17-12a202.   Exempt transactions.The following transactions are exempt from therequirements of K.S.A. 17-12a301 through 17-12a306 and 17-12a504,andamendments thereto:

      (1)   An isolated nonissuer transaction, whether effected by orthrough a broker-dealer or not;

      (2)   a nonissuer transaction by or through a broker-dealerregistered, or exempt from registration under this act, and aresale transaction by a sponsor of a unit investment trustregistered under the investment company act of 1940, in a securityof a class that has been outstanding in the hands of the public forat least 90 days, if, at the date of the transaction:

      (A) (i)   The issuer of the security is engaged in business, theissuer is not in the organizational stage or in bankruptcy orreceivership, and the issuer is not a blank check, blind pool, orshell company that has no specific business plan or purpose or hasindicated that its primary business plan is to engage in a mergeror combination of the business with, or an acquisition of, anunidentified person;

      (ii)   the security is sold at a price reasonably related to itscurrent market price;

      (iii)   the security does not constitute the whole or part of anunsold allotment to, or a subscription or participation by, thebroker-dealer as an underwriter of the security or a redistribution; and

      (iv)   a nationally recognized securities manual or itselectronic equivalent designated by rule adopted or order issuedunder this act or a record filed with the securities and exchangecommission that is publicly available contains:

      (a)   A description of the business and operations of theissuer;

      (b)   the names of the issuer's executive officers and the namesof the issuer's directors, if any;

      (c)   an audited balance sheet of the issuer as of a date within18 months before the date of the transaction or, in the case of areorganization or merger when the parties to the reorganization ormerger each had an audited balance sheet, a pro forma balance sheetfor the combined organization; and

      (d)   an audited income statement for each of the issuer's twoimmediately previous fiscal years or for the period of existence ofthe issuer, whichever is shorter, or, in the case of areorganization or merger when each party to the reorganization ormerger had audited income statements, a pro forma income statement;or

      (B) (i)   the issuer of the security has a class of equitysecurities listed on a national securities exchange registeredunder the securities exchange act of 1934 or designated for tradingon the national association of securities dealers automatedquotation system, unless the issuer of the security is a unit investment trustregistered under the investment company act of1940;

      (ii)   the issuer of the security, including its predecessors,has been engaged in continuous business for at least three years;and

      (iii)   the issuer of the security has total assets of at least$2,000,000 based on an audited balance sheet as of a date within 18months before the date of the transaction or, in the case of areorganization or merger when the parties to the reorganization ormerger each had the audited balance sheet, a pro forma balancesheet for the combined organization;

      (3)   a nonissuer transaction by or through a broker-dealerregistered or exempt from registration under this act in a securityof a foreign issuer that is a margin security defined inregulations or rules adopted by the board of governors of thefederal reserve system;

      (4)   a nonissuer transaction by or through a broker-dealerregistered or exempt from registration under this act in anoutstanding security if the guarantor of the security files reportswith the securities and exchange commission under the reportingrequirements of section 13 or 15(d) of the securities exchange actof 1934 (15 U.S.C. 78m or 78o(d));

      (5)   a nonissuer transaction by or through a broker-dealerregistered or exempt from registration under this act in a securitythat:

      (A)   Is rated at the time of the transaction by a nationallyrecognized statistical rating organization in one of its fourhighest rating categories; or

      (B)   has a fixed maturity or a fixed interest or dividend, if:

      (i)   A default has not occurred during the current fiscal yearor within the three previous fiscal years of the issuer and anypredecessor in the payment of principal, interest, or dividends onthe security; and

      (ii)   the issuer is engaged in business, is not in theorganizational stage or in bankruptcy or receivership, and is notand has not been within the previous 12 months a blank check, blindpool, or shell company that has no specific business plan orpurpose or has indicated that its primary business plan is toengage in a merger or combination of the business with, or anacquisition of, an unidentified person;

      (6)   a nonissuer transaction by or through a broker-dealerregistered or exempt from registration under this act effecting anunsolicited order or offer to purchase;

      (7)   a nonissuer transaction executed by a bona fide pledgeewithout the purpose of evading this act;

      (8)   a nonissuer transaction by a federal covered investmentadviser with investments under management in excess of $100,000,000acting in the exercise of discretionary authority in a signedrecord for the account of others;

      (9)   a transaction in a security, whether or not the security ortransaction is otherwise exempt, in exchange for one or morebona fide outstanding securities, claims, or property interests, orpartly in such exchange and partly for cash, if the terms andconditions of the issuance and exchange or the delivery andexchange and the fairness of the terms and conditions have beenapproved by the administrator after a hearing or otherwise;

      (10)   a transaction between the issuer or other person on whosebehalf the offering is made and an underwriter, or amongunderwriters;

      (11)   a transaction in a note, bond, debenture, or otherevidence of indebtedness secured by a mortgage or other securityagreement if:

      (A)   The note, bond, debenture, or other evidence ofindebtedness is offered and sold with the mortgage or othersecurity agreement as a unit;

      (B)   a general solicitation or general advertisement of thetransaction is not made; and

      (C)   a commission or other remuneration is not paid or given,directly or indirectly, to a person not registered under this actas a broker-dealer or as an agent;

      (12)   a transaction by an executor, administrator of anestate, sheriff, marshal, receiver, trustee in bankruptcy,guardian, or conservator;

      (13)   a sale or offer to sell to:

      (A)   An institutional investor;

      (B)   a federal covered investment adviser; or

      (C)   any other person exempted by rule adopted or order issuedunder this act;

      (14)   a sale or an offer to sell securities by an issuer, ifthe transaction is part of a single issue in which:

