§ 7310. Reorganization of domestic guarantee capital life insurance
companies into domestic stock life insurance companies. (a) As used in
this section, the following terms shall have the following meanings:

(1) "Guarantee capital insurer" means a domestic life insurer with a
guarantee capital represented by shares.

(2) "Shareholder" means a record holder of shares of guarantee capital
of a guarantee capital insurer.

(3) "Policyholder" means a holder, as determined by the records of a
guarantee capital insurer, of an insurance contract issued by such
insurer which is of a type described in paragraph one, two, or three of
subsection (a) of section one thousand one hundred thirteen of this
chapter and which entitles the holder thereof, under the charter of the
guarantee capital insurer, to the policyholder equity interest defined
in this section. A person who, for purposes of subsection (a) of section
four thousand two hundred ten of this chapter would be deemed the
"policyholder" of any insurance contract is deemed to be the holder of
such contract for purposes of this section.

(4) "Policyholders' equity interest" means and includes all rights of
the policyholders as provided in or arising under the charter of the
guarantee capital insurer. The term "policyholders' equity interest"
includes the policyholders' right under the charter to vote and to
participate in distributions of profits and any right arising under the
charter to participate in any distribution of surplus whether such
distribution is made incident to a liquidation of the guarantee capital
insurer or otherwise. Anything in the foregoing sentence to the contrary
notwithstanding, the term "policyholders' equity interest" does not
include any right expressly conferred upon the policyholders by their
insurance contracts which is in addition to those rights provided in or
arising under the charter of the guarantee capital insurer.

(5) "Plan of reorganization" means a plan of conversion, a plan of
merger or a plan for amendment of charter adopted in accordance with
this section.

(6) "Reorganized insurer" means either (i) the domestic stock life
insurer into which a guarantee capital insurer has been converted in
accordance with this section, or (ii) the corporation surviving a merger
between a guarantee capital life insurer and a domestic stock life
insurer in accordance with this section, or (iii) the former guarantee
capital insurer as constituted after an amendment to its charter in
accordance with this section.

(b) Any other provision of this chapter to the contrary
notwithstanding, upon compliance with the requirements and completion of
the proceedings prescribed by this section, a guarantee capital insurer
may either (i) convert into a domestic stock life insurer, or (ii) merge
with a domestic stock life insurer, or (iii) amend its charter so as to
eliminate its policyholders' equity interest. The provisions of
paragraph four of subsection (a) of section one thousand two hundred six
of this chapter shall not apply to an amendment to the charter of a
guarantee capital insurer eliminating its policyholders' equity interest
made under and in accordance with the provisions of this section. In
case of a merger with a domestic stock insurer, the domestic stock
insurer shall comply with the provisions of this chapter applicable to
its participation in a merger.

(c) (1) The guarantee capital insurer shall adopt a plan of
reorganization by the vote of a majority of its entire board of
directors. The plan of reorganization shall set forth (i) the reasons
for and purposes of the proposed reorganization, (ii) the form of the
reorganization which shall be one of the forms of reorganization set
forth in subsection (b) of this section, (iii) the manner and basis by
which the reorganization shall take place, and (iv) the consideration to
be given to the shareholders in exchange for their shares of guarantee
capital and to the policyholders in exchange for their policyholders'
equity interest or the manner of converting the guarantee capital or the
policyholders' equity interests into other securities or other
consideration. If the reorganized insurer proposes to issue for delivery
in this state participating insurance policies or contracts, the plan of
reorganization shall so specify and shall be accompanied by such
information or agreements relative thereto as the superintendent may
require pursuant to section four thousand two hundred thirty-one of this
chapter and, in such event, upon the superintendent's approval of the
plan of reorganization pursuant to this section, the superintendent
shall, in accordance with said section four thousand two hundred
thirty-one, issue a revocable permit to the reorganized insurer
authorizing it to issue participating policies and contracts in this
state. The plan of reorganization may contain any other provisions which
the board of directors of the guarantee capital insurer may deem
necessary or advisable in connection with the proposed reorganization.

