assets of
any subsidiary of the Company upon its liquidation or reorganization will be
subject to the prior claims of creditors of such subsidiary, except to the
extent that claims of the Company itself as a creditor of such subsidiary may be
recognized.
In the event Subordinated Debt Securities are issued to an Allstate Trust or
a trustee of such trust in connection with the issuance of Trust Securities by
such Allstate Trust, such Subordinated Debt Securities subsequently may be
distributed pro rata to the holders of such Trust Securities in connection with
the dissolution of such Allstate Trust upon the occurrence of certain events
described in the Prospectus Supplement relating to such Trust Securities. Only
one series of Subordinated Debt Securities will be issued to an Allstate Trust
or a trustee of such trust in connection with the issuance of Trust Securities
by such Allstate Trust.
The applicable Prospectus Supplement will set forth the price or prices at
which the Debt Securities to be offered will be issued and will describe the
following terms of such Debt Securities: (1) the title of such Debt Securities;
(2) any limit on the aggregate principal amount of such Debt Securities or the
series of
6
<PAGE>
which they are a part; (3) the Person to whom any interest on any of such Debt
Securities will be payable, if other than the Person in whose name that Debt
Security (or one or more Predecessor Debt Securities) is registered at the close
of business on the Regular Record Date for such interest; (4) the date or dates
on which the principal of any of such Debt Securities will be payable; (5) the
rate or rates at which any of such Debt Securities will bear interest, if any,
the date or dates from which any such interest will accrue, the Interest Payment
Dates on which any such interest will be payable and the Regular Record Date for
any such interest payable on any Interest Payment Date; (6) the place or places
where the principal of and any premium and interest on any of such Debt
Securities will be payable; (7) the period or periods within which, the price or
prices at which and the terms and conditions on which any of such Debt
Securities may be redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase any of such
Debt Securities pursuant to any sinking fund or analogous provision or at the
option of the Holder thereof, and the period or periods within which, the price
or prices at which and the terms and conditions on which any of such Debt
Securities will be redeemed or purchased, in whole or in part, pursuant to any
such obligation; (9) the denominations in which any of such Debt Securities will
be issuable, if other than denominations of $1,000 and any integral multiple
thereof; (10) if the amount of principal of or any premium or interest on any of
such Debt Securities may be determined with reference to an index or pursuant to
a formula, the manner in which such amounts will be determined; (11) if other
than the currency of the United States, the currency, currencies or currency
units in which the principal of or any premium or interest on any of such Debt
Securities will be payable (and the manner in which the equivalent of the
principal amount thereof in the currency of the United States is to be
determined for any purpose, including for the purpose of determining the
principal amount deemed to be Outstanding at any time); (12) if the principal of
or any premium or interest on any of such Debt Securities is to be payable, at
the election of the Company or the Holder thereof, in one or more currencies or
currency units other than those in which such Debt Securities are stated to be
payable, the currency, currencies or currency units in which payment of the
principal of and any premium and interest on such Debt Securities as to which
such election is made will be payable, the periods within which and the terms
and conditions upon which such election is to be made and the amount so payable
(or any manner in which such amount is to be determined); (13) if other than the
entire principal amount thereof, the portion of the principal amount of any of
such Debt Securities which will be payable upon declaration of acceleration of
the Maturity thereof; (14) if the principal amount payable at the Stated
Maturity of any of such Debt Securities is not determinable upon original
issuance, the amount which will be deemed to be the principal amount of such
Debt Securities for any other purpose thereunder or under the Indentures
including the principal amount thereof which will be due and payable upon any
Maturity other than the Stated Maturity or which will be deemed to be
Outstanding as of any date (or, in any such case, any manner in which such
principal amount is to be determined); (15) if applicable, that such Debt
Securities, in whole or any specified part, are defeasible pursuant to the
provisions of the Indentures described under "Defeasance and Covenant
Defeasance--Defeasance and Discharge" or "Defeasance and Covenant Defeasance--
Covenant Defeasance," or under both such captions; (16) whether any of such Debt
Securities will be issuable in whole or in part in the form of one or more
Global Securities and, if so, the respective Depositaries for such Global
Securities and any circumstances under which any such Global Security may be
exchanged in whole or in part for Debt Securities registered, and any transfer
of such Global Security in whole or in part may be registered, in the name or
names of Persons other than the Depositary for such Global Security or its
nominee; (17) any addition to or change in the Events of Default applicable to
any of such Debt Securities and any change in the right of the Trustee or the
Holders to declare the principal amount of any of such Debt Securities due and
payable; (18) any addition to or change in the covenants described under
"Certain Covenants" applicable to any of such Debt Securities; and (19) any
other terms of such Debt Securities not inconsistent with the provisions of the
Indentures but which may modify or delete any provision of the Indentures
insofar as it applies to such series; provided that no term thereof shall be
modified or deleted if imposed under the Trust Indenture Act of 1939, as
amended, and that any modification or deletion of the rights, duties or
immunities of the Trustee shall have been consented to in writing by the
Trustee. (Section 301)
7
<PAGE>
Debt Securities, including Original Issue Discount Securities, may be sold
at a substantial discount below their principal amount. Special United States
federal income tax considerations applicable to Debt Securities sold at an
original issue discount will be set forth in the applicable Prospectus
Supplement under "United States Taxation--United States Holders." Special United
States tax and other considerations applicable to any Debt Securities which are
denominated in a currency or currency unit other than United States dollars will
be set forth in the applicable Prospectus Supplement under such caption and
under "Foreign Currency Risks."
FORM, EXCHANGE AND TRANSFER
The Debt Securities of a series may be issued solely as Registered
Securities, solely as Bearer Securities (with or without coupons attached) or as
both Registered Securities and Bearer Securities. Debt Securities of a series
may be issuable in whole or in part in the form of one or more global Debt
Securities, as described below under "Global Securities."
Registered Securities of any series will be exchangeable for other
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. In addition, if Debt Securities of
any series are issuable as both Registered Securities and as Bearer Securities,
at the option of the holder, subject to the terms of the Indentures, Bearer
Securities (accompanied by all unmatured coupons, except as provided below, and
all matured coupons in default) of such series will be exchangeable for
Registered Securities of the same series of any authorized denominations and of
a like aggregate principal amount and tenor. Unless otherwise indicated in the
applicable Prospectus Supplement, any Bearer Security surrendered in exchange
for a Registered Security between a record date or a special record date for
defaulted interest and the relevant date for payment of interest will be
surrendered without the coupon relating to such date for payment of interest and
interest will not be payable in respect of the Registered Security issued in
exchange for such Bearer Security, but will be payable only to the holder of
such coupon when due in accordance with the terms of the Indenture. Bearer
Securities will not be issued in exchange for Registered Securities. No service
charge will be made for any registration of transfer or exchange of Debt
Securities, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. Such transfer
or exchange will be effected upon the Security Registrar or such transfer agent,
as the case may be, being satisfied with the documents of title and identity of
the person making the request. The Company has appointed the Trustee as Security
Registrar. Any transfer agent (in addition to the Security Registrar) initially
designated by the Company for any Debt Securities will be named in the
applicable Prospectus Supplement. (Section 305) The Company may at any time
designate additional transfer agents or rescind the designation of any transfer
agent or approve a change in the office through which any transfer agent acts,
except that the Company will be required to maintain a transfer agent in each
Place of Payment for the Debt Securities of each series. (Section 1002)
In the event of any redemption by the Company, in whole or in part, of Debt
Securities of any series (or of any series and specified terms), the Company
will not be required to (i) issue, register the transfer of or exchange any Debt
Security of that series (or of that series and specified terms, as the case may
be) during a period beginning at the opening of business 15 Business Days before
the day of mailing of a notice of redemption of any such Debt Security selected
for redemption and ending at the close of business on the day of such mailing,
(ii) register the transfer of or exchange any Debt Security so selected for
redemption, in whole or in part, except the unredeemed portion of any such Debt
Security being redeemed in part or (iii) exchange any Bearer Security called for
redemption, except to exchange such Bearer Security for a Registered Security of
that series and of like tenor and principal amount that is immediately
surrendered for redemption. (Section 305)
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GLOBAL SECURITIES
Some or all of the Debt Securities of any series may be represented, in
whole or in part, by one or more Global Securities which will have an aggregate
principal amount equal to that of the Debt Securities represented thereby. Each
Global Security will be registered in the name of the Depository Trust Company
("DTC") as Depositary, or any other Depositary identified in the applicable
Prospectus Supplement, or a nominee thereof, will be deposited with DTC or such
other Depositary or a custodian therefor and will bear a legend regarding the
restrictions on exchanges and registration of transfer thereof referred to below
and any such other matters as may be provided for pursuant to the Indentures.
