State Codes and Statutes

State Codes and Statutes

Statutes > Nebraska > Chapter8 > 8-1111

8-1111. Transactions exempt from registration.Except as provided in this section, sections 8-1103 to 8-1109 shallnot apply to any of the following transactions:(1) Any isolated transaction, whether effected through a broker-dealeror not;(2)(a) Any nonissuer transaction by a registered agent of a registeredbroker-dealer, and any resale transaction by a sponsor of a unit investmenttrust registered under the Investment Company Act of 1940, in a security ofa class that has been outstanding in the hands of the public for at leastninety days if, at the time of the transaction:(i) The issuer of the security is actually engaged in business and notin the organization stage or in bankruptcy or receivership and is not a blankcheck, blind pool, or shell company whose primary plan of business is to engagein a merger or combination of the business with, or an acquisition of, anunidentified person or persons;(ii) The security is sold at a price reasonably related to the currentmarket price of the security;(iii) The security does not constitute the whole or part of an unsoldallotment to, or a subscription or participation by, the broker-dealer asan underwriter of the security;(iv) A nationally recognized securities manual designated by rule andregulation or order of the director or a document filed with the Securitiesand Exchange Commission which is publicly available through the ElectronicData Gathering and Retrieval System (EDGAR) contains:(A) A description of the business and operations of the issuer;(B) The names of the issuer's officers and the names of the issuer'sdirectors, if any, or, in the case of a non-United-States issuer, the corporateequivalents of such persons in the issuer's country of domicile;(C) An audited balance sheet of the issuer as of a date within eighteenmonths or, in the case of a reorganization or merger when parties to the reorganizationor merger had such audited balance sheet, a pro forma balance sheet; and(D) An audited income statement for each of the issuer's immediatelypreceding two fiscal years, or for the period of existence of the issuer ifin existence for less than two years, or, in the case of a reorganizationor merger when the parties to the reorganization or merger had such auditedincome statement, a pro forma income statement; and(v) The issuer of the security has a class of equity securities listedon a national securities exchange registered under the Securities ExchangeAct of 1934 or designated for trading on the National Association of SecuritiesDealers Automated Quotation System (NASDAQ), unless:(A) The issuer of the security is a unit investment trust registeredunder the Investment Company Act of 1940;(B) The issuer of the security has been engaged in continuous business,including predecessors, for at least three years; or(C) The issuer of the security has total assets of at least two milliondollars based on an audited balance sheet as of a date within eighteen monthsor, in the case of a reorganization or merger when parties to the reorganizationor merger had such audited balance sheet, a pro forma balance sheet; or(b) Any nonissuer transaction in a security by a registered agent ofa registered broker-dealer if:(i) The issuer of the security is actually engaged in business and notin the organization stage or in bankruptcy or receivership and is not a blankcheck, blind pool, or shell company whose primary plan of business is to engagein a merger or combination of the business with, or an acquisition of, anunidentified person or persons; and(ii) The security is senior in rank to the common stock of the issuerboth as to payment of dividends or interest and upon dissolution or liquidationof the issuer and such security has been outstanding at least three yearsand the issuer or any predecessor has not defaulted within the current fiscalyear or the three immediately preceding fiscal years in the payment of anydividend, interest, principal, or sinking fund installment on the securitywhen due and payable;(3) Any nonissuer transaction effected by or through a registered agentof a registered broker-dealer pursuant to an unsolicited order or offer tobuy, but the director may by rule or regulation require that the customeracknowledge upon a specified form that the sale was unsolicited and that asigned copy of each such form be preserved by the broker-dealer for a specifiedperiod;(4) Any transaction between the issuer or other person on whose behalfthe offering is made and an underwriter or among underwriters;(5) Any transaction in a bond or other evidence of indebtedness securedby a real or chattel mortgage or deed of trust or by an agreement for thesale of real estate or chattels if the entire mortgage, deed of trust, oragreement, together with all the bonds or other evidences of indebtednesssecured thereby, are offered and sold as a unit. Such exemption shall notapply to any transaction in a bond or other evidence of indebtedness securedby a real estate mortgage or deed of trust or by an agreement for the saleof real estate if the real estate securing the evidences of indebtedness areparcels of real estate the sale of which requires the subdivision in whichthe parcels are located to be registered under the Interstate Land Sales FullDisclosure Act, 15 U.S.C. 1701 et seq., as the act existed on July 20, 2002;(6) Any transaction by an executor, personal representative, administrator,sheriff, marshal, receiver, guardian, or conservator;(7) Any transaction executed by a bona fide pledgee without any purposeof evading the Securities Act of Nebraska;(8) Any offer or sale to a bank, savings institution, trust company,insurance company, investment company as defined in the Investment CompanyAct of 1940, pension or profit-sharing trust, or other financial institutionor institutional buyer, to an individual accredited investor, or to a broker-dealer,whether the purchaser is acting for itself or in some fiduciary capacity.For purposes of this subdivision, the term "individual accredited investor"means (a) any director, executive officer, or general partner of the issuerof the securities being offered or sold, or any director, executive officer,or general partner of a general partner of that issuer, (b) any