$73,820,000 STATE OF LOUISIANA UNCLAIMED PROPERTY SPECIAL REVENUE BONDS, SERIES 2015 (I-49 SOUTH PROJECT)

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1 NEW ISSUE - BOOK-ENTRY ONLY RATINGS: Moody s Aa3 S&P AA- (See RATINGS herein.) In the opinion of Foley & Judell, L.L.P., Bond Counsel, assuming compliance with certain covenants described herein, under existing law, interest on the Series 2015 Bonds is excluded from gross income for federal income tax purposes. In the opinion of Bond Counsel, under existing law, interest on the Series 2015 Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals or corporations, except that interest on the Series 2015 Bonds will be included in a corporate taxpayer s adjusted current earnings for purposes of computing its federal alternative minimum tax. Bond Counsel is further of the opinion that pursuant to the provisions of the Act (as defined below), the Series 2015 Bonds, their transfer and the income therefrom shall at all times be exempt from all taxation by the State of Louisiana or any political subdivision thereof. See TAX EXEMPTION herein and the proposed form of opinion of Bond Counsel attached hereto as APPENDIX B. $73,820,000 STATE OF LOUISIANA UNCLAIMED PROPERTY SPECIAL REVENUE BONDS, SERIES 2015 (I-49 SOUTH PROJECT) Dated: Date of Delivery Due: September 1, as shown on inside cover This Official Statement is furnished in connection with the issuance of the $73,820,000 State of Louisiana Unclaimed Property Special Revenue Bonds, Series 2015 (I 49 South Project) (the Series 2015 Bonds ). The Series 2015 Bonds are being issued by the Louisiana State Bond Commission (the Commission ), on behalf of the State of Louisiana (the State ), under and in full compliance with the Louisiana Constitution of 1974, as amended and supplemented (the State Constitution ), and statutes of the State, particularly Act No. 413 of the 2011 Regular Session of the Louisiana Legislature, being La. R.S. 9:165.1, and La. R.S. 9:165(C)(2)(a) (collectively, the Act ). The Series 2015 Bonds are being issued under and pursuant to the provisions of the State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project, adopted by the Commission on November 21, 2013 (the General Bond Resolution ), as supplemented and amended by the First Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project adopted by the Commission on November 21, 2013 (the First Supplemental Resolution ), and as supplemented and amended by the Second Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project adopted by the Commission on June 18, 2015 (the Second Supplemental Resolution, and, together with the General Bond Resolution and the First Supplemental Resolution, the I-49 South Bond Resolution ). See INTRODUCTION Authorization herein. The Series 2015 Bonds are being issued for the purpose of (i) providing funds to match federal funds to be used by the Department of Transportation and Development for the costs of and associated with the construction of Interstate 49 South from Interstate 10 in the City of Lafayette to the Westbank Expressway in the City of New Orleans (the I-49 South Project ); (ii) funding a deposit to the Debt Service Reserve Account of the Debt Service Fund; and (iii) paying the costs of issuance of the Series 2015 Bonds. See PLAN OF FINANCE herein. The Series 2015 Bonds are secured by and payable on a first lien basis from monies deposited or to be deposited in the I-49 South Account of the Unclaimed Property Leverage Fund created and established pursuant to Section 165(C)(1) of the Act (the Unclaimed Property Leverage Fund ). See INTRODUCTION Security and Sources of Payment and SECURITY AND SOURCES OF PAYMENT herein. The Series 2015 Bonds are issued on a complete parity of lien on the Pledged Revenues (as hereinafter defined) with the $21,080,000 State of Louisiana Unclaimed Property Special Revenue Bonds, Series 2013 (I-49 South Project) (the Outstanding Parity Bonds ). Pursuant to a Cooperative Endeavor Agreement (I-49 South) dated as of December 1, 2013 (the Original Cooperative Endeavor Agreement ), as amended by Amendment No. 1 to Cooperative Endeavor Agreement dated as of September 1, 2015 (the Amendment No. 1, and, together with the Original Cooperative Endeavor Agreement, the DOA Cooperative Endeavor Agreement ), each by and among the State, acting by and through the State of Louisiana Division of Administration, the Commission and the Louisiana Department of Transportation and Development, the State has agreed, subject to appropriation by the Louisiana Legislature, to replenish the Debt Service Reserve Account of the Debt Service Fund in the event amounts on deposit in such account are less than the debt service reserve requirements established under the I-49 South Bond Resolution. Payments under the DOA Cooperative Endeavor Agreement are subject to, and dependent upon, annual appropriation by the Louisiana Legislature. See SECURITY AND SOURCES OF PAYMENT The DOA Cooperative Endeavor Agreement and FUNDING OF STATE OBLIGATIONS herein. The Series 2015 Bonds will be issuable as fully registered bonds in denominations of $5,000 or any integral multiple thereof. The Series 2015 Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ). DTC will act as the Securities Depository for the Series 2015 Bonds. Purchasers of the Series 2015 Bonds will not receive certificates representing their interest in the Series 2015 Bonds purchased. Purchases of the Series 2015 Bonds may be made only in book-entry form in authorized denominations by credit to participating broker-dealers and other institutions on the books of DTC as described herein. Principal of and interest on the Series 2015 Bonds is payable at The Bank of New York Mellon Trust Company, N.A., acting through its corporate trust office maintained in Baton Rouge, Louisiana, as trustee, paying agent and registrar, to DTC, which will remit such payment in accordance with its normal procedures, as described herein. Interest on the Series 2015 Bonds is payable semiannually on March 1 and September 1 of each year, commencing on March 1, The Series 2015 Bonds are subject to redemption prior to maturity on the terms described herein. See THE SERIES 2015 BONDS Redemption Provisions herein. The Series 2015 Bonds will mature in each of the years and with the interest rates included on the schedule which appears on the inside cover page hereof. THE SERIES 2015 BONDS ARE SPECIAL AND LIMITED OBLIGATIONS OF THE STATE, ISSUED ON BEHALF OF THE STATE BY THE COMMISSION, PAYABLE SOLELY FROM AND SECURED BY THE PLEDGED REVENUES (AS HEREIN DEFINED), WHICH INCLUDES, AMONG OTHER THINGS, MONIES ON DEPOSIT IN THE I-49 SOUTH ACCOUNT OF THE UNCLAIMED PROPERTY LEVERAGE FUND. THE SERIES 2015 BONDS ARE NOT GENERAL OBLIGATIONS OF THE STATE OR ANY PUBLIC ENTITY THEREOF, AND NEITHER THE FULL FAITH AND CREDIT OF THE STATE OR ANY PUBLIC ENTITY THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL OF OR THE INTEREST ON THE SERIES 2015 BONDS. THE ISSUANCE OF THE SERIES 2015 BONDS UNDER THE PROVISIONS OF THE ACT SHALL NOT DIRECTLY, INDIRECTLY OR CONTINGENTLY OBLIGATE THE STATE OR ANY GOVERNMENTAL UNIT OF THE STATE TO LEVY ANY TAXES WHATEVER THEREFOR OR TO MAKE ANY APPROPRIATION FOR THEIR PAYMENT, EXCEPT AS SET FORTH IN THE ACT WITH RESPECT TO THE DEPOSIT OF MONIES ON DEPOSIT IN THE I-49 SOUTH ACCOUNT IN THE UNCLAIMED PROPERTY LEVERAGE FUND TO PAY PRINCIPAL AND INTEREST ON THE SERIES 2015 BONDS, AND EXCEPT FOR THE APPROPRIATION OF FUNDS NECESSARY TO REPLENISH THE APPLICABLE DEBT SERVICE RESERVE ACCOUNT OF THE DEBT SERVICE FUND IN ACCORDANCE WITH THE REQUIREMENTS OF THE DOA COOPERATIVE ENDEAVOR AGREEMENT. THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION. The Series 2015 Bonds are offered when, as and if issued by the Commission, on behalf of the State, and accepted by the Underwriters, subject to prior sale, withdrawal or modification of such offer without notice, subject to the approving opinion of Foley & Judell, L.L.P., New Orleans, Louisiana, as Bond Counsel, and certain other conditions. Certain legal matters will be passed upon for the State by the Honorable James D. Buddy Caldwell, Attorney General for the State. Certain legal matters will be passed upon for the Underwriters by their counsel, Breazeale, Sachse & Wilson, L.L.P., Baton Rouge, Louisiana. Lamont Financial Services Corporation, Fairfield, New Jersey, serves as independent Municipal Advisor to the State. It is expected that the Series 2015 Bonds in definitive form will be available for delivery to DTC in New York, New York on or about September 1, 2015, against payment therefor. Drexel Hamilton, LLC August 18, 2015 J.P. Morgan Morgan Stanley Stephens Inc.

2 MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND PRICES BASE CUSIP #: 54651R $73,820,000 STATE OF LOUISIANA UNCLAIMED PROPERTY SPECIAL REVENUE BONDS, SERIES 2015 (I-49 SOUTH PROJECT) Maturity (September 1) Principal Amount Interest Rate Yield Price CUSIP Maturity (September 1) Principal Amount Interest Rate Yield Price CUSIP $2,220,000 2,245,000 2,335,000 2,455,000 2,575,000 2,705,000 2,840,000 2,985,000 3,135,000 3,290, % 4.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 5.00% 0.35% 1.13% 1.47% 1.75% 2.02% 2.37% 2.65% 2.83% 3.00% 3.14% BQ1 BR9 BS7 BT5 BU2 BV0 BW8 BX6 BY4 BZ $3,455,000 3,625,000 3,805,000 3,995,000 4,200,000 4,405,000 4,635,000 4,880,000 6,840,000 7,195, % 5.00% 5.00% 5.00% 5.00% 5.25% 5.25% 5.25% 5.25% 4.00% 3.26% 3.38% 3.48% 3.54% 3.61% 3.66% 3.72% 3.78% 3.80% 4.15% C C C C C C C C C CA5 CB3 CC1 CD9 CE7 CF4 CG2 CH0 CJ6 CK3 C Priced to the first par call date of September 1, CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP Global Services, which is managed on behalf of American Bankers Association by S&P Capital I.Q., a business line of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUISP Service. CUSIP data herein is provided for convenience of reference only. Neither the State, the Commission nor the Underwriters and its agents take any responsibility for the accuracy of such data now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2015 Bonds as a result of various subsequent actions including, but not limited to, a refunding in whole or in part of such maturity or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Series 2015 Bonds.

3 NO DEALER, BROKER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED BY THE STATE, THE COMMISSION OR THE UNDERWRITERS TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS OFFICIAL STATEMENT, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE STATE, THE COMMISSION OR THE UNDERWRITERS. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THE SERIES 2015 BONDS BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. THE INFORMATION SET FORTH HEREIN CONCERNING THE DEPOSITORY TRUST COMPANY ( DTC ) HAS BEEN FURNISHED BY DTC, AND NO REPRESENTATION IS MADE BY THE STATE, THE COMMISSION OR THE UNDERWRITERS AS TO THE COMPLETENESS OR ACCURACY OF SUCH INFORMATION. ALL OTHER INFORMATION SET FORTH HEREIN HAS BEEN OBTAINED FROM THE STATE AND THE COMMISSION AND OTHER SOURCES WHICH ARE BELIEVED TO BE RELIABLE BUT IS NOT GUARANTEED AS TO ACCURACY OR COMPLETENESS BY, AND IS NOT TO BE CONSTRUED AS A REPRESENTATION BY, THE UNDERWRITERS. THE INFORMATION AND EXPRESSIONS OF OPINION HEREIN ARE SUBJECT TO CHANGE WITHOUT NOTICE, AND NEITHER THE DELIVERY OF THIS OFFICIAL STATEMENT NOR ANY SALES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE STATE OR DTC SINCE THE DATE HEREOF. THIS OFFICIAL STATEMENT DOES NOT CONSTITUTE A CONTRACT BETWEEN THE STATE, THE COMMISSION OR THE UNDERWRITERS AND ANY OR MORE OF THE PURCHASERS OR REGISTERED OWNERS OF THE SERIES 2015 BONDS. THE UNDERWRITERS HAVE REVIEWED THE INFORMATION IN THIS OFFICIAL STATEMENT IN ACCORDANCE WITH, AND AS PART OF, THEIR RESPONSIBILITY TO INVESTORS UNDER THE FEDERAL SECURITIES LAWS AS APPLIED TO THE FACTS AND CIRCUMSTANCES OF THIS TRANSACTION, BUT THE UNDERWRITERS DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. BY ITS PURCHASE OF THE SERIES 2015 BONDS, AN INVESTOR IS ACKNOWLEDGING THAT IT HAS REVIEWED ALL THE INFORMATION IT DEEMS NECESSARY TO MAKE AN INFORMED DECISION, AND THAT IT IS NOT RELYING ON ANY REPRESENTATION OF THE UNDERWRITERS OR ANY OF ITS OFFICERS, REPRESENTATIVES, AGENTS OR DIRECTORS IN REACHING ITS DECISION TO PURCHASE THE SERIES 2015 BONDS.

4 THE INVESTOR, BY ITS PURCHASE OF THE SERIES 2015 BONDS, ACKNOWLEDGES ITS CONSENT FOR THE UNDERWRITERS TO RELY UPON THE INVESTOR S UNDERSTANDING OF AND AGREEMENT TO THE PRECEDING PARAGRAPH AS SUCH RELATES TO THE DISCLOSURE AND FAIR DEALING OBLIGATIONS THAT MAY BE APPLICABLE TO THE UNDERWRITERS UNDER APPLICABLE SECURITIES LAWS AND REGULATIONS. THIS OFFICIAL STATEMENT CONTAINS STATEMENTS THAT ARE FORWARD-LOOKING STATEMENTS AS DEFINED IN THE PRIVATE SECURITIES LITIGATION REFORM ACT OF WHEN USED IN THIS OFFICIAL STATEMENT, THE WORDS ESTIMATE, INTEND AND EXPECT AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES WHEREBY ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH FORWARD-LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE SERIES 2015 BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE I-49 BOND SOUTH RESOLUTION BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. THE REGISTRATION OR QUALIFICATION OF THE SERIES 2015 BONDS IN ACCORDANCE WITH APPLICABLE PROVISIONS OF SECURITIES LAWS OF THE STATES IN WHICH THE SERIES 2015 BONDS HAVE BEEN REGISTERED OR QUALIFIED AND THE EXEMPTION FROM REGISTRATION OR QUALIFICATION IN OTHER STATES CANNOT BE REGARDED AS A RECOMMENDATION THEREOF. NEITHER THESE STATES NOR ANY OF THEIR AGENCIES HAVE PASSED UPON THE MERITS OF THE SERIES 2015 BONDS OR THE ACCURACY OR COMPLETENESS OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY MAY BE A CRIMINAL OFFENSE. IN MAKING AN INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN EXAMINATIONS OF THE STATE AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVERALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE

5 MARKET PRICE OF THE SERIES 2015 BONDS OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET, AND SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. THE UNDERWRITERS MAY OFFER AND SELL THE SERIES 2015 BONDS TO CERTAIN DEALERS AND OTHERS AT PRICES OR YIELDS LOWER THAN THE PUBLIC OFFERING PRICES OR YIELDS STATED ON THE INSIDE COVER PAGE OF THIS OFFICIAL STATEMENT, AND SUCH PUBLIC OFFERING PRICES OR YIELDS MAY BE CHANGED FROM TIME TO TIME BY THE UNDERWRITERS. THE REGISTRATION, QUALIFICATION OR EXEMPTION OF THE SERIES 2015 BONDS IN ACCORDANCE WITH THE APPLICABLE SECURITIES LAW PROVISIONS OF THE JURISDICTIONS IN WHICH THESE SECURITIES HAVE BEEN REGISTERED, QUALIFIED OR EXEMPTED DOES NOT MEAN THAT EITHER THESE JURISDICTIONS OR ANY OF THEIR AGENCIES HAVE PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED, THE SECURITIES, OR THEIR OFFER OR SALE. NEITHER THESE JURISDICTIONS NOR ANY OF THEIR AGENCIES HAVE GUARANTEED OR PASSED UPON THE SAFETY OF THE SERIES 2015 BONDS AS AN INVESTMENT, UPON THE PROBABILITY OF ANY EARNINGS THEREON OR UPON THE ACCURACY OR ADEQUACY OF THIS OFFICIAL STATEMENT. THE FINAL OFFICIAL STATEMENT IS BEING PROVIDED TO PURCHASERS EITHER IN BOUND FORM ( ORIGINAL BOUND FORM ) OR ELECTRONIC FORMAT ON THE FOLLOWING WEBSITE: THE FINAL OFFICIAL STATEMENT MAY BE RELIED UPON ONLY IF IT IS IN ITS ORIGINAL BOUND FORMAT OR AS PRINTED IN ITS ENTIRETY DIRECTLY FROM SUCH WEBSITE.

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7 TABLE OF CONTENTS INTRODUCTION... 1 Authorization... 1 The I-49 Project... 1 Security and Sources of Payment... 2 Debt Service Reserve Account... 3 DOA Cooperative Endeavor Agreement... 3 Special and Limited Obligations... 4 Additional Bonds... 5 STATE BOND COMMISSION... 5 THE SERIES 2015 BONDS... 6 Issuance of the Series 2015 Bonds... 6 General Description... 6 Redemption Provisions... 7 Book-Entry Only System... 9 Provisions Applicable if Book-Entry Only System is Terminated Exchange and Transfer Defeasance PLAN OF FINANCE General SOURCES AND USES OF FUNDS ANNUAL DEBT SERVICE REQUIREMENTS SECURITY AND SOURCES OF PAYMENT Pledged Revenues The DOA Cooperative Endeavor Agreement Cooperative Endeavor Agreements Funds and Accounts Debt Service Account of the Debt Service Fund Debt Service Reserve Account of the Debt Service Fund Series 2015 South Issuance Expense Fund Flow of Funds under the I-49 Bond Resolution and the Collection Agreement Summary of Flow of Funds Additional Bonds and Refunding Bonds FUNDING OF STATE OBLIGATIONS Page (i)

8 UNCLAIMED PROPERTY General Statutory Requirements Historical Collection of Abandoned and Unclaimed Property and Deposits into the Unclaimed Property Leverage Fund and General Fund Initiatives by the State to Increase Collections of Abandoned Property and Payments to Owners Collection Initiatives Payment Initiatives Statutory Requirements of the Act BONDHOLDER RISKS Insufficiency of Revenues from Abandoned and Unclaimed Property Nonappropriation Risk Enforceability of Remedies Ratings Secondary Market Book-Entry LITIGATION FORWARD-LOOKING STATEMENTS CERTAIN LEGAL MATTERS ENFORCEABILITY OF THE I-49 SOUTH BOND RESOLUTION TAX EXEMPTION General Alternative Minimum Tax Considerations Changes in Federal and State Tax Law Original Issue Premium Original Issue Discount RATINGS UNDERWRITING MUNICIPAL ADVISOR VALIDITY OF THE SERIES 2015 BONDS CONTINUING DISCLOSURE General Prior Undertakings MISCELLANEOUS (ii)

9 APPENDIX A APPENDIX B APPENDIX C PART I PART II SUMMARY OF CERTAIN PROVISIONS OF THE UNCLAIMED PROPERTY BOND SPECIAL REVENUE BOND RESOLUTION, AND THE COLLECTION AGREEMENT PROPOSED FORM OF OPINION OF BOND COUNSEL FORM OF CONTINUING DISCLOSURE CERTIFICATE INFORMATION CONCERNING THE STATE OF LOUISIANA GENERAL PURPOSE FINANCIAL DATA, DEBT INFORMATION AND LITIGATION UPDATE, INCLUDING BY REFERENCE THE COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2014 (iii)

10 STATE BOND COMMISSION 3 rd Floor State Capitol Building Baton Rouge, Louisiana ( ) STATE OFFICE / APPOINTMENT Treasurer (Chairman of Commission) Governor Lieutenant Governor Secretary of State Attorney General President of the Senate Speaker of the House Chairman, Senate Finance Committee Chairman, Senate Revenue and Fiscal Affairs Committee Chairman, House Committee on Appropriations Chairman, House Committee on Ways and Means Commissioner of Administration Appointed by the President of the Senate Appointed by the Speaker of the House MEMBER John Neely Kennedy Bobby Jindal Jay Dardenne Tom Schedler James D. Buddy Caldwell John A. Alario, Jr. Charles E. Chuck Kleckley Jack L. Donahue Neil Riser James R. Jim Fannin Joel C. Robideaux Kristy Nichols John R. Smith Walter Leger, III Lela M. Folse Director/Secretary MUNICIPAL ADVISOR Lamont Financial Services Corporation Fairfield, New Jersey BOND COUNSEL Foley & Judell, L.L.P. New Orleans, Louisiana (iv)

11 OFFICIAL STATEMENT $73,820,000 STATE OF LOUISIANA UNCLAIMED PROPERTY SPECIAL REVENUE BONDS, SERIES 2015 (I-49 SOUTH PROJECT) INTRODUCTION This Official Statement, including the cover page and Appendices attached hereto, including certain financial information relating to the State of Louisiana (the State ), is provided to furnish certain information in connection with the issuance by the Louisiana State Bond Commission (the Commission ), on behalf of the State, of the State of Louisiana Unclaimed Property Special Revenue Bonds, Series 2015 (the Series 2015 Bonds ), in the original aggregate principal amount of $73,820,000. Authorization The Series 2015 Bonds will be issued under authority granted to the State by and in full compliance with the Louisiana Constitution of 1974, as amended and supplemented (the State Constitution ) and statutes of the State, particularly Act No. 413 of the 2011 Regular Session of the Louisiana Legislature, being La. R.S. 9:165.1, and La. R.S. 9:165(C)(2)(a) (collectively, the Act ), and other constitutional and statutory authority. The Series 2015 Bonds are being issued under and pursuant to the provisions of the State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project, adopted by the Commission on November 21, 2013 (the General Bond Resolution ), as supplemented and amended pursuant to the First Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project, adopted by the Commission on November 21, 2013 (the First Supplemental Resolution ), and as supplemented and amended pursuant to the Second Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project adopted by the Commission on June 18, 2015 (the Second Supplemental Resolution, and, together with the General Bond Resolution and the First Supplemental Resolution, the I-49 South Bond Resolution ). The I-49 Project The Series 2015 Bonds are being issued for the purpose of providing funds to match federal funds to be used by the Department of Transportation and Development for the costs of and associated with the construction of Interstate 49 South from Interstate 10 in the City of Lafayette to the Westbank Expressway in the City of New Orleans (the I-49 South Project ). The Series 2015 Bonds shall also provide funds to fund the Debt Service Reserve Account of the Debt Service Fund and to pay the costs of issuance of the Series 2015 Bonds. See PLAN OF FINANCE herein. On December 23, 2013, the Commission, on behalf of the State, issued its $21,080,000 State of Louisiana Unclaimed Property Special Revenue Bonds, Series 2013 (I-49 South Project) 1

12 (the Outstanding Parity Bonds ) pursuant to the provisions of the General Bond Resolution, as supplemented and amended pursuant to the First Supplemental Resolution. The Outstanding Parity Bonds were issued for the purpose of providing funds to match federal funds used by the Department of Transportation and Development for the costs of and associated with the construction of a segment of the I-49 South Project. The Series 2015 Bonds are issued on a complete parity of lien on the Pledged Revenues (as hereinafter defined) with the Outstanding Parity Bonds. Security and Sources of Payment The Series 2015 Bonds are secured by and payable from the following: (1) Abandoned and unclaimed property receipts which have been deposited into the I-49 South Account of the Unclaimed Property Leverage Fund; (2) Investment income of monies on deposit in the Unclaimed Property Leverage Fund; and (3) All Funds and Accounts created under the I-49 South Bond Resolution (other than the Bond Proceeds Fund), including, but not limited to, the applicable Debt Service Reserve Account of the Debt Service Fund (including monies received from the State under the DOA Cooperative Endeavor Agreement as described under DOA Cooperative Endeavor Agreement hereinbelow), and including Investment Securities held in such Funds or Accounts, together with all proceeds and revenues of the foregoing and all of the Commission s right, title and interest in and to the foregoing. Abandoned and unclaimed property refers to property (typically money) in financial institutions, businesses and other public or private companies that have had no activity generated or contact with the owner for a certain period of time as set forth in the Uniform Unclaimed Property Act of 1997, being La. R.S. 9:151 through La. R.S. 9:181, inclusive (the Uniform Unclaimed Property Act ). The total gross collections of abandoned and unclaimed property must first be deposited into the Bond Security and Redemption Fund; to the extent not needed to pay principal and interest on obligations of the State secured by the full faith and credit of the State, such funds are then distributed as described herein. See SECURITY AND SOURCES OF PAYMENT Flow of Funds under the I-49 South Bond Resolution and Collection Agreement herein. In accordance with Section 165(A) of the Act, commencing in Fiscal Year Ended June 30, 2008, the State Treasurer, as administrator, is required to deposit $15,000,000 into the Unclaimed Property Leverage Fund each Fiscal Year. In accordance with Section 165(A) of the Act and Section 165(B) of the Act, the deposit of $15,000,000 of abandoned and unclaimed property is required to be made after (i) at least $500,000 of total gross collections of abandoned and unclaimed property is set aside by the State Treasurer, as administrator, for the payment of claims for each fiscal year, (ii) an amount equal to the costs incurred for authorized external auditing is set aside from total gross collections of abandoned and unclaimed property for each 2

13 fiscal year, and (iii) an amount not to exceed seven percent (7%) of the total gross collections of abandoned and unclaimed property is set aside during any fiscal year for costs of administering the Uniform Unclaimed Property Act. In accordance with Section 165(C)(1)(a) of the Act, immediately after deposit of $15,000,000 into the Unclaimed Property Leverage Fund, $7,500,000 of such amount is required to be deposited in each Fiscal Year of the State into the I-49 South Account of the Unclaimed Property Leverage Fund. Of the $15,000,000 required to be deposited into the Unclaimed Property Leverage Fund in accordance with Section 165(C)(1)(a) of the Act, $7,500,000 is also required to be deposited in each Fiscal Year of the State into the I-49 North Account of the Unclaimed Property Leverage Fund. Funds on deposit in the I-49 North Account of the Unclaimed Property Leverage Fund will not be available to pay debt service on the Series 2015 Bonds or the Outstanding Parity Bonds. Furthermore, funds on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund are not available to pay debt service on the $90,595,000 State of Louisiana Unclaimed Property Special Revenue Bonds, Series 2013 (I-49 North Project) (the Series 2013 North Project Bonds ), which were issued by the Commission, on behalf of the State, on December 23, 2013, pursuant to the provisions of the I-49 North Bond Resolution (as defined in APPENDIX A hereto). Information regarding historical collection of abandoned and unclaimed property is set forth under the caption UNCLAIMED PROPERTY Historical Collection of Abandoned and Unclaimed Property and Deposits into the Unclaimed Property Leverage Fund and General Fund herein. Debt Service Reserve Account The Series 2015 Bonds are further secured by the Debt Service Reserve Account of the Debt Service Fund created and established pursuant to the I-49 South Bond Resolution. See SECURITY AND SOURCES OF PAYMENT Debt Service Reserve Account of the Debt Service Fund herein. The Debt Service Reserve Requirement will be the maximum Debt Service payable on the Series 2015 Bonds and the Outstanding Parity Bonds in any future calendar year. The Debt Service Reserve Requirement is $7,486,900, which has been funded from $1,696, of the proceeds of the Outstanding Parity Bonds (which includes earnings thereon), and $5,790, of the proceeds of the Series 2015 Bonds on deposit in the Debt Service Reserve Account of the Debt Service Fund on September 1, DOA Cooperative Endeavor Agreement The State of Louisiana (the State ), acting through the State of Louisiana Division of Administration (the DOA ), the Commission and the Louisiana Department of Transportation and Development entered into a Cooperative Endeavor Agreement (I-49 South) dated as of December 1, 2013 (the Original Cooperative Endeavor Agreement ), as amended by Amendment No. 1 to Cooperative Endeavor Agreement dated as of September 1, 2015 (the Amendment No. 1, and, together with the Original Cooperative Endeavor Agreement, the DOA Cooperative Endeavor Agreement ), among the State, the Commission and the Louisiana 3

14 Department of Transportation and Development wherein the State, acting through the DOA, has, in the event insufficient funds are on deposit in the Debt Service Account of the Debt Service Fund and the Trustee transfers amounts on deposit in the Debt Service Reserve Account of the Debt Service Fund to the Debt Service Account of the Debt Service Fund, agreed that it will replenish such Debt Service Reserve Account of the Debt Service Fund on the first day of the Fiscal Year of the State following such transfer, but in no event shall such obligation exceed $7,486,900 per Fiscal Year of the State (the highest principal and interest on the Series 2015 Bonds and the Outstanding Parity Bonds in any future calendar year). The payment of any amounts under the DOA Cooperative Endeavor Agreement is contingent upon the appropriation of funds to fulfill the requirements of the contract by the Louisiana Legislature. The Commissioner of the DOA thereby agrees on behalf of the State that she or he will include in the Executive Budget a budget request for the appropriation by the Louisiana Legislature of funds to permit DOA to fulfill its obligations under the DOA Cooperative Endeavor Agreement. If the Louisiana Legislature fails to appropriate sufficient monies to provide for the continuation of the DOA Cooperative Endeavor Agreement, or if such appropriation is reduced by the veto of the Governor or by any means provided in the appropriations act to prevent the total appropriation for the year from exceeding revenues for that year, or for any other lawful purpose, and the effect of such reduction is to provide insufficient monies for the continuation of the DOA Cooperative Endeavor Agreement, the DOA Cooperative Endeavor Agreement shall nonetheless continue in effect in case there is an appropriation in later years. See FUNDING OF STATE OBLIGATIONS herein. Certain information with respect to the State, including the budgetary process and the economy, is included in PART I INFORMATION CONCERNING THE STATE OF LOUISIANA attached hereto. Certain general purpose financial data and debt information is included in PART II - GENERAL PURPOSE FINANCIAL DATA, DEBT INFORMATION AND LITIGATION UPDATE, INCLUDING BY REFERENCE THE COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2014 attached hereto. Special and Limited Obligations The Series 2015 Bonds, together with the Outstanding Parity Bonds, are special and limited obligations of the State, payable solely from and secured by the Pledged Revenues. Pledged Revenues means monies on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund created as a special fund in the State Treasury pursuant to the provisions of Section 165(C)(1)(b) of the Act representing a portion of the property presumed to be abandoned and unclaimed in accordance with the provisions of the Uniform Unclaimed Property Act, and paid or transferred to the State pursuant to Section 160(A) of the Act, including investment income on the monies on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund, and all Funds and Accounts created under the I-49 South Bond Resolution (other than the Bond Proceeds Fund), including Investment Securities (as hereinafter defined) held in any such Fund or Account, together with all proceeds and revenues of the foregoing and all of the Commission's right, title and interest in and to the foregoing. See UNCLAIMED PROPERTY for further information relating to the collection of the 4

15 abandoned and unclaimed property and SECURITY AND SOURCES OF PAYMENT for additional information relating to the security for the Series 2015 Bonds. The Pledged Revenues may not be used to pay principal and interest on the Series 2013 North Project Bonds. Additional Bonds No Additional Bonds may be authenticated and delivered under the I-49 South Bond Resolution on a pari passu basis with the Series 2015 Bonds and the Outstanding Parity Bonds, except for the exchange of the Series 2015 Bonds and the Outstanding Parity Bonds, as the case may be, in connection with the servicing thereof. See SECURITY AND SOURCES OF PAYMENT Additional Bonds and Refunding Bonds herein. This Official Statement contains brief descriptions of, among other matters, the Series 2015 Bonds, the I-49 South Bond Resolution, the State and the Commission. Such descriptions and information do not purport to be comprehensive or definitive, and all references herein to the I-49 South Bond Resolution and related documents are qualified in their entirety by reference to such documents, and references herein to the Series 2015 Bonds are qualified in their entirety by reference to the form thereof included in the I-49 South Bond Resolution. The information contained herein is subject to change. A summary of certain provisions of the I-49 South Bond Resolution and the Collection Agreement (as hereinafter defined) is set forth in APPENDIX A hereto. The proposed form of the opinion of Bond Counsel is set forth in APPENDIX B hereto. The form of Continuing Disclosure Certificate is set forth in APPENDIX C hereto. This Official Statement, together with the I-49 South Bond Resolution and other documents described herein, will be available upon request prior to the issuance and sale of the Series 2015 Bonds and upon payment of reproduction costs and postage through the Office of the Commission, P.O. Box 44154, Baton Rouge, Louisiana 70804, telephone (225) , and through J.P. Morgan Securities LLC, 383 Madison Avenue, 8th Floor, New York, New York 10179, telephone (212) Following the issuance and sale of the Series 2015 Bonds, this Official Statement and the other documents described herein may be obtained upon request and upon payment of reproduction costs and postage through the office of the Commission. All capitalized terms used and not otherwise defined in this Official Statement shall have the meanings given to them in APPENDIX A hereto. Reference in this Official Statement to owner, holder, registered owner, Bondholder or Bondowner means the registered owner of the Series 2015 Bonds determined in accordance with the I-49 South Bond Resolution. STATE BOND COMMISSION In 1968 the Louisiana Legislature created the Commission to centralize and administer the incurring of debt by the State, including indebtedness incurred by its boards, agencies and commissions. Subsequent to the creation of the Commission, the State Bond and Tax Board, which had been charged with approving the issuance of bonds by the various political subdivisions of the State, was abolished and its functions were transferred to the Commission. 5

16 Article VII, Section 8 of the State Constitution grants constitutional status to the Commission and provides that no bonds or other obligations shall be issued or sold by the State directly or through any State board, agency or commission, or by any political subdivision of the State, unless prior written approval of the Commission is obtained. The State Constitution provides that the membership and authority of the Commission are determined by law, which presently provides that the Commission is to be composed of the following ex-officio members: the Governor, the Lieutenant Governor, the President of the Senate, the Speaker of the House of Representatives, the State Treasurer, the Secretary of State, the Attorney General, the Senate Finance Committee Chairman, the Senate Revenue and Fiscal Affairs Committee Chairman, the House Ways and Means Committee Chairman, the House Appropriations Committee Chairman, two members of the legislature (one is appointed by the President of the Senate and one by the Speaker of the House) and the Commissioner of Administration. The existing membership of the Commission is set forth on page (iv) of this Official Statement. Pursuant to Section 165.1(A)(1) of the Act, the Series 2015 Bonds are being issued by the Commission, on behalf of the State. Issuance of the Series 2015 Bonds THE SERIES 2015 BONDS The Series 2015 Bonds will be issued pursuant to the I-49 South Bond Resolution and the State Constitution and laws of the State, including the Act, subject to the conditions provided in the I-49 South Bond Resolution. The principal of and interest on all Series 2015 Bonds issued under the provisions of the I-49 South Bond Resolution shall be payable solely from and secured by the Pledged Revenues provided in the I-49 South Bond Resolution, including funds transferred into the applicable Debt Service Reserve Account of the Debt Service Fund, and shall be entitled to the security and benefit of the I-49 South Bond Resolution. A summary of certain provisions of the I-49 South Bond Resolution and the Collection Agreement is set forth in APPENDIX A hereto. General Description The Series 2015 Bonds will be issued solely as fully-registered bonds without coupons in denominations of $5,000 or any integral multiple thereof. Interest on the Series 2015 Bonds will be computed on the basis of a 360-day year, composed of twelve 30-day months. The Series 2015 Bonds will be initially dated the date of original issuance and delivery of the Series 2015 Bonds and shall bear interest at the rates and mature on the dates set forth on the inside cover page of this Official Statement. Interest on the Series 2015 Bonds will be payable semiannually on March 1 and September 1, commencing March 1, 2016 (each an Interest Payment Date ). Except as otherwise provided in the section entitled THE SERIES 2015 BONDS Book-Entry Only System herein, interest shall be payable by check or draft mailed by the Trustee to the Registered Owner thereof as of the Record Date at said owner's address as it appears on the registration books maintained by or on behalf of the State or at such other address as is furnished to the Trustee in writing by such registered owner, or upon the written 6

17 request of a registered owner of at least $1,000,000 in principal amount of Series 2015 Bonds, by wire transfer in immediately available funds to an account designated by such registered owner which request will be effective for all Interest Payment Dates until such notice is cancelled by such registered owner. The principal of the Series 2015 Bonds shall be payable in any coin or currency of the United States of America that on the respective dates of payment thereof is legal tender for the payment of public and private debts. The Trustee, Bond Registrar and Paying Agent for the Series 2015 Bonds is The Bank of New York Mellon Trust Company, N.A., acting through its corporate trust office maintained in Baton Rouge, Louisiana (the Trustee ). Redemption Provisions The Series 2015 Bonds are subject to redemption prior to their stated maturities as described in Optional Redemption below. Optional Redemption. The Series 2015 Bonds maturing on and after September 1, 2026 are subject to redemption prior to their stated maturity dates at the election of the Commission, in whole or in part, at any time, on or after September 1, 2025 in such order of maturity determined by the Commission, at the redemption price of 100% of the principal amount of the Series 2015 Bonds to be redeemed, plus accrued interest to the date fixed for redemption. Selection of Bonds to be Redeemed. If less than all of the Series 2015 Bonds of a like maturity shall be called for prior redemption, the particular Series 2015 Bonds or portion of Series 2015 Bonds to be redeemed will be selected at random by the Trustee in such manner as the Trustee in its discretion may deem fair and appropriate; provided, however, that the portion of any Series 2015 Bond of a denomination of more than $5,000 to be redeemed shall be in the principal amount of $5,000 or a multiple thereof, and that, in selecting portions of such Series 2015 Bonds for redemption, the Trustee shall treat each such Series 2015 Bond as representing that number of Series 2015 Bonds of $5,000 denomination which is obtained by dividing by $5,000 the principal amount of such Series 2015 Bond to be redeemed in part. Notice of Redemption. When the Trustee shall receive notice from the Commission of its election or direction to redeem Series 2015 Bonds and when redemption of Series 2015 Bonds is authorized or required pursuant to the I-49 South Bond Resolution, the Trustee shall give notice, in the name of the Commission, of the redemption of such Series 2015 Bonds, which notice shall specify the maturities of the Series 2015 Bonds to be redeemed, the redemption date and the place or places where amounts due upon such redemption will be payable and, if less than all of the Series 2015 Bonds of any like series and maturity are to be redeemed, the letters and numbers or other distinguishing marks of such Series 2015 Bonds so to be redeemed, and, in the case of Series 2015 Bonds to be redeemed in part only, such notice shall also specify the respective portions of the principal amount thereof to be redeemed and whether the notice is conditional, as described below. Such notice shall further state that on such date there shall become due and payable upon each Series 2015 Bond to be redeemed the redemption price thereof, or the redemption price of the specified portions of the principal thereof in the case of Series 2015 Bonds to be redeemed in part only, together with interest accrued to the redemption date, and that from and after such date interest thereon shall cease to accrue and be 7

18 payable. Such notice shall be mailed by the Trustee not less than thirty (30) days prior to the redemption date to the Owners of any Series 2015 Bonds or portions of Series 2015 Bonds which are to be redeemed, at their last address, if any, appearing upon the registry books. Failure of the Owner of any Series 2015 Bonds which are to be redeemed to receive any such notice shall not affect the validity of the proceedings for the redemption of Series 2015 Bonds. In the case of an optional redemption, the notice may state (i) that it is conditioned upon the deposit of moneys, in an amount equal to the amount necessary to effect the redemption, with the Trustee no later than the redemption date, or (ii) that the Commission retains the right to rescind such notice at any time prior to the scheduled redemption date if the Commission delivers a certificate of an Authorized Officer to the Trustee instructing the Trustee to rescind the redemption notice (in either case, a Conditional Redemption ), and such notice and optional redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded as described below. Any Conditional Redemption may be rescinded in whole or in part at any time prior to the redemption date if the Commission delivers a certificate of an authorized officer of the Commission to the Trustee instructing the Trustee to rescind the redemption notice. The Trustee shall give prompt notice of such rescission to the affected Bondowners. Any Bonds subject to Conditional Redemption where redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an Event of Default. Further, in the case of a Conditional Redemption, the failure of the Commission to make funds available in part or in whole on or before the redemption date shall not constitute an Event of Default. Payment of Redeemed Series 2015 Bonds. Notice having been given in the manner provided in the I-49 South Bond Resolution, the Series 2015 Bonds or portions thereof so called for redemption shall become due and payable on the redemption date so designated at the redemption price, plus interest accrued and unpaid to the redemption date, and upon presentation and surrender thereof at the office specified in such notice, such Series 2015 Bonds, or portions thereof, shall be paid at the redemption price, plus interest accrued and unpaid to the redemption date. If there shall be drawn for redemption less than all of a Series 2015 Bond, the Commission shall execute and the Trustee shall authenticate and deliver, upon the surrender of such Series 2015 Bond, without charge to the owner thereof, for the unredeemed balance of the principal amount of the Series 2015 Bonds so surrendered, Series 2015 Bonds of like maturity in any of the authorized denominations. If, on the redemption date, moneys for the redemption of all the Series 2015 Bonds or portions thereof, together with interest to the redemption date, shall be held by the Trustee so as to be available therefor on said date and if notice of redemption shall have been given as aforesaid, then, from and after the redemption date interest on the Series 2015 Bonds or portions thereof so called for redemption shall cease to accrue and become payable. If said moneys shall not be so available on the redemption date, such Series 2015 Bonds or portions thereof shall continue to bear interest until paid at the same rate as they would have borne had they not been called for redemption. 8

19 Book-Entry Only System Introduction Unless otherwise noted, the information contained under the subcaption General below has been provided by The Depository Trust Company ( DTC ), New York, New York. The Commission, on behalf of the State, makes no representation as to the accuracy or the completeness of such information. The Beneficial Owners of the Series 2015 Bonds should confirm the following information with DTC or the DTC Participants. General The Series 2015 Bonds initially will be issued solely in book-entry form to be held in the book-entry-only system maintained by DTC. So long as such book-entry system is used, only DTC will receive or have the right to receive physical delivery of the Series 2015 Bonds and Beneficial Owners will not be or be considered to be, and will not have any rights as, owners or holders of the Series 2015 Bonds under the I-49 South Bond Resolution. DTC will act as securities depository for the Series 2015 Bonds. The Series 2015 Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Series 2015 Bond will be delivered for each maturity of the Series 2015 Bonds in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments from over 100 countries that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at 9

20 Purchases of the Series 2015 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2015 Bonds on DTC s records. The ownership interest of each actual purchaser of each Series 2015 Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2015 Bonds are to be accomplished by entries made on the books of Direct or Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive bonds representing their ownership interests in the Series 2015 Bonds, except in the event that use of the book-entry system for the Series 2015 Bonds is discontinued. To facilitate subsequent transfers, all Series 2015 Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co. or such other name as may be requested by an authorized representative of DTC. The deposit of the Series 2015 Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2015 Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2015 Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Redemption notices shall be sent to DTC. If less than all of the Series 2015 Bonds within an issue are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2015 Bonds unless authorized by a Direct Participant in accordance with DTC s procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Trustee as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Series 2015 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions, and dividend payments on any of the Series 2015 Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC s practice is to credit Direct Participants accounts upon DTC s receipt of funds and corresponding detail information from the Trustee, on each payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, nor its nominee, the 10

21 Trustee or the Commission, on behalf of the State, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividends payments to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC is the responsibility of the Trustee; disbursement of such payments to Direct Participants shall be the responsibility of DTC; and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Series 2015 Bonds at any time by giving reasonable notice to the Trustee. Under such circumstances, in the event that a successor depository is not named, the Series 2015 Bonds are required to be printed and delivered. The Commission, on behalf of the State, may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depository). In that event, the Series 2015 Bonds will be printed and delivered. The information in this section concerning DTC and DTC s book-entry only system has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by the Commission, the State, the Trustee or the Underwriters. Use of Certain Terms in Other Sections of this Official Statement In reading this Official Statement, it should be understood that while the Series 2015 Bonds are in the book-entry only system, references in other sections of this Official Statement to Registered Owners should be read to include the person for which the Direct Participant acquires an interest in the Series 2015 Bonds, but (i) all rights of ownership must be exercised though DTC and the book-entry only system, and (ii) except as described above, notices that are to be given to Registered Owners under the I-49 South Bond Resolution will be given only to DTC. THE COMMISSION, THE STATE, THE TRUSTEE AND THE UNDERWRITERS CANNOT AND DO NOT GIVE ANY ASSURANCES THAT THE DIRECT PARTICIPANTS OR THE INDIRECT PARTICIPANTS WILL DISTRIBUTE TO THE BENEFICIAL OWNERS OF THE SERIES 2015 BONDS (I) PAYMENTS OF PRINCIPAL OF OR INTEREST AND PREMIUM, IF ANY, ON THE SERIES 2015 BONDS, (II) CERTIFICATES REPRESENTING AN OWNERSHIP INTEREST OR OTHER CONFIRMATION OF BENEFICIAL OWNERSHIP INTERESTS IN SERIES 2015 BONDS, OR (III) REDEMPTION OR OTHER NOTICES SENT TO DTC OR CEDE & CO., ITS NOMINEE, AS THE REGISTERED OWNERS OF THE SERIES 2015 BONDS, OR THAT THEY WILL DO SO ON A TIMELY BASIS OR THAT DTC OR DIRECT OR INDIRECT PARTICIPANTS WILL SERVE AND ACT IN THE MANNER DESCRIBED IN THIS OFFICIAL STATEMENT. THE CURRENT RULES APPLICABLE TO DTC ARE ON FILE WITH THE SERIES 2015 BONDS AND EXCHANGE COMMISSION AND THE CURRENT PROCEDURES OF DTC TO BE FOLLOWED IN DEALING WITH DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS ARE ON FILE WITH DTC. 11

22 NEITHER THE COMMISSION, THE STATE, THE TRUSTEE NOR THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATIONS TO SUCH DIRECT PARTICIPANTS OR INDIRECT PARTICIPANTS OR THE BENEFICIAL OWNERS WITH RESPECT TO (1) THE SERIES 2015 BONDS; (2) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC OR ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT; (3) THE PAYMENT BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY AMOUNT DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF OR INTEREST OR PREMIUM, IF ANY, ON THE SERIES 2015 BONDS; (4) THE DELIVERY BY ANY DIRECT PARTICIPANT OR INDIRECT PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE I-49 SOUTH BOND RESOLUTION TO BE GIVEN TO BONDHOLDERS; (5) THE SELECTION OF THE BENEFICIAL OWNERS TO RECEIVE PAYMENT IN THE EVENT OF ANY PARTIAL REDEMPTION OF THE SERIES 2015 BONDS; OR (6) ANY CONSENT GIVEN OR OTHER ACTION TAKEN BY DTC AS BONDHOLDER. Provisions Applicable if Book-Entry Only System is Terminated Purchasers of Series 2015 Bonds will receive principal and interest payments, and may transfer and exchange Series 2015 Bonds, pursuant to the following provisions only if the book-entry only system is terminated. Otherwise, payments and transfers will be made only as described above under Book-Entry Only System. If the book-entry only system is terminated, the principal of and premium, if any, on each Series 2015 Bond, upon maturity or prior redemption, will be payable at the principal office of the Trustee. Payment of the interest on each Series 2015 Bond which is payable, and is punctually paid or duly provided for, on any Interest Payment Date, will be paid to the person in whose name that Series 2015 Bond is registered at the close of business on the Record Date for such interest by check or draft mailed on such Interest Payment Date by the Trustee, provided that the Owners of $1,000,000 or more in aggregate principal amount of Series 2015 Bonds may request payment by wire transfer if such Owners have requested such payment in writing to the Trustee, which request shall be made no later than the Record Date and shall include all relevant bank account information and shall otherwise be acceptable to the Trustee. Such notice shall be irrevocable until a new notice is delivered not later than a Record Date. Series 2015 Bonds may be exchanged at the principal office of the Trustee for a like aggregate principal amount of fully registered Series 2015 Bonds of the same maturity and interest rate in denominations authorized by the I-49 South Bond Resolution. The Commission, on behalf of the State, shall execute and the Trustee shall authenticate and deliver Series 2015 Bonds which the Bondholder making the exchange is entitled to receive, bearing numbers not contemporaneously Outstanding. The execution by the Commission, on behalf of the State, of any fully registered Series 2015 Bond of any authorized denomination shall constitute full and due authorization of such denomination and the Trustee shall thereby be authorized to authenticate and deliver such fully registered Series 2015 Bond. The Trustee shall require the payment by any Bondholder requesting exchange or transfer of Series 2015 Bonds of any tax or other governmental charge required to be paid with respect to 12