The Depositary shall at all times be a clearing agency registered under the
Exchange Act. (Section 101)
DTC has advised the Company as follows: DTC is a limited-purpose trust
company organized under the Banking Law of the State of New York, 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 was created to hold
securities of its participants (defined below) and to facilitate the clearance
and settlement transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers (including firms that might
be underwriters with respect to the Securities), banks, trust companies,
clearing corporations, and certain other organizations, some of whom (and/or
their representatives) own DTC. Access to DTC's book-entry system is also
available to others, such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a participant, either
directly or indirectly.
Notwithstanding any provision of the Indentures or any Debt Security
described herein, no Global Security may be exchanged in whole or in part for
Debt Securities registered, and no transfer of a Global Security in whole or in
part may be registered, in the name of any Person other than the Depositary for
such Global Security or any nominee of such Depositary unless (i) the Depositary
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or has ceased to be qualified to act as such
as required by the Indentures, (ii) there shall have occurred and be continuing
an Event of Default with respect to the Debt Securities represented by such
Global Security or (iii) there shall exist such circumstances, if any, as may be
described in the applicable Prospectus Supplement. All Debt Securities issued in
exchange for a Global Security or any portion thereof will be registered in such
names as the Depositary may direct. (Section 305) The laws of some jurisdictions
require that certain purchasers of Debt Securities take physical delivery of
such Debt Securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a Global Security.
As long as the Depositary, or its nominee, is the registered Holder of a
Global Security, the Depositary or such nominee, as the case may be, will be
considered the sole owner and Holder of such Global Security and the Debt
Securities represented thereby for all purposes under the Debt Securities and
the Indentures. Except in the limited circumstances referred to above, owners of
beneficial interests in a Global Security will not be entitled to have such
Global Security or any Debt Securities represented thereby registered in their
names, will not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange therefor and will not be considered to
be the owners or Holders of such Global Security or any Debt Securities
represented thereby for any purpose under the Debt Securities or the Indentures.
All payments of principal of and any premium and interest on a Global Security
will be made to the Depositary or its nominee, as the case may be, as the Holder
thereof.
Ownership of beneficial interests in a Global Security will be limited to
participants or to persons that may hold beneficial interests through
institutions that have accounts with the Depositary or its nominee
("participants"). Ownership of beneficial interests in a Global Security will be
shown only on, and the transfer of those ownership interests will be effected
only through, records maintained by the Depositary (with respect to
participants' interests) or any such participant (with respect to interests of
persons held by such participants on their behalf). Payments, transfers,
exchanges and other matters relating to beneficial
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interests in a Global Security may be subject to various policies and procedures
adopted by the Depositary from time to time. None of the Company, the Trustee or
any agent of the Company or the Trustee will have any responsibility or
liability for any aspect of the Depositary or any participant's records relating
to, or for payments made on account of, beneficial interests in a Global
Security, or for maintaining, supervising or reviewing any of the Depositary's
records or any participant's records relating to such beneficial ownership
interests.
Secondary trading in notes and debentures of corporate issuers is generally
settled in clearing-house or next-day funds. In contrast, beneficial interests
in a Global Security, in some cases, may trade in the Depositary's same-day
funds settlement system, in which secondary market trading activity in those
beneficial interests would be required by the Depositary to settle in
immediately available funds. There is no assurance as to the effect, if any,
that settlement in immediately available funds would have on trading activity in
such beneficial interests. Also, settlement for purchases of beneficial
interests in a Global Security upon the original issuance thereof may be
required to be made in immediately available funds.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable Prospectus Supplement, payment
of interest on a Security on any Interest Payment Date will be made to the
Person in whose name such Debt Security (or one or more Predecessor Securities)
is registered at the close of business on the Regular Record Date for such
interest. (Section 307)
Unless otherwise indicated in the applicable Prospectus Supplement,
principal of and any premium and interest on the Debt Securities of a particular
series will be payable at the office of such Paying Agent or Paying Agents as
the Company may designate for such purpose from time to time, except that at the
option of the Company payment of any interest may be made by check mailed to the
address of the Person entitled thereto as such address appears in the Security
Register. Unless otherwise indicated in the applicable Prospectus Supplement, a
Paying Agent designated by the Company and located in the Borough of Manhattan,
The City of New York will act as Paying Agent for payments with respect to Debt
Securities of each series. All Paying Agents initially designated by the Company
for the Debt Securities of a particular series will be named in the applicable
Prospectus Supplement. The Company may at any time designate additional Paying
Agents or rescind the designation of any Paying Agent or approve a change in the
office through which any Paying Agent acts, except that the Company will be
required to maintain a Paying Agent in each Place of Payment for the Debt
Securities of a particular series. (Section 1002)
All moneys paid by the Company to a Paying Agent for the payment of the
principal of or any premium or interest on any Debt Security which remain
unclaimed at the end of two years after such principal, premium or interest has
become due and payable will be repaid to the Company upon request, and the
Holder of such Debt Security thereafter may look only to the Company for payment
thereof. (Section 1003)
SUBORDINATION OF SUBORDINATED DEBT SECURITIES
Unless otherwise indicated in the Prospectus Supplement, the following
provisions will apply to the Subordinated Debt Securities.
The Subordinated Debt Securities will, to the extent set forth in the
Subordinated Indenture, be subordinate in right of payment to the prior payment
in full of all Senior Indebtedness. (Section 1401 of the Subordinated Indenture)
In the event of (a) any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding in
connection therewith, relative to the Company or to its creditors, as such, or
to its assets, or (b) any liquidation, dissolution or other winding up of the
Company, whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of creditors or
any other marshaling of assets and liabilities of the Company, then and in any
such event the holders of Senior Indebtedness shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior
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Indebtedness, or provision shall be made for such payment in cash, before the
Holders of Subordinated Debt Securities are entitled to receive any payment on
account of principal of or any premium or interest on Subordinated Debt
Securities, and to that end the holders of Senior Indebtedness shall be entitled
to receive, for application to the payment thereof, any payment or distribution
of any kind or character, whether in cash, property or securities, including any
such payment or distribution which may be payable or deliverable by reason of
the payment of any other indebtedness of the Company being subordinated to the
payment of Subordinated Debt Securities, which may be payable or deliverable in
respect of the Subordinated Debt Securities in any such case, proceeding,
dissolution, liquidation or other winding up event. (Section 1403 of the
Subordinated Indenture)
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company may recover less, ratably, than Holders of Senior Debt
Securities and may recover more, ratably, than the Holders of the Subordinated
Debt Securities.
In the event of the acceleration of the maturity of any Subordinated Debt
Securities, the Holders of all Senior Debt Securities outstanding at the time of
such acceleration will first be entitled to receive payment in full of all
amounts due thereon before the Holders of the Subordinated Debt Securities will
be entitled to receive any payment upon the principal of or any premium or
interest on the Subordinated Debt Securities. (Section 1404 of the Subordinated
Indenture)
No payment of principal (including redemption and sinking fund payments) of
or any premium or interest on the Subordinated Debt Securities may be made
(i) if any Senior Indebtedness of the Company is not paid when due and any
applicable grace period with respect to such default has ended and such default
has not been cured or waived or ceased to exist, or (ii) if the maturity of any
Senior Indebtedness of the Company has been accelerated because of a default.
(Section 1402 of the Subordinated Indenture)
The Subordinated Indenture does not limit or prohibit the incurrence of
additional Senior Debt Securities, which may include indebtedness that is senior
to the Subordinated Debt Securities, but subordinate to other obligations of the
Company. The Senior Debt Securities constitute Senior Debt Securities under the
Subordinated Indenture.
