NAC662.040. Long-term capital notes or debentures: Obligation to depositors, other creditors.

     1. The indebtedness of the bank evidenced by any long-term capital notes or debentures, including the principal and premium, if any, and interest on them, is subordinate in right of payment to the bank’s obligations to its depositors, its obligations under banker’s acceptances and letters of credit, its obligations to any Federal Reserve Bank and any similar obligations to its other creditors, whether outstanding at the time the notes or debentures are issued or thereafter incurred.

     2. In any insolvency, receivership, conservatorship, reorganization, readjustment of debt, marshalling of assets and liabilities or similar proceedings, or any liquidation or winding up of or relating to the bank, whether voluntary or involuntary, all such obligations must be paid in full before any payment is made on account of the principal of, or premium, if any, or interest on, the capital notes or debentures.

     3. A provision containing the substance of subsections 1 and 2 must be incorporated in every long-term capital note, debenture, or agreement for purchase or sale of such capital notes or debentures.

     [Banking Div., Long-Term Capital Notes or Debentures Rule No. 1 subsec. 4, eff. 12-14-78]