(2) The consideration to be given in exchange for the shares of
guarantee capital and the policyholders' equity interest or into which
such shares and equity interest are to be converted may consist of
securities of the reorganized insurer or securities of another
corporation or corporations or other consideration or any combination of
such forms of consideration. The consideration to be given in exchange
for shares of guarantee capital or into which such shares are to be
converted need not be the same as the consideration given in exchange
for the policyholders' equity interests or into which the policyholders'
equity interests are to be converted. The consideration given to any
class or category of policyholder need not be the same as the
consideration given to any other class or category of policyholder. In
the case of a charter amendment in which the shares of guarantee capital
remain outstanding and unchanged, the plan need not provide any
consideration to the holders of such shares.

(3) The plan of reorganization shall include the proposed charter of
the reorganized insurer set out in accordance with subsection (a) of
section one thousand two hundred one of this chapter and its proposed
by-laws, giving effect to any amendments to the charter or by-laws to be
effected by the plan of reorganization.

(4) The plan of reorganization shall specify one or more record dates
to be used for purposes of determining (i) the shareholders and
policyholders who shall be entitled to notice of and to vote at the
meeting called pursuant to this section to act upon a proposal to
approve the plan of reorganization, (ii) the shareholders and
policyholders who shall be entitled to receive notice of the public
hearing required by this section, and (iii) the shareholders and
policyholders who shall be entitled to receive the consideration
provided for by the plan. Each shareholder of record on the record date
specified pursuant to item (iii) of the immediately preceding sentence
shall be entitled to the consideration provided in the plan on the basis
of the number of shares held of record by him as of said record date.
Each policyholder of record as of such record date shall be entitled to
the consideration provided for him in the plan based on his
policyholder's equity interest as of the effective date of conversion,
merger or charter amendment pursuant to this section but only to the
extent that such policyholder's equity interest arose from insurance
contracts of which he was the holder as of such record date.

(5) Upon adoption of the plan of reorganization, it shall be duly
executed by the chairman of the board, the president or a vice president
and attested by the secretary or an assistant secretary of the guarantee
capital insurer under such insurer's corporate seal and shall be
submitted to the superintendent with a copy of the resolutions adopting
such plan accompanied by a certificate of adoption of such resolutions
subscribed by such officers and affirmed by them as true under penalties
of perjury and under the seal of the guarantee capital insurer.

(d) The guarantee capital insurer may, by action of a majority of the
entire board of directors, amend the plan of reorganization at any time
before the plan becomes effective as provided by this section. On
adoption of an amendment it shall be duly executed by the chairman of
the board, the president or a vice president and attested by the
secretary or an assistant secretary of the guarantee capital insurer
under such insurer's corporate seal and shall be submitted to the
superintendent with a copy of the resolutions adopting such amendment
subscribed by such officers and affirmed by them as true under penalties
of perjury and under the seal of the guarantee capital insurer. In case
of an amendment, all references in this section to the plan of
reorganization shall be deemed to refer to the plan as amended. No
amendment made after any public hearing required by this section or
after approval by the shareholders or policyholders as provided in this
section shall change the plan in a manner which the superintendent
determines is materially disadvantageous to the shareholders or any of
the policyholders unless a further public hearing is held on the plan as
amended if the amendment is made after the public hearing, or the plan
as amended is submitted for reconsideration by the shareholders or
policyholders, whichever is disadvantaged by the amendment, if the
amendment is made after the plan has been approved by the shareholders
or policyholders under the conditions and procedures determined by the
superintendent in accordance with this section.

(e) Upon submission to him of the plan of reorganization, the
superintendent may request any additional documents or information and
may examine the guarantee capital insurer or any of its affiliates, to
the extent he may determine to be necessary to enable him to make the
findings required by this section for the approval by him of the plan of
reorganization.

