George K. Baum & Company J.P. Morgan

NEW ISSUE Ratings BOOK-ENTRY-ONLY Fitch: “AA” S&P: “AA-”

In the opinion of Gilmore & Bell, P.C., Bond Counsel, under existing law and assuming continued compliance with certain requirements of the Internal Revenue Code of 1986, as amended, the interest on the Series 2010A Bonds (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal income tax purposes, except as described herein, and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations. The interest on the Series 2010A Bonds is exempt from income taxation by the State of Missouri. The Series 2010A Bonds have not been designated as “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See “TAX MATTERS” in this Official Statement.

$33,895,000 MISSOURI DEVELOPMENT FINANCE BOARD CULTURAL FACILITIES REVENUE BONDS (THE NELSON GALLERY FOUNDATION) SERIES 2010A

Dated: March 9, 2010 Due: See Inside Cover

The Series 2010A Bonds and the interest thereon are special, limited obligations of the Missouri Development Finance Board (the “Board”), payable solely from certain payments made under a Loan Agreement, dated as of February 15, 2010 (the “Loan Agreement”), between the Board and The Nelson Gallery Foundation (the “Foundation”).

The Series 2010A Bonds are issued and secured under a Bond Trust Indenture, dated as of February 15, 2010 (the “Indenture”), between the Board and Commerce Bank, N.A., Kansas City, Missouri, as trustee (the “Trustee”), as described herein. The Series 2010A Bonds do not constitute a debt or liability of the State of Missouri (the “State”) or of any political subdivision thereof within the meaning of any State constitutional provision or statutory limitation and do not constitute a pledge of the faith and credit of the State or of any political subdivision thereof. The issuance of the Series 2010A Bonds will not, directly, indirectly or contingently, obligate the State or any political subdivision thereof to levy any form of taxation therefor or to make any appropriation for their payment. The Board has no taxing power.

The Series 2010A Bonds are issuable as fully registered bonds and, when issued, will be initially registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New York (“DTC”). Purchases of beneficial interests in the Series 2010A Bonds will be made in book-entry-only form in denominations of $5,000 or any integral multiple thereof. Payments of the principal of, and interest on the Series 2010A Bonds will be made directly to DTC or its nominee, Cede & Co., by the Trustee, so long as DTC or Cede & Co. is the sole registered owner. Disbursement of such payments to DTC’s Participants is the responsibility of DTC, and disbursements of such payments to the Beneficial Owners is the responsibility of DTC’s Participants and the Indirect Participants, as more fully described herein. See “BOOK- ENTRY-ONLY SYSTEM.” Principal of the Series 2010A Bonds will be payable on each December 1 in the years shown on the inside cover page. Interest on the Series 2010A Bonds is payable on each June 1 and December 1, beginning on June 1, 2010.

The Series 2010A Bonds are subject to redemption as described herein.

The Series 2010A Bonds are offered when, as and if issued by the Board and accepted by the Underwriters, subject to the approval of legality thereof by Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel, and certain other conditions. Certain legal matters related to this Official Statement will be passed upon by Gilmore & Bell, P.C., Kansas City, Missouri. Certain legal matters will be passed upon for the Board by Gilmore & Bell, P.C., Kansas City, Missouri; and for the Foundation by Husch Blackwell Sanders, LLP, Kansas City, Missouri. It is expected that the Series 2010A Bonds in definitive form will be available for delivery at DTC on or about March 9, 2010.

George K. Baum & Company J.P. Morgan

The date of this Official Statement is February 24, 2010

$33,895,000 MISSOURI DEVELOPMENT FINANCE BOARD CULTURAL FACILITIES REVENUE BONDS (THE NELSON GALLERY FOUNDATION) SERIES 2010A

MATURITY SCHEDULE

Maturity Principal Interest (Dec. 1) Amount Rate Yield CUSIP 2010 $ 455,000 2.000% 0.700% 606037 BV0 2011 45,000 2.000 1.000 606037 BW8 2012 615,000 2.000 1.300 606037 BJ7 2012 1,785,000 5.125 1.300 606037 BX6 2013 500,000 2.250 1.550 606037 BK4 2013 2,005,000 5.125 1.550 606037 BY4 2014 125,000 2.500 1.900 606037 BL2 2014 2,495,000 5.000 1.900 606037 BZ1 2015 1,210,000 2.500 2.350 606037 BM0 2015 1,540,000 5.000 2.350 606037 CA5 2016 565,000 4.000 2.700 606037 BN8 2016 2,290,000 5.000 2.700 606037 CB3 2017 380,000 3.250 3.000 606037 BP3 2017 2,615,000 5.000 3.000 606037 CC1 2018 3,135,000 5.000 3.250 606037 BQ1 2019 285,000 4.000 3.450 606037 BR9 2019 3,005,000 5.000 3.450 606037 CD9 2020 3,450,000 5.000 3.550 606037 BS7 2021 2,380,000 3.500 3.650 606037 BT5 2021 1,245,000 5.000 3.600 606037 CE7 2022 1,770,000 3.500 3.750 606037 BU2 2022 2,000,000 5.000 3.650 606037 CF4

REGARDING USE OF THIS OFFICIAL STATEMENT

No dealer, broker, salesman or other person has been authorized by the Board, the Foundation 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 any of the foregoing. Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as a representation of fact. The information set forth herein has been obtained from the Board, the Foundation and other sources believed to be reliable, but is not guaranteed as to accuracy or completeness and is not to be construed as a representation by the Board or the Underwriters. The information and expressions of opinion contained herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall under any circumstances create any implication that there has been no change in the affairs of the Board or the Foundation since the date hereof.

The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, their responsibilities to investors under federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of that information.

IN CONNECTION WITH THE OFFERING OF THE SERIES 2010A BONDS, THE UNDERWRITERS MAY OVER ALLOT OR EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2010A 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 SERIES 2010A BONDS HAVE NOT BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR HAS THE INDENTURE BEEN QUALIFIED UNDER THE TRUST INDENTURE ACT OF 1939, AS AMENDED, IN RELIANCE UPON EXEMPTIONS CONTAINED IN SUCH ACTS. IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN EXAMINATION OF THE FOUNDATION AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THESE BONDS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

EXCEPT FOR INFORMATION CONCERNING THE BOARD IN THE SECTIONS OF THIS OFFICIAL STATEMENT CAPTIONED “THE BOARD” AND “LITIGATION - THE BOARD,” NONE OF THE INFORMATION IN THIS OFFICIAL STATEMENT HAS BEEN SUPPLIED OR VERIFIED BY THE BOARD, AND THE BOARD MAKES NO REPRESENTATION, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.

______

CAUTIONARY STATEMENTS REGARDING FORWARD- LOOKING STATEMENTS IN THIS OFFICIAL STATEMENT ______

Certain statements included or incorporated by reference in this Official Statement constitute “forward- looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “anticipate,” “budget” or other similar words. Such forward looking statements include, among others, certain statements under “RESULTS OF OPERATIONS” – Management’s Discussion and

Analysis of Results of Operations” in Appendix A to this Official Statement and certain statements under “BONDOWNERS’ RISKS” in the forepart of this Official Statement.

THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. THE FOUNDATION DOES NOT PLAN TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN THE EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES UPON WHICH SUCH STATEMENTS ARE BASED OCCUR.

(ii) TABLE OF CONTENTS

Page Page

INTRODUCTION ...... 1 The Board...... 19 Purpose of the Official Statement ...... 1 The Foundation...... 19 The Board...... 1 UNDERWRITING...... 19 The Series 2010A Bonds ...... 1 MISCELLANEOUS ...... 20 The Foundation ...... 2 Security for the Series 2010A Bonds...... 2 Appendix A: The Nelson Gallery Foundation – Financial Statements ...... 2 Organization and Operations Continuing Disclosure ...... 3 Appendix B: Audited Financial Statement of The Bondowners’ Risks ...... 3 Nelson Gallery Foundation as of and for the Year Definitions and Summaries of Documents ....3 Ended April 30, 2009 and Summarized Financial THE BOARD...... 3 Information for the Year Ended April 30, 2008 General...... 3 Appendix C: Definitions and Summaries of Principal Other Indebtedness of the Board...... 4 Financing Documents THE FOUNDATION...... 5 Appendix D: Form of Opinion of Bond Counsel

PLAN OF FINANCE...... 5

General...... 5 Refunding of the Refunded Bonds...... 5 Sources and Uses of Funds ...... 6 THE SERIES 2010A BONDS ...... 7 General...... 7 Redemption...... 7 Transfer and Exchange ...... 9 ADDITIONAL INDEBTEDNESS ...... 9 BOOK-ENTRY-ONLY SYSTEM...... 9 SECURITY FOR THE SERIES 2010A BONDS 12 Limited Obligations ...... 12 Pledge and Assignment under the Indenture12 The Loan Agreement ...... 12 Enforceability...... 13 BONDOWNERS’ RISKS...... 13 General...... 13 No Pledge of the Foundation’s Revenues or Facilities...... 13 Tax-Exempt Status of the Foundation and the Series 2010A Bonds ...... 13 Gifts, Grants and Bequests...... 14 Endowment ...... 14 Land Use Restrictions...... 14 Certain Matters Relating to Enforceability ..15 Marketability...... 15 TAX MATTERS ...... 15 Opinion of Bond Counsel ...... 15 Other Tax Consequences ...... 16 INDEPENDENT AUDITORS...... 16 CONTINUING DISCLOSURE...... 16 BOND RATINGS ...... 18 LEGAL MATTERS ...... 18 LITIGATION...... 19 (iii) (THIS PAGE LEFT BLANK INTENTIONALLY)

OFFICIAL STATEMENT

$33,895,000 MISSOURI DEVELOPMENT FINANCE BOARD

Cultural Facilities Revenue Bonds (The Nelson Gallery Foundation) Series 2010A

INTRODUCTION

The following introductory statement is subject in all respects to more complete information contained elsewhere in this Official Statement. The order and placement of materials in this Official Statement, including the Appendices, are not to be deemed to be a determination of relevance, materiality or relative importance, and this Official Statement, including the Cover Page and Appendices, must be considered in its entirety. All capitalized terms used in this Official Statement that are not otherwise defined herein shall have the meanings ascribed to them in Appendix C.

Purpose of the Official Statement

The purpose of this Official Statement, including the cover page hereof and the appendices hereto, is to furnish certain information relating to (i) the Missouri Development Finance Board (the “Board”); (ii) the Board’s Cultural Facilities Revenue Bonds (The Nelson Gallery Foundation) Series 2010A in the aggregate principal amount of $33,895,000 (the “Series 2010A Bonds”); (iii) The Nelson Gallery Foundation, a charitable trust (the “Foundation”); and (iv) the Nelson-Atkins Museum of Art (the “Museum”) owned and operated by the Foundation.

The Board

The Board is a body politic and corporate of the State of Missouri, created and existing under the Missouri Development Finance Board Act, §§100.250 through 100.297 of the Revised Statutes of Missouri (the “Act”). See “THE BOARD.”

The Series 2010A Bonds

The Series 2010A Bonds are being issued pursuant to the Act and a Bond Trust Indenture, dated as of February 15, 2010 (the “Indenture”), between the Board and Commerce Bank, N.A., Kansas City, Missouri, as trustee (the “Trustee”), for the purpose of providing funds to make a loan to the Foundation, pursuant to a Loan Agreement, dated as of February 15, 2010 (the “Loan Agreement”), between the Board and the Foundation, the proceeds of which will be used by the Foundation, together with certain other funds of the Foundation (i) to refund the Refunded Bonds on December 1, 2011, as described herein, and (ii) to pay the costs related to the issuance of the Series 2010A Bonds. A description of the Series 2010A Bonds is contained in this Official Statement under “THE SERIES 2010A BONDS.” All references to the Series 2010A Bonds are qualified in their entirety by the definitive terms thereof and the information with respect thereto included in the Indenture and the Loan Agreement. A description of the application of the proceeds of the Series 2010A Bonds is contained in this Official Statement under “PLAN OF FINANCE - Sources and Uses of Funds.”

The Indenture provides for the future issuance of additional bonds (“Additional Bonds”) which, if issued, would rank on a parity with the Series 2010A Bonds and any other bonds then outstanding under the Indenture.

The Foundation

The Foundation is a charitable trust created in 1954 by the trustees of The William Rockhill Nelson Trust (the “Trust”). The Trust was established by the Last Will and Testament of William Rockhill Nelson, the owner of The Kansas City Star newspaper, who died in 1914. Both the Foundation and the Trust are tax-exempt charitable organizations under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, exempt from federal income taxation under Section 501(a) of the Code. The Nelson-Atkins Museum of Art is the commonly used name for the William Rockhill Nelson Gallery of Art (the “Nelson Gallery”) and the Atkins Museum of Fine Arts (the “Atkins Museum”). The Nelson Gallery and the Atkins Museum were erected in 1933 as one building without any line of demarcation between the two structures. The Foundation owns the Nelson Gallery and it owns the 20-acre site on which the Nelson Gallery and Atkins Museum are located, subject only to an easement for the Atkins Museum. With the consent and cooperation of the Trustees of the Mary Atkins Trust, the Foundation has continuously and exclusively operated and maintained the Museum as one facility and paid all costs and expenses associated therewith including insurance. See Appendix A to this Official Statement for further information with respect to the Foundation and the Trust. The Trust is not obligated, directly or indirectly, to make any payments with respect to the Series 2010A Bonds.

Security for the Series 2010A Bonds

The Series 2010A Bonds and the interest thereon are special, limited obligations of the Board, payable solely from certain payments to be made by the Foundation under the Loan Agreement, which payments are pledged under the Indenture as described herein. The Series 2010A Bonds do not constitute a debt or liability of the State of Missouri or of any political subdivision thereof within the meaning of any State constitutional provision or statutory limitation and do not constitute a pledge of the faith and credit of the State or of any political subdivision thereof. The issuance of the Series 2010A Bonds does not, directly, indirectly or contingently, obligate the State or any political subdivision thereof to levy any form of taxation therefor or to make any appropriation for their payment. The Board has no taxing power.

The Series 2010A Bonds will be payable solely from the payments, revenues and receipts received by the Board pursuant to the Loan Agreement and not from any other fund or source of the Board. The obligations of the Foundation to make Loan Payments under the Loan Agreement are the general unsecured obligations of the Foundation. No assets or revenues of the Foundation, other than funds held under the Indenture, are pledged to secure the Foundation’s obligations to make such payments. Pursuant to the Indenture, the Board will pledge and assign such payments, revenues and receipts to the payment of the Series 2010A Bonds and the interest thereon. Payments under the Loan Agreement are designed to be sufficient to pay when due the principal of, and interest on the Series 2010A Bonds. See “SECURITY FOR THE SERIES 2010A BONDS.”

Financial Statements

The financial statements of the Foundation, as of April 30, 2009 and for the year then ended are included in Appendix B to this Official Statement.

The combined financial statements included in Appendix B include the statements of activities and assets and liabilities of the Foundation and The William Rockhill Nelson Trust. The Trust is not directly or indirectly obligated to make any payments with respect to the Series 2010A Bonds.

Certain interim financial information for the Foundation as of October 31, 2009 and 2008 and for the six-month periods then ended are included in Appendix A to this Official Statement. The unaudited interim financial information was prepared by management of the Foundation and should be read in conjunction with the audited financial statements and related notes included in Appendix B to this Official Statement.

-2-

Continuing Disclosure

The Foundation will undertake, pursuant to the Loan Agreement and a Continuing Disclosure Agreement, to provide certain annual financial information and notices of the occurrence of certain material events with respect to the Series 2010A Bonds. A description of this undertaking is set forth under “CONTINUING DISCLOSURE.”

Bondowners’ Risks

Payment of the principal of, and interest on the Series 2010A Bonds is dependent upon the present and future financial resources of the Foundation. Certain risks are inherent in the operations of the Foundation. See “BONDOWNERS’ RISKS” for a discussion of certain of those risks.

Definitions and Summaries of Documents

Definitions of certain words and terms used in this Official Statement and summaries of the Loan Agreement and the Indenture are set forth in Appendix C to this Official Statement. Such definitions and summaries do not purport to be comprehensive or definitive. All references herein to the Indenture, the Loan Agreement, the Escrow Agreement and the Continuing Disclosure Agreement are qualified in their entirety by reference to the definitive forms of such documents, copies of which may be viewed at the offices of the Underwriters, or will be provided to any prospective purchaser requesting the same, upon payment by such prospective purchaser of the cost of complying with such request.

THE BOARD

General

The issuer of the Series 2010A Bonds is the Missouri Development Finance Board, a body corporate and politic duly created and existing under the laws of the State of Missouri, including particularly the Missouri Development Finance Board Act, Sections 100.250 to 100.297, inclusive, of the Revised Statutes of Missouri, as amended. The Series 2010A Bonds will be authorized and issued by the Board under the provisions of the statutes of the State of Missouri, including the Act.

The Board was established pursuant to the Act in 1982 and consists of twelve members, eight of which are appointed by the Governor, with the advice and consent of the Senate. The Lieutenant Governor, the Director of the Department of Economic Development, the Director of the Department of Agriculture and the Director of the Department of Natural Resources serve as ex-officio, voting members of the Board. No more than five of the members may be of the same political party except for the Lieutenant Governor, the Director of the Department of Economic Development, the Director of the Department of Agriculture and the Director of the Department of Natural Resources. Appointed members serve terms of four years. Each member of the Board continues to serve until a successor has been duly appointed and qualified.

Robert V. Miserez serves as Executive Director of the Board.

As of the date hereof, the members of the Board and the terms of appointed members are as follows:

Marie Carmichael — Chair, term as a member expires September 14, 2012. Ms. Carmichael is owner of Affordable Homes Development in Springfield, Missouri.

John D. Starr — Vice Chairman, term as a member expires September 14, 2011. Mr. Starr is Chief Executive Officer of KOCH Equipment LLC, a worldwide distributor and manufacturer for the meat and food industry located in Kansas City, Missouri.

-3-

Larry D. Neff — Secretary, term as a member expires September 14, 2010. Mr. Neff is President of Larry Neff Management and Development in Neosho, Missouri.

L.B. Eckelkamp, Jr. — term as a member expires September 14, 2011. Mr. Eckelkamp is Chairman of the Board of Bank of Washington in Washington, Missouri.

Danette D. Proctor — term as a member expires September 14, 2010. Ms. Proctor is co- owner of D-4 Investments, LLC in Springfield, Missouri.

John E. Mehner — Treasurer, term as a member expires September 14, 2011. Mr. Mehner is President and CEO of the Cape Girardeau Area Chamber of Commerce in Cape Girardeau, Missouri.

Brian May — term as a member expires September 14, 2012. Mr. May is a partner in the law firm of Yates & May, L.C. in Clayton, Missouri.

Kelley M. Martin— term as a member expires September 14, 2012. Mr. Martin is the owner of the Martin Financial Group, a financial services practice in Kansas City.

David Kerr — ex-officio member. Mr. Kerr is the Interim Director of the Department of Economic Development.

Peter D. Kinder — ex-officio member. The Honorable Peter Kinder is the Lieutenant Governor of the State of Missouri.

Dr. Jon Hagler — ex-officio member. Dr. Hagler is the Director of the Department of Agriculture.

Mark N. Templeton — ex-officio member. Mr. Templeton is the Director of the Department of Natural Resources.

Other Indebtedness of the Board

The Board has sold and delivered other bonds and notes secured by instruments separate and apart from, and not secured by, the Indenture securing the Series 2010A Bonds. The holders and owners of such bonds and notes have no claim on assets, funds or revenues of the Board pledged under the Indenture, and the owners of the Series 2010A Bonds will have no claim on assets, funds or revenues of the Board securing other bonds and notes. The Board has never defaulted on any of its bonds or notes.

With respect to additional indebtedness of the Board, the Board intends to enter into separate agreements for the purpose of providing financing for other eligible projects and programs. Issues that may be sold by the Board in the future will be created under separate and distinct indentures or resolutions and secured by instruments, properties and revenues separate from those securing the Series 2010A Bonds.

EXCEPT FOR INFORMATION CONCERNING THE BOARD IN THE SECTIONS OF THIS OFFICIAL STATEMENT CAPTIONED “THE BOARD” AND “LITIGATION – THE BOARD,” NONE OF THE INFORMATION IN THIS OFFICIAL STATEMENT HAS BEEN SUPPLIED OR VERIFIED BY THE BOARD, AND THE BOARD MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION.

-4-

THE FOUNDATION

The Nelson Gallery Foundation is a charitable trust created in 1954 by the trustees of The William Rockhill Nelson Trust. The Trust was established by the Last Will and Testament of William Rockhill Nelson, the owner of The Kansas City Star newspaper, who died in 1914. Both the Foundation and the Trust are tax- exempt charitable organizations under Section 501(c)(3) of the Code, exempt from federal income taxation under Section 501(a) of the Code.

The Nelson-Atkins Museum of Art is the commonly used name for the William Rockhill Nelson Gallery of Art and the Atkins Museum of Fine Arts. The Nelson Gallery and the Atkins Museum were erected in 1933 as one building without any line of demarcation between the two structures. The Foundation owns the Nelson Gallery and the 20-acre site on which the Nelson Gallery and Atkins Museum are located, subject only to an easement for the Atkins Museum. With the consent and cooperation of the Trustees of the Mary Atkins Trust, the Foundation has continuously and exclusively operated and maintained the Museum as one facility and paid all costs and expenses associated therewith including insurance.

The Trust was created by the Last Will and Testament of William Rockhill Nelson for the purpose of acquiring works of art to be exhibited for the delectation and enjoyment of the public in buildings provided for that purpose. The Trust is governed by three University Trustees, as described in Appendix A. In 1954, the University Trustees created the Nelson Gallery Foundation pursuant to a Declaration of Trust to acquire works of fine art for exhibition to the public and to own and operate the Museum and for related purposes and uses. The Foundation is the borrower of the proceeds of the Series 2010A Bonds and is directly obligated to make the payments under the Loan Agreement to pay the principal of and interest on the Series 2010A Bonds. The Trust is not obligated, directly or indirectly, to make any payments with respect to the Series 2010A Bonds.

The Museum opened to the public in December 1933, at which time the Museum owned 200 paintings and 3,800 objects. Today, the Museum’s holdings include nearly 35,000 works of world art: African, Oceanic, American Indian, Ancient, Western European, American, Asian and the Kansas City Sculpture Park. The Museum’s commitment to the collection, preservation, exhibition, and interpretation of works of art has made it a vital force in the cultural and educational fabric of the region served by the Museum. The Museum is ranked as one of the leading art museums in the United States, and the Museum’s collection of Chinese art is considered one of the finest in the world.

For further information with respect to the Foundation, see Appendix A to this Official Statement.

PLAN OF FINANCE

General

The proceeds of the Series 2010A Bonds will be loaned by the Board to the Foundation pursuant to the Loan Agreement. The Foundation will use the proceeds of the Series 2010A Bonds and certain other funds to be contributed by the Foundation, to (i) refund in advance of their maturity the Refunded Bonds described below, and (ii) pay costs related to the issuance of the Series 2010A Bonds.

Refunding of the Refunded Bonds

The proceeds of the Series 2010A Bonds will be used to refund a portion of the Board’s Cultural Facilities Revenue Bonds (The Nelson Gallery Foundation) Series 2001A, issued on December 6, 2001 in the aggregate principal amount of $74,955,000 (the “Series 2001A Bonds”). The Foundation defeased $1,000,000 of the 2030 maturity of the Series 2001A Bonds on April 28, 2006.

-5-

Set forth below is a description of the portion of the Series 2001A Bonds to be refunded (the “Refunded Bonds”):

Maturity Principal Interest CUSIP Maturity Principal Interest CUSIP (Dec. 1) Amount Rate Number (Dec. 1) Amount Rate Number 2012 $2,355,000 4.250% 606037 AC3 2018 $3,170,000 5.250% 606037 AJ8 2013 2,455,000 5.250 606037 AD1 2019 3,335,000 5.250 606037 AK5 2014 2,585,000 5.250 606037 AE9 2020 3,510,000 5.250 606037 AL3 2015 2,720,000 5.250 606037 AF6 2021 3,695,000 5.250 606037 AM1 2016 2,865,000 5.250 606037 AG4 2022 3,890,000 5.250 606037 AN9 2017 3,015,000 5.250 606037 AH2

All of the Refunded Bonds will be called for redemption on December 1, 2011.

To effect the refunding, the Foundation will transfer $36,713,695.29 of the proceeds of the Series 2010A Bonds, to Commerce Bank, N.A., as escrow agent (the “Escrow Agent”), for deposit in the Escrow Fund established under an Escrow Trust Agreement dated as of February 15, 2010 (the “Escrow Trust Agreement”), between the Foundation and the Escrow Agent. Moneys deposited with the Escrow Agent will be used to purchase escrowed securities maturing in such amounts and at such times as shall be sufficient, together with the interest to accrue thereon, to pay the principal and interest on the Refunded Bonds through and including December 1, 2011, the redemption date.

A firm of independent certified public accountants, will provide a report to the effect that the principal of and interest on the escrowed securities will provide sufficient moneys, together with the other moneys held by the Escrow Agent, to make the required payments in accordance with the Foundation’s refunding plan as set forth above.

Sources and Uses of Funds

The following is a summary of the estimated sources of funds, consisting of the proceeds of the Series 2010A Bonds and the anticipated uses of such funds.

Sources of Funds: Par Amount of the Series 2010A Bonds $33,895,000.00 Net Original Issue Premium 3,344,954.90 Total Sources of Funds $37,239,954.90

Uses of Funds: Deposit to the Escrow Fund $36,713,695.29 Costs of Issuance(1) 526,259.61 Total Uses of Funds $37,239,954.90

______(1) Includes the Underwriters’ discount and other costs of issuance of the Series 2010A Bonds.

-6-

THE SERIES 2010A BONDS

General

The Series 2010A Bonds will be initially issued as fully registered Bonds in denominations of $5,000 or any integral multiple thereof. The Series 2010A Bonds will mature, subject to prior redemption, as shown on the inside cover page of this Official Statement. The Series 2010A Bonds will be dated as shown on the cover hereof.

The Series 2010A Bonds, when issued, will be registered in the name of Cede & Co., as nominee for DTC. Payment of the principal of, and interest on each Bond will be made directly to DTC or its nominee, Cede & Co., by the Trustee. See “BOOK-ENTRY-ONLY SYSTEM.”

The Series 2010A Bonds will bear interest at the rates shown on the inside cover page of this Official Statement. Interest on the Series 2010A Bonds will be paid to the registered owners each June 1 and December 1, commencing June 1, 2010. Interest on the Series 2010A Bonds will be calculated on the basis of a 360-day year of twelve 30-day months.

Payment of principal of, and interest on the Series 2010A Bonds will be made directly to DTC or its nominee, Cede & Co., by the Trustee. See “BOOK-ENTRY-ONLY SYSTEM.” If the Series 2010A Bonds are not in a book-entry-only system, payment of principal of, and interest on the Series 2010A Bonds will be made as described in the Indenture.

Redemption

The Series 2010A Bonds are subject to redemption, as described below:

Optional Redemption of Series 2010A Bonds. The Series 2010A Bonds maturing on or after December 1, 2021, are subject to redemption, at the option of the Board, which shall be exercised upon the written direction of the Foundation Representative, on December 1, 2020, or any Business Day thereafter, in whole or in part, in authorized denominations, at a redemption price equal to 100% of the principal amount of the Series 2010A Bonds to be redeemed, plus accrued interest thereon to the redemption date.

Extraordinary Optional Redemption. The Series 2010A Bonds are subject to redemption and payment prior to the stated maturity thereof, at the option of the Board, which shall be exercised upon written direction from the Foundation Representative, in whole or in part on any Business Day, at a redemption price equal to 100% of the principal amount thereof, plus accrued interest thereon to the redemption date, without premium, upon the occurrence of any of the following events:

(i) all or a substantial portion of the facilities financed or refinanced with the proceeds of the Series 2010A Bonds are damaged or destroyed by fire or other casualty, or title to, or the temporary use of, all or a substantial portion of such facilities are condemned or taken for any public or quasi- public use by any authority exercising the power of eminent domain or title thereto is found to be deficient, to such extent that in the determination of the Foundation (A) such facilities cannot be reasonably restored or replaced to the condition thereof preceding such event, or (B) the Foundation is thereby prevented from carrying on its normal operations of such facilities, or (C) the cost of restoration or replacement thereof would exceed the net proceeds of any casualty insurance, title insurance or condemnation awards with respect thereto; or

(ii) as a result of any changes in the Constitution of the State of Missouri or the Constitution of the United States of America or of legislative or administrative action (whether state or federal) or by final direction, judgment or order of any court or administrative body (whether state or federal) entered after the contest thereof by the Foundation in good faith, the Indenture or the Loan

-7-

Agreement become void or unenforceable or impossible of performance in accordance with the intent and purpose of the parties as expressed therein, or unreasonable burdens or excessive liabilities are imposed upon the Foundation with respect to such facilities or the operation thereof; or

(iii) the Foundation is required or ordered, by legislative, judicial or administrative action of the United States or of the State of Missouri, or any agency, department or subdivision thereof, to operate the facilities financed or refinanced with the proceeds of the Series 2010A Bonds in a manner inconsistent with the stated goals, purposes and policies of the Foundation, including without limitation its goals, purposes and policies with respect to its primary operations, and such legislative, judicial or administrative action is applicable to the Foundation because the Foundation is a party to the Loan Agreement.

Notice of Redemption. The Trustee will mail by first class mail, postage prepaid, to the registered owners of all Bonds to be redeemed, at the registered addresses appearing in the registration books kept for such purpose on the day preceding such mailing, notice of redemption at least 30 days prior to the redemption date for Series 2010A Bonds. Each notice of redemption will identify the Series 2010A Bonds or portions thereof to be redeemed and will state, among other things, the redemption price, the redemption date, the place or places where amounts due upon redemption are payable and that on the redemption date the redemption price will become due and payable on each such Bond or portion thereof called for redemption, and that interest thereon will cease to accrue from and after such date. The failure of an owner to receive notice by mailing or any defect in that notice regarding any Bond will not affect the validity of the proceedings for the redemption of the Bond.

In addition to the foregoing notice, further notice will be given by the Trustee to certain registered securities depositories and information services as provided in the Indenture, but no defect in such further notice nor any failure to give all or any portion thereof will in any manner defeat the effectiveness of a call for redemption if notice thereof is given as prescribed in the Indenture and summarized above in the preceding paragraph.

Selection of Bonds to Be Redeemed; Partial Redemption. If less than all Series 2010A Bonds are to be redeemed and paid prior to maturity pursuant to optional redemption or extraordinary optional redemption provisions, such Bonds shall be redeemed from the maturity or maturities selected by the Foundation. If less than all Series 2010A Bonds of any maturity are to be redeemed, the particular Bonds to be redeemed shall be selected by the Trustee from the Series 2010A Bonds of such maturity which have not previously been called for redemption, by such method as the Trustee deems fair and appropriate and which may provide for the selection for redemption of portions equal to minimum authorized denominations of the principal of Series 2010A Bonds of a denomination larger than such minimum authorized denominations.

Any Series 2010A Bond which is to be redeemed only in part must be surrendered at the place of payment therefor (with, if the Board or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Board and the Trustee duly executed by, the owner thereof or his attorney or legal representative duly authorized in writing) and the Board will execute and the Trustee will authenticate and deliver to the owner of such Bond, without service charge, a new Bond or Bonds of the same series and maturity of any authorized denomination or denominations as requested by such owner in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Series 2010A Bond so surrendered. If the owner of any such Bond fails to present such Bond to the Trustee for payment and exchange as aforesaid, said Bond shall nevertheless, become due and payable on the redemption date to the extent of the unit or units of principal amount in minimum authorized denominations called for redemption (and to that extent only).

In lieu of surrender under the preceding paragraph, payment of the redemption price of a portion of any Series 2010A Bond may be made directly to the registered owner thereof without surrender thereof, if there shall have been filed with the Trustee a written agreement of such owner and, if such owner is a nominee, the Person for whom such owner is a nominee, that payment shall be so made and that such owner will not sell, transfer or otherwise dispose of such Bond unless prior to delivery thereof such owner shall present such Bond to the

-8-

Trustee for notation thereon of the portion of the principal thereof redeemed or shall surrender such Bond in exchange for a new Bond or Bonds for the unredeemed balance of the principal of the surrendered Bond.

Transfer and Exchange

The Series 2010A Bonds may be transferred upon surrender of the Series 2010A Bonds at the principal corporate trust office of the Trustee, duly endorsed for transfer or accompanied by an assignment duly executed by the registered owner or such owner’s duly authorized attorney. The Series 2010A Bonds may also be surrendered at the principal corporate trust office of the Trustee and exchanged for other Bonds of any authorized denominations having the same series, form and terms as the Series 2010A Bonds being exchanged. A Series 2010A Bond may be exchanged without cost to the owner thereof, except for any tax or excise required to be paid with respect to the exchange; provided that there shall be no cost or charge to an owner for transfer or exchange caused by partial redemption of a single Bond and the authentication of a new Bond for the unredeemed portion. The Trustee will not be required to transfer or exchange any Bond previously selected for redemption.

The person in whose name any Series 2010A Bond is registered will be deemed and regarded as the absolute owner thereof for all purposes (subject to the provisions of the Indenture relating to the Record Date), and payment of principal of or interest thereon will be made only to or upon the order of the registered owner thereof or his or her legal representative. All such payments will be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.

ADDITIONAL INDEBTEDNESS

Additional Bonds may be issued under and equally and ratably secured by the Indenture on a parity with the Series 2010A Bonds and any other Additional Bonds at any time and from time to time outstanding, upon compliance with the conditions set forth in the Indenture and the Loan Agreement, for any purpose authorized under the Act. Before any Additional Bonds are issued under the Indenture, the Board must adopt a resolution (i) authorizing the issuance of such Additional Bonds, fixing the principal amount thereof and describing the purpose or purposes for which such Additional Bonds are being issued, (ii) authorizing the Board to enter into a Supplemental Indenture for the purpose of issuing such Additional Bonds and establishing the terms and provisions of such series of bonds and the form of the bonds of such series, (iii) authorizing the Board to enter into a Supplemental Loan Agreement with the Foundation to provide for additional Loan Payments at least sufficient to pay the principal of, and interest on the Series 2010A Bonds and Additional Bonds then to be Outstanding (including the Additional Bonds to be issued) as the same become due, and to extend the term of the Loan Agreement if the maturity of any of the Additional Bonds would otherwise occur after the expiration of the term of the Loan Agreement, and (iv) providing for such other matters as are appropriate because of the issuance of the Additional Bonds, which matters, in the judgment of the Board, are not prejudicial to the Board or the owners of the Series 2010A Bonds or any Additional Bonds then outstanding.

In addition, pursuant to the terms of the Loan Agreement, the Foundation may issue or incur Additional Obligations. See “SUMMARY OF THE LOAN AGREEMENT” in Appendix C to this Official Statement.

BOOK-ENTRY-ONLY SYSTEM

The information provided immediately below concerning DTC and the Book-Entry-Only System, as it currently exists, 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 Underwriters, the Board or the Foundation.

General. When the Bonds are issued, ownership interests will be available to purchasers only through a book-entry only system (the “Book-Entry Only System”) maintained by The Depository Trust Company (“DTC”), New York, New York. DTC will act as securities depository for the Bonds. Initially, the Bonds will

-9-

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 Bond certificate for each maturity of the Bonds will be issued, in the aggregate principal amount of such maturity, and will be deposited with DTC or the Trustee as its “FAST” agent. The following discussion will not apply to any Bonds issued in certificate form due to the discontinuance of the DTC Book-Entry Only System, as described below.

DTC and its Participants. 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 1934, as amended. 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 (the “Indirect Participants”). DTC has Standard & Poor’s highest rating: AAA. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com and www.dtc.org.

Purchase of Ownership Interests. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each 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 Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interest in the Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

So long as Cede & Co., as nominee of DTC, is the registered owner of any of the Bonds, the Beneficial Owners of such Bonds will not receive or have the right to receive physical delivery of the Bonds, and references herein to the registered owners of such Bonds shall mean Cede & Co. and shall not mean the Beneficial Owners of such Bonds.

Transfers. To facilitate subsequent transfers, all 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 Bonds with DTC and their registration in the name of Cede & Co. or such other nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds. DTC’s records reflect only the identity of the Direct Participants to whose accounts such 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.

-10-

Notices. 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. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

Redemption notices will be sent to DTC. If less than all of the Bonds 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.