The term "Senior Indebtedness" means, with respect to the Company, (i) the
principal or any premium and interest in respect of (A) indebtedness of such
obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such obligor
issued or assumed as the deferred purchase price of property, all conditional
sale obligations of such obligor and all obligations of such obligor under any
title retention agreement (but excluding trade accounts payable arising in the
ordinary course of business), (iv) all obligations of such obligor for the
reimbursement on any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction, (v) all obligations of the types
referred to in clauses (i) through (iv) above of other persons for the payment
of which the Company is responsible or liable as obligor, guarantor or otherwise
and (vi) all obligations of the types referred to its clauses (i) through (v)
above of other persons secured by any lien on any property or asset of the
Company (whether or not such obligation is assumed by the Company), except for
(1) any such indebtedness that is by its terms subordinated to or PARI PASSU
with the Subordinated Debt Securities and (2) any indebtedness between or among
the Company or its affiliates, including all other debt securities and
guarantees in respect of those debt securities, issued to (a) any other Allstate
Trust or a trustee of such trust and (b) any other trust, or a trustee of such
trust, partnership or other entity affiliated with the Company that is a
financing vehicle of the Company (a "financing entity") in connection with the
issuance by such financing entity of preferred securities unless otherwise
expressly provided in the terms of such debt securities. Such Senior
Indebtedness shall continue to be Senior Indebtedness and be entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness. (Sections 101
and 1408 of the Subordinated Indenture)
The Prospectus Supplement may further describe the provisions, if any,
applicable to the subordination of the Subordinated Debt Securities of a
particular series.
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CERTAIN COVENANTS WITH RESPECT TO SENIOR DEBT SECURITIES
LIMITATION ON LIENS OF STOCK OF AIC
The Senior Indenture prohibits the Company and its Subsidiaries from
directly or indirectly creating, assuming, incurring or permitting to exist any
indebtedness secured by any lien on the capital stock of AIC unless the Senior
Debt Securities (and, if the Company so elects, any other Indebtedness of the
Company that is not subordinate to the Senior Debt Securities and with respect
to which the governing instruments require, or pursuant to which the Company is
otherwise obligated, to provide such security) shall be secured equally and
ratably with such Indebtedness for at least the time period such other
Indebtedness is so secured. (Section 1008)
"Indebtedness" is defined in the Senior Indenture as the principal of and
any premium and interest due on indebtedness of a Person, whether outstanding on
the date of such Indenture or thereafter created, incurred or assumed, which is
(a) indebtedness for money borrowed, and (b) any amendments, renewals,
extensions, modifications and refundings of any such indebtedness. For the
purposes of this definition, "indebtedness for money borrowed" means (i) any
obligation of, or any obligation guaranteed by, such Person for the repayment of
borrowed money, whether or not evidenced by bonds, debentures, notes or other
written instruments, (ii) any obligation of, or any such obligation guaranteed
by, such Person evidenced by bonds, debentures, notes or similar written
instruments, including obligations assumed or incurred in connection with the
acquisition of property, assets or businesses (provided, however, that the
deferred purchase price of any other business or property or assets shall not be
considered Indebtedness if the purchase price thereof is payable in full within
90 days from the date on which such indebtedness was created), and (iii) any
obligations of such Person as lessee under leases required to be capitalized on
the balance sheet of the lessee under generally accepted accounting principles
and leases of property or assets made as part of any sale and lease-back
transaction to which such Person is a party. For purposes of this covenant only,
Indebtedness also includes any obligation of, or any obligation guaranteed by,
any Person for the payment of amounts due under a swap agreement or similar
instrument or agreement, or under a foreign currency hedge exchange or similar
instrument or agreement. (Sections 101 and 1008 of the Senior Indenture)
LIMITATIONS ON DISPOSITION OF STOCK OF AIC
The Senior Indenture also provides that so long as any Senior Debt
Securities are outstanding and except in a transaction otherwise governed by
such Indenture, the Company may not issue, sell, transfer or otherwise dispose
of any shares of, securities convertible into, or warrants, rights or options to
subscribe for or purchase shares of, capital stock (other than preferred stock
having no voting rights of any kind) of AIC, and will not permit AIC to issue
(other than to the Company) any shares (other than director's qualifying shares)
of, or securities convertible into, or warrants, rights or options to subscribe
for or purchase shares of, capital stock (other than preferred stock having no
voting rights of any kind) of AIC, if, after giving effect to any such
transaction and the issuances of the maximum number of shares issuable upon the
conversion or exercise of all such convertible securities, warrants, rights or
options, the Company would own, directly or indirectly, less than 80% of the
shares of AIC (other than preferred stock having no voting rights of any kind);
provided, however, that (i) any issuance, sale, transfer or other disposition
permitted by the Company may only be made for at least a fair market value
consideration as determined by the Board of Directors pursuant to a Board
Resolution adopted in good faith and (ii) the foregoing shall not prohibit any
such issuance or disposition of securities if required by any law or any
regulation or order of any governmental or insurance regulatory authority.
Notwithstanding the foregoing, (i) the Company may merge or consolidate AIC into
or with another direct wholly-owned Subsidiary of the Company and (ii) the
Company may, subject to the provisions set forth in "Consolidation, Merger and
Sale of Assets" below, sell, transfer or otherwise dispose of the entire capital
stock of AIC at one time for at least a fair market value consideration as
determined by the Board of Directors pursuant to a Board Resolution adopted in
good faith. (Section 1009 of the Senior Indenture)
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CERTAIN COVENANTS WITH RESPECT TO SUBORDINATED DEBT SECURITIES
If Subordinated Debt Securities are issued to an Allstate Trust or a trustee
of such trust in connection with the issuance of Trust Securities by such
Allstate Trust and (i) there shall have occurred any event that would constitute
an Event of Default, (ii) the Company shall be in default with respect to its
payment of any obligations under the related Preferred Securities Guarantee or
Common Securities Guarantee, or (iii) the Company shall have given notice of its
election to defer payments of interest on such Subordinated Debt Securities by
extending the interest payment period as provided in the Subordinated Indenture
and such period, or any extension thereof, shall be continuing, then (a) the
Company shall not declare or pay any dividend on, make any distributions with
respect to, or redeem, purchase or make a liquidation payment with respect to,
any of its capital stock (other than (i) purchases or acquisitions of shares of
Common Stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock or (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock of the Company or the security being converted
or exchanged) or make any guarantee payments with respect to the foregoing, and
(b) the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by the Company which rank PARI PASSU with or junior to such
Subordinated Debt Securities. (Section 1008 of the Subordinated Indenture)
In the event Subordinated Debt Securities are issued to an Allstate Trust or
a trustee of such trust in connection with the issuance of Trust Securities of
such Allstate Trust, for so long as such Securities remain outstanding, the
Company will covenant (i) to directly or indirectly maintain 100% ownership of
the Common Securities of such Allstate Trust; provided, however, that any
permitted successor of the Company under the Indenture may succeed to the
Company's ownership of such Trust Common Securities, (ii) to use its reasonable
efforts to cause such Allstate Trust (a) to remain a statutory business trust,
except in connection with the distribution of Subordinated Debt Securities to
the holders of Trust Securities in liquidation of such Allstate Trust, the
redemption of all of the Trust Securities of such Allstate Trust, or certain
mergers, consolidations or amalgamations, each as permitted by the Declaration
of such Allstate Trust, and (b) to continue to be classified as a grantor trust
for United States federal income tax purposes and (iii) to use its reasonable
efforts to cause each holder of Trust Securities to be treated as owning an
undivided beneficial interest in the Subordinated Debt Securities.