(f) The superintendent shall appoint one or more qualified
disinterested persons to appraise in writing the value of the
policyholders' equity interest and the value of the consideration to be
given to the policyholders in exchange for their equity interest or into
which such equity interest shall be converted. Such valuation shall be
made on a fair and equitable basis taking into account the latest filed
annual or quarterly statement of the guarantee capital insurer, and any
significant developments occurring subsequent to the date of such
statement. The appraisers may request of the guarantee capital insurer
access to its books and records and the furnishing by it of any other
information in its possession, to the extent they may reasonably deem
necessary to make the valuations contemplated by this subsection. They
shall report to the superintendent any instance in which the guarantee
capital insurer fails to provide any information requested by them. The
appraisers shall not, under judicial process or otherwise, be obligated
or permitted to divulge to anyone except the superintendent any
information not otherwise publicly available which is so obtained by
them. The appraisers shall receive reasonable compensation and shall be
reimbursed for reasonable expenses incurred in performing their duties.
They may, as necessary, employ consultants to advise them on technical
matters associated with the appraisal. The appraisal report shall be
made to the superintendent. In making the determinations contemplated by
this section, the superintendent shall not be bound by any findings,
conclusions or recommendations made by the appraisers. All information
obtained by the superintendent pursuant to this section, including
without limitation information obtained through examinations by him,
reports of appraisers and other information secured by appraisers and
turned over to the superintendent, are hereby specifically exempted, as
contemplated by paragraph (a) of subdivision two of section eighty-seven
of the public officers law, from disclosure by the superintendent under
said section eighty-seven. Such exemption shall not preclude or exempt
the superintendent from disclosure of such information pursuant to
judicial process under provisions of law other than said section
eighty-seven.

(g) The superintendent shall hold a public hearing upon the fairness
of the terms and conditions of the exchange of the policyholders' equity
interest for the securities or other consideration provided for by the
plan of reorganization and upon whether the reorganization is in the
public interest. Notice stating the time, place and purpose of the
hearing shall be mailed to each holder of guarantee capital and each
policyholder entitled under the plan to receive such consideration at
his address as shown on the records of the guarantee capital insurer at
least thirty days before the date of the hearing. Such notice shall be
preceded or accompanied by a true and complete copy of the plan or a
summary thereof approved by the superintendent and by such other
explanatory information as the superintendent shall approve or require.
In addition, the guarantee capital insurer shall give notice of the
time, place and purpose of the hearing by publication in a newspaper of
general circulation in the city in which the insurer has its principal
office and in two other newspapers of general circulation in other
cities within or without this state approved by the superintendent. Such
newspaper publications shall be made not less than fifteen days nor more
than sixty days before the hearing and shall be in form approved by the
superintendent.

(h) (1) A proposal to approve the plan of reorganization shall be
submitted to a meeting of shareholders and policyholders. Notice stating
the time, place and purpose of such meeting shall be mailed to each such
shareholder and policyholder of record as of the record date for the
meeting, at his address as shown on the records of the guarantee capital
insurer, at least thirty days before the date of the meeting. Such
notice may be combined with notice of the public hearing required by
this section. Such notice shall be preceded or accompanied by a true and
complete copy of the plan or a summary thereof approved by the
superintendent and by such other explanatory information as the
superintendent shall approve or require.

(2) Each shareholder of record as of the record date for the meeting
shall be entitled to cast one vote at such meeting, in person or by
proxy, for each share held of record by him on such record date. Each
policyholder of record as of the record date for the meeting shall be
entitled to cast one vote at such meeting, in person or by proxy,
irrespective of the number or amount of the policies he holds. Any proxy
shall be revocable at any time except to the extent that, at the time of
exercise, the power conferred thereby has been exercised. The presence
in person or by proxy of (i) the holders of record of two-thirds of the
outstanding shares of guarantee capital, and (ii) such number of
policyholders as attend in person or proxy shall constitute a quorum for
the meeting. All votes shall be by written ballot cast in person by
shareholders or policyholders entitled to vote or by proxy agents duly
appointed by shareholders or policyholders entitled to vote. The
proposal to approve the plan of reorganization may be adopted by the
affirmative vote of two-thirds of all guarantee capital shares issued
and outstanding as of the record date and the affirmative vote of
two-thirds of all votes cast by policyholders or record as of the record
date.

(3) The superintendent shall have power to supervise and direct and
prescribe rules governing the procedure for the conduct of the meeting
to such extent, consistent with the provisions of this section, as he
deems necessary to insure a fair and accurate vote. Such powers shall
include but not be limited to power to supervise and regulate (i) the
determination of the shareholders and policyholders entitled to notice
of and to vote at the meeting, (ii) the giving of notice, (iii) the
receipt, custody, safeguarding, verification and tabulation of proxy
forms and ballots, and (iv) the resolution of disputes.

