Louisiana Administrative Code › Title 10 - FINANCIAL INSTITUTIONS, CONSUMER CREDIT, INVESTMENT SECURITIES AND UCC › Part XV - Other Regulated Entities › Chapter 3 - Capital Companies Tax Credit Program › Section XV-303 - Definitions Provided by Rule

Current through Register Vol. 50, No. 6, June 20, 2024
A. The following terms shall have the meanings provided
				  herein, unless the context clearly indicates otherwise.
Affiliate and/or Affiliated Company
-
a. solely for purposes of the transfer or sale of income or
				  premium tax credits pursuant to
				  R.S.
				  51:1924(F),
				  R.S.
				  22:1068(E)(4), and LAC
				  10:XV.305.B,
affiliate
is defined as follows:
i. any person that controls, is controlled by or under common
				  control with another person (including any person that would become an
				  affiliate as a result of a business combination); or
ii. members, partners, or shareholders and any family members
				  thereof, of a legal entity that invests in a CAPCO;
b. for all other purposes, the term
affiliate
is defined as follows:
i. when used with respect to a specified person or legal
				  entity,
affiliate
means a person or legal entity controlling,
				  controlled by or under common control with, another person or legal entity,
				  directly or indirectly through one or more intermediaries;
ii. when used with respect to a qualified Louisiana business,
affiliate
means a legal entity that directly, or indirectly,
				  through one or more intermediaries, controls, is controlled by, or is under
				  common control with, a qualified Louisiana business;
c. for purposes of
				  R.S.
				  22:1068(E)(2)(c), a
group of affiliates
shall mean a person and not less than all
				  affiliates of such person;
d. the test relating to being under common control with will
				  not apply to investments closed prior to the effective date of this rule or to
				  any qualified Louisiana business in which the investing certified Louisiana
				  capital company has invested in prior to the effective date of this
				  rule;
e. Clause ii of this Section shall not include as an
				  affiliate those legal entities that are controlled by either an angel or
				  institutional investor.
Angel Investor in a Qualified
Louisiana
Business
-for purposes of excluding
				  certain companies from being an affiliate of a qualified Louisiana business, an
angel investor
shall be defined as any investor that has
				  provided early state funds to a business unless such investor is, the founder,
				  or a family member of the founder, of the qualified Louisiana business.
Application
- a completed application as
				  determined by the commissioner.
Associate of a CAPCO
-
a. any of the following:
i. a person serving a CAPCO, or an entity that directly or
				  indirectly controls a CAPCO, as any of the following: officer, director
				  (including advisory, regional directors and directors emeritus), employee
				  (provided such employee has significant management and policy responsibilities
				  and powers, or is highly compensated in comparison with the other people
				  employed with the employee), agent, investment or other advisor, manager (inthe
				  case of a manager-managed limited liability company), managing member (in the
				  case of a member-managed limited liability company), accountant, or
				  general/special counsel;
ii. a person directly or indirectly owning, controlling or
				  holding with the power to vote 10 percent or more of the outstanding voting
				  securities or other ownership interests of the CAPCO;
iii. a current or former spouse, parent, child, sibling,
				  father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law or
				  daughter-in-law of any person described in §303 A
Associate of a
				  CAPCO
.a.i or ii;
iv. a person individually or collectively controlled by or
				  under common control, directly or indirectly, with any person described in
				  §303 A
Associate of a CAPCO
.a.i, ii or iii;
v. a person that invests in the CAPCO and has received an
				  income tax credit or premium tax reduction under the CAPCO Program;
vi. an affiliate of any person described in §303 A
Associate of a CAPCO
.a.v; or
vii.(a). a person that, within six months before or at any
				  time after the date that a CAPCO invests in the person, is controlled by a
				  CAPCO or any of its affiliates. A CAPCO's primary purpose is to provide venture
				  capital to qualified Louisiana businesses in need of capital; not to invest in
				  subsidiaries of the CAPCO or its affiliates, or companies that a CAPCO or its
				  affiliates intend to control. Such investments will result in an associate
				  determination and will not be considered "qualified investments" in assessing a
				  CAPCO's compliance with its continuing certification requirements;
(b).Section 303 A
Associate of a
				  CAPCO
.a.vii.(a) does not apply to an investment made by a CAPCO in a
				  qualified Louisiana business if, within six months before or at any time after
				  the date of the investment, the qualified Louisiana business is not controlled
				  by the CAPCO or its affiliates. However, even though a CAPCO may not intend to
				  control a business in which it invests, it may obtain control over the
				  qualified Louisiana business after its initial investment. If control is
				  acquired after the initial investment as a result of the following
				  circumstances, such control will not create an associate relationship under
				  §303 A
Associate of a CAPCO
.a.vii.(a):
(i). persons controlled by the CAPCO as a means of protecting
				  the CAPCO's investment or resulting from a material breach of any financing
				  agreement; or
(ii). instances involving transitory or short-term control of
				  a person by a CAPCO (or an affiliate of the CAPCO) solely to remedy actions by
				  the person that may cause the CAPCO's investment in such person to fail to be
				  treated as a qualified investment, on the good faith belief that such operation
				  of the person is necessary to ensure that the investment in the person will be
				  treated as a qualified investment;
b. for the purposes of this definition, if any associate
				  relationship described in §303 A
Associate of a
				  CAPCO
.a.i-vi exists between a person and the CAPCO at any time within
				  six months before or at any time after the date that the CAPCO makes its
				  initial investment in such person, that associate relationship is considered to
				  exist on the date of the financing.