23 such exchange or transfer. The State shall, under the I-49 South Bond Resolution, be liable to pay all other expenses and charges of the State and of the Trustee in connection with such exchange or transfer. Exchange and Transfer The Series 2015 Bonds, upon surrender thereof at the principal corporate trust office of the Trustee with a written instrument of transfer satisfactory to the Trustee, duly executed by the registered owner or his duly authorized attorney, may be (i) exchanged for an equal aggregate principal amount of Series 2015 Bonds of the same maturity and of any other authorized denominations, or (ii) transferred to transferees in the same aggregate principal amount and maturity of the Series 2015 Bonds so surrendered. In connection with every exchange or transfer of Series 2015 Bonds, the Commission or the Trustee may make a charge sufficient to reimburse itself for any tax, fee or other governmental charge required to be paid with respect to such exchange or transfer. Neither the Commission nor the Trustee shall be required to exchange or transfer Series 2015 Bonds for a period beginning on the Record Date next preceding an interest payment date and ending on such interest payment date. Defeasance If the Commission pays or causes to be paid, or there is otherwise paid (excluding payment made by any Insurer), to the registered owners of all outstanding Series 2015 Bonds or Series 2015 Bonds of a particular maturity or particular Series 2015 Bonds within a maturity, the principal and interest due or to become due thereon, at the times and in the manner stipulated therein and in the I-49 South Bond Resolution, then the pledge of the Pledged Revenues and other moneys and securities pledged under the I-49 South Bond Resolution and all covenants, agreements and obligations of the Commission to the registered owners of such Series 2015 Bonds will thereupon cease, terminate and become void and be discharged and satisfied. Series 2015 Bonds may be deemed paid through the deposit of moneys and the giving of proper notices as set forth in the I-49 South Bond Resolution. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE STATE OF LOUISIANA UNCLAIMED PROPERTY BOND SPECIAL REVENUE RESOLUTION, AND THE COLLECTION AGREEMENT Defeasance for a more detailed description of the conditions under which the lien of the I-49 South Bond Resolution may be discharged. General PLAN OF FINANCE The Commission has elected to issue the Series 2015 Bonds pursuant to Section 165.1(A)(1) of the Act for the purpose of (i) providing funds to match federal funds to be used by the Department of Transportation and Development for the costs of and associated with the construction of the I-49 South Project; (ii) funding a deposit to the Debt Service Reserve Account of the Debt Service Fund; and (iii) paying the costs of issuance of the Series 2015 Bonds. 13

24 The overall I-49 South Project is being constructed to provide a highway to Interstate standards between Interstate 10 in Lafayette, Louisiana, to the West Bank Expressway in the City of New Orleans. The construction of such highway will result in improved access throughout the southern region of the State, improved safety, enhanced hurricane evacuation and congestion relief on I-10 between Lafayette and New Orleans. The proceeds of the Series 2015 Bonds will be used to construct a segment of the highway in Lafayette Parish, Louisiana. The Series 2015 Bonds are the second series of bonds being issued by the Commission, on behalf of the State, under the provisions of the I-49 South Bond Resolution. The Outstanding Parity Bonds were issued under the provisions of the General Bond Resolution, as supplemented and amended pursuant to the First Supplemental Resolution, on December 23, 2013 for the purpose of providing funds for the purpose of providing matching funds to pay construction costs of a segment of the I-49 South Project. No Additional Bonds may be authenticated and delivered under the I-49 South Bond Resolution on a pari passu basis with the Series 2015 Bonds and the Outstanding Parity Bonds, except for the exchange of the Series 2015 Bonds and the Outstanding Parity Bonds, as the case may be, in connection with the servicing thereof. SOURCES AND USES OF FUNDS The following table summarizes the sources and uses of funds: Sources of Funds Principal Amount of Series 2015 Bonds $73,820, Net Original Issue Premium 8,244, Total Sources $82,064, Uses of Funds Bond Proceeds Fund (1) $75,991, Debt Service Reserve Account 5,790, Costs of Issuance (2) 283, Total Uses $82,064, (1) To be held and maintained by the State Treasurer and used to pay costs of construction. (2) Includes Underwriters' discount, municipal advisory fees, legal fees and other costs of issuance. [Remainder of page left intentionally blank] 14

25 ANNUAL DEBT SERVICE REQUIREMENTS The following table sets forth, for each calendar year, the amounts required for the payment of principal, at stated maturity, and interest on the Series 2015 Bonds and the Outstanding Parity Bonds. The payment of principal on the Series 2015 Bonds and the Outstanding Parity Bonds is due on September 1 of each year, and the payment of interest on the Series 2015 Bonds and the Outstanding Parity Bonds is due on March 1 and September 1 of each year, commencing March 1, 2016 with respect to the Series 2015 Bonds. Calendar Year Principal and Interest Requirements on the Series 2015 Bonds $5,779, ,782, ,782, ,785, ,783, ,784, ,784, ,787, ,787, ,786, ,786, ,783, ,782, ,782, ,787, ,782, ,781, ,783, ,486, ,482, Principal and Interest Requirements on the Outstanding Parity Bonds $1,695, ,694, ,693, ,692, ,695, ,691, ,695, ,691, ,691, ,693, ,693, ,694, ,693, ,694, ,691, ,696, ,695, ,692, Total Principal and Interest Payments on the Series 2015 Bonds and the Outstanding Parity Bonds $7,475, ,477, ,476, ,478, ,478, ,475, ,479, ,479, ,479, ,479, ,479, ,478, ,476, ,476, ,479, ,478, ,477, ,476, ,486, ,482, SECURITY AND SOURCES OF PAYMENT Pledged Revenues In accordance with the I-49 South Bond Resolution, the payment obligations of the Commission, on behalf of the State, under the Series 2015 Bonds and the Outstanding Parity Bonds are secured by and payable from the Pledged Revenues which consist of the following: (1) Monies on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund; (2) Investment income on monies on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund; and (3) All Funds and Accounts created under the Bond Resolution (other than the Bond Proceeds Fund), including, but not limited to, the Debt Service Reserve Account of the Debt Service Fund (including monies received from the State under the DOA 15

26 Cooperative Endeavor Agreement), and including Investment Securities held in such Funds or Accounts, together with all proceeds and revenues of the foregoing and all of the Commission s right, title and interest in and to the foregoing. See UNCLAIMED PROPERTY herein. The Series 2015 Bonds are special and limited obligations of the State payable solely from and secured by the Pledged Revenues on a parity basis with the Outstanding Parity Bonds. The Series 2015 Bonds are not general obligations of the State or any public entity thereof, and neither the full faith and credit of the State or any public entity thereof is pledged to the payment of the principal of or the interest on the Series 2015 Bonds. The issuance of the Series 2015 Bonds under the provisions of the Act shall not directly, indirectly or contingently obligate the State or any governmental unit of the State to levy any taxes whatever therefor or to make any appropriation for their payment, except as set forth in the Act with respect to the deposit of monies on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund in accordance with the provisions of the I-49 South Bond Resolution, and except for the appropriation of funds necessary to replenish the Debt Service Reserve Account of the Debt Service Fund in accordance with the requirements of the DOA Cooperative Endeavor Agreement. Section 165.1(J) of the Act provides that when any bonds shall have been issued pursuant to Section of the Act, neither the Louisiana Legislature, the Commission, nor any other entity may discontinue or decrease the revenues pledged to the payment of the bonds authorized thereunder or permit to be discontinued or decreased the revenues in anticipation of the collection of which such bonds have been issued, or in any way make any change in the allocation and dedication of the revenues which would diminish the amount of the revenues to be received by the Commission, until all of such bonds shall have been retired as to principal and interest, and there is hereby vested in the holders from time to time of such bonds a contract right and such provisions under Section 165.1(J) of the Act. The DOA Cooperative Endeavor Agreement The State, through the Division of Administration, has entered into the DOA Cooperative Endeavor Agreement with the Commission and the Louisiana Department of Transportation and Development, pursuant to which the DOA, on behalf of the State, agrees, subject to appropriation by the Louisiana Legislature, in the event insufficient funds are on deposit in the Debt Service Account of the Debt Service Fund, and the Trustee transfers amounts on deposit in the Debt Service Reserve Account of the Debt Service Fund to the Debt Service Account of the Debt Service Fund, to replenish the Debt Service Reserve Requirement or such Debt Service Reserve Account of the Debt Service Fund, but in no event in an amount to exceed $7,486,900 per Fiscal Year of the State (the highest principal and interest on the Series 2015 Bonds and the Outstanding Parity Bonds in any future calendar year). The payment of any amounts under the DOA Cooperative Endeavor Agreement is subject to and dependent upon the appropriation of funds to fulfill the requirements thereof by the Louisiana Legislature. Pursuant to the DOA Cooperative Endeavor Agreement, the Commissioner of the DOA has agreed on behalf of the State that she or he will include in the 16

27 Executive Budget a budget request for the appropriation by the Louisiana Legislature of sufficient funds to permit the DOA to fulfill its obligations under the DOA Cooperative Endeavor Agreement. If the Louisiana Legislature fails to appropriate sufficient moneys to provide for the continuation of the DOA Cooperative Endeavor Agreement, or if such appropriation is reduced by the veto of the Governor of the State or by any means provided in the appropriations act to prevent the total appropriation for the year from exceeding revenues for that year, or for any other lawful purpose, and the effect of such reduction is to provide insufficient moneys for the continuation of the DOA Cooperative Endeavor Agreement, the DOA Cooperative Endeavor Agreement shall nonetheless continue in effect in case there is an appropriation in later years. Pursuant to the DOA Cooperative Endeavor Agreement, the Commissioner of the DOA has agreed to give immediate written notice to the Commission and the Department of Transportation and Development upon the failure to appropriate. It shall not be an event of default under the DOA Cooperative Endeavor Agreement if there is an event of nonappropriation. See FUNDING OF STATE OBLIGATIONS herein. Cooperative Endeavor Agreements The Louisiana Constitution provides that the funds, credit, property, or things of value of the State or of any political subdivision shall not be loaned, pledged or donated to or for any person, association, or corporation, public or private, subject to certain enumerated exceptions. However, for a public purpose, the State and its political subdivisions or political corporations may engage in cooperative endeavors with each other, with the United States or its agencies, or with any public or private association, corporation or individual. The DOA Cooperative Endeavor Agreement constitutes a cooperative endeavor agreement within the meaning of the Louisiana Constitution. To provide programs and services with a public purpose, the State, through its various agencies, boards and commissions, is party to a number of cooperative endeavor agreements with local and federal governmental entities, non profit entities, charitable organizations and others. The majority of such cooperative endeavors are related to programs of public health and social welfare services, local capital construction projects, conservation and restoration activities, and research grant activities through institutions of higher learning. Other cooperative endeavors are related to third party financing of local correctional facilities and capital construction of institutions of higher education. The contractual obligation of the State and/or its various agencies, boards and commissions to make payments under a cooperative endeavor agreement generally does not constitute debt under State law, but rather is subject to annual appropriation by the Louisiana Legislature of amounts sufficient to make such payment. Generally, failure by the Louisiana Legislature to appropriate such amount in any fiscal year does not constitute an event of default under a cooperative endeavor agreement. As of June 30, 2014, the net outstanding balance of all cooperative endeavors to which the State is a party (but not necessarily obligated through debt instruments) was approximately $3.1 billion for the primary component reporting units and approximately $648 million related to college and university activity. 17

28 Article VII, Section 6(F) of the State Constitution requires the Louisiana Legislature to limit the amount of net state tax supported debt ( NSTSD ) that may be issued in any Fiscal Year and further requires that beginning in Fiscal Year and thereafter, debt service payments on NSTSD will or shall not exceed 6% of General Fund and dedicated fund revenues estimated by the Revenue Estimating Conference. The constitutional provision prohibits the Commission from approving the issuance of any NSTSD if the debt service required by such debt would cause the limit to be exceeded. It also provides that the definition of NSTSD cannot be changed nor can the limit be changed or exceeded except by specific legislative instrument that receives the favorable vote of two-thirds of the members of each house of the Louisiana Legislature. The payments under cooperative endeavor agreements, including the DOA Cooperative Endeavor Agreement, are included in the calculation of NSTSD in accordance with the rules of the Commission. In addition, Louisiana law mandates that all cooperative endeavors having an associated debt component commitment must receive State Bond Commission approval and must be reported to the Joint Legislative Committee on the Budget. In addition, the Governor has issued an executive order requiring cooperative endeavor agreements to govern the administration of line item appropriations, including capital items, to non-state entities. Funds and Accounts The I-49 South Bond Resolution establishes certain special funds and accounts within such special funds. They are designated as the Debt Service Account of the Debt Service Fund, the Debt Service Reserve Account of the Debt Service Fund and the Series 2015 South Issuance Expense Fund, all of which are held by the Trustee. Capitalized terms under this caption will have the respective meanings assigned to such terms in the I-49 South Bond Resolution. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE UNCLAIMED PROPERTY SPECIAL REVENUE BOND RESOLUTION, AND THE COLLECTION AGREEMENT herein. Debt Service Account of the Debt Service Fund The I-49 South Bond Resolution establishes an account designated the Debt Service Account of the Debt Service Fund. There are to be deposited into the Debt Service Account of the Debt Service Fund (i) amounts transferred from the Pledged Revenues; (ii) any moneys paid to the Trustee with respect to the Redemption Price of Series 2015 Bonds and the Outstanding Parity Bonds; and (iii) all other moneys received by the Trustee that are accompanied by directions that such moneys are to be deposited into such Account. Moneys in the Debt Service Account of the Debt Service Fund are to be used solely for the payment of the Debt Service on and the Redemption Price of the Series 2015 Bonds and the Outstanding Parity Bonds. 18

29 Debt Service Reserve Account of the Debt Service Fund The I-49 South Bond Resolution establishes an account designated the Debt Service Reserve Account of the Debt Service Fund, which shall be funded in an amount equal to the Debt Service Reserve Requirement. The Debt Service Reserve Account of the Debt Service Fund is created solely for the benefit of the owners of the Series 2015 Bonds and the Outstanding Parity Bonds. On December 23, 2013, $1,696, of the proceeds of the Outstanding Parity Bonds were deposited into the Debt Service Reserve Account of the Debt Service Fund. In addition, there are to be deposited into the Debt Service Reserve Account of the Debt Service Fund (i) a portion of the proceeds of the Series 2015 Bonds; (ii) moneys received by the Trustee under the provisions of the DOA Cooperative Endeavor Agreement; and (iii) all other moneys received by the Trustee that are accompanied by directions that such moneys are to be deposited into the Debt Service Reserve Account of the Debt Service Fund. The Commission, on behalf of the State, may fund the Debt Service Reserve Account of the Debt Service Fund with, or substitute for the cash or Investment Securities on deposit in such Debt Service Reserve Account of the Debt Service Fund, a surety bond, insurance policy, letter of credit, investment agreement, investment contract, or similar instrument (a Debt Service Fund Contract ) that provides for payments when and as required for purposes of such Debt Service Reserve Account of the Debt Service Fund and is issued by an obligor whose obligations such as the Debt Service Fund Contract are, when such contract is deposited into such Debt Service Reserve Account of the Debt Service Fund, rated in one of the two highest generic rating categories by at least two (2) of the Rating Agencies. Any moneys withdrawn from the Debt Service Reserve Account of the Debt Service Fund in connection with the deposit of a Debt Service Fund Contract therein shall be deposited into the Debt Service Account of the Debt Service Fund and used as provided below. If on any payment date or redemption date the amount on deposit in the Debt Service Account of the Debt Service Fund is not sufficient to pay the Debt Service and Redemption Price (excluding any redemption premium, if any) due on the Series 2015 Bonds and/or the Outstanding Parity Bonds, the I-49 South Bond Resolution requires that, subject to certain priorities and other limitations, moneys in the Debt Service Reserve Account of the Debt Service Fund are required to be transferred to the Debt Service Account of the Debt Service Fund. In accordance with the provisions of the I-49 South Bond Resolution, the Trustee agrees that if there is a transfer from the Debt Service Reserve Account of the Debt Service Fund to the Debt Service Account of the Debt Service Fund as a result of an insufficiency in the Debt Service Account of the Debt Service Fund, the Trustee shall immediately make demand on the DOA under the DOA Cooperative Endeavor Agreement in order to replenish the Debt Service Reserve Account of the Debt Service Fund to the Debt Service Reserve Requirement. See SECURITY AND SOURCES OF PAYMENT The DOA Cooperative Endeavor Agreement and FUNDING OF STATE OBLIGATIONS herein. At maturity of the Series 2015 Bonds secured by the Debt Service Reserve Account of the Debt Service Fund or, upon earlier redemption if the money or Investment Securities on 19

30 deposit in the Debt Service Reserve Account of the Debt Service Fund is sufficient to effectuate a redemption in full of the Series 2015 Bonds so secured, moneys on deposit therein may be applied to the final payment of principal of the Series 2015 Bonds. Upon the issuance of the Series 2015 Bonds, the Debt Service Reserve Requirement shall be $7,486,900, which is equal to the maximum annual principal and interest due on the Series 2015 Bonds and the Outstanding Parity Bonds in any future calendar year, which has been funded from $5,790, of the proceeds of the Series 2015 Bonds and from $1,696, of the proceeds of the Outstanding Parity Bonds (which includes earnings thereon). Series 2015 South Issuance Expense Fund The I-49 South Bond Resolution establishes a fund designated the Series 2015 South Issuance Expense Fund. There shall be deposited into the Series 2015 South Issuance Expense Fund a portion of the proceeds of the Series 2015 Bonds. There shall also be retained in the Series 2015 South Issuance Expense Fund interest and other income received on investments of the Series 2015 South Issuance Expense Fund moneys. Such moneys shall be expended to pay costs of issuance of the Series 2015 Bonds. The Trustee is hereby authorized and directed to issue its checks on the Series 2015 South Issuance Expense Fund costs of issuance of the Series 2015 Bonds. The Trustee shall keep and maintain adequate records pertaining to the Series 2015 South Issuance Expense Fund and all payments therefrom, which shall be open to inspection by the State or its duly authorized agent during normal business hours of the Trustee. After all expenses incurred in connection with the issuance of the Series 2015 Bonds have been paid, the Trustee shall file a statement of income and disbursements with respect thereto with the State. Upon payment of all fees and expenses incurred in connection with the issuance of the Series 2015 Bonds, any moneys remaining in the Series 2015 South Issuance Expense Fund shall be transferred into the Debt Service Account of the Debt Service Fund and used to pay principal or interest on the first or next succeeding principal or interest payment or payments on the Series 2015 Bonds. The Series 2015 South Issuance Expense Fund shall be in the custody of the Trustee but in the name of the State, and the State authorizes and directs the Trustee to withdraw sufficient funds from the Series 2015 South Issuance Expense Fund to pay costs of issuance of the Series 2015 Bonds, which authorization and direction the Trustee hereby accepts. Flow of Funds under the I-49 Bond Resolution and the Collection Agreement Pursuant to Sections 159(D) and 160(A) of the Act, abandoned and unclaimed property must be transferred by the holders to the State Treasurer, as administrator, on or before November 1 of each year. The State Constitution requires that in each fiscal year, subject to certain specified exceptions, all moneys received by the State or any State board, agency or commission be deposited in the State treasury and credited to the Bond Security and Redemption Fund. In each fiscal year an amount is allocated from the Bond Security and Redemption Fund to pay 20

31 obligations secured by the full faith and credit of the State in that fiscal year and, except as otherwise provided by law, all remaining moneys are credited to the State General Fund, excluding any Pledged Revenues which are required to be deposited in the Unclaimed Property Leverage Fund, as described herein. A first lien on amounts in the Bond Security and Redemption Fund secures the payment of the full faith and credit obligations of the State. Pursuant to the Act and the Collection Agreement, only if all other amounts on deposit in the Bond Security and Redemption Fund are insufficient for such purpose, is the Treasurer required to pay debt service on full faith and credit obligations of the State from abandoned and unclaimed property. After the deposit into the Bond Security and Redemption Fund in accordance with Section 165(A) of the Act as described above, and in accordance with the provisions of Section 165 of the Act, the State Treasurer, as administrator, shall first retain in a separate trust fund at least $500,000 of the total gross collections of abandoned and unclaimed property for the payment of claims. As a matter of practice, the State Treasurer has historically set aside $4,000,000 of total gross collections of abandoned and unclaimed property on or about the first day of each Fiscal Year (July 1) for the payment of claims. In addition, in accordance with Section 165(B) of the Act, the State Treasurer, as administrator, shall then deduct an amount equal to the costs incurred for authorized external auditing from total gross collections of abandoned and unclaimed property during any fiscal year, and shall deduct an amount not to exceed 7% of the total gross collections of abandoned and unclaimed property during any fiscal year for the remaining costs of administering the Uniform Unclaimed Property Act. Thereafter, in accordance with Section 165(A) of the Act, the State Treasurer, as administrator, shall deposit $15,000,000 of the total gross collections of abandoned and unclaimed property into the Unclaimed Property Leverage Fund. Immediately after the deposit of $15,000,000 into the Unclaimed Property Leverage Fund, in accordance with Section 165(C)(1)(b) of the Act, fifty percent (50%) of such funds deposited into the Unclaimed Property Leverage Fund shall be deposited in the I-49 South Account of the Unclaimed Property Leverage Fund in each Fiscal Year of the State. Funds on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund shall be used exclusively to pay principal and interest on the Series 2015 Bonds and the Outstanding Parity Bonds. In addition, immediately after the deposit of $15,000,000 into the Unclaimed Property Leverage Fund, in accordance with Section 165(C)(1)(a) of the Act, fifty percent (50%) of such funds shall be deposited into the I-49 North Account of the Unclaimed Property Leverage Fund in each Fiscal Year of the State. Funds on deposit in the I-49 North Account of the Unclaimed Property Leverage Fund shall be used exclusively to pay principal and interest on the Series 2013 North Project Bonds. Funds on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund may not be used to pay principal and interest on the Series 2013 North Project Bonds, and funds 21

32 on deposit in the I-49 North Account of the Unclaimed Property Leverage Fund may not be used to pay principal and interest on the Series 2015 Bonds or the Outstanding Parity Bonds. Since Fiscal Year Ended June 30, 2008, $15,000,000 of abandoned and unclaimed property has been deposited into the Unclaimed Property Leverage Fund in accordance with Section 165(C)(1) of the Act on or about January 15 of each year. Pursuant to the Unclaimed Property Collection and Allocation Agreement (I-49 South Project and I-49 North Project) dated as of December 1, 2013 (the Collection Agreement ), among the State Treasurer, the Commission and the Trustee, the State Treasurer is required to transfer Pledged Revenues on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund to the Trustee for deposit into the Debt Service Account of the Debt Service Fund created and established pursuant to the I-49 South Bond Resolution. The transfer to the Trustee for deposit into the Debt Service Account of the Debt Service Fund created and established pursuant to the I-49 South Bond Resolution shall be in an amount so that the balance in the Debt Service Account of the Debt Service Fund shall equal the principal and interest requirements on the Series 2015 Bonds for the next two (2) succeeding interest payment dates for the Series 2015 Bonds plus any additional amounts as may be necessary to ensure payment in full of the principal of and interest on the Series 2015 Bonds which are due on the next two (2) succeeding interest payment dates (the Debt Service Requirement ); provided that in no event shall the Treasurer transfer to the Trustee any of such Pledged Revenues in excess of the Debt Service Requirement. After such transfer, Pledged Revenues, if any, shall be used for pay-as-you-go I-49 South Project costs. Set forth below is a description of the flow of funds of the Pledged Revenues under the I-49 South Bond Resolution, the I-49 North Bond Resolution and the Collection Agreement. Reference is made to APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE STATE OF LOUISIANA UNCLAIMED PROPERTY SPECIAL REVENUE BOND RESOLUTION, AND THE COLLECTION AGREEMENT for a more complete description of said flow of funds. [Remainder of page left intentionally blank] 22

33 Summary of Flow of Funds A flow of funds chart relating to the Outstanding Parity Bonds, the Series 2015 Bonds and the Series 2013 North Project Bonds follows. This chart does not purport to be complete or definitive and is qualified by reference to the provisions of the I-49 South Bond Resolution, the I-49 North Bond Resolution and the Collection Agreement. Flow of Funds for Abandoned and Unclaimed Property (1) Unclaimed Property Revenues are initially deposited into the Escrow Fund with the State s Central Depository wherein they are classified and thereafter transferred in accordance with the provisions of the Act. (2) Pursuant to the State Constitution and the Act, Pledged Revenues are initially required to be deposited into the Bond Security and Redemption Fund. (3) Moneys in the Bond Security and Redemption Fund are used to pay full faith and credit obligations of the State. (4) Pursuant to Sections 165(A) and (B) of the Act, the State Treasurer, as administrator, (i) shall retain at least $500,000 from which the State Treasurer, as administrator, shall pay claims duly allowed, (ii) shall deduct an amount equal to the costs incurred for authorized external auditing from total gross collections of unclaimed property during any fiscal year, and (iii) shall deduct an amount not to exceed 7% of the total gross collections of unclaimed property during any fiscal year for the remaining costs of administering the Uniform Unclaimed Property Act. (5) $15,000,000 of abandoned and unclaimed property is required to be deposited in the Unclaimed Property Leverage Fund. (6) $7,500,000 of funds on deposit in the Unclaimed Property Leverage Fund are required to be deposited into the I-49 North Account of the Unclaimed Property Leverage Fund. (7) $7,500,000 of funds on deposit in the Unclaimed Property Leverage Fund are required to be deposited into the I-49 South Account of the Unclaimed Property Leverage Fund. (8) Subject to appropriation by the Louisiana Legislature, the Series 2013 North Pledged Revenues (as defined in APPENDIX A attached hereto) are first deposited in the Debt Service Fund created and established pursuant to the I-49 North Bond Resolution in the amount required so that the balance in said Fund shall equal the sum of the amounts of debt service requirements on the Series 2013 North Project Bonds for the next respective succeeding interest payment date and principal payment date plus any additional amounts as may be necessary to ensure payment in full of principal and interest on the Series 2013 North Project Bonds that is due on each interest payment date in that calendar year. (9) Subject to appropriation by the Louisiana Legislature, the Pledged Revenues are first deposited in the Debt Service Fund created and established pursuant to the I-49 South Bond Resolution in the amount required so that the balance in said Fund shall equal the sum of the amounts of debt service requirements on the Series 2015 Bonds and the Outstanding Parity Bonds for the next respective succeeding interest payment date and principal payment date plus any additional amounts as may be necessary to ensure payment in full of principal and interest on the Series 2015 Bonds and the Outstanding Parity Bonds that is due on each interest payment date in that calendar year. (10) After satisfying the Debt Service Requirement on the Series 2013 North Project Bonds, funds on deposit in the I-49 North Account of the Unclaimed Property Leverage Fund are used for pay-as-you go I-49 North Project Costs and Bond Related Expenses. (11) After satisfying the Debt Service Requirement on the Series 2015 Bonds and the Outstanding Parity Bonds, funds on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund are used for pay-as-you go I-49 South Project Costs and Bond Related Expenses. (12) Pursuant to Article VII, Section 9(A) of the State Constitution, all money received by the State or by any State board, agency or commission shall be deposited immediately upon receipt in the State Treasury. (13) Abandoned and unclaimed property remaining after payment of the full faith and credit obligations of the State, after payment of claims, after payment of the Auditor Fees and Administrative Expenses, and after deposit of $15,000,000 in the Unclaimed Property Leverage Fund, are deposited into the State General Fund. 23

34 Additional Bonds and Refunding Bonds Additional Bonds. No Additional Bonds may be authenticated and delivered under the I-49 South Bond Resolution on a pari passu basis with the Series 2015 Bonds and the Outstanding Parity Bonds, except for the exchange of the Series 2015 Bonds or the Outstanding Parity Bonds, as the case may be, in connection with the servicing thereof. Refunding Bonds. (a) One or more Series of Refunding Bonds may be issued at any time to refund, by payment or exchange, outstanding Bonds of one or more Series or one or more maturities within a Series or any Bonds of one or more maturities within one or more Series. Refunding Bonds shall be issued in a principal amount sufficient, together with other moneys available therefor, to accomplish such refunding and to make the deposits in the Funds and Accounts under the Resolution required by the provisions of the Supplemental Resolution authorizing such Refunding Bonds. The I-49 South Bond Resolution requires that there shall be delivered a certificate of an Authorized Officer stating and demonstrating that as a result of the refunding, annual Aggregate Debt Service associated with the Series 2015 Bonds and the Outstanding Parity Bonds being refunded for each Bond Year will be reduced upon issuance of the Refunding Bonds. (b) Refunding Bonds of each Series shall be authenticated and delivered by the Trustee only upon receipt by the Trustee of: (1) instructions provided or to be provided by the Commission pursuant to an Escrow Deposit Agreement to give due notice of redemption, if applicable, of all Bonds or other indebtedness to be refunded on a redemption date or dates specified in such instructions; and (2) the Escrow Deposit Agreement provided or to be provided by the Commission for either payment or defeasance of the Bonds or other indebtedness to be refunded in accordance with applicable terms for such payment or defeasance, if it is intended that the refunded Bonds be defeased in accordance with the provisions of the I-49 South Bond Resolution. FUNDING OF STATE OBLIGATIONS The funding obligations of the State under the DOA Cooperative Endeavor Agreement are multi-year obligations of the State and are payable from available funds of the State rather than from the proceeds of the Series 2015 Bonds and/or the Outstanding Parity Bonds. THE FUNDING OBLIGATIONS OF THE STATE UNDER THE DOA COOPERATIVE ENDEAVOR AGREEMENT ARE SUBJECT TO AND DEPENDENT UPON ANNUAL APPROPRIATION OF AVAILABLE FUNDS BY THE LOUISIANA LEGISLATURE. NO REPRESENTATION IS OR CAN BE GIVEN BY THE STATE, THE DOA OR THE COMMISSION REGARDING THE LIKELIHOOD THAT SUCH APPROPRIATION WILL BE MADE. Pursuant to the provisions of the DOA Cooperative Endeavor Agreement, the Commissioner of the Division of Administration has agreed on behalf of the State that she or he 24

35 will include in the Executive Budget a budget request for the appropriation by the Louisiana Legislature of sufficient funds to permit the State to fulfill its obligations under the DOA Cooperative Endeavor Agreement. See BONDHOLDER RISKS Nonappropriation Risk herein. Certain information with respect to the State, including the budgetary process and the economy, is included in PART I - INFORMATION CONCERNING THE STATE OF LOUISIANA attached hereto. Certain general purpose, financial data and debt information is included in PART II - GENERAL PURPOSE FINANCIAL DATA, DEBT INFORMATION AND LITIGATION UPDATE, INCLUDING BY REFERENCE THE COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2014 attached hereto. General UNCLAIMED PROPERTY The Uniform Unclaimed Property Act was enacted for the purpose of (i) reuniting lost owners with their property, (ii) relieving the holder of such property from liability after transferring the property to the State, (iii) establishing a permanent record and repository of all abandoned and unclaimed property, and (iv) ensuring that if an owner of such property cannot be found, the economic windfall enures to the citizens of the State and not to the holder of such abandoned property. Abandoned and unclaimed property is commonly in the form of cash (sometimes referred to as general ledger property) or securities-related property. Examples of cash or general ledger property include bank deposits, trust distributions, annuities, certificates of deposit, traveler s checks, unredeemed money orders or gift certificates, insurance payments or refunds of life insurance policies, wages or other compensation for personal services, deposits or refunds owed to a subscriber by a utility, mineral royalty payments, property in an individual retirement account and contents of safe deposit boxes. Securities-related property includes stock or other forms of equity and bonds. Stocks and bonds received as abandoned and unclaimed property by the State Treasurer, as administrator, are transferred into a brokerage account maintained by the Unclaimed Property Division, Department of Treasury. Historically, the stocks and bonds have not been liquidated and therefore are not included in Pledged Revenues. However, dividends received by the State Treasurer, as administrator, from such stocks, and principal payments, redemption payments and/or interest relating to the bonds are available for deposit into the Unclaimed Property Leverage Fund, as well as the payment of claims and costs associated with administering the Uniform Unclaimed Property Act. The rights of owners to collection abandoned and unclaimed property is in perpetuity and does not expire. 25

36 Statutory Requirements Pursuant to Section 154 of the Act, property is presumed abandoned if it is unclaimed by the apparent owner during the time specified therein for the particular property described therein. In general, stocks and dividends, bonds and interest thereon or the payment of principal thereon, money or credits owed to a customer as a result of a retail business transaction, gift certificates, amounts owed by an insurer of a life or endowment insurance policy or annuity contract and property in an individual retirement account is presumed abandoned after three (3) years. Wages, deposits or refunds owed to a subscriber by a utility and property held by a court, state or other governmental agency is presumed abandoned after one (1) year. For all other property not specifically set forth in Section 154 of the Act, property is presumed abandoned after five (5) years from the time the obligation to pay or distribute the property arises. Pursuant to Section 159 of the Act, a holder of property presumed abandoned shall make a report to the State Treasurer, as administrator, concerning the property. The report shall be filed before November first of each year and cover the twelve months next preceding July first of that year. Pursuant to Section 160 of the Act, the holder of property presumed abandoned is required to pay, transfer or cause to be paid and transferred to the State Treasurer, as administrator, after filing the report described above, the property described in the report on or before November 1 of each year for the period covering the twelve (12) months next preceding July 1 of that year. Upon filing such report, the holder is required to pay, transfer or cause to be paid or transferred to the State Treasurer, as administrator, the property described in the report. Historical Collection of Abandoned and Unclaimed Property and Deposits into the Unclaimed Property Leverage Fund and General Fund Table 1 set forth below reflects (i) receipts from abandoned and unclaimed property, other than stocks and bonds received as abandoned and unclaimed property, deposited with the State Treasurer, as administrator, in accordance with the Uniform Unclaimed Property Act; (ii) the total refunds of abandoned and unclaimed property paid to the owners of such property in accordance with the provisions of Section 167 of the Act, including the number of refund checks issued to such owners; (iii) auditor fees and administrative costs; (iv) abandoned and unclaimed property remaining after payment of refunds to owners, auditor fees and administrative costs; (v) deposits to the Unclaimed Property Leverage Fund by the State Treasurer, as administrator, pursuant to Section 165(A) of the Act; and (vi) total abandoned and unclaimed property remaining after the required deposit to the Unclaimed Property Leverage Fund. Table 1 also reflects, under the heading entitled Total Abandoned and Unclaimed Property, an increase in the collection of abandoned and unclaimed property in Fiscal Years Ended June 30, 2012, June 30, 2013, June 30, 2014 and June 30, 2015 resulting from recent audits of life insurance companies. 26

37 TABLE 1 Historical Collection of Abandoned and Unclaimed Property and Deposits into the Unclaimed Property Leverage Fund and General Fund Fiscal Year Ended June 30 Total Abandoned and Unclaimed Property Refunds to Owners Number of Refund Checks Issued Auditor Fees and Administrative Costs Net Available for Allocation to Unclaimed Property Leverage Fund Deposit to Unclaimed Property Leverage Fund (1)(2) Net Deposit to General Fund (3) $ 36,656, ,468, ,305, ,369, ,881, ,513, ,126, ,208, ,694, ,219, ,781, ,876, $11,935, ,076, ,572, ,708, ,693, ,038, ,226, ,653, ,636, ,136, ,264, ,138, ,601 16,625 16,311 16,959 18,737 23,152 19,043 20,381 27,911 26,037 44,457 24,049 $ 2,133,527 1,589,464 1,723,141 1,622,583 2,755,071 2,600,463 2,427,492 2,183,766 2,779,253 3,779,974 3,930,782 3,297,657 $22,587, ,802, ,009, ,038, ,432, ,874, ,471, ,371, ,278, ,302, ,585, ,440, $ 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 15,000,000 $ 22,587, ,802, ,009, ,038, ,432, ,874, ,471, ,371, ,278, ,302, ,585, ,440, Totals $752,101, $275,081, ,263 $30,823,173 $441,197, $120,000,000 $326,197, (1) (2) (3) In accordance with Section 165(A) of the Act, commencing in Fiscal Year Ended June 30, 2008, the State Treasurer, as administrator, is required to deposit $15,000,000 in each fiscal year into the Unclaimed Property Leverage Fund. Pursuant to Section 165(C)(1)(a) of the Act, fifty percent (50%) of the monies deposited in the Unclaimed Property Leverage Fund each fiscal year shall be transferred into the I-49 North Account, and pursuant to Section 165(C)(1)(a) of the Act, fifty percent (50%) of the monies deposited in the Unclaimed Property Leverage Fund each fiscal year shall be transferred into the I-49 South Account. Unaudited. Table 2 set forth below reflects the major classifications of abandoned and unclaimed property and the percentage of claims paid during Fiscal Year Ended June 30, 2004, to and including Fiscal Year Ended June 30, TABLE 2 Classification Insurance Checks Securities Bank Accounts Mineral Proceeds, Royalties Utilities Court Deposits, Class Actions Miscellaneous Percentage 19% 15% 12% 10% 8% 3% 4% 29% Source: Unclaimed Property Division, Department of the State Treasury. 27

38 Initiatives by the State to Increase Collections of Abandoned Property and Payments to Owners Collection Initiatives The Unclaimed Property Division was established in 1972 within the Department of Revenue. The program was transferred to the Department of the State Treasury in The Unclaimed Property Division is responsible for the following: (1) Educating holders (entities required to remit unclaimed property) about their reporting responsibilities in order to increase compliance; (2) Enforcing compliance with the Uniform Unclaimed Property Act through an active audit program; (3) Collection of unclaimed property remitted to the State Treasury and preparing bank deposits for transmission to State Treasury s Fiscal Division; (4) Reconciling unclaimed property receipts with State Treasury s Fiscal Division; (5) Entering data into the Unclaimed Property computer database, both electronically and manually; (6) Management of the computer database of unclaimed property owners, providing data for newspaper publication and website search databases; (7) Locating owners of abandoned and unclaimed property through various methods; (8) Receiving and verifying claims of unclaimed property owners; (9) Issuing checks to unclaimed property owners; and (10) Reconciling check data with State Treasury s Fiscal Division The Unclaimed Property Division currently has service contracts with eight (8) thirdparty audit firms. Except as set forth below, each audit firm charges a fee ranging from 10.25% to 10.50% of the abandoned property that is transferred to the State as a result of its efforts. Discovery Audit Services charges a fee of 15% of the abandoned property that is transferred to the State as a result of its efforts. The following table sets forth certain information regarding the third-party audit firms: Name of Firm Years of Service Area of Specialty Collection History (Total) Audit Services US LLC 15 years Equity/Corporate Trust Issues $7,100,000 Discovery Audit Services 8 years General Ledger (Cash) $7,430,000 28

39 Name of Firm Years of Service Area of Specialty Collection History (Total) Xerox Unclaimed Property Clearinghouse (a division of Xerox Corporation) 28 years Equity/Corporate Trust Issues/General Ledger (Cash) $59,507,000 Verus Financial LLC 5 years Life Insurance Proceeds $36,000,000 Treasury Services Group 3 years Equity/Corporate Trust Issues $4,100,000 Kelmar Associates 2 years General Ledger (Cash) No collection history EECS LLC 1 year General Ledger (Cash) $538,000 Hertz Herson LLP 1 year General Ledger (Cash) No collection history Payment Initiatives The State Treasurer and the Unclaimed Property Division, Department of the State Treasury, have developed the following methods to locate owners of abandoned and unclaimed property: (1) Annual newspaper publication In accordance with the provisions of the Act, the names of owners of abandoned and unclaimed property valued at $50.00 and above are published, usually in November of each year, in local newspapers throughout the State; (2) Distribution of names to State Legislators In accordance with the provisions of the Act, thirty (30) days prior to the annual newspaper publication, each State Legislator must receive a list of the items to be published with addresses in his or her district; (3) Online searchable database The Department of the State Treasury s website includes a searchable database, updated daily, where individuals can search for abandoned and unclaimed property to which they may be entitled; (4) Participation in MissingMoney.com This unclaimed property search page sponsored by the National Association of Unclaimed Property Administrators allows individuals to search for unclaimed property in multiple states; (5) Locating missing owners through LexisNexis and direct mail The Department of the State Treasury contracts with LexisNexis/Accurint to obtain updated current addresses for owners of abandoned and unclaimed property and then contacts these individuals by direct mail; 29

40 (6) Direct contact for local governments The Unclaimed Property Division staff is proactive in contacting local authorities to initiate claims and return funds owed to various local governmental entities; (7) Interviews and speaking engagements The State Treasurer frequently conducts television interviews and radio interviews and speaks to various groups promoting awareness of abandoned and unclaimed property and the online searchable database; (8) Various municipal and governmental association conferences The Unclaimed Property Division, Department of the State Treasury, staffs exhibits at various in-state conferences to promote awareness of abandoned and unclaimed property; and (9) Providing information to finders In accordance with the State s public records laws, the Unclaimed Property Division, Department of the State Treasury, is required to provide data on abandoned and unclaimed property owners to persons in the business of locating owners of abandoned and unclaimed property. Statutory Requirements of the Act The State Treasurer, as administrator, pursuant to Section 165(A) of the Act, is required to retain in a separate trust fund at least $500,000 from which the State Treasurer, as administrator, shall pay claims duly allowed. The State Treasurer, as administrator, has historically set aside $4,000,000 of total gross collections of abandoned and unclaimed property on or about the first day of each Fiscal Year (July 1) for the payment of claims. The State Treasurer, as administrator, shall also, in accordance with Section 165(B) of the Act, deduct from the gross collections of abandoned and unclaimed property (i) an amount equal to the costs incurred for authorized external auditing from the total gross collections during any fiscal year, and (ii) an amount not to exceed 7% of the total gross collections during any fiscal year for the remaining costs of administering the provisions of the Uniform Unclaimed Property Act. After satisfying the transfers described in the previous paragraphs, beginning Fiscal Year Ended June 30, 2008, and thereafter, the State Treasurer is required to deposit in the Unclaimed Property Leverage Fund each fiscal year $15,000,000. Act No. 413 of the 2011 Regular Session of the Louisiana Legislature amended Section 165 of the Act for the purpose of adding Section to the Act, which provides that the Commission may issue unclaimed property bonds for the I-49 North Project and the I-49 South Project, and pledge for the payment of the principal and interest of the unclaimed property bonds monies deposited or to be deposited into the Unclaimed Property Leverage Fund, which pledge shall be subject to the appropriation of funds by the Louisiana Legislature. Monies appropriated by the Louisiana Legislature from the Unclaimed Property Leverage Fund, including the I-49 North Account and the I-49 South Account, shall be expended only as follows: 30

41 (a) For transfer to the Commission to pay the principal, premium, and interest of unclaimed property bonds issued by the Commission pursuant to Section of the Act as the bonds become due and payable and to fund such reserves for contingencies, costs, and expenses as may be required by the resolution authorizing the issuance of such bonds as well as pay amounts of ongoing expenses associated with the administration, maintenance, or evaluation of the bonds issued for Interstate 49 North and Interstate 49 South. Proceeds of the bonds, except monies needed to fund reserves and pay costs of issuance, and to the extent not needed to pay debt service or other amounts due under the resolution authorizing the bonds, shall be expended utilizing any or all powers granted to the Commission including the funding or securitization of revenue bonds. (b) For transfer to the Department of Transportation and Development: (i) Funds from the 1-49 North Account to be used exclusively to match federal funds to be used for the costs of and associated with the construction of Interstate 49 North from Interstate 220 in the City of Shreveport to the Louisiana/Arkansas border; provided, however, that the monies in the fund shall first be applied to that portion of the project from I-220 to the Louisiana/Arkansas border; and (ii) Funds from the 1-49 South Account to be used exclusively to match federal funds to be used for the costs of and associated with the construction of Interstate 49 South from Interstate 10 in the City of Lafayette to the West Bank Expressway in the city of New Orleans. (c) All unexpended and unencumbered monies in the Unclaimed Property Leverage Fund, the 1-49 North Account, and the 1-49 South Account at the end of the fiscal year shall remain in the Unclaimed Property Leverage Fund, the 1-49 North Account, and the 1-49 South Account and interest earned on the investment of these monies shall be credited to the Unclaimed Property Leverage Fund, the 1-49 North Account, and the 1-49 South Account. Pursuant to Section 165.1(A)(2) of the Act, the unclaimed property receipts which have been deposited into the Unclaimed Property Leverage Fund shall be applied to pay or provide for the payment of debt service and all related costs and expenses associated therewith on unclaimed property bonds issued by the Commission. At no time shall the annual unclaimed property bond payments securitized by unclaimed property receipts in the Unclaimed Property Leverage Fund exceed $15,000,000. In accordance with Section 165.1(E) of the Act, the issuance of unclaimed property bonds shall not be subject to any limitations, requirements or conditions contained in any other law, and unclaimed property bonds may be issued without obtaining the consent of the State or any political subdivision, or of any agency, commission or instrumentality thereof, except that bonds issued thereunder shall be included in the calculation of net state tax supported debt as defined in La. R.S. 39:

42 In accordance with Section 165.1(H) of the Act, any pledge of revenues or monies made by the Commission shall be valid and binding from the time when the pledge is made. The revenues or monies so pledged and thereafter received by the Commission shall immediately be subject to the lien of such pledge without any physical delivery thereof or further act, and the lien of any such pledge shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise against the Commission irrespective of whether such parties have notice thereof. Pursuant to Section 165.1(J) of the Act, when any unclaimed property bond shall have been issued pursuant to Section of the Act, neither the Louisiana Legislature, the Commission nor any other entity may discontinue or decrease the revenues pledged to the payment of the unclaimed property bonds authorized under Section of the Act or permit to be discontinued or decrease the revenues in anticipation of the collection of such unclaimed property bonds have been issued, or in any way make any change in the allocation and dedication of the revenues which would diminish the amount of revenues to be received by the Commission, until all such unclaimed property bonds shall have been retired as to principal and interest, and there is vested in the holders from time of time of such unclaimed property bonds a contract right in the provisions of this section. BONDHOLDER RISKS IN ADDITION TO THE OTHER INFORMATION IN THIS OFFICIAL STATEMENT, THE RISK FACTORS SET FORTH BELOW SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN THE SERIES 2015 BONDS OFFERED HEREBY. NO ASSURANCES CAN BE GIVEN THAT ADDITIONAL RISKS DO NOT NOW EXIST OR WILL NOT ARISE IN THE FUTURE THAT WILL IMPAIR THE ABILITY OF THE STATE TO PAY, WHEN DUE, THE PRINCIPAL OF, PREMIUM, IF ANY, AND INTEREST ON THE SERIES 2015 BONDS. POTENTIAL INVESTORS SHOULD SEEK ANY OTHER RELEVANT INFORMATION RELATING TO THE SERIES 2015 BONDS AND THE SECURITY THEREFOR DEEMED BY THEM TO BE ESSENTIAL OR APPROPRIATE TO MAKING AN INFORMED INVESTMENT DECISION. Insufficiency of Revenues from Abandoned and Unclaimed Property As a result of a decrease in the collection of abandoned and unclaimed property and/or as a result of an increase in the payment of claims to the owners of abandoned and unclaimed property, no representation is or can be given by the State or the Commission that Pledged Revenues will be sufficient to pay principal and interest on the Series 2015 Bonds in the future. As described under the caption UNCLAIMED PROPERTY Initiatives by the Unclaimed Property Division, Department of the State Treasury, State of Louisiana, the State Treasurer and the Unclaimed Property Division, Department of the State Treasury, continually undertake efforts to locate owners of abandoned and unclaimed property, which may result in a decrease of revenues from abandoned and unclaimed property available for deposit to the Unclaimed Property Leverage Fund to pay principal and interest on the Series 2015 Bonds. In addition, technological advances may enhance the ability of the holder of the property to locate the owner of such property, which may result in a decrease in the payment or transfer of such 32