(Section 1009 of the Subordinated Indenture)
CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company, without the consent of the Holders of any of the Outstanding
Debt Securities under the Indentures, may consolidate with or merge into, or
convey, transfer or lease its properties and assets substantially as an entirety
to, any Person or may permit any Person to consolidate with or merge into the
Company, provided that any successor Person must be a corporation, partnership,
or trust organized and validly existing under the laws of any domestic
jurisdiction and must assume the Company's obligations on the Debt Securities
and under the Indentures, that after giving effect to the transaction no Event
of Default, and no event which, after notice or lapse of time or both, would
become an Event of Default shall have happened and be continuing and that
certain other conditions are met; PROVIDED such provisions will not be
applicable to the direct or indirect transfer of the stock, assets or
liabilities of any Subsidiary of the Company to another direct or indirect
Subsidiary of the Company. (Section 801)
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OUTSTANDING DEBT SECURITIES
"Outstanding," when used with respect to Debt Securities, means, as of the
date of determination, all Debt Securities theretofore authenticated and
delivered under the Indentures, except:
(1) Debt Securities theretofore cancelled by the Trustee or delivered to
the Trustee for cancellation;
(2) Debt Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated
in trust by the Company (if the Company shall act as its own Paying Agent)
for the Holders of such Debt Securities; provided that, if such Debt
Securities are to be redeemed, notice of such redemption has been duly given
pursuant to the Indentures or provision therefor satisfactory to the Trustee
has been made;
(3) Debt Securities as to which Defeasance has been effected pursuant to
Section 1302 of the Indentures; and
(4) Debt Securities which have been paid pursuant to the Indentures or
in exchange for or in lieu of which other Debt Securities have been
authenticated and delivered pursuant to the Indentures, other than any such
Debt Securities in respect of which there shall have been presented to the
Trustee proof satisfactory to it that such Debt Securities are held by a
BONA FIDE purchaser in whose hands such Debt Securities are valid
obligations of the Company.
In determining whether the Holders of the requisite principal amount of the
Outstanding Debt Securities have given, made or taken any request, demand,
authorization, direction, notice, consent, waiver or other action under the
Indentures (a) the principal amount of an Original Issue Discount Security that
shall be deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date of such determination upon
acceleration of the Maturity thereof to such date pursuant to the Indentures,
(b) the principal amount of a Debt Security denominated in one or more foreign
currencies or currency units which shall be deemed to be Outstanding shall be
the U.S. dollar equivalent, determined as of the date of original issuance of
such Debt Security in the manner provided as contemplated by the Indentures, of
the principal amount of such Debt Security (or, in the case of an Original Issue
Discount Security, of the amount determined as provided in clause (a) above),
(c) if the principal amount payable at the Stated Maturity of any Debt Security
is not determinable upon original issuance, the principal amount of such Debt
Security that shall be deemed to be Outstanding shall be the amount as specified
or determined as contemplated by the Indentures, and (d) Debt Securities
beneficially owned by the Company or any other obligor upon the Debt Securities
or any Affiliate of the Company or of such other obligor shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Debt Securities which
a Responsible Officer of the Trustee knows to be so owned shall be so
disregarded. Debt Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the Pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Debt Securities and
that the pledgee is not the Company or any other obligor upon the Debt
Securities or any Affiliate of the Company or of such other obligor.
(Section 101)
Except as provided above or as may otherwise be provided in the accompanying
Prospectus Supplement, there are no "event risk" or similar provisions of the
Indentures or the Debt Securities that are intended to afford protection to
Holders in the event of a merger or other significant corporate event involving
the Company.
EVENTS OF DEFAULT
Each of the following will constitute an Event of Default under the
applicable Indenture with respect to Debt Securities of any series: (a) failure
to pay principal of or any premium on any Debt Security of that
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series when due; (b) failure to pay any interest on any Debt Securities of that
series when due, continued for 30 days; (c) failure to deposit any sinking fund
payment, when due, in respect of any Debt Security of that series; (d) failure
to perform any other covenant of the Company in the applicable Indenture (other
than a covenant included in the applicable Indenture solely for the benefit of a
series other than that series), continued for 60 days after written notice has
been given by the Trustee, or the Holders of at least 25% in principal amount of
the Outstanding Debt Securities of that series, as provided in the applicable
Indenture; (e) in the event Subordinated Debt Securities are issued to an
Allstate Trust or a trustee of such trust in connection with the issuance of
Trust Securities by such Allstate Trust, the voluntary or involuntary
dissolution, winding-up or termination of such Allstate Trust, except in
connection with the distribution of Subordinated Debt Securities to the holders
of Trust Securities in liquidation of such Allstate Trust, the redemption of all
of the Trust Securities of such Allstate Trust, or certain mergers,
consolidations or amalgamations, each as permitted by the Declaration of such
Allstate Trust; and (f) certain events in bankruptcy, insolvency or
reorganization. (Section 501)
If an Event of Default with respect to the Debt Securities of any series at
the time Outstanding shall occur and be continuing, either the Trustee or the
Holders of at least 25% in aggregate principal amount of the Outstanding Debt
Securities of that series by notice as provided in the applicable Indenture may
declare the principal amount of the Debt Securities of that series (or, in the
case of any Debt Security that is an Original Issue Discount Security or the
principal amount of which is not determinable on original issuance thereof, such
portion of the principal amount of such Debt Security, or such other amount in
lieu of such principal amount, as may be specified in the terms of such Debt
Security) to be due and payable immediately; provided, however, that after such
acceleration, but before a judgment or decree based on acceleration, the Holders
of a majority in aggregate principal amount of the Outstanding Debt Securities
of that series may, under certain circumstances, rescind and annul such
acceleration if all Events of Default, other than the nonpayment of accelerated
principal, have been cured or waived as provided in the applicable Indenture.
(Section 502) For information as to waiver of defaults, see "Modification and
Waiver."
Subject to the provisions of the Indentures relating to the duties of the
Trustee in case an Event of Default shall occur and be continuing, the Trustee
will be under no obligation to exercise any of its rights or powers under the
applicable Indenture at the request or direction of any of the Holders, unless
such Holders shall have offered to the Trustee reasonable indemnity.
(Section 603) Subject to such provisions for the indemnification of the Trustee,
the Holders of a majority in aggregate principal amount of the Outstanding Debt
Securities of any series will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the Debt
Securities of that series. (Section 512)
No Holder of a Debt Security of any series will have any right to institute
any proceeding with respect to the applicable Indenture, or for the appointment
of a receiver or a trustee, or for any remedy thereunder, unless (i) such Holder
has previously given written notice to the Trustee of a continuing Event of
Default with respect to the Debt Securities of that series, (ii) the Holders of
not less than 25% in principal amount of the Outstanding Debt Securities of that
series shall have made written request to the Trustee to institute proceedings
in respect of such Event of Default in its own name as Trustee under the
applicable Indenture, (iii) such Holder or Holders have offered to the Trustee
reasonable indemnity against costs, expenses and liabilities to be incurred in
compliance with such request, (iv) the Trustee for 60 days after receipt of such
notice, request and offer of indemnity has failed to institute such proceeding
and (v) no direction inconsistent with such written request has been given to
the Trustee during such 60-day period by the Holders of a majority in principal
amount of the Outstanding Debt Securities of that series. (Section 507) However,
such limitations do not apply to a suit instituted by a Holder of a Debt
Security for the enforcement of payment of the principal of and any premium and
interest on such Debt Security on or after the applicable due dates expressed in
such Debt Security. (Section 508)
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The Company will be required to furnish to each Trustee annually a statement
by certain of its officers as to whether or not the Company, to their knowledge,
is in default in the performance or observance of any of the terms, provisions
and conditions of the applicable Indenture and, if so, specifying all such known
defaults. (Section 1004)
MODIFICATION AND WAIVER
Modifications and amendments of the Indentures may be made by the Company
and the Trustee under the applicable Indenture with the consent of the Holders
of not less than a majority in principal amount of the Outstanding Debt
Securities of each series affected by such modification or amendment; provided,
however, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Debt Security affected thereby, (a) change the Stated
Maturity of the principal of, or any installment of principal of or interest on,
any Debt Security (except to the extent provided in a Prospectus Supplement),
(b) reduce the principal amount of or any premium or interest on any Debt
Security, (c) reduce the amount of principal of an Original Issue Discount
Security or any other Debt Security payable upon acceleration of the Maturity
thereof, (d) change the currency of payment of principal of or any premium or
interest on any Debt Security, (e) impair the right to institute suit for the
enforcement of any payment on or with respect to any Debt Security, (f) reduce
the percentage in principal amount of Outstanding Debt Securities of any series,
the consent of whose Holders is required for modification or amendment of the
Indentures, (g) reduce the percentage in principal amount of Outstanding Debt
Securities of any series necessary for waiver of compliance with certain
provisions of the Indentures or for waiver of certain defaults or (h) modify
such provisions with respect to modification and waivers. (Section 902)
The Holders of a majority in principal amount of the Outstanding Debt
Securities of any series may waive compliance by the Company with certain
restrictive provisions of the applicable Indenture. (Section 1010) The Holders
of a majority in principal amount of the Outstanding Debt Securities of any
series may waive any past default under the applicable Indenture, except a
default in the payment of principal, premium or interest and certain covenants
and provisions of the applicable Indenture which cannot be amended without the
consent of the Holder of each Outstanding Debt Security of such series affected.
