§ 7312. Reorganization of a domestic mutual life insurer into a
domestic stock life insurer. (a) Definitions. As used in this section,
the following terms shall have the following meanings:

(1) "Mutual life insurer" means a domestic mutual life insurer.

(2) "Policyholder" means a person, as determined by the records of a
mutual life insurer, who is deemed to be the "policyholder" of a policy
or annuity contract which is of a type described in paragraphs one, two
or three of subsection (a) of section one thousand one hundred thirteen
of this chapter for purposes of paragraph three of subsection (a) of
section four thousand two hundred ten of this chapter.

(3) "Policyholders' membership interest" means and includes all
policyholders' rights as members arising under the charter of the mutual
life insurer or this chapter or otherwise by law including, but not
limited to, the rights to vote and to participate in any distribution of
surplus whether or not incident to a liquidation of the mutual life
insurer. The term "policyholders' membership interest" does not include
rights, including without limitation the right to participate in the
distribution of surplus, expressly conferred upon the policyholders by
their policies or contracts other than any right to vote.

(4) "Plan of reorganization" means a plan of conversion or conversion
and merger in accordance with this section.

(5) "Reorganized insurer" means the domestic stock life insurer into
which a mutual life insurer has been reorganized in accordance with this
section.

(6) "Statement date" means the December thirty-first immediately prior
to the date the plan of reorganization was adopted.

(7) "Person" means an individual, partnership, firm, association,
corporation, joint-stock company, trust, any similar entity or any
combination of the foregoing acting in concert.

(b) Demutualization. Any other provision of this chapter to the
contrary notwithstanding, upon compliance with the requirements of and
completion of the proceedings prescribed by this section and with the
written approval of the superintendent, a mutual life insurer may either
(1) reorganize into a domestic stock life insurer or (2) reorganize as
part of a plan of reorganization in which a majority or all of the
common shares of the domestic stock life insurer is acquired by another
institution which may be an institution organized for such purpose. As
part of the reorganization, the mutual life insurer may merge with a
domestic stock insurer, provided that the merging insurers shall comply
with the provisions of this chapter applicable to their participation in
such a merger.

(c) Plan of reorganization. A plan of reorganization must: (1)
demonstrate a purpose and specify reasons for the proposed
reorganization; (2) be in the best interest of the mutual life insurer
and its policyholders; (3) be fair and equitable to policyholders; (4)
provide for the enhancement of the operations of the reorganized
insurer; and (5) not substantially lessen competition in any line of
insurance business.

(d) Reorganization. The proposed reorganization shall be accomplished
by a plan which must be fair and equitable to the policyholders and must
comply with the terms and conditions set forth in paragraph one, two or
four of this subsection provided however, that a mutual life insurer
which has surplus to policyholders, excluding contingently repayable
obligations of the mutual life insurer under section one thousand three
hundred seven of this chapter, of less than fifty million dollars and
which has industrial insurance in force must comply with the terms and
conditions set forth in paragraph one, two, three or four of this
subsection. Nothing herein contained shall be deemed to give any class
of policyholders priority with respect to the assets of any such
reorganized insurer in liquidation, other than as expressly stated in
paragraph two of this subsection.

(1) (A) The mutual life insurer's participating business comprised of
its participating policies and contracts in force on the effective date
of reorganization shall be operated by the reorganized insurer as a
closed block of participating business in accordance with paragraph five
of this subsection except that, at the option of the mutual life
insurer, some or all classes of group policies and contracts may be
excluded from the closed block of participating business and in such
event such group policies and contracts shall continue to be eligible to
receive dividends based on the experience of such class or classes; (B)
subject to the provisions of subparagraph (D) of this paragraph, the
plan of reorganization provides that the policyholders' membership
interest will be exchanged for all of the common shares of the
reorganized insurer or its parent company, if any, or for either, or a
combination of (i) the common shares of the reorganized insurer or its
parent company, if any, and (ii) consideration equal to the proceeds of
the public sale in the market of such common shares by the issuer
thereof or by a trust or other entity existing for the exclusive benefit
of the policyholders and established solely for the purpose of effecting
the reorganization to which such common shares are issued by the issuer
on the effective date of reorganization, such consideration to be
distributed to policyholders during a process of reorganization
specified in the plan and not to last more than ten years after the
effective date of reorganization or until notification of the death of a
policyholder or the death of the insured, whichever occurs first; (C)
the consideration to be given to the policyholders is allocated among
the policyholders in a manner which is fair and equitable to
policyholders and which may take into account the estimated
proportionate contribution of each class of participating policies and
contracts to the aggregate consideration being given to policyholders;
(D) unless such issuance within a shorter or longer period is disclosed
in the plan of reorganization, the issuer of such common shares has not
issued and does not issue within two years of the effective date of the
reorganization (i) any of its common shares, (ii) any securities
convertible, with or without consideration, into such common shares or
carrying any warrant or right to subscribe to or to purchase common
shares, or (iii) any warrants or rights to subscribe to or purchase such
common shares or other securities described in item (ii) of this
subparagraph, except for the issue of common shares to or for the
benefit of the policyholders pursuant to the reorganization and the
issue of stock in anticipation of options for the purchase of common
shares being granted to officers or employees of the reorganized insurer
or its holding company, if any, pursuant to this chapter and a plan
approved by the superintendent; (E) the issuer shall use its best
efforts to encourage and assist in the establishment of a public market
for such common shares within two years of the effective date of the
reorganization (or such longer period as may be disclosed in the plan of
reorganization); (F) within one year after the offering of stock other
than the initial distribution, but no later than six years after the
effective date of the reorganization the insurer, under a plan approved
by the superintendent, which he finds not to be harmful to the
reorganized insurer, shall offer to make available to policyholders who
received and retained shares of stock with minimal values on
reorganization, a procedure to dispose of those shares of stock at
market value without brokerage commissions or similar fees; and (G) the
costs and expenses of the reorganization shall be borne by the insurer
but no costs and expenses incurred in any manner in connection with the
reorganization shall be charged to the closed block.