43 property to the State Treasurer, as administrator, in accordance with the provisions of the Uniform Unclaimed Property Act. Nonappropriation Risk Section 165.1(A)(1) of the Act requires the Louisiana Legislature to annually appropriate sufficient funds on deposit in the Unclaimed Property Leverage Fund, which will enable the Commission to make payments due on the Series 2015 Bonds and the Outstanding Parity Bonds. No representation is or can be given that such appropriations will be made. Pursuant to the DOA Cooperative Endeavor Agreement, the State, acting through the DOA, has agreed that in the event funds on deposit in the Debt Service Account of the Debt Service Fund are insufficient to pay principal and interest on the Series 2015 Bonds or the Outstanding Parity Bonds, as the case may be, and the Trustee is required to transfer amounts on deposit in the Debt Service Reserve Account of the Debt Service Fund to the Debt Service Account of the Debt Service Fund to replenish the Debt Service Reserve Account of the Debt Service Fund, but in no event shall such obligation exceed $7,486,900 per Fiscal Year of the DOA (the highest principal and interest on the Series 2015 Bonds and the Outstanding Parity Bonds in any future calendar year). As described in FUNDING OF STATE OBLIGATIONS herein, funds available to the DOA, on behalf of the State, to satisfy the commitment described above remain subject to and dependent upon appropriation by the Louisiana Legislature. No representation is or can be given by the State or the Commission regarding the likelihood that such appropriation will be made. If the Louisiana Legislature fails to appropriate sufficient moneys under the DOA Cooperative Endeavor Agreement, or if such appropriation is reduced by the veto of the Governor of the State or by any means provided in the appropriations act to prevent the total appropriations for the year from exceeding revenues for that year, or for any other lawful purpose, and the effect of such reduction is to provide insufficient moneys for the continuation of the DOA Cooperative Endeavor Agreement, the DOA Cooperative Endeavor Agreement will nonetheless remain in effect. Enforceability of Remedies Under the terms of the I-49 South Bond Resolution, the Commission is obligated to make full and timely payment of principal of and interest on the Series 2015 Bonds and the Outstanding Parity Bonds and to observe numerous other agreements and covenants, and the I-49 South Bond Resolution provides remedies upon default by the Commission. These remedies may, in many respects, require judicial actions which are often subject to discretion and delay. Under existing law, the remedies specified by the I-49 South Bond Resolution may not be readily available or may be limited. A court may decide not to order the specific performance of the covenants contained in the I-49 South Bond Resolution. The various legal opinions to be delivered concurrently with the delivery of the Series 2015 Bonds and the Outstanding Parity Bonds will be qualified as to the enforceability of the various legal instruments by limitations imposed by State and federal laws, rulings and decisions and principles of equity affecting 33

44 remedies and by bankruptcy, reorganization or other laws affecting the enforcement of creditors rights generally. Ratings There is no assurance that the ratings assigned to the Series 2015 Bonds at the time of issuance will not be lowered or withdrawn at any time, the effect of which could adversely affect the market price for, and marketability of, the Series 2015 Bonds in the secondary market. See the information under RATINGS herein. Due to the ongoing uncertainty regarding the economy of the United States of America, including, without limitation, matters such as the future political uncertainty regarding the United States debt limit, obligations issued by state and local governments, such as the Series 2015 Bonds, could be subject to ratings downgrades. Additionally, if a significant default or other financial crisis should occur in the affairs of the United States or of any of its agencies or political subdivisions, then such event could also adversely affect the market for and ratings, liquidity, and market value of outstanding debt obligations, including the Series 2015 Bonds. Secondary Market Subject to prevailing market conditions, the Underwriters intend, but are not obligated, to make a market for the Series 2015 Bonds. There is presently no secondary market for the Series 2015 Bonds and no assurance can be given that a secondary market will develop. Consequently, investors may not be able to resell the Series 2015 Bonds purchased should they need or wish to do so for emergency or other purposes, and prospective Series 2015 Bond purchasers should be prepared to hold their Series 2015 Bonds to maturity or prior redemption. Book-Entry Persons who purchase Series 2015 Bonds through DTC Participants become creditors of the DTC Participant with respect to the Series 2015 Bonds. Records of the investors holdings are maintained only by the DTC Participant and the investor. In the event of the insolvency of the DTC Participant, the investor would be required to look to the DTC Participant s estate and to any insurance maintained by the DTC Participant, to make good the investor s loss. Neither the Commission, the State, the Trustee nor the Underwriters are responsible for failures to act by, or insolvencies of, the Securities Depository or any DTC Participant. See THE SERIES 2015 BONDS - Book-Entry Only System herein. LITIGATION There is no litigation now pending or threatened which would restrain or enjoin the sale, execution, issuance or delivery of the Series 2015 Bonds or in any way contesting the validity of said Series 2015 Bonds, the adoption of the General Bond Resolution, the adoption of the First Supplemental Bond Resolution, the adoption of the Second Supplemental Resolution, or any proceeding of the Commission taken with respect to the authorization, sale or issuance of the Series 2015 Bonds or the pledge or application of any moneys provided for the payment of or security for the Series 2015 or the execution and delivery of the Collection Agreement or performance by the Commission or the State thereunder. 34

45 FORWARD-LOOKING STATEMENTS The statements contained in this Official Statement, and in other information provided by the Commission and the State, that are not purely historical, are forward-looking statements, including statements regarding the Commission s and State s expectations, hopes, intentions or strategies regarding the future. All forward-looking statements included in this Official Statement are based on information available to the Commission and the State on the date hereof, and the Commission and the State do not assume any obligation to update any such forwardlooking statements. The forward-looking statements herein are necessarily based on various assumptions and estimates that are inherently subject to numerous risks and uncertainties, including risks and uncertainties relating to the possible invalidity of the underlying assumptions and estimates and possible changes or developments in social, economic, business, industry, market, legal and regulatory circumstances and conditions and actions taken or omitted to be taken by third parties, including customers, suppliers, business partners and competitors, and legislative, judicial and other governmental authorities and officials. Assumptions related to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and, therefore, there can be no assurance that the forward-looking statements included in this Official Statement will prove to be accurate. CERTAIN LEGAL MATTERS The Series 2015 Bonds are issued subject to the approval of legality by Foley & Judell, L.L.P., New Orleans, Louisiana, Bond Counsel. Certain legal matters will be passed upon for the Commission and the State by the Honorable James D. Buddy Caldwell, Attorney General for the State. Certain legal matters will be passed upon for the Underwriters by their counsel, Breazeale, Sachse & Wilson, L.L.P., Baton Rouge, Louisiana. See APPENDIX B Proposed Form of Opinion of Bond Counsel herein for the form of the opinion of Bond Counsel. ENFORCEABILITY OF THE I-49 SOUTH BOND RESOLUTION The remedies available to the owners of the Series 2015 Bonds upon an event of default under the I-49 South Bond Resolution are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory laws and judicial decisions, including specifically the Bankruptcy Code, the remedies in the I-49 South Bond Resolution may not be readily available or may be limited. The various legal opinions to be delivered concurrently with the delivery of the Series 2015 Bonds will be qualified as to enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally. 35

46 TAX EXEMPTION General In the opinion of Bond Counsel, under existing law, interest on the Series 2015 Bonds is excluded from gross income for federal income tax purposes. Bond Counsel is further of the opinion that pursuant to the provisions of the Act, the Series 2015 Bonds, their transfer and the income therefrom shall at all times be exempt from all taxation by the State of Louisiana or any political subdivision thereof. General. The Code imposes a number of requirements that must be satisfied for interest on state and local obligations to be excludable from gross income for federal income tax purposes. These requirements include limitations on the use of bond proceeds and the source of repayment of bonds, limitations on the investment of bond proceeds prior to expenditure, a requirement that excess arbitrage earned on the investment of certain bond proceeds be paid periodically to the United States, except under certain circumstances, and a requirement that information reports be filed with the Internal Revenue Service. The Commission has covenanted that it will, to the extent permitted by the laws of the State, comply with the requirements of the Code in order to maintain the exclusion from gross income of interest on the Series 2015 Bonds for federal income tax purposes. The opinion of Bond Counsel will assume continuing compliance with the covenants of the State pertaining to those sections of the Code which affect the exclusion from gross income of interest on the Series 2015 Bonds for federal income tax purposes and, in addition, will rely on representations by the State with respect to matters solely within the knowledge of the State which Bond Counsel has not independently verified. If the State should fail to comply with its covenants or if the foregoing representations should be determined to be inaccurate or incomplete, interest on the Series 2015 Bonds could become taxable from the date of issuance of the Series 2015 Bonds, regardless of the date on which the event causing such taxation occurs. Bond Counsel has not undertaken to determine (or to inform any person) whether any action taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Series 2015 Bonds may affect the tax status of interest on the Series 2015 Bonds. Except as stated above, Bond Counsel will express no opinion as to any federal, state or local tax consequences resulting from the ownership of, receipt of interest on or disposition of the Series 2015 Bonds. Owners of the Series 2015 Bonds should be aware that (i) the ownership of tax-exempt obligations, such as the Series 2015 Bonds, may result in collateral federal income tax consequences to certain taxpayers, and (ii) certain other federal, state and/or local tax consequences may also arise from the ownership and disposition of the Series 2015 Bonds or the receipt of interest on the Series 2015 Bonds. Furthermore, future laws and/or regulations enacted by federal, state or local authorities may affect certain owners of the Series 2015 Bonds. 36

47 Alternative Minimum Tax Considerations Interest on the Series 2015 Bonds is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals or corporations under the Code. Interest on the Series 2015 Bonds will, however, be included in the adjusted current earnings (for example, the income, including interest on obligations such as the Series 2015 Bonds, used in reports or statements to shareholders or owners or in reports to creditors) of certain corporations, and the alternative minimum taxable income of such corporations must be increased by 75% of the excess of such corporation s adjusted current earnings over its alternative minimum taxable income (determined without regard to such adjustment and prior to reduction for certain net operating losses). Changes in Federal and State Tax Law Tax legislation, administrative actions taken by tax authorities, and court decisions may cause interest on the Series 2015 Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to state income taxation, or otherwise prevent the beneficial owners of the Series 2015 Bonds from realizing the full current benefit of the tax status of such interest. In addition, such legislation or actions (whether currently proposed, proposed in the future or enacted) could affect the market price or marketability of the Series 2015 Bonds. For example, ongoing negotiations between the Executive and Legislative Branches of the United States Government to resolve federal budget deficits may result in the enactment of tax legislation that could significantly reduce the benefit of, or otherwise affect, the exclusion of gross income for federal income tax of interest on all state and local obligations, including the Series 2015 Bonds. It cannot be predicted whether or in what form any such tax legislation might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. In addition, regulatory actions are from time to time announced and proposed, and litigation is threatened or commenced which, if implemented or concluded in a particular matter, could adversely affect the market value of the Series 2015 Bonds. It cannot be predicted whether any such regulatory action will be implemented, how any particular litigation or judicial action will be resolved, or whether the Series 2015 Bonds or the market value thereof would be impacted thereby. Prospective purchasers of the Series 2015 Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, and its impact on their individual situations. The opinions expressed by Bond Counsel are based upon existing legislation and regulations as interpreted by relevant judicial and regulatory authorities as of the date of issuance and delivery of the Series 2015 Bonds, and Bond Counsel has expressed no opinion as of any date subsequent thereto or with respect to any pending or proposed federal or state tax legislation, regulations or litigation. Original Issue Premium The Series 2015 Bonds maturing September 1 in the years 2016, to and including 2034 (the Premium Bonds ) are being offered and sold to the public at a price in excess of their stated principal amounts. Such excess is characterized as a bond premium and must be amortized by an investor purchasing a Premium Bond on a constant yield basis over the remaining term of the Premium 37

48 Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium related to a tax-exempt bond for federal income tax purposes. However, as bond premium is amortized, it reduces the investor's basis in the Premium Bond. Investors who purchase a Premium Bond should consult their own tax advisors regarding the amortization of bond premium and its effect on the Premium Bonds' basis for purposes of computing gain or loss in connection with the sale or exchange of the Premium Bond. Original Issue Discount The Series 2015 Bonds maturing September 1, 2035 (the OID Bonds ) are offered and sold to the public at an original issue discount ( OID ). OID is the excess of the stated redemption price at maturity over the issue price of the OID Bonds. The issue price of the OID Bonds is the initial offering price to the public (other than to bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) at which a substantial amount of the OID Bonds of the same maturity is sold pursuant to that offering. For federal income tax purposes, OID accrues to the owner of a OID Bond over the period to its maturity based on the constant interest rate method, compounded semiannually. With respect to a purchaser of a OID Bond, the portion of OID that accrues during the period such purchaser owns the OID Bond (i) interest is excludable from that purchaser s gross income for federal income tax purposes to the same extent and subject to the same considerations discussed above and (ii) is added to that purchaser s tax basis for purposes of determining gain or loss on the maturity, redemption, sale or other disposition of the OID Bond. Thus, an owner who purchased a OID Bond in the initial public offering at its issue price and holds such OID Bond to its stated maturity will realize no taxable gain for federal income tax purposes upon payment of the stated redemption price of the OID Bond at maturity. The portion of the amount of OID that accrues each year to a corporate owner of a OID Bond is taken into account in computing the corporation s federal alternative minimum tax liability and federal environmental tax liability, although no corresponding cash payment will be received with respect to a OID Bond until its stated maturity or early redemption prior to stated maturity. Owners of the OID Bonds (including owners that purchase a OID Bond other than pursuant to the initial public offering) should consult their own tax advisors as to the determination for federal income tax purposes of the amount of OID properly accruable each year with respect to the OID Bond, the adjusted basis on the OID Bond for purposes of determining taxable gain or loss upon the sale or other disposition of the OID Bond (including sale, redemption or other disposition of the OID Bonds at maturity) and as to other federal tax consequences and any state and local tax aspects of owning the OID Bonds. RATINGS Moody's Investors Service, Inc. ("Moody's"), 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, and Standard & Poor s Ratings Services, a Standard & Poor s Financial Services LLC business ( S&P ), 55 Water Street, New York, New York 10041, have assigned ratings of Aa3 (Negative Outlook) and AA- (Negative Outlook), respectively, to the Series 2015 Bonds. 38

49 Moody's and S&P are collectively referred to as the "Rating Agencies." The Commission, on behalf of the State, furnished each of the Rating Agencies with certain information and materials concerning the Series 2015 Bonds and the State. Generally, each of the Rating Agencies bases its ratings on such information and materials and also on investigations, studies, and assumptions that it may undertake independently. The ratings assigned by Moody s and S&P express only the views of the Rating Agencies. The explanation of the significance of the ratings may be obtained from Moody's and S&P, respectively. A securities rating is not a recommendation to buy, sell or hold securities. There is no assurance that any rating will continue for any period of time or that such rating may not be suspended, lowered, or withdrawn entirely by each of the Rating Agencies if, in its respective judgment, circumstances so warrant. Any revision, suspension, or withdrawal of the ratings on the Series 2015 Bonds may have an effect on the market price thereof. UNDERWRITING The Series 2015 Bonds are being purchased by J.P. Morgan Securities LLC, as Senior Managing Underwriter, and Drexel Hamilton, LLC, Morgan Stanley & Co. LLC, and Stephens Inc., as Co-Managers (collectively, the Underwriters ) at an aggregate purchase price of $81,930, (consisting of the $73,820, par amount of the Series 2015 Bonds, plus net original issue premium of $8,244,600.85, less $133, of underwriters discount). The Bond Purchase Agreement (the Purchase Agreement ) between the Underwriters and the Commission provides that the Underwriters will purchase all of the Series 2015 Bonds if any are purchased. The obligation of the Underwriters to accept delivery of the Series 2015 Bonds is subject to various conditions contained in the Purchase Agreement. The Underwriters intend to offer the Series 2015 Bonds to the public initially at the offering prices set forth on the cover page of this Official Statement, which may subsequently change without any requirement of prior notice. The Underwriters reserve the right to join with dealers and other underwriters in offering the Series 2015 Bonds to the public. The Underwriters may offer and sell the Series 2015 Bonds to certain dealers at prices lower than the public offering price. In connection with this offering, the Underwriters may overallot or effect transactions which stabilize or maintain the market price of the Series 2015 Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage activities. Certain of the Underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various banking and financial services for the Commission and the State for which they received or will receive customary fees and expenses. In the ordinary course of their various business activities, the Underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (which may include bank loans and/or credit default swaps) for their own account and for the accounts of their 39

50 customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve securities and instruments of the State. J.P. Morgan Securities LLC ( JPMS ), one of the Underwriters of the Series 2015 Bonds, has entered into negotiated dealer agreements (each, a Dealer Agreement ) with each of Charles Schwab & Co., Inc. ( CS&Co. ) and LPL Financial LLC ( LPL ) for the retail distribution of certain securities offerings at the original issue prices. Pursuant to each Dealer Agreement (if applicable to this transaction), each of CS&Co. and LPL will purchase Series 2015 Bonds from JPMS at the original issue price less a negotiated portion of the selling concession applicable to any Series 2015 Bonds that such firm sells. Morgan Stanley, parent company of Morgan Stanley & Co. LLC., an underwriter of the Series 2015 Bonds, has entered into a retail distribution arrangement with its affiliate Morgan Stanley Smith Barney LLC. As part of the distribution arrangement, Morgan Stanley & Co. LLC may distribute municipal securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC. As part of this arrangement, Morgan Stanley & Co. LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the Series 2015 Bonds. MUNICIPAL ADVISOR Lamont Financial Services Corporation (the "Municipal Advisor") serves as independent registered municipal advisor to the State on matters relating to debt management. The Municipal Advisor is a financial advisory and consulting organization and is not engaged in the business of underwriting, marketing, or trading municipal securities or any other negotiated instruments. The Municipal Advisor has provided advice as to the plan of financing and the structuring of the Series 2015 Bonds and has reviewed and commented on certain legal documentation, including this Official Statement. The advice on the plan of financing and the structuring of the Series 2015 Bonds was based on materials provided by the State and other sources of information believed to be reliable. The Municipal Advisor has not audited, authenticated, or otherwise verified the information provided by the State or the information set forth in this Official Statement or any other information available to the State with respect to the appropriateness, accuracy, or completeness of disclosure of such information or other information and no guarantee, warranty or other representation is made by the Municipal Advisor respecting the accuracy and completeness of or any other matter related to such information and this Official Statement. VALIDITY OF THE SERIES 2015 BONDS The State Constitution provides that bonds of the State shall not be invalid because of any irregularity or defect in the proceedings or in the issuance and sale thereof and shall be incontestable in the hands of a bona fide purchaser or holder thirty (30) days following publication of the notice of intention to issue such bonds. If no person has instituted an action or proceeding within such 30-day period contesting the validity of the Series 2015 Bonds, the provisions of the I-49 South Bond Resolution, the security for the Series 2015 Bonds, or the validity of any other provisions or proceedings relating to their authorization and issuance, the 40

51 Series 2015 Bonds are presumed conclusively to be legal. The Notice of Intention to Issue Bonds was published in the official journal of the State on June 25, General CONTINUING DISCLOSURE The Commission, on behalf of the State, will enter into an undertaking (the Undertaking ) for the benefit of the owners of the Series 2015 Bonds to file, so long as the Series 2015 Bonds are outstanding, certain financial information and operating data annually and upon the occurrence of certain material events, with the Municipal Securities Rulemaking Board ( MSRB ) electronically through MSRB s Electronic Municipal Market Access System ( EMMA ), and, in the case of notice of certain material events, to the Municipal Securities Rulemaking Board through EMMA. In accordance with the Rule, the Commission, on behalf of the State, has covenanted to provide its Comprehensive Annual Financial Report (the CAFR ) no later than 240 days after the end of each Fiscal Year. The specific nature of the information to be contained in the Annual Report or notices of significant events is set forth in APPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE, pursuant to the requirement of Section (b)(5)(i) of Securities and Exchange Commission Rule 15c2-12 (17 C.F.R. Part 240, c2-12) (the Rule ). A failure by the Commission, on behalf of the State, to comply with the Undertaking will not constitute an Event of Default under the I-49 South Bond Resolution (although Bondholders will have any available remedy at law or in equity). Nevertheless, such a failure must be reported in accordance with the Rule and must be considered by a broker-dealer or municipal securities dealer before recommending the purchase or sale of the Series 2015 Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Series 2015 Bonds and their market price. Prior Undertakings The Commission, on behalf of the State, has entered into prior undertakings (the "Prior Undertakings") for the benefit of the owners of all (i) General Obligation Bonds of the State, (ii) Gasoline and Fuels Tax Revenue Bonds of the State, (iii) State Highway Improvement Revenue Bonds of the State, and (iv) Unclaimed Property Special Revenue Bonds of the State, including any refundings of the foregoing. The Prior Undertakings require the Commission, on behalf of the State, to provide certain financial information and operating data annually and upon the occurrence of certain material events, notice of certain material events, in each case with the MSRB electronically through EMMA. The following summarizes non-compliance with such Prior Undertakings. The Comprehensive Annual Financial Report for the Fiscal Year ended June 30, 2010 was finalized on a timely basis, however, it was not filed with EMMA within 210 days after the end of Fiscal Year ended June 30, 2010, but was filed within approximately 270 days after Fiscal Year ended June 30, As a result of the foregoing, during the five years preceding the date of this Official Statement (the "Compliance Period"), the State inadvertently failed to comply 41

52 with the requirement to provide certain financial information required under the Prior Undertakings with respect to certain Gasoline and Fuels Tax Revenue Bonds and General Obligation Bonds with EMMA in a timely manner. During the Compliance Period, the Commission, on behalf of the State, inadvertently failed to provide notice to EMMA or its predecessors with respect to (1) downgrades of insurers relating to certain General Obligation Bonds and Gasoline and Fuels Tax Revenue Bonds; and (2) rating changes related to upgrades and rating agency recalibrations with respect to certain General Obligation Bonds and certain Gasoline and Fuels Tax Revenue Bonds. As of the date of this Official Statement, all such notices have been filed with EMMA. Certain operating data with respect to certain Gasoline and Fuels Tax Revenue Bonds was inadvertently not timely submitted by the Commission, on behalf of the State, to EMMA or its predecessors during the Compliance Period; however, as of the date of this Official Statement, all such notices and filings have been filed with EMMA. THE FOREGOING DESCRIPTION OF INSTANCES OF NON-COMPLIANCE BY THE STATE WITH CONTINUING DISCLOSURE UNDERTAKINGS SHOULD NOT BE CONSTRUED AS AN ACKNOWLEDGMENT THAT ANY SUCH INSTANCE WAS MATERIAL. The Commission, on behalf of the State, is continuously reviewing and revising its continuing disclosure policies and procedures in order to ensure compliance with its continuing disclosure undertakings in the future on a timely basis. The Commission has enrolled in the EMMA automated reminder system which alerts issuers and obligated persons to upcoming filing deadlines for financial and operating information. In addition, the Commission, on behalf of the State, has conducted an extensive review of its past filings and continuing disclosure undertakings, and has retained counsel, in connection with the Municipalities Continuing Disclosure Cooperation Initiative announced by the U.S. Securities and Exchange Commission. The Division of Administration, on behalf of the State, is responsible for satisfying the reporting requirements under the Rule with respect to numerous appropriation dependent bonds (the Reportable Bonds ), including the filing of audited financial statements, operating data and financial information and notices of listed events. Except in a few instances, audited financial statements, operating data and financial information, and notice of listed events were not filed with EMMA by the Division of Administration, on behalf of the State, during the Fiscal Years ended June 30, 2010, to and including, June 30, As of the date of this Official Statement, all annual financial statements and certain operating data and financial information and notices of listed events have been filed with EMMA. Procedures are being established by the Division of Administration, on behalf of the State, to ensure that the reporting requirements of the Division of Administration, on behalf of the State, under the Rule with respect to the Reportable Bonds are complied with in the future on a timely basis. Act 463 of the 2014 Regular Session of the Louisiana Legislature provides for certain procedures designed to ensure compliance with the Rule. Such legislation, effective August 1, 2014, requires public entities, such as the State, to keep certain records demonstrating 42

53 compliance with the Rule. Additionally, auditors for public entities in the State are required to review the public entity's compliance with such record-keeping requirements, review a sampling of the EMMA filings, and report on the auditor's findings in the annual audited financial statements of such public entity. Other than as described in this Official Statement, the State has complied in all material respects with its prior continuing disclosure undertakings. MISCELLANEOUS The Series 2015 Bonds qualify as collateral for State funds deposited by the State Treasurer. The purpose of this Official Statement is to supply information to prospective buyers of the Series 2015 Bonds. Quotations from and summaries and explanations of the Series 2015 Bonds and of the statutes and documents contained herein do not purport to be complete, and reference is made to such documents and statutes for full and complete statements as to their provisions. This Official Statement is not intended to be a contract or agreement between the Commission and the purchasers and owners of the Series 2015 Bonds. This Official Statement may not be reproduced or used, as a whole or in part, for any purpose other than in connection with the issuance and sale of the Series 2015 Bonds. All data contained herein, including the appendices hereto, have been taken or construed from State records. Insofar as any statements contained in this Official Statement involve matters of opinion, projections or estimates, whether or not expressly stated, they are set forth as such and not as representations of fact. No representation is made that any of the projections will be realized. The Commission, on behalf of the State, will provide appropriate credit information to the nationally recognized rating agencies that rate the State s securities to enable these organizations to review the outstanding ratings. However, the ratings may be revised or withdrawn at any time and the Commission s provision of information to the rating agencies does not ensure the continued existence of ratings. [Remainder of page left intentionally blank] 43

54 The State Treasurer or the Director of the State Bond Commission will deliver a certificate simultaneously with the issuance of the Series 2015 Bonds to the effect that (a) the information, descriptions and statements, including financial statements and data, of or pertaining to the State, contained in the Preliminary Official Statement and the Official Statement, including the cover page and appendices thereto, on the date of the Preliminary Official Statement and the Official Statement, on the date of the sale of the Series 2015 Bonds to the Underwriters and on the date of the delivery thereof, were and are correct in all material respects; (b) insofar as the State and its affairs, including its financial affairs, are concerned, the Preliminary Official Statement and the Official Statement, including the cover page and appendices thereto, did not and do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements contained therein, in the light of the circumstances under which they were made, not misleading; (c) insofar as the descriptions and statements, including financial data, contained in the Preliminary Official Statement and the Official Statement of or pertaining to governmental and/or non-governmental bodies other than the State and their activities contained in the Preliminary Official Statement and in the Official Statement, including the cover page and appendices thereto, are concerned, such information, descriptions, statements and data have been obtained from sources which the Treasurer believes to be reliable and the Treasurer has no reason to believe that they are untrue or incomplete in any material respect; and (d) there has been no material adverse change in the financial condition of the State between the date of the Preliminary Official Statement and the Official Statement and the date of delivery of the Series 2015 Bonds, or from the date of the sale of the Series 2015 Bonds to the Underwriters to and including the date of delivery of the Series 2015 Bonds. The information set forth herein has been obtained from sources which are believed to be reliable but is not guaranteed as to accuracy or completeness by the Commission and is not to be construed as a representation by the Commission. LOUISIANA STATE BOND COMMISSION, ON BEHALF OF THE STATE OF LOUISIANA By: /s/ John N. Kennedy John N. Kennedy, State Treasurer and Chairman, State Bond Commission 44

55 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE STATE OF LOUISIANA UNCLAIMED PROPERTY SPECIAL REVENUE BOND RESOLUTION I-49 PROJECT, AND THE COLLECTION AGREEMENT The following is a general summary of certain provisions of the State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project (the I-49 Bond Resolution or the I-49 South Bond Resolution ), and the Collection Agreement. Summaries of certain definitions contained in the I-49 Bond Resolution are set forth below. Other terms defined in the I-49 Bond Resolution for which summary definitions are not set forth are indicated by capitalization. This summary is not to be considered a full statement of the terms of the I-49 Bond Resolution or the Collection Agreement and accordingly is qualified by reference hereto and is subject to the full texts thereof. Copies of the I-49 Bond Resolution and the Collection Agreement may be obtained from the Commission upon request. Definitions The I-49 Bond Resolution The following are definitions in summary form of certain terms contained in the I-49 Bond Resolution and used herein: Accountant's Certificate shall mean a certificate signed by the State Legislative Auditor, or an independent certified public accountant of recognized standing or a firm of independent certified public accounts of recognized standings selected by the Commission, who may be the accountant or firm of accounts who regularly audits the books of the State. Accreted Value shall mean with respect to any Capital Appreciation Bond, an amount equal to the principal amount of such Capital Appreciation Bond (determined on the basis of the principal amount per $5,000 at maturity thereof) plus the amount assuming semi-annual compounding of earnings which would be produced on the investment of such principal amount, beginning on the dated date of such Capital Appreciation Bond and ending at the maturity date thereof, at a yield which, if produced until maturity, will produce $5,000 at maturity. As of any Valuation Date, the Accreted Value of any Capital Appreciation Bonds shall mean the amount set forth for such date in the Supplemental Resolution authorizing such Capital Appreciation Bonds and as of any date other than a Valuation Date, the sum of (a) the Accreted Value on the preceding Valuation Date and (b) the product of (1) a fraction, the numerator of which is the number of days having elapsed from the preceding Valuation Date and the denominator of which is the number of days from such preceding Valuation Date to the next succeeding Valuation Date, and (2) the difference between the Accreted Values for such Valuation Dates. Act shall mean, collectively, the Louisiana Constitution of 1974, as amended, and statutes of the State, in particular Act No. 413 of the 2011 Regular Session of the A-1

56 Louisiana Legislature, being La. R.S. 9:165.1, and La. R.S. 9:165(C)(2), and other constitutional and statutory authority, as amended and supplemented. Aggregate Debt Service for any period shall mean, as of any date of calculation, the sum of the amounts of Debt Service for such period with respect to all Series; provided, however, that for the purpose of estimating Aggregate Debt Service for any future period, any Option Bonds outstanding during such period shall be assumed to mature on the stated maturity date or mandatory redemption date thereof. Appreciated Value shall mean with respect to any Deferred Income Bond prior to the Interest Commencement Date, an amount equal to the principal amount of such Deferred Income Bond (determined on the basis of the principal amount per $5,000 at the Interest Commencement Date thereof) plus the amount, assuming semi-annual compounding of earnings which would be produced on the investment of such principal amount, beginning on the dated date of such Deferred Income Bond and ending on the interest Commencement Date, at a yield which, if produced until the Interest Commencement Date, will produce $5,000 at the Interest Commencement Date. As of any Valuation Date the Appreciated Value of any Deferred Income Bond shall mean the amount set forth for such date in the Supplemental Resolution authorizing such Deferred Income Bonds and as of any date other than a valuation Date, the sum of (a) the Appreciated Value on the preceding Valuation Date and (b) the product of (1) a fraction, the numerator of which is the number of days having elapsed from the preceding Valuation Date and the denominator of which is the number of days from such preceding valuation Date to the next succeeding Valuation Date, and (2) the difference between the Appreciated Values for such Valuation Dates. "Authorized Department Officer" shall mean the Secretary or the Undersecretary of the Department. Authorized Officer shall mean the Treasurer of the State, the First Assistant Treasurer, the Director of the Commission or any person or persons designated by the commission by resolution to act on behalf of the State under the I-49 Bond Resolution. "Beneficial Owner" shall mean, so long as the Bonds are in the Book-Entry System, any Person who acquires a beneficial ownership interest in a Bond held by DTC. If at any time the Bonds are not held in the Book-Entry System, Beneficial Owner shall mean the Owner for purposes of the I-49 Bond Resolution. Bond or Bonds shall mean any bond or bonds, note or notes, or other obligation or obligations of the State authorized pursuant to the provisions of the Act, including Additional Bonds and Refunding Bonds (and Subordinated Debt), as the case may be, authenticated and delivered under and pursuant to the I-49 Bond Resolution and shall include the Series 2015 Bonds and the Outstanding Parity Bonds. Bond Anticipation Notes shall mean notes or other evidences of indebtedness from time to time issued in anticipation of the issuance of Bonds, the proceeds of which have been or are required to be applied to one or more of the purposes for which Bonds A-2

57 may be issued, and the payment of which is to be made from the proceeds of the Bonds in anticipation of the issuance of which such indebtedness is created. Bond Related Expenses shall mean all fees and expenses of the Commission incurred in connection with the issuance, sale, administration and payment of the Bonds, including, without limitation, the (i) fees and expenses of underwriters, legal counsel and financial advisors, (ii) fees and expenses of fiduciaries under the I-49 Bond Resolution, (iii) the fees and expenses of the Commission for administrative services, (iv) fees, expenses and other amounts due and payable or otherwise required to be paid to the provider of any credit facility, liquidity facility or other credit enhancement facility providing security for the Bonds, and (v) amounts required to be paid to the United States of America in order to comply with the provisions of any covenant relating to the exemption of the interest on the Bonds from federal income taxes contained in the I-49 Bond Resolution. Business Day shall mean any day that is not a Saturday, Sunday or legal holiday in the State or a day on which the State or the Trustee is legally authorized to close. Capital Appreciation Bonds shall mean any Bonds hereafter issued as to which interest is payable only at the maturity or prior redemption of such Bonds. For the purposes of (i) receiving payment of the Redemption Price, if any, of a Capital Appreciation Bond that is redeemed prior to maturity, (ii) receiving payment of a Capital Appreciation Bond if the principal of all Bonds is declared immediately due and payable following an Event of Default as provided in the I-49 Bond Resolution, or (iii) computing the principal amount of Bonds held by the Owner of a Capital Appreciation Bond in giving any notice, consent, request, or demand pursuant to the I-49 Bond Resolution for any purpose whatsoever, the principal amount of a Capital Appreciation Bond shall be deemed to be its Accreted Value. Certified Interest Rate shall mean, with respect to a Series of Commercial Paper Notes or Medium-Term Notes or Variable Interest Rate Bonds maturing on a particular date, the interest rate set forth in the Supplemental Resolution executed on or prior to the date of the first issuance of the Commercial Paper Notes, Medium-Term Notes or Variable Interest Rate Bonds, as the case may be, as determined in accordance with the provisions of the next two paragraphs. With respect to the calculation for the incurrence of Additional Bonds and Refunding Bonds pursuant to the I-49 Bond Resolution, as of the date of the calculation, a Certified Interest Rate shall be determined by the investment banking or financial advisory institution or firm selected by the Commission on the date the proposed Bonds are to be issued for (A) Tax Exempt Bonds, the greater of (i) the average of the Securities Industry and Financial Markets Association Swap Index ( SIFMA Index ) for the twelve (12) month period ending seven (7) days preceding the date of calculation plus 100 basis points, or (ii) the average of the SIFMA Index for the sixty (60) months period ending seven (7) days preceding the date of calculation plus 100 basis points, or (B) Taxable Bonds, the greater of (i) the average of the London Interbank Offered Rate ( LIBOR ) A-3

58 most closely resembling the reset period for the Variable Interest Rate Bonds, Commercial Paper Notes or Medium Term Notes for the twelve (12) month period ending seven (7) days preceding the date of calculation plus 100 basis points, or (ii) the average of LIBOR most closely resembling the reset period for the Variable Interest Rate Bonds, Commercial Paper Notes or Medium Term Notes for the sixty (60) months period ending seven (7) days preceding the date of calculation plus 100 basis points; provided that if the SIFMA Index or LIBOR shall cease to be published, the index to be used in its place shall be that index which the Commission, in consultation with an investment banking firm or financial advisory institution or firm selected by the Commission determines most closely replicates such index, as set forth in a certificate of an Authorized Officer filed with the Trustee. Notwithstanding the foregoing, in no event shall the Certified Interest Rate be in excess of the Maximum Interest Rate. For purposes of calculating the Debt Service Requirement, a Certified Interest Rate shall be that rate of interest determined when the Bonds are issued by an investment banking or financial advisory institution or firm selected by the Commission, (i) in the case of Variable Interest Rate Bonds, as the rate of interest such Variable Interest Rate Bonds would bear if, assuming the same maturity date, terms and provisions (other than interest rate) as the proposed Variable Interest Rate Bonds of such maturity, such proposed Variable Interest Rate Bonds of such maturity were issued at a fixed interest rate, or (ii) in the case of Commercial Paper Notes or Medium-Term Notes as the rate of interest such Commercial Paper Notes or Medium-Term Notes would bear if such Notes were issued as Bonds bearing a fixed interest rate and maturing 30 years after the date of issuance thereof. Commercial Paper Note shall mean any Bond which (a) has a maturity date which is not more than 270 days after the date of issuance thereof and (b) is designated as a Commercial Paper Note in the Supplemental Resolution related to such Bond. Commercial Paper Payment Plan shall mean, with respect to any Series of Commercial Paper Notes and as of any time, the then current Commercial Paper Payment Plan for such notes contained in the Supplemental Resolution related to such Series of Commercial Paper Notes setting forth the sources of funds expected to be utilized by the Commission to pay the principal of and interest on such Commercial Paper Notes; provided, however, that if any Commercial Paper Payment Plan provides for the refunding of any Commercial Paper Note with proceeds of Bonds other than Commercial Paper Notes or Medium-Term Notes that the Commission intends to pay from Pledged Revenues, the principal of such Commercial Paper Note shall, for purposes of the Commercial Paper Payment Plan, be assumed to come due over a period commencing with the due date of the Commercial Paper Note and ending not later than the later of (x) the 30th anniversary of the first issuance of Commercial Paper Notes of such Series or (y) the 10th anniversary of the due date of the Commercial Paper Note to be refunded in installments such that the principal and interest payable on such Commercial Paper Note in each Fiscal Year in such period will be equal to the principal and interest payable on such Commercial Paper Note in each other Fiscal Year in such period. A-4

59 "Commission" shall mean the Louisiana State Bond Commission, created pursuant to Article VII, Section 8 of the State Constitution, or any successor to the duties or functions of the Commission. "Commissioner" shall mean the Commissioner of Administration of the Division of Administration. Credit Facility shall mean a surety bond, a liquidity facility, an irrevocable letter of credit, line of credit, credit agreement, credit facility or guaranty arrangement (other than an Insurance Policy issued by an Insurer). Credit Facility Issuer shall mean any bank or banks, insurance company or companies, or other financial institution or institutions, or any combination of the foregoing, or other person (other than an Insurer) which is the issuer of a Credit Facility. Current Interest Bonds shall mean those Bonds which bear interest payable annually or more frequently. "DTC" shall mean The Depository Trust Company, and successors thereto. Debt Service for any period shall mean, as of any date of calculation and with respect to any Series of Bonds, an amount equal to the sum of (i) the interest accruing during such period on such Series of Bonds except to the extent such interest is to be paid from deposits made from Bond proceeds into the Debt Service Account in the Debt Service Fund, and (ii) that portion of each Principal Installment for such Series which would accrue during such period if such Principal Installment were deemed to accrue daily in equal amounts from the next preceding Principal Installment due date for such Series or, (x) if there should be no preceding Principal Installment due date or (y) such preceding Principal Installment due date is more than one year prior to the due date of such Principal Installment, then from a date one year (or such lesser period as shall be appropriate if Principal Installments shall become due more frequently than annually) preceding the due date of such principal Installment or from the date of issuance of the Bonds of such Series, whichever is later. In the case of Variable Interest Rate Bonds, with respect to a particular period and date of calculation, the interest rate thereon shall be calculated on the assumption that such Bonds will bear interest during such period at the Certified Interest Rate. Such interest and Principal Installments for such Series shall be calculated on the assumption that (x) no Bonds (except for Option Bonds actually tendered for payment prior to the stated maturity thereof and not remarketed) of such Series Outstanding at the date of calculation will cease to be Outstanding except by reason of the payment of each Principal Installment on the due date thereof, (y) the principal amount of Option Bonds tendered for payment before the stated maturity thereof and not remarketed shall be deemed to accrue on the later of (i) the date required to be paid pursuant to such tender or (ii) the date required to be paid pursuant to the terms of the applicable Credit Facility. For purposes of this definition, the principal and interest portions of the Accreted Value of Capital Appreciation Bonds and the Appreciated Value of Deferred Income Bonds becoming due at maturity or by virtue of a Sinking Fund Installment shall be included in the calculations of accrued and unpaid and accruing A-5

60 interest or Principal Installments made under this definition only from and after the date (the Calculation Date ) which is one (1) year (or six months in the case of Capital Appreciation Bonds or Deferred Income Bonds of a particular Series where so provided in the Supplemental Resolution providing for such Series) prior to the date on which such Accreted Value or Appreciated Value becomes so due, and the principal and interest portions of such Accreted Value or Appreciated Value shall be deemed to accrue in equal daily installments from the Calculation Date to such due date. The principal and interest on Reimbursement Obligations shall be included in the calculation of Debt Service (without duplication) as provided in the I-49 Bond Resolution and in the applicable Credit Facility or Insurance Policy. For purposes of calculating Debt Service for the tests set forth in the I-49 Bond Resolution and described in General Provisions for Issuance of Bonds set forth hereinbelow, if any Refundable Principal Installment for any Series of Bonds is included in Debt Service for such period, such computation shall be determined (i) in the case of Refundable Principal Installments with respect to Bonds other than Commercial Paper Notes and Medium-Term Notes, as if each such Refundable Principal Installment had been payable over a period extending from the due date of such Principal Installment through the later of (x) the 30th anniversary of the issuance of such Series of Bonds or (y) the 10th anniversary of the due date of such Refundable Principal Installment, in installments which would have required equal annual payments of principal and interest over such period and (ii) in the case of Refundable Principal Installments with respect to Commercial Paper Notes or Medium-Term Notes, in accordance with the then current Commercial Paper Payment Plan or Medium-Term Note Payment Plan, as applicable, with respect thereto. Interest deemed payable in any Fiscal Year after the actual due date of any Refundable Principal Installment of any Series of Bonds shall be calculated at such rate of interest as the Authorized Officer or an investment banking or financial advisory institution or firm selected by the Authorized Officer, determines would be a reasonable estimate of the rate of interest that would be borne on Bonds maturing at the times determined in accordance with the provisions of the preceding sentence. Debt Service Requirement shall mean, as of any date of calculation, the full amount of interest or Principal Installments coming due in that calendar year on the Bonds. For purposes of this definition, the principal and interest portions of the Accreted Value and Appreciated Value of Capital Appreciation Bonds and Deferred Income Bonds, respectively, becoming due at maturity or by virtue of a Sinking Fund Installment shall be included in the calculations of interest or Principal Installments made under this definition only from and after the date (the Calculation Date ) which is one (1) year (or six months in the case of Capital Appreciation Bonds or Deferred Income Bonds of a particular Series where so provided in the Supplemental Resolution providing for such Series) prior to the date on which such Accreted Value or Appreciated Value becomes so due, and the principal and interest portions of such Accreted Value or Appreciated Value shall be deemed to accrue in equal daily installments from the Calculation Date to such due date. For purposes of calculating the Debt Service Requirement as of any date for any Bonds bearing interest at a Variable Interest Rate, such Bonds shall be deemed to bear interest at the greater of (i) the actual rate of interest then borne by such Bonds for the immediately preceding rate period applicable thereto or (ii) the Certified Interest Rate A-6

61 applicable thereto; provided, however, that whenever a Variable Interest Rate convertible to a fixed rate shall be converted to a fixed rate the Debt Service Requirement for all affected Bonds shall be recalculated as of the conversion date using such fixed rate. Debt Service Reserve Requirement shall mean of any date of calculation, a sum equal to the lesser of (i) 10% of the proceeds of the Bonds and any issue of Series of Additional Bonds payable from the Pledged Revenues, (ii) the highest combined principal and interest requirements for any succeeding calendar year on the Bonds and any issue of Series of Additional Bonds payable from the Pledged Revenues, or (iii) 125% of the average aggregate amount of principal installments and interest becoming due in any calendar year on the Bonds and any issue of Series of Additional Bonds payable from the Pledged Revenues. Defeasance Securities shall mean, to the extent permitted by State law at the time of investment: (i) any bonds or other obligations which constitute direct obligations of, or as to principal and interest are unconditionally guaranteed by, the United States of America; and (ii) certificates that evidence ownership of the right to payments of principal and/or interest on obligations described in clause (i) of this definition, provided that such obligations shall be held in trust by a bank or trust company or a national banking association authorized to exercise corporate trust powers and subject to supervision or examination by federal, state, territorial or District of Columbia authority and having a combined capital, surplus and undivided profits of not less than $50,000,000. Deferred Income Bonds shall mean any Bonds issued under the I-49 Bond Resolution as to which accruing interest is not paid prior to the Interest Commencement Date specified in the Supplemental Resolution authorizing such Bonds and the Appreciated Value for such Bonds is compounded on the Valuation Date for such Series of Deferred Income Bonds. Department shall mean the Department of Transportation and Development. Depository shall mean any bank, trust company, national banking association, savings and loan association, savings bank or other banking association selected by the Commission as a depositary of moneys and securities held under the provisions of the Resolution, and may include the Trustee. DOA Cooperative Endeavor Agreement shall mean the Cooperative Endeavor Agreement (I-49 South) dated as of December 23, 2013, as amended by Amendment No. 1 to Cooperative Endeavor Agreement (I-49 South), each by and among the State of Louisiana, acting by and through the State of Louisiana Division of Administration, the Commission and the Department. A-7

62 Fund or Funds shall mean, as the case may be, each or all of the Funds established in Article V of the I-49 Bond Resolution. I-49 Bond Resolution shall mean, collectively, the I-49 North Bond Resolution and the I-4 South Bond Resolution. I-49 North Bond Resolution shall mean the State of Louisiana Unclaimed Property Special Revenue Bond Resolution - I-49 North Project, adopted by the Commission on November 21, 2013, as supplemented and amended by a First Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution - I-49 North Project, adopted by the Commission on November 21, I-49 Project Costs shall mean all costs incurred in providing the payment for and financing of all or a portion of the costs of funding the construction of a portion of the I-49 South Project, including: (1) interest accruing in whole or in part on Bonds prior to and during construction and for such additional period as the Commission may reasonably determine to be necessary in accordance with the provisions of the I-49 Bond Resolution, including all amounts required by the I-49 Bond Resolution to be paid from the proceeds of Bonds into the Debt Service Account in the Debt Service Fund; (2) the deposit or deposits required to be made under the I-49 Bond Resolution into any fund or account established pursuant to the I-49 Bond Resolution to meet the Debt Service Reserve Requirement for the Bonds or to provide any other reserves for the payment of the Bonds; (3) the costs and expenses of any Credit Facility or Insurance Policy and the costs and expenses, including discounts to the underwriters or other purchasers thereof, legal fees, financial advisory fees, if any, incurred in connection the issuance and sale of the Bonds, or other bonds, notes or other evidences of indebtedness from time to time, the proceeds of which have been or will be required to be applied to one or more purposes for which Bonds could be issued; (4) the payment of principal, premium, if any, and interest when due (whether at the maturity of principal or at the due date of interest or upon redemption) on bonds, notes or other evidences of indebtedness including Subordinated Debt, the proceeds of which have been or will be required to be applied to one or more purposes for which Bonds could be issued; and (5) such purposes as may be provided in the Supplemental Resolution. I-49 South Bond Resolution shall mean the State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project, adopted by the Commission on November 21, 2013, as supplemented and amended by a First Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution A-8