(4) The superintendent shall appoint as inspectors an adequate number
of personnel of the department of financial services or other competent
and disinterested persons and may appoint if necessary, expert
accountants and other assistants and may authorize the procurement of
stationery and supplies necessary for conducting the election and
canvassing the votes. The inspectors shall have power to determine all
questions concerning the verification of the ballots and proxies, the
ascertainment of the validity thereof, the qualifications of the voters
and the canvass of the vote, and with respect thereto shall act under
such rules as shall be prescribed by the superintendent. Any
disagreement among the inspectors shall be reported to and shall be
resolved by the superintendent. Any determinations by the inspectors or
the superintendent shall be subject to judicial review.

(5) Representatives of the shareholders and of the policyholders,
including representatives of shareholders and policyholders favoring or
opposing the approval of the plan, shall be entitled to be present
during the filing, casting, verification and canvassing of the proxies
and ballots and shall be entitled to examine and object to any such
proxy or ballot. The superintendent or the inspectors may limit the
number of persons representing any interested person or group and may
specify fair and reasonable procedures for the examination of and
presentation of objections to the proxies and ballots. Costs incurred in
providing such representation shall not be a charge upon or paid from
the funds of the guarantee capital insurer.

(6) Neither the guarantee capital insurer nor any officer, agent or
employee thereof shall knowingly omit, from any list of policyholders
entitled to notice of the meeting, the name of any policyholders
required to be included therein, or shall knowingly omit to give the
correct name and address of any policyholder, or shall knowingly give a
wrong address. No person shall conceal or withhold or aid or abet any
other person in concealing or withholding any proxy or ballot from the
authorized custodians thereof or from the inspectors. No policyholder or
shareholder shall sell or offer to sell any vote or proxy for any sum of
money or anything of value other than the consideration provided for in
the plan of reorganization if said plan becomes effective.

(7) All ballots and proxies received by the inspectors shall
immediately upon the completion of the canvass be placed in sealed
packages and shall be preserved by the said inspectors for a period of
one year, subject to the order of any court having jurisdiction of any
proceedings relating thereto, and then shall be turned over to the
guarantee capital insurer, or the reorganized insurer, if the
reorganization has become effective.

(8) The meeting and the conduct thereof shall at all times, on
petition of the superintendent or of any person or persons whose rights
may be affected, be subject to the supervision and control of the
supreme court in the judicial district in which the guarantee capital
insurer has its home office.

(9) The inclusion by the guarantee capital insurer of the name of any
person in any list of policyholders required by this section shall not
be construed as an admission by such insurer of the validity of any
policy or contract and no such list shall be competent evidence against
such insurer in any action or proceeding in which the question of the
validity of any policy or contract or of any claim under it is involved.

(10) The provisions of section four thousand two hundred ten of this
chapter shall not apply to a meeting of shareholders and policyholders
held pursuant to this section.

(11) Upon the conclusion of the vote, the guarantee capital insurer
shall submit to the superintendent (i) a certified copy of the plan of
reorganization, subscribed by the chairman of the board, the president
or any vice president and attested by the secretary or an assistant
secretary of the guarantee capital insurer, (ii) a certificate,
subscribed by the chairman of the board, the president or any vice
president and attested by the secretary or assistant secretary of the
guarantee capital insurer, or subscribed by the person or persons, if
any, designated by the superintendent to supervise the giving of notice
of the meeting, to the effect that notice of the meeting was given in
accordance with this section to all persons entitled to such notice, and
(iii) a certificate subscribed by the inspectors of the attendance at
the meeting and of the results of the vote thereat, as evidenced by the
valid proxies and ballots filed thereat. Each such certificate shall be
affirmed as true under the penalties of perjury by the person or persons
subscribing the same and, in the case of a certificate signed by
officers of the guarantee capital insurer, shall be affirmed under the
corporate seal of the guarantee capital insurer.