(2) (A) The mutual life insurer's participating business comprised of
its participating policies and contracts in force on the effective date
of the reorganization shall be operated by the reorganized insurer as a
closed block of participating business in accordance with paragraph five
of this subsection except that, at the option of the mutual life insurer
some or all classes of group policies and contracts may be excluded from
the closed block of participating business and in such event such group
policies and contracts shall continue to be eligible to receive
dividends based on the experience of such class or classes; (B) the
reorganized insurer or its parent corporation is to issue and sell
shares of one or more classes of stock having a total offering price
equal to the estimated value in the public market of the mutual life
insurer; (C) the policyholders' equity is equal to the excess of (i) the
amount of the mutual insurer's assets accumulated from the operations of
participating policies and contracts in force on the effective date of
the reorganization, over the sum of (ii) the amount of assets allocated
to the closed block of participating business and (iii) an amount equal
to the statutory reserves and other statutory liabilities attributable
to any group participating policies and contracts in force on the
effective date of reorganization and not included in the closed block of
participating business, provided however, that the policyholders' equity
cannot be less than the amount of the policyholders' preference account.
The amount of the policyholders' equity shall be determined as of the
statement date and adjusted by the estimated percentage change in the
mutual insurer's total assets, as reported in its statutory statements,
between the statement date and the effective date of the reorganization.
Any determination of policyholders' equity shall include adjustments for
any events or matters deemed by the superintendent appropriate, which
have a material effect on policyholders' equity and occurred within
seven years prior to the statement date; (D) the plan of reorganization
provides that the policyholders' membership interest will be exchanged
for consideration equal to (i) the policyholders' equity, (ii)
nontransferable preemptive subscription rights to purchase all of the
shares of such issuer, (iii) ten percent of the proceeds net of
underwriting commissions and fees raised by the insurer upon the sale of
its initial offering of shares, and (iv) the establishment of a
policyholders' preference account for the benefit of policyholders
existing on the effective date of reorganization, and for the benefit of
the future policyholders of the reorganized insurer, in the event of a
subsequent complete liquidation of the reorganized insurer, such
policyholders' preference account having the terms described below in
this paragraph; (E) the consideration to be given to the policyholders
is allocated among the policyholders in a manner which is fair and
equitable to policyholders and which may take into account the estimated
proportionate contribution of each class of participating policies and
contracts to the aggregate consideration being given to policyholders;
(F) at the option of the mutual life insurer, any common shares of the
reorganized insurer or its parent company, if any, included in the
policyholders' consideration, other than those acquired as a result of a
policyholder exercising any preemptive subscription rights, may be
placed in a trust or other entity existing for the exclusive benefit of
the policyholders and established solely for the purpose of effecting
the reorganization to which such common shares are issued by the issuer
on the effective date of reorganization, such consideration or the
proceeds of the sale of such consideration to be distributed to
policyholders during a process specified in the plan and not to last
more than ten years after the effective date of reorganization or until
notification of the death of the policyholder or the death of the
insured, whichever occurs first; (G) the issuer shall use its best
efforts to encourage and assist in the establishment of a public market
for such common shares within two years of the effective date of the
reorganization; (H) within one year after the offering of stock other
than the initial distribution, but no later than six years after the
effective date of the reorganization the insurer, under a plan approved
by the superintendent which he finds not to be harmful to the
reorganized insurer, shall offer to make available to policyholders who
received and retained shares of stock with minimal values on
reorganization, including but not limited to shares acquired by
policyholders exercising their preemptive subscription rights, a
procedure to dispose of those shares of stock at market value without
brokerage commissions or similar fees; (I) the costs and expenses of the
reorganization shall be borne by the insurer, however if the
reorganization is effected, no costs and expenses incurred in any manner
in connection with the reorganization shall be charged to the
participating business in force on the effective date of reorganization.
Costs and expenses shall include but not be limited to legal fees,
appraisal fees, printing and/or mailing costs; (J) notwithstanding
subparagraph (I) of this paragraph, if the plan of reorganization
provides for or permits a person to directly or indirectly acquire in
any manner the beneficial ownership of five percent or more of the
voting securities of such reorganized insurer or of any institution
which owns a majority or all of the voting securities of the reorganized
insurer, or if the superintendent determines that a person will control,
as defined in paragraph sixteen of subsection (a) of section one hundred
seven of this chapter, such reorganized insurer or any institution which
owns a majority or all of the voting securities of the reorganized
insurer then, unless the superintendent determines that it is in the
policyholders' interest to waive all or part of this condition, the
mutual life insurer shall not, directly or indirectly, pay for any of
the costs or expenses of a proposed reorganization whether or not such
reorganization is effected and in no event shall any of the costs and
expenses incurred in any manner in connection with the reorganization be
charged to the participating business in force on the effective date of
reorganization. Costs and expenses shall include but not be limited to
legal fees, appraisal fees, printing and/or mailing costs; (K) the
policyholders' preference account referred to above shall be equal to
the excess of the amount of the mutual insurer's total admitted assets
over the sum of (i) the total amount of assets allocated to the closed
block of participating business and (ii) the policyholders' equity and
(iii) statutory reserves and liabilities attributed to policies and
contracts not included in the closed block of participating business.
The policyholders' preference account shall be calculated as of the
statement date and adjusted appropriately to reflect any changes in the
components used in determining the amount of the policyholders'
preference account between the statement date and the effective date of
reorganization; (L) a mutual life insurer whose policyholders' equity is
paid in the form of stock may show, as a write-in item labeled
"Reorganization surplus" immediately following "Capital paid up" on the
annual statement of the reorganized insurer, a negative amount equal to
the excess of the policyholders' equity which was paid in the form of
stock over its unassigned surplus on the date of reorganization; and (M)
the policyholders' preference account shall be so designated and shown
as a footnote to the surplus of the reorganized insurer in all of its
published and filed statements. In the event of a subsequent complete
liquidation of the reorganized insurer, and only in such event, the
policyholders' preference account shall be allocated among the then
policyholders in a manner found by the superintendent to be fair and
equitable to policyholders, first to policyholders having participating
policies and contracts in force on the effective date of the
reorganization and then to all other policyholders of the reorganized
insurer. The function of the policyholders' preference account shall be
solely to establish a priority on liquidation and its existence shall
not operate to restrict the use or application of the surplus of the
reorganized insurer except that the reorganized insurer, after complying
with all other requirements of this chapter, cannot declare or pay a
cash dividend on, or repurchase any of, its shares if, after such
declaration or payment, the amount of net preference assets of the
reorganized insurer is less than the amount of the policyholders'
preference account. For this purpose, the net preference assets shall be
equal to the insurer's total admitted assets less the sum of (i) the
assets in the closed block of participating business (ii) the statutory
reserves and liabilities with respect to business not in such closed
block and (iii) the reorganized insurer's capital and paid in surplus.