63 I-49 South Project, adopted by the Commission on November 21, 2013, as supplemented and amended by a Second Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project, adopted by the Commission on June 18, I-49 South Project shall mean the costs of construction of a portion of Interstate 49 South from Interstate 10 in the City of Lafayette to the Westbank Expressway in the City of New Orleans. Insurance Policy shall mean the municipal bond new issue insurance policy, if any, issued by an Insurer that guarantees payment of principal of and interest on all or a portion of the Bonds of a Series. Insured Bonds shall mean all or a portion of the Bonds of any Series, the payment of the principal of and interest on which has been insured by an Insurer. Insurer shall mean any nationally recognized company or association engaged in the business of insuring the payment when due of bonds, which may from time to time insure the payment of the principal of and interest on all or a portion of the Bonds of any Series. Interest Commencement Date shall mean, with respect to any particular Deferred Income Bond, the date specified in the Supplemental Resolution of the Commission providing for the issuance of such Bond (which date must be prior to the maturity date for such Bond) after which interest accruing on such Bond shall be payable periodically on dates specified in the Supplemental Resolution, with the first such payment date being the first such periodic date immediately succeeding such Interest Commencement Date. Investment Securities shall mean and include any of the following securities, if and to the extent the same are at the time legal for investment of the funds of the State: (i) any bonds or other obligations which as to principal and interest constitute direct general obligations of, or are unconditionally guaranteed by, the United States of America, including obligations of any of the Federal agencies set forth in clause (iii) below to the extent unconditionally guaranteed by the United States of America; (ii) any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state or of any agency or instrumentality of any such local governmental unit (a) which shall be rated in the highest rating category by Moody's and S&P's, (b) which are not callable prior to maturity or as to which irrevocable instructions have been given to the trustee of such bonds or other obligations by the obligor to give due notice of redemption and to call such bonds for redemption on the date or dates specified in such instructions, (c) which are secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or bonds or other obligations of the character described in clause (i) hereof which A-9

64 fund may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the redemption date or dates specified in the irrevocable instructions referred to in subclause (b) of this clause (ii), as appropriate, and as to which the principal of and interest on the bonds and obligations of the character described in clause (i) hereof which have been deposited in such fund along with any cash on deposit in such fund are sufficient to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this clause (ii) on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to in subclause (b) of this clause (ii), as appropriate, and (d) which bonds, obligations and cash are held by a bank or trust company organized under any laws of any state of the United States of America or any national banking association in a fiduciary capacity; (iii) direct obligations and fully guaranteed certificates of beneficial interest of the Export-Import Bank of the United States; senior debt obligations of the Federal Home Loan Banks; debentures of the Federal Housing Administration; guaranteed mortgage-backed bonds and guaranteed pass-through obligations of the Government National Mortgage Association; guaranteed Title XI financing of the U.S. Maritime Administration; mortgage-backed securities and senior debt obligations of the Federal National Mortgage Association; obligations of the Student Loan Marketing Association; obligations of the Federal Farm Credit Systems; obligations of Resolution Funding Corporation and participation certificates and senior debt obligations of the Federal Home Loan Mortgage Corporation or any successor agency to each of the foregoing; (iv) direct and general obligations of; the State the payment of the principal of and interest on which the full faith and credit of the State is pledged, or any bonds or other obligations the payment of the principal and interest on which are unconditionally guaranteed by the State; (v) certificates that evidence ownership of the right to payments of principal of or interest on obligations described in clause (i), provided that such obligations shall be held in trust by a bank or trust company or a national banking association meeting the requirements for a successor Trustee under Section 909 of the Resolution; (vi) certificates of deposit, whether negotiable or non-negotiable, of any state bank or national association whose headquarters are in the State, which may include the Trustee, which are rated not lower than the second highest rating category by Moody's and S&P's; (vii) repurchase agreements collateralized by any one or more of the securities described in clause (i) and (iii) with any registered broker/dealer subject to the Securities Investors' Protection Corporation jurisdiction and recognized as a primary dealer by the Federal Reserve Bank of New York if such broker/dealer or A-10

65 bank or the holding company or other controlling corporation of such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated Prime 1 or A3 by Moody's and A-1 or A or better by S&P's, provided: (a) a master repurchase agreement or specific written repurchase agreement governs the transaction; and (b) the securities are held by the Trustee or an independent third party acting solely as agent for the Trustee free and clear of any lien, and such third party is (a) a Federal Reserve Bank, (b) a bank which is a member of the Federal Deposit Insurance Corporation and which has combined capital, surplus and undivided profits of not less than $25 million, or (c) and the Trustee shall have received written confirmation from such third party that it holds such securities, free of any lien, as agent for the Trustee; and (c) a perfected first security interest under the Uniform Commercial Code, or book entry procedures prescribed at 31 C.F.R et seq. or 31 C.F.R et seq. in such securities is created for the benefit of the Trustee; and (d) the Trustee will value the collateral securities no less frequently than monthly and will liquidate the collateral securities if any deficiency in the required collateral percentage is not restored within two business days of such valuation; and (e) the fair market value of the securities in relation to the amount of the repurchase obligation, including principal and interest, is equal to at least 100%; (viii) direct and general obligations of any state of the United States of America, to the payment of the principal of and interest on which the full faith and credit of such state is pledged, provided that at the time of their purchase hereunder such obligations are rated in the two highest rating categories by Moody's and S&P's; (ix) obligations of any state of the United States of America or any political subdivision of any state of the United States of America or any agency or instrumentality of any such state or political subdivision which shall be rated in the two highest long-term rating categories by Moody's and by S&P's and the highest short-term rating category by Moody's and by S&P's; and (x) shares of an Investment Company, organized under the Investment Company Act of 1940 as amended, which invests its assets exclusively in obligations of the type described in clause (i), (ii), (iii), (viii) or (ix) and which are rated in the highest rating category by Moody s and S&P. A-11

66 Maximum Interest Rate shall mean, with respect to any particular Variable Interest Rate Bond, a numerical rate of interest, which shall be set forth in the Supplemental Resolution authorizing such Variable Interest Rate Bond, that shall be the maximum rate of interest such Variable Interest Rate Bond may at any time bear. Medium-Term Note shall mean any Bond which (a) has a maturity date which is more than 365 days, but not more than 15 years, after the date of issuance thereof and (b) is designated as a Medium-Term Note in the Supplemental Resolution related to such Bond. Medium-Term Note Payment Plan shall mean, with respect to any Series of Medium-Term Notes and as of any time, the then current Medium-Term Note Payment Plan for such notes contained in the Supplemental Resolution related to such Series of Medium-Term Notes and setting forth the sources of funds expected to be utilized by the Commission to pay the principal of and interest on such Medium-Term Notes; provided, however, that if any Medium-Term Note Payment Plan provides for the refunding of any Medium-Term Note with proceeds of Bonds other than Commercial Paper Notes or Medium-Term Notes that the Commission intends to pay from Pledged Revenues, the principal of such Medium-Term Note shall, for purposes of the Medium-Term Note Payment Plan, be assumed to come due over a period commencing with the due date of the Medium-Term Note and ending not later than the later of (x) the 30th anniversary of the first issuance of Medium-Term Notes of such Series or (y) the 10th anniversary of the due date of the Medium-Term Note to be refunded, in installments such that the principal and interest payable on such Medium-Term Note in each Fiscal Year will be equal to the principal and interest payable on such Medium-Term Note in each other Fiscal Year in such period. Multimodal Bond shall mean a Bond which contains provisions allowing for the payment of interest at different rates during different interest periods and for the establishment of different interest periods and interest rates; the interest rate during any particular interest period may be a Variable Interest Rate or fixed rate. Net Pledged Revenues shall mean all abandoned and unclaimed property transferred to the State Treasurer, as administrator, in any Fiscal Year, less claims paid by the State Treasurer, as administrator, in such Fiscal Year, and less the amount withheld in such Fiscal Year for external auditing costs and for the costs of administering the Uniform Unclaimed Property Act. Option Bonds shall mean Bonds which by their terms may be tendered by and at the option of the Registered Owner or beneficial owner thereof for payment or purchase by the Commission or another party prior to the stated maturity thereof. Outstanding when used with reference to Bonds, shall mean, as of any date, Bonds theretofore or thereupon being authenticated and delivered under the I-49 Bond Resolution except: (i) Bonds cancelled by the Trustee at or prior to such date; A-12

67 (ii) Bonds (or portions of Bonds) for the payment or redemption of which moneys, equal to the principal amount or Redemption Price thereof, as the case may be, with interest to the date of maturity or redemption date, shall be held in trust under the I-49 Bond Resolution and set aside for such payment or redemption (whether at or prior to the maturity or redemption date), provided that if such Bonds (or portions of Bonds) are to be redeemed, notice of such redemption shall have been given or provision satisfactory to the Trustee shall have been made for the giving of such notice as provided in Article IV of the I-49 Bond Resolution; (iii) Bonds in lieu of or in substitution for which other Bonds shall have been authenticated and delivered pursuant to the I-49 Bond Resolution; (iv) Bonds deemed to have been paid as provided in the I-49 Bond Resolution; and (v) Option Bonds deemed tendered in accordance with the provisions of the Supplemental Resolution authorizing such Option Bonds on the applicable adjustment or conversion date, if interest thereon shall have been paid through such applicable date and the purchase price thereof shall have been paid or amounts are available for such payment as provided in the I-49 Bond Resolution. Outstanding Parity Bonds shall mean the $21,080,000 State of Louisiana Unclaimed Property Special Revenue Bonds, Series 2013 (I-49 South Project), issued and delivered on December 23, 2013 pursuant to the provisions of the I-49 Bond Resolution. Pledged Revenues shall mean monies on deposit in the I-49 South Account of the Unclaimed Property Leverage Fund, all amounts paid under the DOA Cooperative Endeavor Agreement, and all Funds and Accounts created under the I-49 Bond Resolution (other than the Bond Proceeds Fund), including Investment Securities held in any such Fund or Account, together with all proceeds and revenues of the foregoing and all of the Commission s right, title and interest in and to the foregoing. Principal Installment shall mean, as of any date of calculation and with respect to any Series, so long as any Bonds thereof are Outstanding, (i) the principal amount of Bonds of such Series due on a certain future date for which no Sinking Fund Installments have been established, or (ii) the unsatisfied balance (determined as provided in the I-49 Bond Resolution) of any Sinking Fund Installments due on a certain future date for Bonds of such Series, plus the amount of the sinking fund redemption premiums, if any, which would be applicable upon redemption of such Bonds on such future date in a principal amount equal to said unsatisfied balance of such Sinking Fund Installments, or (iii) if such future dates coincide as to different Bonds of such Series, the sum of such principal amount of Bonds and of such unsatisfied balance of Sinking Fund Installments due on such future date plus such applicable redemption premiums, if any. Record Date shall mean with respect to an interest payment date for a particular Series of Bonds, unless otherwise provided by the Supplemental Resolution A-13

68 authorizing such Series, the fifteenth day (or if such day shall not be a Business Day, the preceding Business Day) next preceding such interest payment date. Refundable Principal Installment shall mean any Principal Installment which the Commission intends to pay with moneys which are not Pledged Revenues; provided, however, that (i) in the case of Bonds other than Commercial Paper Notes or Medium- Term Notes, such intent shall have been expressed in the Supplemental Resolution relating to such Series of Bonds, (ii) in the case of Commercial Paper Notes, such intent shall be expressed in the then current Commercial Paper Payment Plan for such Commercial Paper Notes and (iii) in the case of Medium-Term Notes, such intent shall be expressed in the then current Medium-Term Note Payment Plan for such Medium-Term Notes; and provided, further, that such Principal Installment shall be a Refundable Principal Installment only through the penultimate day of the month preceding the month in which such Principal Installment comes due or such earlier time as the Commission no longer intends to pay such Principal Installment with moneys which are not Pledged Revenues. "Refunding Bonds" shall mean all Bonds, whether issued in one or more Series, authenticated and delivered on original issuance pursuant to Section 204 of the I-49 Bond Resolution, and any Bonds thereafter authenticated and delivered in lieu of or in substitution for such Bonds pursuant to Article III or Section 406 or Section 1106 of the I-49 Bond Resolution. Reimbursement Obligations shall mean obligations for payment of advances or loans, together with interest thereon, under Credit Facilities and Bond Insurance Policies, pursuant to the I-49 Bond Resolution. Reserve Credit Facility shall mean any Credit Facility, Insurance Policy, surety bond or similar obligation, as designated in a Supplemental Resolution for each Series of Reserve Secured Bonds. Reserve Secured Bonds shall mean a Series of Bonds for which the Supplemental Resolution related to such Series provide that the payment of the principal or Redemption Price, if any, of, and interest on, the Bonds of such Series shall be secured by amounts on deposit and investments held in a designated subaccount in the Debt Service Reserve Account. Reserve Valuation Deficiency shall mean, as to each Debt Service Reserve Requirement, as of any calculation date, the amount of each such Reserve Requirement less the value of the cash, investments and Reserve Credit Facilities held in the related subaccount in the Debt Service Reserve Account, as determined on each January 1 pursuant to the I-49 Bond Resolution, or as otherwise set forth in a Supplemental Resolution. Series shall mean all of the Bonds authenticated and delivered on original issuance and identified pursuant to the Resolution or the Supplemental Resolution authorizing such Bonds as a separate Series of Bonds, and any Bonds thereafter A-14

69 authenticated and delivered in lieu of or in substitution for such Bonds pursuant to the I-49 Bond Resolution, regardless of variations in maturity, interest rate, Sinking Fund Installments, or other provisions. Series 2013 North Pledged Revenues shall mean monies on deposit in the I-49 North Account of the Unclaimed Property Leverage Fund, all amounts paid under the DOA Cooperative Endeavor Agreement, and all Funds and Accounts created under the I-49 Bond Resolution (other than the Bond Proceeds Fund), including Investment Securities held in any such Fund or Account, together with all proceeds and revenues of the foregoing and all of the Commission s right, title and interest in and to the foregoing. Sinking Fund Installment shall mean with respect to a Series an amount so designated which is established pursuant to a Supplemental Resolution adopted with respect to such Series. State Contract shall mean the Unclaimed Property Collection and Allocation Agreement entered into by the State, acting through the Commissioner of Administration, the State Treasurer, the Commission and the Trustee, dated as of December 1, 2013, together with any and all amendments and supplements thereto. Subordinated Debt shall mean bonds, notes or other evidences of indebtedness, including any payments relating to any Credit Facility or Insurance Policy, issued or incurred by the Commission pursuant to and complying with the provisions of the I-49 Bond Resolution. Supplemental Resolution shall mean any resolution supplemental to or amendatory of the Resolution adopted by the Commission in accordance with Article X of the I-49 Bond Resolution. Taxable Bonds shall mean any Bonds other than Tax Exempt Bonds. Tax Exempt Bonds shall mean any Bonds the interest on which is excluded from gross income for federal income tax purposes. Trustee shall mean the trustee appointed pursuant to a Supplemental Resolution, as its successor or successors and any corporation which may at any time be substituted in its place pursuant to the I-49 Bond Resolution. Unclaimed Property shall mean abandoned and unclaimed property required to be deposited with the State Treasurer, as administrator, pursuant to the Uniform Unclaimed Property Act. Unclaimed Property Leverage Fund shall mean the Unclaimed Property Leverage Fund created pursuant to the Act. Uniform Unclaimed Property Act shall mean the Uniform Unclaimed Property Act of 1997, being La. R.S. 9:151 through La. R.S. 9:181, inclusive. A-15

70 Valuation Date shall mean (i) with respect to any Capital Appreciation Bonds, the date or dates set forth in the Supplemental Resolution authorizing such Bonds on which specific Accreted Values are assigned to the Capital Appreciation Bonds and (ii) with respect to any Deferred Income Bonds, the date or dates prior to the Interest Commencement Date set forth in the Supplemental Resolution authorizing such Bonds on which specific Appreciated Values are assigned to the Deferred Income Bonds. Variable Interest Rate shall mean, when used with respect to any Bond having (or determined by reference to) an interest rate which is subject to future change (through a remarketing, reissuance or an auction or bidding system) so that at the date any calculation of interest thereon is required to be made hereunder, the interest payable at any future time or for any interest period (which is relevant to such calculation) is not known. A Multimodal Bond shall be deemed to be a Variable Interest Rate Bond unless and until it has been irrevocably converted to bear a fixed interest rate for the entire balance of its term. Variable Interest Rate Bonds for any period of time, shall mean Bonds which during such period bear a Variable Interest Rate, provided that Bonds the interest rate on which shall have been fixed for the remainder of the term thereof shall no longer be Variable Interest Rate Bonds. General Provisions for Issuance of Bonds All (but not less than all) the Bonds of each Series shall be executed by the Commission under the I-49 Bond Resolution and delivered to the Trustee and thereupon shall be authenticated by the Trustee and by it delivered to the Commission or upon its order, but only upon the receipt by the Trustee of: (1) An Opinion of Bond Counsel to the effect that (i) the Commission has the right and power to adopt the I-49 Bond Resolution, and the I-49 Bond Resolution has been duly and lawfully adopted by the Commission, is in full force and effect and is valid and binding upon the Commission, and no other authorization for the I-49 Bond Resolution is required; (ii) the I-49 Bond Resolution creates the valid pledge which it purports to create of the Pledged Revenues under the I-49 Bond Resolution, subject to the provisions of the I-49 Bond Resolution permitting the application thereof for the purposes and on the terms and conditions set forth in the I-49 Bond Resolution; and (iii) the Bonds of such Series are valid and binding obligations of the State as provided in the I-49 Bond Resolution and entitled to the benefits of the I-49 Bond Resolution and of the Act as amended to the date of such Opinion, and such Bonds have been duly and validly authorized and issued in accordance with law, including the Act as amended to the date of such opinion, and in accordance with the I-49 Bond Resolution; provided, that such Opinion may take exception as to the effect of, or for restrictions or limitations imposed by or resulting from, bankruptcy, insolvency, debt adjustment, moratorium, reorganization or other similar laws, judicial decisions and principles of equity affecting creditors' rights generally and judicial discretion and the valid exercise of the sovereign A-16

71 police powers of the State of Louisiana and of the constitutional power of the United States of America and may state that no opinion is being rendered as to the availability of any particular remedy; (2) A written order as to the delivery of such Bonds, signed by an Authorized officer; (3) In the case of each Series of Bonds, a copy of the Supplemental Resolution authorizing such Bonds, certified by an Authorized Officer, which shall, among other provisions, specify: (a) the authorized principal amount, designation and Series of such Bonds; (b) the purposes for which such Series of Bonds is being issued, which shall be (i) the purposes specified in the I-49 Bond Resolution, or (ii) the refunding of Bonds as provided in the I-49 Bond Resolution; (c) the date, and the maturity date or dates, of the Bonds of such Series; (d) whether the Bonds of such Series shall be Reserve Secured Bonds, Capital Appreciation Bonds, Deferred Income Bonds, Commercial Paper Notes, Medium-Term Notes, Bond Anticipation Notes, Current Interest Bonds, Multimodal Bonds, Taxable Bonds or Tax Exempt Bonds; (e) the terms of any Escrow Deposit Agreement, Credit Facility or Bond Insurance Policy to be entered into in connection with such Series and the source and priority of payment of any premium, fees, charges, penalties or other amounts due under any of the same in excess of the stated amount therein; (f) the denominations of, and the manner of dating, numbering and lettering, the Bonds of such Series, and whether the book entry registration system set forth in the I-49 Bond Resolution shall be applicable to the proposed Series of Bonds; (g) the Paying Agent or Paying Agents and the place or places of payment of the principal and Redemption Price, if any, of, and interest on, the Bonds of such Series; (h) the Redemption Price or Prices, if any, and, subject to Article IV of the I-49 Bond Resolution, the redemption terms for the Bonds of such Series; (i) the amount and due date of each Sinking Fund Installment, if any, for Bonds of like maturity of such Series, provided that each Sinking Fund Installment due date shall fall upon an interest payment date for such Bonds; (j) if so determined by the Commission, provisions for the sale of the Bonds of such Series; (k) the amount (or the method of determining the amount), if any, to be deposited from the proceeds of such Series of Bonds or other sources in the Debt Service Account in the Debt Service Fund and provisions for the application thereof to the payment of all or a portion of the interest on such Series of Bonds or any other Series of Bonds; (l) the amount (or method of determining the amount), if any, to be deposited from the proceeds of such Series of Bonds in the Debt Service Reserve Account in the Debt Service Fund and the replenishment mechanism for such Debt Service Reserve Account in the event of a withdrawal or Reserve Valuation Deficiency; (m) the form of the Bonds of such Series and the form of the Trustee's certificate of authentication, which forms shall be, respectively, substantially in the forms set forth in the I-49 Bond Resolution, with such variations, omissions and insertions as are required or permitted by the Resolution; (n) with regard to Option Bonds, provisions regarding tender and payment thereof; and (o) for a Series of Reserve Secured Bonds, specify the qualifications of any provider of a Reserve Credit Facility for deposit into the particular subaccount in the Debt Service Reserve Account securing such Reserve Secured Bonds. A-17

72 (4) To the extent required, the amount, if any, necessary for deposit in a subaccount in the Debt Service Reserve Account of the Debt Service Fund so that the amount deposited to such Account shall equal the Debt Service Reserve Requirement for such Series of Bonds calculated immediately after the authentication and delivery of such Series of Bonds, including any amounts necessary to cure any deficiencies in such Account at the time of issuance of such Bonds or, in lieu of depositing such amount, the deposit in the Debt Service Reserve Account of the Debt Service Fund of a Reserve Credit Facility; (5) Except in the case of Refunding Bonds, a certificate of an Authorized Officer stating that the Commission is not in default in the performance of any of the covenants, conditions, agreements or provisions contained in the I-49 Bond Resolution. (6) In the case of a Series of Commercial Paper Notes, the Commercial Paper Payment Plan with respect to such Commercial Paper Notes which shall be set forth in the Supplemental Resolution, which may be amended from time to time to reflect changes, if any, in the expectations of the Commission with respect to the sources of funds to be utilized to pay principal of and interest on such Commercial Paper Notes; (7) In the case of a Series of Medium-Term Notes which shall be set forth in the Supplemental Resolution, which may be amended from time to time to reflect changes, if any, in the expectations of the Commission with respect to the sources of funds to be utilized to pay principal of and interest on such Medium-Term Notes; (8) In the case of any Series of Refunding Bonds issued pursuant to the provisions of the I-49 Bond Resolution, a certificate of an Authorized Officer stating that as a result of the refunding the Aggregate Debt Service will be reduced upon issuance of the Refunding Bonds; (9) If Option Bonds shall be issued, a Credit Facility shall be in effect upon the date of authentication and delivery of such Bonds in such an amount that would accommodate an election by all Bondowners to tender to the Commission for purchase or payment the entire aggregate Outstanding principal amount of such Series of Option Bonds; and (10) Such further documents, moneys, securities and evidences of deposit of funds with the Trustee as are required by the provisions of the I-49 Bond Resolution or any Supplemental Resolution adopted pursuant to Article X of the I-49 Bond Resolution. Reimbursement Obligations Reimbursement Obligations may be incurred concurrently with the issuance of the Bonds of any Series authorized pursuant to the provisions of the I-49 Bond Resolution for which a Credit Facility or Insurance Policy is being provided with respect to such Bonds (or a maturity or maturities or interest rate within a maturity thereof) by a third party. Such Reimbursement Obligations shall be incurred for the purpose of evidencing the Commission's obligation to repay any advances or loans made to, or on behalf of, the Commission in connection with such Credit Facility or Insurance Policy; provided, however, that the stated maximum principal amount of A-18

73 any Reimbursement Obligations shall not exceed the aggregate principal amount of the Bonds with respect to which such Credit Facility or Insurance Policy is being provided, and such number of days' interest thereon as the Commission shall determine prior to the issuance thereof, but not in excess of (i) in the case of an Insurance Policy all interest due with respect to an Insurance Policy, or (ii) in the case of a Credit Facility, three hundred sixty-six (366) days' interest thereon, computed at the maximum interest rate applicable thereto, as provided in the applicable Credit Facility included in the Supplemental Resolution. Special Provisions Relating to Reimbursement Obligations Except as otherwise provided in the Supplemental Resolution related to a Series of Reimbursement Obligations, for the purposes of (i) receiving payment of a Reimbursement Obligation, whether at maturity or upon redemption or (ii) computing the principal amount of Bonds held by the Registered Owner of a Reimbursement Obligation in giving to the Commission any notice, consent, request, or demand pursuant hereto for any purpose whatsoever, or (iii) computing the amount of Debt Service on a Series of Bonds, the principal amount of a Reimbursement Obligation shall be deemed to be the actual amount advanced that the Commission shall owe thereon, less any prior repayments thereof. Capital Appreciation Bonds; Deferred Income Bonds For the purposes of (i) receiving payment of the Redemption Price if a Capital Appreciation Bond or Deferred Income Bond is redeemed prior to maturity, or (ii) receiving payment of a Capital Appreciation Bond or Deferred Income Bond if the principal of all Bonds is declared immediately due and payable following an Event of Default, as provided in the I-49 Bond Resolution, or (iii) computing the principal amount of Bonds held by the registered owner of a Capital Appreciation Bond or Deferred Income Bond in giving to the Commission or the Trustee any notice, consent, request or demand pursuant to the I-49 Bond Resolution for any purpose whatsoever, or (iv) determining whether any Capital Appreciation Bond or Deferred Income Bond has been paid or deemed to have been paid pursuant to the I-49 Bond Resolution, the principal amount of a Capital Appreciation Bond or Deferred Income Bond shall be deemed to be its Accreted Value or Appreciated Value, respectively. The Pledge Effected by the I-49 Bond Resolution (a) The Bonds are special and limited obligations of the State payable solely from the Pledged Revenues. There is pledged and assigned as security for the payment of the principal and Redemption Price of, and interest on, the Bonds in accordance with their terms and the provisions of the I-49 Bond Resolution, subject only to the provisions of the I-49 Bond Resolution permitting the application thereof for the purposes and on the terms and conditions set forth in the I-49 Bond Resolution, all of the Pledged Revenues. The principal, premium, if any, and interest on the Bonds are payable solely from the Pledged Revenues and are not general obligations of the State or any political subdivision thereof and the faith and credit of the State is not pledged to the payment of the principal of, premium, if any, or interest on the Bonds. A-19

74 (b) All Pledged Revenues shall immediately be subject to the lien of this pledge without any physical delivery thereof or further act, and the lien of this pledge shall be valid and binding as against all persons having claims of any kind in tort, contract or otherwise against the Commission, on behalf of the State, irrespective of whether such persons have notice thereof. (c) Nothing contained in this section shall be construed as limiting any authority granted to the Commission elsewhere in the I-49 Bond Resolution to issue Subordinated Debt. Bond Proceeds Fund (a) There shall be paid into the Bond Proceeds Fund the amounts required to be so paid by the provisions of the Resolution. The Treasurer shall apply the amounts on deposit in the Bond Proceeds Fund to pay I-49 Project Costs upon receipt of a request for payment from an Authorized Department Officer. When the payment of all I-49 Project Costs anticipated to be paid from proceeds of the Bonds have in fact been paid, which fact shall be evidenced to the Trustee by a certificate of an Authorized Department Officer delivered to the Trustee, the balance in the Bond Proceeds Fund shall be transferred to the Debt Service Fund and applied to the payment of principal of the Bonds as designated by the Authorized Officer. The date upon which the I-49 Project Costs have been paid shall be evidenced to the Commission and the Trustee by a certificate signed by an Authorized Department Officer. The certificate shall set forth the I-49 Project Costs and state that, except for amounts not then due and payable, or the liability for the payment of which is being contested or disputed in good faith by the Department, the payment of I-49 Project Costs have been paid. Notwithstanding the foregoing, such certificate shall state that it is given without prejudice to any rights against third parties that exist at the date of such certificate or which may subsequently come into being. (b) Notwithstanding any of the provisions of this section, if five (5) days prior to any interest payment date with respect to any Series of Bonds the amount on deposit in the Debt Service Account shall be less than the amount required to be on deposit in such Account on such interest payment date, the Treasurer shall transfer from the Bond Proceeds Fund to the Trustee for deposit in the Debt Service Account in the Debt Service Fund the amount necessary (or all moneys in said Bond Proceeds Fund, if necessary) to make up such deficiency. (c) If at any time the amount on deposit in the Debt Service Reserve Account in the Debt Service Fund shall be less than the Debt Service Reserve Requirement, and the amounts on deposit in the Bond Proceeds Fund are not needed for transfer to the Debt Service Account in the Debt Service Fund pursuant to subsection (b) above, the Treasurer shall transfer from the Bond Proceeds Fund to the Trustee for deposit in the Debt Service Reserve Account in the Debt Service Fund the amount necessary (or all moneys in said Bond Proceeds Fund, if necessary) to make up such deficiency. Payments into Certain Funds In each month, upon receipt of monies pursuant to the State Contract and upon receipt of any monies under the DOA Cooperative Endeavor Agreement, but in no event later than the A-20

75 twentieth day of each month (or the next Business Day thereafter if such twentieth day is not a Business Day), beginning January 20, 2015, the Trustee shall deposit Pledged Revenues into the following Funds and Accounts, in the following order of priority the amounts set forth below: (1) To the Debt Service Fund, (i) for credit to the Debt Service Account in the Debt Service Fund, the amount, if any, required so that the balance in said Account shall equal the sum of the amounts of Debt Service Requirement on all Series of Bonds for the next respective succeeding interest payment dates and/or principal payment dates for each Series plus any additional amounts as may be necessary to ensure payment in full of the principal of and interest on the Bonds which are due on each interest payment date and/or principal payment date in that calendar year, provided that, (a) for the purposes of computing the amount to be deposited in said Account, there shall be excluded from the balance in said Account, the amount, if any, set aside in said Account from the proceeds of Bonds or investment earnings for the payment of interest on Bonds less the amount of such proceeds or investment earnings to be applied in accordance with the Resolution to the payment of interest accrued and unpaid and to accrue on Bonds to the next interest payment date and (b) any amount deposited into such account that is in excess of the minimum amount required to be deposited therein for such calendar year; and (ii) for credit to the Debt Service Reserve Account in the Debt Service Fund, (a) the amount set forth in a Supplemental Resolution regarding replenishment of the Debt Serve Reserve Account as a result of the most recent Reserve Valuation Deficiency, and (b) following a withdrawal under Section 506, and until the full amount of the Debt Service Reserve Requirement applicable for all subaccounts in the Debt Service Reserve Account is restored, the amount, if any, required for such subaccount to equal the Debt Service Reserve Requirement as set forth in a Supplemental Resolution provided that any payments received under the DOA Cooperative Endeavor Agreement shall only be used to replenish the appropriate Debt Service Reserve Account in the Debt Service Fund; and (2) To the Subordinated Debt Fund, the amount, if any required, to pay or provide for payment of the Sinking Fund Installments of and interest on each issue of Subordinated Debt and reserves therefor and the amounts, if any to pay tendered Subordinated Debt, in accordance with the resolution or other debt instrument authorizing such issue of Subordinated Debt; provided, however, that so long as there shall be held in the Debt Service Account in the Debt Service Fund an amount sufficient to pay in full all outstanding Bonds in accordance with their terms (including principal or applicable sinking fund Redemption Price and interest thereon), no transfers shall be required to be made to the Debt Service Fund. Debt Service Fund Debt Service Account (a) Except as may otherwise be provided in a Commercial Paper Payment Plan or a Medium-Term Note Payment Plan set forth in a Supplemental Resolution with respect to a Refundable Principal Installment of Bonds of a particular Series, the Trustee shall pay out of the Debt Service Account in the Debt Service Fund to the respective Paying Agents (i) on or before each interest payment date for any of the Bonds, the amount required for the interest payable on such date; (ii) on or before each Principal Installment due date, the amount required for the A-21

76 Principal Installment payable on such due date; and (iii) on or before any redemption date for the Bonds, the amount required for the payment of interest on the Bonds then to be redeemed. Such amounts shall be applied by the Paying Agents on and after the due dates thereof. The Trustee shall also pay out of the Debt Service Account in the Debt Service Fund the accrued interest included in the purchase price of Bonds purchased. (b) Amounts accumulated in the Debt Service Account in the Debt Service Fund with respect to any Sinking Fund Installment (together with amount accumulated therein with respect to interest on the Term Bonds for which such Sinking Fund Installment was established) may and, if so directed by the Commission, shall be applied by the Trustee, on or prior to the fortieth (40th) day next preceding the due date of such Sinking Fund Installment to (i) the purchase of the Term Bonds for which such Sinking Fund Installment was established, or (ii) the redemption at the applicable sinking fund Redemption Price of such Term Bonds, if then redeemable by their terms. All purchases of any Bonds pursuant to this subsection (b) shall be made at prices not exceeding the applicable sinking fund Redemption Price of such Term Bonds plus accrued interest, and such purchases shall be made by the Trustee as directed in writing from time to time by the Commission. The applicable sinking fund Redemption Price (or principal amount of maturing Bonds) of any Bonds so purchased or redeemed shall be deemed to constitute part of the Debt Service Account in the Debt Service Fund until such sinking Fund Installment date, for the purpose of calculating the amount of such Account. As soon as practicable after the fortieth (40th) day preceding the due date of any such Sinking Fund Installment, the Trustee shall proceed to call for redemption, by giving notice as provided in the I-49 Bond Resolution, on such due date Bonds of the Series and maturity for which such Sinking Fund Installment was established (except in the case of Bonds maturing on a Sinking Fund Installment date) in such amount as shall be necessary to complete the retirement of the unsatisfied balance of such Sinking Fund Installment after making allowance for any Bonds purchased or redeemed pursuant to subsection (e) of this section which the Commission has directed the Trustee to apply as a credit against such Sinking Fund Installment as provided therein. The Trustee shall pay out of the Debt Service Account in the Debt Service Fund to the appropriate Paying Agents, on or before such redemption date (or maturity date), the amount required for the redemption of the Bonds so called for redemption (or for the payment of such Bonds then maturing), and such amount shall be applied by such Paying Agents to such redemption (or payment). All expenses in connection with the purchase or redemption of Bonds shall be paid by the Commission from amounts available therefor pursuant to the State Contract. (c) Amounts accumulated in the Debt Service Account with respect to any principal amount of Serial Bonds (including, in the case of any Option Bond, the principal amount thereof tendered for payment prior to the stated maturity thereof) due (or so tendered for payment) on a certain future date (together with amounts accumulated therein with respect to interest on such Serial Bonds) may be applied by the Commission on or prior to the due date thereof, to (i) the purchase of such Serial Bonds or (ii) the redemption of such Serial Bonds at the applicable Redemption Price, if then redeemable by their terms. All purchases of any Serial Bonds pursuant to this subsection (c) shall be made at prices not exceeding the principal amount of such Serial Bonds plus accrued interest, and such purchases shall be made in such manner as the Commission shall determine. The principal amount of any Serial Bonds so purchased or redeemed shall be deemed to constitute part of the Debt Service Account until such due date, for the purpose of calculating the amount of such account. A-22

77 (d) The amount, if any, deposited in the Debt Service Account in the Debt Service Fund from the proceeds of each Series of Bonds shall be set aside in such Account and applied to the payment of interest on the Bonds of such Series (or Refunding Bonds issued to refund such Bonds) as the same become due and payable. The amount, if any, deposited in the Debt Service Account from the proceeds of Subordinated Debt of the Commission shall be set aside in such account and applied to the payment of interest on Bonds in accordance with the Supplemental Resolution related to such Subordinated Debt. (e) In the event of the refunding or defeasance of any Bonds, the Trustee shall, if the Commission so directs, withdraw from the Debt Service Account in the Debt Service Fund all, or any portion of, the amounts accumulated therein with respect to Debt Service on the Bonds being refunded or defeased and deposit such amounts with itself as Trustee to be held for the payment of the principal or Redemption price, if applicable, and interest on the Bonds being refunded or defeased; provided that such withdrawal shall not be made unless immediately thereafter (i) the Bonds being refunded or defeased shall be deemed to have been paid pursuant to subsection (b) of Section 1201 and (ii) the amount remaining in the Debt Service Account, after giving effect to the issuance of any obligation being issued to refund any Bonds being refunded and the disposition of the proceeds thereof, shall not be less than the requirement of such account pursuant to the I-49 Bond Resolution. In the event of such refunding, the Commission may also direct the Trustee to, withdraw from the Debt Service Account in the Debt Service Fund all, or any portion of, the amounts accumulated therein with respect to Debt Service on the Bonds being refunded and deposit such amounts in any Fund or Account under the I-49 Bond Resolution; provided, however, that such withdrawal shall not be made unless items (i) and (ii) referred to hereinabove have been satisfied and provided, further, that, at the time of such withdrawal, there shall exist no deficiency in any Fund or Account held under the I-49 Bond Resolution. (f) Upon any purchase or redemption of Bonds of any Series and maturity for which Sinking Fund Installments shall have been established with moneys in the Debt Service Account of the Debt Service Fund, there shall be credited toward each such Sinking Fund Installment thereafter to become due such amounts as may be directed by the Commission. The portion of any such Sinking Fund Installment remaining after the deduction of any such amounts credited toward the same (or the original amount of any such Sinking Fund Installment if no such amounts shall have been credited toward the same) shall constitute the unsatisfied balance of such Sinking Fund Installment for the purpose of calculation of Sinking Fund Installments due on a future date. Debt Service Fund Debt Service Reserve Account (a) If and to the extent provided in the Supplemental Resolution for any Series of Bonds, there shall be established one or more subaccounts in the Debt Service Reserve Account in the Sinking Fund for the benefit and security of each one or more Series of Bonds designated as Reserve Secured Bonds as provided in the Supplemental Resolution. (b) There shall be deposited in the Debt Service Reserve Account of the Debt Service Fund, (i) proceeds of Bonds or other moneys identified in a Supplemental Resolution, (ii moneys received by the Trustee under the provisions of the DOA Cooperative Endeavor A-23

78 Agreement, and (iii) all other moneys received by the Trustee that are accompanied by directions that such moneys are to be deposited into the Debt Service Reserve Account. The Trustee agrees that if there is a transfer from the Debt Service Reserve Account to the Debt Service Fund as a result of an insufficiency in the Debt Service Fund, the Trustee shall immediately make a demand on the Commissioner under the DOA Cooperative Endeavor Agreement for payment of any insufficiency in the Debt Service Reserve Account of the Debt Service Fund. (c) If on any interest or Principal Installment due date for Reserve Secured Bonds, payment for such interest or Principal Installment in full has not been made or provided for after giving effect to the transfers to the Debt Service Account in the Debt Service Fund provided for in the I-49 Bond Resolution, the Trustee shall forthwith withdraw from the applicable account of the Debt Service Reserve Account in the Debt Service Fund an amount which, together with amounts on deposit in the Debt Service Account or with the appropriate Paying Agent available for such payment, shall be sufficient to make such payment in full, and such amount so withdraw shall be transferred to the appropriate Paying Agent for application to such payment. (d) Whenever the amount in any subaccount in the Debt Service Reserve Account in the Debt Service Fund, together with the pro-rata amount in the Debt Service Account allocable to the Reserve Secured Bonds in the Debt Service Fund is sufficient to pay in full all Outstanding Reserve Secured Bonds of such Series secured thereby in accordance with their terms (including principal or applicable sinking fund Redemption Price and interest thereon), the funds on deposit in such subaccount in the Debt Service Reserve Account in the Debt Service Fund shall be transferred to the Debt Service Account in the Debt Service Fund and shall be available to pay in full such Series of Outstanding Reserve Secured Bonds. Prior to said transfer, all investments held in such account the Debt Service Reserve Account in the Debt Service Fund shall be liquidated to the extent necessary in order to provide for the timely payment of principal and interest (or Redemption Price) on the Bonds. (e) Whenever the moneys on deposit in any subaccount in the Debt Service Reserve Account shall exceed the Reserve Requirement related thereto, and after giving effect to any Reserve Credit Facility that may be credited to such subaccount, such excess shall be transferred to the Debt Service Account. (f) In the event of the refunding or defeasance of any Bonds of any Series of Reserve Secured Bonds, the Commission may withdraw from the applicable subaccount in the Debt Service Reserve Account established for the benefit of the Bonds of such Series of Reserve Secured Bonds all or any portion of the amounts accumulated therein and deposit such amounts pursuant to an Escrow Deposit Agreement for the Bonds being refunded or defeased to be held for the payment of the principal or Redemption Price, if applicable, and interest on the Bonds being refunded or defeased; provided that such withdrawal shall not be made unless (i) immediately thereafter the Bonds being refunded or defeased shall be deemed to have been paid pursuant to Article XII of the I-49 Bond Resolution, and (ii) the amount remaining in such subaccount in the Debt Service Reserve Account, after giving effect to any Reserve Credit Facility that may be credited to such subaccount, and after giving effect to the issuance of any obligations being issued to refund any Bonds being refunded and the disposition of the proceeds A-24

79 thereof, shall not be less than the remaining Reserve Requirement related to the Reserve Secured Bonds secured by such subaccount. In the event of such refunding or defeasance, the Commission may also withdraw from the applicable subaccount in the Debt Service Reserve Account all or any portion of the amounts accumulated therein and deposit such amounts in any fund or account hereunder; provided that such withdrawal shall not be made unless items (i) and (ii) referred to hereinabove have been satisfied; and provided further, that, at the time of such withdrawal, there shall exist no deficiency in any fund or account held under the I-49 Bond Resolution. Subordinated Debt Fund (a) Subject to subsection (b) hereof, the Trustee as directed by the Commission shall apply amounts in the Subordinated Debt Fund to the payment of the principal or sinking fund installment of and interest on each issue of Subordinated Debt and reserves therefor, free and clear of the lien of the I-49 Bond Resolution, in accordance with the provisions of, and subject to the priorities and limitations and restrictions provided in, the resolution or other debt instrument authorizing each issue of such Subordinated Debt. (b) If at any time the amount on deposit in the Debt Service Reserve Account or any separate subaccount in the Debt Service Fund shall be less than the Debt Service Reserve Requirement for Reserve Secured Bonds, and the amounts on deposit in the Subordinated Debt Fund are not needed for transfer to the Debt Service Account in the Debt Service Fund pursuant to subsection (b) above, the Trustee shall forthwith transfer from the Subordinated Debt Fund for deposit in the Debt Service Reserve Account or such separate subaccounts in the Debt Service Fund, as the case may be, the amount necessary (or all moneys in said Subordinated Debt Fund, if necessary) to make up such deficiency (or, if the amount in said Fund shall be less than the amount necessary to make up the deficiencies with respect to the Debt Service Account and all of the separate subaccounts in the Debt Service Reserve Account, then the amount in said Fund shall be applied first to make up the deficiency in the Debt Service Account, and any balance remaining shall be applied ratable to make up the deficiencies with respect to the separate subaccounts in the Debt Service Reserve Account, in proportion to the deficiency in each such subaccount). Subordinated Debt (a) The Commission may, at any time, or from time to time, issue or incur Subordinated Debt pursuant to the Act, for any of its lawful corporate purposes, payable out of, and which may be secured by a pledge of, such amounts in the Subordinated Debt Fund as may from time to time be available for the purpose of payment thereof; provided, however, that such pledge shall be, and shall be expressed to be, subordinate and junior in all respects to the pledge and lien created by the I-49 Bond Resolution as security for the Bonds. (b) The Commission may also, at any time or from time to time, issue or incur Subordinated Debt to refund any Subordinated Debt issued as provided in this section, or to refund Outstanding Bonds of one or more Series or one or more maturities within a Series. Such Subordinated Debt issued for refunding purposes may be payable out of, and may be secured by a pledge of, such amounts in the Subordinated Debt Fund as may from time to time be available A-25

80 therefor, provided that any such payment or pledge shall be, and shall be expressed to be, subordinate and junior in all respects to the pledge and lien created under the I-49 Bond Resolution as security for the Bonds. (c) The resolution, indenture or other instrument securing or evidencing each issue of Subordinated Debt shall contain provisions (which shall be binding on all holders of such Subordinated Debt) not more favorable to the holders of such Subordinated Debt than the following: (1) In the event that any issue of Subordinated Debt is declared due and payable before its expressed maturity because of the occurrence of an event of default, the Owners of all Bonds Outstanding at the time such Subordinated Debt so becomes due and payable because of such occurrence of such an event of default shall be entitled to receive payment in full of all principal and interest on all such Bonds before the holders of the Subordinated Debt are entitled to receive any accelerated payment from the Pledged Revenues of principal (and premium, if any) or interest upon the Subordinated Debt. (2) If any Event of Default with respect to the Bonds shall have occurred and be continuing, the Owners of all Bonds then Outstanding shall be entitled to receive payment in full of all principal and interest on all such Bonds before the holders of the Subordinated Debt are entitled to receive any accelerated payment from the Pledged Revenues of principal (and premium, if any) or interest upon the Subordinated Debt. (3) No Bondowner shall be prejudiced in his right to enforce subordination of the Subordinated Debt by any act or failure to act on the part of the Commission. (4) The Subordinated Debt may provide that the provisions of (1), (2) and (3) above are solely for the purpose of defining the relative rights of the Owners or the Bonds on the one hand, and the holders of Subordinated Debt on the other hand, and that nothing therein shall impair, as between the Commission on behalf of the State and the holders of the Subordinated Debt, the obligation of the Commission on behalf of the State, which is unconditional and absolute, to pay to the Owners of the Bonds the principal thereof and premium, if any, and interest thereon in accordance with its terms, nor shall anything therein prevent the holders of the Subordinated Debt from exercising all remedies otherwise permitted by applicable law or thereunder upon default thereunder, subject to the rights under (1), (2) and (3) above of the Owners of Bonds to receive cash, property or securities otherwise payable or deliverable to the holders of the Subordinated Debt, and the Subordinated Debt may provide that, insofar as a trustee or paying agent for such Subordinated Debt is concerned, the foregoing provisions shall not prevent the application by such trustee or paying agent of any moneys deposited with such trustee or paying agent for the purpose of the payment of or on account of the principal (and premium, if any) and interest on such Subordinated Debt if such trustee or paying agent did not have knowledge at the time of such application that such payment was prohibited by the foregoing provisions. A-26

81 Any issue of Subordinated Debt may have such rank or priority with respect to any other issue as may be provided in the resolution, indenture or other instrument securing such issue of Subordinated Debt and may contain such other provisions as are not in conflict with the provisions of the I-49 Bond Resolution. Investment of Certain Funds Moneys held in the Debt Service Fund shall be invested and reinvested by the Trustee to the fullest extent practicable in Investment Securities which mature or otherwise provide for withdrawals not later than such times as shall be necessary to provide moneys when needed for payments to be made from such Fund. Moneys held in the Bond Proceeds Fund shall be invested by the Treasurer in Investment Securities under State law and shall mature not later than such times as shall be necessary to provide moneys when needed for payments to be made from such Fund. Subject to the terms of any resolution, indenture or other instrument securing any issue of Subordinated Debt, moneys held in the Subordinated Debt Fund shall be invested and reinvested to the fullest extent practicable in Investment Securities. The Trustee shall make all such investments of moneys held by it in accordance with written instructions from time to time received from an Authorized Officer. In making any investment in any Investment Securities with moneys in any Fund or Account established under the I-49 Bond Resolution, the Trustee or any Depository may combine such moneys with moneys in any other Fund or Account, but solely for purposes of making such investment in such Investment Securities Interest (net of that which represents a return of accrued interest paid in connection with the purchase of any investment) earned or any gain realized on any moneys or investments in the Debt Service Reserve Account in the Debt Service Fund, shall be paid into the Debt Service Account in the Debt Service Fund on a periodic basis at least monthly as shall be directed in writing by the Authorized Officer. Interest earned or gain realized on any moneys or investments in the Debt Service Account in the Debt Service Fund, the Subordinated Debt Fund and the Bond Proceeds Fund shall be held in such Fund or Account, respectively, for the purposes thereof. Nothing in the I-49 Bond Resolution shall prevent any Investment Securities acquired as investments of or security for funds held under the I-49 Bond Resolution from being issued or held in book-entry form on the books of the Department of the Treasury of the United States. Nothing in the I-49 Bond Resolution shall preclude the Trustee from investing or reinvesting moneys through its bond department; provided, however, that an Authorized Officer may, direct that such moneys be invested or reinvested in a manner other than through such bond department. Power to Issue Bonds and Pledge Pledged Revenues The Commission is duly authorized under all applicable laws to create and issue the Bonds and to adopt the I-49 Bond Resolution and to pledge the Pledged Revenues purported to be subjected to the lien of the I-49 Bond Resolution in the manner and to the extent provided in the I-49 Bond Resolution. Except to the extent otherwise provided in the I-49 Bond Resolution, the Pledged Revenues so pledged is and will be free and clear of any pledge, lien, charge or A-27