Voting. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Board 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 Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

Payments of Principal and Interest. So long as any Bond is registered in the name of DTC’s nominee, all payments of principal of, premium, if any, and interest on such Bond 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 Board or the Trustee, on the 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 Trustee or the Board, subject to any statutory and regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Board or the Trustee, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payments to the Beneficial Owners is the responsibility of Direct and Indirect Participants.

Discontinuation of Book-Entry Only System. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the Board or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, bond certificates are required to be printed and delivered as described in the Indenture.

The use of the system of book-entry transfers through DTC (or a successor securities depository) may be discontinued as described in the Indenture. In that event, bond certificates will be printed and delivered as described in the Indenture.

None of the Underwriters, the Trustee, the Foundation nor the Board will have any responsibility or obligations to any Direct Participants or Indirect Participants or the persons for whom they act with respect to (i) the accuracy of any records maintained by DTC or any such Direct Participant or Indirect Participant; (ii) the payment by any Participant of any amount due to any Beneficial Owner in respect of the principal of, premium, if any, or interest on the Bonds; (iii) the delivery by any such Direct Participant or Indirect Participant of any notice to any Beneficial Owner that is required or permitted under the terms of the Indenture to be given to owners of the Bonds; (iv) the selection of the Beneficial Owners to receive payment in the event of any partial redemption of the Bonds; or (v) any consent given or other action taken by DTC as Bondholder.

-11-

The information above concerning DTC and DTC’s book-entry system has been obtained from sources that the Board, the Foundation, the Trustee or the Underwriters believe to be reliable, but is not guaranteed as to accuracy or completeness by and is not to be construed as a representation by the Board, the Foundation, the Trustee or the Underwriters. The Board, the Foundation, the Trustee or the Underwriters make no assurances that DTC, Direct Participants, Indirect Participants or other nominees of the Beneficial Owners will act in accordance with the procedures described above or in a timely manner.

SECURITY FOR THE SERIES 2010A BONDS

Limited Obligations

The Series 2010A Bonds and the interest thereon shall be special, limited obligations of the Board payable (except to the extent paid out of Series 2010A Bond proceeds or the income from the temporary investment thereof and under certain circumstances from insurance proceeds and condemnation awards) solely out of the Loan Payments and other payments derived by the Board under the Loan Agreement (except for fees and expenses payable to the Board and the Board’s right to indemnification as set forth in the Loan Agreement and otherwise as expressly set forth therein) and are secured by a transfer, pledge and assignment of and a grant of a security interest in the Trust Estate to the Trustee and in favor of the owners of the Series 2010A Bonds, as provided in the Indenture. The Series 2010A Bonds and interest thereon will not be deemed to constitute a debt or liability of the State of Missouri or of any political subdivision thereof within the meaning of any state constitutional provision or statutory limitation and will not constitute a pledge of the full faith and credit of the State of Missouri or of any political subdivision thereof, but will be payable solely from the funds provided for in the Loan Agreement and in the Indenture. The issuance of the Series 2010A Bonds will not, directly, indirectly or contingently, obligate the State of Missouri or any political subdivision thereof to levy any form of taxation therefor or to make any appropriation for their payment. The State of Missouri will not in any event be liable for the payment of the principal of, or interest on the Series 2010A Bonds or for the performance of any pledge, mortgage, obligation or agreement of any kind whatsoever which may be undertaken by the Board. No breach by the Board of any such pledge, mortgage, obligation or agreement may impose any liability, pecuniary or otherwise, upon the State of Missouri or any charge upon its general credit or against its taxing power. The Board has no taxing power.

Pledge and Assignment under the Indenture

Under the Indenture, the Board will pledge and assign to the Trustee for the benefit of the bondowners, all of its rights under the Loan Agreement, including such payments, revenues and receipts thereunder as security for the payment of the Series 2010A Bonds and the interest thereon (but excluding the Board’s rights to payment of its fees and expenses and the indemnification as set forth in the Loan Agreement and excluding any payment made by the Trustee or the Foundation to meet the rebate requirements of Section 148(f) of the Internal Revenue Code of 1986, as amended).

The Loan Agreement

The Loan Agreement requires that the Foundation make Loan Payments to the Trustee for deposit into the Debt Service Fund in amounts sufficient to pay the principal of, and interest on the Series 2010A Bonds when due and to make certain other payments. The Foundation will receive credits against amounts due as Loan Payments for certain amounts available from other sources including certain earnings on funds held by the Trustee. The Foundation’s obligations under the Loan Agreement are general obligations of the Foundation, and the full faith and credit of the Foundation are pledged to the payment of all sums due and payable by the Foundation under the Loan Agreement.

The Loan Payments and other amounts payable to the Board under the Loan Agreement (except for Board fees and expenses and rights to indemnification) are pledged under the Indenture for the payment of

-12-

principal, redemption and interest on the Series 2010A Bonds, and the rights of the Board in and to such payments (except for the Board’s right to fees, expenses and advances and rights to indemnification) are assigned to the Trustee, to secure payments on the Series 2010A Bonds. The Foundation agrees to make Loan Payments under the Loan Agreement directly to the Trustee. The Loan Payments and other amounts payable by the Foundation under the Loan Agreement are absolute and unconditional, and the Foundation is not entitled to any abatement or diminution thereof.

Enforceability

The remedies available upon a default under the Indenture or the Loan Agreement will, in many respects, be dependent upon judicial actions, which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including the United States Bankruptcy Code and state laws concerning the use of assets of charitable organizations, the remedies specified in the Indenture and the Loan Agreement may not be readily available or may be limited. The various legal opinions to be delivered in connection with the issuance of the Series 2010A Bonds will be expressly subject to the qualification that the enforceability of the Indenture, the Loan Agreement and other legal documents is limited by bankruptcy, reorganization, insolvency, moratorium and other similar laws affecting the rights of creditors and by the exercise of judicial discretion in appropriate cases.

BONDOWNERS’ RISKS

The following is a discussion of certain risks that could affect payments to be made by the Foundation with respect to the Series 2010A Bonds. Such discussion is not, and is not intended to be, exhaustive and should be read in conjunction with all other parts of this Official Statement and should not be considered as a complete description of all risks that could affect such payments. Prospective purchasers of the Series 2010A Bonds should analyze carefully the information contained in this Official Statement, including the Appendices hereto, and additional information in the form of the complete documents summarized herein and in Appendix C, copies of which are available as described herein.

General

The Series 2010A Bonds are special, limited obligations of the Board, payable solely from payments to be made by the Foundation under the Loan Agreement and certain other funds held by the Trustee under the Indenture. No representation or assurance can be given that the Foundation will realize revenues in amounts sufficient to make such payments under the Loan Agreement with respect to the Series 2010A Bonds and to pay other expenses and obligations of the Foundation. The realization of future revenues is dependent upon, among other things, the capabilities of the management of the Foundation and future changes in economic and other conditions that are unpredictable and cannot be determined at this time.

No Pledge of the Foundation’s Revenues or Facilities

None of the Foundation’s revenues or facilities will be pledged or mortgaged by the Foundation to the Trustee to secure the obligations of the Foundation under the Loan Agreement. The obligations of the Foundation under the Loan Agreement are general unsecured obligations of the Foundation. See “SECURITY AND SOURCES OF PAYMENT FOR THE SERIES 2010A BONDS.”

Tax-Exempt Status of the Foundation and the Series 2010A Bonds

The Internal Revenue Service (the “IRS”) has determined that the Foundation is an organization described in Section 501(c)(3) of the Code, and therefore, is exempt from federal income taxation. As a charitable organization, the Foundation is subject to a number of requirements affecting its operations.

-13-

The failure of the Foundation to remain qualified as a tax-exempt organization could affect the amount of funds available to pay debt service on the Series 2010A Bonds. Such failure, as well as failure to comply with certain legal requirements, could cause an event of default under the Indenture and the Loan Agreement resulting in the inclusion of interest on the Series 2010A Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2010A Bonds. In such event, the maturity of the Series 2010A Bonds may be accelerated. The Indenture does not provide for the payment of any additional interest or penalty in the event of the taxability of the interest on the Series 2010A Bonds. The possible modification or repeal of certain existing federal income tax laws or property tax laws or other loss by the Foundation of the present advantage of such laws, or any legislation imposing additional conditions on tax-exempt organizations, could adversely impact the Foundation’s financial position.

Gifts, Grants and Bequests

From May 1, 1999 through April 30, 2009, the Foundation generated more than $326 million of contributions and pledges. For the fiscal year ended April 30, 2009, the Foundation recognized $20 million in contributions. As of April 30, 2009, there was approximately $14 million of uncollected pledges, net of discounts and allowances, for various fundraising initiatives, excluding the $60 million contribution from the Hall Family Foundation described in Appendix A under the caption “RESULTS OF OPERATIONS - Management’s Discussion and Analysis of Results of Operations” and in Note 4 to the audited financial statements attached in Appendix B. Purchasers of the Series 2010A Bonds should not assume that the Foundation will be able to achieve comparable fundraising successes in the future. There can be no assurance that the uncollected pledges will be received by the Foundation at the times or in the amounts anticipated. See the information set forth under the caption “CONTRIBUTIONS” in Appendix A.

Endowment

As of April 30, 2009, the Foundation had approximately $280 million in short-term and long-term investments. See “RESULTS OF OPERATIONS — Investments and Endowment” in Appendix A for certain information concerning the investments of the Foundation. The strategic asset allocation of the long- term investment pool is 75% (+/- 5%) equities and 25% (+/- 5%) fixed income. The Board of Trustees has adopted an endowment spending policy, whereby a portion of total return on long-term investments may be allocated to support operations. The allocation is based upon a modification of the Yale Spending Formula. For 2008 and 2009, the spending rate was 5.0%. The Foundation historically derives more than half of its operating budget from endowment spending.

Because the Foundation’s long-term investment pool is approximately 75% invested in equity securities, the return on the Foundation’s investments has fluctuated significantly in recent years due to fluctuations in the equity markets generally. There can be no assurance that the endowment will, in the future rise in value at a rate equal to or greater than the spending rate.

Land Use Restrictions

The Museum is located on a 20-acre parcel of land in the heart of Kansas City, Missouri. All Museum facilities, including the Project, are located on or will be located on this land, which is owned by the Foundation, but subject to an easement for the Atkins Museum and to perpetual restrictions as to use under the terms of the instruments conveying ownership of the land to the Foundation and its predecessor in title. The land and Museum buildings, including the Project, may be used only for museum purposes and the fine arts, and will not be pledged as security for the Series 2010A Bonds. Accordingly, as a practical matter, it would be difficult for creditors of the Foundation to realize the value of this property under normal circumstances.

-14-

Certain Matters Relating to Enforceability

Marketability

The Underwriters may engage in secondary market transactions with respect to the Series 2010A Bonds but they are under no obligation to do so. There is no assurance that a secondary market for the Series 2010A Bonds will develop.

TAX MATTERS

Opinion of Bond Counsel

Federal Tax Exemption. In the opinion of Gilmore & Bell, P.C., Bond Counsel, under existing law, the interest on the Series 2010A Bonds (including any original issue discount properly allocable to an owner of Series 2010A Bonds) is excludable from gross income for federal income tax purposes. Interest on the Series 2010A Bonds is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinions set forth in this paragraph are subject to the condition that the Board and the Foundation comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Series 2010A Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The Board and the Foundation have covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Series 2010A Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Series 2010A Bonds. The Series 2010A Bonds have not been designated as “qualified tax-exempt obligations” for purposes of Section 265(b) of the Code.

Missouri Tax Exemption. In the opinion of Bond Counsel, the interest on the Series 2010A Bonds is exempt from income taxation by the State of Missouri.

Original Issue Discount. In the opinion of Bond Counsel, under existing law, the original issue discount in the selling price of each Series 2010A Bond purchased in the original offering at a price less than the principal amount thereof, to the extent properly allocable to each owner of such Series 2010A Bond, is excludable from gross income for federal income tax purposes with respect to such owner. The original issue discount is the excess of the stated redemption price at maturity of such Series 2010A Bond over its initial offering price to the public (excluding underwriters and intermediaries) at which price a substantial amount of the Series 2010A Bonds were sold. Under Section 1288 of the Code, original issue discount on tax-exempt bonds accrues on a compound basis. The amount of original issue discount that accrues to an owner during any accrual period generally equals (i) the issue price of such Series 2010A Bond plus the amount of original issue discount accrued in all prior accrual periods, multiplied by (ii) the yield to maturity on such Series 2010A Bond (determined on the basis of compounding at the close of each accrual period and properly adjusted for the length of the accrual period), minus (iii) any interest payable on such Series 2010A Bond during such

-15-

accrual period. The amount of original issue discount so accrued in a particular accrual period will be considered to be received ratably on each day of the accrual period, will be excludable from gross income for federal income tax purposes, and will increase the owner’s tax basis in such Series 2010A Bond. Owners of any Series 2010A Bonds purchased at an original issue discount should consult with their tax advisors regarding the determination and treatment of original issue discount for federal income tax purposes and the state and local tax consequences of owning such Series 2010A Bonds.

Original Issue Premium. An amount equal to the excess of the purchase price of a Series 2010A Bond over its stated principal amount at maturity constitutes premium on such Series 2010A Bond. An owner of a Series 2010A Bond must amortize any premium over such Series 2010A Bond’s term using constant yield principles, based on the Series 2010A Bond’s yield to maturity. As premium is amortized, the owner’s basis in such Series 2010A Bond and the amount of tax-exempt interest received will be reduced by the amount of amortizable premium properly allocable to such owner. This will result in an increase in the gain (or decrease in the loss) to be recognized for federal income tax purposes on sale or disposition of such Series 2010A Bond prior to its maturity. Even though the owner’s basis is reduced, no federal income tax deduction is allowed. Owners of any Series 2010A Bonds purchased at a premium, whether at the time of initial issuance or subsequent thereto, should consult their individual tax advisors with respect to the determination and treatment of premium for federal income tax purposes and with respect to state and local tax consequences of owning such Series 2010A Bonds.

No Other Opinions. Bond Counsel expresses no opinion regarding other federal, state or local tax consequences arising with respect to the Series 2010A Bonds.

Other Tax Consequences

Prospective purchasers of the Series 2010A Bonds should be aware that ownership of the Series 2010A Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits, certain S corporations with “excess net passive income,” foreign corporations subject to the branch profits tax, life insurance companies, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry or have paid or incurred certain expenses allocable to the Series 2010A Bonds. Bond Counsel expresses no opinion regarding these tax consequences. Purchasers of Series 2010A Bonds should consult their tax advisors as to the applicability of these tax consequences and other federal income tax consequences of the purchase, ownership and disposition of the Series 2010A Bonds, including the possible application of state, local, foreign and other tax laws.

INDEPENDENT AUDITORS

The financial statements of the Foundation, as of April 30, 2009 and for the year then ended, included in Appendix B to this Official Statement, have been audited by Ernst & Young LLP, independent auditors, as stated in their report appearing herein.

CONTINUING DISCLOSURE

The Foundation and the Trustee will enter into a Continuing Disclosure Agreement for the benefit of the owners and Beneficial Owners of the Series 2010A Bonds and in order to assist the Underwriters in complying with Rule 15c2-12 of the Securities and Exchange Commission (the “Rule”). The Foundation is the only “obligated person” with responsibility for continuing disclosure, and the Board has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under the Continuing

-16-

Disclosure Agreement, and has no liability to any person, including any owner or Beneficial Owner of the Series 2010A Bonds, with respect to the Rule.

Pursuant to the Continuing Disclosure Agreement, the Foundation will, or will cause the Dissemination Agent (initially the Trustee) to, not later than 180 days after the end of the Foundation’s fiscal year, commencing with the fiscal year ending April 30, 2010, provide to the MSRB, through EMMA, the following financial information and operating data (the “Annual Report”):

(1) The audited financial statements of the Foundation for the prior fiscal year, prepared in accordance with generally accepted accounting principles. If audited financial statements are not available by the time the Annual Report is required to be filed, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement relating to the Series 2010A Bonds, and the audited financial statements shall be filed in the same manner as the Annual Report promptly after they become available.

(2) Updates as of the end of the fiscal year of the following tables contained in Appendix A to this Official Statement in substantially the same format contained in this Official Statement:

(a) Annual Museum Attendance; (b) Annual Museum Membership; (c) Annual Fund Raising; (d) SUMMARY FINANCIAL INFORMATION THE NELSON GALLERY FOUNDATION; and (e) Foundation’s Investments at Market (which may be shown on a calendar year or a fiscal year basis).

Pursuant to the Continuing Disclosure Agreement, the Foundation also must give, or cause the Dissemination Agent to give, notice of the occurrence of any of the following events with respect to the Series 2010A Bonds, if material (“Material Events”):

(1) principal and interest payment delinquencies;

(2) non-payment related defaults;

(3) modifications to rights of bondowners;

(4) optional, contingent or unscheduled bond calls;

(5) defeasances;

(6) rating changes;

(7) adverse tax opinions or events affecting the tax-exempt status of the Series 2010A Bonds;

(8) unscheduled draws on debt service reserves reflecting financial difficulties;

(9) unscheduled draws on credit enhancements reflecting financial difficulties;

(10) substitution of credit or liquidity providers, or their failure to perform; or

(11) release, substitution or sale of property securing repayment of the Series 2010A Bonds.

-17-

If the Dissemination Agent has been instructed by the Foundation to report the occurrence of a Material Event, the Dissemination Agent must promptly file a notice of such occurrence with MSRB, with a copy to the Foundation.

Pursuant to the Continuing Disclosure Agreement, the Foundation also shall provide, or cause the Dissemination Agent to provide Quarterly Reports to the MSRB.

The Foundation may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Continuing Disclosure Agreement, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent shall not be responsible in any manner for the content of any notice or report prepared by the Foundation pursuant to the Continuing Disclosure Agreement. The initial Dissemination Agent will be the Trustee.

Notwithstanding any other provision of the Continuing Disclosure Agreement, the Foundation and the Dissemination Agent may amend the Continuing Disclosure Agreement and any provision of the Continuing Disclosure Agreement may be waived, provided Bond Counsel or other counsel experienced in federal securities law matters provides the Dissemination Agent with its opinion that the undertaking of the Foundation, as so amended or after giving effect to such waiver, is in compliance with the Rule and all current amendments thereto and interpretations thereof that are applicable to the Continuing Disclosure Agreement.

If the Foundation or the Dissemination Agent fails to comply with any provision of the Continuing Disclosure Agreement, the Trustee may (and, at the request of the Underwriters or the owners of at least 25% aggregate principal amount of Outstanding Bonds, shall), or any owner or Beneficial Owner of the Series 2010A Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Foundation or the Dissemination Agent, as the case may be, to comply with its obligations under the Continuing Disclosure Agreement. A default under the Continuing Disclosure Agreement will not be an event of default under the Indenture or the Loan Agreement, and the sole remedy under the Continuing Disclosure Agreement if the Foundation or the Dissemination Agent fails to comply with the Continuing Disclosure Agreement will be an action to compel performance.

BOND RATINGS

Fitch, Inc. and Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies, Inc. have assigned the Series 2010A Bonds the underlying long-term ratings shown on the cover of this Official Statement, which reflects such rating agencies evaluation of the investment quality of the Series 2010A Bonds.

Such ratings may be obtained from such organizations and reflect only the views of such organizations at the time the ratings were given. The Board, the Underwriters and the Foundation make no representation as to the appropriateness of such ratings. An explanation of the significance of such ratings also may be obtained only from the issuing organization. There is no assurance that the ratings currently assigned to the Series 2010A Bonds will continue for any given period of time or will not be revised downward or withdrawn entirely if, in the judgment of the rating agency, circumstances so warrant. A downward revision or withdrawal of such ratings may have an adverse effect on the market price of the Series 2010A Bonds.

LEGAL MATTERS

Legal matters incident to the authorization and issuance of the Series 2010A Bonds are subject to the approving opinion of Gilmore & Bell, P.C., Kansas City, Missouri, Bond Counsel. Certain legal matters related to this Official Statement will be passed upon by Gilmore & Bell, P.C., Kansas City, Missouri. Certain legal matters will be passed upon for the Board by Gilmore & Bell, P.C., Kansas City, Missouri; and for the Foundation by Husch Blackwell Sanders, LLP, Kansas City, Missouri.

-18-

The various legal opinions to be delivered concurrently with the delivery of the Series 2010A Bonds express the professional judgment of the attorneys rendering the opinions as to the legal issues explicitly addressed therein. By rendering a legal opinion, the opinion giver does not become an insurer or guarantor of that expression of professional judgment, of the transaction opined upon, or of the future performance of parties to such transaction, nor does the rendering of an opinion guarantee the outcome of any legal dispute that may arise out of the transaction.

LITIGATION

The Board

There is not now pending against the Board any litigation restraining or enjoining the issuance or delivery of the Series 2010A Bonds or questioning or affecting the validity of the Series 2010A Bonds or the proceedings and authority under which they are to be issued.

The Foundation

The Foundation periodically experiences litigation against it related to the normal operations of the Museum and the business of the Foundation. There presently is no litigation, proceeding or investigation pending or, to the knowledge of the Foundation, threatened against the Foundation, other than claims that are not expected to materially and adversely affect the financial condition or operations of the Foundation. In addition, no litigation, proceedings or investigations are pending or, to the knowledge of the Foundation, threatened against the Foundation seeking to restrain, enjoin or in any way limit the approval or issuance and delivery of the Indenture, the Series 2010A Bonds, the Loan Agreement or any other transaction documents, or that in any manner challenge or adversely affect the corporate existence or powers of the Foundation to enter into and carry out the transactions described in this Official Statement.

UNDERWRITING

The Underwriters have agreed, subject to certain conditions, to purchase the Series 2010A Bonds from the Board at an aggregate purchase price of $37,039,974.40 (which gives effect to an Underwriters’ discount of $199,980.50 plus original issue premium, net of original issue discount, of $3,344,954.90), plus accrued interest to the date of payment and delivery. The Bond Purchase Agreement among the Underwriters, the Foundation and the Board provides that the Underwriters will purchase all of the Series 2010A Bonds, if any are purchased, and requires the Foundation to indemnify the Underwriters and the Board against losses, claims, damages and liabilities to third parties arising out of any materially incorrect or incomplete statements or information contained in this Official Statement pertaining to the Foundation. The initial public offering price set forth on page (i) of this Official Statement may be changed by the Underwriters and the Underwriters may offer and sell the Series 2010A Bonds to certain dealers (including dealers depositing Series 2010A Bonds into investment trusts) and others at prices lower than the offering price set forth on the inside cover page of this Official Statement.

J.P. Morgan Securities Inc., an underwriter of the Series 2010A Bonds, has entered into an agreement (the “Distribution Agreement”) with UBS Financial Services Inc. for the retail distribution of certain municipal securities offerings at the original issue prices. Pursuant to the Distribution Agreement if applicable for this transaction, J.P. Morgan Securities Inc. will share a portion of its underwriting compensation with respect to the Series 2010A Bonds with UBS Financial Services Inc.

-19-

MISCELLANEOUS

The references herein to the Act, the Indenture, the Loan Agreement and the Continuing Disclosure Agreement are brief outlines of certain provisions thereof. Such outlines do not purport to be complete; for full and complete statements of such provisions, reference is made to the Act, the Indenture, the Loan Agreement and the Continuing Disclosure Agreement.

The agreement of the Board with the owners of the Series 2010A Bonds is fully set forth in the Indenture, and neither any advertisement of the Series 2010A Bonds nor this Official Statement is to be construed as constituting an agreement with the purchasers of the Series 2010A Bonds. Statements made in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended merely as such and not as representations of fact. Copies of the documents mentioned under this heading are on file at the offices of the Underwriters and following delivery of the Series 2010A Bonds will be on file at the office of the Trustee.

The attached Appendices are integral parts of this Official Statement and should be read in their entirety together with all foregoing statements herein.

The Foundation has supplied and reviewed the information contained herein except for the information relating to the Board and has approved all such information for use within this Official Statement.

The execution and delivery of this Official Statement has been duly authorized by the Foundation.

THE NELSON GALLERY FOUNDATION

By: ____/s/ Karen Christiansen ______Chief Operating Officer

-20-

(THIS PAGE LEFT BLANK INTENTIONALLY)

APPENDIX A

THE NELSON GALLERY FOUNDATION

ORGANIZATION AND OPERATIONS

TABLE OF CONTENTS

Page

HISTORY AND BACKGROUND ...... A-1 GOVERNANCE AND ADMINISTRATION ...... A-2 Board of Trustees ...... A-2 Committees ...... A-4 Administration ...... A-5 FACILITIES ...... A-7 The Museum ...... A-7 The Bloch Building...... A-8 Renovations 2002-2007 ...... A-11 Location ...... A-11 Gallery Renovation Projects ...... A-12 COLLECTIONS AND EXHIBITIONS...... A-12 General...... A-12 Exhibitions and Programs ...... A-14 Exhibitions Planned for 2010 and 2011...... A-14 Exhibitions 2008-2009...... A-15 Exhibitions 2004-2007...... A-17 OPERATIONS...... A-18 Mission Statement...... A-18 Museum Attendance ...... A-18 Museum Membership ...... A-19 The Spencer Art Reference Library ...... A-20 Education and Public Programs ...... A-20 The Strategic Vision and the Strategic Plan...... A-21 Employees...... A-21 Insurance ...... A-21 Litigation...... A-22 CONTRIBUTIONS ...... A-22 General...... A-22 Annual Fundraising and Support ...... A-22 RESULTS OF OPERATIONS ...... A-23 Summary Financial Information ...... A-23 Investments and Endowment ...... A-25 Management’s Discussion and Analysis of Results of Operations ...... A-27 Increase in Operating Expenses Due to Completion of the Bloch Building and Museum Renovations..... A-28 Outstanding Debt ...... A-28 THE WILLIAM ROCKHILL NELSON TRUST ...... A-29

* * *

THE NELSON GALLERY FOUNDATION

ORGANIZATION AND OPERATIONS

______

HISTORY AND BACKGROUND

The Nelson Gallery Foundation (the “Foundation”) is a charitable trust created in 1954 by the trustees of The William Rockhill Nelson Trust (the “Nelson Trust” or the “Trust”). The Nelson Trust was established by the Last Will and Testament of William Rockhill Nelson, the owner of The Kansas City Star newspaper, who died in 1914. Both the Foundation and the Nelson Trust are tax-exempt charitable organizations under Section 501(c)(3) of the Internal Revenue Code of 1986.

The Nelson-Atkins Museum of Art (the “Museum”) is the commonly used name for the William Rockhill Nelson Gallery of Art (the “Nelson Gallery”) and the Atkins Museum of Fine Arts (the “Atkins Museum”). The Nelson Gallery and the Atkins Museum were erected in 1933 as one building without any line of demarcation between the two structures. The Foundation owns the Nelson Gallery and it owns the 22-acre site on which the Nelson Gallery and Atkins Museum are located, subject only to an easement for the Atkins Museum. With the consent and cooperation of the Trustees of the Nelson Trust and the Trustees of the Mary Atkins Trust, the Foundation has continuously and exclusively operated and maintained the Museum as one facility and paid all costs and expenses associated therewith.

The Nelson Trust was created for the purpose of acquiring works of art to be exhibited for the delectation and enjoyment of the public in buildings provided for that purpose. The Nelson Trust is governed by three University Trustees, as described below. In 1954, the University Trustees created the Nelson Gallery Foundation pursuant to a Declaration of Trust to acquire works of fine art for exhibition to the public and to own and operate the Museum and for related purposes and uses. The Foundation is the borrower of the proceeds of the Series 2010A Bonds and is directly obligated to make the payments under the Loan Agreement to pay the principal of and interest on the Series 2010A Bonds. The Nelson Trust is not obligated, directly or indirectly, to make any payments with respect to the Series 2010A Bonds.

The Museum opened to the public in December 1933, at which time the Museum owned 200 paintings and 3,800 objects. Today, the Museum’s holdings include nearly 35,000 works of world art: African, Oceanic, Native-American, Ancient, Western European, American, Asian and the Kansas City Sculpture Park. The Museum’s commitment to the collection, preservation, exhibition, and interpretation of works of art has made it a vital force in the cultural and educational fabric of the region served by the Museum. The Museum is ranked as one of the leading art museums in the United States, and the Museum’s collection of Chinese art is considered one of the finest in the world.

The Museum’s initial collections resulted from the generosity of William Rockhill Nelson, whose will created the Nelson Trust. The income from the Nelson Trust was to be used to acquire art, and the economic environment of the early 1930s created a buyer’s market, which greatly benefited the Museum. The Museum’s world-class Asian collection began with the buying activities of Laurence Sickman, whom the Museum engaged as its buying representative in China in the 1930s. Sickman became Curator of Oriental Art in 1936 and Director in 1952. He continued to collect for the Museum until his death in 1988.

A-1

GOVERNANCE AND ADMINISTRATION

Board of Trustees

The Museum is governed by the Foundation Trustees comprised of the Museum Trustees from The Nelson Gallery Foundation and the University Trustees from the Nelson Trust. The Nelson Gallery Foundation was created in 1954 by the Declaration of Trust. The last will and testament of William Rockhill Nelson established the University Trustees who are appointed by the presidents of the University of Kansas, the University of Missouri, and the University of Oklahoma. The University Trustees serve staggered, six-year terms and may not serve more than two consecutive terms. One University Trustee position is currently vacant. The Foundation Trustees consist of not more than twenty-one Trustees and comprise the three University Trustees and up to eighteen Museum Trustees. The Museum Trustees serve staggered three-year terms and may not serve successive terms without a minimum one year break in service.

The Trustees vote as a single class, and action may be taken by the Board of Trustees by a simple majority of Trustees. The Board of Trustees meets eight times each year. The Museum Director/CEO and Chief Operating Officer attend all Board and Executive Committee meetings.

The members of the Board of Trustees as of October 31, 2009 were as follows:

Years on Name Board Committee Assignments Occupation

Mary Atterbury 4 Committee on Collections Community Leader Education

G. Kenneth Baum 15 Development Retired Chairman/Chief Executive Finance and Audit Officer, George K. Baum & Company.

Robert Bernstein 5 Development Chairman and Chief Executive Officer Bernstein-Rein Advertising

Thornton Cooke II 18 Development Retired Chairman First American Insurance Company

Paul DeBruce 5 Development Chief Executive Officer, Executive DeBruce Grain

Ann Dickinson 5 Committee on Collections Chairwoman, Dickinson Financial Corp.

Laura Fields 21 Committee on Collections Community Leader

David M. Fowler 1 Finance and Audit Office Managing Partner, KPMG LLP

J. Peter Gattermeir 2 Development Partner, Kansas City Capital Associates Education

A-2

Years on Name Board Committee Assignments Occupation

Richard C. Green, Jr. 10 Building and Grounds Chief Executive Officer/Chairman, Exhibitions The Calvin Group, LLC Executive

Donald J. Hall 29 Building and Grounds Chairman of the Board, Committee on Collections Hallmark Cards, Inc. Executive Planned Giving

Laurence R. Jones 4 Finance and Audit President, Investment Interstate Production Co.

Sandra Lawrence 3 Finance and Audit Vice-President and Co-Chief Operating Officer, Children’s Mercy Hospital

Alan R. Marsh 10 Development Community Leader Investment

Harry C. McCray, Jr. 15 Building and Grounds Chairman, Daniels-McCray Lumber Co. Executive Development Chairman, Board of Trustees

Robert D. Regnier 3 Development President, Bank of Blue Valley Planned Giving

Sarah F. Rowland 10 Committee on Collections Community Leader Executive Exhibitions

Louis W. Smith 9 Executive Retired President/Chief Executive Officer, Finance and Audit Ewing M. Kauffman Foundation Investment

Kent Sunderland 1 Chair, Building and Grounds Vice Chairman, Ash Grove Cement Company

Adelaide Ward 14 Committee on Collections Community Leader Exhibitions

Henry W. Bloch 19 Committee on Collections Honorary Chairman, Honorary Trustee Exhibitions H&R Block, Inc. Building and Grounds

A-3

Committees

The Board of Trustees has the following permanent committees, which meet regularly to handle assigned responsibilities and make recommendations to the Board. The committee assignments for each trustee are listed in the above table.

Education Committee: This Committee advocates programs and services related to the Museum’s educational mission and institutional initiatives.

Executive Committee: This Committee exercises all powers and discretion of the Board of Trustees and performs all duties of the Board at such times when the Board is not in session, but has no power to alter or revoke any previous order, policy or resolution or vote of the Board of Trustees unless specifically granted such power by the Board of Trustees. The Committee functions as a nominating committee with respect to the identification, investigation and recommendation of Trustees to serve on the Board. The Committee evaluates the performance of Trustees on the Board, the Director/Chief Executive Officer (Director/CEO) of the Museum and the Chief Operating Officer (COO). It also reviews the compensation and employee benefits of the Director/CEO and other senior staff members of the Museum and the scheme for compensation and benefits of all other Museum employees. The Executive Committee appoints the chairman of each of the standing committees of the Board and may remove any chairman at any time.

Finance Committee: This Committee reviews and approves for recommendation to the Board an annual budget and all policies and procedures for non-budget requests for expenditure. The Committee is also responsible for reviewing the employee benefit program for the Director/CEO, COO, curators and Foundation employees. Additionally, it will develop criteria for the selection of auditors.

Investment Committee: This Committee develops, reviews and revises procedures and guidelines for the investment, reinvestment and management of funds or other resources of the Foundation and the endowment fund of the Nelson Trust and assists management of the Foundation in the implementation of such policies, procedures and guidelines.

Exhibitions Committee: This Committee reviews and makes recommendations to the Board of Trustees with respect to major exhibitions of art at the Museum. The Committee also is responsible for advocating financial support from the Board of Trustees for recommended exhibitions.

Committee on Collections: This Committee develops plans, policies and procedures and makes recommendations to the Board of Trustees with respect to the acquisition, disposition, display, preservation, risk management and security of works of art in accordance with the purposes of the Foundation.

Development Committee: This Committee develops and participates in all fundraising programs, including the annual fund, memberships, planned giving, special project funding, grants and prospect research, for budget, capital needs and endowment.

Building and Grounds Committee: This Committee reviews and recommends to the Board of Trustees issues and decision points relating to significant capital projects and ongoing deferred maintenance.

A-4

Administration

The Board of Trustees has delegated authority for the management and daily operations of the Museum to the Director/CEO and COO and the administrative staff.

Reporting to the Director/CEO are the curatorial departments, as well as the Director of Conservation and Collections Management, Director of Public Programs & Interpretation, Director of School & Youth Serving Organizations and Director of Presentations. Four division heads report to the COO: Director of Finance, Director of External Affairs, Director of Human Resources, Director of Administration. This senior management team, referred to as the Strategic Leadership Group, supervises all full-time and part-time staff. Division Heads meet weekly with the Director/CEO and COO.

Members of the Strategic Leadership Group are as follows:

Marc Wilson, Director/Chief Executive Officer, age 66. Mr. Wilson has served as Director/CEO of the Museum for 28 years, prior to which he served as the Museum’s Chief Curator and its Curator of Oriental Art. He received his Master of Arts degree from Yale University; and has served as Trustee, Treasurer, and second Vice President of the American Association of Museum Directors, and Chairman of the Indemnity Advisory Panel. He announced his retirement in April of 2009, which will be effective June 1, 2010. A discussion of the Foundation’s search process is set forth below.

Karen Christiansen, Chief Operating Officer, age 55. Ms. Christiansen came to the Museum in February 1999 to serve as its COO. She earned her Masters of Business Administration degree at Arizona State University and worked in the for-profit sector at SunAmerica for 13 years, leaving as Vice President of Projects. Changing careers to the not-for-profit sector, she has worked as Assistant Director of Administration and Development at SITE Santa Fe, Santa Fe, New Mexico and Development and Marketing Director at the Arizona State University Art Museum in Tempe, Arizona. Ms. Christiansen has oversight responsibilities for such operational departments as finance, investments, human resources, development, marketing, facilities management engineering, maintenance, security, visitor services, volunteers, food service, museum store, information technology, and event planning.

Elisabeth Batchelor, Director of Conservation and Collections Management, age 59. Ms. Batchelor has served the Museum as its Director of Conservation and Collections Management for 11 years. She studied conservation in Vienna and Rome and earned a Master of Arts degree in conservation and technology at the Academy of Fine Arts, Vienna. From 1995 to December 1998, when she was recruited by the Museum, Ms. Batchelor was a museum project consultant for institutions such as the University of Cincinnati, Purdue University Galleries and the Dayton Art Institute. From 1975 to 1995 she was associated with the Cincinnati Art Museum, serving as Assistant Director for Collections from 1989 to 1995.