(3) (A) The mutual life insurer's participating business comprised of
its participating policies and contracts in force on the effective date
of the reorganization shall be operated by the reorganized insurer as a
closed block of participating business, for policyholder dividend
purposes only, to which shall be allocated admitted assets of the mutual
life insurer in an amount equal to the statutory reserves and statutory
liabilities of the mutual life insurer; (B) the consideration to be
given in exchange for the policyholders' membership interest shall be
equal to the statutory surplus of the mutual life insurer; (C) the
amount of statutory reserves and statutory liabilities and statutory
surplus shall be determined as of the statement date and adjusted by the
estimated percentage change in the mutual insurer's total admitted
assets between the statement date and the effective date of
reorganization. Any determination of statutory surplus shall include
adjustments for any events or matters deemed by the superintendent
appropriate, which have a material effect on policyholders'
consideration and occurred within seven years prior to the statement
date; (D) the consideration shall be allocated among the policyholders
in a manner which is fair and equitable to the policyholders and which
may take into account the estimated proportionate contribution of each
class of participating policies and contracts to the aggregate
consideration being given to policyholders; (E) the reorganized insurer
or its parent corporation is to issue and sell shares of one or more
classes of stock having a total offering price equal to the estimated
value in the market of the mutual life insurer; (F) the costs and
expenses of the reorganization shall be borne by the insurer; however,
if the plan of reorganization provides for or permits a person to
directly or indirectly acquire in any manner the beneficial ownership of
five percent or more of any class of a voting security of such
reorganized insurer or of any institution which owns a majority or all
of the voting securities of the reorganized insurer, or if the
superintendent determines that a person will control, as defined in
paragraph sixteen of subsection (a) of section one hundred seven of this
chapter, such reorganized insurer or any institution which owns a
majority or all of the voting securities of the reorganized insurer
then, unless the superintendent determines that it is in the
policyholders' interest to waive all or part of this condition, the
mutual life insurer shall not, directly or indirectly, pay for any of
the costs or expenses of a proposed reorganization whether or not such
reorganization is effected. Costs and expenses shall include but not be
limited to legal fees, appraisal fees, printing and/or mailing costs;
and (G) none of the assets, including the revenue therefrom, allocated
in accordance with subparagraph (A) of this paragraph shall revert to
the benefit of the stockholders of the reorganized insurer.