82 encumbrance thereon or with respect thereto prior to, or of equal rank with the pledge and assignment created by the I-49 Bond Resolution, and all action on the part of the Commission to that end has been and will be duly and validly taken. The Bonds and the provisions of the I-49 Bond Resolution are and will be the valid and legally binding obligations of the State. The Commission shall at all times, to the extent permitted by law, defend, preserve and protect the pledge of the Pledged Revenues pledged under the I-49 Bond Resolution and all the rights of the Bondowners under the I-49 Bond Resolution against all claims and demands of all persons whomsoever. Creation of Liens The Commission shall not issue any bonds, notes, debentures or other evidences of indebtedness of similar nature, other than the Bonds, payable out of or secured by a pledge or assignment of the Pledged Revenues held or set aside by the Fiduciaries under the I-49 Bond Resolution and shall not create or cause to be created any lien or charge on the Pledged Revenues, provided, however, that nothing contained in the I-49 Bond Resolution shall prevent the Commission from issuing, if and to the extent permitted by law (i) evidences of indebtedness payable out of or secured by a pledge and assignment of the Pledged Revenues on and after such date as the pledge of the Pledged Revenues provided in the I-49 Bond Resolution shall be discharged and satisfied as provided therein or (ii) Bond Anticipation Notes or other evidences of indebtedness payable out of, and which may be secured by a pledge of (1) the proceeds of sale of Bonds or investment income therefrom, or (2) amounts in the Bond Proceeds Fund derived from the proceeds of sale of Bond Anticipation Notes or investment income therefrom as may from time to time be available for payment of such Bond Anticipation Notes or other evidences of indebtedness (including redemption premiums, if any, and interest thereon), or (iii) Subordinated Debt. State Contract The Commission shall collect or cause to be collected and forthwith cause to be deposited in the Debt Service Fund and the Subordinated Debt Fund all amounts required to be deposited in the Debt Service Fund and the Subordinated Debt Fund pursuant to the State Contract. The Commission shall enforce the provisions of the State Contract and agreements thereunder including, but not limited to, the provisions thereunder relating to the collection and distribution of the Pledged Revenues. The Commission will not consent or agree to or permit any amendment, change or modification to any State Contract, including the DOA Cooperative Endeavor Agreement, which would adversely affect the rights or security of Bondowners. Accounts and Reports (a) The Commission shall keep or cause to be kept proper books of record and account (separate from all other records and accounts) in which complete and correct entries shall be made of its transactions relating to the application of amounts deposited in each Fund or Account established under the I-49 Bond Resolution. A-28

83 (b) The Trustee and any Depository shall advise the Commission as soon as practicable after the end of each month of the respective transactions during such month relating to each Fund or Account held by it under the I-49 Bond Resolution. (c) The Commission shall annually, within 240 days after the close of each Bond Year file with the Trustee, each Insurer, if any, and otherwise as provided by law, a copy of an annual report for such Bond Year, accompanied by an Accountant's Certificate and including for such Bond Year. Such Accountant's Certificate shall state whether or not, to the knowledge of the signer, the Commission is in default with respect to any of the covenants, agreements or conditions on its part contained in the I-49 Bond Resolution, and if so, the nature of such default. (d) The Commission shall file with the Trustee and each Insurer (a) forthwith upon becoming aware of any Event of Default or default in the performance by the Commission of any covenant, agreement or condition contained in the I-49 Bond Resolution, a certificate signed by an Authorized Officer and specifying such Event of Default or default and (b) within 180 days after the end of each Bond Year, a certificate signed by an appropriate Authorized Officer stating whether, to the best of his knowledge and belief of such Officer, the Commission has kept, observed, performed and fulfilled its covenants and obligations contained in the Resolution and that there does not exist at the date of such certificate any default by the Commission under the Resolution or any Event of Default or other event which, with the lapse of time specified in the I-49 Bond Resolution, would become an Event of Default, or, if any such default or Event of Default or other event shall so exist, specifying the same and the nature and status thereof. (e) The reports, statements and other documents required to be furnished to the Trustee pursuant to any provisions of the I-49 Bond Resolution shall be available for the inspection of Bondowners at the office of the Trustee and shall be mailed to each Bondowner who shall file a written request therefor with the Commission. The Commission may charge each Bondowner requesting such reports, statements and other documents a reasonable fee to cover reproduction, handling and postage. Events of Default The following events shall constitute an Event of Default under the I-49 Bond Resolution: (1) if default shall be made in the due and punctual payment of the principal or Redemption Price of any Bond when and as the same shall become due and payable, whether at maturity or by call for redemption, or otherwise; or (2) if default shall be made in the due and punctual payment of any installment of interest on any Bond or the unsatisfied balance of any Sinking Fund Installment therefor (except when such Installment is due on the maturity date of such Bond), when and as such interest installment or Sinking Fund Installment shall become due and payable; or (3) if default shall be made by the Commission in the performance or observance of any other of the covenants, agreements or conditions on its part in the I-49 Bond Resolution or in the Bonds contained, and such default shall continue for a period A-29

84 of sixty (60) days after written notice thereof to the Commission by the Trustee or to the Commission and to the Trustee by the Registered Owners of not less than ten percent (10%) in principal amount of the Bonds outstanding; or (4) if default shall be made by the Commission or the State in the performance or observance of any covenant, agreement or conditions on the part of the State or the Commission contained in the State Contract and such default shall continue for a period of thirty (30) days after written notice thereof from the Commission or the State by the Trustee; then, and in each and every such case, so long as such Event of Default shall not have been remedied, unless the principal of all the Bonds shall have already become due and payable, either the Trustee (by notice in writing to the Commission), or the Owners of not less than twenty-five percent (25%) in principal amount of the Bonds Outstanding (by notice in writing to the Commission and the Trustee), and, with respect to any Insurer, the written consent of the applicable Insurer, may declare the principal of all the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same shall become and be immediately due and payable, anything in the I-49 Bond Resolution or in any of the Bonds contained to the contrary notwithstanding. The right of the Trustee or of the Owners of not less than twenty-five percent (25%) in principal amount of the Bonds to make any such declaration as aforesaid, however, is subject to the condition that if, at any time after such declaration, but before the Bonds shall have matured by their terms, all overdue installments of interest upon the Bonds, together with interest on such overdue installments of interest to the extent permitted by law and the reasonable and proper fees, charges, expenses and liabilities of the Trustee, and all other sums then payable by the Commission under the I-49 Bond Resolution (except the principal of, and interest accrued since the next preceding interest date on, the Bonds due and payable solely by virtue of such declaration) shall either be paid by or for the account of the Commission or provision satisfactory to the Trustee shall be made for such payment, and all defaults under the Bonds or under the I-49 Bond Resolution (other than the payment of principal and interest due and payable solely by reason of such declaration) shall be made good or be secured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall be made therefor, then and in every such case the Owners of twenty-five percent (25%) in principal amount of the Bonds outstanding, by written notice to the Commission and the Trustee, may rescind such declaration and annul such default in its entirety, or, if the Trustee shall have acted itself, and if there shall not have been theretofore delivered to the Trustee written direction to the contrary by the Owners of twenty-five percent (25%) in principal amount of the Bonds outstanding, then any such declaration shall ipso facto be deemed to be rescinded and any such default shall ipso facto be deemed to be annulled, but no such rescission or annulment shall extend to or affect any subsequent default or impair or exhaust any right or power consequent thereon. Payments of the principal of and interest on any Bonds by the Insurer shall not be taken into consideration for purposes of determining whether an Event of Default has occurred and is continuing under clauses (1) and (2) above. A-30

85 Remedies Upon the occurrence of an Event of Default, the Commission, the Trustee and the Bondowners affected thereby shall have all the rights and remedies as may be allowed by law, this Resolution or pursuant to the provisions of the DOA Cooperative Endeavor Agreement, including but not limited to, suit at law or in equity to enforce or enjoin the action or inaction of parties under the provisions of this Resolution or the DOA Cooperative Endeavor Agreement. In no event shall there be an acceleration of the maturity of the Bonds if an Event of Default occurs under the I-49 Bond Resolution. Application of Pledged Revenues After Default (a) The Treasurer covenants that if an Event of Default shall happen and shall not have been remedied, the Treasurer, upon the demand of the Trustee, shall pay over or cause to be paid over to the Trustee forthwith, all Pledged Revenues held by the Treasurer. (b) During the continuance of an Event of Default, the Trustee shall apply the Pledged Revenues, including all moneys, securities and funds received by the Trustee pursuant to any right given or action taken under the provisions of this Article together with all Funds held by the Trustee under the I-49 Bond Resolution as follows and in the following order: (1) Expenses of Fiduciaries to the payment of the reasonable and proper fees (including reasonable attorney's fees), charges, expenses and liabilities of the Fiduciaries; (2) Principal or Redemption price and Interest to the payment of the interest and principal or Redemption Price then due on the Bonds, as follows: (i) unless the principal of all of the Bonds shall have become or have been declared due and payable, First: Interest To the payment to the persons entitled thereto of all installments of interest then due on the Bonds in the order of the maturity of such installments, together with accrued and unpaid interest on the Bonds theretofore called for redemption, and, if the amount available shall not be sufficient to pay in full any installment or installments maturing on the same date, then to the payment thereof ratably, according to the amounts due thereon, to the persons entitled thereto, without any discrimination or preference; and Second: Principal or Redemption Price To the payment to the persons entitled thereto of the unpaid principal or Redemption Price of any Bonds which shall have become due, whether at maturity or by call for redemption, in the order of their due dates, and, if the amount available shall not be sufficient to pay in full all the Bonds due on any date, then to the payment thereof ratably, according to the amounts of principal or Redemption Price due on such date, to the persons entitled thereto, without any discrimination or preference. A-31

86 (ii) if the principal of all of the Bonds shall have become or have been declared due and payable, to the payment of the principal and interest then due and unpaid upon the Bonds without preference or priority of principal over interest or of interest over principal, or of any installment of interest over any other installment of interest, or of any Bond over any other Bond, ratably, according to the amounts due respectively for principal and interest, to the persons entitled thereto without any discrimination or preference except as to any difference in the respective rates of interest specified in the Bonds. (c) If and whenever all overdue installments of all Bonds, together with the reasonable and proper charges, fees (including reasonable attorneys' fees), expenses and liabilities of the Trustee, and all other sums payable by the Commission under the I-49 Bond Resolution, including the principal and Redemption Price of and accrued unpaid interest on all Bonds which shall then be payable, shall either be paid by or for the account of the Commission, or provisions satisfactory to the Trustee shall be made for such payment, and all defaults under the I-49 Bond Resolution or the Bonds shall be made good or secured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall be made therefor, the Trustee shall pay over to the Commission all moneys, securities and funds then remaining unexpended in the hands of the Trustee (except moneys, securities and funds deposited or pledged, or required by the terms of the I-49 Bond Resolution to be deposited or pledged, with the Trustee), and thereupon the Commission and the Trustee shall be restored, respectively, to their former positions and rights under the I-49 Bond Resolution. No such payment over to the Commission by the Trustee nor such restoration of the Commission and the Trustee to their former positions and rights shall extend to or affect any subsequent default under the I-49 Bond Resolution or impair any right consequent thereon. Restrictions and Bondowner's Action (a) No Owner of any Bond shall have any right to institute any suit, action or proceeding at law or in equity for the enforcement of any provision of the I-49 Bond Resolution or the execution of any trust under the Resolution or for any remedy under the I-49 Bond Resolution, unless such Owner shall have previously given to the Trustee and each Insurer, if any, written notice of the happening of an Event of Default, as provided in this Article, and the Owners of at least twenty-five percent (25%) in principal amount of the Bonds then outstanding shall have filed a written request with the Trustee, and shall have offered it reason-able opportunity, either to exercise the powers granted in the I-49 Bond Resolution or by the Act or by the laws of the State of Louisiana or to institute such action, suit or proceeding in its own name, and unless such Owners shall have offered to the Trustee adequate security and indemnity against the costs, fees (including reasonable attorneys' fees), expenses and liabilities to be incurred therein or thereby, and the Trustee shall have refused to comply with such request for a period of sixty (60) days after receipt by it of such notice, request and offer of indemnity, it being understood and intended that no one or more series of Bonds shall have any right in any manner whatever by his or their action to affect, disturb or prejudice the pledge created by the I-49 Bond Resolution, or to enforce any right under the I-49 Bond Resolution, except in the manner therein provided; and that all proceedings at law or in equity to enforce any provision of the I-49 Bond Resolution shall be instituted, had and maintained in the manner provided in the I-49 Bond A-32

87 Resolution and for the equal benefit of all Owners of the outstanding Bonds, subject only to the provisions of the I-49 Bond Resolution. (b) Nothing in the I-49 Bond Resolution or in the Bonds contained shall affect or impair the obligation of the State, acting through the Commission, which is absolute and unconditional, to pay at the respective dates of maturity and places therein expressed the principal of (and premium, if any) and interest on the Bonds to the respective Owners thereof, or affect or impair the right of action, which is also absolute and unconditional, of any Owner to enforce such payment of his Bond. Notice of Default The Trustee shall promptly mail written notice of the occurrence of any Event of Default to each Insurer, if any, and each Owner of Bonds then outstanding at his address, if any, appearing upon the registry books of the Commission. Credit Facility Issuer and Insurer Right to Direct Notwithstanding anything to the contrary hereinabove, so long as any Insurer or Credit Facility Issuer is not insolvent or in default in its payment obligations under its Insurance Policy or Credit Facility, respectively, and unless otherwise provided as to any Series of Bonds, each Insurer and Credit Facility Issuer shall have the right at any time to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions hereof and of the Bonds to which its Insurance Policy or Credit Facility relates, and the rights and remedies hereunder and under such Bonds. Trustee; Appointment and Acceptance of Duties The Bank of New York Mellon Trust Company, N.A. is appointed Trustee under the I-49 Bond Resolution. The Trustee shall signify its acceptance of the duties and obligations imposed upon it by the I-49 Bond Resolution by executing and delivering to the Commission a written acceptance thereof, and by executing such acceptance the Trustee shall be deemed to have accepted such duties and obligations with respect to all the Bonds thereafter to be issued, but only, however, upon the terms and conditions set forth in the I-49 Bond Resolution. Paying Agents; Appointment and Acceptance of Duties (a) The Commission shall appoint one or more Paying Agents for the Bonds of each Series, and may at any time or from time to time appoint one or more other Paying Agents. All Paying Agents appointed shall have the qualifications set forth in the I-49 Bond Resolution for a successor Paying Agent. The Trustee may be appointed a Paying Agent. (b) Each Paying Agent shall signify its acceptance of the duties and obligations imposed upon it by the I-49 Bond Resolution by executing and delivering to the Commission and to the Trustee a written acceptance thereof. A-33

88 (c) Unless otherwise provided, the principal corporate; trust offices of the Paying Agents are designated as the respective offices or agencies of the Commission for the payment of the interest on and principal or Redemption Price of the Bonds. Responsibilities of Fiduciaries (a) The recitals of fact in the I-49 Bond Resolution and in the Bonds contained shall be taken as the statements of the Commission and no Fiduciary assumes any responsibility for the correctness of the same. No Fiduciary makes any representations as to the validity or sufficiency of the I-49 Bond Resolution or of any Bonds issued thereunder or as to the security afforded by the I-49 Bond Resolution, and no Fiduciary shall incur any liability in respect thereof. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds. No Fiduciary shall be under any responsibility or duty with respect to the application of any moneys paid by such Fiduciary in accordance with the provisions of the I-49 Bond Resolution to the Commission or to any other Fiduciary. No Fiduciary shall be under any obligation or duty to perform any act which would involve it in expense or liability or to institute or defend any suit in respect thereof, or to advance any of its own moneys, unless properly indemnified. Subject to the provisions of the I-49 Bond Resolution, no Fiduciary shall be liable in connection with the performance of its duties hereunder except for its own negligence, misconduct or default. (b) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default which may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in the I-49 Bond Resolution. In case an Event of Default has occurred (which has not been cured) the Trustee shall exercise such of the rights and powers vested in it by the I-49 Bond Resolution, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. Any provision of the I-49 Bond Resolution relating to action taken or to be taken by the Trustee or to evidence upon which the Trustee may rely shall be subject to the provisions of Section 903 and Section 904 of the I-49 Bond Resolution. (c) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder except for the failure of the Commission to cause to be made any of the payments to the Trustee required to be made by Article V of the I-49 Bond Resolution, unless the Trustee shall be specifically notified in writing of such Event of Default by the Commission, the State or by the Owners of not less than twenty-five percent (25%) in principal amount of the Bonds outstanding, and all notices or other instruments required by this Resolution, to be delivered to the Trustee, must, in order to be effective, be delivered at the principal corporate trust office of the Trustee, and in the absence of such notice so delivered, the Trustee may conclusively assume there is no Event of Default except as aforesaid. (d) The Trustee shall not be required to give any bond or surety in respect to its acceptance of the duties and obligations imposed upon it by the I-49 Bond Resolution or otherwise in respect of the premises. A-34

89 Supplemental Resolutions Effective Upon Filing With the Trustee For any one or more of the following purposes and at any time or from time to time, a Supplemental Resolution of the Commission may be adopted without the consent of the Registered Owners, any Insurer or Credit Facility Issuer, which, shall be fully effective in accordance with its terms: (a) To close the I-49 Bond Resolution against, or provide limitations and restrictions in addition to the limitations and restrictions contained in the I-49 Bond Resolution on, the authentication and delivery of Bonds or the issuance of other evidences of indebtedness; (b) To add to the covenants and agreements of the Commission in the Resolution, other covenants and agreements to be observed by the Commission which are not contrary to or inconsistent with the I-49 Bond Resolution as theretofore in effect; (c) To add to the limitations and restrictions in the I-49 Bond Resolution, other limitations and restrictions to be observed by the Commission which are not contrary to or inconsistent with the I-49 Bond Resolution as theretofore in effect; (d) To authorize Bonds of a Series and, in connection therewith, specify and determine the matters and things referred to in Article II, and also any other matters and things relative to such Bonds which are not contrary to or inconsistent with the I-49 Bond Resolution as theretofore in effect, or to amend, modify or rescind any such authorization, specification or determination at any time prior to the first authentication and delivery of such Bonds or so long as no Bonds are outstanding, to amend, modify or rescind any of the provisions hereof; (e) To confirm, as further assurance, any pledge or assignment under, and the subjection to any pledge or assignment created or to be created by, the I-49 Bond Resolution of the Pledged Revenues and to pledge any additional taxes or additional revenues, moneys, securities, Credit Facilities or other agreements; (f) Notwithstanding any other provisions of the I-49 Bond Resolution, to authorize Bonds of a Series having terms and provisions different than the terms and provisions theretofore provided in the I-49 Bond Resolution, including but not limited to provisions relating to the timing of the payment of interest, maturity amounts and valuation as of a given time, and authorizing the form of bond for such Series of Bonds and otherwise to provide amendments or modifications of provisions of the I-49 Bond Resolution relative to such Bonds; provided that neither the authorization and issuance of such Series of Bonds nor any such amendments or modifications shall in any manner impair or adversely affect the rights or security of the Owners of Bonds then outstanding under the I-49 Bond Resolution; (g) To modify any of the provisions of the I-49 Bond Resolution in any other respect whatever, provided that (i) such modification shall be, and be expressed to be, effective only after all Bonds of each Series outstanding at the date of the adoption of such Supplemental Resolution shall cease to be Outstanding, and (ii) such Supplemental A-35

90 Resolution shall be specifically referred to in the text of all Bonds of any Series authenticated and delivered after the date of the adoption of such Supplemental Resolution and of Bonds issued in exchange therefor or in place thereof; (h) To make such changes or modifications as may be necessary or required in order to obtain a rating from a Rating Agency to obtain an Insurance Policy, or to obtain a Credit Facility or Liquidity Facility for any Bonds if so desired by the Commission; (i) To authorize Subordinated Debt and, in connection therewith, specify and determine any matters and things relative to such Subordinated Debt which are not contrary to or inconsistent herewith as theretofore in effect, or to amend, modify or rescind any such authorization, specification or determination at any time prior to the first authentication and delivery of such Subordinated Debt; and (j) To comply with the provisions of any federal or state securities law, including, without limitation, the Trust Indenture Act of 1939, as amended, or to comply with the Code. Supplemental Resolutions Effective Upon Consent of Trustee For any one or more of the following purposes and at any time or from time to time, a Supplemental Resolution may be adopted, which, upon (i) the filing with the Trustee of a copy thereof certified by an Authorized Officer, (ii) the filing with the Commission of an instrument in writing made by the Trustee consenting thereto, and (iii) delivery of a Bond Counsel's opinion to the effect that the provisions of such Supplemental Resolution will not have a material adverse effect on such interests of the Registered Owners of Outstanding Bonds (in rendering such opinion, Bond Counsel may rely on such certifications of (a) any investment banking or financial advisory institution or firm serving as financial advisor to the Commission, as to financial and economic matters and (b) such other experts, as to matters within their fields of expertise as it, in its reasonable judgment, determines necessary or appropriate), shall be fully effective in accordance with its terms: (a) To cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in the I-49 Bond Resolution; or (b) To insert such provisions clarifying matters or questions arising under the I-49 Bond Resolution as are necessary or desirable and are not contrary to or inconsistent with the I-49 Bond Resolution as theretofore in effect. Powers of Amendment Any modification or amendment of the I-49 Bond Resolution and of the rights and obligations of the Commission and of the Owners of the Bonds thereunder, in any particular, may be made by a Supplemental Resolution with the written consent, given as provided in the I-49 Bond Resolution, of the Owners of at least a majority in principal amount of the Bonds Outstanding at the time such consent is given; provided, however, that if such modification or amendment will, by its terms, not take effect so long as any Bonds of any specified like Series and maturity remain Outstanding, the consent of the Owners of such Bonds shall not be required A-36

91 and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under this section. No such modification or amendment shall permit a change in the terms of redemption (including Sinking Fund Installments) or maturity of the principal of any outstanding Bond or of any installment of interest thereon or a reduction in the principal amount or the Redemption Price thereof or in the rate of interest thereon without the consent of the Owner of such Bond, or shall reduce the percentages or otherwise affect the classes of Bonds the consent of the Owners of which is required to effect any such modification or amendment, or shall change or modify any of the rights or obligations of any Fiduciary without its written assent thereto. For the purpose of this section, a Series shall be deemed to be affected by a modification or amendment of the I-49 Bond Resolution if the same adversely affects or diminishes the rights of the Owners of Bonds of such Series. The Trustee may in its discretion determine whether or not, in accordance with the foregoing powers of amendment, Bonds of any particular Series or maturity would be affected by any modification or amendment of the Resolution and any such determination shall be binding and conclusive on the Commission and all Owners of Bonds. Consent of Bondowners The Commission may at any time adopt a Supplemental Resolution making a modification or amendment permitted by the provisions of the I-49 Bond Resolution to take effect when and as provided therein. A copy of such Supplemental Resolution (or brief summary thereof or reference thereto in form approved by the Trustee), together with a request to Bondowners for their consent thereto in form satisfactory to the Trustee, shall be mailed by the Commission to Bondowners (but failure to mail such copy and request shall not affect the validity of the Supplemental Resolution when consented to as in the I-49 Bond Resolution provided). Such Supplemental Resolution shall not be effective unless and until (i) there shall have been filed with the Trustee (a) the written consents of Owners of the percentages of outstanding Bonds specified in the I-49 Bond Resolution and (b) an Opinion of Counsel stating that such Supplemental Resolution has been duly and lawfully adopted and filed by the Commission in accordance with the provisions of the Resolution, is authorized or permitted by the Resolution, and is valid and binding upon the Commission and enforceable in accordance with its terms, subject to any applicable bankruptcy, insolvency or other laws affecting creditors' rights generally, and (ii) a notice shall have been given as provided in the I-49 Bond Resolution. At any time after the Owners of the required percentages of Bonds shall have filed their consents to the Supplemental Resolution, the Trustee shall make and file with the Commission a written statement that the Owners of such required percentages of Bonds have filed such consents. Such written statements shall be conclusive that such consents have been so filed. At any time thereafter, notice stating in substance that the Supplemental Resolution (which may be referred to as a Supplemental Resolution adopted by the Commission on a stated date, a copy of which is on file with the Trustee) has been consented to by the Owners of the required percentages of Bonds, and will be effective as provided in the I-49 Bond Resolution, may be given to Bondowners by the Commission by mailing such notice to Bondowners (but failure to mail such notice shall not prevent such Supplemental Resolution from becoming effective and binding as in the I-49 Bond Resolution provided). The Commission shall file with the Trustee proof of the mailing thereof. A record, consisting of the certificates or statements required or permitted by the I-49 Bond Resolution to be made by the Trustee, shall be proof of the matters therein stated. Such Supplemental Resolution making such amendment or modification shall be deemed A-37

92 conclusively binding upon the Commission, the Fiduciaries and the Owners of all Bonds at the expiration of forty (40) days after the filing with the Trustee of the proof of the mailing of such last mentioned notice, except in the event of a final decree of a court of competent jurisdiction setting aside such Supplemental Resolution in a legal action or equitable proceeding for such purpose commenced within such forty (40) day period, provided, however, that any Fiduciary and the Commission during such forty (40) day period and any such further period during which any such action or proceeding may be pending shall be entitled in their absolute discretion to take such action, or to refrain from taking such action, with respect to such supplemental Resolution as they may deem expedient. Modifications by Unanimous Consent The terms and provisions of the I-49 Bond Resolution and the rights and obligations of the Commission and of the Owners of the Bonds thereunder may be modified or amended in any respect upon the adoption and filing by the Commission of a Supplemental Resolution and the consent of the Owners of all of the Bonds then outstanding, such consent to be given as provided in Section 1103 except that no notice to Bondowners shall be required; provided, however, that no such modification or amendment shall change or modify any of the rights or obligations of any Fiduciary without the filing with the Trustee of the written assent thereto of such Fiduciary in addition to the consent of the Bondowners. Defeasance (a) Bonds or principal installments or interest installments for the payment or redemption of which moneys shall have been set aside and shall be held in trust by the Paying Agents (through deposit by the Commission of funds for such payment or redemption or otherwise) at the maturity or redemption date thereof shall be deemed to have been paid within the meaning and with the effect expressed in the I-49 Bond Resolution. Subject to the provisions of subsection (c) and subsection (d) of this section, any outstanding Bonds or principal installments or interest installments shall prior to the maturity or redemption date thereof be deemed to have been paid within the meaning and with the effect expressed in the I-49 Bond Resolution if (i) in case any of said Bonds are to be redeemed on any date prior to their maturity, the Commission shall have given to the Trustee instructions accepted in writing by the Trustee to mail as provided in Article IV notice of redemption of such Bonds (other than Bonds which have been purchased by the Trustee at the direction of the Commission or purchased or otherwise acquired by the Commission and delivered to the Trustee as hereinafter provided prior to the mailing of such notice of redemption) on said date, (ii) there shall have been deposited with the Trustee either moneys (including moneys withdrawn and deposited pursuant to subsection (d) of Section 505 and subsection (d) of Section 506) in an amount which shall be sufficient, or Defeasance Securities (including any Defeasance securities issued or held in book-entry form on the books of the Department of the Treasury of the United States) the principal of and the interest on which when due will provide moneys which, together with the moneys, if any, deposited with the Trustee at the same time, shall be sufficient, to pay when due the principal or Redemption price, if applicable, and interest due and to become due on said Bonds on or prior to the redemption date or maturity date thereof, as the case may be, (iii) in the event said Bonds are not by their terms subject to redemption within the next succeeding sixty (60) days, the Commission shall have given the Trustee in form satisfactory to it instructions to mail a notice to the Owners A-38

93 of such Bonds that the deposit required by (ii) above has been made with the Trustee and that said Bonds are deemed to have been paid in accordance with this section and stating such maturity or redemption date or manner of determining such maturity or redemption date or period during which a maturity or redemption date may be chosen and the manner in which such date shall be chosen and the date upon which moneys are expected be available for the payment of the principal or Redemption price, if applicable, on said Bonds (other than Bonds which have been purchased by the Trustee at the direction of the Commission or purchased or otherwise acquired by the Commission and delivered to the Trustee as hereinafter provided prior to the mailing of the notice of redemption referred to in clause (a) hereof), and (d) the Commission shall have received a report of an independent nationally recognized certified public accountant or a financial advisor or financial consultant of recognized standing in the field of municipal bonds to the effect that the amount of moneys and the principal of and interest when due on the Defeasance Securities deposited at the same time with the Trustee shall be sufficient to pay when due the principal or Redemption Price, if applicable, and interest due and to become due on said Bonds on or prior to the redemption or maturity date thereof, as the case may be. Any notice of redemption mailed pursuant to the preceding sentence with respect to Bonds which constitute less than all of the outstanding Bonds of any maturity within a Series shall specify the letter and number or other distinguishing mark of each such Bond. The Trustee shall, as and to the extent necessary, apply moneys held by it pursuant to this section to the retirement of said Bonds in amounts equal to the unsatisfied balances (determined as provided in Section 505) of any Sinking Fund Installments with respect to such Bonds, all in the manner provided in the Resolution. The Trustee shall, if so directed by the Commission (i) prior to the maturity date of Bonds deemed to have been paid in accordance with the I-49 Bond Resolution which are not to be redeemed prior to their maturity date or (ii) prior to the mailing of the notice of redemption referred to in clause (i) above with respect to any Bonds deemed to have been paid in accordance with the I-49 Bond Resolution which are to be redeemed on any date prior to their maturity, apply moneys deposited with the Trustee in respect of such Bonds and redeem or sell Defeasance Securities so deposited with the Trustee and apply the proceeds thereof to the purchase of such Bonds and the Trustee shall immediately thereafter, cancel all such Bonds so purchased; provided, however, that the moneys and Defeasance Securities remaining on deposit with the Trustee after the purchase and cancellation of such Bonds shall be sufficient to pay when due the Principal Installment or Redemption Price, if applicable, and interest due or to become due on all Bonds in respect of which such moneys and Defeasance Securities are being held by the Trustee on or prior to the redemption date or maturity date thereof, as the case may be. If at any time (i) prior to the maturity date of Bonds deemed to have been paid in accordance with the I-49 Bond Resolution which are not to be redeemed prior to their maturity date or (ii) prior to the mailing of the notice of redemption referred to in clause (i) in the preceding paragraph with respect to any Bonds deemed to have been paid in accordance with the I-49 Bond Resolution which are to be redeemed on any date prior to their maturity, the Commission shall purchase or otherwise acquire any such Bonds and deliver such Bonds to the Trustee prior to their maturity date or redemption date, as the case may be, the Trustee shall immediately cancel all such Bonds so delivered; such delivery of Bonds to the Trustee shall be accompanied by directions from the Commission to the Trustee as to the manner in which such Bonds are to be applied against the obligation of the Trustee to pay or redeem Bonds deemed paid in accordance with the I-49 Bond Resolution. The directions given by the Commission to the Trustee referred to in the preceding A-39

94 sentences shall also specify the portion, if any, of such Bonds so purchased or delivered and cancelled to be applied against the obligation of the Trustee to pay Bonds deemed paid in accordance with the I-49 Bond Resolution upon their maturity date or dates and the portion, if any, of such Bonds so purchased or delivered and cancelled to be applied against the obligation of the Trustee to redeem Bonds deemed paid in accordance with the I-49 Bond Resolution on any date or dates prior to their maturity. In the event that on any date as a result of any purchases, acquisitions and cancellations of Bonds as provided in the I-49 Bond Resolution the total amount of moneys and Defeasance Securities remaining on deposit with the Trustee under the I-49 Bond Resolution is in excess of the total amount which would have been required to be deposited with the Trustee on such date in respect of the remaining Bonds in order to satisfy subclause (ii) of this subsection (b) of the I-49 Bond Resolution, the Trustee shall, if requested by the Commission, pay the amount of such excess to the Commission for deposit in the Unclaimed Property Leverage Fund free and clear of any trust, lien, pledge or assignment securing said Bonds or otherwise existing under the I-49 Bond Resolution. Except as otherwise provided in this subsection and in subsection (c) and subsection (d) of this section, neither Defeasance Securities nor moneys deposited with the Trustee pursuant to this section nor principal or interest payments on any such Defeasance Securities shall be withdrawn or used for any purpose other than, and shall be held in trust for, the payment of the principal or Redemption price, if applicable, and interest on said Bonds; provided that any cash received from such principal or interest payments on such Defeasance Securities deposited with the Trustee, (A) to the extent such cash will not be required at any time for such purpose, shall be paid over to the Commission for deposit in the Unclaimed Property Leverage Fund as received by the Trustee, free and clear of any trust, lien or pledge securing said Bonds or otherwise existing under the I-49 Bond Resolution, and (B) to the extent such cash will be required for such purpose at a later date, shall, to the extent practicable, be reinvested in Defeasance Securities maturing at times and in amounts sufficient to pay when due the principal or Redemption price, if applicable, and interest to become due on said Bonds on or prior to such redemption date or maturity date thereof, as the case may be, and interest earned from such reinvestments shall be paid over to the Commission for deposit in the Unclaimed Property Leverage Fund, as received by the Trustee, free and clear of any trust, lien, pledge or assignment securing said Bonds or otherwise existing under the I-49 Bond Resolution. (c) For purposes of determining whether Variable Interest Rate Bonds shall be deemed to have been paid prior to the maturity or redemption date thereof, as the case may be, by the deposit of moneys, or Defeasance Securities and moneys, if any, in accordance with the second sentence of subsection (b) of the I-49 Bond Resolution, the interest to come due on such Variable Interest Rate Bonds on or prior to the maturity date or redemption date thereof, as the case may be, shall be calculated at the Maximum Interest Rate permitted by the terms thereof; provided, however, that if on any date, as a result of such Variable Interest Rate Bonds having borne interest at less than such Maximum Interest Rate for any period, the total amount of moneys and Defeasance Securities on deposit with the Trustee for the payment of interest on such Variable Interest Rate Bonds is in excess of the total amount which would have been required to be deposited with the Trustee on such date in respect of such Variable Interest Rate Bonds in order to satisfy the second sentence of subsection (b) of the I-49 Bond Resolution, the Trustee shall, if requested by the Commission, pay the amount of such excess to the Commission free and clear of any trust, lien, pledge or assignment securing the Bonds or otherwise existing under the I-49 Bond Resolution. A-40

95 (d) Option Bonds shall be deemed to have been paid in accordance with the second sentence of subsection (b) of the I-49 Bond Resolution only if, in addition to satisfying the requirements of clauses (i) and (iii) of such sentence, there shall have been deposited with the Trustee moneys (including moneys withdrawn and deposited pursuant to the I-49 Bond Resolution) in an amount which shall be sufficient to pay when due the maximum amount of principal of and premium, if any, and interest on such Bonds which could become payable to the Owners of such Bonds upon the exercise of any options provided to the Owners of such Bonds; provided, however, that if at the time a deposit is made with the Trustee pursuant to subsection (b) of this section, the options originally exercisable by the Owner of an Option Bond are no longer exercisable, such Bond shall not be considered an Option Bond for purposes of this subsection (d). If any portion of the moneys deposited with the Trustee for the payment of the principal of and premium, if any, and interest on Option Bonds is not required for such purpose the Trustee shall, if requested by the Commission, pay the amount of such excess to the Commission for deposit in the Unclaimed Property Leverage Fund free and clear of any trust, lien, pledge or assignment securing said Bonds or otherwise existing under the I-49 Bond Resolution. (e) Anything in the I-49 Bond Resolution to the contrary notwithstanding, any moneys held by a Fiduciary in trust for the payment and discharge of any of the Bonds which remain unclaimed for six years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Fiduciary at such date, or for six years after the date of deposit of such moneys if deposited with the Fiduciary after the said date when such Bonds became due and payable, shall, at the written request of the Commission, be repaid by the Fiduciary to the Commission, as its absolute property and free from trust, and the Fiduciary shall thereupon be released and discharged with respect thereto and the Bondowners shall look only to the Commission for the payment of such Bonds; provided, however, that before being required to make any such payment to the Commission the Fiduciary shall, at the expense of the Commission, cause to be published at least twice, at an interval of not less than seven days between publications, in an Authorized Newspaper, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall be not less than thirty (30) days after the date of the first publication of such notice, the balance of such moneys then unclaimed will be returned to the Commission. (f) Nothing in the I-49 Bond Resolution shall be construed as requiring the Commission, at the time of provision for the payment of any Bonds or principal or interest installments, to irrevocably exercise or waive the exercise of any rights with respect to any optional redemption provisions for the Bonds but such action may be taken in connection with the effectuation of Bonds being paid hereunder. Definitions The Collection Agreement Act shall mean Chapter 1 of Title III of the Louisiana Civil Code Ancillaries and, in particular, La. R.S. 9:165.1, and other constitutional and statutory authority. A-41

96 Bond Related Expenses shall mean all fees and expenses of the Commission incurred in connection with the issuance, sale, administration and payment of the Bonds, including, without limitation, the (i) fees and expenses of underwriters, legal counsel and financial advisors, (ii) fees and expenses of fiduciaries under the I-49 Bond Resolution, (iii) fees, expenses and other amounts due and payable or otherwise required to be paid to the provider of any credit facility, liquidity facility or other credit enhancement facility providing security for the Bonds, and (iv) amounts required to be paid to the United States of America in order to comply with the provisions of any covenant relating to the exemption of the interest on the Bonds from federal income taxes contained in the I-49 Bond Resolution. Bond Security and Redemption Fund shall mean the Fund by the name created by Article VII, Section 9 of the Louisiana Constitution. Bonds shall mean any bonds, notes or other evidence of indebtedness issued or incurred by the Commission pursuant to the Act, including the Series 2013 North Project Bonds, the Series 2015 Bonds and the Outstanding Parity Bonds. Business Day shall mean any day that is not a Saturday, Sunday or legal holiday in the State or a day on which the State or the Trustee is legally authorized to close. Commission shall mean the Louisiana State Bond Commission, created by Article VII, Section 8 of the Louisiana Constitution, or any successor to the duties and functions of the Commission. Debt Payment Date shall mean any date on which the principal, whether at maturity, redemption, acceleration, or otherwise, interest or premium, if any, on the Bonds is due and payable. Debt Service Requirement shall mean the sum of the amounts required to be deposited into each fund and account created under the I-49 Bond Resolution to provide for the payment of the principal of, interest and premium, if any, on the Bonds in a calendar year, and the amounts required to be deposited into any debt service reserve account or similar reserve account created under the I-49 Bond Resolution for such Bonds. Department shall mean the Department of Transportation and Development of the State of Louisiana. Depository Bank shall mean the bank designated from time to time by the Treasurer to hold all monies to be received by the State Treasurer and shall include the monies deposited or to be deposited into the Unclaimed Property Leverage Fund, Pledged Revenues, and the successors and assigns to the duties and functions of such bank. I-49 Bond Resolution shall mean, collectively, (i) the State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 North Project adopted by the Commission on November 21, 2013, as supplemented and amended by a First Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 North Project adopted by the Commission on November 21, 2013, and (ii) the State of Louisiana Unclaimed Property Special A-42

97 Revenue Bond Resolution I-49 South Project adopted by the Commission on November 21, 2013, as supplemented and amended by a First Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project adopted by the Commission on November 21, 2013, and as supplemented and amended by a Second Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project adopted by the Commission on June 18, I-49 North Account means the I-49 North Account in the Unclaimed Property Leverage Fund required to be created and established within the State Treasury and maintained by the State Treasurer pursuant to the provisions of the Act. I-49 South Account means the I-49 South Account in the Unclaimed Property Leverage Fund required to be created and established within the State Treasury and maintained by the State Treasurer pursuant to the provisions of the Act. State shall mean the State of Louisiana. Treasurer shall mean the Treasurer of the State, and any successor to the duties and functions of such officer. Trustee shall mean The Bank of New York Mellon Trust Company, N.A., and its successors and assigns hereunder. Unclaimed Property shall mean the funds received under Chapter 1 of Title III of the Louisiana Civil Code Ancillaries. Unclaimed Property Leverage Fund shall mean the Unclaimed Property Leverage Fund required to be created and established within the State Treasury and maintained by the Treasurer. General The Treasurer shall deposit or cause to be deposited Unclaimed Property, as collected, with the Depository Bank. The Treasurer shall cause all Unclaimed Property to be held by the Depository Bank in trust on behalf of the Treasurer. Such proceeds shall be credited or expended pursuant to the Act. The Treasurer shall give appropriate notice to the Undersecretary of the Department and the Trustee of any replacement or successor Depository Bank. The Treasurer shall promptly deposit in the Bond Security and Redemption Fund all funds received under the Act, including the proceeds from the sale of abandoned property under R.S. 9:164, and then such monies, to the extent not needed to make any payments from the Bond Security and Redemption Fund, shall be transferred to the Treasurer for application in accordance with the Act. The Treasurer shall retain in a separate trust fund at least $500,000 from which the Treasurer shall pay claims duly allowed. The Treasurer shall also deduct an amount equal to the costs incurred for authorized external auditing from total gross collections during any fiscal year, A-43

98 and an amount not to exceed seven percent of the total gross collections during any fiscal year for the remaining costs of administering the provisions of the Act. Additionally, from such monies the Treasurer shall deposit $7,500,000 into the I-49 North Account and $7,500,000 into the I-49 South Account of the Unclaimed Property Leverage Fund in each fiscal year beginning no later than January 15 of each year, commencing January 15, As early as practicable but no later than January 15th of each year, the Treasurer shall notify the Commissioner of the Division of Administration as to whether there is or will be an expected insufficiency in the amount deposited in the I-49 North and I-49 South Accounts which will result in a draw on the Debt Service Reserve Account and the need for the Debt Service Reserve Account to be replenished as provided in the Cooperative Endeavor Agreement dated as of December 1, 2013, as amended and supplemented by Amendment No. 1 to Cooperative Endeavor Agreement (I-49 South) dated as of September 1, 2015, each among the Department, the Division of Administration and the Commission. Flow of Funds After the appropriation by the Legislature of monies for the Unclaimed Property Leverage Fund to pay debt service on the Bonds or replenish the Debt Service Reserve Account, the Treasurer shall make the following transfers: (a) On the 15th Business Day of each month, commencing January 15, 2015, and continuing through June 30 of said year until amounts required to be on deposit in the Series 2013 North Debt Service Account of the Debt Service Fund are fully funded, the Treasurer shall transfer monies from the I-49 North Account as follows and in the following priority: (i) to the Trustee an amount equal to the Debt Service Requirement, provided that in no event shall the Treasurer transfer to the Trustee any monies in excess of the Debt Service Requirement pursuant to this subsection (a); and (ii) to the Trustee an amount necessary to cause amounts on deposit in the Series 2013 North Debt Service Reserve Account of the Debt Service Fund to equal the Series 2013 North Debt Service Reserve Requirement. (b) On the 15th Business Day of each month, commencing January 15, 2015, and continuing through June 30 of said year until amounts required to be on deposit in the Series 2013 South Debt Service Account of the Debt Service Fund are fully funded, the Treasurer shall transfer monies from the I-49 South Account as follows and in the following priority: (i) to the Trustee an amount equal to the Debt Service Requirement, provided that in no event shall the Treasurer transfer to the Trustee any monies in excess of the Debt Service Requirement pursuant to this subsection (b); and A-44

99 (ii) to the Trustee an amount necessary to cause the Series 2013 South Debt Service Reserve Account of the Debt Service Fund to equal the Series 2013 South Debt Service Reserve Requirement. At any time, amounts on deposit in the I-49 North Account shall be applied by the Treasurer for the payment of Bond Related Expenses. Monies from the I-49 North Account shall also be used to match federal funds to be used by the Department for the costs for and associated with the construction of the I-49 North Project, but only if all transfers described in (a) above have been fully funded for the current calendar year. At any time, amounts on deposit in the I-49 South Account shall be applied by the Treasurer for the payment of Bond Related Expenses. Monies from the I-49 South Account shall also be used to match federal funds to be used by the Department for the costs for and associated with the construction of I-49 South Project, but only if all transfers described in (b) above have been fully funded for the current calendar year. The Treasurer shall deposit in the I-49 North Account all amounts required to be deposited therein pursuant to law and pursuant to the I-49 Bond Resolution and shall apply all such amounts as required by the Agreement or as may otherwise be required by law. The Treasurer shall deposit in the I-49 South Account all amounts required to be deposited therein pursuant to law and pursuant to the I-49 Bond Resolution and shall apply all such amounts as required by the Agreement or as may otherwise be required by law. Miscellaneous The Treasurer shall keep or cause to be kept proper books of record and account (separate from all other records and accounts) in which complete and correct entries shall be made of the Unclaimed Property deposited with the Depository Bank, transferred to the Trustee, and deposited in the Bond Security and Redemption Fund and of all moneys deposited in the Unclaimed Property Leverage Fund and of all moneys deposited in the Unclaimed Property Leverage Fund so as to provide audit compliance with the terms and provisions of the Collection Agreement. The Treasurer shall annually, within 240 days after the close of each State fiscal year, file with the Trustee a certified statement for such year, beginning with the fiscal year ending June 30, 2014, accompanied by supporting documentation showing in reasonable detail: (i) a statement of the Unclaimed Property deposited with the Depository Bank during such year and the amounts deposited into each account; and (ii) a statement of the Unclaimed Property transferred to the Trustee, the Bond Security and Redemption Fund and the Unclaimed Property Leverage Fund during such year. If, as a result of delinquent payments, required refunds, audits or other adjustments (including, but not limited to, adjustments relating to returned checks, bank errors and misclassifications of funds upon deposit), the amounts transferred to the Treasurer or the Trustee pursuant to the Collection Agreement are greater or less than the amounts required by the Collection Agreement, the Treasurer shall direct the Depository Bank to make an adjustment in A-45

100 the amounts to be transferred to the Treasurer, or the Treasurer shall make an adjustment in the amounts to be transferred to the Trustee, in subsequent months in order that any overpayment or underpayment is eliminated as soon as practicable. The parties acknowledge and agree that the Unclaimed Property, together with the investment income thereon, are subject to application thereof to the purposes provided herein and in the I-49 Bond Resolution, have been pledged by the Commission to the payment of the principal of, premium, if any, and interest on the Bonds pursuant to the I-49 Bond Resolution, and the parties agree to take all action necessary to effectuate, preserve and protect such pledge. In the event of any failure by any party to the Collection Agreement to perform any of their respective obligations under the Collection Agreement, each party may bring any suit, action, or proceeding in law or in equity, including any special actions or specific performance as may be necessary and appropriate to enforce any covenant, agreement or obligation under the Collection Agreement. The Collection Agreement may be amended or supplemented from time to time, provided that no amendment or supplement to this Agreement shall adversely affect the rights or interests of the holders of the Bonds without their written consent. A-46

101 APPENDIX B PROPOSED FORM OF OPINION OF BOND COUNSEL September 1, 2015 Louisiana State Bond Commission Baton Rouge, Louisiana $73,820,000 STATE OF LOUISIANA UNCLAIMED PROPERTY SPECIAL REVENUE BONDS SERIES 2015 (I-49 SOUTH PROJECT) We have acted as bond counsel to the Louisiana State Bond Commission (the "Commission"), acting on behalf of the State of Louisiana (the "State") in connection with the issuance by the Commission of the captioned bonds (the "Series 2015 South Bonds"). Capitalized terms used herein and not otherwise defined herein have the meanings given them in the hereinafter defined Bond Resolution. The Series 2015 South Bonds are issued pursuant to La. 9:165.1 and La. R.S. 9:165(C)(2)(a) (collectively, the "Act") and other constitutional and statutory authority, including, without limitation, Article VII, Section 6 of the Louisiana Constitution of 1974, and the State of Louisiana Unclaimed Property Special Revenue Bond Resolution B I-49 South Project (the "Bond Resolution") adopted by the Commission on November 21, 2015, as supplemented through the Second Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project (the "Second Supplemental Resolution"), adopted by the Commission on June 18, 2015 (the Bond Resolution, as so supplemented and as may hereafter be amended and supplemented, being hereinafter called the "Resolution"). The Series 2015 South Bonds are issued for the purpose of constructing Interstate 49 South from Interstate 10 in the City of Lafayette to the West Bank Expressway in the City of New Orleans and funding a deposit to the Debt Service Reserve Fund. The Series 2015 South Bonds are payable from and secured by the Pledged Revenues which includes the monies deposited or to be deposited into the Unclaimed Property Leverage Fund - I-49 South, all amounts paid under the herein defined CEA, and all Funds and Accounts created under the Resolution (other than the Bond Proceeds Fund), including Investment Securities held in any such Fund or Account, together with all proceeds and revenues of the foregoing, and all of the Commission's right, title and interest in and to the foregoing. The Series 2015 South Bonds are issued as fully registered bonds in the denominations, are dated, bear interest at the rates per annum, mature on the date and in the principal amount, are subject to tender and redemption, and are payable all as set forth in the Resolution. B-1

