6-405.01. Capital notes and debentures

A. With prior approval of the superintendent an association may issue and sell its capital notes or debentures.

B. Capital notes and debentures legally issued by an association may be converted into shares of guaranty capital in accordance with such provision therefor as may be made in such capital notes and debentures with prior approval of the superintendent.

C. Capital notes and debentures shall be an unsecured indebtedness of the association and shall be subordinate to the claims of depositors, account holders and all other creditors of the association, regardless of whether the claims of depositors, account holders or other creditors arose before or after the issuance of such debentures or capital notes. In the event of liquidation, all depositors, account holders and other creditors of the association shall be entitled to be paid in full before any payment shall be made on account of principal or interest on such capital notes or debentures. No payment shall at any time be made on account of the principal thereof if the payment is prohibited by regulation of the insurance corporation.

D. Subject to a requirement in the articles of incorporation of the association, or an amendment thereto, and if authorized by the superintendent, convertible capital notes and debentures may be issued without offer thereof to existing stockholders.

E. The amounts of outstanding capital notes and debentures legally issued by any association shall be treated as if guaranty capital.