(Section 513)
Except in certain limited circumstances, the Company will be entitled to set
any day as a record date for the purpose of determining the Holders of
Outstanding Debt Securities of any series entitled to give, make or take any
request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by the applicable Indenture to be given, made or
taken by Holders of Debt Securities of such series, in the manner and subject to
the limitations provided in the applicable Indenture. To be effective, any such
action for which the Company has set a record date must be taken by Holders of
the requisite principal amount of Debt Securities of the relevant series
Outstanding on such record date within 180 days after the record date, or within
such shorter period as the Company may specify from time to time. (Section 104)
DEFEASANCE AND COVENANT DEFEASANCE
If and to the extent indicated in the applicable Prospectus Supplement, the
Company may elect at its option at any time to have the provisions of Section
1302, relating to defeasance and discharge of indebtedness, or Section 1303,
relating to defeasance of certain covenants in the Indentures, applied to the
Debt Securities of any series, or to any specified part of a series.
(Section 1301)
DEFEASANCE AND DISCHARGE. The Indentures provide that, upon the Company's
exercise of its option (if any) to have Section 1302 applied to any Debt
Securities, the Company will be discharged from all its obligations with respect
to such Debt Securities (except for certain obligations to exchange or register
the transfer of Debt Securities, to replace stolen, lost or mutilated Debt
Securities, to maintain paying agencies and to hold moneys for payment in trust)
upon the deposit in trust for the benefit of the Holders of such Debt Securities
of money or U.S. Government Obligations, or both, which, through the payment of
principal and interest in respect thereof in accordance with their terms, will
provide money in an amount sufficient to pay the principal of and
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any premium and interest on such Debt Securities on the respective Stated
Maturities in accordance with the terms of the applicable Indenture and such
Debt Securities. Such defeasance or discharge may occur only if, among other
things, the Company has delivered to the Trustee an Opinion of Counsel stating
that the Company has received from, or there has been published by, the United
States Internal Revenue Service a ruling, or there has been a change in tax law,
in either case to the effect that Holders of such Debt Securities will not
recognize gain or loss for federal income tax purposes as a result of such
deposit, defeasance and discharge and will be subject to federal income tax on
the same amount, in the same manner and at the same times as would have been the
case if such deposit, defeasance and discharge were not to occur.
(Sections 1302 and 1304)
DEFEASANCE OF CERTAIN COVENANTS. The Indentures provide that, upon the
Company's exercise of its option (if any) to have Section 1303 applied to any
Debt Securities, the Company may omit to comply with certain covenants as
described in the applicable Prospectus Supplement, and the occurrence of certain
Events of Default, which are described herein under clause (d) (with respect to
such covenants) under "Events of Default" as described in the applicable
Prospectus Supplement, will be deemed not to be or result in an Event of
Default, in each case with respect to such Debt Securities. The Company, in
order to exercise such option, will be required to deposit, in trust for the
benefit of the Holders of such Debt Securities, money or U.S. Government
Obligations, or both, which, through the payment of principal and interest in
respect thereof in accordance with their terms, will provide money in an amount
sufficient to pay the principal of and any premium and interest on such Debt
Securities on the respective Stated Maturities in accordance with the terms of
the applicable Indenture and such Debt Securities. The Company will also be
required, among other things, to deliver to the Trustee an Opinion of Counsel to
the effect that Holders of such Debt Securities will not recognize gain or loss
for federal income tax purposes as a result of such deposit and defeasance of
certain obligations and will be subject to federal income tax on the same
amount, in the same manner and at the same times as would have been the case if
such deposit and defeasance were not to occur. In the event the Company
exercised this option with respect to any Debt Securities and such Debt
Securities are declared due and payable because of the occurrence of any Event
of Default, the amount of money and U.S. Government Obligations so deposited in
trust will be sufficient to pay amounts due on such Debt Securities at the time
of their Stated Maturities but may not be sufficient to pay amounts due on such
Debt Securities upon any acceleration resulting from such Event of Default. In
such case, the Company will remain liable for such payments. (Sections 1303 and
1304)
NOTICES
Notices to Holders of Debt Securities will be given by mail to the addresses
of such Holders as they may appear in the Security Register. (Sections 101 and
106)
TITLE
The Company, the Trustee and any agent of the Company or the Trustee may
treat the Person in whose name a Debt Security is registered as the absolute
owner thereof (whether or not such Debt Security may be overdue) for the purpose
of making payment and for all other purposes. (Section 308)
GOVERNING LAW
The Indentures and the Debt Securities will be governed by, and construed in
accordance with, the internal laws of the State of New York. (Section 112)
REGARDING THE TRUSTEE
State Street Bank and Trust Company, which is the Trustee under the
Indentures described herein, performs other services for the Company and its
affiliates.
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DESCRIPTION OF DEBT WARRANTS
The Company may issue, together with other Securities or separately, Debt
Warrants for the purchase of Debt Securities. The Debt Warrants are to be issued
under Debt Warrant Agreements (each a "Debt Warrant Agreement") to be entered
into between the Company and a bank or trust company, as Debt Warrant Agent (the
"Debt Warrant Agent"), all as set forth in the Prospectus Supplement relating to
Debt Warrants in respect of which this Prospectus is being delivered. A copy of
the form of Debt Warrant Agreement, including the form of Warrant Certificates
representing the Debt Warrants (the "Debt Warrant Certificates"), reflecting the
alternative provisions to be included in the Debt Warrant Agreements that will
be entered into with respect to particular offerings of Debt Warrants, is filed
as an exhibit to the Registration Statement. The following summaries of certain
provisions of the Debt Warrant Agreement and the Debt Warrant Certificates do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Debt Warrant Agreement and
the Debt Warrant Certificates, respectively, including the definitions therein
of capitalized terms.
GENERAL
Reference is made to the Prospectus Supplement for the terms of Debt
Warrants in respect of which this Prospectus is being delivered, the Debt
Warrant Agreement relating to such Debt Warrants and the Debt Warrant
Certificates representing such Debt Warrants, including the following: (1) the
designation, aggregate principal amount and terms of the Debt Securities
purchasable upon exercise of such Debt Warrants and the procedures and
conditions relating to the exercise of such Debt Warrants; (2) the designation
and terms of any related Debt Securities with which such Debt Warrants are
issued and the number of such Debt Warrants issued with each such Debt Security;
(3) the date, if any, on and after which such Debt Warrants and the related Debt
Securities will be separately transferable; (4) the principal amount of Debt
Securities purchasable upon exercise of each Debt Warrant and the price at which
such principal amount of Debt Securities may be purchased upon such exercise;
(5) the Date on which the right to exercise such Debt Warrants shall commence
and the date on which such right shall expire (the "Expiration Date"); (6) if
the Debt Securities purchasable upon exercise of such Debt Warrants are original
issue discount Debt Securities, a discussion of federal income tax
considerations applicable thereto; and (7) whether the Debt Warrants represented
by the Debt Warrant Certificate will be issued in registered or bearer form,
and, if registered, where they may be transferred and registered.
