PURPOSE: This rule prescribes policies and procedures applicable to the exemption of securities of not-for-private profit organizations.

1. (1) The notification in writing of section 409.402(a)(9) of the Missouri Uniform Securities Act (the Act) shall be filed thirty (30) days before the securities to be exempted by the notification are initially offered for sale or sold, and at least thirty (30) days before the expiration of thirteen (13) months following the commencement of the initial offering of securities exempted by the notification if the offering of securities covered by the original notification is not completed and annually after that until the offering of securities covered by the original notification and any subsequent notification is completed. Any document filed with the original notification may be incorporated by reference in any subsequent notification to the extent the document is currently accurate. Each notification shall consist, to the extent appropriate, of the following:

   1. (A) A description of the method by which full disclosure of material facts will be made to each offeree (section 409.101, RSMo). A prospectus, pamphlet, circular or similar literature making the disclosure normally will suffice for this purpose. Where appropriate, the minimum disclosure required in the document shall include:

      1. 1. The cover or first page includes:

         1. A. The name of the issuer;
         2. B. Title of securities;
         3. C. In tabular form, the per unit and

aggregate price to the public, underwriting or selling commissions and expenses and net proceeds to the issuer;

1. D. Name of broker-dealer or financial

adviser;

1. E. Names of trustee and paying agent;
2. F. If the offering is being made only

to certain persons, a description of these offerees;

1. G. Unless other language is approved

by the commissioner, the following language shall appear in boldface type: IN MAKING AN INVESTMENT DECISION, IN- VESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE PERSON OR ENTITY CREATING THE SECURI- TIES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE SECU- RITIES HAVE NOT BEEN RECOM- MENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FUR- THERMORE, THE FOREGOING AUTHORITIES HAVE NOT CON- FIRMED THE ACCURACY OR DETER- MINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE;

1. H. If appropriate, the following state-

ment shall appear in boldface: THIS OFFER- ING IS SUBJECT TO CERTAIN RISKS (see Risk Factors); and

1. I. The date of the disclosure docu-

ment;

1. 2. A table of contents;

2. 3. The issuer information includes:

   1. A. The name, address, organization

(state in which organized, date organized and statute under which organized) and purpose of the issuer;

1. B. The history of the issuer;
2. C. A description of the general area

and location of the issuer;

1. D. Accreditation and regulation of the

issuer;

1. E. The number of paid employees and

a description of any employee benefit plans; and

1. F. Any affiliation between the issuer

and the broker-dealer, or any officers of either, with any building contractor or supplier who has an interest in or may receive any of the proceeds of the offering;

1. 4. Risk factors. Where appropriate, risk

factors in connection with the offering must be disclosed. Reference to risk factors should note the page number of the disclosure document at which they may be found or further disclosure is made. Risk factors that should be considered include, but are not limited to, the following examples:

1. A. There is no market for the securi-

ties and there is no assurance that a market will develop. Consequently, investors may not be able to resell any securities purchased should they need to or wish to do so for emergency purposes or otherwise;

1. B. The issuer is primarily dependent

upon contributions of the membership to meet expenses for operation of the issuer and payments of principal and interest of the securities. The issuer may not receive sufficient funds to meet these obligations;

1. C. During the past _____ fiscal years,

the issuer has operated at a loss and is currently not earning sufficient income to pay the principal and interest on the securities offered here. There is no assurance the issuer will be able to meet debt service requirements in the future;

1. D. These securities will mature and

become payable on ___________ and it is anticipated the issuer will attempt to refinance them at that time. There is no assurance that refinancing funds will be available at that time or that the funds will be available at terms acceptable to the issuer;

1. E. These securities are not secured by

land, buildings or equipment of the issuer. In the event of default, the investor has the status of an unsecured creditor;

1. F. The issuer has defaulted on a pre-

vious issue of securities. This issue is for the purpose of refinancing; and

1. G. The trust indenture permits the

issuer further to encumber the property securing these securities through the future issuance of additional securities;

1. 5. Use of proceeds information in-

cludes:

1. A. An itemized statement as to the

application of the proceeds of the offering. If additional funds are needed to accomplish the stated purposes, this should be disclosed, together with a statement showing how these funds will be obtained.