102 As security for and payment of the Series 2015 South Bonds, the Department of Transportation and Development ("DOTD"), the Division of Administration (the "Division") and the Commission, have entered into a Cooperative Endeavor Agreement (I-49 South) dated as of December 1, 2013, as amended by Amendment No. 1 to Cooperative Endeavor Agreement (I-49 South) dated September 1, 2015 (collectively, the "CEA"), pursuant to the terms of which the State has agreed, subject to appropriation, to replenish the Debt Service Reserve Account for the State's Unclaimed Property Special Revenue Bonds, Series 2015 (I-49 South Project) (the "Series 2013 South Bonds") and the Series 2015 South Bonds. The Commission, in and by the Resolution, has also entered into certain covenants and agreements with the owners of the Series 2015 South Bonds with respect to the security and payment of the Series 2015 South Bonds including a provision for the issuance of pari passu obligations hereafter under certain conditions and restrictions, for the terms of which reference is made to the Resolution. We have examined the provisions of the Constitution and statutes of the State, including the Act, a certified transcript of the proceedings of the Commission relating to the issuance of the Series 2015 South Bonds, the Unclaimed Property Collection and Allocation Agreement (I-49 South Project and I-49 North Project) dated as of December 1, 2013 (the "Collection Agreement") among the Treasurer of the State of Louisiana, the Commission and The Bank of New York Mellon Trust Company, N.A., as Trustee under the Resolution, the CEA, and such other documents, proofs and matters of law as we have deemed relevant to the issuance of the Series 2015 South Bonds and necessary for the purpose of this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Commission contained in the Resolution and in the certified proceedings and other certifications of public officials and others furnished to us, including certifications furnished to us by or on behalf of the State, without undertaking to verify the same by independent investigation. On the basis of the foregoing examinations, we are of the opinion, as of the date hereof and under existing law, that: 1. The Series 2015 South Bonds have been duly authorized and issued by the Commission pursuant to the Act and the Resolution. 2. The Series 2015 South Bonds are valid and binding limited and special obligations of the Commission and are payable as to principal, premium, if any, and interest, equally with the Series 2013 South Bonds, solely from and are secured by an irrevocable pledge and dedication of the Pledged Revenues. 3. The Resolution has been duly adopted by the Commission and is a valid and binding obligation of the Commission, enforceable against the Commission. The Resolution creates the valid pledge which it purports to create of the Pledged Revenues. The lien created by the Resolution on the Pledged Revenues and the moneys and securities in the funds and accounts pledged is and will be prior to all other liens as provided in the Resolution. 4. The Collection Agreement is a valid and binding obligation of the State. 5. The Series 2015 South Bonds are not general obligations of the State or any political subdivision thereof, and the faith and credit of the State is not pledged to the payment of the principal or interest on the Series 2015 South Bonds. 6. Interest on the Series 2015 South Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations; it should be noted, however, that for the purpose of computing B-2

103 the alternative minimum tax imposed on certain corporations, such interest is taken into account in determining adjusted current earnings. 7. Pursuant to the Act, the Series 2015 South Bonds, their transfer, and the income therefrom shall at all times be exempt from all taxation by the State or any political subdivision thereof. In rendering the opinion expressed in paragraph 6 above, we have relied on representations of the Commission and the Treasurer with respect to questions of fact material to our opinion without undertaking to verify the same by independent investigation, and have assumed continuing compliance with the covenants in the Resolution pertaining to those sections of the Internal Revenue Code of 1986, as amended, which affect the exclusion from gross income of interest on the Series 2015 South Bonds for federal income tax purposes. In the event that such representations are determined to be inaccurate or the Commission or the Treasurer fails to comply with the foregoing covenants in the Resolution, interest on the Series 2015 South Bonds could be includable in gross income for federal income tax purposes from the date of their original delivery, regardless of the date on which the event causing such inclusion occurs. It is to be understood that the rights of the owners of the Series 2015 South Bonds and the enforceability of the Series 2015 South Bonds, the Collection Agreement, the CEA and the Resolution may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted to the extent constitutionally applicable, and that their enforcement may also be subject to the exercise of the sovereign police powers of the State or its governmental bodies and the exercise of judicial discretion in appropriate cases. For the purposes of this opinion, our services as bond counsel have not extended beyond the examinations and expressions of the conclusions referred to above. Except as stated above, we express no opinion as to any federal, state or local tax consequences resulting from the ownership of, receipt of interest on, or disposition of the Series 2015 South Bonds. We note that a failure of the Legislature of the State to appropriate funds to pay principal, interest and premium, if any, on the Series 2015 South Bonds will not be a default of the State and no recourse for such failure to appropriate shall be available against the State or any political subdivision thereof. We express no opinion herein as to the accuracy, adequacy or completeness of the Official Statement relating to the Series 2015 South Bonds. Respectfully submitted, B-3

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105 APPENDIX C FORM OF CONTINUING DISCLOSURE CERTIFICATE $73,820,000 STATE OF LOUISIANA UNCLAIMED PROPERTY SPECIAL REVENUE BONDS, SERIES 2015 (I-49 SOUTH PROJECT) This Continuing Disclosure Certificate (the Disclosure Certificate ) is executed and delivered by the Louisiana State Bond Commission (the Commission ), acting through the Chairman, in connection with the issuance of the above-captioned bonds (the Bonds ). The Bonds are being issued pursuant to the State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project adopted by the Commission on November 21, 2013 (the General Bond Resolution ), the First Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project adopted by the Commission on November 21, 2013 (the I-49 South First Supplemental Resolution ), and the Second Supplemental State of Louisiana Unclaimed Property Special Revenue Bond Resolution I-49 South Project adopted by the Commission on June 18, 2015 (the I-49 South Second Supplemental Resolution, and, together with the General Bond Resolution and the I-49 South First Supplemental Resolution, the I-49 South Bond Resolution ). The Bonds are described in that certain Official Statement dated August 18, 2015 which contains certain information concerning the Commission, the security for the Bonds and certain financial and other information relating thereto. The Commission covenants and agrees as follows: SECTION 1. Definitions. In addition to the definitions set forth in the I-49 South Bond Resolution, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this section, the following capitalized terms shall have the following meanings: Annual Report shall mean any Annual Report provided by the Commission pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. Beneficial Owner shall mean any person who has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries). Dissemination Agent shall mean the Commission, or Dissemination Agent designated by the Commission. EMMA shall mean the Electronic Municipal Market Access system of the MSRB. As of the date of this Disclosure Certificate, the EMMA Internet Web site address is GAAP shall mean generally accepted accounting principles, as such principles are prescribed, in part, by the Financial Accounting Standards Board and modified by the Government Accounting Standards Board and in effect from time to time. C-1

106 Listed Events shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. MSRB shall mean the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the single centralized repository for the collection and availability of continuing disclosure documents for purpose of the Rule. The continuing disclosure documents must be provided to the MSRB in searchable portable document format (PDF) to the following: Municipal Securities Rulemaking Board Electronic Municipal Market Access Center Notice of Listed Events shall mean the Notice required to be given in accordance with Section 5 hereof Act shall mean the Securities Exchange Act of 1934, as amended. Official Statement shall mean the Official Statement dated August 18, Participating Underwriter shall mean any of the original Underwriters (as defined in the I-49 South Bond Resolution) of the Bonds required to comply with the Rule in connection with an offering of the Bonds. Rule shall mean Rule 15c2-12 (b) (5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. SEC shall mean the Securities and Exchange Commission. Securities Counsel shall mean legal counsel expert in federal securities law. State shall mean the State of Louisiana. SECTION 2. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Commission, on behalf of the State, for the benefit of the owners of the Bonds, including owners of beneficial interests in the Bonds, and the Participating Underwriter, and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2-12(b) (5). SECTION 3. Provision of Annual Reports. (a) Each year, the Commission, on behalf of the State, shall provide, or shall cause the Dissemination Agent to provide, not later than 240 days from the end of the State s fiscal period, commencing with the State s Annual Report for its fiscal year ending June 30, 2016, to the MSRB an Annual Report for the preceding fiscal year which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than five (5) business days prior to said date, the Commission, on behalf of the State, shall provide the Annual Report to the C-2

107 Dissemination Agent (if other than the State). In each case, the Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by specific reference other information as provided in Section 4 of this Disclosure Certificate. (b) If the Commission, on behalf of the State, is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the Commission, on behalf of the State, shall send a notice, in a timely manner, to the MSRB, in substantially the form attached as Exhibit A. (c) If the State s fiscal year changes, the Commission, on behalf of the State, shall send written notice of such change to the MSRB, in substantially the form attached as Exhibit B. (d) The Commission shall file a report with the State certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, stating the date it was provided to the MSRB. (e) In connection with providing the Annual Report, the Commission is not obligated or responsible under this Disclosure Certificate to determine the sufficiency of the content of the Annual Report for purposes of the Rule or any other state or federal securities law, rule, regulation or administrative order. SECTION 4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the following: a. Basis of accounting used by the State in reporting its financial statements. The State follows GAAP principles and mandated Louisiana statutory accounting requirements as in effect from time to time. In the event of any material change in such requirements the impact of such changes will be described in the Annual Report of the year such change occurs. b. Updates of the following table in the Official Statement which is under the following caption (such table will be presented in the same format presented in the Official Statement): Historical Collections of Abandoned and Unclaimed Property and Deposits into the Unclaimed Property Leverage Fund and the General Fund Any or all of the items listed above may be incorporated by reference from other documents, including official statements of debt issues of the Commission, on behalf of the State, or related public entities, which have been submitted to the MSRB. If the document incorporated by reference is a deemed final official statement, it shall be available from the MSRB. The Commission shall clearly identify each such other document so incorporated by reference. SECTION 5. Reporting of Listed Events. (a) The Commission, on behalf of the State, covenants to provide, or cause to be provided, to the MSRB notice of the occurrence of any of the following events with respect to the Bonds, in a timely manner not in excess of ten (10) business days after the occurrence of the C-3

108 event. Each notice shall be so captioned and shall prominently state the date, title and CUSIP numbers of the Bonds: (1) principal and interest payment delinquencies; (2) non-payment related defaults, if material; (3) unscheduled draws on debt service reserves reflecting financial difficulties; (4) unscheduled draws on credit enhancements reflecting financial difficulties; (5) substitution of credit or liquidity providers, or their failure to perform; (6) adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds; (7) modifications to rights of Bondholders, if material; (8) Bond calls, if material, and tender offers; (9) defeasances; (10) release, substitution or sale of property securing repayment of the Bonds, if material; (11) rating changes; (12) bankruptcy, insolvency, receivership, or similar event of the State (1) ; (13) the consummation of a merger, consolidation, or acquisition involving the State or the sale of all or substantially all of the assets of the State, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and/or (1) For the purposes of this event, the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the State in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court of governmental authority has assumed jurisdiction over substantially all of the assets or business of the State, or if such jurisdiction has been assumed by leaving the existing government body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan or reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction or substantially all of the assets or business of the State. C-4

109 (14) appointment of a successor or additional paying agent or the change of name of a paying agent, if material. (b) In connection with providing a notice of the occurrence of a Listed Event, the Commission, solely in its capacity as Dissemination Agent, is not obligated or responsible under this Disclosure Certificate to determine the sufficiency of the content of the notice for purposes of the Rule or any other state or federal securities law, rule, regulation or administrative order. (c) The Commission, on behalf of the State, acknowledges that the rating changes referred to above in Section 5(a)(11) of this Disclosure Certificate may include, without limitation, any change in any rating on the Bonds or other indebtedness issued under the I-49 South Bond Resolution. (d) The Commission, on behalf of the State, acknowledges that it is not required to provide a notice of a Listed Event with respect to credit enhancement when the credit enhancement is added after the primary offering of the Bonds, the Commission, on behalf of the State, does not apply for or participate in obtaining such credit enhancement, and such credit enhancement is not described in the Official Statement. (e) As of the date of this Disclosure Certificate, the Listed Events described in subsection (a)(5) is not applicable to the Bonds. SECTION 6. Mandatory Electronic Filing with EMMA. All filings with the MSRB under this Disclosure Certificate shall be made by electronically transmitting such filings through the EMMA Dataport at as provided by the amendments to the Rule adopted by the SEC in Securities Exchange Release No on December 5, SECTION 7. Termination of Reporting Obligation. (a) The State s obligations under this Disclosure Certificate shall terminate upon the legal defeasance of the Bonds or the prior redemption or payment in full of all of the Bonds. (b) This Disclosure Certificate, or any provision hereof, shall be null and void in the event that the State (i) receives an opinion of Securities Counsel, addressed to the State, to the effect that those portions of the Rule, which require such provisions of this Disclosure Certificate, do not or no longer apply to the Bonds, whether because such portions of the Rule are invalid, have been repealed, amended or modified, or are otherwise deemed to be inapplicable to the Bonds, as shall be specified in such opinion, and (ii) files notice to such effect with the MSRB. SECTION 8. Dissemination Agent. The State, from time to time, may appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. The initial Dissemination Agent shall be the Commission. Except as otherwise provided in this Disclosure Certificate, the Dissemination Agent (if other than the State) shall not be responsible in any manner for the content of any notice or report prepared by the State pursuant to this Disclosure Certificate. C-5

110 SECTION 9. Amendment; Waiver. (a) Notwithstanding any other provision of this Disclosure Certificate, this Disclosure Certificate may be amended, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied: (1) if the amendment or waiver relates to the provisions of Section 3(a), (b), (c), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, a change in law or a change in the identity, nature or status of the State or the type of business conducted by the State; (2) this Disclosure Certificate, as so amended or taking into account such waiver, would, in the opinion of Securities Counsel, have complied with the requirements of the Rule at the time of the original issuance of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (3) the amendment or waiver does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the Bondholders or Beneficial Owners. (b) In the event of any amendment to, or waiver of a provision of, this Disclosure Certificate, the State shall describe such amendment or waiver in the next Annual Report, and shall include an explanation of the reason for such amendment or waiver. In particular, if the amendment results in a change to the annual financial information required to be included in the Annual Report pursuant to Section 4 of this Disclosure Certificate, the first Annual Report that contains the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of such change in the type of operating data or financial information being provided. Further, if the annual financial information required to be provided in the Annual Report can no longer be generated because the operations to which it related have been materially changed or discontinued, a statement to that effect shall be included in the first Annual Report that does not include such information. (c) If the amendment results in a change to the accounting principles to be followed in preparing financial statements as set forth in Section 4 of this Disclosure Certificate, the Annual Report for the year in which the change is made shall include a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of such differences and the impact of the changes on the presentation of the financial information. To the extent reasonably feasible, the comparison shall also be quantitative. A notice of the change in accounting principles shall be filed by the State, or the Dissemination Agent (if other than the State) at the written direction of the State with the MSRB. SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the State from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the State chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to C-6

111 that which is specifically required by this Disclosure Certificate, the State shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event. SECTION 11. Failure to Comply. In the event of a failure of the State or the Dissemination Agent (if other than the State) to comply with any provision of this Disclosure Certificate, any Bondholder or Beneficial Owner may bring an action to obtain specific performance of the obligations of the State or the Dissemination Agent (if other than the State) under this Disclosure Certificate, but no person or entity shall be entitled to recover monetary damages hereunder under any circumstances, and any failure to comply with the obligations under this Disclosure Certificate shall not constitute a default with respect to the Bonds or under the I-49 South Bond Resolution authorizing the issuance of the Bonds. SECTION 12. Duties of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate. SECTION 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the State, the Dissemination Agent, the Participating Underwriters, the Bondholders and the Beneficial Owners, and shall create no rights in any other person or entity. SECTION 14. Transmission of Information and Notices. Unless otherwise required by law or this Disclosure Certificate, and, in the sole determination of the State or the Dissemination Agent, as applicable, subject to technical and economic feasibility, the State or the Dissemination Agent, as applicable, shall employ such methods of information and notice transmission as shall be requested or recommended by the herein designated recipients of such information and notices. SECTION 15. Additional Disclosure Obligations. The State acknowledges and understands that other State and federal laws, including, without limitation, the Securities Act of 1933, as amended, and Rule 10b-5 promulgated by the SEC pursuant to the 1934 Act, may apply to the State, and that under some circumstances, compliance with this Disclosure Certificate, without additional disclosures or other action, may not fully discharge all duties and obligations of the State under such laws. SECTION 16. Governing Law. This Disclosure Certificate shall be construed and interpreted in accordance with the laws of the State, and any suits and actions arising out of this Disclosure Certificate shall be instituted in a court of competent jurisdiction in the State. Notwithstanding the foregoing, to the extent this Disclosure Certificate addresses matters of federal securities laws, including the Rule, this Disclosure Certificate shall be construed and interpreted in accordance with such federal securities laws and official interpretations thereof. [Remainder of page left intentionally blank] C-7

112 IN FAITH WHEREOF, the undersigned has executed this Continuing Disclosure Certificate on this, the day of September, LOUISIANA STATE BOND COMMISSION, ACTING ON BEHALF OF THE STATE OF LOUISIANA By: Name: John N. Kennedy Title: State Treasurer C-8

113 EXHIBIT A NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT $73,820,000 STATE OF LOUISIANA UNCLAIMED PROPERTY SPECIAL REVENUE BONDS, SERIES 2015 (I-49 SOUTH PROJECT) (THE BONDS ) NOTICE IS HEREBY GIVEN that the Louisiana State Bond Commission (the Commission ), has not provided an Annual Report for the Bonds as required by the Second Supplemental State Unclaimed Property Revenue Bond Resolution I-49 South adopted by the Commission on June 18, 2015, providing for the issuance of Bonds. The Commission anticipates that its Annual Report will be filed by. Date: LOUISIANA STATE BOND COMMISSION, ACTING ON BEHALF OF THE STATE OF LOUISIANA By: Name: John N. Kennedy Title: State Treasurer C-9

114 EXHIBIT B NOTICE OF CHANGE IN STATE S FISCAL YEAR Name of Obligated Person: State of Louisiana Name of Bond Issue: $73,820,000 State of Louisiana Unclaimed Property Special Revenue Bonds, Series 2015 (I-49 South Project) Date of Bonds: September 1, 2015 NOTICE IS HEREBY GIVEN that the fiscal year of the State of Louisiana changed. Previously, the State s fiscal year ended on. It now ends on. LOUISIANA STATE BOND COMMISSION, ACTING ON BEHALF OF THE STATE OF LOUISIANA By: Name: John N. Kennedy Title: State Treasurer C-10

115 PART I INFORMATION CONCERNING THE STATE OF LOUISIANA PART I contains certain information concerning the State of Louisiana (the "State"), including budget information, the most recently approved Executive Budget, the most recent Revenue Estimating Conference report, the State's economy and the State's outstanding debt, as updated or supplemented to the date specified herein. The State intends to update and supplement such information (the "Annual Information Statement") on an annual basis as provided in the State s continuing disclosure certificates. PART I has been supplied by the State to provide information about the financial condition of the State. The Annual Information Statement will be filed with the Municipal Securities Rulemaking Board ("MSRB") through its Electronic Municipal Market Access ("EMMA") system and will be updated annually. An electronic copy of the Annual Information Statement will be accessible through the EMMA system at An official copy of the Annual Information Statement may be obtained by contacting the State Bond Commission, P.O. Box 44154, Baton Rouge, Louisiana 70804; telephone: (225) Budgetary Process STATE BUDGETARY PROCESS State law, La. R.S. 39:33(A)(1), requires that, on a date specified by the Commissioner of Administration, but not later than November 15th of each year, the head of each budget unit submit to the Governor, the Joint Legislative Committee on the Budget and the Legislative Fiscal Office an estimate of financial requirements and receipts of the budget unit for the ensuing Fiscal Year. La. R.S. 39:32 eliminates the utilization of continuation budgeting and requires the agency to submit its request at the existing operating budget level with a prioritized listing of budget packages to increase or decrease the existing operating budget. The Governor is required to prepare an executive budget, submit a copy to the Joint Legislative Committee on the Budget forty-five (45) days (except that during the first year of each term it shall be submitted 30 days) prior to the beginning of the regular session of the Legislature and transmit a copy to each member of the Legislature on the first day of the regular session. La. R.S. 39:36 also requires the Governor to submit a budget message in the executive budget summarizing the proposed financial plan and programmatic policies, including a statement of impact that his proposed recommendations have on the existing operating budget. The budget is enacted into law by the Legislature and sent to the Governor for his signature. The State Constitution prohibits the passage of an unbalanced budget. The Governor may veto any line item appropriation, subject to legislative override. During the execution phase of the budget process, the Commissioner of Administration may approve the transfer of funds between programs within a budget unit, which, in the aggregate, do not exceed one percent of the total appropriation of the budget unit, when sufficient evidence is presented to the Commissioner of Administration indicating the operations of the budget unit or programs are being or will be impaired without such transfers. With the approvals required by law, the Commissioner of Administration, with the approval of the Joint P-I(i)

116 Legislative Committee on the Budget, may approve the transfer of funds between programs within a budget unit, provided that the transfers authorized do not exceed twenty-five percent in the aggregate of the total appropriation of the budget unit for a Fiscal Year. Budget revisions during the year reflecting increases in expenditures due to increases in federal funds and selfgenerated revenues must be approved by the Commissioner of Administration and the Joint Legislative Committee on the Budget. State law requires the Governor to submit to the Legislature, no later than the eighth day of the regular legislative session, a proposed five-year capital outlay program. The Legislature enacts into law a bill that incorporates the first year of the five-year capital outlay program. The program for the remaining four years, itemizing the capital projects, amounts and funding sources, is to be adopted by concurrent resolution of the Legislature. Under State law, prior year appropriation activities are required to be completed within 45 days after the fiscal year end, June 30. Additionally, the law limits the usage of prior period appropriation balances after the June 30 close to only those items that are true liabilities and further delineates those items for which appropriations can be rolled forward. Upon approval of the Commissioner of Administration, any State funds that were appropriated during a fiscal year specifically for the purpose of matching federal grants and any federal funds may be carried forward into the ensuing year's appropriation. The Commissioner of Administration, pursuant to La. R.S. 39:334, is the general accountant of the State and keeper of all public accounts, books, vouchers, documents, and other papers relative to revenue, debt, and fiscal affairs. As general accountant, the Commissioner of Administration has authority to draw all warrants upon the State Treasury for funds in cases expressly provided by law. No warrant, however, is required to be drawn until a monthly budget has been approved. Such warrant must express, on its face, the particular fund or other identified schedules from which the money appropriated by law is to be drawn. The Commissioner of Administration is also required to keep accounts between the State and the State Treasurer and make quarterly reports to the Governor of the amount of money in the custody of the State Treasurer belonging to the State. Appropriations are made available to the budget units, upon approval of the Division of Administration, in an allotment determined to be sufficient by the Division of Administration. Financial information contained in this Official Statement, unless otherwise noted, has been furnished by the Division of Administration. Per La. R.S. 39:75, the Division of Administration is required to submit a budget status report monthly to the Joint Legislative Committee on the Budget. The budget status report presented at the first meeting of the Joint Legislative Committee on the Budget after October fifteenth of any Fiscal Year shall reflect the balance in any fund for the previous fiscal year. "Balance in any fund" is defined in La. R.S. 39:2(5.1) to mean the deficit or surplus in any fund at the close of the fiscal year. A "deficit" is defined in La. R.S. 39:2(11.1) to mean the excess for any fiscal year of actual expenditures paid by warrant or transfer over the actual monies received and any monies or balances carried forward for any fund at the close of the fiscal year as such are reported by the office of statewide reporting within the division of administration. Conversely, a "surplus" is defined in La. R.S. 39:2(48) to mean the excess for any fiscal year of the actual monies received and any monies or balances carried forward over the actual P-I(ii)

117 expenditures paid by warrant or transfer for any fund at the close of the fiscal year as such are reported by the office of statewide reporting within the Division of Administration. At the first meeting of the Joint Legislative Committee on the Budget after publication of the State's Comprehensive Annual Financial Report (the "CAFR"), the Commissioner of Administration shall certify to the Joint Legislative Committee on the Budget the actual expenditures paid by warrant or transfer and the actual moneys received and any moneys or balances carried forward for any fund at the close of the previous fiscal year which shall be reflected in the budget status report. At the first meeting of the Joint Legislative Committee on the Budget after publication of the CAFR, the Commissioner of Administration and the Legislative Auditor shall present the budget status report to the Joint Legislative Committee on the Budget. The budget status report shall include a section describing any issues that materially affect the budgetary soundness of the State but that are not required to be fully addressed during the current fiscal year. The Division of Administration, after consultation with the Legislative Fiscal Office, shall prepare a description of each such issue. The description of such issues shall be submitted to the Legislative Fiscal Office at least one week prior to each meeting of the Joint Legislative Committee on the Budget. If the budget status report indicates that the total appropriation from any fund will exceed the official forecast for that fund, the Joint Legislative Committee on the Budget shall immediately notify the Governor that a projected deficit exists for that fund. Upon receiving notification that a projected deficit exists, the Governor shall have interim budget balancing powers to adjust the budget for any program that is appropriated from a fund that is in a deficit posture. If within thirty (30) days of the determination that a projected deficit exists in a fund the necessary adjustments are not made to eliminate the projected deficit, the Governor shall call a special session of the Legislature for this purpose unless the Legislature is in regular session. The State Constitution requires that a deficit existing at the end of a Fiscal Year must be eliminated no later than the end of the next fiscal year. If the official forecast of recurring money for the next fiscal year is at least 1% less than the official forecast of recurring money for the current fiscal year, the Governor and the Legislature may employ certain methods and procedures in the development of the State budget for the next fiscal year for the purpose of avoiding a budget deficit in the next fiscal year. Revenue Estimating Conference The Revenue Estimating Conference (the REC ) was established by Act 814 of the 1987 Regular Session of the Legislature and given constitutional status in 1990 (Article VII, Sections 10(A) and (B) of the State Constitution). The REC was established to provide an official forecast of anticipated State revenues upon which each executive budget is to be based, to provide for a more stable and accurate method of financial planning and budgeting and to facilitate the adoption of a balanced budget as is required by Article VII, Section 10(E) of the State Constitution. In developing the official forecast, the REC may only consider revenues that are projected to accrue to the State as a result of laws and rules enacted and in effect during the forecast period. The REC is prohibited from including revenues that would be raised by proposed legislation or rules. P-I(iii)

118 In addition, under the provisions of Article VII, Section 10(B) of the State Constitution, the REC is required to designate, in each estimate, the money that is "non-recurring." "Nonrecurring revenue" is statutorily defined as all revenue received by the State from any source identified by the REC as being of a "non-recurring" nature but does not include revenues from a source that has been available for the preceding two fiscal years or that will be available for the succeeding two fiscal years. Under the provisions of Article VII, Section 10(D)(2) of the State Constitution, unless specifically addressed by another provision of the State Constitution, the appropriation of any money designated in the official forecast as non-recurring shall be made only for the purpose of retiring or for the defeasance of bonds in advance and in addition to the existing amortization requirements of the State, providing for payments against the unfunded accrued liability of the public retirement systems, providing funding for capital outlay projects in the State's capital budget, providing for allocation or appropriation for deposit into the Budget Stabilization Fund established in Article VII, Section 10.3, providing for allocation or appropriation for deposit unto the Coastal Restoration Fund, and providing for new highway construction for which federal matching funds are available. On October 22, 2011, the electorate approved a constitutional revision (Act 422 of the Regular Legislative Session of 2011) to amend Article VII, Section 10(D)(2)(b), wherein, effective for fiscal years and at least 5% of any officially designated nonrecurring revenue shall be appropriated for application to the balance of the unfunded accrued liabilities of the Louisiana State Employees Retirement System and the Teachers Retirement System of Louisiana existing as of June 30, For fiscal year and every fiscal year thereafter, at least 10% of any officially designated nonrecurring revenue shall be appropriated for this purpose. The Governor is required to cause to be prepared an executive budget presenting a complete financial and programmatic plan for the ensuing fiscal year based only upon the official estimate of anticipated State revenues, as determined by the REC. La. R.S. 39:54(c) provides that appropriations from the General Fund and dedicated funds for any fiscal year shall not exceed the official forecast in effect at the time the appropriations are made. Article VII, Section 10(J) of the State Constitution defines "state general fund and dedicated funds" to include all money required to be deposited in the State Treasury, except that money the origin of which is: 1. the federal government; 2. self-generated collections by any entity subject to the various higher education supervisory boards; 3. a transfer from another state agency, board, or commission; and 4. funds allocated to parishes for severance tax and royalties allocation in accordance with Article VII, Sections 4(D) and (E) of the State Constitution. The REC is composed of the following principals: the Governor, the President of the Senate, the Speaker of the House of Representatives or their respective designees, and a faculty member with revenue forecasting expertise from a public or a private university in the State. Such faculty member is selected by the other three principals of the REC from a list of as many as five, but not fewer than three, faculty members submitted to them by the Louisiana Higher P-I(iv)

119 Education Executive Advisory Committee. La. R.S. 39:22 et seq. provides for membership of the REC to include as participants, along with the above-mentioned principals, persons who are invited to participate by a principal. The REC, under La. R.S. 39:24 et seq., is required to prepare and publish initial and revised estimates of money to be received by the General Fund and dedicated funds for the current and next five fiscal years that are available for appropriation (the "REC Reports"). All REC decisions to adopt these estimates must be by unanimous vote of its members who, under La. R.S. 39:26 et seq. must meet at least four (4) times annually by: October 15, January 1, the third Monday in March, and August 15. The most recently adopted estimate of money available for appropriation shall be the official forecast. Appropriations by the Legislature from the General Fund shall not exceed the official forecast in effect at the time the appropriations are made. The REC Reports may be viewed at the official website of the Legislative Fiscal Office, under the caption entitled "Official Revenue Estimates" and the Office of Planning and Budget, Expenditure Limitation Article VII, Section 10(C) of the State Constitution provides for the determination by the Legislature of an expenditure limit for each fiscal year to be established during the first quarter of the calendar year for the next fiscal year. The expenditure limit for Fiscal Year was required to be the actual appropriations from the General Fund and dedicated funds for that year, except funds derived from severance taxes and mineral royalties allocated to the parish governments by Article VII, Sections 4(D) and (E) of the State Constitution. For subsequent fiscal years, the limit may not exceed the expenditure limit for Fiscal Year plus an amount equal to that limit times a positive growth factor. The growth factor is the average annual percentage rate of change of personal income for the State, as defined and reported by the United States Department of Commerce for the three calendar years prior to the fiscal year for which the limit is calculated. Monies used in this calculation include, in addition to State General Fund and statutory dedications, fees and self-generated revenues (except college tuition). The limit may be changed in any fiscal year by a favorable vote of two-thirds of the elected members of each house of the Legislature. Constitutional Limitations The ability of the State to increase taxes is subject to certain constitutional limitations. These limitations include the following: (1) the levy of a new tax, increase in an existing tax or repeal of an existing tax exemption requires the enactment of a law by two-thirds vote of the elected members of each house of the Legislature; (2) the State tax on property for all purposes may not exceed an annual rate of five and three-quarter mills per dollar of assessed valuation (the State does not currently levy this authorized millage); (3) the homestead exemption law provides that a tract of land not exceeding 160 acres, whether rural or urban, on which is situated an owner-occupied residence, is exempt from State, parish, and special ad valorem taxes to the extent of seven thousand five hundred dollars of the assessed valuation (improvements for residential purposes are assessed at 10% of fair market value); (4) various other property P-I(v)

120 exemptions from ad valorem taxation such as public land and other public property used for a public purpose; (5) the State sales and use tax shall not apply on the sales or purchases of food for home consumption, natural gas, electricity and water for home consumption, prescription drugs; (6) the income tax rates and brackets can never exceed that set forth in the Louisiana Revised Statutes as of January 1, 2003, and (7) the prohibition from the imposition of any real estate transfer tax, excluding those already in existence in the Parish of Orleans. Budget Stabilization Fund Act 1149 of the 1997 Regular Session of the Legislature created the Budget Stabilization Fund (the "Stabilization Fund"), the proceeds of which may be utilized, under certain conditions with legislative approval, to either offset a deficit or supplement a revenue shortfall. In 1998, the voters ratified a constitutional amendment that placed the Stabilization Fund into Article VII, Section 10.3 of the State Constitution and abolished the Revenue Stabilization/Mineral Trust Fund. Monies required to be deposited in the Stabilization Fund include: (i) monies in excess of the expenditure limit and mineral revenues in excess of $750 million annually (pursuant to a 2003 constitutional amendment, this may be adjusted by twothirds vote of each house of the Legislature, not to exceed 50% of the increase in the Consumer Price Index ("CPI") for the preceding ten years; as the result of the passage of Act 11 of the 2004 First Extraordinary Session of the Legislature, this base amount was raised from $750 million to $850 million effective July 1, 2004, and Act No. 257 of the 2015 Regular Session of the Legislature raised the base amount from $850 million to $950 million, effective June 29, 2015 (the Base Amount )); (ii) all monies available for appropriation from the State General Fund and dedicated funds in excess of the expenditure limit; (iii) 25% of any money designated in the official forecast as non-recurring as provided in Article VII, Section 10(D)(2) of the State Constitution; and (iv) any money appropriated to the Stabilization Fund. Money may be appropriated from the Stabilization Fund under the following circumstances: (1) by 2/3 vote of each house of the Legislature to fund a projected shortfall in the next year's budget, not to exceed 1/3 of the Stabilization Fund's balance; or (2) by 2/3 vote of each house of the Legislature to fund a projected current year shortfall, an amount equal to 1/3 of the Stabilization Fund's balance not to exceed the projected shortfall. The Stabilization Fund balance is capped at 4% of total State revenue receipts for the previous Fiscal Year. In accordance with Article VII, Section 10.3(C) of the State Constitution, the money in the Budget Stabilization Fund shall not be available for appropriation or use except under the following conditions: (1) If the official forecast of recurring money for the next fiscal year is less than the official forecast of recurring money for the current fiscal year, the difference, not to exceed one-third of the Budget Stabilization Fund shall be incorporated into the next year's official forecast only after the consent of two-thirds of the elected members of each house of the Legislature. If the Legislature is not in session, the two-thirds requirement may be satisfied upon obtaining the written consent of two-thirds of the elected members of each house of the Legislature in a manner provided by law. (2) If a deficit for the current fiscal year is projected due to a decrease in the official forecast, an amount equal to one-third of the Budget Stabilization Fund not to exceed the projected deficit may be appropriated after the consent of two-thirds of the P-I(vi)

121 elected members of each house of the Legislature. Between sessions of the Legislature the appropriation may be made only after the written consent of two-thirds of the elected members of each house of the Legislature. (3) In no event shall the amount included in the official forecast for the next fiscal year plus the amount appropriated in the current fiscal year exceed one-third of the fund balance at the beginning of the current fiscal year. (4) No appropriation or deposit to the Budget Stabilization Fund shall be made if such appropriation or deposit would cause the balance in the Budget Stabilization Fund to exceed four percent of total State revenue receipts for the previous fiscal year. Act 226 of the 2009 Regular Session of the Legislature amended La. R.S. 39:94(C)(4)(b) to provide that, except pursuant to a specific legislative appropriation, no appropriation or deposit to the Stabilization Fund shall be made in the same fiscal year as an appropriation, use, or withdrawal is made from the Stabilization Fund or until such time as the official forecast exceeds the actual collections of state general fund (direct) revenue for Fiscal Year A lawsuit was filed challenging the constitutionality of the amendment to La. R.S. 39:94(C)(4)(b). See PART II Litigation Against the State herein. Act 646 of the 2014 Regular Session of the Legislature ("Act 646") provides that the provisions of La. R.S. 39:94(C)(4)(b) shall be null, void, and of no effect on July 1, Act 646 also provides that the greater of $25,000,000 from any source, or twenty-five percent (25%) of any money designated in the official forecast as nonrecurring as provided in Article VII, Section 10(D)(2) of the State Constitution, shall annually be deposited in and credited to the Stabilization Fund. On April 20, 2010, the Deepwater Horizon drilling rig, located in the Gulf of Mexico caught fire and exploded, killing eleven workers and resulting in the blowout of the Macondo well on the ocean floor. The rig sank on April 22, 2010, and these events resulted in the unauthorized discharge of oil, gas and other pollutants from the wellhead into the Gulf of Mexico and ultimately into and upon the waters and coastline of the State (the Spill ). The well was capped July 12, 2010, but the Spill and its aftermath caused damage to the natural resources of the State and impacted the State s economy. The State filed suit against BP Exploration & Production Inc. ( BP ), Transocean Ltd., Halliburton Energy Services and other parties in the Eastern District Court of Louisiana (the Court ) for damages resulting from the Spill under the Clean Water Act and general maritime law. In addition, the U.S. Department of Justice filed suit against BP, Transocean Ltd., Halliburton Energy Services and other parties alleging criminal and civil violations of the Clean Water Act. On July 2, 2015, an Agreement in Principle (the Settlement Agreement ) was reached with BP on all of the State and federal claims arising from the Spill. The State anticipates receiving approximately $6.8 billion over a period of approximately 16 years as a result of the Settlement Agreement for claims related to natural resource damages, the State s share of the Clean Water Act penalties, and the State s various economic damage claims. Before any funds P-I(vii)

122 are distributed, the Settlement Agreement must be approved by the Court after a public comment process; as of the date of this Official Statement, the public comment period has not been scheduled and it is not possible to determine when and if the Court will approve the Settlement Agreement. If approved, in accordance with the Settlement Agreement, $5 billion of the natural resource damage funds to be received by the State under the Settlement Agreement are required to be expended on coastal restoration projects associated with natural resource damage, and approximately $787 million of the Clean Water Act penalty funds to be received by the State under the Settlement Agreement are required to be deposited in the Coastal Protection and Restoration Fund, where they will be expended for integrated coastal protection efforts. The remaining $1 billion to be received by the State under the Settlement Agreement are for economic damages incurred by the State. Pursuant to La. R.S. 39:91, the Deepwater Horizon Economic Damages Collection Fund has been established within the State Treasury. After allocation of money to the Bond Security and Redemption Fund as required by Article VII, Section 9(B) of the State Constitution, the State Treasurer is required to deposit in and credit to the Deepwater Horizon Economic Damages Collection Fund proceeds of the settlement, judgment or final disposition of the State s economic damages claims in the BP litigation. In accordance with La. R.S. 39:91(B), forty-five percent (45%) of each such receipt of economic damages proceeds is required to be deposited into the Stabilization Fund, which was created and established pursuant to Article VII, Section 10.3 of the State Constitution, until that fund reaches $811 million (subject to adjustment by the Legislature). Forty-five percent (45%) of each such receipt of economic damages proceeds is required to be deposited into the Medicaid Trust Fund for the Elderly until an amount of $700 million has been deposited into such fund. Ten percent (10%) of each such receipt of economic damages proceeds is required to be deposited into the Health Trust Fund until an amount of $30 million has been deposited into such fund. Act 473 of the 2015 Regular Session of the Legislature provides for an amendment to Article VII, Section 10.3 of the State Constitution, which, if approved by the voters in the State at a State-wide election held on October 24, 2015, will establish within the State Treasury the Budget and Transportation Stabilization Trust in place of the current Budget Stabilization Fund (and the establishment of the Budget Stabilization Subfund and the Transportation Stabilization Subfund therein). Act 473 further provides that mineral revenues in excess of the Base Amount shall be deposited into the Budget Stabilization Subfund until the balance therein equals and shall be maintained in the amount of $500 million, and thereafter such mineral revenues shall be deposited into the Transportation Stabilization Subfund until the balance therein equals and shall be maintained in the amount of $500 million, and thereafter any excess mineral revenues shall be deposited into the State s general fund. Act No. 465 of the 2015 Regular Session of the Legislature authorizes certain amendments to La. R.S. 39:94 to reflect the amendment to Article VII, Section 10.3 of the State Constitution, and further provides that the Base Amount may be adjusted every 5 years. The amendments to the State Constitution are subject to voter approval at a statewide election to be P-I(viii)

123 held on October 24, In addition, Act No. 465 of the 2015 Regular Session of the Legislature shall take effect and become operative if and when the proposed amendments to the State Constitution discussed above are approved by the voters on October 24, It is expected that distributions under the Settlement Agreement would take place subsequent to the October 24, 2015 election. Accordingly, if approved by the voters on October 24, 2015, it is unclear the impact Act No. 473 would have on the distributions and deposits of the economic damages received by the State under the Settlement Agreement. CONDITION OF THE GENERAL FUND IN RECENT YEARS The table below sets forth in summary fashion the condition of the State's General Fund and Bond Security and Redemption Fund for Fiscal Years through , as reflected in the Comprehensive Annual Financial Report: Fiscal Year Fiscal Year ($ in thousands) Fiscal Year Fiscal Year Total Revenues $24,008,304 $23,197,877 $22,338,862 $23,478,857 Total Expenditures (24,352,250) (23,633,274) (23,058,363) (23,425,056) Excess (Deficiency) of Revenues Over (Under) Expenditures (343,946) (435,397) (719,501) 53,801 Total Other Financing Sources (Uses) (241,444) 81, ,537 (48,241) Net Change in Fund Balance (585,390) (353,435) (453,964) 5,560 Fund Balances at Beginning of Year as Restated 4,516,536 3,996,210 3,669,771 3,159,376 Decrease in Reserves for Inventories 4,159 (5,566) (2,055) (0) Fund Balances at End of Year $3,935,305 $3,637,209 $3,213,752 $3,164,936 The table below reflects the present four year trend of the Unassigned General Fund and Budget Stabilization Fund balances. These balances declined from $ million in Fiscal Year to $ million in Fiscal Year : Fiscal Year ($ in thousands) Fiscal Year Fiscal Year Fiscal Year General Fund Unassigned Fund Balance $111,769 $127,508 $36,529 $62,574 Restricted for Budget Stabilization 646, , , ,505 Total $757,899 $570,442 $480,398 $507,079 Source: State of Louisiana Comprehensive Annual Financial Report The budget-basis results presented in the Fiscal Status Summary are unaudited and also reflect significant accounting differences from the GAAP-basis results found in the CAFR. In P-I(ix)

124 addition to being budget-basis rather than GAAP, the Fiscal Status Summary includes a much smaller portion of General Fund activities than found in the GAAP-basis audited General Fund financial statements. In connection with the preparation of the CAFR, the Legislative Auditor reviews, but does not audit, certain figures in the Fiscal Status Summary. The procedures used by the Legislative Auditor to review the results can be found on the Legislative Auditor's website at The table below sets forth in summary fashion the Fiscal Status Summary for Fiscal Years through , as received and accepted by the Joint Legislative Committee on the Budget, and the estimated Fiscal Status Summary for Fiscal Year presented to the Joint Legislative Committee on the Budget on May 20, 2015: STATE OF LOUISIANA GENERAL FUND FISCAL STATUS SUMMARY, FY ($ in millions) Fiscal Year Fiscal Year Fiscal Year Fiscal Year Revenues 7, , , ,507.5 Fund Transfers* Bond Premiums 68.2 Various Carry Forwards SUBTOTAL REVENUES 8, , , ,568.6 Expenditures 8, , , ,469.1 Various Carry Forwards SUBTOTAL EXPENDITURES 8, , , ,494.1 General Fund Revenue Less Appropriations & Requirements (140.6) 99.4 Undesignated General Fund Cash Balance From Prior Year NA NA NA Undesignated General Fund Cash Balance NA NA * In FY , spending in Dedicated Funds was reduced by $49.8 million in Dedicated Funds, which allowed a transfer of this amount to the General Fund. 1 Fiscal Years , and are actuals. Fiscal Year is an estimate as reported in the May 2015 Fiscal Status Report presented at the last meeting of the Joint Legislative Committee on the Budget. Source: Division of Administration and Legislative Auditor, See At June 30, 2015, there was $469.9 million on deposit in the Stabilization Fund. See STATE BUDGETARY PROCESS Budget Stabilization Fund in this Part I. P-I(x)

125 See also "GENERAL FUND FISCAL YEARS , and CASH FLOW ANALYSIS" for a discussion of the possible negative impact of the use of any surplus in the General Fund cash position and Inter-fund Borrowing. GENERAL FUND FISCAL YEAR Act 16 of the 2015 Regular Session, the General Appropriations Act, and the other appropriations acts as passed by the Legislature were in balance with the REC Official Forecast and the fiscal notes for the revenue bills passed by the Legislature. The REC is tentatively scheduled to meet in August to consider the actions of the Legislature during the 2015 Regular Session. As passed by the Legislature, General Fund available revenues totaled $9.0 billion. General Fund appropriations from this revenue totaled $9.0 billion with other means of financing sources totaling $16.1 billion, while total expenditures, excluding double counts, are $ billion. Certain acts passed by the Legislature during the 2015 Regular Session of the Legislature are discussed below under the caption LEGISLATIVE ACTIONS HAVING FISCAL (REVENUE) IMPACT. Significant appropriated changes when comparing appropriated Fiscal Year expenditures to Fiscal Year appropriated expenditures are: Department of Health and Hospitals, State General Fund increase of $445 million, total expenditure increase of $155.8 million; Higher Education, State General Fund decrease of $271.6 million, total expenditure increase of $10 million; Executive Department, State General Fund decrease of $37.2 million, total expenditure decrease of $389.6 million; Department of Public Safety and Corrections, State General Fund decrease of $20.2 million, total expenditure decrease of $174.2 million; Capital Outlay, State General Fund had no change, total expenditure decrease of $545.2 million. The expenditure limit for Fiscal Year was established at $13.85 billion, showing an increase of 3.65% compared to $13.37 billion the previous fiscal year. The Fiscal Year budget includes $12.33 billion in expenditures that apply towards the expenditure limit. This is $1.52 billion below the established limit. See STATE BUDGETARY PROCESS - Expenditure Limitation and - Constitutional Limitations in this Part I. The Fiscal Year budget approved by the Legislature was $ billion. The appropriated allocation of budgeted funds for Fiscal Year (which does not include the $18.8 million reduction in State General Fund that was included as a Preamble adjustment by the Legislature) includes the following: [Remainder of page left intentionally blank] P-I(xi)

126 rounding. Total Allocation ($ Billion) Human Resources $ Education $ General Government $ Public Safety $ Business & Infrastructure $ Environment & Natural Resources $ Total $ (1) See (1) Total does not reflect budget approved by the Legislature ($ billion) due to The REC met on May 14, 2015 and adopted a forecast for Fiscal Year that projected an increase in the State General Fund of 1.4% (compared to the forecast for Fiscal Year ). However, including legislative action of the 2015 Regular Legislative Session, the State General Fund is projected to increase by about 4%. These increases are mainly located in three revenue streams: the sales tax (general and vehicle) collection is estimated to increase by 7%, the individual income tax is projected to rise by 5%, and the corporate collections are projected to rise by 16% (these percentages include the impact of legislative action). Severance taxes are projected to decrease. The projections assume a price of crude oil of $61.70 per barrel and a price of natural gas of $2.99 per million BTU for Fiscal Year On July 10, 2015, Governor Jindal issued Executive Order BJ which provides that certain departments, agencies and/or budget units of the Executive Branch of the State shall freeze expenditures and positions as provided in the Executive Order in order to ensure that the State will not suffer a budget deficit due to Fiscal Year appropriations exceeding actual revenues. GENERAL FUND FISCAL YEARS , AND CASH FLOW ANALYSIS The State s cash management plans address periods of actual or projected temporary cash flow shortfalls, including prioritizing payments from the General Fund and borrowing from available balances in other legally authorized funds ("Inter-fund Borrowing"). Inter-fund Borrowing addresses temporary mismatches between the timing of receipts and disbursements in the General Fund within a fiscal year. Under current State law, Inter-fund Borrowing must be repaid within 45 days of the end of the fiscal year in which the borrowing is made. In recent years, the General Fund has had a growing need for Inter-Fund Borrowing, especially at the weakest seasonal point in the year. As of November 30, 2014, which was the weakest month-end during Fiscal Year , the General Fund was in a borrowing position of ($1.078) billion, compared to ($656.7) million at its weakest month-end in Fiscal Year , and ($581.3) million in Fiscal Year P-I(xii)