(4) (A) Any method approved by the superintendent under which the
policyholders' membership interest is converted into or exchanged for
consideration determined by the superintendent to be fair and equitable
to policyholders and meeting the requirements of this section; (B) the
consideration to be given to the policyholders is allocated among the
policyholders in a manner which is fair and equitable; (C) unless the
superintendent determines that it is in the policyholders' interest to
waive all or part of this condition, the mutual life insurer does not,
directly or indirectly, pay for any of the costs or expenses of a
proposed reorganization whether or not such reorganization is effected.
Costs and expenses shall include but not be limited to legal fees,
appraisal fees, printing and/or mailing costs; and (D) in determining
whether any reorganization is fair and equitable, the superintendent
shall be guided by the legitimate economic interests of participating
policyholders as delineated in this section.

(5) (A) When the mutual life insurer's participating business
comprised of its participating policies and contracts in force on the
effective date of the reorganization shall be operated by the
reorganized insurer as a closed block of participating business in
accordance with paragraphs one and two of this subsection, then it shall
be so operated for the exclusive benefit of such policies and contracts
included therein, for policyholder dividend purposes only; (B) to such
closed block shall be allocated assets of the mutual life insurer in an
amount which together with anticipated revenue from such business is
reasonably expected to be sufficient to support such business including,
but not limited to, provisions for payment of claims, expenses and
taxes, and to provide for continuation of current payable dividend
scales, if the experience underlying such scales continues and for
appropriate adjustments in such scales if the experience changes; (C)
the amount of such assets shall be determined as of the statement date
and brought forward to the effective date of the reorganization using
methods which would have been used had the closed block been established
on the statement date with appropriate recognition of new issues; and
(D) none of the assets, including the revenue therefrom, allocated in
accordance with subparagraph (B) of this paragraph shall revert to the
benefit of the stockholders of the reorganized insurer.

(6) If any amount of the policyholders' consideration for certain
classes of policies or contracts is to be paid in the form of increased
annual dividends to the policyholders in those classes, that amount is
to be added to the assets previously allocated in accordance with
paragraph three or five of this subsection and is to be paid out to
those classes in a fair and equitable manner.

(e) Adoption of plan of reorganization. (1) A mutual life insurer
seeking to reorganize under this section shall, by action of
three-fourths of its entire board of directors, adopt a plan consistent
with the provisions of this section and that it finds is fair and
equitable to the policyholders. The board of directors of the mutual
life insurer, in selecting one of the methods described in subsection
(d) of this section, shall set forth the basis for their selection. The
plan of reorganization shall set forth (A) a demonstration of the
purpose for the proposed reorganization; (B) the form of the
reorganization; (C) the proposed charter of the reorganized insurer set
out in accordance with section one thousand two hundred one of this
chapter and its proposed by-laws which shall provide for the removal of
the word "mutual" from the name of the company; (D) the manner and basis
by which the reorganization shall take place; (E) the consideration to
be given to the policyholders in exchange for their policyholders'
membership interest or the manner of converting the policyholders'
membership interest into securities or other consideration; (F) the
method of allocating the consideration among policyholders; (G) the
method of operation of the mutual life insurer's participating business
comprised of its participating policies and contracts in force on the
effective date of the reorganization; and (H) a plan of operation for
the reorganized insurer including actuarial projections for a ten-year
period and a statement indicating its intentions with regard to issuing
any nonparticipating business. If the reorganized insurer proposes to
continue to issue for delivery in this state participating policies or
contracts, the plan of reorganization shall so specify. In such event,
upon the superintendent's approval of the plan of reorganization
pursuant to this section, the superintendent shall, in accordance with
section four thousand two hundred thirty-one of this chapter, 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 conditions and provisions which the
board of directors of the mutual life insurer may deem necessary or
advisable in connection with the proposed reorganization.

(2) The consideration to be given in exchange for the policyholders'
membership interest or into which such membership interest is to be
converted may consist of cash, securities of the reorganized insurer or
securities of another institution or institutions, a certificate of
contribution, additional life insurance or annuity benefits, increased
dividends or other consideration or any combination of such forms of
consideration. The consideration, if any, 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. The certificate of contribution
referred to above shall be repayable in five years and bear annual
interest at the published monthly average, as defined in section three
thousand two hundred six of this chapter, for the calendar month ending
two months before the effective date of reorganization.

(3) The policyholders who shall be entitled to notice of and to vote
upon the proposal to approve the plan of reorganization and to notice of
the public hearing required by this section shall be the policyholders
whose policies or contracts are in force on the date of adoption of the
plan of reorganization. Each such policyholder whose policy has been in
force on such date shall be entitled to the consideration, if any,
provided for such policyholder in the plan based on such policyholder's
membership interest determined pursuant to this section but only to the
extent that such policyholder's membership interest arose from policies
or contracts that shall be in force on the date of adoption of the plan.