Tammy Bluhm, Director, Finance, age 52. Ms. Bluhm came to the Museum in June 2008 as Manager, Accounting. In May of 2009 she became co-manager of the Finance Department and in November 2009 was promoted to Director of the department. During Ms. Bluhm’s nearly thirty years in the accounting field she has spent twelve years in the not-for-profit arena. Her not for profit background includes Director of Finance / Controller for the American Public Works Association in Kansas City, Missouri and Vice President for Administration and Finance with Big Lakes Developmental Center, Inc. in Manhattan, Kansas. She is a Certified Public Accountant, certified in the state of Kansas, and holds a Bachelor of Science in Business Administration degree from Kansas State University.

Cammie Downing, Director of School and Youth Serving Organizations, age 62. Ms. Downing began as the Teacher Services Specialist in 1989. In addition to classroom teaching experience she has served as a professor of art education and Director of Education at the Kemper Museum of Contemporary Art. She has a Master of Liberal Arts with additional coursework in Museum Studies and has served as President of the

A-5

Missouri Art Education Association. Her areas of responsibility include all areas of museum education that involve schools and teachers.

Catherine L. Futter, Helen Jane and R. Hugh “Pat” Uhlmann Curator, Decorative Arts, age 50. Dr. Futter came to the Museum in March 2002. She earned her Bachelor of Arts degree in Medieval and Renaissance Studies from Duke University and her Master of Arts and Doctor of Philosophy degrees in the History of Art from Yale University. Her dissertation was on the 19th century New York interior decorating and furniture-manufacturing firm of Herter Brothers. Although she is a generalist in the field of decorative arts, her specialization is American and European decorative arts from 1850 to the present. Dr. Futter is currently preparing an important international exhibition of decorative arts made for display at world’s fairs, 1851-1939.

Barbara Head, Manager, Major Gifts, age 48. Ms. Head has served the Museum as a fund raiser since 2002. She received her Bachelor of Arts and Juris Doctor degrees from Washburn University, Topeka, Kansas. Ms. Head brings to the Nelson-Atkins twenty-two years of experience in fund raising and institutional advancement.

Christine Minkler, Director of Public Programs and Interpretation, age 49. Ms. Minkler’s career in museum education spans over twenty years and has included extensive community involvement. From 2001- 2008, she led Youth and Family Programs, a department that encompassed family events, community programs, and studio art classes for the Museum. In 2009, her responsibilities expanded to include interpretative resources, volunteers, and adult programming. She has been the author and project coordinator for numerous grant projects, including two NEA Foundation grants for the planning and implementation of a resource guide for educators. Ms. Minkler served as president and national delegate for the South Carolina Art Education Association from 1999, until her move to Kansas City in August 2001.

Simon Kelly, Associate Curator, European Painting and Sculpture, age 40. Mr. Kelly joined the museum as Associate Curator in December, 2005, and previously held postdoctoral fellowships at the Walters Art Museum, Baltimore and The Metropolitan Museum of Art. Mr. Kelly graduated from the University of Cambridge and received his doctorate from the University of Oxford and has published widely in his field. He is currently Co-Chair of the Professional Development Committee of the Association of Art Museum Curators.

Kelly Summers, Director, Human Resources, age 47. Ms. Summers came to the Museum in April of 2009 as Director, Human Resources. Prior to coming to the Museum, Ms. Summers spent 18 years in Human Resources management working in a variety of industries including business to business communications, commercial construction, service management, and wholesale and retail businesses. Her areas of responsibility include employment, compensation, benefit design and administration, wellness, staff relations, payroll administration, performance management, and organizational and human resources development. Ms. Summers was born and raised in the Kansas City area and is a graduate of Baker University where she earned her degree in Business Administration.

Steve Waterman, Director Presentations, age 47. Initially joining the Museum in 2000 as Chief Exhibition Designer, he was promoted five months later to Director of Design. Currently as Director, Presentations, Mr. Waterman works to plan, coordinate and implement a museum-wide aesthetic, utilizing ongoing projects including permanent and temporary exhibitions. Prior to 2000, Mr. Waterman was Exhibition Designer and Chief Preparator at the Bard Graduate Center in New York, New York. During that time, he was also an exhibitions consultant and designer for the Yale University Art Gallery, the Brooklyn Federal Courthouse and the Greenwich Historical Society. Mr. Waterman holds Master of Fine Arts degree in Ceramics from Alfred University and a Bachelor of Fine Arts degree in Ceramics from the University of Wisconsin-Milwaukee

Toni Wood, Manager, Marketing and Communications, age 51. Ms. Wood joined the Museum in July 2005 as Assistant Manager of Marketing and Communications and became Manager in June 2008. She

A-6 holds a journalism degree from the University of Kansas. Ms. Wood covered the Kansas Legislature for United Press International and was a Kansas City Star reporter from 1983 to 1988. As a freelance writer for many years, Ms. Wood contributed to The New York Times, USA Today, Parents, Writer’s Digest and many other publications. She is the author of a children’s activity textbook and travel guides to Kansas City and Branson, Missouri.

Mark Zimmerman, Director, Administration, age 50. Mr. Zimmerman joined the Museum in August 2002 following 20 years in the hotel industry in Chicago, San Francisco, Seattle, Shanghai, Denver, Singapore, Cincinnati and Kansas City. His areas of responsibility include security, visitor services, the Rozzelle Court restaurant, special events, volunteer services, information technology, the Museum store and mail services. In May 2009 the departments of engineering, maintenance, purchasing and project oversight were added. A native of Wausau, Wisconsin, Mr. Zimmerman graduated from the University of Wisconsin, Madison.

As noted above, on June 1, 2010, the Foundation’s Director/CEO will retire after serving in that capacity for 28 years. He announced his intention to resign in April of 2009. Following his announcement the Trustees formed a nine-member Search Committee. The Search Committee completed a comprehensive assessment of the responsibilities for the position by interviewing community leaders, leadership of other arts organization, institutional members and donors. Additionally letters seeking input on the desired qualifications for this key position were sent to over 100 individuals and groups. Based on the results of these efforts, the Search Committee formalized a job description which was approved by the Board of Trustees. Interviews for the position began in January of 2010 and a replacement is expected to be named in March of 2010.

The position of Director of External Affairs is vacant and the Museum has been seeking to fill the position since March of 2007. This position is responsible for overseeing membership, development and marketing/communications. Karen Christiansen, COO, together with six managers in External Affairs, are managing this division during the search process.

FACILITIES

The Museum

In 1933, The Nelson Gallery of Art-Atkins Museum of Fine Arts (as it was then called) began operations in a massive, limestone-clad building, measuring 390 feet long and 175 feet deep and rising to the height of a six-story office building (the “1933 Nelson-Atkins building”). The 1933 Museum is a neoclassical temple on the outside and a treasure house within. As designed by the Beaux Arts-trained Thomas Wight, the facade, with its towering Ionic columns and ornamented cornice, was a symmetrical, rectangular composition of three weighty blocks. The interior was essentially a large loft structure framed in steel and reinforced concrete, which could easily be divided and organized to serve the Museum’s functions. When the building opened in 1933, the west wing was mostly an empty shell, awaiting future expansion of the collections.

A-7

______Photography by Roland Halbe

The Bloch Building

The Bloch Building opened to the public in June of 2007. The Bloch Building expanded the Museum’s available space for special exhibitions and display of permanent collections by 45%, allowing for the display of many outstanding works of art formerly in storage. The Bloch Building houses the Museum’s collections of African art, modern and contemporary art, Isamu Noguchi Sculpture and photography, as well as featured exhibition galleries. The new building expands the square footage of the Museum by 71%, from 234,000 square feet to nearly 400,000 square feet. In addition to the new galleries, it houses a visitor lobby, an art library, the museum store, and a café.

The Bloch Building has received international attention and acclaim for its unique architectural design. Designed by Steven Holl, the building is unique in that it avoids obstructing the view of the 1933 Nelson-Atkins building’s major facades by constructing the addition largely underground, topped with a long ribbon of free-form glass above ground. The building and Steven Holl have been featured in articles in The New Yorker, The Wall Street Journal, The New York Times, Time Magazine, a segment of the NewsHour with Jim Lehrer broadcast on PBS and many other publications. The design of the building has been described in The New Yorker as follows: “the building consists of five freestanding structures—or lenses, as Holl calls them—cascading down one side of the museum’s sloping lawn and linked underground by a series of galleries.”

A-8

Steven Holl, the architect of the Bloch Building, was selected by the Foundation in 1999 through an international juried competition. Before the opening of the Bloch Building, he was best known for his design work on the Kiasma Museum of Contemporary Art in Helsinki Finland, the Chapel of St. Ignatius in Seattle and the Simmons Hall undergraduate residence at the Massachusetts Institute of Technology. He is an author and a tenured faculty member at Columbia University. His work on the Bloch Building was described in a June 2007 article by Nicolai Ouroussoff in an article in The New York Times titled A Translucent and Radiant Partner With the Past:

Mr. Holl’s breathtaking addition to the Nelson-Atkins Museum of Art, opening here on June 9, is his most mature work to date, a perfect synthesis of ideas that he has been refining for more than a decade. By subtly interweaving his building with the museum’s historic fabric and the surrounding landscape, he has produced a work of haunting power.

For the art world, the addition, known as the Bloch Building, should reaffirm that art and architecture can happily coexist. The rest of us can draw comfort from the fact that public works of our own day and age can equal or surpass the grand achievements of past generations.

______Photograph: Copyright Timothy Hursley

A-9

The interior design of the Bloch Building has also been recognized for its unique architectural accomplishments. The purpose of the interior design is to focus and engage visitors in the art and provide a welcoming experience to the Museum. In a June 2007 article in The Wall Street Journal, by Judith H. Dobrzynski titled It Is What’s Inside That Dazzles, describes the interior:

The Bloch Building, which opens officially on Saturday, dazzles from the inside. It is neither a big, sterile, white cube, divided into smaller cubes, nor a sharp-angled, slant-walled space that competes for attention with the works on view. Rather, Mr. Holl has designed a series of elegant, asymmetric galleries that descend with the landscape, gracefully leading visitors through the art and subtly luring them to wonder what's beyond the next bend. The galleries have several entry points to one another, to an internal promenade, and to the park outside, so that no one feels trapped, forced to retrace steps to get out.

______Photography by Roland Halbe

A-10

Renovations 2002-2007

The Foundation completed substantial renovations and improvements to the 1933 Nelson-Atkins building. These improvements included the construction of a two-level 450-car underground parking facility; construction of a connecting link between the existing 1933 Nelson-Atkins building and the new Bloch Building, installation of elevators in the existing 1933 Nelson-Atkins building and renovation of the ground floor of the existing 1933 Nelson-Atkins building, named the Ford Learning Center, to support education programs.

The cost of designing, developing and completing all of the new construction and the renovations and improvements as well as capitalized interest in the amount of $26.7 million and the financing costs related thereto was approximately $220.4 million, in the aggregate.

Location

The Museum is located in Kansas City, Missouri, which is the central city of an eleven county Metropolitan Statistical Area (MSA). The MSA consists of seven counties in the State of Missouri and four counties in the State of Kansas. Kansas City is located in parts of Jackson, Clay, Platte and Cass counties on the western border of the State of Missouri. The Kansas City MSA has a total population of approximately two million people.

Kansas City is a regional center for agribusiness, transportation, telecommunications, manufacturing, health care, trade, financial services, government and the visual and performance arts. Major companies headquartered in metropolitan Kansas City include Hallmark Cards, Sprint, The American Century Funds, Interstate Bakeries, H&R Block and Yellow Roadway Corporation.

The Museum is located on a 22-acre parcel of land owned by the Foundation and located adjacent to the Brush Creek corridor in central Kansas City, Missouri. The Brush Creek corridor which runs along the Museum’s property to the south has experienced a radical transformation in the past decade. The City of Kansas City has completed an approximately $70 million project to widen and beautify Brush Creek, which runs through the heart of the Country Club Plaza (a nationally known shopping, business and residential center in the heart of Kansas City established in 1927) and immediately south of the Museum. Construction projects in the Brush Creek corridor have included a new headquarters for the Ewing Marion Kauffman Foundation and the Muriel McBrien Kauffman Foundation, a new 600,000-square-foot cancer research institute known as the Stowers Institute for Medical Research (created by James E. Stowers, the founder of The American Century Funds, and Virginia G. Stowers), and the renovation and modernization of the headquarters of Midwest Research Institute. In addition, the campus of the University of Missouri at Kansas City is located immediately south of Brush Creek, approximately 1/2 mile from the Museum and contiguous with the Stowers Institute for Medical Research campus and Midwest Research Institute. The University has completed a variety of construction projects contributing to the transformation of the Brush Creek corridor. To the east of the Museum is the campus of the Kansas City Art Institute, a distinguished private four-year college of art and design and the Kemper Museum of Contemporary Art, a nationally recognized modern and contemporary art museum.

A-11

Gallery Renovation Projects

The Foundation recently renovated over 13,000 square feet of gallery space on the second floor in the 1933 Nelson-Atkins building. The renovated space houses the American art (7,215 sq ft) and American Indian art galleries (6,157 sq ft). The new galleries opened in April 2009 and November 2009 respectively. The remaining space on the second floor is home to the Asian Collection. The combined cost of the renovation was $17.5 million.

American Art Galleries. The expansion of the American art galleries focuses on key moments in American history and culture, from 1776 to the 1940s, from New England colonial portraits and furniture to the many emerging styles on the eve of World War II. The expanded space presents paintings, sculpture, works on paper and decorative arts together, continuing the Nelson-Atkins’ approach of integrating different types of art that possess a common affinity in time and culture, much like the integration found in the European galleries on the first floor of the 1933 Nelson-Atkins building. The new galleries underscore the way these individual works of art connect with one another as part of the Museum’s nationally recognized American collection.

American Indian Art Galleries. The renovation and expansion of the American Indian art galleries created unique and expanded displays of American Indian art, with the goal of establishing the Museum among the preeminent art museums in this field. Three galleries on the second floor of the 1933 Nelson-Atkins building are dedicated to the display of the Museum’s expanding American Indian collection. The new installation, represents a three-fold increase in space devoted to American Indian art, and establishes Native art and traditions within the larger context of American art and culture. It underscores a redefinition of Native American art as central to the Museum. The Indian arts’ proximity to the new American galleries, provides visitors with an unprecedented look at the achievements of American artists from pre-contact times to the present.

Ancient Art Galleries. Renovation of the Ancient art galleries began in October 2009 and is expected to be completed in May 2010. The $1.6 million renovation project encompasses three galleries (1,100 sq ft) and when completed will provide a dramatic presentation of a mummy, sarcophagus and related tomb treasures recently added to the Museum’s collection.

COLLECTIONS AND EXHIBITIONS

General

The Museum’s comprehensive permanent collection spans 5,000 years and numbers nearly 35,000 objects. The Asian art collection (9,079 objects) is among the finest in the world by virtue of its size, depth and overall level of quality. Every phase of China’s artistic activity is documented (6,719 objects within the larger Asian art collection), with particularly remarkable examples of ceramic arts spanning 3,000 years; a group of tomb figures from the T’ang Dynasty is considered the most important in the Western world. Chinese paintings, sculpture, decorative arts and domestic furniture are equally comprehensive and are among the best outside of Asia. The arts of Japan include strengths in the area of folding paper screens, while the South Asian art collection is strong in sculpture. The outstanding ancient art collection numbers 587 objects, with masterpieces from ancient Mesopotamia, Egypt and the classical world. The decorative arts collection contains 5,635 objects, with European holdings strong in English pottery (1,682 objects) and with fine 17th- and 18th-century furniture. The American decorative arts holdings are strongest in Boston area case furniture of the 18th century. The European painting and sculpture collection (886 objects), while not large, is of fine quality throughout. Some of the world-class masterpieces are works by Bernardo Daddi, Petrus Christus, Jan Gossaert, and Lucas Cranach, Bronzino’s Portrait of a Young Man, Caravaggio’s Saint John the Baptist, Poussin’s The Triumph of Bacchus, a major Zurbaran altarpiece, Gaetano Gandolfi’s Assumption of the Virgin, and Chardin’s Still-Life with Cat and Fish. The 19th-century paintings include major Impressionist and Post-

A-12

Impressionist works, such as Monet’s seminal Boulevard des Capucines, Van Gogh’s Olive Orchard and Cezanne’s Mont-Sainte Victoire.

The American art department includes 622 paintings and sculptures with superb portraits by Copley, Stuart, Sargent and Eakins and landscapes by major 18th and 19th-century painters such as Cole, Church, Heade and Kensett. Among the still-life paintings are Raphaelle Peale’s Venus Rising From the Sea - A Deception and a large masterpiece by Peto, Books on a Table. The important holdings of native Missourian Thomas Hart Benton include his masterpiece, Persephone. The modern and contemporary art collection (1,034 objects) includes important works from the early 20th century to the present, among them works by Kandinsky and Juan Gris, and Robert Rauschenberg’s Tracer and Willem de Kooning’s Woman IV. The American Indian art collection (2,741 objects) is particularly strong in southwest Navajo material, and continues to grow through a recent bequest of a diverse assortment of 129 new objects, including Sioux, Nez Perce, Hopi, Zuni, Apache and Inuit objects. The African art holdings include 376 objects, and the Museum has made an institutional commitment to develop Kansas City as a significant center for the collection and study of African art. Among the most important African works of art are a 16th-century Memorial Head of an Oba from Benin and an Asante Stool. The Museum’s collection of works on paper (prints and drawings) total 4,362 works, including excellent examples by Rembrandt and Poussin, among others.

In 2006, the Museum acquired the Hallmark Photographic Collection containing over 5,000 photographs. The breadth, depth, and quality of the Museum’s photography collection are matched by only a small group of the largest museums in the United States. Including the recent Hallmark gift of 5,957 photographs, the Museum’s photography collection contains approximately 7,500 items. The collection provides a panoramic vision of its subject, American photography, from the invention of the medium in 1839 to the present.

With support from the Hall Family Foundation, the Museum launched the Modern Sculpture Initiative in 1989. The Initiative is a collection drive through which more than 40 donors have contributed both indoor and outdoor sculptures to the Museum in the 1990s. Among these are the monumental, four-part Shuttlecocks, the first commissioned sculptures for the 20-acre Kansas City Sculpture Park. The work, by Claes Oldenburg and Coosje van Bruggen, was installed in the Sculpture Park in 1994 and quickly became a civic landmark for Kansas City. In 2000, the Museum announced the addition of 84 masterworks of modern and contemporary sculpture, including 52 bronzes by Henry Moore (the largest collection of Moore bronzes outside of his native England) and works by Brancusi, Giacometti, Calder, Noguchi and Abakanowicz. In 2006, an endowment was established to maintain the park’s grounds, in addition to the endowment gift additional specific funds were provided to increase programming and “enliven” the Sculpture Park.

In 1999, The William T. Kemper Foundation of Kansas City pledged $10 million over a period of 10 years to the Museum in support of art acquisitions from the 20th century and beyond. The initiative made it a priority to acquire works by artists of all cultures and races. Since 1999 over 30 works of art have been acquired through the Kemper collecting initiative. The additions include works by Elizabeth Murray, Robert Mangold, Kerry James Marshall, and Felix Gonzales Torres, among others. Also in 1999, 72 works of English, Irish and Scottish silver from the renowned Folgers Coffee Silver Collection were given to the Museum by The Procter & Gamble Co. of Cincinnati. The Folgers Collection is one of the world’s most significant collections of antique silver coffee pots and related serving pieces, ranging from the early 18th century to the time of the Industrial Revolution.

In 2009, long time donors and supporters of the Museum, Morton and Estelle Sosland gave a substantial portion of their American Indian collection to the Museum. The Sosland’s gave 34 objects which concentrated from the Northwest Coast. The gift transformed the Museum’s collection and contributed greatly by strengthening the newly opened American Indian Art galleries. Currently, 6.1% of the Museum’s collection 2,089 objects) is on display at any given time, with as much as 25% exhibited annually through collection rotation. The Museum has approximately 32,147 art objects in storage. Any work of art not on view is available for research, unless its condition precludes this use. Along with programming and space

A-13 consideration, the length of time an object remains on display is also determined by conservation concerns. Like many other institutions undergoing construction projects the Museum issued a loan moratorium between November 1, 2005 and June 1, 2008 due to the opening of the new Bloch Building. Even during the moratorium, the Museum had an active loan program in fiscal year 2008 the Museum lent 57 objects to 19 institutions, in fiscal year 2007 the Museum lent 38 objects to nine institutions; in fiscal year 2006 the Museum lent 76 objects to 33 institutions; in fiscal year 2000, the Museum lent 129 objects to 54 institutions; and in fiscal year 1999, the Museum lent 115 objects to 22 institutions. In fiscal year 2009, the Museum lent 42 works to 16 institutions. The Museum anticipates lending 22 works to 12 lenders for fiscal year 2010.

Exhibitions and Programs

The Museum’s philosophy for the use of special exhibitions, as stated in the Strategic Plan discussed below, is to “create an imaginative program of special exhibitions that supplements or complements the permanent collection in ways that are compelling and meaningful to the Museum’s varied communities.” The exhibition philosophy is also guided by the need to rotate collections that are sensitive to light or otherwise fragile, as well as a commitment to mount regular series of exhibitions for prints, the miniature portrait collections and Chinese paintings to enliven the permanent collection galleries.

Exhibitions Planned for 2010 and 2011

The Foundation has arranged for the following special exhibits in 2010 and 2011:

Magnificent Gifts for the 75th (February – April 2010) This exhibition will feature 120 of the 400 generous gifts and promised gifts made in honor of the Museum’s 75th anniversary and will reflect the creative vigor of nearly every continent.

Venice: Three Visions in Glass (March – August 2010) This exhibition will include 50 works of decorative glass art by three leading Venetian artists.

Exploring Egypt (March – July 2010) This exhibition will include recent acquisitions to the Museum’s photographic collection that will compliment the opening of the new Egyptian galleries.

Edward Steichen: In High Fashion, The Condé Nast Years 1923-1937 (May – July 2010) This exhibition will include 150 works by one of the 20th century’s leading figures in photography, during his tenure as chief photographer for Condé Nast’s magazines, Vogue and Vanity Fair.

Through African Eyes: The European in African Art, 1500 to present (Sept 2010 – January 2011) This exhibition will examine 500 years of cultural and political interactions between African cultures and European outsiders.

Romancing the West: Alfred Jacob Miller (September 2010 – January 2011) This exhibition will include 30 works on paper in watercolor and mixed media from the artist’s 1837 trip from the Kansas City area to the annual trapper/trader rendezvous in Wyoming.

Clare Twomey (Fall 2010) Inspired by the Museum’s Burnap pottery collection, this exhibition will feature site specific installation featuring works determined by the artist. The underlying theme is that decorative arts and crafts can be defined in many ways.

A-14

KCAI 125th Anniversary (July 2010 – January 2011) This exhibition will include 40 works of photography that celebrates the 125th anniversary of the Kansas City’s Art Institute. The exhibition celebrates achievements of KCAI alumna and the development of the program starting with Thomas Barrow (class of 1963) through recent graduates.

Disorient (January – June 2011) This exhibition will present day imagery of land traveled by Marco Polo with surround-sound narration of his writings. The installation of dual screens represents fusing or blurring of the past and present, place and time. One screen pans a cabinet of curiosity-like installation reflecting cultures visited by Marco Polo as the second presents present day imagery of lands.

Light Years: The Photographs of Ray Metzker (January – June 2011) This exhibition will focus on the historical importance of the 78 year old artist’s work. The works demonstrate various aspects of reality, city, nature, and the human condition, while providing an inventory of the various modes of photographic vision itself.

Exhibitions 2008 - 2009

The Foundation offered the following special exhibits in 2008 and 2009:

Decorative Designs, Decorative Landscapes and Still Life (April - November 2009) This exhibition displayed the works of German artist Abrecht Dürer who made decorative designs for wealthy patrons that did not depict “high art” like Bible scenes or historical or mythological subjects.

Art on Paper: Highlights from the American Collection (April - October 2009) This exhibition displayed the works of American artists over two centuries using an array of media including graphite, charcoal, pen and ink, watercolor, pastel, engraving, etching, woodcut and lithography. The works illuminate additional dimensions of American artists whose paintings are among the treasures of the Museum’s American collection.

Senses and Sensibilities (February – October 2009) This exhibition displayed objects showing how for thousands of years Chinese painters have translated the sights, sounds, scents, tastes and textures of Chinese life into paintings.

Beloved Daughters: Photographs by Fazal Sheikh (June – September 2009) This exhibition displayed the photographs by artist and activist, Fazal Sheikh, who uses photography to create sustained portraits of communities around the world, addressing their beliefs and traditions and their political and economic problems. The exhibition, organized by Princeton University Art Museum, unites two projects, Moksha and Ladli, which examine the lives of women in two sectors of Indian society. Moksha concerns dispossessed widows in the holy city of Vrindavan, while Ladli examines the effects of enduring prejudices against girls and young women in a changing, modern India.

Inventing the Shuttlecocks - Today (May – July 2009) This exhibition celebrated the 15th anniversary of the Shuttlecock, a sculptural icon for the Museum and for Kansas City.

Islamic Inspirations and Influences (May – August 2009) This exhibition displayed silk and velvet textiles of Islamic lands, and those influenced by Islamic aesthetic traditions, spanning the 15th-17th centuries.

A-15

George Segal: Street Scenes (May – July 2009) The first exhibition of this sculptor’s work to focus on a single theme: the city. Spanning four decades, from the 1960s - 1990s, the exhibition included more than a dozen large sculptures that chronicled the ever-evolving dynamics of the city from the quiet nostalgia of The Diner (1964-1966) to more contemporary references such as punk art graffiti in Dumpster (2000).

From the Land of the Taj Mahal: Paintings for India’s Mughal Emperors (March - June 2009) This exhibition included vibrant illustrations and calligraphies from the greatest artists of the Mughal Empire, an Islamic dynasty descended from the Mongols, that ruled most of India from 1526 to 1857.

The Photographs of Homer Page: The Guggenheim Year, New York, 1949-50 (February – June 2009) This exhibition used 100 of Page’s black-and-white prints of New York City.

Contemporary American Studio Ceramics (June 2008 – June 2009) This exhibition featured works by studio potters from the whimsical, trompe l'oeil lighthouse of Richard Shaw to the colorful, Asian-inspired designs of Victor Babu, to highlight significant changes in American studio ceramic production at the turn of the 20th century.

Animalia: 19th and 20th Century European Prints and Drawings (December 2008 – June 2009) This exhibition featured works by 19th century artists depicting domesticated, wild and mythological animals in both their tamed and untamed states. Twentieth-century artists sought not to faithfully represent animals, but to reveal their interior states.

Caricature, Fashion and Fantasy (November 2008 – August 2009) This exhibition featured prints and drawings from the 16th - 18th centuries encompassing a broad span of social comment from caricatures to documentary realism.

Resting Places Living Things: Designs by Michael Cross (October 2008 – April 2009) This exhibition was British designer Michael Cross’ 1st American exhibition. Cross utilized the Museum’s project space in ways that challenged its parameters: the wooden floor featured hills and valleys, tree branches supported books and walls became resting places.

Fashionable Luxuries: French and Italian Textiles (August 2008 – February 2009) This exhibition displayed silk fragments spanning the 16th-18th centuries which once adorned the clothing and furnishings of the elite in France and Italy.

Restoration: Robert and Shana ParkeHarrison (October 2008 – February 2009) This exhibition displayed a survey of major photographs of Robert and Shana ParkeHarrison who are internationally renown for their constructed, allegorical works.

Art in the Age of Steam: Europe, America and the Railway, 1830-1960 (Sept. 2008 – January 2009) This exhibition contained works showing how artists responded to the expansion of the railroad in the 19th and early 20th centuries, especially in Europe and the United States.

Landscapes: Real and Imagined (May – November 2008) This exhibition of prints and drawings featured the painting of landscapes, both real and imagined, by 19th century landscape painters, French Impressionists and 20th century European artists.

Reality and Fantasy: Land, Town and Sea (April – October 2008) This exhibition displayed European works from the 16th, 17th, and 18th centuries was drawn from the Museum’s collection of urban and rural landscapes.

A-16

Human/Nature: Recent European Landscape Photography (July- October 2008) This exhibition included large-scale color photographs by a new generation of European artists, including Andreas Gefeller, Peter Bialobrzeski, Massimo Vitali, Olaf Otto Becker, Bart Michels, Jem Southam, and Wout Berger, among others.

Sparks! The William T. Kemper Collecting Initiative (May – July 2008) This exhibition included 36 modern and contemporary works acquired through the William T. Kemper Collecting Initiative.

Print Lovers at 30: Celebrating Three Decades of Giving (May – July 2008) This exhibition honored the Museum’s Print Society on its 30th anniversary with 31 of the 79 prints donated by that group over 30 years.

In the Public Eye: Photography and Fame (March – June 2008) This exhibition featured a broad range of works from the 1860s to the present. Featured photographers included Mathew Brady, Edward Steichen, Henri Cartier-Bresson, Imogen Cunningham, Irving Penn, Richard Avedon, Arnold Newman, Andy Warhol and Annie Leibovitz.

Siah Armajani: Dialogue with Democracy (May – September 2008) This exhibition displayed the works of Iranian-born, American sculptor Siah Armajani who used simple sculptural forms such as chairs, doors, bridges and other objects to convey complex ideas.

American Horizons: The Photographs of Art Sinsabaugh (January – April 2008) This exhibition featured the artistic and historically significant works of photographer Art Sinsabaugh. Best known for his “Midwest Landscapes” of the early 1960s, his “Chicago Landscapes” (1964-66), and his “American Landscapes” (1969-83).

Starr Miniature Collection: Military Portrait Miniatures (November 2007 – May 2008) Spanning the 17th-19th centuries, this exhibition of military miniatures celebrated members of the military who played pivotal roles in military history, and soldiers whose names are now unknown.

War and Suffering (November 2007 – May 2008) This exhibition displayed 19th and early 20th century European prints and drawings exploring the faces of war.

Tapping Currents: Contemporary African Art and the Diaspora (November 2007 – April 2008) This exhibition featured contemporary African art and art of the diaspora.

Rising Dragon: Ancient Treasures from China (October 2007 – February 2008) This exhibition featured objects spanning 5,000 years of Chinese creativity.

Exhibitions 2004 – 2007

The Foundation offered the following special exhibits in 2004 through 2007:

Developing Greatness: The Origins of American Photography, 1835-1885 (June – December 2007)

Monet to Matisse: Impressionist Masters from the Marion and Henry Bloch Collection (June – September 2007)

Kiki Smith: Constellation (June – October 2007)

Harry Callahan (June – October 2007)

A-17

Dürer to Tiepolo: Works on Paper (April – October 2007)

The Naked and the Nude: Representations of the Body (October 2006 – April 2007)

Looking at Historic Lands: Urban and Rural (October 2006 – March 2007)

Enrique Chagoya: ‘Return to Goya’s Caprichos.’ (July – December 2006)

The Feminine Mystique: Portraits of and by Women (April – October 2006)

Religious Subjects: A Variety of Approaches (April – September 2006)

New Media Projects: William Kentridge (April – July 2006)

Realism and Abstraction: Six Degrees of Separation (June 2004 – June 2006)

Bingham to Benton: The Midwest as Muse (February – July 2005)

Frederick Sommer: Photography, Drawing, Collage - A Centennial Celebration (May – July 2005)

Black and White in America: Photography of the Civil Rights Era. (June – October 2004)

OPERATIONS

Mission Statement

The Nelson-Atkins Museum of Art is dedicated to the enjoyment and understanding of the visual arts and the varied cultures they represent. It is committed through its collections and programs to being a vital partner in the educational and cultural life of Kansas City and a preeminent institution both nationally and internationally. It strives to achieve this goal by adherence to the highest professional standards in the collection, preservation, exhibition, and interpretation of works of art.

Museum Attendance

The Museum is the leading cultural institution serving metropolitan Kansas City, an 11-county region in Missouri and Kansas, with a population of approximately two million.

The following table sets forth the total annual Museum attendance for the last ten fiscal years:

A-18

Annual Museum Attendance

Fiscal Year Attendance

2009 358,405 2008 453,000 2007 267,315 2006 250,130 2005 243,600 2004 311,506 2003 347,649 2002 280,014 2001 331,892 2000 364,839

Museum attendance was directly impacted by the construction and opening of the Bloch Building, the Museum’s other renovation projects, and changes to the Museum’s operating schedule. Prior to 2003, the year of the commencement of the construction of the Bloch Building, annual attendance at the Museum was 280,014. During construction attendance decreased, and in 2005 annual attendance fell to less than 250,000. In 2008, the opening year of the Bloch Building, the Museum’s attendance grew to a record 453,000. The Museum completed the most recent fiscal year having attracted 358,405 visitors. The Foundation attributes the decline from 2008 to 2009 to several factors, including: (1) returning to more normal attendance level, and (2) a reduction in the operating days of the Museum.

Museum Membership

Museum membership is a vital asset to the Museum because members use the Museum at a higher rate than non-members, members provide a basis for broader community financial support of the Museum and Museum leaders often begin as Museum members. The Museum has several different membership and sponsorship opportunities for those wanting to support the Museum on a regular basis. Membership categories include Friends of Art, Society of Fellows and the Business Council. Each of these memberships provide members with special benefits, such as meetings with the Museum’s curators, preview or special showings and social gatherings at the Museum. Sponsorships may include a corporation or a foundation supporting a special program or a featured exhibition. See “CONTRIBUTIONS - Annual Fundraising and Support” herein.

The following table sets forth the total annual Museum membership for the last ten fiscal years:

Annual Museum Membership

Fiscal Year Membership

2009 10,823 2008 13,138 2007 11,600 2006 9,897 2005 9,607 2004 11,981 2003 15,905 2002 13,948 2001 14,236 2000 11,823

A-19

With the opening of the Bloch Building in 2008, Museum membership increased 13% from the previous year in response to the publicity and member only events. Due to adverse economic conditions and natural attrition after a building opening, memberships decreased in 2009 by 18%. While the reduction in membership count was significant, financially the decline held at 13% due to a previous increase in membership fees.

The Spencer Art Reference Library

The Spencer Art Reference Library (the “Library”) is a non-circulating research library dedicated to the history of art. The Library collection reflects the strengths of the art collection. While serving the research needs of the Museum staff, the Library also extends its resources and services to the community, students, faculty and collectors of the greater Kansas City region. Scholars and public researchers are welcome in the Library. The Library’s catalog is accessible through the LEONARDO online library catalog, and bibliographic records are also available through the Research Libraries Information Network.

The Library collection of approximately 155,000 volumes includes monographs, serials, auction catalogues, exhibition catalogues, current newspapers, DVDs, and electronic research resources in ten languages. The Library welcomes everyone to consult materials on-site in the public reading room, and staff associates provide reference and research assistance. The Library is the largest comprehensive art research library in the region. The LEONARDO online library catalog, accessible on the web and shared with the Linda Hall Library, provides detailed information on library holdings. The Library web page lists current hours and links to research resources, such as reading lists for Museum exhibitions and other timely topics.

Education and Public Programs

Education is at the center of the Museum’s public service role. More than 100,000 adults and children each year participate in structured learning opportunities offered by the Museum’s Education Division. As stated in the Strategic Plan, the Museum is committed to:

• Creating connections between the Museum’s current and potential visitors and its collections and resources; • Increasing understanding, appreciation and enjoyment of the Museum’s collection and related programs by an ever-broadening audience; • Ensuring access to specialized knowledge and to the Museum’s reference and research services; and • Being a vital partner in the educational and cultural life of the greater Kansas City area and the region.

The Education Division is comprised of three areas: Schools and Youth Serving Organizations, Public Programs and Interpretation, and the Spencer Reference Library. The Ford Learning Center, which includes seven classrooms, a seminar room, and the Educator Resource Center was the first phase of the campus enhancement project that culminated in the Bloch Building project. These facilities, coupled with the relocation of the library reading room, have increased the visibility of educational resources and expanded capacity for programs to underserved audiences. Educational offerings at the museum include studio art classes and workshops for children, adults, and families, as well as for schools and community groups. Summer and afterschool programs offered to youth serving organizations provide students with an introduction that may be continued through the Museum’s need-based scholarship program. In addition, an incentive program that provides funding to underserved school districts has been in place since 2006. New media technologies are incorporated into an innovative program for high school students, called New Dimensions. Weekend programming for families, as well as enhanced offerings for college students and young adults has been achieved. These accomplishments were made possible, in part, by the successful recruitment and training of an increased number of volunteers and docents.