BIDCO
- a Business and Industrial Development
				  Corporation licensed pursuant to the Louisiana Business and Industrial
				  Development Corporation Act,
				  R.S.
				  51:2386 et seq.
Business
- for the purposes of determining if
				  a qualified Louisiana business operates primarily in Louisiana or performs
				  substantially all of its production in Louisiana means an entity, together with
				  all of that entity's affiliates that would directly or indirectly receive an
				  economic benefit from a financing by a CAPCO. For purposes of this definition,
				  an affiliate of the entity includes any entity which will become an affiliate
				  of the entity as a result of a financing from a CAPCO.
CAPCO
- a Certified Louisiana Capital Company
				  certified pursuant to the Louisiana Capital Companies Tax Credit Program,
				  R.S.
				  51:1921 et seq.
Capitalization-
for purposes of initial
				  certification, pursuant to
				  R.S.
				  51:1925(B):
a.
Generally Accepted Accounting Principles (GAAP)
				  Capital
-common stock, preferred stock, general partnership interests,
				  limited partnership interests, surplus and any other equivalent ownership
				  interest, all of which shall be exchanged for cash; undivided profits or loss
				  which shall be reduced by a fully-funded loan loss reserve; contingency or
				  other capital reserves and minority interests; less all organization
				  costs;
b.
Less
: the following, when any preferred or
				  common stock, partnership interests, or other equivalent ownership interests
				  are subject to redemption or repurchase by the CAPCO: preferred stock, common
				  stock, partnership interests, limited partnership interests, and other
				  equivalent ownership interests shall be multiplied by the following percentage
				  reductions and deducted from capital:
Within five years from redemption or repurchase
20 percent
Within four years from redemption or repurchase
40 percent
Within three years from redemption or repurchase
60 percent
Within two years from redemption or repurchase
80 percent
Within one year from redemption or repurchase
100 percent
c. notwithstanding the foregoing, there will be no reduction
				  for a withdrawal within five years after certification, provided the withdrawal
				  is contemplated by all governing documents and disclosed to all prospective
				  investors and any such withdrawal is concurrently replaced by an equal amount
				  of cash GAAP capital. Moreover, the amount contemplated to be withdrawn shall
				  not be the basis for any income tax credit or premium tax reduction.
Capitalize a Business
-for purposes of LAC
				  10:XV.303.
Investment
.b.i.(d)-the investment of cash in a
				  business in exchange for common stock, or an equivalent ownership interest.
				  Additionally, this shall include subordinated debt only if:
a. it is used to refinance senior debt thereby allowing a
				  qualified Louisiana business to expand; or
b. the CAPCO agrees to subordinate such debt to any current
				  or future senior indebtedness owed by the business, provided that, in the case
				  of future indebtedness, the senior indebtedness is incurred by the portfolio
				  company within three months of the date the CAPCO made the subordinated debt
				  investment.
Certified
Louisiana
Capital Company Group
-any two or more CAPCOs which share
				  common management or is under common control, whether such management or
				  control is accomplished directly or indirectly.