(4) 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 mutual
life insurer under such insurer's corporate seal and shall be submitted
to the superintendent with a copy of the resolutions adopting such plan
and finding that it is fair and equitable to the policyholders,
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 mutual life insurer.

(f) Amendment or withdrawal of plan. The mutual life insurer may, by
action of a majority of the entire board of directors, at any time
before the plan of reorganization becomes effective as provided by this
section (1) amend the plan of reorganization; or (2) withdraw the plan
of reorganization. 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 mutual life
insurer under such insurer's corporate seal and shall be submitted to
the superintendent with a copy of the resolutions adopting such
amendments subscribed by such officers and affirmed by them as true
under penalties of perjury and under the seal of the mutual life
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 policyholders as provided in this section shall
change the plan in a manner which the superintendent determines is
materially disadvantageous to 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 policyholders if the amendment is made after the
plan has been approved by the policyholders, under the conditions and
procedures determined by the superintendent in accordance with this
section.

(g) Additional information. Upon submission to him of the plan of
reorganization, the superintendent may request any additional documents
or information and may examine the mutual life 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. If the reorganized insurer proposes to
continue to issue for delivery in this state participating policies or
contracts, the superintendent may also request such information or
agreements relative thereto as he may require pursuant to section four
thousand two hundred thirty-one of this chapter.

(h) Consultants and certifications. (1) The superintendent may appoint
one or more qualified disinterested persons or institutions as
consultants to advise him on any matters related to the reorganization.
The appointment of a consultant shall be in writing and shall set forth
the duties and responsibilities of the consultant. Copies of such
appointment shall be given to the consultant and concurrently to the
mutual life insurer.

(2) If the plan of reorganization satisfies the conditions set forth
in paragraph one or two of subsection (d) of this section, the
superintendent shall appoint one or more qualified and disinterested
actuaries for the purpose specified in paragraph three of this
subsection. Such actuary shall be a member of the American Academy of
Actuaries, and shall be knowledgeable and experienced as to the matters
to be certified.

(3) Such actuary shall certify in writing as to (A) in the case of a
plan of reorganization pursuant to paragraph two of subsection (d) of
this section, the amount of the mutual insurer's assets accumulated from
the operations of participating policies and contracts in force on the
effective date of the reorganization and (B) in the case of a plan of
reorganization pursuant to paragraphs one or two of subsection (d) of
this section, the reasonableness and sufficiency of the asset allocation
referred to in subparagraph (B) of paragraph five of subsection (d) of
this section. Such certification shall be in form satisfactory to the
superintendent and shall be made in accordance with professional
standards and practices generally accepted by the actuarial profession
and such other factors as such actuary in his professional judgment
believes are reasonable and appropriate at the time such certification
is made. Any such certification shall be accompanied by a memorandum of
the actuary, in form satisfactory to the superintendent, describing the
calculations made in support of such certification and the assumptions
used in such calculations.

(4) The consultant and the actuary may request of the mutual life
insurer access to its books and records and the furnishing by it of any
other information in its possession, to the extent it may reasonably be
deemed necessary to make the valuations and certifications contemplated
by this subsection, or to advise the superintendent on any matters
related to the reorganization. The consultant and the actuary shall
report to the superintendent any instance in which the mutual life
insurer fails to provide any information requested by them. The
consultant and the actuary shall not, under judicial process or
otherwise, be obligated or permitted to divulge to any one except the
superintendent any information not otherwise publicly available which is
so obtained by them. The consultant and the actuary shall receive
reasonable compensation and shall be reimbursed for reasonable expenses
incurred in performing their duties.

(5) The report of the consultant and the certification of the actuary
shall be made to the superintendent. In making the determinations
contemplated by this section, the superintendent shall not be bound by
any findings, conclusions, certifications or recommendations made by the
consultant or the actuary. All information obtained by the
superintendent pursuant to this section, including without limitation
information obtained through examinations by him, the report of the
consultant, the certification of the actuary, the memorandum of the
actuary and other information secured by the consultant or the actuary
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 of such law. 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 of the public
officers law, nor prohibit any disclosure which in the opinion of the
superintendent, and after an opportunity for the insurer to be heard,
the superintendent deems should be made public for the benefit of the
insurer, its policyholders or the public. If the department intends to
make any report or certification public, then such report or
certification shall be made available to the company at least fifteen
days prior to such public disclosure.

(6) Nothing contained in this section shall be construed to exclude
any person or employee or member of an institution from the category of
"disinterested person" solely because such individual is a policyholder
of the insurer or that such person or institution is to be one of the
underwriters of any shares to be sold pursuant to the plan of
reorganization.