A-20

The Strategic Vision and the Strategic Plan

In November 1993 the Museum’s Trustees and staff began the process of envisioning a “new” Nelson- Atkins Museum, which culminated in ratification of the Museum’s Strategic Plan in June 1998. The Museum’s Strategic Plan identifies key development areas for the Museum, including an emphasis on the preservation, development and presentation of the collection, and education and research initiatives. As a result of the strategic planning process, the Nelson Trustees identified the capital and program needs of the Museum, including the substantial expansion of the Museum building and facilities. The construction of the Bloch Building, the Museum renovations, the parking garage and improvements discussed above under the caption “FACILITIES” were the direct result of this planning process.

The Strategic Plan covers: (1) Collection Preservation, Management, and Development; (2) The Collection: Presentation and Interpretation; (3) Special Exhibitions; (4) Education Initiatives, Research Services, and the Community Art Resource Center; (5) Image and Visitors’ Experience; (6) Audience Development and Marketing; (7) Fiscal Stability/Ongoing Fund Development; (8) Human Resources and Professional Development; and (9) Governance and Volunteer Support. The Strategic Plan’s guiding principles are as follows:

• The experience of original works of art is invaluable and is key to understanding our past, present, and future. The collection is of fundamental importance to all the Museum does. • The Museum is dedicated to connecting the Museum’s collections, special exhibitions, and programs to its entire community (local, national, and international), and to promoting active dialogue and collaboration. • The highest standards of excellence must inform all the Museum does. • Integrity and responsibility are essential to the fulfillment of the Museum’s mission. The Museum will employ its resources - human, artistic, and financial - in prudent and ethical ways. • Diversity strengthens creativity; the Museum is committed to diversity in all areas.

The Strategic Plan was reviewed by a task force of the Board of Trustees in 2007 and continues to be the core document which governs and directs the Museum’s activities.

Employees

As of December 31, 2009, the Museum employed 216 full-time-equivalent employees.

The management of the Museum considers its relationship with its employees to be excellent. Management has worked to strengthen that relationship by instituting various programs addressing the interaction of employees, management, and Museum visitors and users. Management has established mechanisms for addressing employee grievances and involving employees in the management process.

The Museum provides a wide variety of benefits to its employees, including health insurance, dental insurance, long-term disability insurance, life insurance, pension plan, tuition reimbursement, and customary vacation, holidays and sick days.

At present, none of the Museum’s employees are represented by a union or other collective bargaining representative. Management is not aware of any organizing activity or of any work disruption involving its employees.

Insurance

The Foundation is required to maintain insurance with respect to its property, the operation thereof and its business, or to self-insure, against such casualties, contingencies and risks (including public liability, property and casualty, business interruption or use and occupancy, workers’ compensation, and employee

A-21 dishonesty) and in such amounts not less than is customary in the case of organizations engaged in the same or similar activities and similarly situated and as is adequate to protect the Foundation’s property and operations.

Litigation

As of the date of the Official Statement, there are no suits pending or, to the knowledge of the Foundation’s management, threatened against the Foundation, the Nelson Trust or the Museum.

CONTRIBUTIONS

General

Through the leadership, dedication and the enormous generosity of its Board of Trustees, past and present, and many other friends of the Museum, the Museum has laid the foundation for its future financial stability. From individual Museum members to large corporate benefactors to national grant organizations, supporters of the Museum have recognized the significance of the Museum’s work and generously contributed to the future of its mission.

From May 1, 1997 through April 30, 2009, the Foundation generated more than $428 million in contributions and pledges net of $58 million in discounts and $1 million in allowances at April 30, 2009. An additional $30 million in bequests and other commitments were considered conditional promises to give at April 30, 2009 and, as such, are not included in the above totals. Included within this amount was a unique 30 year $60 million gift commitment from the Hall Family Foundation and a $48 million gift of land and buildings from the City of Kansas City, Missouri. See “RESULTS OF OPERATIONS – Outstanding Indebtedness” herein for a discussion of the Hall Family Foundation gift. During this same period, the Foundation applied approximately $245 million of the more than $428 million to strengthen the Museum’s endowment. One important goal of the increased endowment is to permit the Museum to maintain free admission. It is common for institutions to divert a significant percentage of their fundraising efforts following the completion of large building projects to meet increased expenses. However, these endowment initiatives ensured that the Museum would have the financial base to fulfill it’s mission through increased endowment support. In addition to these fundraising initiatives, the Museum has been awarded numerous competitive national grants to aid with the development of specific programs or institutional areas of expertise.

Annual Fundraising and Support

The Foundation conducts an annual fund campaign providing an important component of the Foundation’s unrestricted revenues. The annual fundraising efforts includes, not only memberships, but the annual fund, corporate sponsorships, government grants, annual major gifts, and gifts from national or local foundations.

The following table sets forth the total raised through these various avenues of giving for the last five fiscal years:

A-22

Annual Fund Raising (1) In Millions

Fiscal Year Receipts

2009 $7.3 2008 $5.8 2007 $5.1 2006 $5.7 2005 $3.5 ______(1) Includes receipts from memberships, corporate sponsorships, government grants, annual major gifts, and gifts from national or local foundations.

For fiscal year 2010, the Museum’s budget for revenues from memberships, corporate sponsorships, government grants, annual major gifts, and gifts from national or local foundations is $5.5 million. This budgeted amount has been adjusted downward from fiscal year 2009 to account for the financial environment, ongoing endowment fundraising, and donors’ focus on fulfilling pledges.

RESULTS OF OPERATIONS

Summary Financial Information

The table below presents summary financial data for the Foundation as of and for each of the five fiscal years in the period ending April 30, 2009, and the unaudited comparative data for the six-month periods ending October 31, 2008 and 2009. The information for the five fiscal year period ending April 30, 2009, has been derived from the combined financial statements of the Foundation and the Nelson Trust audited by Ernst & Young LLP, independent auditors, and with respect to the fiscal year ending April 30, 2009, should be read in conjunction with the audited combined financial statements of the Foundation and the Nelson Trust, including the notes thereto, contained in Appendix B to this Official Statement. The unaudited comparative data for the six-month periods ending October 31, 2008 and 2009, has been prepared by management of the Foundation and should be read in conjunction with the audited financial statements and related notes included in Appendix B to this Official Statement.

A-23

SUMMARY FINANCIAL INFORMATION THE NELSON GALLERY FOUNDATION (in 000’s)

Audited (Fiscal year ending April 30) Unaudited Oct. 31 Oct. 31 2005 2006 2007 2008 2009 2008 2009

STATEMENT OF ACTIVITIES DATA: Unrestricted support and revenue: Contributions $ 2,205 $ 20,251 $ 7,552 $ 11,350 $ 13,003 $ 2,106 $ 1,274 Investment return 10,870 26,484 27,235 4,732 (62,027) (65,694) 38,503 Other unrestricted support and revenue 5,421 5,751 7,418 9,902 7,833 3,800 3,008 Net assets released from restrictions 7,659 12,808 13,250 17,652 10,613 3,604 3,407 Total unrestricted support and revenue $ 26,155 $ 65,294 $ 55,455 $ 43,636 $(30,578) $ (56,184) $ 46,192

Expenses: Program $ 6,535 $ 8,320 $ 9,662 $10,157 $12,748 $ 6,186 $ 4,657 Supporting services 13,925 15,569 17,282 31,362 27,311 16,412 11,326 Total expenses $ 20,460 $ 23,889 $ 26,944 $41,519 $40,059 $ 22,598 $ 15,983

Change in unrestricted net assets due to acquisitions and dispositions of art and library collections $ (648) $ (192) $ (305) $ (307) $ (99) $ (211) $ (27) Additional net pension obligations (53) 552 (382) (1,111) (119) - - Donor redesignations of contributions 1,491 5,653 12,087 - - - - Change in unrestricted net assets $ 6,485 $ 47,418 $ 39,911 $ 699 $(70,855) $(78,993) $ 30,182

Temporarily and permanently restricted support and revenue: Contributions $ 15,304 $ 44,886 $ 8,842 $ 11,827 $ 7,145 $ 4,346 $ 1,449 Investment return 4,206 10,640 11,251 1,543 (14,755) (14,638) 3,612 Other restricted support and revenue - - - - - Net assets released from restrictions (7,659) (12,808) (13,250) (17,652) (10,613) (3,604) (3,407) Total restricted support and revenue $ 11,851 $ 42,718 $ 6,843 (4,282) $(18,223) $(13,896) $ 1,654

Change in restricted net assets due to acquisitions and dispositions of art and library collections $ (3,921) $(13,935) $ (2,131) $ (2,276) $ (3,554) $ (2,946) $ (585) Change in value of trusts held by others 161 916 1,255 (1,098) (5,770) - 2,912 Donor redesignations of contributions (1,491) (5,653) (12,087) - - - - Change in restricted net assets $ 6,600 $ 24,046 $ (6,120) $ (7,656) $(27,547) $(16,842) $ 3,981 Change in total net assets $ 13,085 $ 71,464 $ 33,791 $ (6,957) $(98,402) $(95,835) $34,163

STATEMENT OF FINANCIAL POSITION: Total current assets $ 32,666 $ 59,670 $ 51,868 $ 34,856 $ 39,214 $ 28,505 $ 33,685 Investments and other 579,264 622,280 663,024 674,235 594,167 606,653 633,033 Total assets $611,930 $681,950 $714,892 $709,091 $633,381 $635,158 $666,718

Total Liabilities $227,642 $226,197 $225,348 $226,504 $249,196 $248,406 $248,370 Net assets: Unrestricted $195,701 $243,120 $283,030 $283,729 212,874 $204,736 $243,056 Temporary restricted 129,967 150,465 142,410 135,409 114,218 120,701 115,304 Permanently restricted 58,620 62,168 64,104 63,449 57,093 61,315 59,988 Total net assets $384,288 $455,753 $489,544 $482,587 $384,185 $386,752 $418,348

Total liabilities and net assets $611,930 $681,950 $714,892 $709,091 $633,381 $635,158 $666,718

A-24

Investments and Endowment

The Museum’s investments (consisting of the investments of both the Foundation and the Nelson Trust) are supervised by the Investment Committee of the Board of Trustees. The Investment Committee reviews the performance of the Museum’s investments and makes recommendations to the Board concerning the Museum’s investment policies. All long-term investments are managed by outside professional managers. The Museum’s investment policy was revised in September of 2009 and the re-balancing of the portfolio in accordance with the revised policy was completed by December 31, 2009. The investment portfolio allocation in place through previous and current investment policies is as follows:

Investment Policy Targets

Previous Policy Current Policy U.S. Equity 35% 30% Non-U.S. Equity 15 15 Emerging Markets 5 5 Marketable Alternatives 15 20 Real Assets 5 5 Nominal Fixed Income 25 19 Treasury Inflation Protected Securities - 6 100% 100%

The following table sets forth a summary of the Foundation’s investment portfolio for the calendar years ended December 31, 2007 and 2008, and the ten-month period ended October 31, 2009.

Foundation’s Investments at Market (in 000’s)

Percent of Percent of Percent of 2007 Portfolio(1) 2008 Portfolio(1) 10/31/2009 Portfolio(1)

Short Term Investments $ 21,212 $ 26,789 $22,443

Long-Term Investment Pool: Cash equivalent funds 2,242 1% 754 0% 22,910 8% Government securities 16,771 5% 3,649 2% 3,712 1% Corporate bonds 19,897 6% 15,088 6% 0 0% Common Stocks 16,511 5% 10,558 4% 13,624 5% Mutual funds 15,913 4% 7,907 3% 11,149 4% Alternative Investments 268,164 79% 209,000 85% 243,792 82% Total Long-Term Investments $339,498 100% $246,956 100% $295,187 100%

Total Investments $360,710 $273,745 $317,630

Rates of Return(2) 9.42% (27.26)% 19.68% ______(1) Percent shown for Long-Term Investment Pool. (2) Rates of return are computed for the period shown, net of fees and are computed solely on the Long-Term Investment Pool.

From January 1, 2009 through October 31, 2009, the rate of return of the Foundation’s Long-Term Investment Pool increased to 19.68%.

A-25

The estimated liquidity, based upon the expected time needed to convert an investment to cash, of the Nelson Gallery Foundation Endowment Funds at October 31, 2009 is set forth below.

Estimated Liquidity Breakdown of Nelson Gallery Foundation Endowment Funds As of October 31, 2009

Liquidity Market Value (in 000’s)

Same Day(1) $ 49,065 Daily - With 5 days notice 11,149 Daily - With 2 days notice 109,195 Weekly 13,624 Monthly - With a weeks notice 9,776 Monthly - With 30 days notice 28,900 Two Weeks - With 10 days notice 21,690 First Business Day of Each Month 22,352 Annual - With 100 days notice 41,883 Greater Than One Year 9,996 $317,630

(1) Approximately 50% of the same day funds were reclassified to “Monthly with 30 days notice” and “Greater than one year” as a result of end of the month rebalancing.

The category of “alternative investments” in the table “Foundation’s Investments at Market” above includes investments in equities, fixed income securities, real estate trusts and derivatives, both domestic and international. The term “alternative investments” is used to describe investments where the Foundation is the beneficial owner of the investment entity, but the underlying assets of the investment entity are not directly owned by the Foundation. For example, as of October 31, 2009, alternative investments included $56.0 million of investments which were classified as “hedge fund” investments under the Foundation’s investment policy. All of the hedge fund investments are managed through Cambridge Associates in a “fund of funds” approach to fund management. Currently, Cambridge Associates uses 19 different fund managers to manage the investments.

The following table set forth a summary of the general asset classification of alternative investments as of October 31, 2009.

A-26

Alternative Investments by Asset Classification

Percent U.S. Equity Funds 24% Hedge Funds 18 Fixed Income 7 Non-U.S. Developed Market – Equity Funds 21 Emerging Market – Equity Funds 4 Real Assets 26 Total alternative investments) 100%

The Foundation determines the market value of investments based upon a number of factors including publicly reported prices, valuations provided by each of the Foundation’s managers and valuation of other assets which are provided periodically. The assets themselves are invested as a fungible pool, and are not segregated except by explicit donor stipulation. Effective December 1, 2003, the Foundation and the Nelson Trust combined their long-term investment portfolios into a common fund for investment management purposes. Within this common fund, the separate percentage ownership by the Foundation and the Nelson Trust are maintained. Under the Foundation’s endowment spending policy, a portion of the total return on long-term investments may be allocated to support operations. The allocation is based upon a modification of the Yale Spending Formula. For 2008 and 2009, the spending rate was 5.0%.

The Foundation receives support through various trusts administered by third parties for the benefit of the Foundation. In accordance with generally accepted accounting principles in the United States (US GAAP), the value of investments and other assets held in these trusts is included in the audited financial statements of the Foundation if certain conditions are met. As of April 30, 2009, the market value of trust assets in trusts administered by third parties for the benefit of the Foundation was approximately $12.9 million.

Management’s Discussion and Analysis of Results of Operations

The on-going implementation of the Museum’s Strategic Plan and completion and occupancy of the Bloch Building affected the results of operations in fiscal years 2005 through 2009. The increase in program expense from $6.5 million in fiscal year 2005 to $12.7 million in fiscal year 2009 was primarily due to the expansion of certain programs and services as the Museum continued to fulfill certain objectives of the Strategic Plan. The increase in supporting services expense from $13.9 million in fiscal year 2005 to $27.3 million in fiscal year 2009 was primarily due to interest expense, depreciation, and occupancy costs associated with financing and operation of the newly renovated and expanded Museum.

The results of operations for the last five years have also been significantly affected by the investment returns on the Foundation’s investment portfolio. The net assets of the Foundation increased from $384.3 million at April 30, 2005 to $482.6 million at April 30, 2008, an increase of $98.3 million or 26%. Net assets at April 30, 2009 were $384.2 million, a decrease of $98.4 million from April 30, 2008, reflecting the most recent economic downturn. Investment losses accounted for $76.8 million. These losses combined with the decrease in value of trusts held by others of $5.8 million represent 84% of the total decrease in net assets. Realized losses accounted for only $0.6 million of these losses. As of October 31, 2009, the end of the second quarter of fiscal year 2010, the Foundation’s net assets had increased by $34.1 million to $418.3 million. Improved market conditions and the Investment Committee’s decision to retain earnings and contributions in short term investments rather than entering the market throughout the remainder of fiscal year 2009 and until November of calendar year 2009, contributed to the limitation of losses. As of October 31, 2009, the Foundation’s rate of return year to date on long-term investments was 19.68%.

A-27

The decrease in net assets due to acquisitions and dispositions of art and library collections has fluctuated over the five-year period due primarily to the varying opportunities in the art market to acquire desired pieces at prices the Museum believes to be appropriate. The $13.9 million decrease in restricted net assets in fiscal year 2006 is primarily due to acquisition of a very important and extensive photography collection. The use of cash or other assets of the Foundation to acquire art objects results in a decrease in net assets because neither the cost nor the value of art objects are reflected on the Statement of Financial Position of the Foundation.

Increase in Operating Expenses Due to the Completion of the Bloch Building and Museum Renovations

As noted above, the increase in supporting services expense from $13.9 million in fiscal year 2005 to $31.4 million in fiscal year 2008 was primarily due to interest expense, depreciation, and occupancy costs associated with financing, the opening of the Bloch Building and the operation of the newly renovated and expanded Museum. In 2003, the Board of Trustees approved additional spending of up to $15 million from the endowment, over five years, to assist with the anticipated increase in operating expenses of the expanded and renovated Museum. This additional spending was over and above the Foundation’s regular spending policy. The Foundation used $14.8 million of the approved $15 million. The final draws on the approved additional spending occurred in fiscal years 2007 and 2008 with additional spending of $2.4 million and $1.9 million respectively. The Foundation returned to its normal endowment spending policy in fiscal year 2009.

In February of 2009, in response to the negative investment performance of the Foundation’s endowment through the latter part of 2008 and the first month of 2009, and a decline in donations during that same period, management of the Foundation implemented a staff reorganization resulting in the elimination of 25 positions. The negative investment performance and the decline in giving were both the attributable to the worldwide economic downturn.

The Foundation estimates that total operating expenses for fiscal years 2010 through 2012 will be approximately $23 million per fiscal year. The Foundation expects to fund such expenses from: (1) endowment support, (2) museum store and other auxiliary revenues, and (3) revenues from increases in memberships and other support programs.

Outstanding Debt

The Board has issued three separate series of bonds all of which are reflected in the Foundation’s financial statements as long-term debt. The three series of bonds and the outstanding principal amounts are described as follows:

• Cultural Facilities Revenue Bonds (The Nelson Gallery Foundation) Series 2001A, issued on December 6, 2001, in the aggregate principal amount of $74,955,000, all of which remains outstanding. A portion of these bonds will be refunded and redeemed with the proceeds of the Series 2010A Bonds. See “PLAN OF FINANCE” in the front part of this Official Statement.

• Variable Rate Demand Cultural Facilities Revenue Bonds (The Nelson Gallery Foundation) Series 2004, issued on April 29, 2004, in the aggregate principal amount of $60,000,000, all of which remains outstanding. These bonds are supported by a liquidity facility that permits annual renewals. The current expiration date is May 28, 2010. These bonds were issued to facilitate a contribution from the Hall Family Foundation, as donor, in the form of a Donation Agreement. The Donation Agreement unconditionally obligates the Hall Family Foundation to make donations to the Foundation in an amount equal to all of the principal and interest due on the Series 2004 Bonds. The donation agreement and Series 2004 Bonds are reflected as a contribution and as long-term indebtedness of the Foundation, respectively, and are described in Notes 4 and 13 to the Financial Statements included in Appendix B.

A-28

• Variable Rate Demand Cultural Facilities Revenue Bonds (The Nelson Gallery Foundation) Series 2008A, issued on August 28, 2008, in the aggregate principal amount of $108,500,000, all of which remains outstanding. The $85,000,000 Series 2001B issue was refunded in full with a portion of the proceeds of this issue. These bonds are supported by a liquidity facility that permits annual renewals. The current expiration date is November 16, 2010.

The Foundation has no other outstanding long-term debt or long-term lease commitments. The Nelson Trust has no outstanding long-term debt or long-term lease commitments and is not liable on the bonds of the Foundation. Neither the Foundation nor the Nelson Trust expect to incur any debt in the foreseeable future. Likewise, neither institution has guaranteed any outstanding indebtedness of any other entity.

THE WILLIAM ROCKHILL NELSON TRUST

The William Rockhill Nelson Trust was created by the Last Will and Testament of William Rockhill Nelson for the purpose of acquiring works of art to be exhibited for the delectation and enjoyment of the public in buildings provided for that purpose. The Nelson Trust is governed by three University Trustees appointed by the Presidents of the Universities of Missouri, Kansas and Oklahoma. In 1954, the University Trustees created the Foundation to acquire works of fine art for exhibition to the public and to own and operate the Museum for related purposes and uses. The Foundation is the borrower of the proceeds of the Series 2010A Bonds and is directly obligated to make the payments under the Loan Agreement to pay the principal of and interest on the Series 2010A Bonds. The Nelson Trust is not obligated, directly or indirectly, to make payments with respect to the Series 2010A Bonds.

The financial statements included in Appendix B are the combined financial statements of the Foundation and the Nelson Trust, prepared in accordance with US GAAP. These audited financial statements include statements of activities and assets and liabilities of the Nelson Trust, which is not directly or indirectly obligated to make any payments with respect to the Series 2010A Bonds. As reflected in those financial statements, however, the Nelson Trust provides annual support to the Foundation for the maintenance of the art collection in addition to direct purchases of art for the Museum. The following table sets forth the annual financial support provided by the Nelson Trust to the Foundation for each of the last five fiscal years and the market value of the short and long-term investments of the Nelson Trust as of the end of each of those fiscal years. The net assets of the Nelson Trust at April 30, 2009, were approximately $41.4 million.

The following table sets forth for the last five fiscal years the Nelson Trust’s financial support of the Museum and net assets at year end.

The William Rockhill Nelson Trust Summary Financial Information (in thousands)

Fiscal Years Ended April 30, Anticipated 2005 2006 2007 2008 2009 2010 Support for the Museum $ 1,831 $ 1,824 $ 1,829 $ 1,866 $ 1,936 $1,753 Net assets(1) 43,774 52,330 53,344 52,112 41,376 ______(1)At the end of each fiscal year shown.

The Board of Trustees has adopted an endowment spending policy, whereby a portion of the total return on long-term investments may be allocated to support operations. The allocation is based upon a modification of the Yale Spending Formula. For 2008 and 2009, the spending rate was 5.0%.

A-29

As of April 30, 2009, of the total net assets of the Nelson Trust, $26.3 million is commingled with the Long Term Investment Pool of the Foundation. At October 31, 2009 $29.9 million of Nelson Trust assets participate in the Long Term Investment Pool. As of April 30, 2009, the market value of trust assets in trusts administered by third parties for the benefit of the Nelson Trust was approximately $11.6 million. At October 31, 2009 those assets are reported at $13.2 million.

______

A-30

(THIS PAGE LEFT BLANK INTENTIONALLY)

APPENDIX B

AUDITED FINANCIAL STATEMENTS OF THE NELSON GALLERY FOUNDATION AS OF AND FOR THE YEAR ENDED APRIL 30, 2009 AND SUMMARIZED FINANCIAL INFORMATION FOR THE YEAR ENDED APRIL 30, 2008

(THIS PAGE LEFT BLANK INTENTIONALLY) C OMBINED F INANCIAL S TATEMENTS

The William Rockhill Nelson Trust and The Nelson Gallery Foundation Year Ended April 30, 2009, and Summarized Financial Information for the Year Ended April 30, 2008 With Report of Independent Auditors

0901-1019274 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Combined Financial Statements

Year Ended April 30, 2009, and Summarized Financial Information for the Year Ended April 30, 2008

Contents

Report of Independent Auditors...... 1

Audited Financial Statements

Combined Statements of Financial Position ...... 2 Combined Statements of Activities ...... 3 Combined Statements of Cash Flows ...... 4 Notes to Combined Financial Statements ...... 5

0901-1019274

The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Combined Statements of Financial Position

April 30, 2009 The Nelson The William Gallery Rockhill April 30, 2008 Foundation Nelson Trust Combined Combined Assets Current assets: Cash $ 2,106,700 $ 2,492,321 $ 4,599,021 $ 361,541 Short-term investments 27,633,336 903,846 28,537,182 27,300,449 Accounts receivable 341,764 – 341,764 152,199 Contributions receivable (Note 4) 8,229,485 – 8,229,485 8,451,087 Other receivables, principally accrued dividends, and interest 27,871 – 27,871 216,255 Bookstore inventory 874,992 – 874,992 950,083 Total current assets 39,214,148 3,396,167 42,610,315 37,431,614

Pooled marketable securities, at market (Note 5) 251,877,260 26,339,841 278,217,101 369,398,010 Contributions receivable (Note 4) 65,507,808 – 65,507,808 65,675,345 Property and equipment, net (Note 7) 247,048,309 30,000 247,078,309 246,836,496 Trusts held by others 12,946,387 11,615,394 24,561,781 31,610,463 Assets whose use is limited (Note 14) 14,055,846 – 14,055,846 7,138,843 Bond financing costs, net 2,731,247 – 2,731,247 3,363,774 Collections (Note 8) – – – – Total assets $ 633,381,005 $ 41,381,402 $ 674,762,407 $ 761,454,545

Liabilities and net assets Current liabilities: Accounts payable and accrued liabilities $ 1,831,330 $ 5,741 $ 1,837,071 $ 2,887,508 Bond interest payable (Note 13) 1,643,266 – 1,643,266 1,683,479 Construction bonds payable (Note 13) 24,083,333 – 24,083,333 14,500,000 Total current liabilities 27,557,929 5,741 27,563,670 19,070,987

Construction bonds payable (Note 13) 219,371,667 – 219,371,667 205,455,000 Accrued pension obligation (Note 12) 2,266,135 – 2,266,135 2,229,955 Total liabilities 249,195,731 5,741 249,201,472 226,755,942

Net assets: Unrestricted: General undesignated 1,752,676 323,169 2,075,845 2,091,483 Board-designated 211,121,349 15,916,383 227,037,732 308,390,045 Temporarily restricted (Note 9) 114,218,498 – 114,218,498 135,408,739 Permanently restricted (Note 11) : Trust corpus – 10,935,182 10,935,182 10,935,182 Art acquisition 875,962 4,140,809 5,016,771 6,294,973 Endowment 56,216,789 10,060,118 66,276,907 71,578,181 Total net assets 384,185,274 41,375,661 425,560,935 534,698,603 Total liabilities and net assets $ 633,381,005 $ 41,381,402 $ 674,762,407 $ 761,454,545

See accompanying notes.

0901-1019274 2 The William Rockhill Nelson Trust and The Nelson Gallery Foundation Combined Statements of Activities

Combined Summarized Year Ended April 30, 2009 Financial The Nelson Gallery Foundation The William Rockhill Nelson Trust Information Temporarily Permanently Total Permanently Total for Year Ended Unrestricted Restricted Restricted Foundation Unrestricted Restricted Trust Combined April 30, 2008 Support and revenue: Contributions $ 13,003,118 $ 4,700,607 $ 2,444,374 $ 20,148,099 $ – $ – $ – $ 20,148,099 $ 23,177,758 Membership dues and fees 2,813,348 – – 2,813,348 – – – 2,813,348 3,238,989 Program fees from The William Rockhill Nelson Trust (Note 3) 1,936,399 – – 1,936,399 (1,936,399) – (1,936,399) – – Investment return (62,027,186) (13,991,859) (763,247) (76,782,292) (8,576,876) 515,539 (8,061,337) (84,843,629) 7,644,868 Admission fees 110,789 – – 110,789 – – – 110,789 276,020 Program fees, royalties, and other 665,710 – – 665,710 – – – 665,710 1,550,529 Revenues of auxiliary activities 2,306,413 – – 2,306,413 – – – 2,306,413 2,969,899 Net assets released from restrictions (Note 9) : Satisfaction of program restrictions 5,639,925 (5,639,925) – – – – – – – Satisfaction of time restrictions 4,779,171 (4,779,171) – – – – – – – Satisfaction of capital acquisition restrictions 193,987 (193,987) – – – – – – – Total support and revenue (30,578,326) (19,904,335) 1,681,127 (48,801,534) (10,513,275) 515,539 (9,997,736) (58,799,270) 38,858,063

Expense: Program: Curators, design, and conservation 8,297,267 – – 8,297,267 – – – 8,297,267 6,205,915 Special exhibitions 1,754,300 – – 1,754,300 – – – 1,754,300 1,379,156 Education and library 2,695,854 – – 2,695,854 – – – 2,695,854 2,571,734 Supporting services: Administration 8,805,325 – – 8,805,325 – – – 8,805,325 10,572,661 Operations and security 14,456,065 – – 14,456,065 – – – 14,456,065 15,052,796 Membership services 1,140,874 – – 1,140,874 – – – 1,140,874 1,196,873 Development and public information 707,838 – – 707,838 – – – 707,838 1,503,778 Expenses of auxiliary activities 2,201,242 – – 2,201,242 – – – 2,201,242 3,036,419 Total expense 40,058,765 – – 40,058,765 – – – 40,058,765 41,519,332

Change in net assets due to acquisitions and dispositions of art and library collections (Note 8) (99,112) (699,108) (2,854,336) (3,652,556) – 540,078 540,078 (3,112,478) (2,770,074) Change in value of trusts held by others – (586,798) (5,183,376) (5,770,174) – (1,278,508) (1,278,508) (7,048,682) (1,647,195) Pension related changes other than net periodic pension cost (118,473) – – (118,473) – – – (118,473) 158,417 Change in net assets before effect of adoption of FASB Statement No. 158 (70,854,676) (21,190,241) (6,356,585) (98,401,502) (10,513,275) (222,891) (10,736,166) (109,137,668) (6,920,121)

Effect of adoption of FASB Statement No. 158 (1,269,211)

Change in net assets (70,854,676) (21,190,241) (6,356,585) (98,401,502) (10,513,275) (222,891) (10,736,166) (109,137,668) (8,189,332)

Net assets, beginning of year 283,728,701 135,408,739 63,449,336 482,586,776 26,752,827 25,359,000 52,111,827 534,698,603 542,887,935 Net assets, end of year $ 212,874,025 $ 114,218,498 $ 57,092,751 $ 384,185,274 $ 16,239,552 $ 25,136,109 $ 41,375,661 $ 425,560,935 $ 534,698,603

See accompanying notes.

3 0901-1019274 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Combined Statements of Cash Flows

Year Ended April 30, 2009 Year Ended The Nelson The William April 30, Gallery Rockhill 2008 Foundation Nelson Trust Combined Combined Cash flows from operating activities: Change in net assets $ (98,401,502) $ (10,736,166) $ (109,137,668) $ (8,189,332) Adjustments to reconcile change in net assets to net cash used in operating activities: Depreciation 7,666,270 – 7,666,270 7,116,520 Discount accretion on contributions receivable (13,188) – (13,188) 921,958 Change in receivables 401,146 – 401,146 5,936,561 Change in bookstore inventory 75,091 – 75,091 (68,331) Change in accounts payable and accrued liabilities (804,882) (245,555) (1,050,437) (2,911,574) Contributions restricted for long-term investment (11,229,149) – (11,229,149) (18,668,554) Change in accrued pension obligation 36,180 – 36,180 1,331,703 Interest and dividends restricted for long-term investment (20,325) – (20,325) (48,240) Net losses on long-term investments 82,431,976 9,136,015 91,567,991 670,108 Change in net assets due to acquisitions and dispositions of art and library collections 3,652,557 (540,078) 3,112,479 2,524,519 Net cash used in operating activities (16,205,826) (2,385,784) (18,591,610) (11,384,662)

Cash flows from investing activities: Purchase of investments (90,816,977) – (90,816,977) (66,049,949) Proceeds from sale of investments 86,157,025 3,036,139 89,193,164 63,434,730 Change in value of trusts held by others 5,770,174 1,278,508 7,048,682 1,647,196 Proceeds from sales of limited use assets (6,936,324) – (6,936,324) 6,257,627 Change in accrued interest receivable on limited use assets 19,319 – 19,319 2,671 Purchase of property and equipment (7,908,083) – (7,908,083) (9,342,987) Purchase of art and library collections (3,702,623) (29,962) (3,732,585) (3,540,172) Proceeds from sale of art and library collections 50,066 570,040 620,106 1,015,653 Net cash (used in) provided by investing activities (17,367,423) 4,854,725 (12,512,698) (6,575,231)

Cash flows from financing activities: Proceeds from construction bond issue 108,500,000 – 108,500,000 – Refunding of construction bond issue (85,000,000) – (85,000,000) – Change in bond financing costs 632,527 – 632,527 107,913 Change in bond interest payable (40,213) – (40,213) (291,446) Proceeds from contributions restricted for: Permanent endowment 1,482,065 – 1,482,065 1,103,147 Temporary funds 9,410,617 – 9,410,617 17,047,565 Acquisition of art collections 336,467 – 336,467 517,842 11,229,149 – 11,229,149 18,668,554

Interest and dividends restricted for reinvestment 20,325 – 20,325 48,240 Net cash provided by financing activities 35,341,788 – 35,341,788 18,533,261

Net increase in cash 1,768,539 2,468,941 4,237,480 573,368 Cash at beginning of year 338,161 23,380 361,541 (211,827) Cash at end of year $ 2,106,700 $ 2,492,321 $ 4,599,021 $ 361,541

Supplemental disclosure of cash flow information Cash paid for interest $ 6,622,522 $ – $ 6,622,522 $ 8,304,433

Change in art and library collections accrued at year-end $ – $ (245,554) $ (245,554) $ (3,504,446) See accompanying notes.

0901-1019274 4 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements

April 30, 2009 and 2008

1. Organization

The Nelson Gallery Foundation (the Foundation) is a charitable trust created in 1954 by the trustees of the William Rockhill Nelson Trust (the Trust). The Trust and the Foundation are two separate legal entities; however, the Trust operates solely for the benefit of the Foundation. Combined financial statements are presented as a result of this relationship.

The Trust and the Foundation are tax-exempt charitable organizations under Section 501(c)(3) of the Internal Revenue Code (the Code) and exempt from federal income taxes on related income pursuant to Section 501(a) of the Code. Therefore, no provision for income taxes has been made in these financial statements.

2. Summary of Accounting Policies

Principles of Combined Statements and Basis of Presentation

The accompanying combined financial statements of the Trust and the Foundation have been prepared on the accrual basis of accounting in accordance with U.S. generally accepted accounting principles (GAAP). The following is a summary of significant accounting and reporting policies used in preparing the financial statements.

Reclassifications

Prior year reported amounts of cash and short-term investments of $1,260,718 and $26,401,272, respectively, reflect reclassifications to conform to the current year’s presentation.

Fund Accounting

The accounts of the Trust and the Foundation are maintained in accordance with the principles of fund accounting. This accounting and reporting method classifies resources by their nature and purpose, based on the presence or absence of donor-imposed restrictions, into three classes of net assets as follows:

Unrestricted Net Assets – Consists of funds free of any donor-imposed restrictions and are subclassified into undesignated funds and Board-designated funds.

0901-1019274 5 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

2. Summary of Accounting Policies (continued)

Temporarily Restricted Net Assets – Consists of contributions and other inflows of funds temporarily subject to donor-imposed restrictions. The restrictions are temporary in that they are expected to expire with the passage of time or be satisfied and removed by actions of the Foundation that fulfill donor stipulations. Also, included in this category are amounts that function as an endowment, including certain accumulated investment gains (see Note 2 – Investments), and contributions for which the donor directs that the principal amount can be spent if the related income earned does not meet donor specified levels. Certain donors of temporarily restricted amounts above have reserved the right to specify the use of their contributions. As these rights are exercised or relinquished, the respective funds may be reclassified among the three net asset classes.

Permanently Restricted Net Assets (Foundation) – Consists of contributions and other inflows of funds subject to donor-imposed restrictions that neither expire by the passage of time nor can be fulfilled or otherwise removed by actions of the Foundation. Permanently restricted funds are subclassified into art acquisition funds and endowment funds. Art acquisition funds are available for the acquisitions of art or as an endowment which provides income for the acquisition of art. Endowment funds are invested to provide income to support either specific activities or general operations in accordance with donor stipulations.