1. B. If there is to be an escrow of funds,

a description of the escrow arrangements;

1. 6. Description of property information

includes:

1. A. In addition to describing physical

properties, a valuation of mortgaged property should be included as follows: Total valuation of existing land, buildings, improvements and equipment before the offering: $_________ ; and total valuation of land, buildings, improvements and equipment after the offering and upon completion of construction: $___________ ; and

1. B. The person preparing any

appraisals shall be identified and his/her qualifications for serving as such shall be indicated;

1. 7. Management and control information

includes:

1. A. The name and principal occupa-

tion of each officer, trustee, board member and the like. In the case of religious organizations, a brief summary of the background of the minister(s) and any other important church officials should be included; and

1. B. A description of any material

transactions or proposed transactions between the issuer and those persons or any affiliate of them;

1. 8. Material litigation and transactions

information includes: Any pending or threatened litigation which may materially affect the issuer’s income. Any contracts with the issuer which, if terminated, would materially affect the issuer’s income;

1. 9. Description of securities information

includes:

1. A. Description of the indenture under

which the securities are to be issued should include information as to:

1. (I) Interest and interest payment

dates;

1. (II) Default;
2. (III) Redemption;
3. (IV) Subordination;
4. (V) Sinking fund;
5. (VI) Subsequent issues;
6. (VII) Modification of the inden-

ture; 15 CSR 30-54

(VIII) Insurance coverage on prop-

erties of the issuer; and

1. (IX) Any other material facts

regarding the rights of holders;

1. B. A pay-back or maturity schedule;

and

1. C. If guarantees of payment are made

by any other person, information describing the ability of that person to guarantee, including financial statements, shall be included. Note—A guarantee in and of itself involves the offering of a separate security which may require registration;

1. 10. Plan of distribution information

includes:

1. A. The name and address of the bro-

ker-dealer and fund-raising adviser;

1. B. The aggregate underwriting or

selling commissions and finders’ fees; and

1. C. A brief description of any under-

writing arrangements or distribution plan, including whether best efforts or firm commitment, and whether exclusive or nonexclusive; and

1. 11. Financial statements information

includes:

1. A. Balance sheet within four (4)

months prior to the date of filing, prepared in accordance with generally accepted accounting principles;

1. B. Income and expense statements for

each of the three (3) fiscal years preceding the date of the balance sheet and for any period between the close of the last fiscal year and the date of the balance sheet or such shorter period as the issuer has been in existence, prepared in accordance with generally accepted accounting principles;

1. C. Any statements or information

necessary to explain extraordinary or nonrecurring fluctuations in the statements supplied; and

1. D. If applicable, the number of pledg-

ing units and the average annual contribution per pledging unit;

1. (B) The following exhibits should be included:

   1. 1. Copy of the issuer’s articles of incor-

poration or other comparable organizational documents and of any bylaws;

1. 2. Opinion of counsel relating to the not-

for-private profit status of the issuer, the formation and good standing of the issuer, legality of the securities to be issued and the validity of the indenture under which the securities are to be issued;

1. 3. Copy of the indenture under which

the securities are to be issued;

1. 4. Specimen of the security;
2. 5. Copy of any underwriting or selling

agreement;

1. 6. A consent to service of process form

executed by the issuer and a copy of the resolution of the board of directors of the issuer authorizing the consent (Missouri Form S-B or Forms U-2 and U-2A may be used);

1. 7. Assurance of the issuer, and of any

underwriter, that the sale or offer for sale of any security under the exemption of section 409.402(a)(9) of the Act will not be effected until receipt of a statement from the commissioner expressing no objection to reliance upon the exemption;

1. 8. Assurance of the issuer that in the

event of any material change in the security or the disclosure document becomes incomplete in any material respect or contains any statement which is, in the light of the circumstances under which it is made, false or misleading with respect to any material fact, the sale or offer for sale pursuant to the exemption of section 409.402(a)(9) of the Act will cease and will not be resumed until appropriate notice has been filed with the commissioner and s/he has expressed no objection to further reliance upon the exemption; and

1. 9. Assurance that the disclosure docu-

ment will be delivered to the purchaser prior to consummation of any sale or contract for sale; and

1. (C) Any summaries of the disclosure document to be used in the solicitation of indications of interest.

1. (2) The thirty (30)-day notice period of section 409.402(a)(9) of the Act is deemed to commence with the receipt in writing of the notice, or the receipt in writing of, as a minimum, the name and address of the issuer, a brief description of the securities to be offered, the exhibit of paragraph (1)(B)7. and an assurance of a further filing within a thirty (30)-day period of the notification set forth in section (1) to the extent feasible.
2. (3) The notification shall be accompanied by the fee prescribed in 15 CSR 30- 50.030(2)(E).

AUTHORITY: sections 409.402(a)(9) and 409.413(a), RSMo 1986.* Original rule filed June 25, 1968, effective Aug. 1, 1968. Amended: Filed May 21, 1969, effective Aug. 1, 1969. Amended: Filed July 21, 1972, effective Aug. 1, 1972. Amended: Filed March 21, 1974, effective April 1, 1974. Amended: Filed June 3, 1974, effective June 17, 1974. Amended: Filed Nov. 15, 1974, effective Nov. 25, 1974. Amended: Filed Dec. 19, 1975, effective Dec. 31, 1975. Amended: Filed Oct. 15, 1987, effective Jan. 29, 1988. *Original authority: 409.402(a)(9), RSMo 1967, amended 1977, 1978, 1986 and 409.413(a), RSMo 1967.