CAPITAL NOTES OR DEBENTURES

(a) With the prior written approval of the banking commissioner, a state bank may at any time, through action of its board and without requiring action of its shareholders, issue and sell its capital notes or debentures. The capital notes or debentures must be subordinate to the claims of depositors and may be subordinate to other claims, including the claims of other creditors or the shareholders. (b) Capital notes or debentures may be convertible into shares of any class or series. The issuance and sale of convertible capital notes or debentures are subject to satisfaction of preemptive rights, if any, to the extent provided by law. (c) Without the prior written approval of the banking commissioner, a state bank may not pay interest due or principal repayable on outstanding capital notes or debentures when the bank is in hazardous condition or is insolvent, or to the extent that payment will cause the bank to be in hazardous condition or insolvent, as determined by the banking commissioner. (d) The amount of any outstanding capital notes or debentures that meet the requirements of this section and that are subordinated to unsecured creditors of the bank may be included in equity capital of the bank for purposes of determining hazardous condition or insolvency and for other purposes provided by rules adopted under this subtitle.