Change of Control
- for purposes of LAC
				  10:XV.319.A shall mean:
a. a change in beneficial ownership of 50 percent or more of
				  the outstanding shares of the CAPCO or 50 percent or more of the combined
				  voting power of the CAPCO; provided that any transfer to a person or entity who
				  was a shareholder as of the later of the certification date for the CAPCO or
				  the date of the CAPCO's last notification under LAC 10:XV.319.A for whom the
				  Office of Financial Institutions has received a current Biographical Affidavit
				  and conducted a current background check shall be disregarded; or
b. individuals who constitute the voting power of the board
				  of directors, board of managers or other governing board of the CAPCO as of the
				  later of the CAPCO's certification date or the date of the CAPCO's last
				  notification under LAC 10:XV.319.A cease to comprise more than 50 percent of
				  the voting power of such board of directors, board of managers, or other board;
				  or
c. a change in the general partner or manager of the CAPCO or
				  a
change of control
with respect to such general partner or
				  manager; or
d. any merger or consolidation if a
change of
				  control
has occurred based upon the surviving entity being considered
				  to be a continuation of the CAPCO that was the party to the merger or
				  consolidation transaction.
Commissioner
- the Commissioner of the Office
				  of Financial Institutions.
Control
-
a. solely for purposes of determining whether a qualified
				  Louisiana business
controls
, is
controlled
by, or is under common
control
with another person, or if a
				  person is an associate of a CAPCO,
control
means:
i. the power or authority, whether exercised directly or
				  indirectly, to direct or cause the direction of management and/or policies of a
				  legal entity by contract or otherwise; or
ii. to directly or indirectly own of record or beneficially
				  hold with the power to vote, or hold proxies with discretionary authority to
				  vote, 50 percent or more of the then outstanding voting securities issued by a
				  legal entity, when such control is used with respect to a specified person or
				  legal entity;
b. for all other purposes,
control
means:
i. the power or authority, whether exercised directly or
				  indirectly, to direct or cause the direction of management and/or policies of a
				  legal entity by contract or otherwise; or
ii. to directly or indirectly own of record or beneficially
				  hold with the power to vote, or hold proxies with discretionary authority to
				  vote 25 percent or more of the then outstanding voting securities issued by a
				  legal entity.
a. execution of all legal documents and elimination of all
				  material contingencies associated with the consummation of the transaction;
				  and
b. the date that the CAPCO receives a cash investment of
				  certified capital that is available for investment in qualified Louisiana
				  businesses.
Equity Features
- includes [pursuant to
				  R.S. 51:1923(4) and
				  (5)] the following.
a.
Royalty Rights
- rights to receive a
				  percent of gross or net revenues, may be either fixed or variable, may provide
				  for a minimum or maximum dollar amount per year or in total, may be for an
				  indefinite or fixed period of time, and may be based upon revenues in excess of
				  a base amount.
b.
Net Profit Interests
- rights to receive a
				  percent of operating or net profits, may be either fixed or variable, may
				  provide for a minimum or maximum dollar amount per year or in total, may be for
				  an indefinite or fixed period of time, and may be based upon operating or net
				  profits in excess of a base amount.
c.
Warrants for Future Ownership
- options on
				  the stock of the qualified Louisiana business. The qualified Louisiana business
				  may repurchase a warrant (a "call") or the qualified Louisiana business may be
				  required to repurchase a warrant (a "put") at some fixed amount or an amount
				  based on a pre-agreed upon formula.
d.
Equity
Sale
Participation Rights
- conversion options of debt, to convert
				  all or a portion of the debt to the qualified Louisiana business's stock, then
				  to participate in the sale of the stock of the qualified Louisiana
				  business.
e.
Equity Rights
- the receipt or creation of
				  a significant equity interest in a qualified Louisiana business.
f. And such other conceptually similar rights and elements as
				  the OFI may approve.
Family Member
- spouse, parent, child,
				  sibling, father-in-law, mother-in-law, brother-in-law, sister-in-law,
				  son-in-law or daughter-in-law.
Financing Assistance Provided in Cash
and
The Investment of Cash
- a transaction, which in substance and
				  in form, results in a disbursement of cash.
Examples of transactions excluded from this definition are:
				  circular transactions as determined by the commissioner; capitalization of
				  accrued principal, interest, royalty or other income; letters of credit; loan
				  guarantees; loan collection expenses or legal fees incurred by a CAPCO in
				  protecting its collateral interest in an investment.
Headquartered in Louisiana
-at least 80
				  percent of the total employees of such business shall be domiciled in the state
				  of Louisiana and that at least 80 percent of the payroll of such business be
				  paid to such employees. In analyzing whether the business has a substantial
				  portion of its assets located in Louisiana, Subparagraph a of the definition
				  of
Operates Primarily in Louisiana
shall be utilized in making
				  the determination. The application of this definition shall only be made to
				  investments made from pools of capital certified in 2002 or thereafter.