127 The General Fund cash position as of June 30 each year has also weakened. As of June 30, 2015, the General Fund was in a borrowing position of ($446.5) million, compared to ($141.8) million on June 30, 2014, and compared to $35.3 million on June 30, In compliance with current State law, all Inter-fund Borrowings during Fiscal Year were repaid on July 1, 2014 and July 17, 2015, respectively. Balances available for Inter-fund Borrowing remain large in comparison to the peak seasonal needs of the General Fund. During Fiscal Year , available borrowable funds ranged from a high of $2.896 billion in December, 2014 to a low of $2.534 billion in June, As a result of these high margins, it is not expected that the State will require external short-term borrowings. The Department of the Treasury monitors the State's cash position on a daily basis and reports the balances to the Division of Administration weekly and to the Revenue Estimating Conference when requested, generally several times a year. The State has established procedures designed to maintain balance between revenues and expenditures, which also address cash balances. These procedures include expenditure reductions and revenue adjustments such as those employed in previous years to address emerging mid-year budget imbalances and transfers of monies of statutorily dedicated funds to the General Fund. General PRIVATIZATION OF CHARITY HOSPITAL SYSTEM Pursuant to legislative action taken in 1997, the State transferred the operation of the State's Charity Hospital System, consisting of ten (10) hospitals located throughout the State, to the Health Care Services Division of the Board of Supervisors of the Louisiana State University and Agricultural and Mechanical College ("LSU"). The Charity Hospital System provides services to Medicaid and uninsured patients. In the summer of 2012, Congress made a $523 million reduction to the State's Medicaid funding; the State applied nearly $329 million of those cuts to the public health care system. In October 2012, LSU announced the reduction plan that included the layoff of 1,500 employees to be implemented in early 2013, which reduction plan also called for service cuts to charity hospitals and a reduction of inpatient beds. Shortly thereafter, the State announced its intention to utilize private partners to address the Charity Hospital System reductions. Beginning in December 2012, the State began entering into cooperative endeavor agreements with private partners to operate the LSU operated hospitals and affiliated clinics. The table set forth below lists the hospitals and locations now being operated by the private partners, and the identity of the private partners. Hospital Name City Private Partner LSU Medical Center Shreveport Biomedical Research Foundation of Northwest Louisiana, Inc. P-I(xiii)

128 Hospital Name City Private Partner E.A. Conway Hospital Monroe Biomedical Research Foundation of Northwest Louisiana, Inc. Huey P. Long Medical Center (1) Pineville Christus Health Central Louisiana/Rapides Healthcare System LLC University Medical Center New Orleans Louisiana Children's Medical Center, Inc. University Medical Center in Lafayette Lafayette Lafayette General Health Systems, Inc. Leonard J. Chabert Medical Center Houma Southern Regional Medical Corporation Inc./Terrebonne General Medical Center Earl K. Long Medical Center (1) Baton Rouge Our Lady of the Lake Regional Medical Center, Inc. W.O. Moss Regional Medical Center (1) Lake Charles Lake Charles Memorial Hospital, Inc. Bogalusa General Medical Center Bogalusa Our Lady of the Angels Hospital, Inc. (1) The physical plant of this hospital was closed and services were absorbed within the operations of the partnership hospital. Among other things, the cooperative endeavor agreements provided that certain existing LSU operated hospitals and affiliated clinics would be leased by the State to the private partners. In connection therewith, the private partners listed in the table in the section entitled "Advance Lease Payments" below prepaid their respective lease obligations to the State in the amounts set forth in such table. Each cooperative endeavor agreement provides that, if future lease payments are not funded at the levels required thereunder, the private partner has the option to terminate the cooperative endeavor agreement upon sixty (60) days prior written notice. In the event a private partner elects to exercise such option, the State would need to contract with another private partner or find another solution to continue to operate the affected hospital. The replacement of a private partner could result in higher costs to the State. The Louisiana Department of Health and Hospitals ("DHH") is responsible for securing approval from the Centers for Medicare and Medicaid Services ("CMS") of Medicaid State Plan Amendments relating to supplemental Medicaid hospital payments and disproportionate share hospital payments ("DSH Payments") to the private hospitals participating in the public-private partnerships. Documents pertaining to the efforts of the Louisiana Department of Health and Hospitals are set forth on the following website: The website includes each of the cooperative endeavor agreements executed by each of the private partners, and includes the State Plan Amendments (the "SPAs") and the status of the CMS approval of such SPAs. As of December 23, 2014, CMS has approved the SPAs for the following private partners: 1. Our Lady of the Lake Regional Medical Center, Inc. (Earl K. Long Medical Center in Baton Rouge); 2. Southern Regional Medical Corporation, Inc. (Leonard J. Chabert Medical Center in Houma); P-I(xiv)

129 3. Christus Health Central Louisiana and Rapides Health Care System, LLC. (Huey P. Long Medical Center in Pineville); 4. University Medical Center Managed Corporation (Interim LSU Hospital in New Orleans); 5. University Hospital and Clinics (University Medical Center in Lafayette); 6. Lake Charles Memorial Hospital (WO Moss Medical Center in Lake Charles); 7. University Health-Shreveport (LSU Medical Center in Shreveport); 8. University Health-Conway (EA Conway Medical Center in Monroe); and 9. Our Lady of Angels Hospital (Washington/St. Tammany Medical Center in Bogalusa). Advanced Lease Payments On April 7, 2014, CMS issued a Deferral letter in the amount of $189,999,295 related to certain advanced lease payments made by certain of the private partners to the State discussed hereinabove. The following are the advanced lease payments the State has received from the private partners: Louisiana CEAs - Advanced Lease Payments SFY Facility Amount 2013 University Medical Center - New Orleans Lease $110,000, Ambulatory Care Building and Parking Facility Lease $143,000, Lafayette Hospital Lease $15,790, Lake Charles Hospital Lease $3,730, Bogalusa Hospital Lease $5,481, University Medical Center - New Orleans Lease $33,574,047 Overall Totals: $311,576,411 On December 23, 2014, CMS issued a Disallowance Letter with respect to the advanced lease payments. The following is an excerpt from the December 23, 2014, Disallowance Letter from CMS: "This letter serves as notice of a disallowance in the amount of $311,576,411 Total Computable (TC), $189,999,295 Federal Financial Participation (FFP) due to Louisiana's collection of impermissible providerrelated donations. On May 9, 2014, CMS notified your agency that it had disapproved the proposed State Plan Amendments (SPA) 13-23, 13-25, and as a result of provisions in the related cooperative endeavor agreements (CEAs) that required substantial advance lease payments by the participating hospitals that were linked to increased Medicaid payments to the same privately-owned hospitals. P-I(xv)

130 Section 1903(w) of the Social Security Act (the Act) generally places limitations on the use of provider-related donations and taxes as funding sources for expenditures claimed by states as the basis for federal financial participation (FFP). Among these limitations, as set forth in implementing regulations at 42 C.F.R , FFP is not available to the extent that it would be based on the use of such financing sources when there is a "hold harmless arrangement" under which providers (or the provider class) could be effectively repaid for a providerrelated tax or donation through any direct or indirect payment, offset, or waiver. A hold harmless arrangement is defined to include circumstances in which an increased Medicaid payment is conditional on the receipt of a donation. Supplemental and Disproportionate Share Hospital (DSH) payments made under the disapproved SPAs are linked to CEAs that provide, among other things, for non-bona fide provider-related donations from privately owned hospitals that the state refers to as "advance lease payments." The CEAs provide for annual facility and equipment leases along with the advance lease payments. These advance lease payments are not usual and customary industry payment arrangements and are linked to the increased Medicaid payments. CMS has determined that these are not reasonable and necessary lease payments, but are, in fact, non-bona fide provider-related donations." As a result of a Request for Reconsideration of CMS s disallowance described above, on April 21, 2015, the State received a Reconsideration Decision with respect to impermissible provider related donations, which decision affirmed the disallowance because the State has not met its burden of documenting the allowability of its claims for FFP. DHH disagrees with CMS's position that the advanced lease payments do not comply with "usual and customary industry payment arrangements". According to DHH, the advanced lease payments are based on the fair market value of the State's respective assets. According to DHH, CMS has approved the fair market valuation process. Therefore, it is DHH's position that the advanced lease payments simply reflect adjustments in the amortization schedule of the lease payments and do not change the overall amount to be paid for leasing the respective assets. DHH, on behalf of the State, will exercise all of its appeal rights and, per Federal Regulations, CMS would not be allowed to recoup the disputed funds from the State until all appeal rights are exhausted. The disputed funds are the Federal Financial Participation in the amount of $189,999,295. An appeal of a Disallowance Letter in accordance with the applicable Federal Regulations is a time consuming process. By way of example, on July 13, 2007, CMS issued a Disallowance Letter to DHH regarding approximately $115 million of federal participation overpayments made to non-state governmental nursing facilities for the period April 1, 2001, through September 30, The appeal process ended on March 22, 2010, resulting in the repayment by DHH of approximately $115 million in four equal installments of approximately $29 million, commencing March 31, 2010, to and including December 31, P-I(xvi)

131 In addition, on September 15, 2009, DHH received a Disallowance Letter from CMS with respect to disproportionate share hospital payments. The appeal process ended on January 12, 2011, resulting in the repayment by DHH of approximately $240 million in five equal installments of approximately $48 million, commencing March 31, 2011, to and including March 31, LSU Medical Center in Shreveport and E.A. Conway Hospital in Monroe On July 10, 2015, LSU formally notified the Biomedical Research Foundation of Northwest Louisiana ( BRF ) and BRF Hospital Holdings, L.L.C. ( BRFHH ) of specific grievances related to BRF s role as the private operator of LSU s hospitals in Shreveport and Monroe. LSU has alleged that BRF and BRFHH are not satisfying their contractual obligations in the public-private partnership, including by not adequately serving the public purposes articulated in the cooperative endeavor agreement. In accordance with the agreement, the official complaint initiates a breach of contract resolution process between LSU and BRF and BRFHH. In the event that the dispute resolution process results in the termination of the publicprivate partnership with BRF and BRFHH, the State will endeavor to find an alternative partner. University Medical Center in New Orleans A new University Medical Center ("UMC") in New Orleans opened on August 1, 2015; patient appointments began on August 3, The clinics housed at the UMC opened on August 8, The UMC replaces the old Charity Hospital and other buildings in the Medical Center of Louisiana at New Orleans complex ("MCLNO") that were closed due to heavy damage as the result of Hurricane Katrina. UMC will be operated by Louisiana Children's Medical Center, Inc. ( Children s ). This facility will provide care for the indigent, uninsured, and private pay patients, as well as provide training of physicians and other health care professionals from LSU, Tulane University and other area institutions. The amount of funding necessary to open and operate UMC for Fiscal Year was successfully negotiated by the Division of Administration and Children s. The UMC facility was financed from capital outlay appropriations, proceeds of general obligation bonds of the State, and funds received from FEMA resulting from storm damages to the old Charity Hospital. The State also acquired land on behalf of the City of New Orleans for an adjacent site which was transferred to the U.S. Department of Veterans Affairs (VA) for construction of a VA hospital that will complement the UMC facility. Costs for acquisition of land for the VA hospital was provided by the City of New Orleans from its allocation of storm-related Community Development Block Grant funds. Low-Income and Needy Care Collaboration Agreements On May 9, 2014, the Director of CMS provided a letter to the Medicaid director of each state which provides guidance to states concerning federal statutes and regulations relating to the allowable and unallowable use of provider-related donations and also addresses the use of certain types of public-private arrangements, such as low-income and needy care collaboration agreements ("LINCCAs"). P-I(xvii)

132 LINCCAs generally involve Medicaid supplemental payments or special add-ons to the base payment rate that are contingent upon or otherwise related to agreements between government and private entities under which the private entities assume obligations to provide donated services or other transfers of value as directed in such agreements. The Director of CMS stated that, if a provider enters into a public-private partnership to provide non-medicaid services and the provider receives, as a direct result, additional Medicaid base or supplemental payments than might otherwise be received under the current approved state plan, CMS will consider this exchange in value of either cash or in-kind services by the private entity to the public entity to be a non-bona fide donation, and may reject it. As of the date of this Official Statement, CMS has not raised any issues regarding the LINCCAs that are currently in effect in the State. Funding Requirements for DHH CERTAIN PENDING BUDGET ISSUES The Fiscal Year budget for DHH contains standstill funding for various programs, such that certain allocations do not meet the level of funding that DHH requested in its October 2014 budget request. All State agencies, including DHH, are required to operate within their budget allocations. During the past four fiscal years, DHH s annual expenditures have been less than its original budget requests. In addition to actively managing program costs, DHH is subject to Executive Order BJ15-11 which requires freezing expenditures and positions not related to direct care in order to ensure that the State will not suffer a budget deficit due to year Fiscal Year appropriations exceeding actual revenues. See PART I STATE BUDGETARY PROCESS Budgetary Process herein for a description of the process of addressing a projected deficit if necessary. Road Home Elevation Program To assist the Gulf Coast in its response to the widespread damage caused by Hurricanes Katrina and Rita, Congress appropriated funds to the U.S. Department of Housing and Urban Development ("HUD") to be allocated to the impacted states through HUD's Community Development Block Grant Disaster Recovery Program administered by HUD's Department of Community Planning and Development ("HUD-CPD"). $13.4 billion of the funds appropriated by Congress to HUD were granted to the State. At the State level, the HUD funds are administered by the Disaster Recovery Unit within the State's Division of Administration, Office of Community Development ("OCD-DRU") through the State's Road Home Assistance Program. The homeowner assistance program in the State includes several forms of funding assistance, including a Road Home Elevation Incentive Program (the "Elevation Program"). The Inspector General for HUD conducted an audit examining whether individual Elevation Program grant recipients elevated their homes either prior to or subsequent to the receipt of Elevation Program funds. In a report issued to HUD-CPD, the Inspector General recommends that OCD-DRU enforce the provisions of the grant agreements to the recipient homeowners and collect from homeowners who were non-compliant. In its final P-I(xviii)

133 recommendation, the Inspector General recommends that the State repay from non-federal funds any uncollectible grant funds related to the Elevation Program. Through a Management Decision by HUD-CPD issued July 26, 2013, HUD-CPD agreed with the recommendations of the Inspector General for HUD of enforcement of the grant agreements and pursuing grant recapture processes by the OCD-DRU, but disagreed with the recommendation by the Inspector General that the State be required to repay grant funds related to the Elevation Program if not collectible from the homeowners, recognizing that pursuing its grant recapture procedures, the State will have satisfied its due diligence obligations. On December 9, 2014, OCD-DRU received a revised response issued by HUD-DCP confirming that it would not seek payment from the State if the State exhausted its grant recovery processes, except in those instances that the State did not recapture from grant recipients monies that were both material and collectible and there is no other relief available to the homeowner such as reclassification of the elevation to a rebuilding compensation grant or to satisfy an eligible unmet need. HUD-DPD continues to work with OCD-DRU to ensure coordinated implementation and interpretation of those provisions. OCD-DRU has estimated that the number of currently non-compliant Elevation Program grant recipients who have neither elevated their homes nor repaid their Elevation Program grant funds or demonstrated use of the Elevation Program grant funds for repair purposes is approximately $484 million. So long as OCD-DRU diligently implements the close out of the Road Home Program, including recapture and collection procedures, it is anticipated that the State will likely have no liability to HUD. Unfunded Risk Management Premiums and Liabilities Act 448 of the 1988 Regular Session of the Legislature reenacted La. R.S. 39:1533 and created the "Self Insurance Fund" within the State Treasury. The Self Insurance Fund consists of all premiums paid by State agencies under the State's risk management program, the investment earnings thereon, and commissions retained. The Self Insurance Fund may only be used for the payment of losses incurred by State agencies under the self- insurance program, premiums for insurance obtained through commercial carriers, administrative expenses associated with the management of the State's risk, and the funding of legal services. The Office of Risk Management ("ORM"), pursuant to La. R.S. 39:1527 et seq., is responsible for the State's risk management program and has the duty of negotiating, compromising, settling and funding the defense of all tort claims against the State or State agencies, which includes all claims covered by the Self Insurance Fund, as well as all tort claims funded by the Legislature through the General Fund. Beginning in July, 2010, claims management and loss prevention functions were privatized. ORM continues to oversee and audit the work performed by the third party vendor, and approves all settlements and payments above designated thresholds. P-I(xix)

134 The current funding plan for the ORM Self-Insurance Fund is to maintain cash reserves equivalent to anticipated cash flow needs, exclusive of road hazard judgments. Road hazard judgments are now submitted to the Legislature for appropriation from the General Fund. In 1995, the voters ratified a constitutional amendment authorizing the Legislature to cap liability and damage awards against the State. Act 63 of the 1996 First Extraordinary Session of the Legislature capped the total amount recoverable, exclusive of property damages, medical care and related benefits, and loss of earnings and support, in all suits for personal injury or wrongful death, at $500,000. In February 2004, the Louisiana Supreme Court ruled that La. R.S. 13:5106, as amended by said Act 63, limited recovery for wrongful death to $500,000 per "claimant", and not "per victim". The result was to expand the potential liability associated with such claims. By Act 1 of the 2005 Regular Session, the Legislature further amended this statute to overrule this Supreme Court decision, making it explicit that the limit is, in fact, $500,000 per victim. To satisfy claims and judgments for Fiscal Year , the sum of $147,067,309 was paid from the Self-Insurance Fund, of which $114,293,831 was for claimant costs, $32,477,858 was for litigation costs and $295,620 was for other costs. As of June 30, 2014, there was a cash balance on the ORM agency balance sheet that included $32,764,218 in the Self- Insurance Fund and $770,834 in the Future Medical Care Fund. Notwithstanding this positive cash balance, the Self-Insurance Fund is in a deficit posture and is no longer a viable service fund and discounts are not applicable under GASB Standard Number 10. As of June 30, 2014, outstanding non-discounted reserve valuations, net of recoveries, of the open claims within the programs totaled $970,653,844, allocated as $16,612,671 current and $954,041,173 long term. The ORM advises that the non-discounted liability reserve valuations for the claims in litigation against State agencies being handled by the ORM are valued at $206,407,701. For Fiscal Year , a partial level of funding for all lines of coverage, excluding road hazards, was provided to the Self-Insurance Fund through appropriations contained in the various appropriations acts. As a consequence, any settlement or judgment action of any type on a road hazard claim requires the introduction and passage of a special legislative appropriation from the State General Fund in order to be paid. LEGISLATIVE ACTIONS HAVING FISCAL IMPACT (REVENUE) During the 2015 Regular Session of the Legislature, the Legislature passed broad-based tax changes and revised service fees as summarized in the report of the Policy Services Division of the Louisiana Department of Revenue which may be viewed at: The fiscal impact (revenue) resulting from the enactment of legislation during the latest Regular Session of the Legislature may be viewed at the official website of the Legislative Fiscal Office, under the caption entitled "2015 Session Revenue Fiscal Notes." See PART II Litigation Against the State for a description of a lawsuit regarding the constitutionality of House Concurrent Resolution 8 (suspension of all tax exemptions for business entities for taxes levied on the sale of steam, water, electric power or energy, and natural gas for one year). P-I(xx)

135 PENSION SYSTEMS Accrued Unfunded Pension Fund Liability The State maintains four defined benefit pension plans ("DBP") that are considered component units of the State and are included in the Comprehensive Annual Financial Report ("CAFR") as a part of the primary government. Those plans are administered by four public employee retirement systems. The State has a constitutional obligation to guarantee the retirement benefits of certain classes of employees who are members of the following State retirement systems: the Louisiana Teachers' Retirement System of Louisiana ("TRSLA"), the Louisiana State Employees' Retirement System ("LASERS"), the Louisiana School Employees' Retirement System ("LSERS"), and the State Police Retirement System ("LSPS"). In addition, there are nine "Statewide" retirement systems providing for the retirement of various types of local employees. The State is not constitutionally or statutorily obligated to make payments to these systems or to guarantee the benefits of the systems' members. The LASERS, established July 1, 1947, includes classified and unclassified employees of the State. The TRSLA was established August 1, 1936, for the benefit of public school teachers and, effective July 1, 1983, includes school lunch employees. TRSLA also offers a defined contribution plan to a relatively small, select group of employees in higher education. The LSERS was established on July 1, 1947, for persons employed as school bus drivers, school janitors, school custodians, school maintenance employees, and any regular school employee who works on a school bus helping with the transportation of school children. The LSPRS was established by Act 293 of Its members include commissioned law enforcement officers of the Office of State Police and the Superintendent of the Office of State Police. A constitutional amendment concerning the actuarial soundness of the State and Statewide retirement systems was approved by voters on November 27, This article mandates that the actuarial soundness of the systems shall be attained and maintained and requires the Legislature to establish a method of actuarial valuation for this purpose. Commencing with Fiscal Year , the Legislature was required to determine all required contributions to be made by members and employers and to appropriate amounts required for the sound actuarial maintenance of the systems, including the elimination of the unfunded accrued liability ("UAL") annually. The article further requires the elimination of the Initial Unfunded Accrued Liability ("IUAL") of the State and the Statewide systems existing as of the end of Fiscal Year by the year This article prohibits the Legislature and the board of trustees of each system from taking any action that would cause the actuarial present value of expected future expenditures to exceed or further exceed the sum of the current actuarial value of assets and the actuarial present value of expected future receipts except for (1) normal business operating expenses, (2) capital outlay expenditures, (3) management of investments, and (4) cost-of-living increases to retirees, as provided by law. It also provides that all assets, proceeds, or income of each system and all contributions and payments made to each system to provide for retirement and related benefits shall be held in trust, invested as authorized by law, or disbursed for the exclusive purpose of providing such benefits, refunds, and administrative expenses under the management of the board of trustees of each system and shall not be encumbered for or diverted to any other purpose. Finally, the article provides that the accrued benefits of members of the systems shall not be diminished or impaired. P-I(xxi)

136 In compliance with that amendment, the Legislature enacted La. R.S. 11:1-127 in its 1988 regular session to consolidate the public retirement law. LASERS and TRSLA must use the projected unit credit cost method to determine their actuarially required contributions; LSERS and LSPRS must use the entry age normal cost method for this determination. Subsequently, on June 9, 2014, Governor Jindal signed Senate Bill 13, which became Act 571 ("Act 571") of the 2014 Regular Legislative Session. Act 571 requires LASERS and TRSLA to use the entry age normal method, effective on the date that the Public Retirement Systems' Actuarial Committee adopts a valuation for each respective system utilizing the entry age normal method of actuarial valuation, which it did in November La. R.S. 11:42B (4), (5), (10), and (11) establish requirements for the amortization of UAL of these Public Employees Retirement Systems (PERS). La. R.S. 11:42(B)(4) requires the UAL of LSERS as of June 30, 1988, be amortized over a forty-year period, beginning in fiscal year , with level dollar payments annually. LASERS and TRSLA requirements before La. R.S. 11:42(B)(5) and (11) were amended as follows: The IUAL liability as of June 30, 1988, determined under the projected unit credit funding method "...shall be amortized over a forty year period, commencing with the Fiscal Year " La. R.S. 11:42(B)(5) and (11) were amended in 1992 to require that the outstanding balance of the UAL as of June 30, 1992, for LASERS and TRSLA, " shall be amortized over the remaining thirty-seven year period with payments forming an annuity at four and one half percent annually." La. R.S. 11:42(B)(5) and (11) were amended in Fiscal Year by Act 497 of 2009 Regular Session to require that the outstanding balance of the UAL as of June 30, 2009, for LASERS and TRSLA, " shall be consolidated with other amortization bases and credits as provided in La. R.S. 11:102.1, and that consolidated total shall be amortized over the remaining constitutionally-mandated period with annual payments beginning in Fiscal Year The final payment shall be made in Fiscal Year " La. R.S. 11:42(B)(10) specifies that the unfunded accrued liability of the LSPRS as of June 30, 1988, be amortized over a twenty year period, beginning in Fiscal Year , with level dollar payments annually. La. R.S. 11:62 specifies employee contribution rates each year for each system, while La. R.S. 11:102 details the calculation of the employer contribution rate each year for each system. Act 588 of the 2004 Regular Session made significant changes to prospective funding for LASERS, TRSLA, and LSERS. As a result of the act, the outstanding balances of changes in liabilities prior to 1999 were re-amortized using the level dollar method until The remaining amortization periods for changes in liabilities, beginning with 1999 through 2003, were extended to a thirty year period from the date of occurrence and amortized as a level percentage of projected payrolls. Bases established after June 30, 2004, are amortized over a thirty year period as level dollar payments. In addition, the act authorizes the Legislature to set employer contribution rates based on specific criteria, but no less than fifteen and one-half percent for LASERS and TRSLA. The Employer Credit Account is credited with contributions P-I(xxii)

137 from the Actuarially Required Contribution rate that is in excess of the minimum rate set by the Legislature. On October 20, 2007, the voters approved another constitutional amendment ("Article X, Section 29(E)(5)(b)"), which requires a new benefit for members of the State systems to identify a funding source that will fully liquidate any actuarial cost within ten years. This article, including the recent amendments, requires the Legislature to provide for the retirement of employees of the State and its political subdivisions and teachers and other employees of the public education system. The Constitution guarantees the payment of benefits to retirees of the State systems established through such authority; the obligation for the payments and benefits of the Statewide systems is borne by the local employers who participate in them. Act 852 of the 2008 Regular Session establishes La. R.S. 11:102(B)(3)(d)(viii) relative to the amortization periods and methods of amortizing outstanding balances of established amortization bases established before June 30, 2009, for the LSPRS. Effective July 1, 2009, the outstanding balances of existing increasing bases payable through June 30, 2029, are reamortized as a level dollar. New bases established on and after the effective date will be amortized over a 30 year period as a level dollar. However, under Act 399 (defined below), effective for the June thirtieth valuation following the fiscal year in which the system first attains a funded percentage of eighty-five or more and for every year thereafter, the amortization period for the new bases shall be twenty years from the year in which the change, gain, or loss occurred. Act 497 of the 2009 Regular Session ("Act 497") provides that, effective July 1, 2010, all LASERS and TRSLA amortization payment schedules established on or before July 1, 2008, except those established due to an increase in benefits for Peace Officers, Alcohol Tobacco Control employees and regular employees per Act 262 of the 2008 Session, will be consolidated into two amortization schedules, the Original Amortization Base ("OAB") and the Experience Account Amortization Base ("EAAB"). The OAB will consist of the outstanding balance of the Initial Unfunded Accrued Liability Account (the "Initial UAL Account") created and established pursuant to Act 497 and schedules with negative outstanding balances. The outstanding balance of this schedule will be credited with funds from the Initial UAL Account, excluding the subaccount of this fund. For TRSLA, the outstanding balance of this schedule will also be credited with the balance of the Employer Credit Account. The Initial UAL Account will be credited interest at 8.25% in Fiscal Years and For TRSLA, the OAB payment schedule will increase by 7% for 3 years, 6.5% for 4 years, and 2% until paid off in Fiscal Year For LASERS, the OAB payment schedule will increase by 6.5% for 1 year, 5.5% for 4 years, 5% for 2 years, and 2% until paid off in Fiscal Year The EAAB will consist of the 2004 schedule and all remaining schedules. The outstanding balance of this schedule will be credited with the balance of funds from the Initial UAL subaccount, which were transferred from the Employee Experience Account on June 30, For TRSLA, the EAAB payment schedule will increase by 7% for 3 years, 6.5% for 4 years, then will be level until paid off in Fiscal Year For LASERS, the EAAB payment schedule will increase by 6.5% for 1 year, 5.5% for 4 years, 5% for 2 years, then will be level until paid off in Fiscal Year P-I(xxiii)

138 Act 497 also revises the amortization of contribution variances. For TRSLA, any overpayment of contributions received from Fiscal Years 2010 through 2040 will be credited to the EAAB and the EAAB will be re-amortized according to the new payment schedule. For LASERS, any overpayment of contributions received through Fiscal Year 2017 will be credited to the OAB and the OAB will be re-amortized according to the new payment schedule. Similarly, any overpayment resulting from the statutory minimum contribution of 15.5% exceeding the actuarially calculated contribution from Fiscal Years through for TRSLA and through for LASERS will be credited to the EAAB and the EAAB will be re-amortized. Additionally, TRSLA's first $100,000,000 and LASERS' first $50,000,000 of investment gain above the actuarially assumed investment rate will be used to reduce and re-amortize the OAB. TRSLA's next $100,000,000 and LASERS' next $50,000,000 of excess investment return will be used to reduce and re-amortize the EAAB. Fifty percent of any excess return above $200,000,000 for TRSLA and $100,000,000 for LASERS will be credited to the Employee Experience Account. However, these provisions were later modified by Act 399 (defined below). Act 357 of the 2011 Regular Session became effective with passage of an amendment to Constitutional Article VII, Section 10(D)(2)(b). It requires a minimum of 5% of any money designated as nonrecurring revenue in the official forecast to be applied to the payment of the balance of the unfunded accrued liability (UAL) for Fiscal Years and for those liabilities existing at June 30, 1988, for LASERS and TRSLA in proportion to the balance of the UAL of each system. For Fiscal Year and thereafter, the minimum amount of nonrecurring revenue applied to payment of the balance of the UAL increases to 10%. Recent Legislation. On May 30, 2014, Governor Jindal signed House Bill 1225, which became Act No. 399 of the 2014 Regular Session ("Act 399"). Act 399 generally requires increased payments to outstanding debts of state retirement systems and restricts the creation of additional system liabilities by limiting the amount and frequency of benefit increases. It requires each of the four State retirement systems to apply a portion of each year's excess investment returns to its oldest debt. The amount paid will increase each year in proportion to the growth in the system's actuarial value of assets. For LASERS and TRSLA, starting with the June 30, 2015, valuation, Act 399 indexes these required payments to the percentage increase in the system's actuarial value of assets for the preceding year. Each subsequent year, the maximum amount to be applied by the system to its OAB and EAAB shall equal the prior year's maximum payment increased by the percentage increase in the actuarial value of assets, if any. For 2014 only, Act 399 lowers the required payments toward the LASERS OAB and EAAB to $25 million each. It requires excess returns between these thresholds and the 2015 hurdle of $50 million each to be amortized as an employer credit over 5 years. Also, for 2014 only, Act 399 lowers the required payments toward the TRSL OAB and EAAB to $50 million each. It requires excess returns between these thresholds and the 2015 hurdle of $100 million each to be amortized as an employer credit over 5 years. LASERS and TRSLA's respective OAB and EAAB shall not be reamortized after application of payments unless the respective system is 85% funded or greater. Upon complete liquidation of either the OAB or the EAAB, LASERS and TRSLA shall each continue to apply to the remaining debt the same indexed payments it would have made to P-I(xxiv)

139 the fully liquidated debt. Upon complete liquidation of both the OAB and the EAAB, LASERS and TRSLA shall each continue to pay the full amount of indexed payments to its oldest outstanding debt, excluding particularized liabilities and employer contribution variance liabilities. For LSRS and LSPS, Act 399 requires that in any year that those systems have excess investment returns above its actuarially assumed rate of return, the system must apply a certain portion of such returns to its oldest outstanding debt. Starting with the June 30, 2015, valuation, LSERS must pay the first $15 million of such excess returns to its oldest debt. Starting July 1, 2015, LSPRS must pay the first $5 million of such excess returns to its oldest debt. Act 399 further requires that the amount paid each subsequent year be increased by the percentage increase in the system's actuarial value of assets for the preceding year. Each year the maximum amount to be applied by the system to its oldest debt shall equal the prior year's maximum payment increased by the percentage increase in the actuarial value of assets, if any. Once the oldest debt has been completely liquidated, the systems must apply remaining sums and subsequent payments to the next oldest debt, excluding employer contribution variance liabilities, until all system debts are completely liquidated. Debts shall not be reamortized after application of payments unless the system is 85% funded or greater. For 2014 only, Act 399 requires LSERS to pay the first $7.5 million of excess returns to its oldest debt. It further requires that excess returns above this amount and below the 2015 hurdle of $15 million be amortized as an employer credit over 5 years. Also for 2014 only, Act 399 requires LSPRS to pay the first $2.5 million of excess returns to its oldest debt. It further requires that excess returns above this amount and below the 2015 hurdle of $5 million be amortized as an employer credit over 5 years. For all four State systems, Act 399 provides that, once a system attains 85% funded, all future gains and losses, irrespective of the system's funded percentage, shall be amortized over a period of 20 years, rather than 30 years, as present law provides. Further, for the June 30, 2014, valuation only, all gains not applied directly to debt or credited to the experience account shall be amortized over a period of five years. Experience accounts are accounts established pursuant to present law to fund permanent benefit increases ("PBIs") for retirees of state systems. Act 399 requires debts created by funds being moved into an experience account to be amortized over a 10-year period starting with the June 30, 2019, valuation. If a system is less than 80% funded, Act 399 authorizes credits to an experience account up to the amount necessary to grant one PBI, rather than two PBIs-cap provided under previous law. Act 399 also provides that interest may only be credited up to the applicable cap and that, if a system dips below 80% funded, no interest may be credited to the account while the reserves in the account exceed the one PBI-cap. Prior to Act 399, PBIs were limited to the lesser of 3% or the consumer price index (U.S. city average for all urban consumers (CPI-U)) for the preceding calendar year. Under Act 399, a benefit increase funded by the experience account is limited to the lesser of the following: date. (1) The CPI-U for the twelve month period ending on the system's valuation (2) (a) If the system is 80% funded or greater, 3%. P-I(xxv)

140 (b) If the system is at least 75% funded but less than 80% funded and the legislature has not granted a benefit increase in the preceding year, 2.5%. (c) If the system is at least 65% funded but less than 75% funded and the legislature has not granted a benefit increase in the preceding year, 2%. (d) If the system is at least 55% funded but less than 65% funded and the legislature has not granted a benefit increase in the preceding year, 1.5%. (e) granted. If the system is less than 55% funded, no benefit increase shall be For LASERS and TRSL, Act 399 retains the requirement that, if the system does not attain an actuarial rate of return of at least 8.25%, a PBI is limited to the lesser of 2% or the CPI-U. It also retains the requirement that no benefit increase shall be granted in a year in which the system is less than 80% funded and the system fails to meet its actuarially assumed rate of return. For LSERS, Act 399 provides that if the system does not attain its actuarial rate of return of 7.25%, a PBI is limited to the lesser of 2% or the CPI-U. And for LSPRS, Act 399 provides that if the system does not attain its actuarial rate of return of 7%, a PBI is limited to the lesser of 2% or the CPI-U. For all State systems, Act 399 authorizes each system to grant a partial PBI, regardless of funded ratio or achieved rate of return, if all of the following criteria are met: (1) No benefit increase was granted in the preceding fiscal year. (2) The experience account balance in the preceding fiscal year had reached its maximum reserve for that valuation year. (3) The experience account balance in the current fiscal year is no longer enough to fund the maximum increase due to either or both of the following: (a) Growth in the cost of the increase based on changes in the pool of eligible recipients, growth in the benefit amount due to the indexing of the CPI-U, or both. (b) Credits to the account in the current fiscal year, if any, are insufficient to cover the growth in the cost of the increase. If all of the criteria are met, the systems are authorized to provide an increase equal to the amount the balance in the experience account will fully fund rounded down to the lower 0.1%. Further, for any benefit increase granted on or after July 1, 2015, Act 399 lowers the amount to which the PBI applies by requiring the increase to be calculated only on the first $60,000 of a retiree's benefit, indexed to the CPI-U for the twelve month period ending on the system's valuation date. Supplemental benefits for LSPRS retirees are similarly limited. P-I(xxvi)

141 Finally, Act 399 repealed the requirement that provided that a benefit increase be enacted by adoption of a resolution by majority vote of the elected members of each house of the legislature. Plan Description Louisiana State Employees' Retirement System. Although there are 354 contributing employers in this system, LASERS is considered a single employer plan because the material portion of its activity is with one employer - the State of Louisiana. The system is established and provided for within Title 11, Subtitle II, Chapter 1, of the Louisiana Revised Statutes. Benefit provisions are authorized within La. R.S. 11: Those employees considered eligible for membership in LASERS include all employees of the State (except those specifically excluded by statute) and are eligible immediately upon employment. Members are vested after 10 years of service. A member employed prior to 2008 is eligible to retire after at least 10 years of service at age 60, 25 years at age 55, or after 30 years at any age. Effective January 1, 1996, members may choose to retire with 20 years of service at any age, with an actuarially reduced benefit. The system does provide for deferred benefits for vested members who terminate before being eligible for retirement. Once the member reaches retirement age, benefits are payable at 2.5% of the average of the highest three consecutive years of compensation, multiplied by the number of years of creditable service. Act 75 of the 2005 Regular Session changes retirement eligibility and final average compensation for members who are eligible to begin participation in the DBP beginning July 1, For members employed on or after July 1, 2006, final average compensation will be based on the member's average annual earned compensation for the highest sixty months of successive employment or the highest sixty successive joined months of employment where an interruption of service occurred. Eligibility for these members is limited to age 60, or thereafter, upon attainment of ten years of creditable service. Once an employee has accumulated 10 years of service, disability benefits apply based on the regular benefit formula without age restrictions. Act 740 of the 2008 Regular Session changes the eligibility requirement of enforcement personnel of the Alcohol and Tobacco Control Office of the Department of Revenue to 25 years of service at any age, or 10 years of service at age 60. Act 835 of the 2006 Regular Session increases the maximum retirement allowance for peace officers (other than state troopers) employed by the Department of Public Safety and Corrections, Office of State Police, to 3.33% for each year of qualifying service. Act 353 of the 2007 Regular Session, effective June 30, 2007, increases the maximum retirement allowance for personnel employed by the Department of Revenue, Office of Alcohol and Tobacco Control to 3.33% for each year of qualifying service. All other benefit provisions remain the same as those for regular members. Act 992 of the 2010 Regular Session, effective January 1, 2011, provides for the creation of three new plans for LASERS' members who are hired on or after January, 1, 2011: Rank and File Plan, Judges Plan, and Hazardous Duty Plan. The act also provides for a change in retirement eligibility for Act 75 members from 10 years of service at age 60 to 5 years of service at age 60. P-I(xxvii)

142 The Rank and File Plan created within LASERS combines certain sub-plans and eliminates enhanced benefit provisions with LASERS relative to certain members. It further provides that the governor, lieutenant governor and certain legislators will receive the same benefits as rank and file members. The Judges Plan created within LASERS is for judges and court officers with special retirement eligibility requirements and benefit provisions. The Hazardous Duty Services Plan ("HDSP") created within LASERS is for persons whose first employment making them eligible for LASERS membership occurred on or after January 1, 2011, for certain hazardous duty positions. Each member of an existing hazardous duty plan (Alcohol and Tobacco Control, Appellate Law Clerks, Bridge Police, Corrections, Legislators, Peace Officers and Wildlife Agents) with LASERS may retain membership in that plan. Existing hazardous duty plans were closed for new members effective January 1, Final average compensation will be based on the member's average earned compensation for the highest 60 consecutive months of employment. For members under this new plan, retirement eligibility is 25 years of service at any age, 12 years or more at age 55, or 20 years at any age with reduced benefits. Retirement benefits are payable at 3.33% of the members' average salary, multiplied by the number of creditable service not to exceed 100% of the average compensation. Act 368 of the 2011 Regular Session, effective July 1, 2011, allows any member of the HDSP, if he does not meet retirement eligibility under the HDSP, to retire under the Rank and File Plan provision with 5 years at age 60 with benefits calculated at the 2.5% accrual rate. Act 368 of the 2011 Regular Session allows members of HDSP to participate in the Deferred Retirement Option Plan ("DROP"), Initial Benefits Option ("IBO") and Cost-of-Living Adjustment ("COLA") retirement options. Disability benefits are provided based upon a total and permanent disability resulting solely from injuries sustained in the performance of his official duty of 75% of average compensation regardless of years of service. This benefit is payable only if the injury or injuries were sustained while on active duty status. Act 226 of the 2014 Regular Session changes the age at which non-hazardous duty members of LASERS first employed on or after July 1, 2015, may retire from age 60 with five years of service to age 62 with five years of service. Act 301 of 2009 Regular Session allows a member employed at a public college or university, who voluntarily or involuntarily participates in a furlough plan implemented as a result of budget reductions, the option to accrue service credit for the periods of the furlough. The service credit shall be used for calculation of benefits and attaining retirement eligibility. The employee and the employer shall remit their respective contributions which would have been remitted if not for the furlough. The service credit accrued, together with certain other credit purchases, shall not exceed 5 years. This provision shall not apply to furloughs implemented as a result of a declaration of financial exigency or force majeure. The furlough days shall not exceed 30 days in any fiscal year. In 1990, the Legislature created the DROP with Act 14. When members enter DROP, they continue to work at their regular job and draw their regular salary for a period of up to three years. While in DROP, the retiree's retirement benefits are paid into a special account. The election is irrevocable once participation begins. Interest is credited after participation ends, at which time the member must choose a distribution option for benefits that have accumulated in P-I(xxviii)

143 the DROP account. The DROP program was designed to have no actuarial effect on LASERS' unfunded liability. Currently, there are 1,838 members in the program. Act 483 of the 2012 Regular Session of the Legislature established a cash balance retirement plan for certain employees of LASERS, TRSLA and LSERS employed after July 1, Act 483 was passed by a simple majority of the Louisiana House of Representatives; however, less than two-thirds of the members of the Louisiana House of Representatives voted in favor of Act 483. Act 483 was designed, among other things, to replace a traditional pension plan with a 401(k)-style defined benefit plan. The Louisiana Retired State Employees Association filed a lawsuit in August 2012, challenging the constitutionality of Act 483 on the basis that pursuant to Article X, Section 29(F) of the Louisiana Constitution, twothirds of the elected members of each house of the Legislature were required for passage; Article X, Section 29(F) of the Louisiana Constitution provides that legislative enactments that alter benefit provisions of any members of any public retirement system and that have an actuarial cost shall not be enacted unless approved by two-thirds of the elected members of each house of the Legislature. On June 28, 2013, the Louisiana Supreme Court found that, based on the Legislative Auditor's determination, the enactment of Act 483 produced an actuarial cost and thus held that Act 483 was unconstitutional. Teachers' Retirement System of Louisiana. The TRSLA is the administrator of a costsharing multiple employer plan. The system was established and provided for within Title 11, Subtitle II, Chapter 2, of the Louisiana Revised Statutes. Benefit provisions are authorized within La. R.S. 11: The word "plan," as used below, does not carry the same definition as referred to in GASB Statements 25, 26, and 27. The State's use of the word "plan" in this context refers to individual benefit options. Those employees considered eligible for membership in TRSLA include employees who meet the legal definition of teacher as provided by la. R.S. 11:701, teachers and eligible school lunch employees who are eligible immediately upon employment. Under the Teachers' Regular Plan, as amended by Act 1055 of the 2001 Regular Session, members are vested after 5 years of service. A teacher member who became a member prior to July 1, 1999, is eligible to retire after at least 5 years of service at age 60, or after 20 years at any age, and will receive benefits based on a formula of 2% of the member's average compensation; a teacher member who retires with 25 years of service at age 55, 20 years at age 65, or 30 years at any age will receive benefits based on a formula of 2.5% of the member's average compensation. A teacher member who became a member on or after July 1, 1999, is eligible to retire after at least 5 years of service at age 60, 20 years at any age (actuarially reduced), 25 years of service at age 55, or 30 years at any age and will receive benefits based on a formula of 2.5% of the member's average compensation. Average compensation for members employed on or before December 31, 2010, will be based on the highest three successive years of employment or the highest three successive joined years of employment where an interruption of service occurred. Average compensation for members employed on or after January 1, 2011, will be based on the highest five successive years of employment or the highest five successive joined years of employment where an interruption of service occurred. In 1983 the Louisiana School Lunch Employees' Retirement System was merged into this system. The Louisiana School Lunch Employees' Retirement System contained two plans that were acquired by TRSLA: Plan A for members who are employed by the school system and are not covered by the Social Security P-I(xxix)

144 system, and Plan B for members who are employed by the school system and are covered by Social Security. Plan A members are eligible to receive benefits based on a 3% benefit formula after 5 years of service at age 60, 25 years at age 55, or 30 years service at any age. A 2% benefit formula accrues to Plan B members after 5 years service at age 60 and after 30 years service at age 55. These benefits are calculated on a percentage of the member's average salary for the thirty-six highest successive months. The system does provide for deferred benefits for vested members who terminate before being eligible for retirement. Benefits become payable once the member reaches the appropriate age for retirement. After an employee has accumulated five years of service, he becomes eligible for disability benefits based on the regular benefit formula without age restrictions if determined eligible by the medical board. Act 992 of the 2010 Regular Session changed the eligibility for disability benefits from five years to ten years for members hired on or after January 1, The member must also be in active service at the time of filing the application for disability retirement. Otherwise, reduced benefits are available based on varying percentage formulas for each plan. Act 226 of the 2014 Regular Session changes the age at which non-hazardous duty members of TRSLA first employed on or after July 1, 2015, may retire from age 60 with five years of service to age 62 with five years of service. The Optional Retirement Plan (ORP), in La. R.S. 11: , provides a defined contribution program for academic employees in higher education. Eligible members have the option of making an irrevocable election to participate in the ORP, rather than the TRSLA, and purchase annuity contracts for benefits payable at retirement. Monthly contributions based on percentages of salary are made by the employee and the employer to companies selected as providers of the plan. ORP provides for portability of assets and full and immediate vesting of all contributions submitted to the participating companies on behalf of the employees. In accordance with La. R.S 11:927(B), prior to fiscal year 2015, the employer contribution to ORP participants accounts was equivalent to the employer s portion of the normal cost contribution for the TRSL defined benefit plan. (Normal cost is the cost of funding the benefits all active members in the TRSL defined benefit plan will accrue that year). From the ORP s inception through fiscal year 2014 this rate ranged from 5.18% to 7.09%. In 2014 the Legislature changed the method for determining the rates going forward, such that the employer contribution for ORP participants accounts will never go below the employer portion of the normal cost of TRSL s DB plan. For employer contributions from July 1, 2014, through the end of fiscal year 2018, higher education institutions must contribute, for the ORP participants accounts, an amount equal to or greater than the equivalent of the employer portion of the normal cost of TRSL s DB plan. For employer contributions beginning July 1, 2018, higher education institutions must contribute, for the ORP participants accounts, at least 6.2% of pay. For non-higher education employers, from July 1, 2014 and thereafter, the employer must contribute to ORP participants accounts the greater of the employer s portion of the normal cost of TRSL s DB plan or 6.2% of pay. The number of employers participating in the ORP program is currently 113. Current membership in the program is 6,173. The ORP is not an obligation of the State or TRSL, and is therefore not included in the CAFR.. P-I(xxx)