Permanently Restricted Net Assets (Trust) – Consists of Trust corpus and inflows of funds subject to Trust restrictions that neither expire by the passage of time nor can be fulfilled or otherwise removed by actions of the trustees. Permanently restricted funds are subclassified into art acquisition funds and endowment funds. Art acquisition funds are available only for the acquisitions of art. Trust corpus represents the original bequest of William Rockhill Nelson and has not changed since 1930. Trust corpus is invested to provide income to support activities allowed under the Trust.

Art Objects

In conformity with accounting policies generally followed by art museums, the collections which were acquired through purchases by the trustees and contributions since the inception are not recognized as assets on the combined statements of financial position. Purchases of collection items are recorded as decreases in unrestricted net assets in the year in which the items are acquired or as decreases in temporarily or permanently restricted net assets if the assets used to purchase the items were restricted by donors. Contributed collection items are not reflected on the combined financial statements. Proceeds from deaccessions are reflected as increases in permanently restricted net assets.

0901-1019274 6 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

2. Summary of Accounting Policies (continued)

Investments

Gains and losses from sales of investments are recognized using the first-in, first-out (FIFO) method.

Investment gains are classified as unrestricted, temporarily restricted, or permanently restricted based on the donor’s intentions for the use of the income. Certain accumulated investment gains are classified as temporarily restricted, rather than unrestricted, due to donor preferences for use of the Foundation’s spending policy described below. The spending policy determines investment gains which can be spent and investment gains which are retained as temporarily restricted funds functioning as endowment.

The Board of Trustees has adopted an endowment spending policy, whereby a portion of total return on investments may be allocated to support operations. The allocation is based on prior year allocated investment income and a formula using the market value of investments at the previous calendar year-end and an established spending rate. For 2009 and 2008, the nominal spending rate was 5%, applied to endowments established to support program operations. The Board of Trustees previously adopted an endowment spending policy with respect to certain Board-designated funds. The approved nominal spending rate of 1.5% was applied to these funds to support program operations for both 2009 and 2008.

Short-term investments represent operating funds needed for liquidity and certain donations received where the donor has yet to provide direction for the intended use or investment of the money and funds intended to be added to long-term investments over time.

Contributions

Unconditional promises to give cash and other assets are reported at fair value at the date the promise is received. Conditional promises to give and indications of intentions to give are reported at fair value at the date the gift is received or the condition has been satisfied. Contributions are reported as either temporarily or permanently restricted support if they are received with donor stipulations that limit the use of the donated assets. When a donor restriction is satisfied (as to either time or purpose), temporarily restricted net assets are reclassified as unrestricted net assets and reported in the combined statements of activities as net assets released from restrictions. Donor-restricted contributions whose restrictions are met within the same year as received are reported as unrestricted contributions in the combined accompanying statements of activities.

0901-1019274 7 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

2. Summary of Accounting Policies (continued)

All unconditional contributions are included in revenue of unrestricted net assets at the time they are received or pledged. Donated property is recorded at fair market value on the date it is received or pledged.

Bookstore Inventory

Inventory consists of books on art, posters, and other art-related items and is stated at the lower of cost or market, using the FIFO method.

Property and Equipment

Purchases of real estate, buildings, furniture, fixtures, and equipment are recorded at cost. Donated real estate, buildings, furniture, fixtures, and equipment are recorded at fair value at the date of donation. Improvements and replacements are capitalized, and repairs and maintenance are expensed as incurred. Depreciation expense is computed on a straight-line basis over the estimated useful lives of certain assets, which are generally 5 to 40 years.

Real estate subject to life estates includes property to which the Foundation received title, with the donors retaining residency by means of life estates until death. The property is recorded at the amount of the estimated fair market value determined by the donors for tax purposes.

Trusts Held by Others

Trusts administered by third parties for the benefit of the Trust and the Foundation are included in the financial statements with changes in such amounts recorded in the combined statements of activities as changes in temporarily restricted or permanently restricted net assets.

Fair Value of Financial Instruments

The following methods and assumptions were used to estimate the fair value of each class of financial instruments as it appears on the combined statements of financial position, for which it was practicable to estimate that value (for all categories listed, carrying value approximates fair value):

Cash – For the purpose of the combined statements of cash flows, these assets of cash in banks and investments in short-term, interest-bearing instruments are carried at cost plus accrued interest which approximate market value.

0901-1019274 8 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

2. Summary of Accounting Policies (continued)

Contributions Receivable – Fair value, after allowance for uncollectible pledges, was determined by discounting the expected future cash flows.

Investments – Investments in government bonds, corporate bonds, and equity securities, including mutual funds and common trust funds, are stated at fair market value based primarily on quoted market prices, with gains and losses included in the combined statements of activities. Management’s estimate of the fair value of certain investments is included in Note 6.

The Foundation and Trust invest in limited partnerships, limited liability companies, and commingled vehicles, some of which employ traditional strategies in readily marketable securities and others of which employ less traditional strategies. The fair value of alternative investments is generally determined by an investment manager of the individual investment fund, based on the fair value of the underlying investments. A portion of the underlying alternative investments is not readily marketable. Therefore, its estimated fair value is subject to uncertainty and therefore may differ from the value that would have been used had a ready market for such investment existed. Such difference could be significant.

Trusts Held by Others – Trusts administered by third parties for the benefit of the Trust and the Foundation are carried at the fair value of the trusts’ assets as determined by the third parties, less the present value of any contingent portion. Changes in the fair value of the trusts that exist in perpetuity are recorded in the combined statements of activities as permanently restricted.

Construction Bonds Payable – The fair value of the Foundation’s long-term debt, estimated based on the quoted market prices for the same or similar issues or discounted cash flow analyses, approximates its carrying value.

Use of Estimates

The preparation of combined financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the combined financial statements and the reported revenue, gains, and other support and expenses during the reporting periods. Actual results could differ from those estimates.

0901-1019274 9 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

2. Summary of Accounting Policies (continued)

Concentrations of Credit Risk

Financial instruments that potentially subject the Trust and the Foundation to concentrations of credit risk include cash, investments, and contributions receivable. Collateral is not held for these instruments. However, investments and cash and cash equivalents are managed within guidelines established by the Investment Committee, which, as a matter or policy, limit the amounts that may be invested with one issuer. Concentrations of credit risk with respect to contributions receivable are limited since amounts are generally due from large number of individual donors or corporations. See Note 4 for additional information.

2008 Summarized Financial Information

The accompanying combined financial statements include certain prior year summarized comparative information in total but not by net asset class. Such information does not include sufficient detail to constitute a presentation in conformity with GAAP. Accordingly, such information should be read in conjunction with the Foundation’s and the Trust’s financial statements for the year ended April 30, 2008, from which the summarized information was derived.

Adoption of New Accounting Standards

Effective May 1, 2008, both the Foundation and the Trust have adopted Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value GAAP, and expands disclosures regarding fair value measurements. The Foundation and Trust’s adoption of SFAS No. 157 had no material impact on their financial statements.

In February 2008, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115, which among other things, provides an option to elect fair value as an alternative measurement for selected assets and liabilities not previously recorded at fair value. As a result of adopting SFAS No. 159, the Trust and the Foundation did not elect fair value accounting for any additional assets or liabilities.

0901-1019274 10 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

2. Summary of Accounting Policies (continued)

In August 2008, the FASB issued FASB Staff Position No. 117-1, Endowments of Not-for-Profit Organizations: Net Asset Classification of Funds Subject to an Enacted Version of the Uniform Prudent Management of Institutional Funds Act, and Enhanced Disclosures for All Endowment Funds (FSP FAS 117-1), which, among other things, provides guidance on the net asset classification of donor-restricted endowment funds for a not-for-profit organization that is subject to an enacted version of the Uniform Prudent Management of Institutional Act of 2006 (UPMIFA) and additional disclosures about an organization’s endowment funds. In 2009, the State of Missouri introduced a version of UPMIFA with an expected enactment date of August 28, 2009, and therefore, the Trust and the Foundation have not yet completed their assessment of the impact of FSP 117-1 on net asset. However, the Trust and the Foundation are still subject to disclosure requirements (see Note 15).

In May 2009, the FASB issued SFAS No. 165, Subsequent Events. SFAS No. 165 defines subsequent events as events or transactions that occur after the balance sheet date, but before the financial statements are issued or available to be issued. It defines two types of subsequent events: recognized subsequent events, which provide additional evidence about conditions that existed at the balance sheet date, and nonrecognized subsequent events, which provide evidence about conditions that did not exist as of the balance sheet date, but arose after that date. Recognized subsequent events are required to be recognized in the financial statements, and certain nonrecognized subsequent events are required to be disclosed. SFAS No. 165 requires entities to disclose the date through which the subsequent events have been evaluated and the basis for that date. The Foundation and the Trust adopted SFAS No. 165 as required (see Note 16).

Recent Accounting Pronouncements

In December 2008, the FASB issued FSP 132(R) 1, Employers’ Disclosure About Postretirement Benefit Plan Assets, which amends SFAS No. 132, Employers’ Disclosures About Pensions and Other Postretirement Benefits. This FSP requires sponsors of postretirement benefit plans to disclose additional information about the plan’s invested assets. Sponsors will be required to disclose the fair value of each major category of assets in the plans as of each annual reporting date and the basis for determining the value, more detailed description of investment policies and strategies, and more detailed descriptions of concentrations of credit risk. The additional disclosures are required for fiscal years ending after December 15, 2009, which for the Foundation and the Trust is April 30, 2010.

0901-1019274 11 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

3. Related Parties

The trustees of The William Rockhill Nelson Trust are also trustees of The Nelson Gallery Foundation. The Foundation pays certain operating costs incurred by The Nelson-Atkins Museum of Art (the Museum) for the Trust. Under this arrangement, the Trust periodically remits amounts to the Foundation to fund certain operating expenses of the Museum, rather than directly paying these expenses. These payments from the Trust represent net Trust investment income, are determined pursuant to the spending policy, and are reported in the Foundation’s statement of activities.

4. Contributions Receivable

Contributions receivable at April 30, 2009 and 2008, are comprised of the following:

Foundation 2009 2008

Unrestricted $ 3,682,529 $ – Temporarily restricted 69,217,258 73,914,768 Permanently restricted 837,506 211,664 $ 73,737,293 $ 74,126,432

Contributions receivable at April 30, 2009 and 2008, are due to be received in the following periods: Foundation 2009 2008

Receivable in one year $ 8,229,485 $ 8,451,087 Receivable in one to five years 16,525,115 16,577,757 Receivable in more than five years 48,982,693 49,097,588 $ 73,737,293 $ 74,126,432

Contributions receivable are discounted to present value at a weighted-average discount rate of 4.13% for 2009 and 4.14% for 2008. Discounts at April 30, 2009 and 2008, were $58,468,421 and $61,171,426, respectively. The allowance for doubtful pledges at April 30, 2009 and 2008, was $716,604 and $760,971, respectively.

0901-1019274 12 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

4. Contributions Receivable (continued)

Bequests and other commitments amounting to $30,447,626 and $28,710,610 at April 30, 2009 and 2008, respectively, are considered to be conditional promises to give and, as such, have not been reflected in the accompanying combined financial statements.

Pursuant to an agreement entered into with a certain donor during the fiscal year ended April 30, 2004, the Foundation recorded a contribution receivable in the amount of $60,000,000, net of discount. Under the terms of the agreement, the donor is unconditionally obligated to make contributions equal in amount to all required interest and principal payments, as they become due, on the Foundation’s outstanding Series 2004A tax-exempt bonds (see Note 13) for the purpose of meeting the Foundation’s obligation to make such payments.

5. Pooled Marketable Securities

A substantial portion of the unrestricted, temporarily restricted, and permanently restricted net assets is combined for investment purposes into pooled marketable securities. The remaining invested assets are comprised of short-term investments. Pooled marketable securities consisted of the following at April 30, 2009 and 2008 (at market):

2009 2008 Total Total Foundation Trust Combined Combined

Cash equivalent funds $ 645,915 $ – $ 645,915 $ 2,050,887 Government bonds 4,154,800 – 4,154,800 19,186,554 Corporate bonds –– – 4,292,666 Equity securities 12,496,166 – 12,496,166 17,665,504 Mutual funds 10,258,169 – 10,258,169 16,936,333 Common trust funds – fixed income 87,758,730 – 87,758,730 68,493,092 Common trust funds – equities 64,585,851 – 64,585,851 101,041,588 Alternative investments 98,317,470 – 98,317,470 139,731,386 Trust investment in pooled securities (26,339,841) 26,339,841 – – Total $ 251,877,260 $ 26,339,841 $ 278,217,101 $ 369,398,010

0901-1019274 13 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

5. Pooled Marketable Securities (continued)

The Foundation’s rationale for investment in alternative investments is improved diversification, alternative opportunities for generating attractive returns due to inefficient markets, and potential reduction in the portfolio’s volatility of returns. These asset classes have lower liquidity and require a commitment to a high level of oversight over a long period of time to manage a diversified program. The underlying securities of the alternative investments are comprised of equities, fixed income securities, real estate trusts, and derivatives, both domestic and international.

The investment return was comprised of the following:

2009 2008 Temporarily Permanently Total Total Unrestricted Restricted Restricted Combined Combined Foundation: Investment income $ 5,078,920 $ 1,283,121 $ 155,045 $ 6,517,086 $ 7,932,969 Net investment losses (66,091,899) (15,061,595) (897,233) (82,050,727) (568,868) Investment expenses (1,014,207) (213,385) (21,059) (1,248,651) (1,089,462) (62,027,186) (13,991,859) (763,247) (76,782,292) 6,274,639

Trust: Investment income 661,267 – 515,539 1,176,806 1,578,960 Net investment losses (9,136,015) – – (9,136,015) (130,288) Investment expenses (102,128) – – (102,128) (78,443) – (8,576,876) 515,539 (8,061,337) 1,370,229 Total combined investment return $ (70,604,062) $ (13,991,859) $ (247,708) $ (84,843,629) $ 7,644,868

0901-1019274 14 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

6. Fair Value Measurements

Effective May 1, 2008, the Foundation and the Trust adopted SFAS No. 157, Fair Value Measurements, which provides a framework for measuring fair value of certain assets and liabilities and expands disclosures about fair value measurements. As defined in SFAS No. 157, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. SFAS No. 157 establishes a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement). Certain of the Foundation and Trust’s financial assets and financial liabilities are measured at fair value on a recurring basis, including money market, fixed income, and equity instruments. The three levels of the fair value hierarchy defined by SFAS No. 157 and a description of the valuation methodologies used for instruments measured at fair value are as follows: Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date. Level 1 primarily consists of financial instruments such as money market securities and listed equities. Level 2 – Pricing inputs other than quoted prices included in Level 1 that are either directly observable or that can be derived or supported from observable data as of the reporting date. Instruments in this category include certain U.S. government agency and sponsored entity debt securities and interest rate swap contracts. Level 3 – Pricing inputs include those that are significant to the fair value of the financial asset or financial liability and are not observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value. Certain of the Foundation and the Trust’s alternative investments are primarily made through LLCs and LPs. These LLCs and LPs provide the Foundation and the Trust with a proportionate share of the investment gains (losses). The Foundation and the Trust account for their ownership in the LLCs and LPs under the equity method; thus, these investments are excluded from the scope of SFAS No. 157.

0901-1019274 15 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

6. Fair Value Measurements (continued) The fair value of financial assets and liabilities measured at fair value on a recurring basis was determined using the following inputs at April 30, 2009:

Fair Value Measurements at Reporting Date Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Fair Market Assets Inputs Inputs Value (Level 1) (Level 2) (Level 3) Assets Money markets and short-term investments $ 29,183,097 $ 29,183,097 $ – $ Marketable equity securities 12,496,166 12,496,166 – – Government bonds 4,154,800 – 4,154,800 – Mutual funds 10,258,169 10,258,169 – – Common trust funds – fixed income 87,758,730 – 87,758,730 – Common trust funds – equities 64,585,851 – 64,585,851 – Trusts held by others 24,561,781 – 6,097,845 18,463,936 Assets whose use is limited 14,055,846 – 14,055,846 – $ 247,054,440 $ 51,937,432 $ 176,653,072 $ 18,463,936

Year Ended April 30, 2009 Fair value measurement using significant unobservable inputs (Level 3) for Trusts held by others Fair value beginning balance $ 22,438,628 Change in value of trusts held by others (3,974,692) Transfers into (out of) Level 3 – Fair value ending balance $ 18,463,936

The fair values of the securities included in Level 1 were determined through quoted market prices. The fair values of Level 2 securities were determined through evaluated bid prices based on recent trading activity and other relevant information, including market interest rate curves and referenced credit spreads, and estimated prepayment rates where applicable are used for valuation purposes provided by third-party pricing services where quoted market values are not available. Level 2 assets include corporate fixed income, equities, and government bonds. Due to the volatility of the capital markets, there is a reasonable possibility of significant changes in fair value and additional gains (losses) in the near term subsequent to April 30, 2009.

0901-1019274 16 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

6. Fair Value Measurements (continued)

The fair value of perpetual split-interest trusts held by others is estimated based on the Foundation and the Trust’s beneficial interests in the trusts held by others. The fair values of the trusts, themselves, are based on present value techniques that utilize significant unobservable inputs. Thus, perpetual split-interest trusts held by others are categorized as Level 3 in the fair value hierarchy.

7. Property and Equipment

Property and equipment are comprised of the following at April 30, 2009 and 2008:

2009 2008 Foundation: Land $ 9,044,501 $ 9,044,501 Buildings 239,564,289 239,564,289 Furniture, fixtures, and equipment 19,575,023 19,329,139 268,183,813 267,937,929 Less accumulated depreciation 36,289,872 28,623,602 231,893,941 239,314,327 Construction-in-progress 15,140,486 7,478,287 Real estate subject to life estates 13,882 13,882 247,048,309 246,806,496 Trust: Real estate 30,000 30,000 $ 247,078,309 $ 246,836,496

8. Collections

The Trust and the Foundation maintain comprehensive fine arts collections of approximately 28,000 pieces spanning approximately 5,000 years and many cultures. The respective collections are used for the purposes of exhibition, education, study, research, publications, and loans to other museums. The collections are kept under curatorial care, including extensive conservation practices and specialized fine arts insurance coverage and are subject to the Trust’s and the Foundation’s policies that require proceeds from the sale of collection items to be used only for acquisition of additional collections. The Trust and the Foundation do not recognize donated collection items as contribution income, as its collections are not capitalized.

0901-1019274 17 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

8. Collections (continued)

A summary of the cost of collection items purchased and proceeds from sale of collection items for the years ended April 30, 2009 and 2008, is presented as follows (transfers due to satisfaction of acquisition requirements are reflected as an adjustment to costs of acquisition):

2009 2008 Temporarily Permanently Total Total Unrestricted Restricted Restricted Combined Combined Foundation: Proceeds from sales: Art collections sold $ – $ – $ 50,066 $ 50,066 $ 123,370

Cost of acquisitions: Art acquisitions (99,112) (633,000) (2,855,523) (3,587,635) (2,333,619) Library acquisitions – (66,108) (48,879) (114,987) (372,460) (99,112) (699,108) (2,904,402) (3,702,622) (2,706,079) Net acquisitions (99,112) (699,108) (2,854,336) (3,652,556) (2,582,709)

Trust: Proceeds from art collections sold – – 570,040 570,040 892,283 Cost of art acquisitions – – (29,962) (29,962) (1,079,648) Net acquisitions – – 540,078 540,078 (187,365) Combined net art acquisitions $ (99,112) $ (699,108) $ (2,314,258) $ (3,112,478) $ (2,770,074)

All collection items deaccessed during 2009 and 2008 were placed on consignment with art dealers to be sold in the ordinary course of business; as a consequence, some deaccessioned items remain unsold on consignment at year-end. No collection items were given away, destroyed, lost, or stolen during 2009 and 2008.

0901-1019274 18 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

9. Temporary Restrictions Satisfied

Temporarily restricted net assets were released from restriction during the years ended April 30, 2009 and 2008, by incurring expenses satisfying the restricted purposes or by the occurrence of other events specified by donors:

2009 2008 Program restrictions: Curators and collections management $ 2,037,520 $ 2,393,310 Special exhibitions 1,759,948 1,379,156 Education and library 1,292,027 1,295,098 Other program related purposes 550,430 431,743 Program restrictions satisfied 5,639,925 5,499,307 Time restrictions expired 4,779,171 9,262,990 Property/equipment acquisition restrictions satisfied 193,987 2,889,864 Art and library acquisitions 699,108 1,174,637 $ 11,312,191 $ 18,826,798

10. Temporarily Restricted Net Assets

Temporarily restricted net assets at April 30, 2009 and 2008, are restricted to the following purposes or periods:

2009 2008 Curators and collections management: Curatorial programs and galleries $ 19,660,036 $ 26,318,136 Publication 284,056 849,535 Special exhibitions 10,486,422 16,957,644 Education and library 4,985,052 6,662,512 Program support for future periods 8,575,016 13,201,024 Building, equipment, and other 61,188,285 61,364,889 Donor purpose to be defined 9,039,631 10,054,999 $ 114,218,498 $ 135,408,739

0901-1019274 19 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

11. Permanently Restricted Net Assets

Permanently restricted net assets at April 30, 2009 and 2008, are restricted to the following:

Foundation 2009 2008 Investment in perpetuity, the income from which is expendable to support: Curators, permanent exhibitions, and publications: Curatorial programs and galleries $ 24,431,315 $ 25,128,021 Publications 950,824 950,824 Education 5,700,559 5,770,842 Multiple program activities 7,905,016 7,905,016 Art acquisition 4,341,143 4,341,143 General 12,887,932 16,143,709 56,216,789 60,239,555 Investment in art 875,962 3,209,781 $ 57,092,751 $ 63,449,336

Trust 2009 2008

Trust corpus $ 10,935,182 $ 10,935,182 Investment in perpetuity, the income from which is expendable to support art acquisition 10,060,118 11,338,626 Investment in art 4,140,809 3,085,192 $ 25,136,109 $ 25,359,000

12. Pension Plan

The Foundation has a defined benefit pension plan covering all of its salaried and certain hourly employees. The benefits are based on years of service and the participant’s final average earnings as defined by the plan. The Foundation’s policy is to make quarterly contributions to the plan equal to minimum amounts required under its funding policy in accordance with ERISA as determined by the actuary. The plan’s assets are invested in a variety of fixed-income and equity securities.

0901-1019274 20 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

12. Pension Plan (continued)

On April 30, 2008, the Foundation adopted the recognition and disclosure provisions of SFAS No. 158, which required the Foundation to recognize the funded status of its plan (the difference between the projected benefit obligation and the current fair value of the plan’s assets) on the April 30, 2008, statement of financial position, with a corresponding adjustment to net assets reported in the statement of activities as a separate line item. The adjustment represents the net unrecognized actuarial losses, unrecognized prior service costs, and unrecognized transition obligation remaining from initial adoption of SFAS No. 87, Employers’ Accounting for Pensions, all of which were previously netted against the plan’s funded status under SFAS No. 87. These amounts will be amortized to net periodic pension cost in future years. Future actuarial gains and losses will also be recognized as an adjustment to change in net assets reported in the statement of activities as separate line items in the years in which they arise and will also subsequently be amortized into net periodic pension costs. The incremental effects of adopting the provisions of SFAS No. 158 on the Foundation’s statement of financial position at April 30, 2008, are presented in the following table:

Prior to Effect of Adopting Adopting As Reported at SFAS No. 158 SFAS No. 158 April 30, 2008

Accrued pension liability $ 960,744 $ 1,269,211 $ 2,229,955 Unrestricted net assets 284,997,912 1,269,211 283,728,701

0901-1019274 21 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

12. Pension Plan (continued)

The following disclosures set forth the Foundation’s funded status and amounts recognized in the combined financial statements (as actuarially determined):

Projected Net Benefit Liability Obligation Assets (Asset)

Balance at May 1, 2008 $ 7,677,300 $ 5,447,345 $ 2,229,955 Service cost 432,732 – 432,732 Interest cost 480,602 – 480,602 Return on plan assets – 426,737 (426,737) Contribution – 625,024 (625,024) Benefits paid (236,486) (236,486) – Assumption changes (320,114) – (320,114) Loss (542,922) (1,037,643) 494,721 Balance at April 30, 2009 $ 7,491,112 $ 5,224,977 $ 2,266,135

Projected Net Benefit Liability Obligation Assets (Asset)

Balance at May 1, 2007 $ 7,122,318 $ 4,954,854 $ 2,167,464 Service cost 434,004 – 434,004 Interest cost 448,129 – 448,129 Return on plan assets – 374,019 (374,019) Contribution – 359,767 (359,767) Benefits paid (207,033) (207,033) – Loss (120,118) (34,262) (85,856) Balance at April 30, 2008 $ 7,677,300 $ 5,447,345 $ 2,229,955

0901-1019274 22 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

12. Pension Plan (continued)

Included in unrestricted net assets at April 30 are the following amounts that have not yet been recognized in net periodic pension cost:

2009 2008

Unrecognized actuarial losses $ 1,617,428 $ 1,498,965

Changes in plan assets and benefit obligations in unrestricted net assets during 2009 include unrecognized actuarial losses of $118,473.

The components of net periodic pension cost were as follows for the years ended April 30:

2009 2008

Service cost $ 432,732 $ 434,004 Interest cost 480,602 448,129 Expected return on plan assets (426,737) (374,019) Amortization of accumulated losses 56,134 72,561 Net periodic pension cost $ 542,731 $ 580,675

The amount of unrecognized actuarial losses expected to be recognized through net periodic pension costs during 2010 is $68,523.

0901-1019274 23 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

12. Pension Plan (continued)

The assumptions used in determining pension information for the plan for the years ended April 30, 2009 and 2008, are as follows:

2009 2008 Weighted-average assumptions used to determine projected benefit obligation: Discount rate 6.3% 6.0% Rate of compensation increase 5.0% 5.0%

2009 2008 Weighted-average assumptions used to determine net periodic benefit cost: Discount rate 6.0% 6.0% Expected return on plan assets 7.5% 7.5% Rate of compensation increase 5.0% 5.0%

The actuarial present value of accumulated plan benefits is the discounted present value of only those benefits accrued to the measurement date. The actuarial present value of accumulated plan benefits at January 1, 2009 and 2008, was $5,023,297 and $4,676,238, respectively.

Pension plan weighted-average asset allocations at April 30, 2009 and 2008, by asset category are as follows:

April 30 Asset Category 2009 2008

Equity securities 36% 48% Debt securities 46 41 Cash equivalents 18 11 Total 100% 100%

0901-1019274 24 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

12. Pension Plan (continued)

This allocation of pension assets is within the target mix by asset class: equity securities, 25% to 55%; fixed income securities, 45% to 65%; and cash equivalents, 0% to 25%. The strategic goal is to achieve an optimal rate of return at an acceptable level of investment risk in order to provide for the payment of benefits. Invested assets in the plan are large cap equities, small cap equities, international equities, high-quality fixed income securities, and cash equivalents.

The current assumption for the expected long-term rate of return on plan assets is 7.5%. This assumption is determined by analyzing (1) historical average returns, (2) historical data on the volatility of returns, (3) current yields available in the marketplace, (4) actual returns on plan assets, and (5) current and anticipated future allocation among asset classes.

Benefits expected to be paid in each year from 2010 through 2014 are $312,000, $332,000, $338,000, $337,000, and $358,000, respectively. Aggregate benefits to be paid from 2015 through 2018 are $2,596,000.

The Foundation’s funding policy is to make quarterly contributions to the plan equal to the amounts required as determined by the plan’s actuary. All contributions were made in accordance with the minimum funding requirements of ERISA. The 2010 contribution for the plan will be $492,563.

13. Construction Bonds Payable

The Foundation has entered into four loan agreements with the Missouri Development Finance Board (the Board). Pursuant to these loan agreements, in December 2001, the Board issued $74,955,000 in tax-exempt, Cultural Facilities Revenue Bonds (the Series 2001A Bonds) and $85,000,000 in tax-exempt, Variable Rate Demand Cultural Facilities Revenue Bonds (the Series 2001B Bonds). During April 2004, the Board issued $60,000,000 in tax-exempt, Variable Rate Demand Cultural Facilities Revenue Bonds (the Series 2004A Bonds). During August 2008, the Board issued $108,500,000 in tax-exempt, Variable Rate Demand Cultural Facilities Revenue Bonds (the Series 2008A Bonds).

0901-1019274 25 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

13. Construction Bonds Payable (continued)

The proceeds of the Series 2001A, Series 2001B, and Series 2004A bonds have been used to finance the costs of improvements and additions to the Nelson-Atkins Museum of Art and to pay interest during construction, the premium on the bond insurance policy, and other costs related to the issuance of the bonds. The Series 2008A Bonds have been used to refund the Series 2001B Bonds and have been and will be used to finance costs of improvements and additions to the Nelson-Atkins Museum of Art and to pay interest during construction, the premium on the bond insurance policy, and the other costs related to the issuance of the bonds.

While the bonds are not a direct indebtedness of the Foundation, the loan agreement with the Board obligates the Foundation to make payments equal to the principal of and premium, if any, and interest on the respective bonds, whether at maturity, upon acceleration, or upon redemption. The bonds are general unsecured obligation of the Foundation. No assets or reserves of the Foundation, other than funds held under the bond trust indenture and rights to receive payments on certain contribution receivables (see Note 4) are pledged to secure the Foundation’s obligations to make payments on the bonds.

Simultaneously with the issuance of the bonds, the Foundation entered into a Bond Trust Indenture with Commerce Bank, N.A., Kansas City, Missouri, as trustee for the bonds.

The Foundation must comply with the conditions and covenants as required by the Bond Trust Indenture, including maintaining unrestricted net assets, as defined by the bond Trust Indenture, in an amount not less than 80% of the bonds outstanding, excluding the Series 2004A Bonds. During 2009 and 2008, the Foundation did comply with the conditions and covenants as required by the Bond Trust Indenture.

0901-1019274 26 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

13. Construction Bonds Payable (continued)

A summary of construction bonds payable at April 30, 2009 and 2008, is as follows:

2009 2008 Cultural Facilities Revenue Bonds, Series 2001A, tax-exempt fixed rate term, payable at various dates through 2030, with interest rates ranging from 4.125% to 5.25% $ 74,955,000 $ 74,955,000

Variable Rate Demand Cultural Facilities Revenue Bonds, Series 2001B, tax-exempt variable rate term, payable at various dates through 2031, with variable interest as determined by the remarketing agent; interest rates ranged from 1.05% to 9.0% and from 0.95% to 4.75% during fiscal years 2009 and 2008, respectively – 85,000,000

Variable Rate Demand Cultural Facilities Revenue Bonds, Series 2004A, tax-exempt variable rate term, payable at various dates through 2034, with variable interest as determined by the remarketing agent; interest rates ranged from 0.25% to 9.0% and from 0.65% to 4.08% during fiscal years 2009 and 2008, respectively 60,000,000 60,000,000

Variable Rate Demand Cultural Facilities Revenue Bonds, Series 2008A, tax-exempt variable rate term, payable at various dates through 2038, with variable interest as determined by the remarketing agent; interest rates ranged from 0.25% to 9.0% during 2009 108,500,000 – Total $ 243,455,000 $ 219,955,000

0901-1019274 27 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

13. Construction Bonds Payable (continued)

The interest rates on the Series 2004A and 2008A bonds are reset daily by a remarketing agent based upon current market conditions. The Series 2004A and 2008A bonds are also subject to daily optional tender by the holders thereof and as a result may become due as a result of such tender.

The liquidity facilities supporting the payment of the tender price for the variable rate term bonds requires that the principal of these bonds purchased by the liquidity provider that are not remarketed must be paid over a 5-year period in 10 equal semiannual installments or over a 3-year period in 6 equal semiannual installments, for the Series 2004A and 2008A bonds, respectively, beginning the first June or December that is at least 6 months after the purchase. If a purchase were to occur under the liquidity facilities, the Foundation would be required to make one principal payment within the next fiscal year; therefore, $24.1 million is classified as a current liability. While the bonds are held by the liquidity provider, the bonds bear interest at a market based rate. The liquidity facility related to the Series 2004A bond expires on May 28, 2010. The liquidity facility related to the Series 2008A Bonds expired on August 27, 2009, and an extension was put in place which expires on November 16, 2009.

At April 30, 2009, combined future aggregate principal maturities of the construction bonds payable assuming none of the bonds are tendered by the holder thereof for the years ending April 30 are as follows:

2010 $ – 2011 – 2012 2,260,000 2013 2,355,000 2014 2,455,000 Thereafter 236,385,000 $ 243,455,000

Certain of the regularly scheduled payments of principal and interest on the bonds are generated under a financial guaranty insurance policy.

0901-1019274 28 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

13. Construction Bonds Payable (continued)

A summary of interest cost on construction bonds payable at April 30, 2009 and 2008, is as follows:

2009 2008 Interest expense incurred: Series 2001A Bonds $ 3,636,049 $ 3,738,412 Series 2001B Bonds 1,283,360 2,782,993 Series 2004A Bonds 827,383 1,852,810 Series 2008A Bonds 980,885 – Total $ 6,727,677 $ 8,374,215

Interest received on bond proceeds: Series 2001A Bonds $ 4,816 $ 37,700 Series 2001B Bonds – 151,911 Series 2004A Bonds 9,767 171,617 Series 2008A Bonds 130,785 – Total $ 145,368 $ 361,228

Net amount of interest cost: Capitalized $ – $ 584,614 Expensed 6,582,309 7,428,373 Total $ 6,582,309 $ 8,012,987

0901-1019274 29 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

14. Assets Limited as to Use

Unexpended proceeds from the issuance of the Series 2001A, Series 2001B, Series 2004A, and Series 2008A bonds are limited as to use, as follows:

2009 2008

Series 2001A Bond Defeasance Fund $ 1,016,411 $ 1,021,423 Series 2001A Capitalized Interest Fund – – Series 2001A Debt Service Fund 1 1 Series 2001A Bonds 1,016,412 1,021,424

Series 2001B Capitalized Interest Fund – 2,615,340 Series 2001B Debt Service Fund – 1,476 Series 2001B Bonds – 2,616,816

Series 2004A Project Fund – 3,454,438 Series 2004A Debt Service Fund – 26,846 Series 2004A Bonds – 3,481,284

Series 2008A Project Fund 13,033,242 – Series 2008A Debt Service Fund 6,192 – Series 2008A Bonds 13,039,434 –

Accrued interest receivable – Series 2001A, 2001B, and 2004A bonds – 19,319 Assets limited as to use $ 14,055,846 $ 7,138,843

The Project Fund is used for facility construction and improvements; the Debt Service Fund receives and pays amounts related to debt service; and the Bond Defeasance Fund was established for the purpose of retiring $1 million in Series 2001A Bonds on June 30, 2006.

The above funds are invested in permitted investments, as defined by the Bond Trust Indenture, with the investment earnings generally becoming a part of the related fund. Amounts remaining from the above funds after all obligations of the fund are met are generally transferred to the Debt Service Fund to redeem bonds. Under certain conditions, the remaining amounts may be used for other purposes as set forth in the Bond Trust Indenture.

0901-1019274 30 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

15. Endowment

The Trust and the Foundation endowments consist of approximately 89 individual funds established for a variety of purposes. The endowment includes both donor-restricted endowment funds and funds designated by the Board of Trustees to function as endowments. Net assets associated with endowment funds, including funds designated by the Board of Trustees to function as endowments, are classified and reported based on the existence or absence of donor- imposed restrictions.

The Board of Trustees of the Trust and the Foundation have interpreted the UPMIFA as requiring the preservation of the fair value of the original gift as of the gift date of the donor- restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Trust and the Foundation classify as permanently restricted assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument at the time the accumulation is added to the fund. The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the organization in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Trust and the Foundation consider the following factors in making a determination to appropriate or accumulate donor-restricted funds:

The duration and preservation of the fund. The purposes of the Trust and the Foundation and the donor-restricted endowment fund. General economic conditions. The possible effect of inflation and deflation. The expected total return from income and the appreciation of investments. Other resources of the Trust and the Foundation. The investment policies of the Trust and the Foundation.

0901-1019274 31 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

15. Endowment (continued)

The Trust and the Foundation have adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Trust and the Foundation must hold in perpetuity or for a donor-specific period(s) as well as Board-designated funds. Under this policy, as approved by the Board of Trustees, the endowment assets are invested in a manner that is intended to produce a real return, net of inflation and investment management costs, of at least 5.25% over the long term. Actual returns in any given year may vary from this amount.

To satisfy its long-term rate-of-return objectives, The Trust and the Foundation rely on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Trust and the Foundation targets a diversified asset allocation that places a greater emphasis on equity-based alternative investments to achieve its long-term objective within prudent risk constraints.