Debt Warrant Certificates will be exchangeable for new Debt Warrant
Certificates of different denominations and Debt Warrants may be exercised at
the corporate trust office of the Debt Warrant Agent or any other office
indicated in the Prospectus Supplement. Prior to the exercise of their Debt
Warrants, holders of Debt Warrants will not have any of the rights of holders of
the Debt Securities purchasable upon such exercise and will not be entitled to
payments of principal of (and premium, if any) or interest, if any, on the Debt
Securities purchasable upon such exercise.
EXERCISE OF DEBT WARRANTS
Each Debt Warrant will entitle the holder to purchase for cash such
principal amount of Debt Securities at such exercise price as shall in each case
be set forth in, or be determinable as set forth in, the Prospectus Supplement
relating to the Debt Warrants offered thereby. Debt Warrants may be exercised at
any time up to the close of business on the Expiration Date set forth in the
applicable Prospectus Supplement. After the close of business of the Expiration
Date, unexercised Debt Warrants will become void.
Debt Warrants may be exercised as set forth in the Prospectus Supplement
relating to the Debt Warrants in respect of which this Prospectus is being
delivered. Upon receipt of payment and the Debt Warrant Certificate properly
completed and duly executed at the corporate trust office of the Debt Warrant
Agent or any other office indicated in the Prospectus Supplement, the Company
will, as soon as
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practicable, forward the Debt Securities purchasable upon such exercise. If less
than all of the Debt Warrants represented by such Debt Warrant Certificate are
exercised, a new Debt Warrant Certificate will be issued for the remaining
amount of Debt Warrants.
DESCRIPTION OF PREFERRED STOCK
The Company is authorized to issue up to 25,000,000 shares of preferred
stock, par value $1.00 per share, none of which is currently issued and
outstanding. The Board of Directors of the Company is authorized to provide for
the issuance of the preferred stock in series, to establish or change the number
of shares to be included in each such series and to fix the designation,
relative rights, preferences and limitations of each such series, subject to
such limitations as may be prescribed by law. In particular, the Board of
Directors of the Company is authorized, without limitation, to determine with
respect to each series of preferred stock the number of shares, the designation
of the series, the dividend rate, voting rights, conversion rights, redemption
provisions, liquidation rights and sinking fund provisions, all without further
action by the Company's stockholders.
The Preferred Stock will be fully paid and nonassessable. Unless otherwise
indicated in a Prospectus Supplement, the Preferred Stock will have preference
over the Company's common stock with respect to the payment of dividends and the
distribution of assets in the event of a liquidation, winding up or dissolution
of the Company. Unless otherwise indicated in a Prospectus Supplement, each
series of Preferred Stock will rank on a parity with each other series.
The following summaries of certain provisions of the Preferred Stock do not
purport to be complete and are subject, and are qualified in their entirety by
reference, with respect to any particular series of Preferred Stock, to the
description of the terms thereof included in the applicable Prospectus
Supplement and to the applicable provisions of the Company's Certificate of
Incorporation and Bylaws.
DIVIDENDS
Holders of shares of the Preferred Stock of each series shall be entitled to
receive, when, as and if declared by the Board of Directors of the Company, out
of assets of the Company legally available for payment, cash or other dividends
at such rates and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record
as they appear on the stock books of the Company on such record dates as shall
be fixed by the Board of Directors of the Company.
Dividends on any series of the Preferred Stock may be cumulative or
noncumulative, as provided in the applicable Prospectus Supplement. If the Board
of Directors of the Company fails to declare a dividend payable on a dividend
payment date on any series of the Preferred Stock for which dividends are
noncumulative, then the holders of such series of the Preferred Stock will have
no right to receive a dividend in respect of the dividend period ending on such
dividend payment date, and the Company will have no obligation to pay the
dividend accrued for such period, whether or not dividends on such series are
declared payable on any future dividend payment date.
LIQUIDATION RIGHTS
In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the holders of Preferred Stock will be entitled to
receive out of assets of the Company available for distribution to stockholders,
before any distribution of assets is made to holders of common stock,
liquidating distributions in the amount of the liquidation price per share (as
set forth in the applicable Prospectus Supplement) plus all accrued and unpaid
dividends. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the amounts payable with respect to the Preferred
Stock and any other shares of stock of the Company ranking as to any such
distribution on a parity with the Preferred Stock are not paid in full, the
holders of the Preferred Stock and of such other shares will share
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ratably in any such distribution of assets of the Company in proportion to the
full respective preferential amounts to which they are entitled. After payment
of the full amount of the liquidating distribution to which they are entitled,
the holders of Preferred Stock will not be entitled to any further participation
in any distribution of assets by the Company. A consolidation or merger of the
Company with or into any other corporation or corporations or a sale of all or
substantially all of the assets of the Company shall not be deemed to be a
liquidation, dissolution or winding up of the Company.
REDEMPTION
The Preferred Stock will be redeemable in whole or in part, at the times and
at the redemption prices set forth in the applicable Prospectus Supplement.
Unless otherwise indicated in a Prospectus Supplement, the Company may not
purchase or redeem any of the outstanding shares of any series of Preferred
Stock unless full cumulative dividends, if any, have been paid or declared and
set apart for payment upon all outstanding shares of any series of preferred
stock for all past dividend periods, and unless all matured obligations of the
Company with respect to all sinking funds, retirement funds or purchase funds
for all series of preferred stock then outstanding have been met.
VOTING RIGHTS
Unless otherwise indicated in a Prospectus Supplement, the holders of the
Preferred Stock will not be entitled to vote under any circumstances.
DESCRIPTION OF PREFERRED SECURITIES
Each Allstate Trust may issue, from time to time, only one series of
Preferred Securities having terms described in the Prospectus Supplement
relating thereto. The Amended and Restated Declaration of Trust (the "Restated
Declaration") of each Allstate Trust will authorize the Regular Trustees of such
Allstate Trust to issue on behalf of such Allstate Trust one series of Preferred
Securities. Each Restated Declaration will be qualified as an indenture under
the Trust Indenture Act. The Preferred Securities will have such terms,
including distributions, redemption, voting, liquidation and such other
preferred, deferred or other special rights or such restrictions as shall be set
forth in the Restated Declaration or made part of the Restated Declaration by
the Trust Indenture Act, and which will mirror the terms of the Subordinated
Debt Securities held by the Allstate Trust and described in the Prospectus
Supplement related thereto. The following summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the form of Restated Declaration, which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part, and the Trust Indenture Act. Reference is made to the Prospectus
Supplement relating to the Preferred Securities of any Allstate Trust for
specific terms, including (i) the distinctive designation of such Preferred
Securities; (ii) the number of Preferred Securities issued by such Allstate
Trust; (iii) the annual distribution rate (or method of determining such rate)
for Preferred Securities issued by such Allstate Trust and the date or dates
upon which such distributions shall be payable; provided, however, that
distributions on such Preferred Securities shall be payable on a quarterly basis
to holders of such Preferred Securities as of a record date in each quarter
during which such Preferred Securities are outstanding; (iv) whether
distributions on Preferred Securities issued by such Allstate Trust shall be
cumulative, and, in the case of Preferred Securities having such cumulative
distribution rights, the date or dates or method of determining the date or
dates from which distributions on Preferred Securities issued by such Allstate
Trust shall be cumulative; (v) the amount or amounts which shall be paid out of
the assets of such Allstate Trust to the holders of Preferred Securities of such
Allstate Trust upon voluntary or involuntary dissolution, winding-up or
termination of such Allstate Trust; (vi) the obligation or the option, if any,
of such Allstate Trust to purchase or redeem Preferred Securities issued by such
Allstate Trust and the price or prices at which, the period or periods within
which, and the terms and conditions upon which, Preferred Securities issued by
such Allstate Trust shall be
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purchased or redeemed, in whole or in part, pursuant to such obligation; (vii)
the voting rights, if any, of Preferred Securities issued by such Allstate Trust
in addition to those required by law, including the number of votes per
Preferred Security and any requirement for the approval by the holders of
Preferred Securities, or of Preferred Securities issued by one or more Allstate
Trusts, or of both, as a condition to specified action or amendments to the
Declaration of such Allstate Trust; (viii) the terms and conditions, if any,
upon which the Subordinated Debt Securities may be distributed to holders of
Preferred Securities; (ix) if applicable, any securities exchange upon which the
Preferred Securities shall be listed; and (x) any other relevant rights,
preferences, privileges, limitations or restrictions of Preferred Securities
issued by such Allstate Trust not inconsistent with the Restated Declaration of
such Allstate Trust or with applicable law. All Preferred Securities offered
hereby will be guaranteed by the Company to the extent set forth below under
"Description of Preferred Securities Guarantees." Certain United States federal
income tax considerations applicable to any offering of Preferred Securities
will be described in the Prospectus Supplement relating thereto.