manager ofa limited liability company that is the issuer of the securities being offeredor sold, (c) any natural person whose individual net worth, or joint net worthwith that person's spouse, at the time of his or her purchase, exceeds onemillion dollars, or (d) any natural person who had an individual income inexcess of two hundred thousand dollars in each of the two most recent yearsor joint income with that person's spouse in excess of three hundred thousanddollars in each of those years and has a reasonable expectation of reachingthe same income level in the current year;(9)(a) Any transaction pursuantto an offering in which sales are made to not more than fifteen persons, otherthan those designated in subdivisions (8), (11), and (17) of this section,in this state during any period of twelve consecutive months if (i) the seller reasonably believes that allthe buyers are purchasing for investment, (ii) no commission or otherremuneration is paid or given directly or indirectly for soliciting any prospectivebuyer except to a registered agent of a registered broker-dealer, (iii) a notice generally describing the termsof the transaction and containing a representation that the conditions ofthis exemption are met is filed by the seller with the director within thirtydays after the first sale for which this exemption is claimed, except thatfailure to give such notice may be cured by an order issued by the directorin his or her discretion, and (iv) no general or publicadvertisements or solicitations are made.(b) If a seller (i) makessales pursuant to this subdivision for five consecutive twelve-month periodsor (ii) makes sales of at least one million dollars from an offering or offeringspursuant to this subdivision, the seller shall, within ninety days after theearlier of either such occurrence, file with the director audited financialstatements and a sales report which lists the names and addresses of all purchasersand holders of the seller's securities and the amount of securities held bysuch persons. Subsequent thereto, such seller shall file audited financialstatements and sales reports with the director each time an additional onemillion dollars in securities is sold pursuant to this subdivision or afterthe elapse of each additional sixty-month period during which sales are madepursuant to this subdivision;(10) Any offer or saleof a preorganization certificate or subscription if (a) no commission or otherremuneration is paid or given directly or indirectly for soliciting any prospectivesubscriber, (b) the number of subscribers does not exceed ten, and (c) nopayment is made by any subscriber;(11) Any transaction pursuant to an offer to existing security holdersof the issuer, including persons who at the time of the transaction are holdersof convertible securities, nontransferable warrants, or transferable warrantsexercisable within not more than ninety days of their issuance, if (a) nocommission or other remuneration, other than a standby commission, is paidor given directly or indirectly for soliciting any security holder in thisstate or (b) the issuer first files a notice specifying the terms of the offerand the director does not by order disallow the exemption within the nextfive full business days;(12) Any offer, but not a sale, of a security for which registrationstatements have been filed under both the Securities Act of Nebraska and theSecurities Act of 1933 if no stop order or refusal order is in effect andno public proceeding or examination looking toward such an order is pendingunder either the Securities Act of Nebraska or the Securities Act of 1933;(13) The issuance of any stock dividend, whether the corporation distributingthe dividend is the issuer of the stock or not, if nothing of value is givenby the stockholders for the distribution other than the surrender of a rightto a cash dividend when the stockholder can elect to take a dividend in cashor stock;(14) Any transaction incident to a right of conversion or a statutoryor judicially approved reclassification, recapitalization, reorganization,quasi-reorganization, stock split, reverse stock split, merger, consolidation,or sale of assets;(15) Any transaction involving the issuance for cash of any evidenceof ownership interest or indebtedness by an agricultural cooperative formedas a corporation under section 21-1301 or 21-1401 if the issuer has firstfiled a notice of intention to issue with the director and the director hasnot by order, mailed to the issuer by certified or registered mail withinten business days after receipt thereof, disallowed the exemption;(16) Any transaction in this state not involving a public offering when(a) there is no general or public advertising or solicitation, (b) no commissionor remuneration is paid directly or indirectly for soliciting any prospectivebuyer, except to a registered agent of a registered broker-dealer or registeredissuer-dealer, (c) a notice generally describing the terms of the transactionand containing a representation that the conditions of this exemption aremet is filed by the seller with the director within thirty days after thefirst sale for which this exemption is claimed, except that failure to givesuch notice may be cured by an order issued by the director in his or herdiscretion, (d) a filing fee of two hundred dollars is paid at the time offiling the notice, and (e) any such transaction is effected in accordancewith rules and regulations adopted and promulgated by the director relatingto this section when the director finds in adopting and promulgating suchrules and regulations that the applicability of sections 8-1104 to 8-1107is not necessary or appropriate in the public interest or for the protectionof investors. For purposes of this subdivision, not involving a public offeringmeans any offering in which the seller has reason to believe that the securitiespurchased are taken for investment and in which each offeree, by reason ofhis or her knowledge about the affairs of the issuer or otherwise, does notrequire the protections afforded by registration under sections 8-1104 to 8-1107 in order to make a reasonably informed judgment with respect to suchinvestment;(17) The issuance of any investment contract issued in connection withan employee's stock purchase, savings, pension, profit-sharing, or