The current spending policy of The Trust and the Foundation is made up of support generated from the Operating Endowment and support generated from a separate “Generations” Endowment Fund. The support from the Operating Endowment is calculated approximately at 30% of the long-term spending rate of 5% applied to the endowment’s market value at December 31 of the preceding calendar year plus 70% of the endowment spending allowed for the previous fiscal year, adjusted for inflation. Support will be appropriated from endowment gifts received after December 31 of the preceding calendar year at 5% of the gift amount, prorated on a monthly basis.” Support from the “Generations” Endowment Fund is equal to the market value of the Generations fund at December 31 of the immediately preceding year times 1.5% times a weighting factor of 30% plus the prior year appropriation inflated in proportion to monetary inflation measured by the Consumer Price Index for the immediately preceding year times a weighting factor of 70%.

With this policy, the annual dollar amount available for spending will be known at the beginning of the year. The objectives of the portfolio are the enhancement of capital and real purchasing power while limiting exposure to risk of loss. In light of the return requirement, the portfolio should be constructed using a total approach with significant portion of the funds invested to seek growth of principal over time. The assets are to be invested for the long term, and higher short-term volatility in these assets is to be expected and accepted.

0901-1019274 32 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

15. Endowment (continued)

At April 30, 2009, the endowment net asset composition by type of fund consisted of the following:

Temporarily Permanently Unrestricted Restricted Restricted Total Foundation Donor-restricted funds $ (6,909,038) $ 47,587,773 $ 44,422,740 $ 85,101,475 Board-designated funds 203,731,610 – – 203,731,610 196,822,572 47,587,773 44,422,740 288,833,085 Trust Donor-restricted funds – – 10,935,182 10,935,182 Board-designated funds 15,916,383 – – 15,916,393 Total funds $ 212,738,955 $ 47,587,773 $ 55,357,922 $ 315,684,650

Changes in endowment net assets for the fiscal year ended April 30, 2009, consisted of the following: Temporarily Permanently Unrestricted Restricted Restricted Total Foundation Endowment net assets, beginning of year $ 255,937,566 $ 68,947,876 $ 45,598,700 $ 370,484,142

Investment return: Investment income 3,947,377 1,159,963 112,223 5,219,563 Net depreciation (realized and unrealized) (66,361,958) (15,061,595) (897,233) (82,320,786) Total investment loss (62,414,581) (13,901,632) (785,010) (77,101,223)

Contributions 9,739,803 929,078 2,127,452 12,796,333 Appropriation of endowment assets for expenditure (11,219,387) (3,608,378) (2,518,402) (17,346,167)

Other changes: Transfers to create Board-designated endowment funds 4,779,171 (4,779,171) – – Endowment net assets, end of year $ 196,822,572 $ 47,587,773 $ 44,422,740 $ 288,833,085

0901-1019274 33 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

15. Endowment (continued)

Temporarily Permanently Unrestricted Restricted Restricted Total Trust Endowment net assets, beginning of year $ 26,429,658 $ – $ 10,935,182 $ 37,364,840

Investment return: Investment income 559,139 – – 559,139 Net depreciation (realized and unrealized) (9,136,015) – – (9,136,015) Total investment loss (8,576,876) – – (8,576,876)

Contributions – – – – Appropriation of endowment assets for expenditure (1,936,399) – – (1,936,399) Endowment net assets, end of year $ 15,916,383 $ – $ 10,935,182 $ 26,851,565

Total Endowment net assets, end of year $ 212,738,955 $ 47,587,773 $ 55,357,922 $ 315,684,650

At April 30, 2008, the endowment net asset composition by type of fund consisted of the following:

Temporarily Permanently Unrestricted Restricted Restricted Total Foundation Donor-restricted funds $ 781,845 $ 68,947,876 $ 45,598,700 $ 115,328,421 Board-designated funds 255,155,721 – – 255,155,721 255,937,566 68,947,876 45,598,700 370,484,142 Trust Donor-restricted funds – – 10,935,182 10,935,182 Board-designated funds 26,429,658 – – 26,429,658 Total funds $ 282,367,224 $ 68,947,876 $ 56,533,882 $ 407,848,982

0901-1019274 34 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

15. Endowment (continued)

Changes in endowment net assets for the fiscal year ended April 30, 2008, consisted of the following:

Temporarily Permanently Unrestricted Restricted Restricted Total Foundation Endowment net assets, beginning of year $ 246,976,888 $ 74,706,873 $ 44,889,971 $ 366,573,732

Investment return: Investment 4,967,788 1,384,670 157,474 6,509,932 Net depreciation (realized and unrealized) (776,404) (61,920) (51,120) (889,444) Total investment loss 4,191,384 1,322,750 106,354 5,620,488

Contributions 8,223,611 5,594,722 1,014,733 14,833,066 Appropriation of endowment assets for expenditure (12,717,307) (3,413,479) (412,358) (16,543,144)

Other changes: Transfers to create Board-designated endowment funds 9,262,990 (9,262,990) – – Endowment net assets, end of year $ 255,937,566 $ 68,947,876 $ 45,598,700 $ 370,484,142

0901-1019274 35 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

15. Endowment (continued)

Temporarily Permanently Unrestricted Restricted Restricted Total Trust Endowment net assets, beginning of year $ 27,725,497 $ – $ 10,935,182 $ 38,660,679

Investment return: Investment income 700,506 – – 700,506 Net depreciation (realized and unrealized) (130,288) – – (130,288) Total investment loss 570,218 – – 570,218

Contributions – – – – Appropriation of endowment assets for expenditure (1,866,057) – – (1,866,057) Endowment net assets, end of year $ 26,429,658 $ – $ 10,935,182 $ 37,364,840

Total Endowment net assets, end of year $ 282,367,224 $ 68,947,876 $ 56,533,882 $ 407,848,982

From time to time, the fair value of assets associated with individual donor-restricted endowment funds may fall below the level that the donor or UPMIFA requires the Trust and the Foundation to retain as a fund of perpetual duration. Deficiencies of this nature, which are reported in unrestricted net assets, were $7,003,503 as of April 30, 2009, and $121,353 as of April 30, 2008. These deficiencies resulted from unfavorable market fluctuations that occurred shortly after the investment of new permanently restricted contributions and continued appropriation for certain programs that was deemed prudent by the Board of Trustees.

0901-1019274 36 The William Rockhill Nelson Trust and The Nelson Gallery Foundation

Notes to Combined Financial Statements (continued)

16. Subsequent Events

The Foundation and the Trust evaluated events and transactions occurring subsequent to April 30, 2009 through September 1, 2009, the date of issuance of the financial statements. During this period, there were no subsequent events requiring recognition in the combined financial statements. Additionally, there were no nonrecognized subsequent events requiring disclosure, except that for the liquidity facility, the payment of the tender price for the 2008A Bonds was extended through November 16, 2009, as described in Note 13.

0901-1019274 37 (THIS PAGE LEFT BLANK INTENTIONALLY)

APPENDIX C

DEFINITIONS AND SUMMARIES OF PRINCIPAL FINANCING DOCUMENTS

(THIS PAGE LEFT BLANK INTENTIONALLY) DEFINITIONS OF WORDS AND TERMS

In addition to terms defined elsewhere in this Official Statement, the following are definitions of certain terms used in the Bond Trust Indenture. Loan Agreement and this Official Statement. Reference is hereby made to the Bond Trust Indenture and the Loan Agreement for complete definitions of all terms.

“Act” means the Missouri Development Finance Board Act, Sections 100.250 to 100.297, inclusive, of the Revised Statutes of Missouri, as from time to time amended.

“Additional Bonds” means any additional parity bonds issued by the Board pursuant to the Bond Indenture that stand on a parity and equality under the Bond Indenture with the Bonds and any other Additional Bonds.

“Additional Obligations” means any Indebtedness of the Foundation issued or incurred by the Foundation in accordance with the Loan Agreement and secured on a parity with the Bonds and Additional Bonds, which obligations may be issued to any Person other than the Board.

“Board” means the Missouri Development Finance Board, and its successors and assigns or any entity succeeding to or charged with the powers, duties and functions of the Board.

“Board Representative” means the Chairman, Vice Chairman or Executive Director of the Board, and such other person or persons at the time designated to act on behalf of the Board in matters relating to the Bond Indenture and the Loan Agreement as evidenced by a written certificate furnished to the Foundation and the Bond Trustee containing the specimen signature of such person or persons and signed on behalf of the Board by its Chairman, Vice Chairman or Executive Director. Such certificate may designate an alternate or alternates, each of whom shall be entitled to perform all duties of the Board Representative.

“Bond” or “Bonds” means the Series 2010A Bonds and any Additional Bonds issued, authenticated and delivered under and pursuant to the Bond Indenture.

“Bond Indenture” means the Bond Trust Indenture as originally executed by the Board and the Bond Trustee, as from time to time amended and supplemented by Supplemental Bond Indentures in accordance with the provisions of the Bond Indenture.

“Bond Trustee” means Commerce Bank, N.A., and its successor or successors and any other corporation or association which at any time may be substituted in its place pursuant to and at the time serving as trustee under the Bond Indenture.

“Book-Entry System” means the book-entry system maintained by the Securities Depository described in the Bond Indenture.

“Book Value” means, when used with respect to Property of the Foundation, the value of such Property, net of accumulated depreciation and amortization, as it is carried on the books of account of the Foundation as reflected in the most recent audited combined financial statements of the Foundation.

“Business Day” means a day other than (a) a Saturday, Sunday or legal holiday, or (b) a day on which banking institutions located in New York, New York, or in any city in which the corporate trust office or designated payment office of the Bond Trustee are located, are required or authorized by law to remain closed, or (c) a day on which the New York Stock Exchange or the Securities Depository is closed.

C-1

“Commitment Indebtedness” means the obligation of the Foundation to repay amounts disbursed pursuant to a binding commitment from a financial institution (including a line of credit, letter of credit, standby bond purchase agreement, reimbursement agreement or similar credit or liquidity facility or arrangement established in connection with the issuance or incurrence of any Indebtedness of the Foundation) to refinance, pay, purchase or redeem when due, tendered or required to be paid, purchased or redeemed, other Indebtedness of the Foundation which was incurred or issued in accordance with the provisions of the Loan Agreement, and the obligation of the Foundation to pay interest payable on amounts disbursed for such purposes, plus any fees payable to such financial institution for such commitment.

“Completion Indebtedness” means Long-Term Indebtedness of the Foundation incurred for the purpose of financing, without materially changing the scope thereof, (a) the completion of facilities for which Long-Term Indebtedness was previously incurred under the provisions of the Loan Agreement, or (b) the improvement, replacement or substitutions for, or additions to, facilities for which Long-Term Indebtedness was previously incurred, necessitated by faulty design, damage to or destruction of such facilities, or required by enactment of legislation or the promulgation of any ruling affecting the operation of the Foundation by a government agency.

“Continuing Disclosure Agreement” means the Continuing Disclosure Agreement dated as of February 15, 2010, between the Foundation and Commerce Bank, N.A., as Dissemination Agent, as from time to time amended in accordance with the provisions thereof.

“Costs of Issuance” means issuance costs with respect to the Bonds that are permitted under the Act to be paid out of proceeds of the Bonds, including but not limited to the following: underwriters’ spread (whether realized directly or derived through purchase of Bonds at a discount below the price at which they are expected to be sold to the public); counsel fees (including bond counsel, underwriter’s counsel, Board’s counsel, Foundation’s counsel, as well as any other specialized counsel fees incurred in connection with the borrowing); financial advisor fees of any financial advisor to the Board or the Foundation incurred in connection with the issuance of the Bonds; rating agency fees; trustee, escrow agent and paying agent fees; accountant fees and other expenses related to issuance of the Bonds; printing costs (for the Bonds and of any official statement relating to the Bonds); and fees and expenses of the Board incurred in connection with the issuance of the Bonds.

“Debt Service Fund” means the fund by that name created by the Bond Indenture.

“Defeasance Obligations” means:

(a) Cash.

(b) U.S. Treasury Certificates, Notes and Bonds (including State and Local Government Series- SLGs).

(c) Direct obligations of the U.S. Treasury which have been stripped by the Treasury itself, CATS, TIGRS and similar securities.

(d) Resolution Funding Corp. (REFCORP). Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book-entry form are acceptable.

C-2 (e) Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P. If however, the issue is only rated by S&P (i.e., there is no Moody’s rating), then the pre-refunded bonds must have been pre-refunded with cash, direct U.S. or U.S. guaranteed obligations, or AAA rated pre-refunded municipals to satisfy this condition.

(f) Obligations issued by the following agencies which are backed by the full faith and credit of the U.S.:

(1) U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership.

(2) Farmers Home Administration (FmHA) Certificates of beneficial ownership.

(3) Federal Financing Bank

(4) General Services Administration Participation certificates.

(5) U.S. Maritime Administration Guaranteed Title XI financing.

(6) U.S. Department of Housing and Urban Development (HUD) Project Notes. Local Board Notes. New Communities Debentures-U.S. government guaranteed debentures. U.S. Public Housing Notes and Bonds-U.S. government guaranteed public housing notes and bonds.

“Electronic Notice” means notice given by facsimile transmission or by telephone (promptly confirmed in writing).

“Escrowed Deposits” means cash, including proceeds of Refunding Indebtedness or other Long- Term Indebtedness, or Defeasance Obligations (including, where appropriate, the earnings or other increment to accrue thereon) that are on deposit in an irrevocable escrow or trust account with the Bond Trustee or a third party escrow agent and are required to be applied to pay all or a portion of the principal of and interest on, as the same shall become due, any Bonds or Indebtedness which would otherwise be considered Outstanding and such amounts so required to be applied are sufficient to pay such principal and interest.

“Financing Documents” means the Bond Indenture, the Bonds, the Loan Agreement, the Purchase Contract, the Tax Compliance Agreement and any and all future renewals and extensions or restatements of, or amendments or supplements to, any of the foregoing; provided, however, that when the words “Financing Documents” are used in the context of the authorization, execution, delivery, approval or performance of Financing Documents by a particular party, the same shall mean only those Financing Documents that provide for or contemplate authorization, execution, delivery, approval or performance by such party.

“Foundation” means The Nelson Gallery Foundation, a Missouri trust, and its permitted successors and assigns.

C-3 “Foundation Representative” means any university trustee of the governing board of the Foundation, the chair or vice chair of the governing board of the Foundation, the Chief Executive Officer, Chief Operating Officer or Director of Finance and such other person or persons at the time designated to act on behalf of the Foundation in matters relating to the Bond Indenture and the Loan Agreement as evidenced by a written certificate furnished to the Board and the Bond Trustee containing the specimen signature of such person or persons and signed on behalf of the Foundation by its chair, vice chair, chief executive officer or chief operating officer. Such certificate may designate an alternate or alternates each of whom shall be entitled to perform all duties of the Foundation Representative.

“Guaranty” means an obligation of the Foundation guaranteeing in any manner, whether directly or indirectly, any indebtedness or other obligation of any other Person which indebtedness or obligation would constitute Indebtedness if such Person were the Foundation.

“Indebtedness” means all indebtedness or obligations of the Foundation for the repayment of borrowed money (including capital leases, installment purchase contracts and guarantees of the foregoing) shown as liabilities on the combined balance sheet of the Foundation or which are properly capitalized on the combined balance sheet of the Foundation in accordance with generally accepted accounting principles, less any indebtedness or obligations of the Foundation payable from the proceeds of a Qualified Donation Agreement.

“Interest Payment Date” means each June 1 and December 1 commencing June 1, 2010.

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended, and, when appropriate, any statutory predecessor or successor thereto, and all applicable regulations thereunder and any applicable official rulings, announcements, notices, procedures and judicial determinations relating to the foregoing.

“Loan” means the loan of the proceeds of the Bonds made by the Board to the Foundation under the Loan Agreement.

“Loan Agreement” means the Loan Agreement dated as of February 15, 2010, between the Board and the Foundation, as from time to time amended by Supplemental Loan Agreements in accordance with the provisions of the Loan Agreement.

“Loan Payments” means the payments of principal and interest on the Loan referred to in the Loan Agreement.

“Long-Term Indebtedness” means (a) Indebtedness having an original stated maturity or term greater than one year, or (b) Indebtedness having an original stated maturity or term equal to or less than one year that is renewable or extendable at the option of the debtor for a period greater than one year from the date of original issuance or incurrence thereof, or with respect to which the Foundation has incurred Commitment Indebtedness that would refinance such Indebtedness for a period extending beyond one year from the date of original issuance or incurrence thereof.

“Non-Recourse Indebtedness” means Long-Term Indebtedness secured by a mortgage, lien or security interest in Property, the liability for which is limited to the Property subject to such encumbrance, with no other recourse, directly or indirectly, to the general credit of the Foundation or to any other Property of the Foundation.

C-4 “Officer’s Certificate” means a written certificate of the Foundation signed by the Foundation Representative, which certificate shall be deemed to constitute a representation of, and shall be binding upon, the Foundation with respect to matters set forth in the Bond Indenture, and which certificate in each instance, including the scope, form, substance and other aspects thereof, is acceptable to the Bond Trustee.

“Opinion of Bond Counsel” means a written opinion of legal counsel acceptable to the Board and the Bond Trustee who shall be nationally recognized as expert in matters pertaining to the validity of obligations of governmental issuers and the exemption from federal income taxation of interest on such obligations.

“Opinion of Counsel” means a written opinion of any legal counsel having expertise in the matters covered in such opinion and acceptable to the Foundation Representative and the Bond Trustee and, to the extent the Board is asked to take action in reliance thereon, the Board, who may be an employee of or counsel to the Foundation or the Bond Trustee.

“Original Purchaser” means, collectively, George K. Baum & Company and J.P. Morgan Securities Inc. , the original purchasers of the Bonds under the Purchase Contract.

“Outstanding” means:

(a) When used with respect to Bonds, as of the date of determination, all Bonds theretofore authenticated and delivered under the Bond Indenture, except:

(1) Bonds theretofore cancelled by the Bond Trustee or delivered to the Bond Trustee for cancellation as provided in the Bond Indenture;

(2) Bonds for whose payment or redemption money or Defeasance Obligations in the necessary amount has been deposited with the Bond Trustee in trust for the owners of such Bonds as provided in the Bond Indenture, provided that, if such Bonds are to be redeemed, notice of such redemption has been duly given pursuant to the Bond Indenture or provision therefor satisfactory to the Bond Trustee has been made;

(3) Bonds in exchange for or in lieu of which other Bonds have been authenticated and delivered under the Bond Indenture;

(4) Bonds alleged to have been destroyed, lost or stolen which have been paid as provided in the Bond Indenture; and

(5) Bonds that are not delivered upon a mandatory redemption of Bonds.

(b) When used with respect to Indebtedness, as of the date of determination, all Indebtedness theretofore issued or incurred by the Foundation, except:

(1) Indebtedness, to the extent that any related Bonds are no longer deemed Outstanding under the Bond Indenture; and

(2) Indebtedness, other than Indebtedness with respect to related Bonds, to the extent the obligation to make payments on such Indebtedness has been discharged in accordance with the terms of the instrument or instruments creating or evidencing such Indebtedness.

C-5

“Participants” means those financial institutions for whom the Securities Depository effects book- entry transfers and pledges of securities deposited with the Securities Depository in the Book-Entry System, as such listing of Participants exists at the time of such reference.

“Permitted Encumbrances” means, with respect to Property of the Foundation as of any particular time, the following:

(a) the lien and security interest of the Loan Agreement and any other liens or security interest in Property that equally and ratably secure the Loan on a parity basis;

(b) liens for taxes, assessments, and other governmental charges not delinquent, or if delinquent are being contested in good faith by appropriate proceedings and as to which the Foundation shall have set aside on its books adequate reserves with respect thereto;

(c) mechanic’s, laborer’s, materialman’s, supplier’s or vendor’s liens not filed of record and similar charges not delinquent, or if filed of record are being contested in good faith and have not proceeded to judgment and as to which the Foundation shall have set aside on its books adequate reserves with respect thereto;

(d) liens in respect of judgments or awards with respect to which the Foundation is in good faith currently prosecuting an appeal or proceedings for review, and with respect to which the Foundation shall have secured a stay of execution pending such appeal or proceedings for review, provided the Foundation shall have set aside on its books adequate reserves with respect thereto;

(e) utility, access and other easements and rights-of-way, restrictions, encumbrances and exceptions that do not materially affect the marketability of title to such Property and do not in the aggregate materially impair the use of such Property for the purposes for which it is held by the Foundation;

(f) such minor defects and irregularities of title as normally exist with respect to property similar in character to the Property affected thereby and which do not materially affect the marketability of title to or value of such Property and do not materially impair the use of such Property for the purposes for which it is held by the Foundation;

(g) zoning laws, ordinances or regulations and similar restrictions that are not violated by the Property affected thereby;

(h) statutory liens and rights of setoff granted to banks or other financial institutions with respect to operating account funds on deposit in the ordinary course of business;

(i) all right, title and interest of the state, municipalities and the public in and to tunnels, bridges and passageways over, under or upon a public way;

(j) rights reserved to, or vested in, any municipality or governmental or other public authority by virtue of any franchise, license or statute to control or regulate any Property of the Foundation, or to use such Property in any manner, or to purchase, or designate a purchaser of or order the sale of, any Property of the Foundation upon payment of cash or reasonable

C-6 compensation therefor, or to terminate any franchise, license or other rights provided that the exercise of such right would not materially impair the use of such Property or materially and adversely affect the value thereof;

(k) liens arising by reason of (1) good faith deposits with the Foundation in connection with tenders, leases of real estate, bids or contracts (other than contracts for the payment of money), (2) deposits by the Foundation to secure public or statutory obligations, or to secure, or in lieu of, surety, stay or appeal bonds, (3) deposits as security for the payment of taxes or assessments or other similar charges, and (4) deposits with, or the giving of any form of security to, any municipality or governmental or other public authority for any purpose at any time as required by law or governmental regulation as a condition to the transaction of any business or the exercise of any privilege or license, or to enable the Foundation to maintain self-insurance or to participate in any funds established to cover any insurance risks or in connection with worker’s compensation, unemployment insurance, pensions or profit sharing plans or other social security plans or programs, or to share in the privileges or benefits required for corporations participating in such arrangements;

(l) restrictions on Property received by the Foundation through gifts, grants, bequests, contributions or donations imposed by the donor or grantor of such Property and which consist solely of restrictions on the use of such Property or the income therefrom;

(m) liens on and security interests in the proceeds of Indebtedness prior to the application of such proceeds or any debt service fund, reserve fund, escrow fund or similar fund established to secure the payment of Indebtedness;

(n) liens existing on Property at the time of its acquisition by the Foundation through purchase, lease or otherwise, or liens existing on Property of a Person on the date such Person merges into or consolidates with the Foundation that were not imposed or incurred in contemplation of such Person merging into or consolidating with the Foundation; provided, that no such lien may be increased, extended, renewed, or modified after such date to apply to any Property of the Foundation not subject to such lien on such date unless such lien as so increased, extended, renewed or modified otherwise qualifies as a Permitted Encumbrance;

(o) leases, under which the Foundation is lessor, that relate to a portion of the Property of the Foundation which is of a type that is customarily the subject of such leases; such as leases of office space for educational institutions, food service facilities, parking facilities, day care centers, and gift shops; and any other leases entered into in accordance with the disposition of Property provisions of the Loan Agreement;

(p) purchase money security interests, and liens securing Purchase Money Indebtedness, placed upon Property other than real property in order to obtain the use of such Property or to secure a portion of the purchase price thereof;

(q) liens on Property (other than real property) of the Foundation that is classified as property, plant and equipment as shown on the balance sheet of the Foundation determined in accordance with generally accepted accounting principles, securing any Indebtedness if at the time of incurrence of such Indebtedness and after giving effect to all liens classified as Permitted Encumbrances under this subsection, the Book Value of all Property of the Foundation subject to such liens is not more than 15% of such value of all of the Property of

C-7 the Foundation that is classified as property, plant and equipment as shown on the balance sheet of the Foundation determined in accordance with generally accepted accounting principles;

(r) liens on Property securing Commitment Indebtedness issued in support of any Long-Term Indebtedness which are equal in rank and priority with or subordinate to any Permitted Encumbrance granted to secure the Long-Term Indebtedness;

(s) liens on Property securing Subordinated Indebtedness, provided that a superior lien on the same Property is granted to secure the Loan;

(t) liens on Property which are existing at the date of the Bond Indenture and the Loan Agreement; provided that no such lien (or the amount of Indebtedness secured thereby) may be increased, extended, renewed or modified to apply to any Property of the Foundation not subject to such lien on such date unless such lien as so increased, extended, renewed or modified otherwise qualifies as a Permitted Encumbrance;

(u) any other lien or encumbrance created or incurred in the ordinary course of business which does not secure, directly or indirectly, the repayment of borrowed money or the payment of installment sales contracts or capital leases and which, individually or in the aggregate, does not materially impair the value or the utility of the Property subject to such lien or encumbrance; and

(v) any other liens on Property expressly permitted by the Loan Agreement.

“Permitted Investments” means, if and to the extent the same are at the time legal for investment of funds held under the Bond Indenture:

(a) Direct obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury, and CATS and TIGRS) or obligations the principal of and interest on which are unconditionally guaranteed as to full and timely payment by the United States of America.

(b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (stripped securities are only permitted if they have been stripped by the agency itself):

(1) U.S. Export-Import Bank (Eximbank) Direct obligations or fully guaranteed certificates of beneficial ownership.

(2) Farmers Home Administration (FmHA) Certificates of beneficial ownership.

(3) Federal Financing Bank

(4) Federal Housing Administration Debentures (FHA)

(5) General Services Administration

C-8 Participation certificates.

(6) Government National Mortgage Association (GNMA or Ginnie Mae) GNMA-guaranteed mortgage-backed bonds. GNMA-guaranteed pass-through obligations.

(7) U.S. Maritime Administration Guaranteed Title XI financing.

(8) U.S. Department of Housing and Urban Development (HUD) Project Notes. Local Board Bonds. New Communities Debentures-U.S. government guaranteed debentures. U.S. Public Housing Notes and Bonds-U.S. government guaranteed public housing notes and bonds.

(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit U.S. government agencies (stripped securities are only permitted if they have been stripped by the agency itself):

(1) Federal Home Loan Bank System Senior debt obligations.

(2) Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mae) Participation Certificates. Senior debt obligations.

(3) Federal National Mortgage Association (FNMA or Fannie Mae) Mortgage-backed securities and senior debt obligations.

(4) Student Loan Marketing Association (SLMA or Sallie Mae) Senior debt obligations.

(5) Resolution Funding Corp. (“REFCORP”) obligations

(6) Farm Credit System Consolidated systemwide bonds and notes.

(d) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of AAAm-G; AAA-m; or Aa-m and if rated by Moody’s rated Aaa, Aa1 or Aa2.

(e) Certificates of deposit secured at all times by collateral described in (a) and/or (b) above. Such certificates must be issued by commercial banks, savings and loan associations or mutual savings banks. The collateral must be held by a third party and the Bond Trustee must have a perfected first security interest in the collateral.

(f) Certificates of deposit, savings accounts, deposit accounts or money market deposits which are fully insured by FDIC, including BIF and SAIF.

C-9

(g) Investment Agreements, including GIC’s, Forward Purchase Agreements and Reserve Fund Put Agreements with providers rated at the time of execution rated, at the time of purchase, “Prime-1” by Moody’s and “A-1” or better by S&P..

(h) Commercial paper rated, at the time of purchase, “Prime-1” by Moody’s and “A-1” or better by S&P.

(i) Bonds or notes issued by any state or municipality which are rated by Moody’s and S&P in one of the two highest rating categories assigned by such agencies.

(j) Federal funds or bankers acceptances with a maximum term of one year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of “Prime-1” or “A3” or better by Moody’s and “A-1” or “A” or better by S&P.

(k) Repurchase Agreements ( or “repos”) for 30 days or less must follow the following criteria.

Repurchase agreements provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of cash from a municipal entity to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange for the securities at a specific date.

(1) Repos must be between the municipal entity and a dealer bank or securities firm

(A) Primary dealers on the Federal Reserve reporting dealer list which are rated A or better by S&P and Moody’s, or

(B) Banks rated “A” or above by S&P and Moody’s.

(2) The written repo contract must include the following:

(A) Securities which are acceptable for transfer are:

(i) Direct U.S. governments, or

(ii) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA & FHLMC)

(B) The term of the repo may be up to 30 days

(C) The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities).

(D) Valuation of Collateral

C-10 (i) The securities must be valued weekly, marked-to-market at current market price plus accrued interest

(a) The value of collateral must be equal to 104% of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of cash transferred by municipality, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105%.

(3) Legal opinion which must be delivered to the municipal entity:

(A) Repo meets guidelines under state law for legal investment of public funds.

“Person” means any natural person, firm, association, corporation, partnership, limited liability company, joint stock company, a joint venture, trust, unincorporated organization or firm, or a government or any agency or political subdivision thereof or other public body.

“Property” means any and all rights, titles and interests of the Foundation in and to all land, leasehold interests, buildings, fixtures and equipment of the Foundation, including the cultural facilities of the Foundation known as the Nelson-Atkins Museum of Art and located at 4525 Oak Street, in Kansas City, Missouri, and any and all other property, whether real or personal, tangible (including cash) or intangible, wherever situated and whether now owned or hereafter acquired; provided, however, that Property of the Foundation shall not include (a) any object of art which the Foundation or the Trust owns, leases or has in its possession, (b) any assets of “employee pension benefit plans” as defined in the Employee Retirement Income Security Act of 1974, as amended, (c) any assets of a self-insurance trust which prohibits any application of such assets for purposes which are not related to claims as defined in the governing trust document, (d) all endowment funds and property derived from gifts, grants, research contracts, bequests, donations and contributions made to or with the Foundation which are specifically restricted by the donor, testator or grantor to a particular purpose, and the income and gains derived therefrom, and (e) any other property, which may be established by the Foundation in an Officer’s Certificate delivered to the Bond Trustee.

“Purchase Contract” means the Bond Purchase Agreement relating to the Series 2010A Bonds among the Board, the Foundation and the Original Purchaser.

“Purchase Money Indebtedness” means Indebtedness incurred by the Foundation pursuant to a purchase money contract, conditional sale agreement, installment purchase contract, capitalized lease, or other similar debt or title retention agreement in connection with the acquisition of real or personal property and secured by a purchase money mortgage, security interest or lien with respect to the property acquired by the Foundation, where the lien of the seller or lender under such agreement is limited to such property.

“Qualified Donation Agreement” means a donation agreement satisfying each of the following requirements: (i) the donation agreement must be in writing; (ii) the donation must be payable to the Foundation,; (iii) the donation must be unconditional and irrevocable; (iv) the use of the proceeds of the donation must be either unrestricted or restricted to the repayment of indebtedness or obligations of the Foundation; (v) the donor must be rated “AA-” or above by Standard & Poor’s Corporation or “Aa3” or above

C-11 by Moody’s Investors Service at the time such donation agreement is executed; (vi) the donor must be current on all payments required under the donation agreement; and (vii) the donor must provide the Foundation and the Bond Trustee with a written legal opinion regarding the validity and enforceability of the donation agreement, subject only to assumptions and exclusions customarily found in enforceability opinions.

“Qualified Swap Agreement” means an interest rate exchange, hedge or similar agreement with respect to a series of Bonds entered into by the Foundation and a swap counterparty pursuant to which the Foundation is obligated to make interest-like payments to or on behalf of another Person and that Person is obligated to make similar interest-like payments to or on behalf of the Foundation (based on a different rate of, or formula for, interest), with neither party obligated to repay any principal, which agreement (a) may include, without limitation, an interest rate swap, a forward or futures contract or an option (e.g., a call, put cap, floor or collar), and (b) does not constitute an obligation to repay money borrowed, credit extended or the equivalent thereof; provided that the long-term credit rating of the swap counterparty (or any guarantor thereof) is in one of the two highest rating categories of any rating service (without regard to any refinements of gradation of any rating category by numerical modifier or otherwise) then rating such Bonds, unless such Bonds are secured by a credit facility, in which case such Qualified Swap Agreement shall be approved in writing by the provider of such credit facility.

“Rating Agency” means, if the Bonds are rated, Moody’s if such agency’s ratings are in effect with respect to the Bonds, S&P if such agency’s ratings are in effect with respect to the Bonds, and Fitch, Inc., if such agency’s ratings are in effect with respect to the Bonds, and their respective successor and assigns. If any such corporation ceases to act as a securities Rating Agency, the Foundation Representative may appoint any nationally recognized securities Rating Agency as a replacement.

“Rebate Fund” means the fund by that name created by the Bond Indenture.

“Record Date” means the close of business on the 15th day (whether or not a Business Day) of the calendar month immediately preceding an Interest Payment Date.

“Refunding Indebtedness” means Long-Term Indebtedness issued for the purpose of refunding other Long-Term Indebtedness (including Long-Term Indebtedness commonly referred to as current refunding indebtedness, advance refunding indebtedness or cross-over refunding indebtedness where the proceeds of such Refunding Indebtedness are deposited in an irrevocable escrow or trust account to secure the payment on the applicable payment dates of the interest and principal on such Refunding Indebtedness and/or the Indebtedness being refunded).

“Securities Depository” means The Depository Trust Company, New York, New York, or its nominee, and its successors and assigns, acting as securities depository under a Book-Entry System.

“Short-Term Indebtedness” means Indebtedness having an original maturity less than or equal to one year from the date of original incurrence thereof, and not renewable or extendible at the option of the obligor thereon for a term greater than one year beyond the date of original incurrence.

“Subordinated Indebtedness” means Indebtedness that by the terms thereof is specifically junior and subordinate to the Bonds, the Loan and any Additional Bonds or Additional Obligations with respect to payment of principal and interest thereon.

“Supplemental Bond Indenture” means any indenture supplemental or amendatory to the Bond Indenture entered into by the Board and the Bond Trustee pursuant to the Bond Indenture.

C-12

“Supplemental Loan Agreement” means any agreement supplemental or amendatory to the Loan Agreement entered into by the Board and the Foundation pursuant to the Loan Agreement.

“Tax Compliance Agreement” means the Tax Compliance Agreement dated as of February 15, 2010 among the Board, the Foundation and the Bond Trustee, as from time to time amended in accordance with the provisions thereof.

“Tax-Exempt Organization” means a nonprofit organization, organized under the laws of the United States of America or any state thereof, that is an organization described in Section 501(c)(3) of the Internal Revenue Code, is exempt from federal income taxes under Section 501(a) of the Internal Revenue Code, and is not a “private foundation” within the meaning of Section 509(a) of the Internal Revenue Code, or corresponding provisions of federal income tax laws from time to time in effect.

“Trust Estate” means the Trust Estate described in the Granting Clauses of the Bond Indenture.

“United States Bankruptcy Code” means the United States Bankruptcy Reform Act of 1978, as amended from time to time, or any substitute or replacement legislation.

“Unrestricted Net Assets” means the sum of (i) unrestricted net assets of the Foundation as reflected on the most recently completed audited combined financial statements of the Foundation and (ii) any unexpended proceeds of Long-Term Indebtedness incurred to finance the costs of property, plant and equipment, less the sum of (A) the net book value of property, plant and equipment as reflected on the most recently completed audited combined financial statements of the Foundation less any Long-Term Indebtedness incurred to finance the costs of property, plant and equipment, and (B) the net book value of construction in progress, if any, as reflected on the most recently completed audited combined financial statements of the Foundation. The costs of property, plant and equipment shall include capitalized interest related thereto and shall be determined based upon generally accepted accounting principles. For purposes of this definition the phrase “unrestricted net assets of the Foundation as reflected on the most recently completed audited combined financial statements of the Foundation” assumes that all self- insurance liabilities have been recorded and thereby have already reduced unrestricted net assets and that any funds of the Foundation designated as a reserve for self-insurance will be deemed restricted assets. For purposes of this definition “construction in progress” shall not be deducted from the sum of (i) and (ii) above to the extent it is included in the net book value of property plant and equipment as reflected on the most recently completed audited combined financial statements of the Foundation.

C-13 SUMMARY OF BOND INDENTURE

The following is a summary of certain provisions contained in the Bond Indenture. The following is not a comprehensive description, however, and is qualified in its entirety by reference to the Bond Indenture for a complete recital of the terms thereof.