Institutional Investor
-shall include venture
				  capital companies, investment companies, mutual funds, brokerage companies,
				  insurance companies, pension funds, investment banks, Small Business Investment
				  Companies licensed by the U.S. Small Business Administration under the Small
				  Business Investment Act of 1958, CAPCOs, BIDCOs, and any other corporation,
				  limited liability company, or partnership with total assets in excess of
				  $5,000,000 formed for the purpose of making investment in multiple businesses.
				  Examples:
a. a company founded by an individual seeks additional
				  capital to continue product development. A high net worth individual or an
institutional investor
reviews the investment and elects to
				  provide capital. Following this investment, the company is able to develop its
				  product to a certain stage. Now, the company is in need of a larger investment
				  to bring the product to market and a certified Louisiana capital company
				  desires to invest. Under this scenario, neither the net worth nor the net
				  income of the angel or
institutional investor
or any companies
controlled
by the angel or
institutional
				  investor
would be combined with the qualified Louisiana business in
				  determining if the limits founds in
				  R.S.
				  51:1923(13)(a) would be
				  exceeded;
b. a high net worth individual controls one or more companies
				  that are not considered qualified Louisiana businesses. This high net worth
				  individual founds another company and provides the capital for startup and
				  product development and now seeks funding by a certified Louisiana capital
				  company. Under this scenario, the founder of the company seeking
investment
would not be considered an angel or
institutional investor
.
Investment
a. for purposes of earning tax credits or reductions under
				  R.S. 51:1923(1) and
				  (2),
				  R.S.
				  51:1924(A) and (B), or
				  R.S.
				  22:1068(E), means a
				  transaction that, in substance and in form, is the investment of cash in
				  exchange for:
i. common stock, preferred stock, or an equivalent ownership
				  interest in a CAPCO; or
ii. a loan receivable or note receivable from a CAPCO which
				  has a stated final maturity date of not less than five years from the
				  origination date of the loan or note;
iii. notwithstanding the above, an
investment
shall also include debt instruments which are
				  obligations of the investing insurance company to a certified Louisiana capital
				  company. Such debt instruments shall be converted into cash at a rate of not
				  less than 10 percent per year from the date of the
investment
;
iv. however, at all times, in order to perfect the tax
				  credits earned as a result of an investment described in Subparagraphs a-c of
				  this Paragraph, the CAPCO shall have at least 50 percent of the certified
				  capital of each investment pool that is received in cash:
(a). available to be invested in qualified investments in
				  qualified Louisiana businesses;
(b). invested in qualified
investments
made
				  subsequent to the
investment
date of the
investmen
t pool; or
(c). a combination of §303 A
Investment
.a.iv.(a) and (b);
b. i. an
Investment
furthers economic
				  development within Louisiana. If the proceeds from an investment are used in a
				  manner consistent with representations contained in the affidavit required to
				  be obtained from the qualified Louisiana business prior to an investment in the
				  business and the documented use of such proceeds promote Louisiana economic
				  development. Proceeds shall be determined to promote Louisiana economic
				  development if more than 50 percent of the proceeds derived from the investment
				  are used by the qualified Louisiana business for two or more of the following
				  purposes:
(a). to hire significantly more Louisiana employees;
(b). to directly purchase or lease furniture, fixtures, land
				  or equipment that will be used in the Louisiana operations of the business or
				  to construct or expand production or operating facilities located in Louisiana.
				  This does not include the purchase of these assets as part of a buyout of a
				  company;
(c). to purchase inventory for resale from Louisiana-based
				  operations or outlets;
(d). to capitalize a business in order for the business to
				  secure future debt financing to support the Louisiana operations of the
				  business;
(e). to increase or preserve working capital and/or cash
				  flows for Louisiana operations of the business. However, except as allowed in
				  Subclause (d) above, this does not include those
investments
whereby the proceeds of the
investment
will be utilized to
				  refinance existing debt of the business;
(f). to preserve or expand Louisiana corporate headquarters
				  operations.