In connection with the issuance of Preferred Securities, each Allstate Trust
will issue one series of Common Securities. The Restated Declaration of each
Allstate Trust will authorize the Regular Trustees of such trust to issue on
behalf of such Allstate Trust one series of Common Securities having such terms
including distributions, redemption, voting and liquidation rights or such
restrictions as shall be set forth therein. The terms of the Common Securities
issued by an Allstate Trust will be substantially identical to the terms of the
Preferred Securities issued by such trust and the Common Securities will rank
PARI PASSU, and payments will be made thereon pro rata, with the Preferred
Securities except that, upon an event of default under the Restated Declaration,
the rights of the holders of the Common Securities to payment in respect of
distributions and payments upon liquidation, redemption and otherwise will be
subordinated to the rights of the holders of the Preferred Securities. Except in
certain limited circumstances, the Common Securities will also carry the right
to vote to appoint, remove or replace any of the Allstate Trustees of an
Allstate Trust. All of the Common Securities of each Allstate Trust will be
directly or indirectly owned by the Company.
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF PREFERRED SECURITIES
If an Event of Default under the Restated Declaration of an Allstate Trust
occurs and is continuing, then the holders of Preferred Securities of such
Allstate Trust would rely on the enforcement by the Property Trustee of its
rights as a holder of the applicable series of Subordinated Debt Securities
against the Company. In addition, the holders of a majority in liquidation
amount of the Preferred Securities of such Allstate Trust will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee or to direct the exercise of any trust or
power conferred upon the Property Trustee under the applicable Restated
Declaration, including the right to direct the Property Trustee to exercise the
remedies available to it as a holder of the Subordinated Debt Securities. If the
Property Trustee fails to enforce its rights under the applicable series of
Subordinated Debt Securities, a holder of Preferred Securities of such Allstate
Trust may institute a legal proceeding directly against the Company to enforce
the Property Trustee's rights under the applicable series of Subordinated Debt
Securities without first instituting any legal proceeding against the Property
Trustee or any other person or entity. Notwithstanding the foregoing, if an
Event of Default under the applicable Restated Declaration has occurred and is
continuing and such event is attributable to the failure of the Company to pay
interest or principal on the applicable series of Subordinated Debt Securities
on the date such interest or principal is otherwise payable (or in the case of
redemption, on the redemption date), then a holder of Preferred Securities of
such Allstate Trust may directly institute a proceeding for enforcement of
payment to such holder of the principal of or interest on the applicable series
of Subordinated Debt Securities having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such holder (a "Direct
Action") on or after the respective due date specified in the applicable series
of Subordinated Debt Securities. In connection with such Direct Action, the
Company will be subrogated to the rights of such holder of Preferred Securities
under the applicable Restated Declaration to the extent of any payment made by
the Company to such holder of Preferred Securities in such Direct Action.
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DESCRIPTION OF PREFERRED SECURITIES GUARANTEES
Set forth below is a summary of information concerning the Preferred
Securities Guarantees which will be executed and delivered by the Company for
the benefit of the holders from time to time of Preferred Securities. Each
Preferred Securities Guarantee will be qualified as an indenture under the Trust
Indenture Act. State Street Bank and Trust Company will act as the independent
trustee under each Preferred Securities Guarantee (the "Preferred Guarantee
Trustee") for purposes of compliance with the Trust Indenture Act. The terms of
each Preferred Securities Guarantee will be those set forth in such Preferred
Securities Guarantee and those made part of such Preferred Securities Guarantee
by the Trust Indenture Act. The following summary does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the form of Preferred Securities Guarantee,
which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, and the Trust Indenture Act. Each Preferred Securities
Guarantee will be held by the Preferred Guarantee Trustee for the benefit of the
holders of the Preferred Securities of the applicable Allstate Trust.
GENERAL
Pursuant to each Preferred Securities Guarantee, the Company will agree, to
the extent set forth therein, to pay in full, to the holders of the Preferred
Securities issued by an Allstate Trust, the Guarantee Payments (as defined
herein) (except to the extent paid by such Allstate Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which such Allstate
Trust may have or assert. The following payments with respect to Preferred
Securities issued by an Allstate Trust to the extent not paid by such Allstate
Trust (the "Guarantee Payments") will be subject to the Preferred Securities
Guarantee thereon (without duplication): (i) any accrued and unpaid
distributions which are required to be paid on such Preferred Securities, to the
extent such Allstate Trust shall have funds available therefor; (ii) the
redemption price set forth in the applicable Prospectus Supplement (the
"Redemption Price"), which will not be lower than the liquidation amount, and
all accrued and unpaid distributions, to the extent such Allstate Trust has
funds available therefor with respect to any Preferred Securities called for
redemption by such Allstate Trust; and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of such Allstate Trust (other than in
connection with the distribution of Subordinated Debt Securities to the holders
of Preferred Securities or the redemption of all of the Preferred Securities),
the lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid distributions on such Preferred Securities to the date of payment, to the
extent such Allstate Trust has funds available therefor and (b) the amount of
assets of such Allstate Trust remaining available for distribution to holders of
such Preferred Securities in liquidation of such Allstate Trust. The Company's
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of Preferred Securities or by
causing the applicable Allstate Trust to pay such amounts to such holders.
Each Preferred Securities Guarantee will not apply to any payment of
distributions on the Preferred Securities except to the extent such Allstate
Trust shall have funds available therefor. If the Company does not make interest
payments on the Subordinated Debt Securities purchased by an Allstate Trust,
such Allstate Trust will not pay distributions on the Preferred Securities
issued by such Allstate Trust and will not have funds available therefor. See
"Description of Debt Securities--Certain Covenants of the Company." The
Preferred Securities Guarantee, when taken together with the Company's
obligations under the Subordinated Debt Securities, the Subordinated Indenture
and the Declaration, including its obligations to pay costs, expenses, debts and
liabilities of such Allstate Trust (other than with respect to the Trust
Securities), will provide a full and unconditional guarantee on a subordinated
basis by the Company of payments due on the Preferred Securities.
The Company has also agreed separately to irrevocably and unconditionally
guarantee the obligations of the Allstate Trusts with respect to the Common
Securities (the "Common Securities Guarantees") to the same extent as the
Preferred Securities Guarantee, except that upon an event of default under the
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Subordinated Indenture, holders of Preferred Securities shall have priority over
holders of Common Securities with respect to distributions and payments on
liquidation, redemption or otherwise.
CERTAIN COVENANTS OF THE COMPANY
In each Preferred Securities Guarantee, the Company will covenant that, so
long as any Preferred Securities issued by the applicable Allstate Trust remain
outstanding, if there shall have occurred any event that would constitute an
event of default under such Preferred Securities Guarantee or the Declaration of
such Allstate Trust, then, unless otherwise set forth in a Prospectus Supplement
(a) the Company shall not declare or pay any dividend on, make any distributions
with respect to, or redeem, purchase or make a liquidation payment with respect
to, any of its capital stock (other than (i) purchases or acquisitions of shares
of Common Stock in connection with the satisfaction by the Company of its
obligations under any employee benefit plans, (ii) as a result of a
reclassification of the Company's capital stock or the exchange or conversion of
one class or series of the Company's capital stock for another class or series
of the Company's capital stock or (iii) the purchase of fractional interests in
shares of the Company's capital stock pursuant to the conversion or exchange
provisions of such capital stock of the Company or the security being converted
or exchanged) or make any guarantee payments with respect to the foregoing and
(b) the Company shall not make any payment of interest, principal or premium, if
any, on or repay, repurchase or redeem any debt securities (including
guarantees) issued by the Company which rank PARI PASSU with or junior to such
Subordinated Debt Securities.