Pledge and Assignment of Trust Estate

To declare the terms and conditions upon which the Bonds and any Additional Bonds are to be authenticated, issued and delivered, to secure the payment of all of the Bonds and any Additional Bonds issued and Outstanding under the Bond Indenture, to secure the performance and observance by the Authority of all the covenants, agreements and conditions contained in the Bond Indenture, and in consideration of the premises, the acceptance by the Bond Trustee of the trusts created by the Bond Indenture, the purchase and acceptance of the Bonds and any Additional Bonds by the owners thereof, the Board transfers in trust, pledges and assigns to the Bond Trustee, and grants a security interest to the Bond Trustee in, the following described property (said property referred to herein as the “Trust Estate”):

(a) all right, title and interest of the Board (including, but not limited to, the right to enforce any of the terms thereof) in, to and under (1) the Loan Agreement, including all Loan Payments and other payments owing to the Board and paid by the Foundation under the Loan Agreement (except the Board’s rights to payment of its fees and expenses and to indemnification as set forth in the Loan Agreement and as otherwise expressly set forth therein), and (2) all financing statements or other instruments or documents evidencing, securing or otherwise relating to the loan of the proceeds of the Bonds;

(b) all moneys and securities (except moneys and securities held by the Bond Trustee in the Rebate Fund) from time to time held by the Bond Trustee in the funds and accounts under the terms of the Bond Indenture; and

(c) any and all other property (real, personal or mixed) of every kind and nature from time to time, by delivery or by writing of any kind, pledged, assigned or transferred as and for additional security under the Bond Indenture by the Board or by anyone in its behalf or with its written consent, to the Bond Trustee, which is authorized to receive any and all such property at any and all times and to hold and apply the same subject to the terms of the Bond Indenture.

The Bond Trustee shall hold in trust and administer the Trust Estate upon the terms and conditions set forth in the Bond Indenture for the equal and pro rata benefit and security of each and every owner of Bonds and any Additional Bonds, without preference, priority or distinction as to participation in the lien, benefit and protection of the Bond Indenture of one Bond over or from the others, except as otherwise expressly provided in the Bond Indenture.

Creation of Funds and Accounts

There are created and ordered to be established in the custody of the Bond Trustee the following special trust funds with respect to the Bonds, to be designated as follows:

(a) “Costs of Issuance Account”.

(b) “Debt Service Fund”.

C-14

The Bond Trustee is authorized to establish separate accounts within such funds or otherwise segregate moneys within such funds, on a book-entry basis or in such other manner as the Bond Trustee may deem necessary or convenient, or as the Bond Trustee shall be instructed by the Board.

All moneys deposited with or paid to the Bond Trustee for the funds and accounts held under the Bond Indenture shall be held by the Bond Trustee in trust and shall be applied only in accordance with the provisions of the Bond Indenture and the Loan Agreement, and, until used or applied as provided in the Bond Indenture, and except as provided in the Bond Indenture, shall (except for moneys in the Rebate Fund) constitute part of the Trust Estate and be subject to the lien, terms and provisions hereof and shall not be commingled with any other funds of the Board or the Foundation except as provided under provisions of the Bond Indenture for investment purposes.

Deposit of Bond Proceeds

The net proceeds of the sale of the Series 2010A Bonds shall be paid to the Bond Trustee, and the Bond Trustee shall deposit and apply such proceeds, together with any other moneys deposited with the Bond Trustee, as specified in the Bond Indenture.

Costs of Issuance Fund

Moneys in the Costs of Issuance Fund shall be used solely for the purpose of paying Costs of Issuance, as provided in the Bond Indenture.

Debt Service Fund

The Bond Trustee shall deposit and credit to the Debt Service Fund, as and when received, the following:

(a) All Loan Payments made by the Foundation pursuant to the Loan Agreement shall be deposited and credited to the Debt Service Fund.

(b) Interest earnings and other income on Permitted Investments in the Debt Service Fund shall be deposited and credited to the Debt Service Fund pursuant to the Bond Indenture.

(c) All other moneys received by the Bond Trustee under and pursuant to any of the provisions of the Bond Indenture or the Loan Agreement for deposit into the Debt Service Fund.

Moneys in the Debt Service Fund shall be held in trust and shall be applied in accordance with the provisions of the Bond Indenture to pay the principal of and redemption premium, if any, and interest on the Bonds as the same become due and payable at maturity, upon redemption, by acceleration or otherwise.

After payment in full of the principal of, redemption premium, if any, and interest on the Bonds (or after provision has been made for the payment thereof as provided in the Bond Indenture), all rebatable arbitrage to the United States, and the fees, charges and expenses of the Bond Trustee and the Board, and any other amounts required to be paid under the Bond Indenture and the Loan Agreement, all amounts remaining in

C-15 the Debt Service Fund shall be paid to the Foundation upon the expiration or sooner termination of the Loan Agreement.

Rebate Fund

There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Compliance Agreement. All amounts on deposit at any time in the Rebate Fund shall be held by the Bond Trustee in trust to the extent required to pay rebatable arbitrage to the United States of America, and neither the Foundation, the Board nor the owner of any Bonds shall have any rights in or claim to such money.

Investment of Moneys

Moneys held in each of the funds and accounts under the Bond Indenture shall be invested and reinvested by the Bond Trustee, pursuant to written directions of the Foundation Representative, in accordance with the provisions of the Bond Indenture and the Tax Compliance Agreement in Permitted Investments which mature or are subject to redemption by the owner thereof prior to the date such funds are expected to be needed. The Bond Trustee is authorized, in making or disposing of any investment permitted by the Bond Indenture, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Bond Trustee or for any third person or dealing as principal for its own account. The Bond Trustee may pool moneys for investment purposes, except moneys held in any fund or account that are required to be yield restricted in accordance with the Tax Compliance Agreement shall not be comingled with other money and shall be invested separately. Any such Permitted Investments shall be held by or under the control of the Bond Trustee and shall be deemed at all times a part of the fund or account in which such moneys are originally held. The interest accruing on each fund or account and any profit realized from such Permitted Investments (other than any amounts required to be deposited in the Rebate Fund pursuant to the Bond Indenture) shall be credited to such fund or account, and any loss resulting from such Permitted Investments shall be charged to such fund or account. The Bond Trustee shall sell or present for redemption and reduce to cash a sufficient amount of such Permitted Investments whenever it shall be necessary to provide moneys in any fund or account for the purposes of such fund or account and the Bond Trustee shall not be liable for any loss resulting from such investments.

Tax Covenants

The Board (to the extent within its power or direction) shall not use or permit the use of any proceeds of Bonds or any other funds of the Board, directly or indirectly, in any manner, and shall not take or permit to be taken any other action or actions, which would adversely affect the exclusion of the interest on any Bond from gross income for federal income tax purposes. The Board agrees that so long as any of the Bonds remain Outstanding, it will (to the extent within its power or direction) comply with the provisions of the Tax Compliance Agreement applicable to the Board.

The Bond Trustee agrees to comply with the provisions of the Tax Compliance Agreement and with any statute, regulation or ruling that may apply to it as Bond Trustee under the Bond Indenture and relating to reporting requirements or other requirements necessary to preserve the exclusion from federal gross income of the interest on the Bonds. The Bond Trustee from time to time may cause a firm of attorneys, consultants or independent accountants or an investment banking firm to supply the Bond Trustee, on behalf of the Board, with such information as the Bond Trustee, on behalf of the Board, may request in order to determine in a manner reasonably satisfactory to the Bond Trustee, on behalf of the Board, all matters relating to (a) the actuarial yields on the Bonds as the same may relate to any data or conclusions necessary to verify that the

C-16 Bonds are not “arbitrage bonds” within the meaning of Section 148 of the Internal Revenue Code, and (b) compliance with the rebate requirements of Section 148(f) of the Internal Revenue Code. Costs and expenses incurred by the Bond Trustee in connection with supplying the foregoing information shall be paid by the Foundation.

Events of Default

The term “event of default,” wherever used in the Bond Indenture, means any one of the following events (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) default in the payment of any interest on any Bond when such interest becomes due and payable;

(b) default in the payment of the principal of (or premium, if any, on) any Bond when the same becomes due and payable (whether at maturity, upon proceedings for redemption, by acceleration or otherwise);

(c) default in the performance, or breach, of any covenant or agreement of the Board in the Bond Indenture (other than a covenant or agreement a default in the performance or breach of which is specifically dealt with elsewhere in this caption), and continuance of such default or breach for a period of 60 days after there has been given to the Board and the Foundation by the Bond Trustee or to the Board, the Foundation and the Bond Trustee by the owners of at least 25% in principal amount of the Bonds Outstanding, a written notice specifying such default or breach and requiring it to be remedied; provided, that if such default cannot be fully remedied within such 60-day period, but can reasonably be expected to be fully remedied, such default shall not constitute an event of default if the Board shall promptly upon receipt of such notice commence the curing of such default and shall thereafter prosecute and complete the same with due diligence and dispatch; or

(d) any event of default under the Loan Agreement shall occur and is continuing and has not been waived.

Acceleration of Maturity; Rescission and Annulment

If an event of default occurs and is continuing, the Bond Trustee may, and if requested by the owners of not less than 25% in principal amount of the Bonds Outstanding shall by written notice to the Board and the Foundation, immediately declare the principal of all Bonds Outstanding and the interest accrued thereon to be due and payable, and upon any such declaration such principal and interest shall become immediately due and payable.

At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on any Bonds has been obtained by the Bond Trustee as provided in the Bond Indenture, the owners of a majority in principal amount of the Bonds Outstanding may by written notice to the Board, the Foundation and the Bond Trustee, rescind and annul such declaration and its consequences if:

(a) there is deposited with the Bond Trustee a sum sufficient to pay:

C-17 (1) all overdue installments of interest on all Bonds;

(2) the principal of (and premium, if any, on) any Bonds which have become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in such Bonds; and

(3) all sums paid or advanced by the Bond Trustee under the Bond Indenture and the reasonable compensation, expenses, disbursements and advances of the Bond Trustee, its agents and counsel; and

(b) all events of default, other than the non-payment of the principal of Bonds which have become due solely by such declaration of acceleration, have been cured or have been waived as provided in the Bond Indenture.

Exercise of Remedies by the Bond Trustee

Upon the occurrence and continuance of any event of default under the Bond Indenture, unless the same is waived as provided in the Bond Indenture, the Bond Trustee shall have the following rights and remedies, in addition to any other rights and remedies provided under the Bond Indenture or by law:

(a) Right to Bring Suit, Etc. The Bond Trustee may pursue any available remedy at law or in equity by suit, action, mandamus or other proceeding to enforce the payment of the principal of, premium, if any, and interest on the Bonds Outstanding, including interest on overdue principal (and premium, if any) and on overdue installments of interest, and any other sums due under the Bond Indenture, to realize on or to foreclose any of its interests or liens under the Bond Indenture or any other Financing Document, to enforce and compel the performance of the duties and obligations of the Board as set forth in the Bond Indenture and to enforce or preserve any other rights or interests of the Bond Trustee under the Bond Indenture with respect to any of the Trust Estate or otherwise existing at law or in equity.

(b) Exercise of Remedies at Direction of Bondowners. If requested in writing to do so by the owners of not less than 25% in principal amount of Bonds Outstanding and if indemnified as provided in the Bond Indenture, the Bond Trustee shall be obligated to exercise such one or more of the rights and remedies conferred by the Bond Indenture as the Bond Trustee shall deem most expedient in the interests of the bondowners.

(c) Appointment of Receiver. Upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Bond Trustee and of the bondowners under the Bond Indenture, the Bond Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Trust Estate, pending such proceedings, with such powers as the court making such appointment shall confer.

(d) Suits to Protect the Trust Estate. The Bond Trustee shall have power to institute and to maintain such proceedings as it may deem expedient to prevent any impairment of the Trust Estate by any acts which may be unlawful or in violation of the Bond Indenture and to protect its interests and the interests of the bondowners in the Trust Estate, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order would impair the

C-18 security under the Bond Indenture or be prejudicial to the interests of the bondowners or the Bond Trustee, or to intervene (subject to the approval of a court of competent jurisdiction) on behalf of the bondowners in any judicial proceeding to which the Board or the Foundation is a party and which in the judgment of the Bond Trustee has a substantial bearing on the interests of the bondowners.

(e) Enforcement Without Possession of Bonds. All rights of action under the Bond Indenture or any of the Bonds may be enforced and prosecuted by the Bond Trustee without the possession of any of the Bonds or the production thereof in any suit or other proceeding relating thereto, and any such suit or proceeding instituted by the Bond Trustee shall be brought in its own name as trustee of an express trust. Any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Bond Trustee, its agents and counsel, and subject to the provisions of the Bond Indenture, be for the equal and ratable benefit of the owners of the Bonds in respect of which such judgment has been recovered.

(f) Restoration of Positions. If the Bond Trustee or any bondowner has instituted any proceeding to enforce any right or remedy under the Bond Indenture by suit, foreclosure, the appointment of a receiver, or otherwise, and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Bond Trustee or to such bondowner, then and in every case the Board, the Foundation, the Bond Trustee and the bondowners shall, subject to any determination in such proceeding, be restored to their former positions and rights under the Bond Indenture, and thereafter all rights and remedies of the Bond Trustee and the bondowners shall continue as though no such proceeding had been instituted.

Limitation on Suits by Bondowners

No owner of any Bond shall have any right to institute any proceeding, judicial or otherwise, under the Bond Indenture, or for the appointment of a receiver or trustee or for any other remedy under the Bond Indenture, unless:

(a) such owner has previously given written notice to the Bond Trustee of a continuing event of default;

(b) the owners of not less than 25% in principal amount of the Bonds Outstanding shall have made written request to the Bond Trustee to institute proceedings in respect of such event of default in its own name as Bond Trustee under the Bond Indenture;

(c) such owner or owners have offered to the Bond Trustee indemnity as provided in the Bond Indenture against the costs, expenses and liabilities to be incurred in compliance with such request;

(d) the Bond Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding; and

(e) no direction inconsistent with such written request has been given to the Bond Trustee during such 60-day period by the owners of a majority in principal amount of the Outstanding Bonds;

C-19 it being understood and intended that no one or more owners of Bonds shall have any right in any manner whatever by virtue of, or by availing of, any provision of the Bond Indenture to affect, disturb or prejudice the lien of the Bond Indenture or the rights of any other owners of Bonds, or to obtain or to seek to obtain priority or preference over any other owners or to enforce any right under the Bond Indenture, except in the manner provided in the Bond Indenture and for the equal and ratable benefit of all Outstanding Bonds.

Notwithstanding the foregoing or any other provision in the Bond Indenture, however, the owner of any Bond shall have the right which is absolute and unconditional to receive payment of the principal of (and premium, if any) and interest on such Bond on the respective stated maturity expressed in such Bond (or, in the case of redemption, on the redemption date) and nothing contained in the Bond Indenture shall affect or impair the right of any owner to institute suit for the enforcement of any such payment.

Control of Proceedings by Bondowners

The owners of a majority in principal amount of the Bonds Outstanding shall have the right during the continuance of an event of default:

(a) to require the Bond Trustee to proceed to enforce the Bond Indenture, either by judicial proceedings for the enforcement of the payment of the Bonds and the foreclosure of the Bond Indenture, or otherwise; and

(b) to direct the time, method and place of conducting any proceeding for any remedy available to the Bond Trustee, or exercising any trust or power conferred upon the Bond Trustee under the Bond Indenture, provided that:

(1) such direction shall not be in conflict with any rule of law or the Bond Indenture;

(2) the Bond Trustee may take any other action deemed proper by the Bond Trustee which is not inconsistent with such direction; and

(3) the Bond Trustee shall not determine that the action so directed would be unjustly prejudicial to the owners not taking part in such direction.

Application of Moneys Collected

Any moneys collected by the Bond Trustee pursuant to the Bond Indenture (after the deductions for payment of costs and expenses of proceedings resulting in the collection of such moneys) together with any other sums then held by the Bond Trustee as part of the Trust Estate, shall be applied in the following order, at the date or dates fixed by the Bond Trustee and, in case of the distribution of such money on account of principal (or premium, if any) or interest, upon presentation of the Bonds and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:

(a) First: To the payment of all amounts due the Bond Trustee under the Bond Indenture;

(b) Second: To the payment of the whole amount then due and unpaid upon the Outstanding Bonds for principal (and premium, if any) and interest, in respect of which or for the benefit of which such money has been collected, with interest (to the extent that such interest has been collected by the Bond Trustee or a sum sufficient therefor has been so collected and payment thereof is legally enforceable at the respective rate or rates prescribed therefor in the

C-20 Bonds) on overdue principal (and premium, if any) and on overdue installments of interest; and in case such proceeds shall be insufficient to pay in full the whole amount so due and unpaid upon such Bonds, then to the payment of such principal and interest, without any preference or priority, ratably according to the aggregate amount so due; and

(c) Third: To the Foundation or to whosoever may be lawfully entitled to receive the same or as a court of competent jurisdiction may direct.

Corporate Trustee Required; Eligibility

There shall at all times be a Bond Trustee under the Bond Indenture which shall be a commercial bank or trust company organized and doing business under the laws of the United States of America or of any state thereof, authorized under such laws to exercise corporate trust powers, subject to supervision or examination by federal or state authority, having a principal corporate trust office located in the State of Missouri, and having a combined capital and surplus of at least $100,000,000, or must provide a guaranty of the full and prompt performance by the Bond Trustee of its obligations under the Bond Indenture and any other agreements made in connection with the Bonds, on terms satisfactory to the Board, by a guarantor with such combined capital and surplus. If such corporation publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then for the purposes of the Bond Indenture, the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Bond Trustee shall cease to be eligible in accordance with the provisions of the Bond Indenture, it shall resign immediately in the manner and with the effect specified in the Bond Indenture.

Resignation and Removal of Bond Trustee

(a) The Bond Trustee may resign at any time by giving written notice thereof to the Board, the Foundation and each owner of Bonds Outstanding as shown by the bond register required by the Bond Indenture to be kept by the Bond Trustee. If an instrument of acceptance by a successor Bond Trustee shall not have been delivered to the Bond Trustee within 30 days after the giving of such notice of resignation, the resigning Bond Trustee may petition any court of competent jurisdiction for the appointment of a successor Bond Trustee.

(b) The Bond Trustee may be removed at any time by an instrument or concurrent instruments in writing delivered to the Board and the Bond Trustee signed by the owners of a majority in principal amount of the Outstanding Bonds, or, so long as the Foundation is not in default under the Loan Agreement, by the Foundation. The Board, the Foundation or any bondowner may at any time petition any court of competent jurisdiction for the removal for cause of the Bond Trustee.

(1) the Bond Trustee shall cease to be eligible under provisions of the Bond Indenture and shall fail to resign after written request therefor by the Foundation, the Board or by any such bondowner, or

(2) the Bond Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Bond Trustee or of its property shall be appointed or

C-21 any public officer shall take charge or control of the Bond Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation,

then, in any such case, the Board may remove the Bond Trustee, the Foundation or any bondowner may petition any court of competent jurisdiction for the removal of the Bond Trustee and the appointment of a successor Bond Trustee.

The Bond Trustee shall give notice of each resignation and each removal of the Bond Trustee and each appointment of a successor Bond Trustee to the registered owners of Bonds as their names and addresses appear in the bond register maintained by the Bond Trustee. Each notice shall include the name of the successor Bond Trustee and the address of its corporate trust office in the State of Missouri or other designated payment office.

No resignation or removal of the Bond Trustee shall become effective until the acceptance of appointment by the successor Bond Trustee under the Bond Indenture.

Appointment of Successor Bond Trustee

If the Bond Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Bond Trustee for any cause, the Board, with the written consent of the Foundation (so long as no event of default under the Bond Indenture or under the Loan Agreement has occurred and is continuing), or the owners of a majority in principal amount of Bonds Outstanding (if an event of default under the Bond Indenture or under the Loan Agreement has occurred and is continuing), by an instrument or concurrent instruments in writing delivered to the Board and the retiring Bond Trustee, shall promptly appoint a successor Bond Trustee. In case all or substantially all of the Trust Estate shall be in the possession of a receiver or trustee lawfully appointed, such receiver or trustee, by written instrument, may similarly appoint a temporary successor to fill such vacancy until a new Bond Trustee shall be so appointed by the Board or the bondowners. If, within 30 days after such resignation, removal or incapability or the occurrence of such vacancy, a successor Bond Trustee shall be appointed in the manner provided in the Bond Indenture, the successor Bond Trustee so appointed shall, forthwith upon its acceptance of such appointment, become the successor Bond Trustee and supersede the retiring Bond Trustee and any temporary successor Bond Trustee appointed by such receiver or trustee. If no successor Bond Trustee shall have been so appointed and accepted appointment in the manner provided in the Bond Indenture, the Foundation, the Bond Trustee or any bondowner may petition any court of competent jurisdiction for the appointment of a successor Bond Trustee, until a successor shall have been appointed as above provided. The successor so appointed by such court shall immediately and without further act be superseded by any successor appointed as above provided. Every such successor Bond Trustee appointed pursuant to the provisions of the Bond Indenture shall be a bank with trust powers or trust company in good standing under the law of the jurisdiction in which it was created and by which it exists, meeting the eligibility requirements of the Bond Indenture.

Supplemental Bond Indentures without Consent of Bondowners

Without the consent of the owners of any Bonds, the Board and the Bond Trustee may from time to time enter into one or more Supplemental Bond Indentures for any of the following purposes:

(a) to substitute or add additional property thereto as permitted by the Loan Agreement, or to correct or amplify the description of any property at any time subject to the lien of the Bond Indenture, or better to assure, convey and confirm unto the Bond Trustee any property subject

C-22 or required to be subjected to the lien of the Bond Indenture, or to subject to the lien of the Bond Indenture additional property;

(b) to add to the conditions, limitations and restrictions on the authorized amount, terms or purposes of issue, authentication and delivery of Bonds or of any series of Bonds, as set forth in the Bond Indenture, additional conditions, limitations and restrictions thereafter to be observed;

(c) to authorize the issuance of any series of Additional Bonds and make such other provisions as provided in the Bond Indenture;

(d) to modify or eliminate any of the terms of the Bond Indenture; provided, however, that:

(1) such Supplemental Bond Indenture shall expressly provide that any such modifications or eliminations shall become effective only when there is no Bond Outstanding of any series issued prior to the execution of such Supplemental Bond Indenture; and

(2) the Bond Trustee may, in its discretion, decline to enter into any such Supplemental Bond Indenture which, in its opinion, may not afford adequate protection to the Bond Trustee when the same becomes operative;

(e) to evidence the appointment of a separate trustee or the succession of a new trustee under the Bond Indenture, or the appointment of a new Bond Trustee, and in connection therewith to change any times of day specified in the Bond Indenture by which any action must be taken;

(f) to add to the covenants of the Board or to the rights, powers and remedies of the Bond Trustee for the benefit of the owners of all or any series of Bonds or to surrender any right or power conferred in the Bond Indenture upon the Board;

(g) to cure any ambiguity, to correct or supplement any provision in the Bond Indenture which may be inconsistent with any other provision in the Bond Indenture or to make any other change, with respect to matters or questions arising under the Bond Indenture, which shall not be inconsistent with the provisions of the Bond Indenture, provided such action shall not materially adversely affect the interests of the owners of the Bonds; or

(h) to modify, eliminate or add to the provisions of the Bond Indenture to such extent as shall be necessary to effect the qualification of the Bond Indenture under the Trust Indenture Act of 1939, as amended, or under any similar federal statute hereafter enacted, or to permit the qualification of the Bonds for sale under the securities laws of the United States or any state of the United States.

Supplemental Bond Indentures with Consent of Bondowners

With the consent of the owners of not less than a majority in principal amount of the Bonds then Outstanding affected by such Supplemental Bond Indenture, the Board and the Bond Trustee may enter into one or more Supplemental Bond Indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Bond Indenture or of modifying in any manner the rights of

C-23 the owners of the Bonds under the Bond Indenture; provided, however, that no such Supplemental Bond Indenture shall, without the consent of the owner of each Outstanding Bond affected thereby,

(a) change the stated maturity of the principal of, or any installment of interest on, any Bond, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or change any place of payment where, or the coin or currency in which, any Bond, or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the stated maturity thereof (or, in the case of redemption, on or after the redemption date);

(b) reduce the percentage in principal amount of the Outstanding Bonds, the consent of whose owners is required for any such Supplemental Bond Indenture, or the consent of whose owners is required for any waiver provided for in the Bond Indenture of compliance with certain provisions of the Bond Indenture or certain defaults under the Bond Indenture and their consequences;

(d) modify or alter the provisions of the proviso to the definition of the term “Outstanding”;

(e) modify any of the provisions of the Bond Indenture relating to Supplemental Indentures requiring the consent of the Bondowners or waivers of past defaults of the Bond Indenture, except to increase any percentage provided thereby or to provide that certain other provisions of the Bond Indenture cannot be modified or waived without the consent of the owner of each Bond affected thereby; or

(f) permit the creation of any lien ranking prior to or on a parity with the lien of the Bond Indenture with respect to any of the Trust Estate or terminate the lien of the Bond Indenture on any property at any time subject to the Bond Indenture or deprive the owner of any Bond of the security afforded by the lien of the Bond Indenture.

Payment, Discharge and Defeasance of Bonds

Bonds will be deemed to be paid and discharged and no longer Outstanding under the Bond Indenture and will cease to be entitled to any lien, benefit or security of the Bond Indenture if the Board shall pay or provide for the payment of such Bonds in any one or more of the following ways:

(a) by paying or causing to be paid the principal of (including redemption premium, if any) and interest on such Bonds, as and when the same become due and payable;

(b) by delivering such Bonds to the Bond Trustee for cancellation; or

(c) by depositing in trust with the Bond Trustee moneys and Defeasance Obligations in an amount, together with the income or increment to accrue thereon, without consideration of any reinvestment thereof, sufficient to pay or redeem (when redeemable) and discharge the indebtedness on such Bonds at or before their respective maturity or redemption dates (including the payment of the principal of, premium, if any, and interest payable on such Bonds to the maturity or redemption date thereof); provided that, if any such Bonds are to be

C-24 redeemed prior to the maturity thereof, notice of such redemption is given in accordance with the requirements of the Bond Indenture or provision satisfactory to the Bond Trustee is made for the giving of such notice.

The Bonds may be defeased in advance of their maturity or redemption dates pursuant to subsection (c) above, subject to receipt by the Bond Trustee of (1) if the Bonds will be defeased more than 90 days in advance of the earlier of their maturity or redemption date, a verification report prepared by independent certified public accountants, or other verification agent, satisfactory to the Bond Trustee and the Board, to the effect that the payment of the principal of and redemption premium, if any, and interest on all of the Bonds then Outstanding and any and all other amounts required to be paid under the provisions of the Bond Indenture has been provided for in the manner set forth in the Bond Indenture, and (2) an Opinion of Bond Counsel addressed and delivered to the Bond Trustee and the Board to the effect that so providing for the payment of any Bonds will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes, notwithstanding the satisfaction and discharge of the Bond Indenture.

The foregoing notwithstanding, the liability of the Board in respect of such Bonds shall continue, but the owners thereof shall thereafter be entitled to payment only out of the moneys and Defeasance Obligations deposited with the Bond Trustee as aforesaid.

Moneys and Defeasance Obligations so deposited with the Bond Trustee pursuant to the Bond Indenture shall not be a part of the Trust Estate but shall constitute a separate trust fund for the benefit of the Persons entitled thereto. Such moneys and Defeasance Obligations shall be applied by the Bond Trustee to the payment to the Persons entitled thereto, of the principal (and premium, if any) and interest for whose payment such moneys and Defeasance Obligations have been deposited with the Bond Trustee.

Satisfaction and Discharge of Bond Indenture

The Bond Indenture and the lien, rights and interests created by the Bond Indenture shall cease, determine and become null and void (except as to any surviving rights under the Bond Indenture) if the following conditions are met:

(a) the principal of, premium, if any, and interest on all Bonds has been paid or is deemed to be paid and discharged by meeting the conditions of the Bond Indenture;

(b) all other sums payable under the Bond Indenture with respect to the Bonds are paid or provision satisfactory to the Bond Trustee is made for such payment;

(c) the Bond Trustee receives an Opinion of Bond Counsel (which may be based upon a ruling or rulings of the Internal Revenue Service) addressed and delivered to the Bond Trustee and the Board to the effect that so providing for the payment of any Bonds will not adversely affect the exclusion of the interest on the Bonds from gross income for federal income tax purposes, notwithstanding the satisfaction and discharge of the Bond Indenture;

(d) the Bond Trustee receives an Opinion of Counsel addressed and delivered to the Bond Trustee and the Board to the effect that all conditions precedent in the Bond Indenture to the satisfaction and discharge of the Bond Indenture have been complied with.

C-25 Acts of Bondowners

Any notice, request, demand, authorization, direction, consent, waiver or other action provided by the Bond Indenture to be given or taken by bondowners may be embodied in and evidenced by one or more substantially concurrent instruments of similar tenor signed by such bondowners in person or by an agent duly appointed in writing. Except as otherwise expressly provided in the Bond Indenture, such action shall become effective when such instrument or instruments are delivered to the Bond Trustee, and, where it is expressly required by the Bond Indenture, to the Board or the Foundation. Proof of execution of any such instrument or of a writing appointing any such agent, or of the ownership of Bonds, shall be sufficient for any purpose of the Bond Indenture and conclusive in favor of the Board and the Bond Trustee, if made in the following manner:

(a) The fact and date of the execution by any Person of any such instrument or writing may be proved by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof, or by the affidavit of a witness of such execution. Whenever such execution is by an officer of a corporation or a member of a partnership on behalf of such corporation or partnership, such certificate or affidavit shall also constitute sufficient proof of his authority.

(b) The fact and date of execution of any such instrument or writing and the authority of any Person executing the same may also be proved in any other manner which the Bond Trustee deems sufficient; and the Bond Trustee may in any instance require further proof with respect to any of the matters referred to in this caption.

(c) The ownership of Bonds and the amount or amounts, numbers and other identification of such Bonds, and the date of holding the same, shall be proved by the bond register maintained by the Bond Trustee.

C-26 SUMMARY OF LOAN AGREEMENT

The following is a summary of certain provisions contained in the Loan Agreement. The following is not a comprehensive description, however, and is qualified in its entirety by reference to the Loan Agreement for a complete recital of the terms thereof.

Loan of Funds

The Board shall make the Loan to the Foundation, using the proceeds of the sale of the Bonds, and the Foundation shall receive such Loan from the Board, for the purposes and upon the terms and conditions provided in the Loan Agreement and in the Bond Indenture.

Use of Proceeds

The proceeds of the Bonds loaned to the Foundation shall be paid to the Bond Trustee for deposit as provided in the Bond Indenture to refund in advance of their maturities the Refunded Bonds and to pay Costs of Issuance of the Bonds in the manner as provided in the Bond Indenture.

Loan Payments

The Foundation shall make the following payments (“Loan Payments”) in repayment of the Loan and to provide for payment of the principal of, redemption premium, if any, and interest on the Bonds, directly to the Bond Trustee, in immediately available funds, for deposit in the Debt Service Fund, on the following dates, and otherwise as set out below:

(a) Debt Service Fund--Interest: On or before 11:00 a.m., central time, on the Business Day before each Interest Payment Date or any other date that any payment of interest is required to be made in respect of the Bonds pursuant to the Bond Indenture, an amount which is, together with any other moneys available for such purpose in the Debt Service Fund, not less than the interest to become due on the Bonds on such Interest Payment Date or other date that interest is due.

(b) Debt Service Fund--Principal: On or before 11:00 a.m., central time, on the Business Day before each principal payment date on the Bonds (whether at maturity or upon mandatory sinking fund redemption or acceleration or otherwise), an amount which, together with any other moneys available for such purpose in the Debt Service Fund, is not less than the principal due on the Bonds on the next principal payment date by maturity, mandatory sinking fund redemption, acceleration or otherwise.

(c) Debt Service Fund--Redemption: On or before the date required by the Loan Agreement or the Bond Indenture, the amount required to redeem Bonds then Outstanding if the Foundation Representative exercises the right to redeem Bonds under any provision of the Bond Indenture or if any Bonds are required to be redeemed (other than pursuant to mandatory sinking fund redemption provisions) under any provision of the Bond Indenture.

C-27 Obligations Absolute and Unconditional

The obligations of the Foundation under the Loan Agreement are general obligations of the Foundation, and the full faith and credit of the Foundation is pledged to the payment of all amounts due and payable by the Foundation under the Loan Agreement. The Foundation shall pay all such amounts due and payable under the Loan Agreement using any and all available resources of the Foundation, as necessary. The Foundation shall pay all Loan Payments and other payments due under the Loan Agreement and perform its obligations, covenants and agreements under the Loan Agreement, without notice or demand, and without abatement, deduction, set-off, counterclaim, recoupment, discrimination or defense or any right of termination or cancellation arising from any circumstances whatsoever, and regardless of the invalidity of any portion of the Loan Agreement, and, to the extent permitted by law, the Foundation waives the provisions of any statute or other law now or hereafter in effect contrary to any of its obligations, covenants or agreements under the Loan Agreement or which releases or purports to release the Foundation therefrom. Nothing in the Loan Agreement shall be construed as a waiver by the Foundation of any rights or claims the Foundation may have against the Board under the Loan Agreement or otherwise, but any recovery upon such rights or claims shall be had from the Board separately, it being the intent of the Loan Agreement that the Foundation shall be unconditionally and absolutely obligated to perform fully all of its obligations, agreements and covenants under the Loan Agreement for the benefit of the owners of the Bonds.

Existence and Tax-Exempt Status

Except as otherwise expressly provided in the Loan Agreement, the Foundation shall (1) preserve and keep in full force and effect its separate legal existence, (2) remain qualified to do business and conduct its affairs in each jurisdiction where ownership of its Property or the conduct of its business or affairs requires such qualification, and (3) maintain its status as a Tax-Exempt Organization.

Maintenance and Use of Property

The Foundation shall cause all of its Property used or useful in the conduct of its business and operations to be maintained, preserved and kept in good repair and working order and condition and in as safe condition as its operations will permit and shall make all repairs, renewals, replacements and improvements thereof necessary for the efficient conduct of its business and operations, and shall, during the term of the Bonds, operate the facilities financed and refinanced by the Bonds, as a “project” within the meaning of the Act. Nothing in the Loan Agreement shall obligate the Foundation to preserve, repair, renew or replace any Property no longer used or no longer useful in the conduct of its business, or prevent the Foundation from discontinuing the operation of any Property or from removing or demolishing any building or buildings, if such discontinuance is desirable in the conduct of its business. The Foundation may make additions, alterations and changes to its Property so long as such additions, alterations and changes are made in compliance with the provisions of the Loan Agreement and will not result in a violation of the provisions of the Loan Agreement, and the Foundation may dispose of any Property as permitted by the Loan Agreement.

Compliance With Laws and Regulations

The Foundation shall conduct its affairs and carry on its business and operations in such manner as to comply with any and all applicable laws of the United States of America and the several states thereof and observe and conform to all valid orders, regulations or requirements of any governmental authority applicable to the conduct of its business and operations and the ownership of its Property, including without limitation environmental laws, orders or regulations; provided, however, that nothing contained in the Loan Agreement shall require the Foundation to comply with, observe and conform to any such law, order, regulation or

C-28 requirement of any governmental authority so long as the applicability or validity thereof shall be contested in good faith by appropriate proceedings, provided that the Foundation shall have set aside on its books adequate reserves with respect to such contest and such contest shall not materially impair the ability of the Foundation to meet its obligations under the Loan Agreement.

Payment of Taxes and Other Charges

The Foundation shall pay or cause to be paid as they become due and payable all taxes, assessments and other governmental charges lawfully levied or assessed or imposed upon the Foundation or its property or any part thereof or upon any income therefrom; provided, however, that the Foundation shall not be required to pay and discharge or cause to be paid and discharged any such tax, assessment or governmental charge to the extent that the amount, applicability or validity thereof shall currently be contested in good faith by appropriate proceedings and the Foundation shall have established and shall maintain adequate reserves on its books for the payment of the same.

Licenses and Permits

The Foundation shall procure and maintain all licenses and permits necessary or desirable in the operation of its business, programs and facilities which the governing board of the Foundation determines are appropriate; provided, however, that the Foundation shall not be required to procure or maintain in effect any permit or license that the governing board of the Foundation determines in good faith, is not in the best interests of the Foundation and is no longer necessary or desirable in the conduct of its business and the lack of which will not materially impair the ability of the Foundation to perform its obligations under the Loan Agreement.

