STATE OF ARKANSAS
|IN THE MATTER OF||ORDER PROVIDING A WAIVER|
|OF CERTAIN PROVISIONS OF THE|
|EXEMPTION PURSUANT TO ARK.|
|CODE ANN. § 23-42-504(a)(9)(B)|
|COOPERATIVE EXCHANGE||NO. 99-021-S|
FINDINGS OF FACT
On May 12, May 19, and May 26, 1999, letters were received by the Arkansas Securities Commissioner requesting that the proposed offering and sale of the 1999 Owner Note Series (the "Notes") of Ozark Food Cooperative Exchange (the "Company") to its members (the "Transaction"), be determined to be an exempt transaction pursuant to Ark. Code Ann. §23-42-504(a)(9).
The Company is a cooperative association, d/b/a Ozark Natural Foods, organized under the laws of the State of Arkansas.
The Company has filed a proof of exemption pursuant to Ark. Code Ann. §23-42-504(a)(9) and Rule 504.01(A)(9) of the Rules of the Arkansas Securities Commissioner (the "Rules").
Sales will be limited to members of the Company. The Company has represented that sales will be made to not more than ninety (90) unaccredited purchasers during any period of twelve (12) consecutive months. The Company has requested a waiver of the number of purchasers permitted in order to permit sales to no more than 90 unaccredited purchasers during any period of twelve consecutive months.
The Company had engaged a member to contact prospective purchasers to determine if they have an interest in purchasing a note. This member will be paid a fee that is based on the amount of time devoted to this matter and will not exceed $3,000. This fee is contingent upon the successful completion of the transaction or upon any amount of the Notes being purchased. The Company has requested a waiver of the provision stating that no commission or other remuneration may be paid or given directly or indirectly for soliciting any prospective purchaser unless the person receiving such commission or remuneration is registered as a broker-dealer or agent of the Company.
The Company has requested a waiver of the requirement of Rule 504.01(A)(9)(b) that the investment may not exceed 20% of any unaccredited purchasers net worth. The Company has provided disclosure by means of Exhibit D outlining the risks associated with the repayment of the notes and cautioned that the notes should not be purchased by members who cannot bear those risks.
CONCLUSIONS OF LAW
Ark. Code Ann. §23-42-504(a)(9)(B) states that the commissioner may by rule or order, as to any security or transaction or any type of security or transaction, withdraw or further condition this exemption, or increase or decrease the number of purchasers permitted, or waive the conditions in subdivisions (a)(9)(A)(i) and (ii) of this section with or without the substitution of a limitation on remuneration.
It is not necessary or appropriate in the public interest for the protection of investors for the Company to be required to register the Transaction under the Act for the purposes of the contemplated offering.
It is not necessary or appropriate in the public interest for the protection of investors for the Company to be required to engage the services of a registered agent for the purpose of making sales of the securities.
In recognition of the representations made by the Company, it appears registration of this Transaction is unnecessary in this instance.
This order does not exempt the Company from the antifraud provisions of the Act.
IT IS THEREFORE ORDERED that securities offered or sold in Arkansas for the proposed Transaction, if offered and sold in compliance with the representations made in the letters of May 12, May 19, and May 26, 1999, and the attached exhibits, and in accordance with the Findings of Fact stated herein, shall be exempted from Sections 23-42-501 and 23-42-502 of the Act.
WITNESS MY HAND AND SEAL this 27th day of May 1999.