(i) Public hearing. The superintendent shall hold a public hearing
upon the fairness of the terms and conditions of the plan of
reorganization, the reasons and purposes for the mutual life insurer to
demutualize, and whether the reorganization is in the interest of the
mutual life insurer and its policyholders, and not detrimental to the
public. Notice stating the time, place and purpose of the hearing shall
be mailed by the mutual life insurer to each policyholder entitled to
notice of the hearing in accordance with paragraph three of subsection
(e) of this section, at his last known address as shown on the records
of the mutual life insurer; such notice shall be mailed 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 by a summary
thereof approved by the superintendent, and such other explanatory
information as the superintendent shall approve or require. In addition,
the mutual life insurer shall give notice of the time, place and purpose
of the hearing by publication in three newspapers of general
circulation, one in the county in which the insurer has its principal
office and two 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 a form approved by the superintendent.

(j) Approval of plan by superintendent. The superintendent shall after
the public hearing required by subsection (i) of this section approve
the plan of reorganization if he finds that the proposed reorganization,
in whole and in part, does not violate this chapter, is fair and
equitable to the policyholders and is not detrimental to the public and
that, after giving effect to the reorganization, the reorganized insurer
will have an amount of capital and surplus the superintendent deems to
be reasonably necessary for its future solvency. If approval is denied,
the denial shall be in writing setting forth a statement of the reasons
therefor and the mutual life insurer shall have the right to a hearing
before the superintendent within thirty days of the date of such denial.
The superintendent shall not disapprove of a plan of reorganization for
the reason that the mutual life insurer selected one of the methods
provided for in subsection (d) of this section rather than another. The
superintendent shall approve or disapprove the plan in writing on or
before sixty days after the conclusion of the public hearing required by
subsection (i) of this section.

(k) Approval by policyholders. (1) A proposal to approve the plan of
reorganization shall be submitted to policyholders. Notice stating the
date, time and place for voting on such proposal shall be mailed by the
mutual life insurer to each policyholder entitled to notice of and to
vote on the proposal in accordance with paragraph three of subsection
(e) of this section, at his last known address as shown on the records
of the mutual life insurer; such notice shall be mailed at least thirty
days before the date of the action. 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
by a summary thereof approved by the superintendent, and such other
explanatory information as the superintendent shall approve or require.

(2) Each policyholder entitled to vote on the proposal shall be
entitled to cast one vote, unless otherwise provided in the charter or
by-laws of the mutual life insurer, on the proposal, either in person or
by mail or by proxy, irrespective of the number or amount of the
policies or contracts 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. All votes shall be by written ballot cast in
person or by mail by policyholders entitled to vote or by proxy agents
duly appointed by policyholders entitled to vote. The voting on the
proposal shall be held at the home office of the mutual life insurer.
The polls shall be opened at ten o'clock in the forenoon and remain open
until four o'clock in the afternoon of the day fixed for such voting, at
which time they shall be closed. The proposal to approve the plan of
reorganization may be adopted by the affirmative vote of two-thirds of
all votes cast by policyholders entitled to vote.

(3) The superintendent shall have power to supervise and direct and
prescribe rules governing the procedure for the conduct of the voting on
the proposal 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 (A) the determination of policyholders entitled to notice of
and to vote on the proposal; (B) the giving of notice of the proposal;
(C) the receipt, custody, safeguarding, verification and tabulation of
proxy forms and ballots; and (D) 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 voting on the
proposal 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 policyholders, including representatives of
policyholders favoring or opposing the approval of the plan, shall be
entitled to be present during the 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 and
expenses incurred in providing such representation shall not be a charge
upon or paid from the funds of the mutual life insurer or the person
responsible for the costs and expenses of the reorganization.

(6) Neither the mutual life insurer nor any officer, agent or employee
thereof shall knowingly omit, from any list of policyholders entitled to
notice of and to vote on the proposal, the name of any policyholder
required to be included therein, or shall, in connection with any such
list, knowingly omit to give the name and address, as last shown on the
records of the mutual life insurer, of any policyholder. 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 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 or reorganization if such 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 inspectors for a period of four
years, subject to the order of any court having jurisdiction of any
proceedings relating thereto, and then shall be turned over to the
mutual life insurer, or the reorganized insurer if the reorganization
has become effective.

(8) The conduct of the voting on the proposal 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 mutual life insurer
has its home office.

(9) The inclusion by the mutual life 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 the action by policyholders pursuant to this
section.

(11) Upon the conclusion of the vote, the mutual life insurer shall
submit to the superintendent (A) 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 mutual life insurer; (B) 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 mutual life
insurer, or subscribed by the person or persons, if any, designated by
the superintendent to supervise the giving of notice of the date for
action on the proposal, to the effect that such notice was given in
accordance with this section to all policyholders entitled to such
notice; and (C) a certificate subscribed by the inspectors of the
results of the vote, as evidenced by valid ballots received before the
polls were closed. 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 mutual life
insurer, shall be affirmed under the corporate seal of the mutual life
insurer.