Insurance

The Foundation shall maintain insurance coverage, through reputable insurance carriers or self- insurance or other alternative risk management programs, with respect to its property and its operations, covering such risks that are of an insurable nature and of a character customarily insured against by institutions operating similar properties and engaged in similar operations (including but not limited to Property and casualty, general liability, business interruption, worker’s compensation and employee dishonesty) and in such amounts as, in its judgment, are adequate to protect the Foundation and its property and its operations. Each policy or other contract for such insurance shall contain an agreement by the insurer that, notwithstanding any right of cancellation reserved to such insurer, such policy or contract shall continue in force for at least 10 days after written notice of cancellation to the Foundation and each other insured or loss payee named therein.

The Foundation may elect to be self-insured for all or any part of the foregoing requirements if (i) the Foundation annually obtains a written evaluation with respect to such self-insurance program from an independent insurance consultant or actuary, (ii) the evaluation is to the effect that the self-insurance program is prudent under the circumstances and is actuarially sound, and (iii) unless the evaluation states that such reserves are not necessary, the Foundation deposits and maintains adequate reserves for the self-insurance program with a corporate trustee.

The Foundation will annually review the insurance it maintains with respect to its property and operations to determine that it is adequate to protect its property and operations. As soon as practicable after the execution of the Bond Indenture, and within 90 days after the close of each fiscal year thereafter, the Foundation Representative will file with the Bond Trustee an Officer’s Certificate containing a list of the insurance or self-insurance in force upon the Property and operations of the Foundation on a date therein

C-29 specified (which date shall be within 30 days of the filing of such certificate), including the names of the insurers with which the policies and other contracts of insurance are carried, the numbers, amounts and expiration dates of such policies and other contracts and the property and hazards covered thereby, and stating that the insurance so listed complies with the Loan Agreement. To the extent the insurance required by the Loan Agreement is provided through commercial insurance policies, the Foundation annually will deliver to the Bond Trustee policies evidencing all such insurance, or a certificate or certificates or binders of the respective insurers stating that such insurance is in force and effect, or actuarial reports or other evidence of current insurance and self-insurance coverage. In lieu of separate policies, the Foundation may maintain a single policy, blanket or umbrella policies, or a combination thereof, in which event the Foundation Representative shall deposit with the Bond Trustee a certificate or certificates of the respective insurers as to the amount of coverage in force upon its property and operations.

Financial Statements and Other Information

The Foundation shall keep proper books of record and account, in which full and correct entries shall be made of all dealings or transactions of or in relation to the properties, business and affairs of the Foundation in accordance with generally accepted accounting principles. The Foundation Representative shall furnish to the Bond Trustee and the Original Purchaser, the following:

(a) Quarterly Financial Statements. As soon as practicable after they are available but in no event more than 60 days after the end of the first three quarterly fiscal periods of each fiscal year, the unaudited combined financial statements of the Foundation for such period, including (1) a statement of financial position, statement of operations, statement of cash flows and changes in net assets of the Foundation during such periods, and (2) statements and summaries of investments of the Foundation’s endowment funds as of the end of the previous quarter, including the asset classes, yields, maturities, credit ratings.

(b) Annual Financial Statements. As soon as practicable after they are available but in no event more than 180 days after the last day of each fiscal year, the audited combined financial statements of the Foundation for such fiscal year certified by the Foundation’s independent certified public accountants, covering the operations of the Foundation for such fiscal year and containing a balance sheet as of the end of such fiscal year and a statement of changes in fund balances and a statement of cash flows for such fiscal year, showing in each case in comparative form the financial figures for the preceding fiscal year, all in reasonable detail and accompanied by an independent auditor’s report stating that (1) its audit was in accordance with generally accepted auditing standards, and (2) the financial statements present fairly (in all material respects) the financial position of the Foundation as of the end of such fiscal year.

(c) Officer’s Compliance Certificate. Simultaneously with the delivery of each set of financial statements referred in subsection (b) above, an Officer’s Certificate stating that after due inquiry there does not exist on the date of such certificate any event of default or event which with notice or lapse of time or both would constitute an event of default under the Loan Agreement of which the Foundation is aware or, if any event of default does exist, stating that such event exists and setting forth the details thereof and the action that the Foundation is taking or proposes to take with respect thereto.

(d) Auditor’s Compliance Certificate. At the time of delivery of the audit report referred to in subsection (b) above, a separate written certificate of the accountants preparing such report

C-30 stating that such accountants have, during the course of the audit, obtained no knowledge of any default by the Foundation in the fulfillment of any of the covenants, provisions or conditions of the Loan Agreement, or if such accountants shall have obtained knowledge of any such default or defaults, they shall disclose in such statement the default or defaults and the nature thereof (but such accountants shall not be liable directly or indirectly to anyone for failure to obtain knowledge of any default).

Liens and Encumbrances

The Foundation shall not create or incur or permit to be created or incurred or to exist any mortgage, lien, security interest, charge or encumbrance upon its Property except Permitted Encumbrances, and shall promptly discharge or terminate all mortgages, liens, security interests, charges and encumbrances on its Property that are not Permitted Encumbrances. The Foundation shall comply with all terms, covenants and provisions contained in any lien or security interest existing upon its Property or any part thereof or securing any of its Indebtedness unless the validity, amount or collectability thereof is being contested in good faith or the failure to comply or contest would not materially impair its ability to pay its Indebtedness when due nor subject a material amount of the Property of the Foundation to loss or forfeiture.

Sale, Lease or Other Disposition of Property

The Foundation shall not in any fiscal year, sell, lease or otherwise transfer or dispose of (a “Transfer”) its Property in an amount which aggregates in excess of 10% of the Book Value of the Property of the Foundation (as shown in the most recent audited combined financial statements of the Foundation), except for Transfers of Property as follows:

(a) The Foundation may transfer Property to any Person in the ordinary course of business.

(b) The Foundation may transfer Property to any Person for fair and adequate consideration on terms no less favorable than would be obtained in a comparable arm’s-length transaction.

(c) The Foundation may transfer Property to any Person, if in its reasonable judgment, such Property has, or within the next succeeding 24 calendar months is reasonably expected to, become inadequate, obsolete or worn out, or otherwise unsuitable, unprofitable, undesirable or unnecessary for the operation of the Foundation’s primary business.

(d) The Foundation may transfer Property to any Person, if such Property consists solely of assets which are specifically restricted by the donor or grantor to a particular purpose which is inconsistent with its use for payment on indebtedness of the Foundation.

(e) The Foundation may transfer Property to any Person for fair and adequate consideration if the Property to be transferred is not essential to the Foundation’s primary business operations, and the proceeds of such Transfer are used to acquire additional facilities, to repay indebtedness of the Foundation, or otherwise used in a productive manner to the benefit of the Foundation’s operations.

(f) The Foundation may transfer Property as part of a consolidation, merger, conveyance or transfer permitted by the Loan Agreement.

C-31 (g) The Foundation may transfer Property as a loan to any Person provided that such loan is evidenced in writing, such loan bears interest at a reasonable interest rate, and the Bond Trustee receives an Officer’s Certificate stating that there is a reasonable expectation that such loan will be repaid in accordance with its terms and that such would not result in a reduction of the level of unrestricted cash and liquid investments of the Foundation below 30 days’ operating expenses. Any loan made pursuant to this clause (g) shall be excluded from the calculation of Unrestricted Net Assets for the purposes of any test under the Loan Agreement.

(h) The Foundation may transfer Property without limitation provided such transfer does not result in a reduction of the underlying ratings assigned to the Bonds at the times the Bonds are issued, and the Foundation provides to the Bond Trustee written confirmation that such ratings will not be adversely affected by such transfer.

(i) The Foundation may transfer Property without limitation provided that, after giving effect to such transfer, the Unrestricted Net Assets of the Foundation shall not be less than 135% of all Outstanding Long-Term Indebtedness of the Foundation. Immediately following any transfer pursuant to this subparagraph the Foundation shall file with the Bond Trustee, a certificate demonstrating that the Foundation has met such test.

Consolidation, Merger, Conveyance or Transfer of Property

The Foundation shall not consolidate with or merge into any other Person or convey or transfer its Property substantially as an entirety to any Person, without the satisfaction of the following conditions:

(a) such merger, consolidation, conveyance or transfer is on such terms as shall fully preserve the lien and security of the Bond Indenture and the Loan Agreement and the rights and powers of the Bond Trustee and the owners of the Bonds under the Bond Indenture and the Loan Agreement;

(b) the Person formed by such consolidation or into which the Foundation is merged or the Person which acquires by conveyance or transfer the Foundation’s Property substantially as an entirety is a corporation or other legal entity organized and existing under the laws of the United States of America or any state thereof, is authorized to conduct business in the State of Missouri, is a Tax-Exempt Organization, and shall execute and deliver to the Bond Trustee a written instrument in form satisfactory to the Bond Trustee, containing an assumption by such successor of the due and punctual payment of the principal of (and premium, if any) and interest on the Loan and the performance and observance of every covenant and condition of the Loan Agreement to be performed or observed by the Foundation;

(c) the Bond Trustee receives an Officer’s Certificate stating that, immediately after giving effect to such transaction, (1) no event of default under the Loan Agreement shall have occurred and be continuing; (2) the successor or transferee shall possess such permits and licenses to operate such property as may be required if it is to operate such property, (3) the Foundation could meet the conditions described in the Loan Agreement for the incurrence of one dollar of additional Long-Term Indebtedness, and (4) the Unrestricted Net Assets of the successor or transferee will be equal to at least 90% of the Unrestricted Net Assets of the Foundation immediately prior to such transaction;

C-32 (d) the Bond Trustee and the Board receive an Opinion of Counsel to the effect that (1) such consolidation, merger, conveyance or transfer complies with the Loan Agreement and all conditions precedent provided in the Loan Agreement for relating to such transaction have been complied with, (2) such transaction will not adversely affect the status of the successor or transferee as a Tax-Exempt Organization, and (3) the successor or transferee which is the surviving entity is liable on the Loan, as if the Loan were originally made to such Person; and

(e) the Bond Trustee and the Board receive an Opinion of Bond Counsel to the effect that under then existing law the consummation of such consolidation, merger, conveyance, or transfer would not adversely affect the exclusion of the interest payable on such Bonds from gross income under the Internal Revenue Code.

Upon any consolidation or merger or any conveyance or transfer of the Foundation’s Property substantially as an entirety in accordance with the Loan Agreement, the successor corporation or other entity formed by such consolidation or into which the Foundation is merged or to which such conveyance or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Foundation under the Loan Agreement with the same effect as if such successor corporation or other entity had been named as the Foundation in the Loan Agreement.

Continuing Disclosure

The Foundation covenants and agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure Agreement. The Foundation acknowledges that the Foundation is the only “obligated person” with responsibility for continuing disclosure, and the Board has undertaken no responsibility with respect to any reports, notices or disclosures provided or required under the Loan Agreement, and has no liability to any person, including any Beneficial Owner of the Bonds, with respect to the SEC Rule 15c2-12. Notwithstanding any other provision of the Loan Agreement, failure of the Foundation to comply with the Continuing Disclosure Agreement shall not be considered an event of default under the Loan Agreement.

Tax Covenants

The Foundation represents, warrants and agrees that the Tax Compliance Agreement executed and delivered by the Foundation concurrently with the issuance and delivery of the Bonds is true, accurate and complete in all material respects as of the date on which executed and delivered. The Foundation shall comply with the Tax Compliance Agreement and the Foundation covenants and agrees that it will not take any action or permit any action to be taken that would adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bonds and will take whatever action, or refrain from whatever action, necessary to comply with the requirements of the Internal Revenue Code to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds, and the Foundation will pay or provide for payment to the United States Government, all rebate payments required under Section 148(f) of the Internal Revenue Code and the Tax Compliance Agreement. This covenant shall survive payment in full or defeasance of the Bonds.

Assignment By the Foundation

The Foundation shall not assign the Loan Agreement, as a whole or in part, unless such assignment is pursuant to a merger, consolidation or transfer of Property substantially as an entirety permitted under the Loan Agreement, or unless the following conditions are met:

C-33 (a) No assignment shall relieve the Foundation from primary liability for any of its obligations under the Loan Agreement, and in the event of any such assignment, the Foundation shall continue to remain primarily liable for payment of the amounts specified in the Loan Agreement and the performance and observance of the other agreements to be performed and observed by the Foundation under the Loan Agreement to the same extent as though no assignment had been made.

(b) The assignee shall assume the obligations of the Foundation under the Loan Agreement to the extent of the interest assigned.

(c) The Bond Trustee and the Board shall have received an Opinion of Bond Counsel, in form and substance satisfactory to the Bond Trustee and the Board, to the effect that under then existing law the consummation of such assignment would not cause the interest payable on the Bonds to become includable in gross income under the Internal Revenue Code.

(d) The Foundation Representative shall give prior written notice of such assignment to the Board and the Bond Trustee, and, within 30 days after the delivery thereof, shall furnish or cause to be furnished to the Board and the Bond Trustee a true and complete copy of each assignment and assumption of obligations and an Opinion of Counsel, delivered to the Bond Trustee and the Board, that such assignment is permitted by and in compliance with the provisions of the Loan Agreement.

Additional Bonds

The Board from time to time may, in its sole discretion, at the written request of the Foundation Representative, authorize the issuance of Additional Bonds for the purposes and upon the terms and conditions provided in the Bond Indenture; provided that (1) the terms of such Additional Bonds, the purchase price to be paid therefor and the manner in which the proceeds thereof are to be disbursed shall have been approved by resolutions adopted by the Board and the Foundation; (2) the Board and the Foundation shall have entered into a Supplemental Loan Agreement to acknowledge that Loan Payments are revised to the extent necessary to provide for the payment of the principal of, redemption premium, if any, and interest on the Additional Bonds and to extend the term of the Loan Agreement if the maturity of any of the Additional Bonds would otherwise occur after the expiration of the term of the Loan Agreement; (3) the Board and the Foundation shall have otherwise complied with the provisions of the Loan Agreement and the Bond Indenture with respect to the issuance of such Additional Bonds; and (4) as a condition precedent thereto, there shall be executed and delivered to the Bond Trustee an Officer’s Certificate stating (1) that no event of default under this Loan Agreement has occurred and is continuing and that no event has occurred and is continuing which with the lapse of time or giving of notice, or both, would constitute such an event of default, and (2) the purpose or purposes for which such Additional Bonds are being issued and the classification of the Indebtedness under Section 6.3 of the Loan Agreement and accompanied by the certificates, reports or opinions demonstrating compliance with the applicable tests set forth in Section 6.3 of the Loan Agreement. The Foundation agrees that the net proceeds of such Additional Bonds shall be deposited with the Bond Trustee as provided in the Bond Indenture and in the Supplemental Bond Indenture executed in connection with the issuance of such Additional Bonds.

C-34 Additional Obligations

The Foundation may incur Additional Obligations for any proper purpose if prior to the issuance and delivery of any Additional Obligations, and as a condition precedent thereto, the following documents and showings shall be executed and delivered to the Bond Trustee:

(a) A loan agreement or other debt instrument, executed by the Foundation and the lender, specifying, among other things, the principal amount, rate of interest, maturity, terms of optional prepayment, if any, and form of any Additional Obligations.

(b) An Officer’s Certificate stating (1) that no event of default under the Loan Agreement has occurred and is continuing and that no event has occurred and is continuing which with the lapse of time or giving of notice, or both, would constitute such an event of default, and (2) (2) the purpose or purposes for which such Additional Obligations are being incurred and the classification of the Indebtedness under Section 6.3 of the Loan Agreement and accompanied by the certificates, reports or opinions demonstrating compliance with the applicable tests set forth in Section 6.3 of the Loan Agreement; and

(c) Such other certificates, title insurance policies, endorsements or reports, financing statements, financial statements and opinions as the Bond Trustee may reasonably request.

Except with respect to Permitted Encumbrances, such Additional Obligations shall have a security interest standing on a parity with the security interest granted to the Board by the Loan Agreement provided that any security interest granted to secure such Additional Obligations provides that all amounts realized from such security interest shall be paid to the Bond Trustee for disposition in accordance with the Bond Indenture. The owners of such Additional Obligations shall not have a security interest in or other rights to or be entitled to share on a parity with the owners of the Bonds or Additional Bonds in the Debt Service Fund or any other funds or accounts held under the Bond Indenture. Such Additional Obligations may be further secured in any manner not inconsistent with the provisions and intent of the Bond Indenture or the Loan Agreement.

In the event that the Foundation shall propose to secure any such Additional Obligation by a pledge, lien, mortgage or other security interest permitted by the Loan Agreement except with respect to Permitted Encumbrances (which shall not require any action to be taken under the Loan Agreement), the Board, the Bond Trustee and the Foundation shall take, or shall cause to be taken, such actions (including entering into a Supplemental Loan Agreement or Supplemental Bond Indenture) and execute, deliver, file and record such instruments of security as their respective counsel agree to be necessary or appropriate to grant to and/or otherwise secure for the owner or owners of the Additional Obligation, equivalent security to that of the Bond Trustee and the Foundation shall as a condition of securing such Additional Obligation execute, deliver, file and record, and cause to be executed, delivered, filed and recorded by such owner or owners, such documents as counsel for the Bond Trustee and the Foundation agree to be necessary or appropriate to grant to and/or otherwise secure for the Bond Trustee a pledge of and a security interest in any security granted to the owner or owners of the Additional Obligation and not theretofore granted to the Bond Trustee equivalent to the interest granted to such owner or owners of such Additional Obligation, to the end that all such outstanding secured Additional Obligations and the Loan shall be of equal rank and be entitled to share pari passu in such security.

Any default under any instrument or agreement providing for repayment of any Additional Obligation secured on a parity with the Loan as provided in the Loan Agreement shall be a default under the Loan Agreement and there shall be included in any instrument or agreement providing for repayment of such

C-35 Additional Obligation a provision that any default under the Loan Agreement shall be a default under such instrument or agreement. Any action which cures a default under any such instrument or agreement shall also cure such default under the Loan Agreement. Unless otherwise agreed to by the Bond Trustee, the Bond Trustee shall act as trustee under any instrument securing any such Additional Obligation. Any instrument or agreement providing for repayment of such Additional Obligation shall include a provision that, prior to exercising any remedies upon a default by the Foundation under such instrument or agreement, the Bond Trustee (or the owners thereof, if the Bond Trustee otherwise consents) shall consider the interests of the owners of the Additional Obligations and the Bonds and shall proceed such that the interests of such owner or owners of the Additional Obligations and the bondowners shall be equally protected.

Permitted Indebtedness

The Foundation shall not incur any Indebtedness other than existing and outstanding at the date hereof, including the Loan and the following Indebtedness:

(a) Long-Term Indebtedness. The Foundation may incur Long-Term Indebtedness upon compliance with the conditions.

(A) Maintaining “AA” Rating. The Long-Term Indebtedness will have at least two of the following ratings based solely upon the credit of the Foundation or the Foundation will maintain at least two of the following underlying ratings following the incurrence of the Long-Term Indebtedness: (i) “Aa” or higher category by Moody’s Investors Service, Inc., (ii) “AA” or higher category by S&P and (iii) “AA” or higher category by Fitch, Inc. (in each case without regard to any rating modifier applicable to such rating category);

(B) Long-Term Indebtedness of $25 million or Less. If the proposed Long-Term Indebtedness is a principal amount of $25,000,000 or less the Foundation’s Unrestricted Net Assets, will equal not less than 80% of all of the Outstanding Long-Term Indebtedness of the Foundation, including the proposed Long-Term Indebtedness.

(C) Long-Term Indebtedness in Excess of $25 million. If the proposed Long-Term Indebtedness is a principal amount of more than $25,000,000, the Foundation’s Unrestricted Net Assets will not be less than 90% of all of the Outstanding Long-Term Indebtedness of the Foundation including the proposed Long-Term Indebtedness, as of the end of the most recent Fiscal Year.

(b) Short-Term Indebtedness. Short-Term Indebtedness if, immediately after the incurrence of such Short-Term Indebtedness, the total principal amount of Outstanding Short-Term Indebtedness of the Foundation incurred under this subsection does not exceed 15% of the unrestricted net assets (without regard to the defined term Unrestricted Net Assets) of the Foundation as shown on the audited combined financial statements of the Foundation for the most recent fiscal year for which audited combined financial statements are available, provided that in each year, any Short-Term Indebtedness consisting of a line of credit obligation shall be reduced to $0 for a period of at least thirty consecutive days.

(c) Guaranties. The Foundation may execute a Guaranty, if the conditions for the incurrence of Indebtedness set forth in this caption are satisfied where it is assumed that the obligation guaranteed by the Foundation is Indebtedness of the Foundation, and any calculation required by the applicable subsection of this caption is made in accordance with the requirements and assumptions contained in such subsection.

C-36

(d) Non-Recourse Indebtedness. The Foundation, may incur Non-Recourse Indebtedness if the principal amount of all Non-Recourse Indebtedness of the Foundation incurred under this subsection Outstanding immediately after the incurrence of such Indebtedness does not exceed 20% of the Book Value of all Property of the Foundation that is classified as property, plant and equipment as shown on the balance sheet of the Foundation as shown on the audited combined financial statements of the Foundation for the most recent fiscal year for which audited combined financial statements are available.

(e) Purchase Money Indebtedness. The Foundation may incur Purchase Money Indebtedness if, immediately after entering into such Purchase Money Indebtedness, the aggregate principal amount due on all Purchase Money Indebtedness then Outstanding will not be greater than 20% of the unrestricted net assets (without regard to the defined term) of the Foundation as shown on the audited combined financial statements of the Foundation for the most recent fiscal year for which audited combined financial statements are available.

(f) Refunding Indebtedness. The Foundation may incur Refunding Indebtedness for the purpose of refunding (whether in advance of maturity or otherwise) any Outstanding Long-Term Indebtedness, if the Foundation determines that such refunding is in the best interest of the Foundation.

(g) Subordinated Indebtedness. The Foundation may incur Subordinated Indebtedness without limit as to principal amount, provided such Indebtedness is evidenced by an instrument containing provisions for the subordination of such Indebtedness (to which appropriate reference shall be made in the instrument evidencing such Indebtedness) to the Bonds, the Additional Bonds, the Loan and any Additional Obligations with respect to payment out of the Trust Estate, so that if at any time the Foundation shall be in default in paying either interest on or principal of the Bonds, the Additional Bonds, the Loan and Additional Obligations or if the Foundation shall be in default in making any payments required to be made under the provisions of the Loan Agreement, the Foundation shall make no payments of either principal of or interest on said Subordinated Indebtedness until said default or defaults be cured.

(h) Swap Agreements. In connection with the issuance of a series of Bonds or at any time thereafter so long as a series of Bonds remains Outstanding, the Foundation may enter into a Qualified Swap Agreement providing for certain payments by the Foundation and a swap counterparty, which payments are calculated by reference to fixed or variable rates and constituting a financial accommodation between the Foundation and such swap counterparty if the Foundation determines that any such agreement (1) will assist the Foundation in more effectively managing its interest costs or cash flow, and (2) will not result in a downward revision or withdrawal of any rating on any series of Bonds by a nationally recognized rating service.

Indebtedness may be classified and incurred under any of the above-referenced subsections with respect to which the tests set forth in such subsections are met. The Foundation may elect to have Indebtedness that was classified and issued pursuant to one provision of this Section, reclassified as having been incurred under another provision of this Section, by demonstrating compliance with such other provision on the assumption that such Indebtedness is being reissued on the date of delivery of the materials required to be delivered under such other provision. From and after such demonstration, such Indebtedness shall be

C-37 deemed to have been incurred under the provision with respect to which such compliance has been demonstrated until any subsequent reclassification of such Indebtedness.

Notwithstanding the foregoing, the aggregate principal amount of all Indebtedness of the Foundation issued and Outstanding at any time under the provisions of subsections (b), (d) and (e) of this Section, and which has not been subsequently reclassified as having been issued under another subsection of this Section, may not exceed 25% of the unrestricted net assets (without regard to the defined term Unrestricted Net Assets) of the Foundation, at the time of incurrence of any such Indebtedness, as shown on the audited combined financial statements of the Foundation for the most recent fiscal year for which audited combined financial statements are available.

The Foundation shall, prior to the incurrence of any Indebtedness, deliver to the Bond Trustee an Officer’s Certificate which identifies the Indebtedness incurred, identifies the subsection of this Section pursuant to which such Indebtedness is to be incurred, demonstrates compliance with the provisions of such subsection and the other requirements of this Article and attaches a copy of the instrument evidencing such Indebtedness.

Events of Default

The term “event of default,” wherever used in the Loan Agreement, means any one of the following events (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(a) default in the payment of any interest on the Loan when such interest becomes due and payable; or

(b) default in the payment of the principal of (or premium, if any, on) the Loan when the same becomes due and payable (whether at maturity, upon proceedings for redemption, by acceleration or otherwise); or

(c) default in the performance, or breach, of any covenant or agreement of the Foundation in the Loan Agreement (other than a covenant or agreement a default in the performance or breach of which is specifically dealt with elsewhere in this caption), and continuance of such default or breach for a period of 60 days after there has been given to the Foundation by the Board or the Bond Trustee or to the Foundation and the Bond Trustee by the owners of at least 25% in principal amount of the Bonds Outstanding, a written notice specifying such default or breach and requiring it to be remedied; provided, that if such default cannot be fully remedied within such 60-day period, but can reasonably be expected to be fully remedied, such default shall not constitute an event of default if the Foundation shall promptly upon receipt of such notice commence the curing of such default and shall thereafter prosecute and complete the same with due diligence and dispatch; or

(d) any representation or warranty made by the Foundation in the Loan Agreement or in any written statement or certificate furnished to the Board or the Bond Trustee or the purchaser of any Bond in connection with the sale of any Bond or furnished by the Foundation pursuant to the Loan Agreement proves untrue in any material respect as of the date of the issuance or making thereof and shall not be corrected or brought into compliance within 60 days after there has been given to the Foundation by the Board or the Bond Trustee or to the Foundation

C-38 and the Bond Trustee by owners of at least 25% in principal amount of the Bonds Outstanding, a written notice specifying such default or breach and requiring it to be remedied; provided, that if such default cannot be fully remedied within such 60-day period, but can reasonably be expected to be fully remedied, such default shall not constitute an event of default if the Foundation shall promptly upon receipt of such notice commence the curing of such default and shall thereafter prosecute and complete the same with due diligence and dispatch; or

(e) the entry of a decree or order by a court having jurisdiction in the premises for relief in respect of the Foundation, or adjudging the Foundation a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, adjustment or composition of or in respect of the Foundation under the United States Bankruptcy Code or any other applicable federal or state law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of or for the Foundation or any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order remains unstayed and in effect for a period of 90 consecutive days; or

(f) the commencement by the Foundation of a voluntary case, or the institution by the Foundation of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking reorganization, arrangement or relief under the United States Bankruptcy Code or any other applicable federal or state law, or the consent or acquiescence by it to the filing of any such petition or the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Foundation or any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability or its failure to pay its debts generally as they become due, or the taking of action by the Foundation in furtherance of any such action; or

(g) the occurrence and continuance of any “event of default” specified in the Bond Indenture that has not been waived or cured.

Acceleration of Maturity; Rescission and Annulment

If an event of default under the Loan Agreement occurs and is continuing, the Bond Trustee, as assignee of the Board may, by written notice to the Foundation and the Board, declare the principal of the Loan and the interest accrued thereon to be due and payable, and upon any such declaration such principal and interest shall become immediately due and payable. The Bond Trustee shall make such declaration if requested by the owners of not less than 25% in principal amount of the Bonds Outstanding.

At any time after such a declaration of acceleration has been made, but before any judgment or decree for payment of money due on the Loan has been obtained by the Bond Trustee as provided in the Loan Agreement, the Bond Trustee may, and shall if requested by the owners of not less than a majority in principal amount of the Bonds Outstanding, by written notice to the Foundation, rescind and annul such declaration and its consequences as provided in the Loan Agreement.

C-39 Exercise of Remedies by the Bond Trustee

Upon the occurrence and continuance of any event of default under the Loan Agreement, unless the same is waived as provided in the Loan Agreement, the Bond Trustee, as assignee of the Board, shall have the following rights and remedies, in addition to any other rights and remedies provided under the Loan Agreement or by law:

(a) Right to Bring Suit, Etc. The Bond Trustee may pursue any available remedy at law or in equity by suit, action, mandamus or other proceeding to enforce the payment of the principal of, premium, if any, and interest on the Loan, including interest on overdue principal (and premium, if any) and on overdue installments of interest, and any other sums due under the Loan Agreement, to realize on or to foreclose any of its interests or liens under the Loan Agreement, to enforce and compel the performance of the duties and obligations of the Foundation as set forth in the Loan Agreement and to enforce or preserve any other rights or interests of the Bond Trustee under the Loan Agreement existing at law or in equity.

(b) Exercise of Remedies at Direction of Bondowners. If requested in writing to do so by the owners of not less than 25% in principal amount of Bonds Outstanding and if indemnified as provided in the Bond Indenture, the Bond Trustee shall be obligated to exercise such one or more of the rights and remedies conferred by the Loan Agreement as the Bond Trustee shall deem most expedient in the interests of the bondowners.

(c) Restoration of Positions. If the Bond Trustee has instituted any proceeding to enforce any right or remedy under the Loan Agreement by suit, foreclosure, the appointment of a receiver, or otherwise, and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Bond Trustee, then and in every case the Board, the Foundation, the Bond Trustee and the bondowners shall, subject to any determination in such proceeding, be restored to their former positions and rights under the Loan Agreement, and thereafter all rights and remedies of the Bond Trustee shall continue as though no such proceeding had been instituted.

Application of Moneys Collected

Any moneys collected by the Bond Trustee pursuant to the Loan Agreement (after the deductions for payment of costs and expenses of proceedings resulting in the collection of such moneys) together with any other sums then held by the Bond Trustee as part of the Trust Estate, shall be applied as provided in the Bond Indenture and, in case of the distribution of such money on account of principal (or premium, if any) or interest on the Bonds, shall be credited against amounts due on the Loan.

Supplemental Loan Agreements without Consent of Bondowners

Without the consent of the owners of any Bonds, the Board and the Foundation may from time to time enter into one or more Supplemental Loan Agreements, for any of the following purposes:

(a) to more precisely identify any project financed or refinanced out of the proceeds of the Refunded Bonds, or to substitute or add additional property thereto; or

C-40 (b) to add to the conditions, limitations and restrictions on the authorized amount, terms or purposes of the Loan, as set forth in the Loan Agreement, additional conditions, limitations and restrictions thereafter to be observed; or

(c) to evidence the succession of another corporation to the Foundation and the assumption by any such successor of the covenants of the Foundation contained in the Loan Agreement; or

(d) to add to the covenants of the Foundation or to the rights, powers and remedies of the Bond Trustee for the benefit of the owners of all Bonds or to surrender any right or power conferred upon the Foundation in the Loan Agreement; or

(e) to cure any ambiguity, to correct or supplement any provision in the Loan Agreement which may be inconsistent with any other provision in the Loan Agreement or to make any other changes, with respect to matters or questions arising under the Loan Agreement, provided such action shall not materially adversely affect the interests of the owners of the Bonds.

Supplemental Loan Agreements with Consent of Bondowners

With the written consent of the owners of not less than a majority in principal amount of the Bonds then Outstanding affected by such Supplemental Loan Agreement, the Board and the Foundation may enter into Supplemental Loan Agreements for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Loan Agreement or of modifying in any manner the rights of the Bond Trustee and the owners of the Bonds under the Loan Agreement; provided, however, that no such Supplemental Loan Agreement shall, without the written consent of the owner of each Outstanding Bond affected thereby,

(a) change the stated maturity of the principal of, or any installment of interest on, the Loan, or reduce the principal amount thereof or the interest thereon or any premium payable upon the redemption thereof, or change any place of payment where, or the coin or currency in which, the Loan, or the interest thereon is payable, or impair the right to institute suit for the enforcement of any such payment on or after the stated maturity thereof (or, in the case of redemption, on or after the redemption date); or

(b) reduce the percentage in principal amount of the Outstanding Bonds, the consent of whose owners is required for any such Supplemental Loan Agreement, or the consent of whose owners is required for any waiver provided for in the Loan Agreement of compliance with certain provisions of the Loan Agreement or certain defaults under the Loan Agreement and their consequences; or

(c) modify any of the provisions of the Loan Agreement governing Supplemental Loan Agreements with the consent of the Bondowners, except to increase any percentage provided thereby or to provide that certain other provisions of the Loan Agreement cannot be modified or waived without the consent of the owner of each Bond affected thereby.

Governing Law

The Loan Agreement shall be governed by and construed in accordance with the laws of the State of Missouri.

C-41 (THIS PAGE LEFT BLANK INTENTIONALLY)

APPENDIX D

FORM OF BOND COUNSEL OPINION

March 9, 2010

Missouri Development Finance Board George K. Baum & Company Jefferson City, Missouri Kansas City, Missouri

The Nelson Gallery Foundation J.P. Morgan Securities Inc. Kansas City, Missouri New York, New York

Commerce Bank, N.A. Kansas City, Missouri, Trustee

Re: $33,895,000 Missouri Development Finance Board Cultural Facilities Revenue Bonds (The Nelson Gallery Foundation), Series 2010A ______

Ladies and Gentlemen:

We have acted as bond counsel in connection with the issuance by the Missouri Development Finance Board (the “Board”) of the above-captioned bonds (the “Bonds”), pursuant to the Missouri Development Finance Board Act, §§100.250 through 100.297, inclusive, R.S.Mo. 2000 (the “Act”), and a Bond Trust Indenture (the “Indenture”), between the Board and Commerce Bank, N.A., Kansas City, Missouri, as trustee (the “Trustee”). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Indenture.

We have examined the law and such certified proceedings and other documents as we deem necessary to render this opinion. As to questions of fact material to our opinion, we have relied upon representations of the Board and the Foundation contained in the Loan Agreement and the other Financing Documents and the certified proceedings and other certifications of public officials and others furnished to us, without undertaking to verify the same by independent investigation.

Reference is made to an opinion of even date herewith of Husch Blackwell Sanders, LLP, counsel to the Foundation, with respect to, among other matters, (a) the status and due organization of the Foundation, (b) the status of the Foundation as an organization described in Section 501(c)(3) of the Code, (c) the power of the Foundation to enter into and perform its obligations under the Loan Agreement, and (d) the due authorization, execution and delivery of the Loan Agreement by the Foundation and the binding effect and enforceability thereof against the Foundation.

Based upon the foregoing, we are of the opinion, under existing law, as follows:

1. The Bonds have been duly authorized, executed and delivered by the Board and are valid and legally binding special obligations of the Board, payable solely from the loan payments made by the Foundation under the Loan Agreement and from other funds held by the Trustee and pledged under the Indenture. The Bonds do not constitute a debt or liability of the State or of any political subdivision thereof within the meaning of any constitutional or statutory provision or limitation and do not constitute a pledge of

D-1

the full faith and credit of the State or of any political subdivision thereof. The issuance of the Bonds shall not, directly, indirectly or contingently, obligate the State or any political subdivision thereof to levy any form of taxation therefor or to make any appropriation for their payment.

2. The Indenture and the Loan Agreement have been duly authorized, executed and delivered by the Board and are valid and legally binding agreements of the Board, enforceable against the Board. All of the Board’s right, title and interest in the Loan Agreement (except certain rights to indemnification, reimbursement and administrative fees) have been duly assigned by the Board to the Trustee under the Indenture for the benefit and security of the Owners of the Bonds.

3. The interest on the Bonds (including any original issue discount properly allocable to an owner thereof) is excludable from gross income for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the “Code”). Interest on the Bonds is not an item of tax preference for purposes of computing the federal alternative minimum tax imposed on individuals and corporations but is taken into account in determining adjusted current earnings for the purpose of computing the alternative minimum tax imposed on certain corporations. The opinions set forth in this paragraph are subject to the condition that the Board and the Foundation comply with all requirements of the Code that must be satisfied subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excludable from gross income for federal income tax purposes. The Board and the Foundation have covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause the inclusion of interest on the Bonds in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The Bonds have not been designated as “qualified tax-exempt obligations” for purposes of Section 265(b) of the Code. We express no opinion regarding other federal tax consequences arising with respect to the Bonds.

4. The interest on the Bonds is exempt from income taxation by the State of Missouri.

The rights of the holders of the Bonds and the enforceability of the Bonds, the Indenture and the Loan Agreement may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted to the extent applicable and their enforcement may be subject to the exercise of judicial discretion in appropriate cases.

Very truly yours,

D-2