(i) The superintendent shall approve the plan of reorganization in
writing if he finds that the proposed reorganization does not violate
this chapter and is fair and equitable to the shareholders and the
policyholders and the public, and that after giving effect to the
reorganization, the reorganized insurer would have capital and surplus
at least equal to the minimum capital and surplus required by the
superintendent for a newly organized stock insurer doing the same kind
or kinds of insurance business, or an amount of capital and surplus the
superintendent deems to be reasonably necessary for the solvency of the
reorganized insurer, whichever is the greater. If approval is denied,
the denial shall be in writing setting forth a statement of the reasons
therefor and the guarantee capital insurer shall have the right to a
hearing before the superintendent within thirty days of the date of such
denial. Unless otherwise agreed by the guarantee capital insurer, the
superintendent shall approve or disapprove the plan in writing on or
before a date which is the later of: (i) sixty days after submission to
him of the report of the appraiser or appraisers appointed pursuant to
subsection (f) of this section, (ii) sixty days after the conclusion of
the public hearing required by subsection (g) of this section, or (iii)
ten days after certification to him of the results of the vote at the
meeting held pursuant to subsection (h) of this section.

(j) When the superintendent has given his approval of the plan of
reorganization as provided in subsection (i) of this section and
certification of approval of the plan has been made to the
superintendent as provided in subsection (h) of this section, a copy of
the plan of reorganization with the superintendent's approval endorsed
thereon shall be filed in the office of the superintendent. In the case
of a merger, a copy of such plan shall also be filed in the office of
the clerk of the county where the principal office of the guarantee
capital insurer and the domestic stock insurer is located. The plan of
reorganization shall take effect in accordance with its terms on the
date when the filings required by this subsection have been made or on
such later date, if any, as may have been specified in such plan or
pursuant thereto.

(k) Upon the conversion of the guarantee capital insurer or merger in
the manner herein provided, all the rights, franchises and interests of
the former guarantee capital insurer, in and to every species of
property, real, personal and mixed, and things in action thereunto
belonging, shall be deemed transferred to and vested in the reorganized
insurer, without any other deed or transfer; and simultaneously
therewith such company shall be deemed to have assumed all of the
obligations and liabilities of the former guarantee capital insurer,
other than obligations and liabilities with respect to the
policyholders' equity interest eliminated by the plan of reorganization.

(l) No action or proceeding pending at the time of the conversion or
merger to which the guarantee capital insurer may be a party shall be
abated or discontinued by reason of such conversion or merger, but the
same may be prosecuted to final judgment in the same manner as if the
conversion or merger had not taken place, or the reorganized insurer may
be substituted in place of such guarantee capital insurer by order of
the court in which the action or proceeding may be pending.

(m) The directors and officers of the guarantee capital insurer shall
serve as directors and officers of the reorganized insurer until new
directors and officers have been duly elected and qualified pursuant to
the charter and by-laws of the reorganized insurer.

(n) The guarantee capital insurer shall deliver to the superintendent
at the time of submission of the plan of reorganization a written
undertaking in form and substance satisfactory to the superintendent and
signed by the guarantee capital insurer and by such other persons as the
superintendent may require, specifying the manner in which all costs and
expenses incurred in any manner in connection with the plan of
reorganization shall be paid or reimbursed. Such undertaking shall
provide for the payment or reimbursement of all expenses incurred by the
superintendent or the department of financial services in connection
with the plan of reorganization, other than normal operating expenses of
the department of financial services. Such undertaking shall provide to
the effect that no payment of expenses by the guarantee capital insurer
or the reorganized insurer shall, after giving effect to any
reimbursement or contribution received by such insurer with respect
thereto, have the effect of reducing the consideration to be paid to the
policyholders pursuant to the plan of reorganization or of reducing the
portion of the surplus of the reorganized insurer which is attributable
to policyholders. The said undertaking shall apply to expenses incurred
prior to the submission of the plan of reorganization as well as those
incurred thereafter and shall be binding whether or not the plan of
reorganization takes effect. The consideration to be paid to
policyholders pursuant to the plan shall not be subject to this
subsection nor to said undertaking.

(o) Notice of the pendency of the proposed reorganization and of the
effect thereof shall be given by the guarantee capital insurer or the
reorganized insurer in a manner satisfactory to the superintendent to
all persons to whom the guarantee capital insurer or the reorganized
insurer delivers insurance contracts which are issued after the record
date specified for policyholders entitled to receive any of the
consideration provided for in the plan of reorganization but are issued
on or before the date sixty days after such record date. Such persons
shall have the right to rescind such contracts, and to receive refund of
any amounts paid with respect thereto by written notice to such insurer
or its agent given within ten days of their receipt of the aforesaid
notice given by such insurer.