(l) Effective date of reorganization. When the superintendent has
given his approval of the plan of reorganization as provided in
subsection (j) of this section and certification of approval of the plan
has been made to the superintendent as provided in subsection (k) 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. A copy of such plan certified by the
superintendent shall also be filed by the mutual life insurer in the
office of the clerk of the county where the principal office of the
mutual life 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 or determined in accordance with said
plan or pursuant thereto. The superintendent shall issue an amended
certificate of authority to the reorganized insurer and such license, if
any, as may be required under section one thousand two hundred four of
this chapter for the sale of its securities as specified in its plan of
reorganization.

(m) Corporate existence. Upon the reorganization of the mutual life
insurer in the manner herein provided, the reorganized insurer shall be
deemed a continuation of the corporate existence of the mutual life
insurer or, in the case of a merger, of the company specified in the
plan of reorganization as the continuing company, which may be either
the mutual life insurer or the domestic stock life insurer with which it
is merged. All the rights, franchises and interests of the mutual life
insurer and, in the case of a merger, of the domestic stock 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 continuing company, without any other deed or transfer; and
simultaneously therewith such continuing company shall be deemed to have
assumed all of the obligations and liabilities of the mutual life
insurer and, in the case of a merger, of the domestic stock insurer,
other than obligations and liabilities with respect to the
policyholders' membership interest eliminated by the plan of
reorganization.

(n) Actions and proceedings. No action or proceeding pending at the
time of the reorganization to which the mutual life insurer may be a
party shall be abated or discontinued by reason of such reorganization,
but the same may be prosecuted to final judgment in the same manner as
if the reorganization had not taken place, or the reorganized insurer
may be substituted in place of such mutual life insurer by order of the
court in which the action or proceeding may be pending.

(o) Directors and officers. The directors and officers of the mutual
life insurer, unless otherwise specified in the plan of reorganization,
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.

(p) Costs and expenses. (1) The mutual life 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 mutual life 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 in connection
with the plan of reorganization, other than normal operating expenses of
the department.

(2) Such undertaking, other than a reorganization pursuant to
paragraph one of subsection (d) of this section, shall also provide that
no payment of costs and expenses by the mutual life 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, other than the policyholders'
preference account referred to in paragraph two of subsection (d) of
this section, to be paid to the policyholders pursuant to the plan of
reorganization. The requirements of this paragraph may be waived in a
reorganization pursuant to paragraphs three and four of subsection (d)
of this section if the superintendent determines that it is in the
policyholders' interest to do so.

(3) The said undertaking shall apply to costs and 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 given to
policyholders pursuant to the plan shall not be deemed a cost or expense
of the reorganization subject to this subsection nor to such
undertaking.

(q) Notice of proposed reorganization. Notice of the pendency of the
proposed reorganization and of the effect thereof shall be given by the
mutual life insurer in a manner satisfactory to the superintendent to
all persons to whom the mutual life insurer delivers policies or
contracts which are issued after the date on which the plan of
reorganization is adopted by the mutual life insurer and before the plan
takes effect or is withdrawn. Such persons shall have the right, unless
the laws of their domiciliary state gives other rights, to rescind such
policies or contracts, and to be refunded 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.

(r) Effect of reorganization. If the plan of reorganization takes
effect, the rights of all policyholders thereafter shall be as specified
in their policies or contracts, in the charter of the reorganized
insurer and in the plan of reorganization, except for the elimination of
the right to vote, if any, and they shall have no rights under the
charter of the mutual life 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.

(s) Failure to give notice. If the mutual life insurer complies
substantially and in good faith with the requirements of this section
with respect to the giving of any required notice to 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.

(t) Limitation of actions; security. (1) Any action challenging the
validity of or arising out of acts taken or proposed to be taken under
this section must be commenced within one year after a copy of the plan
of reorganization, with the superintendent's approval endorsed thereon,
shall be filed in the office of the superintendent or six months from
the effective date of the reorganization, whichever is later, or if the
plan of reorganization is withdrawn, within six months of such
withdrawal.

(2) In any action arising out of acts taken or proposed to be taken
under this section, the mutual life insurer of the reorganized insurer
shall be entitled at any stage of the proceedings before final judgment
to petition the court to require plaintiff or plaintiffs to give
security for the reasonable expenses, including attorneys' fees, which
may be incurred by it in connection with such action and by any other
parties defendant in connection therewith or for which the mutual life
insurer or the reorganized insurer may become liable under this chapter,
under any contract or otherwise by law, to which security the mutual
life insurer or the reorganized insurer shall have recourse in such
amount as the court having jurisdiction of such action shall determine
upon the termination of such action. The amount of security may
thereafter from time to time be increased or decreased in the discretion
of the court having jurisdiction of such action upon showing that the
security provided has or may become inadequate or excessive.

(u) Modification or exchange of existing policies. Nothing in this
section shall preclude either the mutual life insurer or the reorganized
insurer, on compliance with all applicable requirements of this chapter,
from offering at any time or from time to time to any class or category
of policyholders to modify their policies or contracts or to exchange
their policies or contracts for other policies or contracts in the
manner set forth in the offer.