145 Act 301 of the 2009 Regular Session allows a member employed at a public college or university, who voluntarily or involuntarily participates in a furlough plan implemented as a result of budget reductions, the option to accrue service credit for the periods of the furlough. The service credit shall be used for calculation of benefits and attaining retirement eligibility. The employee and the employer shall remit their respective contributions which would have been remitted if not for the furlough. The service credit accrued, together with certain other credit purchases, shall not exceed 5 years. This provision shall not apply to furloughs implemented as a result of a declaration of financial exigency or force majeure. The furlough days shall not exceed 30 days in any fiscal year. Members of the ORP are eligible for this provision but they do not earn service credit, rather the employee and the employer contributions are remitted to a third-party provider who invests the ORP funds on behalf of the participant. Act 716 of 2012 Regular Session requires the employer contribution rate to be separately determined for each TRSL sub-plan Regular Plan (K-12), Regular Plan (Higher Education), Lunch Plan A, and Lunch Plan B. The individualized rates began July 1, The employer contribution rate is primarily based upon two factors: 1) normal cost of funding retirement benefits for the current year and 2) amortization of the retirement system's unfunded accrued liability. The aggregate employer contribution rate for in fiscal year 2016 is 26.2%. Act 298 of 2012 Regular Session allows charter school teachers to purchase service credit in the TRSLA. Members of TRSLA also have the option of participating in a three-year DROP program. Although Act 1055 of the 2001 Regular Session changes the vesting requirements, members must still have 10 years of service credit to participate in DROP. Act 368 of the 2011 Regular Session allows members hired on or after January 1, 2011, to participate in DROP with 5 years of service at age 60. Current membership in the program is 2,291 as of 2014 fiscal year end. The election is irrevocable once participation begins. The Initial Lump-Sum Benefit ("ILSB") became effective January 1, Under this program, a retiring member who does not participate in DROP can select an ILSB alternative. This alternative provides the retiree with a one-time payment of up to 36 months of a regular maximum monthly retirement benefit with a reduced regular monthly retirement benefit for life. On July 1, 1999, TRSL s Excess Benefit Plan was created by the Legislature. This plan is an unfunded, non-qualified plan intended to be a qualified excess benefit arrangement. It is designed to pay excess benefits to those members who retired on July 1, 1988, or later. The excess benefit is the portion of the TRSLA benefit that exceeds the maximum benefit allowed under Section 415 of the Internal Revenue Code. Act 483 of the 2012 Regular Session of the Legislature established a cash balance retirement plan for certain employees of LASERS, TRSLA and LSERS employed after July 1, Act 483 was passed by a simple majority of the Louisiana House of Representatives; however, less than two-thirds of the members of the Louisiana House of Representatives voted in favor of Act 483. Act 483 was designed, among other things, to replace a traditional pension plan with a 401(k)-style defined benefit plan. The Louisiana Retired State Employees Association filed a lawsuit in August 2012, challenging the constitutionality of P-I(xxxi)

146 Act 483 on the basis that pursuant to Article X, Section 29(F) of the Louisiana Constitution, twothirds of the elected members of each house of the Legislature were required for passage; Article X, Section 29(F) of the Louisiana Constitution provides that legislative enactments that alter benefit provisions of any members of any public retirement system and that have an actuarial cost shall not be enacted unless approved by two-thirds of the elected members of each house of the Legislature. On June 28, 2013, the Louisiana Supreme Court found that based on the Legislative Auditor's determination, the enactment of Act 483 produced an actuarial cost and thus held that Act 483 was unconstitutional. Act. No. 868 of 2012 Regular Session became effective with the passage of an amendment to Article X, Section 29(G) of the Louisiana Constitution. It authorizes the Legislature to provide for the forfeiture of retirement benefits by any person who is a member of a public retirement system who has been convicted of a felony related to his office. Forfeited benefits will be applied to the retirement system's unfunded accrued liability. The forfeiture applies to persons employed, re-employed, or elected after January 1, Louisiana School Employees' Retirement System. Although the LSERS is considered part of the State financial reporting entity, it is not a part of the State payroll. LSERS is the administrator of a cost-sharing, multiple-employer, defined-benefit pension plan. The system was established and provided for by La. R.S. 11: La. R.S. 11:1116 mandates that specified employees become members of the system as a condition of employment. Benefit provisions are authorized in La. R.S. 11: Membership is mandatory for all employees under age 60 employed by a Louisiana parish or city school board, who work more than 20 hours per week as a school bus driver, school janitor, school custodian, school maintenance employee, and any regular school employee who works on a school bus helping with the transportation of school children. Members hired prior to July 1, 2010 are vested after 10 years of service. Those hired on or after 7/1/10 are vested after 5 years of service. Members hired prior to 07/1/2010 are eligible to retire after at least 10 years of service at age 60, 25 years at age 55, or after 30 years at any age. Act 368 of the 2011 Regular Session provides that members hired on or after July 1, 2010, may retire at 20 years of service subject to an actuarial reduction of benefits, and at 5 years of service at age 60. The system does provide for deferred benefits for vested members who terminate before being eligible for retirement. Benefits become payable once the member reaches retirement age. The maximum retirement benefit is an amount equal to 3.33% of the average compensation for the 3 highest consecutive years of membership service, multiplied by the number of years of service limited to 100% of final average compensation, plus a supplementary allowance of $2 per month for each year of service. For members who joined the system on or after July 1, 2006, the average compensation used to calculate benefits consist of the 5 highest consecutive years' average salary. Once an employee has accumulated 5 years of service, disability benefits apply based on the normal benefit formula without age restrictions. A member who joined the system on or after July 1, 2006, must have at least 10 years of service to qualify for disability benefits. Other benefits have resulted from legislative changes and include cost-of-living benefits. P-I(xxxii)

147 Act 226 of the 2014 Regular Session changes the age at which non-hazardous duty members of LSERS first employed on or after July 1, 2015, may retire from age 60 with five years of service to age 62 with five years of service. Effective July 1, 1992, members of the LSERS may elect to participate in the DROP and defer receipt of benefits. The election may be made one time only and is limited to three years. Monthly retirement benefits are paid into the plan and credited to a subaccount for that individual. Interest credited and payments from the DROP account are made in accordance with La R.S. 11:1152(F)(3). Upon termination of participation in both the plan and employment, a participant may receive either a lump sum payment from the account or systematic disbursements. All employers are eligible to participate in DROP. Effective January 1, 1996, the Legislature authorized the Plan to establish the Initial Benefit Retirement Plan ("IBRP"). IBRP is available to members who have not participated in DROP and who select the maximum benefit, Option 2 benefit, Option 3 benefit or Option 4 benefit. Thereafter, these members are ineligible to participate in DROP. IBRP provides both a one-time single sum payment of up to 36 months of a regular monthly retirement benefit, plus a reduced monthly retirement benefit for life. Interest credited and payments from the IBRP account are made in accordance with LRS 11:1152(F)(3). Act 483 of the 2012 Regular Session of the Legislature established a cash balance retirement plan for certain employees of LASERS, TRSLA and LSERS employed after July 1, Act 483 was passed by a simple majority of the Louisiana House of Representatives; however, less than two-thirds of the members of the Louisiana House of Representatives voted in favor of Act 483. Act 483 was designed, among other things, to replace a traditional pension plan with a 401(k)-style defined benefit plan. The Louisiana Retired State Employees Association filed a lawsuit in August, 2012, challenging the constitutionality of Act 483 on the basis that pursuant to Article X, Section 29(F) of the Louisiana Constitution, twothirds of the elected members of each house of the Legislature were required for passage; Article X, Section 29(F) of the Louisiana Constitution provides that legislative enactments that alter benefit provisions of any members of any public retirement system and that have an actuarial cost shall not be enacted unless approved by two-thirds of the elected members of each house of the Legislature. On June 28, 2013, the Louisiana Supreme Court found that based on the Legislative Auditor's determination, the enactment of Act 483 produced an actuarial cost and thus held that Act 483 was unconstitutional. Act. No. 868 of the 2012 Regular Session became effective with the passage of an amendment to Article X, Section 29(G) of the Louisiana Constitution. It authorizes the Legislature to provide for the forfeiture of retirement benefits by any person who is a member of a public retirement system who has been convicted of a felony related to his office. Forfeited benefits will be applied to the retirement system's unfunded accrued liability. The forfeiture applies to persons employed, re-employed, or elected after January 1, Louisiana State Police Retirement System. The LSPRS was established by Act 293 of 1938 and is the administrator of a single employer plan. Benefit provisions are authorized within LRS 11: P-I(xxxiii)

148 Those employees considered eligible for membership in LSPRS include commissioned law enforcement officers of the Office of State Police and the Superintendent of State Police, and are eligible (upon successful completion of the State Police Training Academy) immediately upon employment. After 10 years of service at age 50, benefits are determined by multiplying the years of service credit by 3.33% to compute a retirement percentage factor (not to exceed 100%), which is then multiplied by the member's average salary. For those plan members employed before September 8, 1978, with 20 years of service at any age, benefits are determined by multiplying the years of service by 3.33% to compute retirement percentage factor (not to exceed 100%), which is then multiplied by the member's average salary. For those plan members employed on or after September 8, 1978, with 25 years of service at any age, benefits are determined by multiplying the years of service by 3.33% to compute retirement percentage factor (not to exceed 100%), which is then multiplied by the member's average salary. Act 992 of the 2010 Regular Session created a new State Police Retirement Plan within LSPRS for members whose first employment making them eligible for membership in LSPRS occurred on or after January 1, For members under this new plan, retirement eligibility is 25 years of service at any age, 12 years or more at age 55, or 20 years at any age with reduced benefits and are not eligible to participate in the Back-DROP. Retirement benefits are payable at 3.33% of the members' average salary, multiplied by the number of years of creditable service not to exceed 100% of the average compensation. For members hired on or after January 1, 2011, the average compensation used to calculate benefits consists of the highest sixty months of successive employment, or for the highest sixty successive joined months of employment where interruption of service occurred. Disability benefits are provided based upon a total and permanent disability resulting solely from injuries sustained in the performance of his official duty of 75% of average compensation regardless of years of service. This benefit is payable only if the injury or injuries were sustained while on active duty status (or for non-service connected disabilities you must have 10 years of service and will receive 50% of the final average for the first 10 years plus 1.5% for each year above 10.). The following Acts of the 2003 Regular Legislative Session affect LSPRS as described. Act 211 provides a retroactive (to January 1, 1999) benefit to the surviving spouse of any member who died of terminal cancer, which was initially diagnosed after the marriage, where such diagnosis occurred before April 1, Act 538 provides a benefit of 100% of final average compensation or $36,000 annually, whichever is greater, for certain catastrophic disability retirees as of June 30, Act 748 provides a 20% longevity bonus or benefits as provided by LRS 11:1307.1, whichever is greater, for members who participated in DROP on or before June 30, 2003, and who continued in employment after DROP. Act 876 amended the plan to make it eligible for tax-shelter qualification with the Internal Revenue Service effective January 1, Disability benefits equal 50% of average salary plus one and one-half percent of average salary for each year in excess of 10 years. Disability benefits shall be modified whenever a non-service disability retiree is engaged in gainful employment. Non-duty disability rates vary depending on length of service, but begin after 5 years of service credit. Death benefits vary whether cause was in the line of duty and whether there is a surviving spouse and/or number of P-I(xxxiv)

149 minor children. The system provides for deferred benefits for vested members who terminate before being eligible for retirement. Any active member who is eligible to receive a service retirement allowance is eligible to participate in the DROP and defer receipt of benefits. The participation period shall not exceed 3 years. Upon termination of employment at the end of the DROP period, a participant may receive benefits in a lump sum payment, by a true annuity or in any other manner approved by the Board. Effective October 1, 2009, active members who have not participated in DROP may elect to participate in BACK-DROP. BACK-DROP allows an eligible member, at retirement, to look back up to three years and make an election to have entered DROP based on service and final average compensation that existed at that time. Benefit adjustments are made to the benefit accruals and employee contributions that occurred during the DROP period. Act. No. 868 of 2012 Regular Session became effective with the passage of an amendment to Article X, Section 29(G) of the Louisiana Constitution. It authorizes the Legislature to provide for the forfeiture of retirement benefits by any person who is a member of a public retirement system who has been convicted of a felony related to his office. Forfeited benefits will be applied to the retirement system's unfunded accrued liability. The forfeiture applies to persons employed, re-employed, or elected after January 1, A summary of government employers participating in the plans at June 30, 2014, is as follows: Number of Employers LASERS State Agencies 216 Other Public Employers 152 Total 368 TRSLA School Boards 69 Colleges and Universities 27 State Agencies 58 Charter Schools 34 Other 18 Total 206 LSERS School Boards 64 Other Agencies 40 Total 104 LSPRS 1 Funding Policy. Article X, Section 29(E)(2)(a) of the Louisiana Constitution of 1974 assigns the Legislature the authority to determine employee contributions. Employer contributions are actuarially determined using statutorily established methods on an annual basis and are constitutionally required to cover the employer's portion of the normal cost and provide for the amortization of the unfunded accrued liability. Employer contributions are adopted by the P-I(xxxv)

150 Legislature annually upon recommendation of the Public Retirement Systems' Actuarial Committee. Employee and employer contributions effective for the year ended June 30, 2014, were as follows: Defined Benefit Pension Plan Active Member Contribution Percentage Employer Contribution Percentage LASERS 7.5% % 30.7%-40.7% LSPRS 8.5% - 9.5% 66.7% TRSL 5.0% - 9.1% 26.5%-32.6% LSERS 7.5% - 8.0% 32.3% Actual contributions as a percentage of required contributions to cost-sharing plans for the years ending June 30, 2014, 2013, and 2012, were as follows: Fiscal Year Ending Required Contributions Percentage Contributed LSERS 6/30/12 $ 92,137, % 6/30/13 $ 91,531, % 6/30/14 $ 97,189, % TRSL 6/30/12 $1,120,095, % 6/30/13 $1,149,134, % 6/30/14 $1,218,397, % The State's annual pension cost, percentage of annual pension cost contributed, and the net pension obligation for its sole employer plans for the years ending June 30, 2014, 2013, and 2012 are as follows: Fiscal Year Ending Annual Pension Cost (APC) Percentage of APC Contributed Net Pension Obligation LASERS 6/30/12 $698,486, % $158,077,949 6/30/13 $730,519, % $214,106,330 6/30/14 $682,559, % $259,931,093 LSPRS 6/30/12 $42,932, % $2,313,481 6/30/13 $43,439, % $1,545,157 6/30/14 $41,692, % $1,593,225 P-I(xxxvi)

151 The State's annual pension cost and net pension obligation for its sole employer defined benefit plans for the current year are as follows: LASERS LSPRS Annual required contribution $ 737,645,184 $ 42,792,972 Interest on net pension obligation 17,128, ,161 Adjustment to annual required contribution (72,214,058) (1,208,141) Annual pension cost 682,559,631 41,692,992 Contributions made (636,734,870) (44,831,374) Increase (decrease) in net pension obligation 45,824,761 (3,138,382) Net pension obligation beginning of year 214,106,330 1,545,157 Net pension obligation end of year $ 259,931,091 (1,593,225) Funding Status and Funding Progress. Information on the funded status for the State's sole employer defined benefit plans is detailed below. The Schedule of Funding Progress provides trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. Schedule of Funding Progress (Expressed in Thousands) Actuarial Valuation Date 06/30/2014 6/30/13 6/30/12 6/30/11 6/30/10 6/30/09 Actuarial Value of Assets $10,606,475 $9,740,878 $9,026,416 $8,763,101 $8,512,403 $8,499,662 Actuarial Accrued Liability $17,877,745 $16,182,195 $16,157,898 $15,221,055 $14,764,015 $13,986,847 Unfunded AAL $7,271,270 $6,441,317 $7,131,482 $6,457,954 $6,251,612 $5,487,185 Funded Ratio 59.30% 60.2% 55.9% 57.6% 57.7% 60.8% Annual Covered Payroll $1,813,759 $1,951,988 $2,341,703 $2,408,840 $2,546,457 $2,562,576 UAAL as a Percentage of Covered Payroll % 330.0% 304.5% 268.1% 245.5% 214.1% LSPRS Actuarial Valuation Date 6/30/2014 6/30/13 6/30/12 6/30/11 6/30/10 6/30/09 Actuarial Value of Assets $549,075 $474,235 $415,966 $401,146 $391,669 $395,905 Actuarial Accrued Liability $837,941 $797,839 $759,653 $740,257 $704,748 $678,307 Unfunded AAL $288,865 $323,604 $343,687 $339,111 $313,078 $282,402 Funded Ratio 65.50% 59.4% 54.8% 54.2% 55.6% 58.4% Annual Covered Payroll $54,332 $51,262 $57,828 $58,592 $59,340 $59,556 UAAL as a Percentage of Covered Payroll % 631.4% 594.3% 578.8% 527.6% 474.2% Actuarial Methods and Assumptions. The following table provides information concerning actuarial methods and assumptions for the State's sole employer defined benefit plans as of the June 30, 2014, actuarial valuation date. P-I(xxxvii)

152 LASERS LSPRS Actuarial Cost Method Entry Age Normal Entry Age Normal Amortization Method Level Dollar Level Dollar Remaining Amortization Period (Open or Closed Period) Asset Valuation Method Up to 30 years Closed Smoothing of gains and losses relative to the assumed rate of return over a five year period 30 years Closed Smoothing of gains and losses relative to the assumed rate of return over a five year period Actuarial Assumptions: Investment Rate of Return* 7.75% 7% Projected Salary Increases % % Cost of Living Adjustment None** None*** * Includes inflation at: 3% 2.75% ** While there is no explicit assumption regarding the provision of cost-of-living adjustments, the rate used to discount accrued benefits is net of the statutory gain sharing provision (50% of investment gains in excess of $100 million) from which cost-of-living adjustment would be funded. Effective July 1, 2014 a cost of living adjustment of 1.5% was granted. *** Effective July 1, 2014 a cost of living adjustment of % was granted. Resources: For more detailed information on the various retirement systems of the State, as of June 30, 2014, see (a) the State's CAFR at the Annual Financial Reports and Actuarial Reports as of June 30, 2014 for the Louisiana State Employees' Retirement System which may be viewed on the web at: and (b) the Annual Financial Reports and Actuarial Reports as of June 30, 2014 for the Louisiana School Employees' Retirement System and the Louisiana State Police Retirement System which may be viewed by contacting those specific system's administrative offices. General OTHER POST-EMPLOYMENT BENEFITS (OPEB) In addition to providing pension benefits as described under the caption "PENSION SYSTEMS" herein, the State is required to provide certain medical, prescription drug and life insurance benefits to retirees, disabled retirees and their eligible beneficiaries through premium subsidies. The Office of Group Benefits administers the State of Louisiana post-retirement benefit plan, a defined-benefit, agent multiple-employer other post-employment benefit plan. Current employees who participate in an Office of Group Benefits health plan while active are eligible for plan benefits if they retire under the following statewide retirement systems: (i) LASERS, (ii) LSPRS, (iii) TRSL, or (iv) LSERS. Benefit provisions are established under La. R.S. 42:821 for life insurance benefits and La. R.S. 42:851 for health insurance benefits. P-I(xxxviii)

153 For a more detailed description of Employment Benefits Other Post-Employment Benefits (OPEB) as of June 30, 2014, see NOTE 6A (page 76) of the CAFR. Office of Group Benefits Recently, the Office of Group Benefits implemented certain modifications to the Group Health Care Plan and introduced a new HRA high deductible plan as well as a limited network HMO plan. Modifications to existing plans include, but are not limited to, increased out-ofpocket maximum for all Group Health Care Plan options, increased deductibles for all Group Health Care Plan options, increased co-pays for those proposed health plans which include copays, and increased out-of-pocket maximum for prescription drug benefits. According to the Division of Administration, as of May 1, 2015, cash on hand available to pay health care claims under the Group Health Care Plan was approximately $221 million, down from $538 million as of July 1, According to the Division of Administration, the decrease in the funds available to pay health care claims is attributed to increased medical and pharmaceutical claims payments and an administrative decision by the Office of Group Benefits to reduce premiums payable by employees, which reduce the amount of the State's employer contribution and the amount of the employees' contribution. The Division of Administration has further stated that with the changes under the Group Health Care Plan implemented in March 2015 and the rate increases implemented July 1, 2015, sufficient funds will continue to be available to pay health care claims. See also PART II - LITIGATION AGAINST THE STATE herein for a description of litigation pending against the State with respect to the Office of Group Benefits. CERTAIN INFORMATION REGARDING THE LOUISIANA ECONOMY General State Overview The State is a resource-rich region located in the southern United States on the Gulf of Mexico. The State is a major source of domestic petroleum and refined petroleum products, natural gas, petrochemicals, forest products, agricultural crops, salt, sulfur and seafood. The State achieved statehood on April 30, Louisiana covers an area of 52,389 square miles, of which 9,829 are water. Terrain in the State consists of pine hills, hardwood forests, bluffs, prairies, coastal marshes, cypress-tupelo swamps and alluvial plains. The highest elevation in the State is Driskill Mountain in North Louisiana at 535 feet. The lowest point of elevation is in New Orleans, parts of which are roughly five to eight feet below sea level. The State is strategically located astride the mouth of the Mississippi River. Its location makes it the natural gateway into the heavily industrialized Mississippi River Valley and also the logical point of export for much of the goods and produce of the American Midwest. The State's resources and key location have made it a region favored by international investors almost from its founding by the French some 300 years ago. As of June 2015, total announced and invested capital expenditures by non-u.s. entities in the State total approximately $72.0 billion. The State is a predominantly urban state with nearly three-fourths of its citizens living in nine combined metropolitan statistical areas (MSA). These include New Orleans (a major port P-I(xxxix)

154 and tourist destination with its famous food, music, culture, cruise ships and convention facilities), Baton Rouge (the State capital and a center of education, government, petrochemical production and petroleum refining), Shreveport (the commercial, distribution and manufacturing center of northwest Louisiana), Lafayette (the oil and gas center and unofficial "capital" of Acadiana and Cajun and Creole culture), Alexandria (central Louisiana's wood products, agriculture and distribution center), Monroe (the manufacturing, distribution and commercial center of northeastern Louisiana), Lake Charles (the major petrochemical, agricultural and port city in southwestern Louisiana) and Houma/Thibodaux (the oil exploration, seafood and agricultural center of the southern coastal region of the State). The Hammond MSA was recently added to the State by the White House's Office of Management and Budget as a sign of growing trade in the State. Louisiana Economy Overview The State has a combination of natural resources and strategic location on the Mississippi River and the Gulf of Mexico. The State, because of its central location and numerous waterways, is a hub for international commerce and has been historically an international destination for trade. In fact, more tonnage is handled by State ports than most other port systems in the world. Five of the 15 largest U.S. ports (ranked by tonnage) are located in the State. In addition to grain, other goods shipped include chemicals, coal and general cargo. Over 45 steamship lines and barge companies serve the more than 3,000 seagoing vessels and 60,000 barges that ply the State's waterways each year. Trade is conducted with all parts of the globe. In 2014, the State was ranked number 6 th in total value of exports leaving from the State, with this amount exceeding $65 billion. (Source: U.S. Department of Commerce, International Trade Association) The State is a major producer of petroleum and natural gas, and it continues to be home to the offshore oil and gas industry and the chemical and refinery industry (which is dependent upon both domestic as well as international oil and gas). Over 18% of the total refinery capacity in the United States is located in the State, calculated using Atmospheric Crude Oil Distillation Capacity Operable-Operating Barrels per Steam Day. Oil and gas flows into the State from rigs offshore and from the Louisiana Offshore Oil Platform (LOOP). LOOP offloads petroleum from oil freighters to be transferred through pipelines to many areas in the United States. The State has 19 refineries and nearly 150 chemical plants of various sizes that produce mainly first stage chemicals for the U.S. and foreign markets. Other products produced in the State include plastics and fertilizers. Louisiana typically ranks as one of the top five states in the U.S. for petrochemical manufacturing. The State has lignite coal resources and is the largest producer of salt in America. It is also a major producer of lime and silica sands. The total value of all mineral production in the State is the fourth highest in the U.S. The State has 14.8 million acres of hardwood and softwood forests that support a large pulp and paper industry and the production of pine plywood and lumber for construction. The State is also a major manufacturer of linerboard, Kraft paper and fine papers. The State's mild climate and abundant rainfall give it one of the fastest tree-growing cycles in North America. The State's general manufacturing sector includes maritime, military, barge and recreational vessel shipbuilding; light truck assembly; aerospace and aviation facilities; P-I(xl)

155 automobile equipment manufacturing; food processing; paper and pulp manufacturing; and chemical manufacturing. The State is home to significant military operations, including the Army's Fort Polk in Leesville, Barksdale Air Force Base in Bossier City and the Naval Air Station at Belle Chasse. The State supports one of the most diverse aquaculture and fishery industries in the nation. The harvest of marine freshwater and marine fish and shellfish in Louisiana continues to be economically significant. The catch includes oysters, crabs, shrimp, menhaden, redfish, speckled trout, shark and butterfish. In addition, crawfish, catfish and alligator are harvested from specially-developed freshwater farms. Agricultural products include rice, sugar, cotton, sweet potatoes, soybeans and livestock. The State is among the ten largest producers in the United States of cotton, sugar cane, sweet potatoes, rice, and pecan nuts. It also raises maize, strawberries, truck crops and beef cattle. Although important, the State's agricultural sector is small, providing just less than 1% of Louisiana's real gross state product, according to the U.S. Bureau of Economic Analysis. The State, because of its sub-tropical climate, unique natural landscapes, culture and people, attracts tourists from all parts of the world, making tourism one of the State's largest industries. The State tourist attractions include outstanding hunting and freshwater and deepwater fishing; thousands of miles of rivers and bayous and hundreds of lakes for boating, water skiing, sailing, camping, hiking and canoeing and several dozen plantation homes and other historical sites. The State annually hosts more than 25 million visitors. Economic Development and Recent Project Announcements Information regarding certain economic development and recent project announcements may be viewed at the Louisiana Department of Economic Development's website: Employment and Major Industries Information regarding employment and major industries may be obtained from the Louisiana Workforce Commission, the U.S. Bureau of Labor Statistics, the U.S. Census Bureau and the U.S. Bureau of Economic Analysis. P-I(xli)

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157 PART II GENERAL PURPOSE FINANCIAL DATA, DEBT INFORMATION AND LITIGATION UPDATE, INCLUDING BY REFERENCE THE COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR FISCAL YEAR ENDED JUNE 30, 2014

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159 GENERAL PURPOSE FINANCIAL DATA, DEBT INFORMATION AND LITIGATION UPDATE GENERAL Accounting practices of the State are conducted in accordance with statutory requirements, and financial statements are in conformity with generally accepted accounting principles as prescribed by the Governmental Accounting Standard Board (GASB) including the new pronouncement, Number 34 entitled Basic Financial Statements and Management's Discussion and Analysis for State and Local Governments. In accordance with the accounting practices outlined above, the basic financial statements of the State include the government-wide financial statements, the fund financial statements and notes to the basic financial statements. The government-wide statements consist of a Statement of Net Assets and a Statement of Activities. These statements are prepared using the economic resources measurement focus and accrual basis of accounting, with revenues recognized in the period earned and expenses recognized in the accounting period in which the associated liability is incurred. Major revenues such as sales tax, general severance tax, gasoline tax, inspection fees, and tobacco tax are assessed and collected so they can be accrued accordingly. All assets, including buildings, movable property, and infrastructure, as well as all liabilities, are reported on the government-wide statements. Liabilities include judgments, general obligation debt, other post-employment benefits (primarily for health insurance) and compensated leave. Fiduciary activities are excluded from the government-wide statements. The governmental fund statements include a balance sheet and a statement of revenues, expenditures, and changes in fund balances, with one column for the General Fund, one for each of the major funds, and one column combining all the non-major governmental funds. The statements are prepared using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized in the accounting period in which they become measurable and available to finance expenditures of the current period, generally considered 45 days after the end of the fiscal year, except for federal grants, which generally are considered available for 12 months after the end of the fiscal year. Expenditures are recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest payments on general long-term liabilities, which are recognized when due. Comprehensive Annual Financial Report The most recent CAFR may be viewed at /Publications/cafr2014.pdf has been audited by the Legislative Auditor of the State as set forth in his opinion report dated December 19, 2014, which report is included in the CAFR. Such audited financial statements, including the notes thereto, should be read in their entirety. General Fund The General Fund is the principal operating fund of the State, and was established administratively to provide for the distribution of funds appropriated by the Legislature for the ordinary expenses of State government. Revenue is provided from the direct deposit of federal P-II(i)

160 grants and the transfer of State revenues from the Bond Security and Redemption Fund after general obligation debt service requirements are met and transfers are made into the special revenue funds. Special Revenue Funds Special Revenue funds account for the proceeds of special revenue sources that are legally restricted to expenditures for specified purposes. Article VII, Section 9(B) of the State Constitution directs the deposit of State revenues described in Article VII, Section 9(A) of the State Constitution to the payment of debt service for all obligations secured by the full faith and credit of the State, which become due and payable within the current fiscal year. Dedicated funds are immediately credited to the Bond Security and Redemption Fund and then to special revenue funds if not required for payment of debt service as set forth above. The amounts are then expended for the purposes that are provided for by law. Capital Project Funds Capital Project funds account for all financial resources segregated for the acquisition or construction of major general government capital projects. CASH MANAGEMENT Since the implementation of the central cash management system, the State Treasurer has been able to invest surplus funds not required for immediate expenditure. Major emphasis is placed on effective cash planning to provide that adequate cash is available to meet needs as they arise. Highest priority is given to expediting the processing of receipts for immediate deposit in the State's accounts to maximize cash available for investment. A statewide network of deposit accounts in local banks and wire transfers to the State depository banks provide timely receipt and deposit of State and federal funds to the State Treasurer's central depository account. Since warrants are not paid until presented to the State Treasurer, it is possible to maximize investment return on available funds. AUDIT PRACTICES Article III, Section 11 of the State Constitution created the Office of Legislative Auditor, who is responsible solely to the Legislature and serves as its fiscal advisor. The Legislative Auditor performs the duties and functions provided by law related to auditing fiscal records of the State, its agencies and political subdivisions. The Legislative Auditor serves at the will of the Legislature with no fixed term. Under the provisions of La. R.S. 24:513, the Legislative Auditor has authority to examine and audit the books and accounts of the State Treasurer as well as all public boards and commissions or any agency or department or political subdivision of the State or any public official or employee. The scope of his examinations may include certification of financial accountability, legal compliance and evaluations of the economic efficiency and effectiveness of the entity being audited. He is required to prepare and, on the first day of each regular session of the Legislature, submit to the Governor and the Legislature a statement in writing showing fully the financial condition of the State Treasury at the close of the preceding fiscal year. See the P-II(ii)

161 Independent Auditor's report for the Fiscal Year ending June 30, 2014 in the State's Comprehensive Annual Financial Report (the "CAFR"), which may be viewed at has been audited by the Legislative Auditor of the State as set forth in his opinion report dated December 19, 2014, which report is included in the CAFR. Such audited financial statements, including the notes thereto, should be read in their entirety. GENERAL FUND AND BOND SECURITY AND REDEMPTION FUND With respect to the General Fund and the Bond Security and Redemption Fund, the following two tables, which may be viewed at /osrap/library/publications/cafr2014.pdf, set forth for Fiscal Years through (i) the combined comparative balance sheet and (ii) the combined statement of revenues, expenditures and changes in fund balances. COMBINED GENERAL FUND AND BOND SECURITY AND REDEMPTION FUND COMPARATIVE BALANCE SHEET AT JUNE 30, 2010 THRU JUNE 30, 2014 ($ IN THOUSANDS) 2014 (2) 2013 (2) 2012 (2) 2011 (2) 2010 (1) ASSETS: Cash and Investments $865,453 $846,539 $686,235 $1, 121,934 $1,421,274 Investments 16,697 16,697 30,200 67,534 28,255 Accounts Receivable (net) 1,784,952 2,031,243 1,921,602 1,840,427 1,721,751 Due from Federal Government 2,118,701 2,009,522 2,506,561 2,443,887 1,708,911 Due from Other Funds 348, , , , ,556 Due from Component Units 75, , ,231 91,934 82,078 Inventories-Regular 71,306 73,780 70,707 76,272 72,113 Prepayments 376, , , , ,727 Other Assets Total Assets $5,658,162 $5,871,078_ $6,350,510 $6,299,242 $5,619,242 LIABILITIES AND FUND BALANCE: Liabilities: Accounts Payable and Accruals $2,026,815 $1,894,204 $2,283,211 $2,449,550 $2,034,137 Other Payables 5,484 9,064 1, ,603 Refunds Payable 397, , , , ,276 Deferred Revenue 1,263,439 1,247,736 1,236,134 1,056,217 Unclaimed Property Liability 159, , , ,210 Estimated Liability for Claims 116, , , , ,260 Amounts due to Component Units 56,315 38,775 60, ,102 10,144 Due to Federal Government 660, , , , ,725 Unearned Revenues 405,404 Due to Other Funds 544, , , , ,464 Total Liabilities $5,353,528 $4,908,147 $5,048,084 $5,287,814 $4,654,826 Deferred Inflows of Resources: Unavailable Revenue $666,121 Total Deferred Inflows of Resources $666,121 Fund Balance: Reserved 1,013,749 Unreserved-Designated 152,118 Unreserved-Undesignated (201,451) Nonspendable $111,497 73,780 70,707 76,273 Restricted 225, , , ,396 Committed 294, , , ,652 Assigned 190, , , ,052 Unassigned (197,191) 22, ,219 6,055 Total Fund Balance $624,311 $962,931 $1,302,426 $1,011, ,416 Total Liabilities and Fund Balance $5,658,162 $5,871,078 $6,350,510 $6,299,242 $5,619,242 (1) As shown in CAFR of the indicated year but restated in the following year. (2) In accordance with GASB Statement 54 (implemented in Fiscal Year ) the State General Fund as presented in the CAFR includes activity that was previously presented in other fund types, such as special revenue funds. That activity included in the State General Fund as a result of the implementation of GASB Statement 54 has been removed to allow for consistency with prior year reporting. Source: Supplementary Information to the CAFR for the Year Ended June 30, 2014, P-II(iii)

162 COMBINED GENERAL FUND AND BOND SECURITY AND REDEMPTION FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FOR THE YEARS ENDED JUNE 30, (IN THOUSANDS) (2) (2) (2) (2) (1) REVENUES: INTERGOVERNMENTAL REVENUES $ 10,792,212 $ 10,323,048 $ 11,684,943 $ 12,574,157 $ 12,398,259 TAXES: SALES TAX 2,923,336 2,825,751 2,815,919 2,812,804 2,573,381 SEVERANCE TAX 829, , , , ,656 INDIVIDUAL INCOME TAX 2,726,249 2,633,251 2,525,560 2,307,198 2,312,744 CORPORATION INCOME TAX 438, , , , ,606 GASOLINE/SPECIAL FUEL TAX 471, , , , ,827 OTHER 1,135, , , , ,446 GAMING 848, , , , ,527 TOBACCO SETTLEMENT 55,983 84,250 56,496 55,407 58,729 USE OF MONEY AND PROPERTY: MINERAL RESOURCES 535, , , , ,150 INTEREST INCOME 236, , , , ,390 OTHER 125,660 61,791 82,604 52,656 22,332 LICENSES, PERMITS, AND FEES 825, , , , ,849 SALE OF COMMODITIES/SERVICE 863, , , , ,549 OTHER 602, , , , ,391 RESIDUAL REDICUTIONS TO OTHER FUNDS 501, ,429 TOTAL REVENUE 23,409,957 22,221,259 23,645,729 24,179,803 23,372,836 EXPENDITURES: GENERAL GOVERNMENT 4,394,824 4,064,143 4,825,866 5,715,901 4,911,766 CULTURE, RECREATION, TOURISM 66,026 71,382 69,162 82,009 71,088 TRANSPORTATION 454, , , , ,007 PUBLIC SAFETY 310, , , , ,083 HEALTH AND WELFARE 10,174,503 10,006,567 9,881,978 9,671,602 9,497,394 CORRECTIONS 597, , , , ,723 YOUTH SERVICES 103,472 98, , , ,506 CONSERVATION 240, , , , ,913 EDUCATION 5,733,688 5,908,328 6,196,604 6,207,126 6,319,886 INTERGOVERNMENTAL 474, , , , ,377 OTHER EXPENDITURES 21,321 20,239 15,751 30,817 31,279 DEBT SERVICE 402, , , , ,216 RESIDUAL DEDICATIONS TO OTHER FUNDS 763, , ,525 TOTAL EXPENDITURES 23,736,930 22,848,064 23,467,803 24,198,726 24,082,763 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (326,973) (626,805) 177,926 (18,923) (709,927) OTHER FINANCING SOURCES (USES): PAYMENTS TO REFUNDED BOND ESCROW AGENT (168,915) (701,526) (528,128) (125,997) BOND PROCEEDS 157, , , ,650 OTHER & LONG TERM DEBT PREMIUM 60, , ,279 83,353 TOTAL OTHER FINANCING SOURCES (USES) 60, ,481 72,243 30,360 12,563 EXCESS (DEFICIENCY) OF REVENUES AND OTHER SOURCES OVER EXPENDITURES AND OTHER USES (266,692) (372,324) 250,169 11,437 (697,364) FUND BALANCE (DEFICIT) AT BEGINNING OF YEAR 962,931 1,302,426 1,011, ,416 1,658,777 RESTATEMENT ON BEGINNING FUND BALANCE (71,928) 34,884 46,395 31,416 18,783 EQUITY TRANSFERS INCREASE/DECREASE IN INVENTORY RESERVE (2,055) (5,566) 4,159 (15,780) FUND BALANCE(DEFICIT) AT END OF YEAR $ 624,311 $ 962,931 $ 1,302,426 $ 1,011,428 $ 964,416 (1) As shown in CAFR of the indicated year but restated in the following year. For all years, this presentation reflects the combined activity of the Bond Security and Redemption Fund and General Fund as shown in the CAFR of the indicated year. For comparison purposes, transfers have been reclassified as revenue/expenditures with inter-fund elimination and the Fund Balances are restated the following year. (2) In accordance with GASB Statement 54 (implementation in Fiscal Year ), the State General Fund as presented in the CAFR includes activity that was previously presented in other fund types, such as special revenue funds. That activity included in the State General Fund as a result of the implementation of GASB Statement 54 has been removed to allow for consistency in reporting. Source: Supplementary Information to the CAFR for the Year Ended June 30, 2014, P-II(iv)

163 DEBT STRUCTURE OF THE STATE Debt Authorization and Debt Structure of the State The Louisiana Constitution provides in Article VII, Section 6(A) that the State shall have no power, directly or indirectly, through any State board, agency, commission, or otherwise, to incur debt or issue bonds, except by law enacted by two-thirds of the elected members of each house of the Legislature. Such debt may be incurred or the bonds issued only if the funds are to be used to (i) repel invasion, (ii) suppress insurrection, (iii) provide relief from natural catastrophes, (iv) refund outstanding indebtedness at the same or a lower effective interest rate, or (v) make capital improvements, but only in accordance with a comprehensive capital budget that the Legislature shall adopt. If the purpose is to make capital improvements, the nature and location and, if more than one project, the amount allocated to each and the order of priority shall be stated in the comprehensive capital budget that the Legislature is required to adopt. Except for revenue bonds authorized in Article VII, Section 6(C) of the Louisiana Constitution and except as provided in Article VII, Section 27 of the Louisiana Constitution relating to the Transportation Trust Fund, the full faith and credit of the State shall be pledged to the repayment of all bonds, or other evidences of indebtedness issued by the State directly or through any State board, agency, or commission. The Legislature may also, by law enacted by two-thirds of the elected members of each house, propose a statewide public referendum to authorize the incurring of debt by the State for any purpose for which the legislature is not authorized by the Louisiana Constitution to issue debt. Article VII, Section 6(B)(2) of the Louisiana Constitution requires that the total amount of debt service to be paid for capital improvements for the subsequent fiscal year be stated as a separate item and by budget unit in the budget estimate required to be submitted by the Governor of the State in accordance with Article VII, Section 11 of the Louisiana Constitution. Bond Security and Redemption Fund Article VII, Section 9(B) of the State Constitution gives constitutional status to the Bond Security and Redemption Fund and further provides that, subject to contractual obligations existing on the effective date of the State Constitution (midnight December 31, 1974), all State money deposited in the State Treasury is to be credited to the Bond Security and Redemption Fund, except money received as the result of grants or donations or other forms of assistance when the terms and conditions thereof or agreements pertaining thereto require otherwise. Article VII, Section 27(A) of the State Constitution provides that the four cents ($.04) tax levied by the State on gasoline and motor fuels and special fuels pursuant to the provisions of La. R.S. 47:820.1 shall be credited to the Bond Security and Redemption Fund only after payments have been made to pay principal, interest, or premium, if any, and other obligations incident to the issuance, security and payment in respect of bonds authorized in Section 27(C) thereof. Article VII, Section 9 of the State Constitution further provides that, with certain exceptions, all money received by the State or by any State board, agency or commission shall be deposited immediately upon receipt in the State Treasury. The State Constitution further requires that in each fiscal year an amount be allocated from the Bond Security and Redemption Fund sufficient to pay all obligations that are secured by the full faith and credit of the State and that become due and payable within the current fiscal year, including principal, interest, premiums, sinking or P-II(v)

164 reserve funds or other requirements. Thereafter, except as otherwise provided by law, money remaining in the Bond Security and Redemption Fund is to be credited to the General Fund. Debt Limitation Article VII, Section 6(F) of the Louisiana Constitution requires the Legislature to limit the amount of net state tax supported debt ("NSTSD") that may be issued in any fiscal year and further requires that debt service payments on NSTSD not exceed 6% of General Fund and dedicated fund revenues estimated by the Revenue Estimating Conference (the "REC"). The constitutional provision prohibits the State Bond Commission from approving the issuance of any NSTSD if the debt service required by such debt would cause the limit to be exceeded. It also provides that the definition of NSTSD cannot be changed nor can the limit be changed or exceeded except by specific legislative instrument that receives the favorable vote of two-thirds of the members of each house of the Legislature. La. R.S. 39:1367, the statutory companion to Article VII, Section 6(F) of the Louisiana Constitution, provides that NSTSD shall not be issued if the amount that is to be expended for servicing NSTSD each fiscal year exceeds certain percentages of General Fund and dedicated funds revenues established by the REC. The allowable percentage for Fiscal Year and each fiscal year thereafter is 6%. According to La. R.S. 39:1367(2)(a), NSTSD means all of the following debt obligations issued by the State or any entity in the State for which the State is legally obligated to make debt service payments, either directly or indirectly: (i) general obligation bonds secured by the full faith and credit of the State; (ii) debt secured by capital leases of immovable property payable by the State or annual appropriations of the State; (iii) debt secured by statewide tax revenues or statewide special assessments; (iv) any funds advanced by a political subdivision in accordance with La R.S. 47:820.2; and (v) bonds secured by self-supported revenues which in the first instance may not be sufficient to pay debt service and will then draw upon the full faith and credit of the State. According to La. R.S. 39:1367(2)(b), NSTSD does not mean: (i) any obligations owed by the State pursuant to the State Employment Security Law, (ii) cash flow borrowings payable from revenue attributable to one Fiscal Year, (iii) any bond or note, including the full payment of and interest on any refunding bond or note, issued by the State pursuant to Section 4 or 5 of Act 41 of the 2006 First Extraordinary Session of the Legislature, (iv) any bond, note, certificate, warrant, reimbursement obligation, or other evidence of indebtedness issued pursuant to R.S. 23:1532.1, (v) any bond, note, or other evidence of indebtedness issued for the purpose of financing the projects set forth in R.S. 17:3394(C) or any bonds used to refund such bonds, notes, or evidences of indebtedness, or (vi) any short term loan not to exceed one year issued by a postsecondary education management board for the purpose of financing projects as authorized in R.S. 39:128(B)(1). Pursuant to La. Administrative Code, Title 71, Part III, Section 1501, the State Bond Commission has adopted a debt limit policy that is more restrictive than R.S. 39:1367. P-II(vi)

165 State Attorney General Opinion No interprets the types of indebtedness that R.S. 39:1367 includes and excludes as NSTSD; however, the State Bond Commission has adopted a rule that is more restrictive than the State Attorney General's opinion. Act 419 of the 2013 Regular Session of the Legislature, effective July 1, 2013, modifies the definition of the funds that shall be included in the annual Official Forecast of the REC, which sets forth the sources and amounts of funds available for spending, to include the State general fund and dedicated funds except that money the origin of which is (i) the federal government, (ii) self-generated collections by any entity subject to the policy and management authority established by the State Constitution, or (iii) a transfer from another state agency, board or commission. The provisions of this Act also contain a new requirement that the REC " shall include an estimate of money available for appropriation from each dedicated fund " and another new stipulation to the effect that " the executive budget shall not include recommendations for appropriation from any fund in excess of the official forecast of money available for appropriation from that fund." Another provision thereof provides new limitations on the appropriation act as follows: "The General Appropriation Bill and other appropriation bills shall not appropriate any funds, as defined in Article VII, Section 10(J) of the Constitution of Louisiana, which are not part of the official forecast " Finally, another provision contains a new restriction regarding spending from statutorily dedicated funds that limits "Financing from any existing statutorily dedicated fund for appropriations other than the fund's intended statutory purposes shall be limited to the prior year's fund balances and shall not include anticipated fund balances for the ensuing fiscal year unless provided by law." Pursuant to Attorney General Opinion issued on May 5, 2014, as a result of Act 419, it is the Attorney General's opinion that Act 419 also modifies the limitation on the issuance of NSTSD. These newly-recognized statutorily dedicated funds and self-generated funds generally flow through the Bond Security and Redemption Fund, so they were already available to pay for general obligation bond debt service. Act 419 incorporates the revenues into the denominator of the NSTSD calculation, thus increasing the amount of NSTSD that could be issued. The State Bond Commission adopted a policy at its August 21, 2014 meeting regarding NSTSD in light of the enactment of Act 419. Such policy was adopted to alleviate concerns that additional NSTSD would be issued under the increased debt limit without the benefit of additional revenues to pay debt service on debt that constitutes NSTSD pursuant to Article VII, Section 6(F) of the State Constitution, La. R.S. 39:1367, and La. Administrative Code, Title 71, Part III, Section The policy adopted by the State Bond Commission provides that the State Bond Commission shall not approve the issuance of any debt that constitutes NSTSD pursuant to the State Constitution, La. R.S. 39:1367, and La. Administrative Code, Title 71, Part III, Section 1501, if the issuance of that debt shall cause the amount of money necessary to service outstanding NSTSD to exceed six percent (6%) of the estimate of money to be received by the State's general fund and dedicated funds for each respective fiscal year as determined by the REC under the methods used by the REC prior to the effective date of Act 419. The State Bond Commission policy is effective August 21, Debt service payable on NSTSD for Fiscal Year was $407,295,389 or 3.87% of the estimated General Fund and dedicated funds revenues established by the REC, as P-II(vii)

166 compared to an authorized limit for the current and subsequent fiscal years of 6%. As of June 30, 2015, debt service payable on NSTSD for Fiscal Year is calculated to be $538,471,454, or 5.00% of the estimated General Fund and dedicated fund revenues contained in the official forecast adopted by the REC at its first meeting after the beginning of Fiscal Year The following graph illustrates the State's compliance with the NSTSD limit for each fiscal year since the enactment of the law. NET STATE TAX SUPPORTED DEBT HISTORY Actual Allowable In addition to the debt limitations contained in Article VII, Section 6(F) of the Constitution and R.S. 39:1367, et. seq., two additional statutory debt limitations, contained in La. R.S. 39:1365(25) and La. R.S. 39:1402(D), exist. Under R.S. 39:1365(25), the Legislature shall not authorize any general obligation bonds or other general obligations secured by the full faith and credit of the State if the total principal amount of such debt outstanding plus the amount of such debt authorized by the Legislature but unissued exceeds two times the average annual revenues of the Bond Security and Redemption Fund for the last three fiscal years completed prior to such authorization. As of June 30, 2015, total general obligation debt issued plus authorized but unissued was $4,750,695,000 while the Bond Security and Redemption Fund average collections for the last 3 years times 2 was $24,257,081,333. Under R.S. 39:1402(D), the State Bond Commission shall not issue general obligation bonds or other general obligations secured by the full faith and credit of the State at any time when the highest annual debt service requirement for the current or any subsequent fiscal year for such debt, including the debt service on such bonds or other general obligations then proposed to be sold by the State Bond Commission, exceeds ten percent of the average annual revenues of the Bond Security and Redemption Fund for the last three fiscal years completed prior to such issuance. As of June 30, 2015, the highest annual general obligation debt service P-II(viii)