      (A)   Not more than 25 purchasers are present in this stateduring any 12 consecutive months, other than those designated inparagraph (13);

      (B)   a general solicitation or general advertising is not madein connection with the offer to sell or sale of the securities;

      (C)   a commission or other remuneration is not paid or given,directly or indirectly, to a person other than a broker-dealerregistered under this act or an agent registered under this act forsoliciting a prospective purchaser in this state; and

      (D)   the issuer reasonably believes that all the purchasers inthis state, other than those designated in paragraph (13), arepurchasing for investment;

      (15)   a transaction under an offer to existing security holdersof the issuer, including persons that at the date of thetransaction are holders of convertible securities, options, orwarrants, if a commission or other remuneration, other than astandby commission, is not paid or given, directly or indirectly,for soliciting a security holder in this state;

      (16)   an offer to sell, but not a sale, of a security notexempt from registration under the securities act of 1933 if:

      (A)   A registration or offering statement or similar record asrequired under the securities act of 1933 has been filed, but isnot effective, or the offer is made in compliance with rule 165adopted under the securities act of 1933 (17 C.F.R. 230.165); and

      (B)   a stop order of which the offeror is aware has not beenissued against the offeror by the administrator or the securitiesand exchange commission, and an audit, inspection, or proceedingthat is public and that may culminate in a stop order is not knownby the offeror to be pending;

      (17)   an offer to sell, but not a sale, of a security exemptfrom registration under the securities act of 1933 if:

      (A)   A registration statement has been filed under this act,but is not effective;

      (B)   a solicitation of interest is provided in a record toofferees in compliance with a rule adopted by the administratorunder this act; and

      (C)   a stop order of which the offeror is aware has not beenissued by the administrator under this act and an audit,inspection, or proceeding that may culminate in a stop order is notknown by the offeror to be pending;

      (18)   a transaction involving the distribution of thesecurities of an issuer to the security holders of another personin connection with a merger, consolidation, exchange of securities,sale of assets, or other reorganization to which the issuer, or itsparent or subsidiary and the other person, or its parent or subsidiary, areparties;

      (19)   a rescission offer, sale, or purchase under K.S.A. 17-12a510,and amendments thereto;

      (20)   an offer or sale of asecurity through a broker-dealer registered under this act to a person not aresident of this state and not present in this state if the offer or sale doesnot constitute a violation of the laws of the state or foreign jurisdiction inwhich the offeree or purchaser is present and is not part of an unlawful planor scheme to evade this act;

      (21)   employees' stock purchase, savings, option, profit-sharing, pension, orsimilar employees' benefit plan, including anysecurities, plan interests, and guarantees issued under acompensatory benefit plan or compensation contract, contained in arecord, established by the issuer, its parents, its majority-ownedsubsidiaries, or the majority-owned subsidiaries of the issuer'sparent for the participation of their employees including offers orsales of such securities to:

      (A)   Directors; general partners; trustees, if the issuer isa business trust; officers; consultants; and advisors;

      (B)   family members who acquire such securities from thosepersons through gifts or domestic relations orders;

      (C)   former employees, directors, general partners, trustees,officers, consultants, and advisors if those individuals wereemployed by or providing services to the issuer when the securitieswere offered; and

      (D)   insurance agents who are exclusive insurance agents of theissuer, or the issuer's subsidiaries or parents, or who derive morethan 50% of their annual income from those organizations;

      (22)   a transaction involving:

      (A)   A stock dividend or equivalent equity distribution,whether the corporation or other business organization distributing thedividend or equivalent equity distribution is the issuer ornot, if nothing of value is given by stockholders or other equityholders for the dividend or equivalent equity distribution otherthan the surrender of a right to a cash or property dividend ifeach stockholder or other equity holder may elect to take thedividend or equivalent equity distribution in cash, property, orstock;

      (B)   an act incident to a judicially approved reorganization inwhich a security is issued in exchange for one or more outstandingsecurities, claims, or property interests, or partly in suchexchange and partly for cash; or

      (C)   the solicitation of tenders of securities by an offeror ina tender offer in compliance with rule 162 adopted under thesecurities act of 1933 (17 C.F.R. 230.162);

      (23)   a nonissuer transaction in an outstanding security by orthrough a broker-dealer registered or exempt from registrationunder this act, if the issuer is a reporting issuer in a foreignjurisdiction designated by this paragraph or by rule adopted ororder issued under this act; has been subject to continuousreporting requirements in the foreign jurisdiction for not lessthan 180 days before the transaction; and the security is listed onthe foreign jurisdiction's securities exchange that has beendesignated by this paragraph or by rule adopted or order issuedunder this act, or is a security of the same issuer that is ofsenior or substantially equal rank to the listed security or is a warrant orright to purchase or subscribe to any of the foregoing.For purposes of this paragraph, Canada, together with its provincesand territories, is a designated foreign jurisdiction and theToronto stock exchange, inc., is a designated securities exchange.After an administrative hearing in compliance with the Kansasadministrative procedure act, the administrator, by rule adoptedor order issued under this act, may revoke the designation of asecurities exchange under this paragraph, if the administratorfinds that revocation is necessary or appropriate in the publicinterest and for the protection of investors; or

      (24)   a transaction involving an interest in oil, gas or other mineral rightsthat is conducted in compliance with a rule adopted or order issued under thisact. In the rule or order, the administrator may limit the availability ofother exemptions provided herein for transactions involving interests in oil,gas or other mineral rights.

      History:   L. 2004, ch. 154, § 7;L. 2006, ch. 47, § 2; July 1.