(v) Prohibitions on certain offers to acquire and acquisitions of
shares. Prior to, and for a period of five years following the date when
the distribution of consideration to the policyholders in exchange for
their membership interests is completed pursuant to such plan of
reorganization, no person, other than the reorganized insurer or an
institution referred to in subsection (b) of this section that is a part
of the plan of reorganization as provided by said subsection (b) or an
institution that is formed, with the approval of the superintendent,
subsequent to the effective date of the reorganization in order to
acquire all of the common shares of the reorganized insurer in a
transaction where holders of common shares of the reorganized insurer
receive all of the common shares of such institution on a basis that is
proportionate to the number of common shares of the reorganized insurer
held by each such holder, shall directly or indirectly offer to acquire
or acquire in any manner the beneficial ownership of five percent or
more of any class of a voting security of such reorganized insurer or of
any institution which owns a majority or all of the voting securities of
the reorganized insurer, without the prior approval of the
superintendent. In the event of any violation of this subsection, or of
any action which, if consummated, might constitute such a violation, (1)
all voting securities of the reorganized insurer or of such institution
acquired by any person in excess of the maximum amount permitted to be
acquired by such person pursuant to this subsection shall be deemed to
be non-voting securities of the reorganized insurer or of such
institution, as the case may be, and (2) such violation or action may be
enforced or enjoined, as the case may be, by appropriate proceeding
commenced by the reorganized insurer, such institution or the
superintendent, the attorney general or any policyholder or stockholder
of the reorganized insurer or such institution on behalf of the
reorganized insurer or such institution in the supreme court in the
judicial district in which the reorganized insurer has its home office
or in any other court having jurisdiction, and such court may issue any
order, injunctive or otherwise, it finds necessary to cure such
violation or to prevent such action. For the purposes of this
subsection, the term "beneficial ownership", with respect to any
security, means the sole or shared power to vote, or direct the voting
of, such security and/or the sole or shared power to dispose, or direct
the disposition, of such security; the term "voting security" includes
voting securities as defined in paragraph forty-five of subsection (a)
of section one hundred seven of this chapter, any preorganization
certificate or subscription (including subscription rights issued
pursuant to a plan of reorganization), or any security convertible (with
or without consideration) into any such security, or carrying any
warrant or right to subscribe for or purchase any such security, or any
such warrant or right; the term "offer" includes every offer to buy or
acquire, solicitation of an offer to sell, tender offer for, or request
or invitation for tenders of, a security or interest in a security for
value; and the term "person" means an individual, group, firm,
corporation, partnership, association, joint stock company, trust, any
similar entity or any combination of the foregoing acting in concert.

(w) Prohibited transactions by officers, directors or employees. (1)
Prior to, and for a period of five years following the date when the
distribution of consideration to the policyholders in exchange for their
membership interests is completed pursuant to such plan of
reorganization, no officer, director or employee of the mutual insurer
or of the reorganized insurer, including family members and their
spouses, shall directly or indirectly offer to acquire or shall acquire
in any manner the beneficial ownership of any securities of the
reorganized insurer or of the institution referred to in subsection (b)
of this section unless the acquisition is (A) made pursuant to a stock
option plan approved by the superintendent; (B) made pursuant to the
plan of reorganization; (C) made by employees, including their family
members and their spouses, from a broker or dealer registered with the
Securities and Exchange Commission at the then quoted prices on the date
of purchase; or (D) made by officers or directors, including their
family members and their spouses, at least two years after the initial
public offering from a broker or dealer registered with the Securities
and Exchange Commission at the then quoted prices on the date of
purchase.

(2) For purposes of this subsection, the term "beneficial ownership",
with respect to any security, means the sole or shared power to vote, or
direct the voting of, such security and/or the sole or shared power to
dispose, or direct the disposition, of such security.

(3) For purposes of this subsection, the term "securities", includes
voting securities as defined in section one hundred seven of this
chapter, any preorganization certificate or subscription (including
subscription rights issued pursuant to a plan of reorganization), or any
security convertible (with or without consideration), into any such
security, or carrying any warrant or right to subscribe for or purchase
any such security, or any such warrant or right.

(4) For purposes of this subsection, the term "family member",
includes a brother, sister, spouse, ancestor or descendant of the
officer, director or employee of the mutual insurer or of the
reorganized insurer.

(5) No officer, director or employee shall receive any fee or other
consideration, other than regular salary, director fees, or
consideration as a policyholder in connection with any proposed
reorganization. This paragraph, however, shall not prohibit the mutual
life insurer from compensating in cash any firm with which one of its
directors is associated for services rendered in connection with any
proposed reorganization.

(x) Effect on department personnel. Notwithstanding subsection (a) of
section five hundred one of the financial services law, the
superintendent, any deputy or other employee of the department shall be
permitted to receive and exercise any rights received as a policyholder
in connection with a reorganization.