MODIFICATION OF THE PREFERRED SECURITIES GUARANTEES; ASSIGNMENT
Except with respect to any changes which do not adversely affect the rights
of holders of Preferred Securities (in which case no vote will be required),
each Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities issued by the applicable Allstate Trust. The
manner of obtaining any such approval of holders of such Preferred Securities
will be as set forth in an accompanying Prospectus Supplement. All guarantees
and agreements contained in a Preferred Securities Guarantee shall bind the
successors, assigns, receivers, trustees and representatives of the Company and
shall inure to the benefit of the holders of the Preferred Securities of the
applicable Allstate Trust then outstanding.
TERMINATION
Each Preferred Securities Guarantee will terminate as to the Preferred
Securities issued by the applicable Allstate Trust (a) upon full payment of the
Redemption Price of all Preferred Securities of such Allstate Trust, (b) upon
distribution of the Subordinated Debt Securities held by such Allstate Trust to
the holders of the Preferred Securities of such Allstate Trust or (c) upon full
payment of the amounts payable in accordance with the Declaration of such
Allstate Trust upon liquidation of such Allstate Trust. Each Preferred
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of Preferred Securities issued by the
applicable Allstate Trust must restore payment of any sums paid under such
Preferred Securities or such Preferred Securities Guarantee. The subordination
provisions of the Subordinated Debt Securities provide that in the event payment
is made on the Subordinated Debt Securities or the Preferred Securities
Guarantee in contravention of such provisions, such payments shall be paid over
to the holders of Senior Indebtedness.
EVENTS OF DEFAULT
An event of default under a Preferred Securities Guarantee will occur upon
the failure of the Company to perform any of its payment or other obligations
thereunder.
The holders of a majority in liquidation amount of the Preferred Securities
relating to such Preferred Securities Guarantee have the right to direct the
time, method and place of conducting any proceeding for
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any remedy available to the Preferred Guarantee Trustee in respect of the
Preferred Securities Guarantee or to direct the exercise of any trust or power
conferred upon the Preferred Guarantee Trustee under such Preferred Securities.
If the Preferred Guarantee Trustee fails to enforce such Preferred Securities
Guarantee, any holder of Preferred Securities relating to such Preferred
Securities Guarantee may institute a legal proceeding directly against the
Company to enforce the Preferred Guarantee Trustee's rights under such Preferred
Securities Guarantee, without first instituting a legal proceeding against the
relevant Allstate Trust, the Preferred Guarantee Trustee or any other person or
entity. Notwithstanding the foregoing, if the Company has failed to make a
guarantee payment, a holder of Preferred Securities may directly institute a
proceeding against the Company for enforcement of the Preferred Securities
Guarantee for such payment. The Company waives any right or remedy to require
that any action be brought first against such Allstate Trust or any other person
or entity before proceeding directly against the Company.
STATUS OF THE PREFERRED SECURITIES GUARANTEES
Unless otherwise indicated in a Prospectus Supplement, the Preferred
Securities Guarantees will constitute unsecured obligations of the Company and
will rank (i) subordinate and junior in right of payment to all other
liabilities of the Company, (ii) PARI PASSU with the most senior preferred or
preference stock now or hereafter issued by the Company and with any guarantee
now or hereafter entered into by the Company in respect of any preferred or
preference stock of any affiliate of the Company, and (iii) senior to Common
Stock. The terms of the Preferred Securities provide that each holder of
Preferred Securities issued by the applicable Allstate Trust by acceptance
thereof agrees to the subordination provisions and other terms of the Preferred
Securities Guarantee relating thereto.
The Preferred Securities Guarantees will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without instituting a legal proceeding against any other person or
entity).
INFORMATION CONCERNING THE PREFERRED GUARANTEE TRUSTEE
The Preferred Guarantee Trustee, prior to the occurrence of a default with
respect to a Preferred Securities Guarantee, undertakes to perform only such
duties as are specifically set forth in such Preferred Securities Guarantee and,
after default, shall exercise the same degree of care as a prudent individual
would exercise in the conduct of his or her own affairs. Subject to such
provisions, the Preferred Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by a Preferred Securities Guarantee at the
request of any holder of Preferred Securities, unless offered reasonable
indemnity against the costs, expenses and liabilities which might be incurred
thereby.
GOVERNING LAW
The Preferred Securities Guarantees will be governed by and construed in
accordance with the internal laws of the State of New York.
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PLAN OF DISTRIBUTION
The Company may sell any series of Debt Securities, Debt Warrants and
Preferred Stock and the Allstate Trusts may sell the Preferred Securities being
offered hereby (i) directly to one or more purchasers; (ii) through agents;
(iii) to or through underwriters or dealers; or (iv) through a combination of
any such methods of sale. The distribution of the Securities may be effected
from time to time in one or more transactions at a fixed price or prices, which
may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The Prospectus
Supplement will set forth the terms of the offering of the offered Securities,
including the name or names of any underwriters, dealers or agents; the purchase
price of such Securities and the proceeds to the Company and/or an Allstate
Trust from such sale; any underwriting discounts and commissions or agency fees
and other items constituting underwriters' or agents' compensation; any initial
public offering price and any discounts or concessions allowed or reallowed or
paid to dealers or any securities exchange on which such Securities may be
listed. Any initial public offering price, discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
Any discounts, concessions or commissions received by underwriters or agents
and any profits on the resale of Securities by them may be deemed to be
underwriting discounts and commissions under the Act. Unless otherwise set forth
in the Prospectus Supplement, the obligations of underwriters to purchase the
offered Securities will be subject to certain conditions precedent, and such
underwriters will be obligated to purchase all such Securities, if any are
purchased. Unless otherwise indicated in the Prospectus Supplement, any agent
will be acting on a best efforts basis for the period of its appointment.
Under certain circumstances, the Company may repurchase offered Securities
and reoffer them to the public as set forth above. The Company may also arrange
for repurchase and resale of such offered Securities by dealers.
If so indicated in the Prospectus Supplement, the Company may authorize
underwriters, dealers or other persons acting as the Company's agents to solicit
offers by certain institutions to purchase Securities from the Company, pursuant
to contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others (but in all cases such institutions must be
approved by the Company). The obligations of any purchaser under any such
contract will be subject to the conditions that the purchase of the offered
Securities shall not at the time of delivery be prohibited under the laws of the
jurisdiction to which such purchaser is subject. The underwriters and such other
agents will not have any responsibility in respect of the validity or
performance of such contracts.
In connection with the offering of Securities, the Company and/or, if
applicable, any Allstate Trust, may grant to the underwriters an option to
purchase additional Securities to cover over-allotments, if any, at the initial
public offering price (with an additional underwriting commission), as may be
set forth in the accompanying Prospectus Supplement. If the Company and/or, if
applicable, any Allstate Trust, grants any over-allotment option, the terms of
such over-allotment option will be set forth in the Prospectus Supplement for
such Securities.
The Securities may be a new issue of securities that have no established
trading market. Any underwriters to whom Securities are sold for public offering
and sale may make a market in such Securities, but such underwriters will not be
obligated to do so and may discontinue any market making at any time without
notice. Such Securities may or may not be listed on a national securities
exchange. No assurance can be given as to the liquidity of or the existence of
trading markets for any Securities.
Under agreements which may be entered into by the Company and/or, if
applicable, any Allstate Trust, underwriters and agents who participate in the
distribution of Securities may be entitled to indemnification by the Company
against certain liabilities, including liabilities under the Act, or to
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contribution with respect to payments which the underwriters or agents may be
required to make in respect thereof. Such underwriters and agents may be
customers of, engaged in transactions with, or perform services for the Company
in the ordinary course of business.
LEGAL OPINION
The validity of the Securities offered hereby will be passed upon for the
Company by Kirkland & Ellis, Chicago, Illinois, counsel for the Company and
Morris, James, Hitchens & Williams, Wilmington, Delaware, counsel for the
Allstate Trusts.
EXPERTS
The consolidated financial statements and the related financial statement
schedules incorporated in this Prospectus by reference from the Company's Annual
Report on Form 10-K for the year ended December 31, 1997 have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
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