Preserve
means a company that is in danger of
				  failing or contemplating a move out-of-state;
(g). to support research and development or technological
				  development within Louisiana;
(h). to fund start-up businesses that will operate primarily
				  in Louisiana; or
(i). to provide for an additional economic benefit not
				  otherwise described above. However, before this purpose may be used as a basis
				  for a determination that the
investment
furthers economic
				  development within Louisiana, the CAPCO shall request in writing and the
				  commissioner shall issue a written response to the CAPCO that, based upon
				  relevant facts and circumstances, the proposed
investment
will
				  further Louisiana economic purposes and result in a significant net benefit to
				  the state. The commissioner's letter opinion shall be issued within 30 days of
				  the request by the CAPCO, and shall be part of the annual review required to be
				  performed by the department and billed according to provisions contained in
				  §307. D However, upon written notification to the CAPCO, the 30-day
				  period can be extended by the commissioner if he determines that the initial
				  information submitted is insufficient or incomplete for such
				  determination;
ii. an
investment
by a CAPCO in interim
				  construction financing shall not be considered to further economic development
				  within Louisiana, unless the same CAPCO also provides the debt funding that
				  refinances the interim funding upon completion and the permanent financing is
				  determined to further economic development within Louisiana;
iii. for purposes of Subclause b.i.(e) of this definition, an
investment
by a CAPCO to refinance interim debt of a qualified
				  Louisiana business will be considered to further economic development within
				  Louisiana if the commitment to fund the
investment
by the
				  CAPCO occurs before the funding of the interim debt.
Louisiana
Employees
-
a. full-time and part-time employees and officers, converted
				  to a full-time equivalent basis, that perform services in Louisiana for a
				  qualified Louisiana business in exchange for salaries, wages and/or other
				  compensation, which is included in Louisiana withholding tax returns filed by
				  the qualified Louisiana business;
b. the term
Louisiana
employees
shall not include:
i. attorneys, accountants or advisors providing consulting or
				  professional services to a qualified Louisiana business on a contract basis;
				  or
ii. employees of any business that perform services
				  (contractor) for a qualified Louisiana business.
For example: a contractor may enter into an agreement to
				  perform services for a qualified Louisiana business. The contractor's employees
				  that perform services under that agreement would not be Louisiana employees
				  under this definition.
Net Income
- net income as defined under or
				  consistent with Generally Accepted Accounting Principles.
Net Worth
- net worth as defined under or
				  consistent with Generally Accepted Accounting Principles.
Office
- the Office of Financial Institutions
				  (OFI).
Operates Primarily in Louisiana
-a business
operates primarily in
Louisiana
if, at the
				  time of the initial
investment
, the business is in good
				  standing with the Louisiana Secretary of State, if applicable, and meets one or
				  more of the following:
a. the business has more than 50 percent of its total assets
				  located in Louisiana;
b. more than 50 percent of the business' net income is
				  allocable or apportionable to Louisiana in accordance with Louisiana income tax
				  law, but disregarding whether the business is taxable or tax-exempt for
				  Louisiana income tax purposes;
c. more than 50 percent of the total salaries, wages and/or
				  other compensation of the business are paid to Louisiana employees; or
d. the CAPCO has, prior to investing in the business,
				  received a written opinion from the commissioner that, based upon relevant
				  facts and circumstances, the business has demonstrated it operates primarily in
				  Louisiana and will continue to operate primarily in Louisiana for at least one
				  year from the date of any financing by a CAPCO. The commissioner's letter
				  opinion shall be issued within 30 days of the request by the CAPCO, and shall
				  be part of the annual review required to be performed by the department and
				  billed according to provisions contained in §307. D However, upon written
				  notification to the CAPCO, the 30-day period can be extended by the
				  commissioner if he determines that the initial information submitted is
				  insufficient or incomplete for such determination.
Note: For
investments
made utilizing
				  certified capital raised during 2002 or 2003, Subparagraph c is superseded by
				  R.S.
				  51:1923(13)(a)(i) which
				  requires that at least 80 percent of the total employees of such business shall
				  be domiciled in the state of Louisiana and that at least 80 percent of the
				  payroll of such business be paid to such employees. Therefore, in addition to
				  meeting this new 80 percent test, in order for the business to be deemed to
				  operate primarily in Louisiana, one or more of Subparagraphs a, b or d must be
				  met.
Participation between CAPCOs
- are loans or
				  other investments in which one or more CAPCOs have an ownership interest. If a
				  loan or investment is determined to meet the definition of a qualified
				  investment, a CAPCO may only include its participation (ownership interest) as
				  a qualified investment.
Performs Substantially All of Its Production in
				  Louisiana
- a business performs substantially all of its production in
				  Louisiana if:
a. the business derives more than 50 percent of its gross
				  receipts from the sale of manufactured, produced or processed goods; and
b. more than 50 percent of the total value added to the
				  business' finished product is added within Louisiana.