(p) If the plan of reorganization takes effect, the rights of all
policyholders thereafter shall be as specified in the charter of the
reorganized insurer and in their insurance contracts and they shall have
no rights under the charter of the guarantee capital insurer. The
reorganized insurer shall thereafter be subject to all laws, rules and
regulations applicable to domestic stock life insurers and shall not be
subject to any laws, rules or regulations of this state applicable to
domestic mutual insurers and not to domestic stock life insurers. If the
reorganized insurer has outstanding shares of guarantee capital after
the reorganization takes effect, the reorganization shall not affect the
rights of such shares as provided in the charter of the reorganized
insurer but for all other purposes of this chapter such shares shall be
deemed to constitute shares of stock.

(q) If the guarantee capital insurer complies substantially and in
good faith with the requirements of this section with respect to the
giving of any required notice to shareholders or policyholders, its
failure in any case to give such notice to any person or persons
entitled thereto shall not impair the validity of the actions and
proceedings taken under this section or entitle such person to any
injunctive or other equitable relief with respect thereto but this
subsection shall not impair any claim for damage such person or persons
would otherwise have due to such failure.

(r) A shareholder or policyholder whose shares or policyholder's
equity interest would be exchanged for or converted into other
consideration pursuant to a plan of reorganization adopted pursuant to
this section shall, by complying with section six hundred twenty-three
of the business corporation law, except as otherwise provided in this
subsection, have the right to receive payment for the fair value of his
shares or policyholder's equity interest. In the case of a policyholder,
no act pursuant to such section six hundred twenty-three, and no receipt
by him of any payment pursuant to such section with respect to his
policyholder's equity interest, shall impair or otherwise affect his
rights expressly conferred by his insurance contract which are in
addition to those rights conferred by or arising under the charter of
the guarantee capital insurer. The provisions of section seven thousand
one hundred nineteen of this chapter shall not apply in case of a
reorganization under this section. For purposes of this subsection, the
provisions of section six hundred twenty-three of the business
corporation law, other than paragraphs (i) and (m) thereof are
applicable except that:

(1) The references to "this chapter" in paragraph (a) of section six
hundred twenty-three of the business corporation law are deemed to refer
to this section.

(2) The references used in section six hundred twenty-three of the
business corporation law to "shareholder" and "shareholders" are deemed
to include a policyholder or policyholders and the references therein to
"shares" are, in the case of a policyholder, deemed to refer to his
policyholder's equity interest.

(3) The term "shareholders authorization date" used in section six
hundred twenty-three of the business corporation law is deemed to refer
to the date of the meeting required by subsection (h) of this section.

(4) In the case of a policyholder, the information with respect to
shareholdings required by paragraphs (a) and (c) of section six hundred
twenty-three of the business corporation law to be contained in the
notice of election to dissent is deemed to refer to the policy number of
the policyholder's insurance contract entitling him to a policyholder's
equity interest.

(5) Notwithstanding paragraph (e) of section six hundred twenty-three
of the business corporation law, upon filing by a policyholder of
election to dissent the policyholder shall cease to have any rights with
respect to his policyholder's equity interest, but his rights expressly
conferred by his insurance contract and not conferred by or arising
under the charter of the guarantee capital insurer shall be unaffected.
In the case of a policyholder, the provisions of paragraph (e) thereof
providing for the reinstatement of a shareholder's rights in certain
events are deemed to provide for reinstatement of his policyholder's
equity interest.

(6) In the case of a policyholder, the provision of paragraph (f) of
section six hundred twenty-three of the business corporation law,
referring to share certificates shall be deemed to refer to insurance
contracts.

(7) Any provision of paragraph (g) of section six hundred twenty-three
of the business corporation law to the contrary notwithstanding, the
written offer made pursuant to said paragraph to the policyholders who
have filed notices of election to dissent shall be made at prices such
that the total price offered to all such policyholders shall be
apportioned among the different classes and categories of said
dissenting policyholders in the same manner as the plan of
reorganization provides for the total consideration to be paid pursuant
thereto to be apportioned among all of the classes and categories of
policyholders.