Delaware Code
Chapter 49A. DELAWARE INSURANCE COMPANY MUTUAL-TO-STOCK CONVERSION ACT
§ 4977. Optional provisions of plan of conversion.

(a) The plan may provide that the directors, officers, and employees of the mutual company shall receive, without payment, nontransferable subscription rights to purchase capital stock of the converted stock company or the stock of another corporation that is participating in the conversion plan, as provided in § 4975(a)(3)a. of this title. These subscription rights shall be allocated among the directors, officers, and employees by a fair and equitable formula and shall be subordinate to the subscription rights of eligible members. Nothing contained in this chapter shall require the subordination of subscription rights received by directors and officers in their capacity as eligible members, if any.
(b) The aggregate total number of shares that may be purchased by directors and officers of the mutual company in their capacity under subsection (a) of this section and in their capacity as eligible members under § 4975(a)(3)a. of this title shall not exceed 35% of the total number of shares to be issued for a mutual company if total assets of the mutual company are less than $50,000,000 or 25% of the total number of shares to be issued for a mutual company if total assets of the mutual company are more than $500,000,000. For mutual companies with total assets of or between $50,000,000 and $500,000,000, the percentage of the total number of shares that may be purchased shall be interpolated.
(c) The plan may allocate to a tax-qualified employee benefit plan nontransferable subscription rights to purchase up to 10% of the capital stock of the converted stock company or the stock of another corporation that is participating in the conversion plan, as provided in § 4975(a)(3)a. of this title. A tax-qualified employee benefit plan is entitled to exercise subscription rights granted under this subsection regardless of the total number of shares purchased by other persons.
(d) The plan may provide that the other classes of subscribers approved by the Commissioner shall receive, without payment, nontransferable subscription rights to purchase capital stock of the converted stock company or the stock of another corporation that is participating in the conversion plan, as provided in § 4975(a)(3)a. of this title. Other classes of subscribers that may be approved by the Commissioner include, without limitation:

(1) Members of the mutual insurer that became members after the date fixed for establishing eligible members;
(2) Brokers, agents, or other producers or their directors, officers, or employees that represent the mutual insurer;
(3) The shareholders of another corporation that is participating in the conversion plan, as provided in § 4975(a)(3)a. of this title; or
(4) The shareholders of another corporation that is a party to an acquisition, merger, consolidation, or other similar transaction with the mutual insurer.
(e) The plan may provide for the creation of a liquidation account for the benefit of members in the event of voluntary liquidation subsequent to conversion in an amount equal to the surplus of the mutual company, exclusive of the principal amount of any surplus note, on the last day of the quarter immediately preceding the date of adoption of the plan.

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