NOTE: For
investments
made utilizing
				  certified capital raised during 2002 or 2003,
				  R.S.
				  51:1923(13)(a)(i) adds a new
				  requirement that at least 80 percent of the total employees of such business
				  shall be domiciled in the state of Louisiana and that at least 80 percent of
				  the payroll of such business be paid to such employees. Therefore, in addition
				  to meeting this new 80 percent test, in order for the business to be deemed to
				  perform substantially all of its production in Louisiana, this new 80 percent
				  test must be met in addition to Subparagraphs a and b.
Permissible Investments
-for purposes of
				  R.S.
				  51:1926(B), cash deposited
				  with a federally-insured financial institution; certificates of deposit in
				  federally-insured financial institutions; investment securities that are
				  obligations of the United States, its agencies or instrumentalities, or
				  obligations that are guaranteed fully as to principal and interest by the
				  United States; investment-grade instruments (rated in the top four rating
				  categories by a nationally recognized rating organization); obligations of any
				  state, municipality or of any political subdivision thereof; money market
				  mutual funds or mutual funds that only invest in
permissible
				  investments
of a kind and maturity permitted by this definition; or
				  any other
investments
approved in advance and in writing by
				  the commissioner. All
permissible investments
which are
				  included in the calculation under Subclause a.(iv)(a) of the definition of
Investment
in LAC 10:XV.303 shall have a maturity of two years
				  or less or the terms of the investment instrument shall provide that the
				  principal is repayable to the CAPCO within 10 days following demand by the
				  CAPCO in connection with funding a qualified investment. This limitation on the
				  maturity of an investment shall only apply to
investments
made
				  subsequent to the date of this rule.
Person
- a natural person or juridical
				  entity. If used with respect to acquiring control of or controlling a specified
				  person,
person
includes a combination of two or more persons
				  acting in concert.
Primary Business Activity of a CAPCO
- the
				  investment of a CAPCO's certified capital primarily in qualified investments in
				  qualified Louisiana businesses. Primary business activity is demonstrated by
				  having at all times, a minimum of 50 percent of total certified capital of each
				  investment pool, which has been collected in cash, available for investment in
				  or having been invested as qualified investments in qualified Louisiana
				  businesses.
Sophisticated Investor
- any of the
				  following:
a. an institutional investor such as a bank, savings and loan
				  association or other depository institution insured by the Federal Deposit
				  Insurance Corporation, registered investment company or insurance
				  company;
b. a corporation with total assets in excess of
				  $5,000,000;
c. a natural person whose individual net worth, or joint net
				  worth with that person's spouse at the time of his purchase, exceeds
				  $1,000,000; or
d. a natural person with an individual income in excess of
				  $200,000 in each of two most recent years or joint income with that person's
				  spouse in excess of $300,000 in each of those years and has a reasonable
				  expectation of reaching the same income level in the current year.
Total Certified Capital under Management
-
				  for purposes of investment limits, pursuant to
				  R.S.
				  51:1926(B):
a.
GAAP Capital
-common stock, preferred
				  stock, general partnership interests, limited partnership interests, surplus
				  and other equivalent ownership interests, all of which shall be exchanged for
				  cash and is available for investment in qualified
investments
;
				  undivided profits or loss which shall be reduced by a fully-funded loan loss
				  reserve; contingency or other capital reserves and minority interests; reduced
				  by all organization costs;
b. Plus: Qualified Non-GAAP Capital: the portion of
				  debentures, notes or any other quasi-equity/debt instruments with a maturity of
				  not less than five years which is available for investment in qualified
				  investments;
c. Less: The following, when any GAAP capital or Qualified
				  Non-GAAP capital is subject to redemption or repurchase by the CAPCO:
i. the GAAP Capital and Qualified Non-GAAP Capital subject to
				  redemption or repurchase shall be multiplied by the following percentage
				  reductions and deducted from capital:
Within five years from redemption or repurchase
20 percent
Within four years from redemption or repurchase
40 percent
Within three years from redemption or repurchase
60 percent
Within two years from redemption or repurchase
80 percent
Within one year from redemption or repurchase
100 percent
d. the portion of an investment that is guaranteed by the
				  United States Small Business Administration or the United States Department of
				  Agriculture's Business and Industry Guaranteed Loan Program shall be excluded
				  from the amount of the investment when determining the investment limit
				  pursuant to
				  R.S.
				  51:1926(B).
AUTHORITY NOTE:
				  Promulgated in accordance with R.S.
				  51:1921-1933.