similarbenefit plan if no commission or other remuneration is paid or given directlyor indirectly for soliciting any prospective buyer except to a registeredagent of a registered broker-dealer;(18) Any interest in a common trust fund or similar fund maintainedby a bank or trust company organized and supervised under the laws of anystate or a bank organized under the laws of the United States for the collectiveinvestment and reinvestment of funds contributed to such common trust fundor similar fund by the bank or trust company in its capacity as trustee, personalrepresentative, administrator, or guardian and any interest in a collectiveinvestment fund or similar fund maintained by the bank or trust company forthe collective investment of funds contributed to such collective investmentfund or similar fund by the bank or trust company in its capacity as trusteeor agent which interest is issued in connection with an employee's savings,pension, profit-sharing, or similar benefit plan or a self-employed person'sretirement plan, if a notice generally describing the terms of the collectiveinvestment fund or similar fund is filed by the bank or trust company withthe director within thirty days after the establishment of the fund. Failureto give the notice may be cured by an order issued by the director in hisor her discretion;(19) Any transaction in which a United States Series EE Savings Bondis given or delivered with or as a bonus on account of any purchase of anyitem or thing;(20) Any transaction in this state not involving a public offering bya Nebraska issuer selling solely to Nebraska residents, when (a) any suchtransaction is effected in accordance with rules and regulations adopted andpromulgated by the director relating to this section when the director findsin adopting and promulgating such rules and regulations that the applicabilityof sections 8-1104 to 8-1107 is not necessary or appropriate in the publicinterest or for the protection of investors, (b) no commission or remunerationis paid directly or indirectly for soliciting any prospective buyer, exceptto a registered agent of a registered broker-dealer or registered issuer-dealer,(c) a notice generally describing the terms of the transaction and containinga representation that the conditions of this exemption are met is filed bythe seller with the director no later than twenty days prior to any salesfor which this exemption is claimed, except that failure to give such noticemay be cured by an order issued by the director in his or her discretion,(d) a filing fee of two hundred dollars is paid at the time of filing thenotice, and (e) there is no general or public advertising or solicitation;(21) Any transaction by a person who is an organization described insection 501(c)(3) of the Internal Revenue Code as defined in section 49-801.01involving an offering of interests in a fund described in section 3(c)(10)(B)of the Investment Company Act of 1940 solely to persons who are organizationsdescribed in section 501(c)(3) of the Internal Revenue Code as defined insection 49-801.01 when (a) there is no general or public advertising or solicitation,(b) a notice generally describing the terms of the transaction and containinga representation that the conditions of this exemption are met is filed bythe seller with the director within thirty days after the first sale for whichthis exemption is claimed, except that failure to give such notice may becured by an order issued by the director in his or her discretion, and (c)any such transaction is effected by a trustee, director, officer, employee,or volunteer of the seller who is either a volunteer or is engaged in theoverall fundraising activities of a charitable organization and receives nocommission or other special compensation based on the number or the valueof interests sold in the fund; or(22) Any offer or sale of any viatical settlement contract or any fractionalizedor pooled interest therein in a transaction that meets all of the followingcriteria:(a) Sales of such securities are made only to the following purchasers:(i) A natural person who, either individually or jointly with the person'sspouse, (A) has a minimum net worth of two hundred fifty thousand dollarsand had taxable income in excess of one hundred twenty-five thousand dollarsin each of the two most recent years and has a reasonable expectation of reachingthe same income level in the current year or (B) has a minimum net worth offive hundred thousand dollars. Net worth shall be determined exclusive ofhome, home furnishings, and automobiles;(ii) A corporation, partnership, or other organization specificallyformed for the purpose of acquiring securities offered by the issuer in relianceupon this exemption if each equity owner of the corporation, partnership,or other organization is a person described in subdivision (22) of this section;(iii) A pension or profit-sharing trust of the issuer, a self-employedindividual retirement plan, or an individual retirement account, if the investmentdecisions made on behalf of the trust, plan, or account are made solely bypersons described in subdivision (22) of this section; or(iv) An organization described in section 501(c)(3) of the InternalRevenue Code as defined in section 49-801.01, or a corporation, Massachusettsor similar business trust, or partnership with total assets in excess of fivemillion dollars according to its most recent audited financial statements;(b) The amount of the investment of any purchaser, except a purchaserdescribed in subdivision (a)(ii) of this subdivision, does not exceed fivepercent of the net worth, as determined by this subdivision, of that purchaser;(c) Each purchaser represents that the purchaser is purchasing for thepurchaser's own account or trust account, if the purchaser is a trustee, andnot with a view to or for sale in connection with a distribution of the security;(d)(i) Each purchaser receives, on or before the date the purchaserremits consideration pursuant to the purchase agreement, the following informationin writing:(A) The name, principal business and mailing addresses, and telephonenumber of the issuer;(B) The suitability standards for prospective purchasers as set forthin subdivision (a) of this subdivision;(C) A description of the issuer's type of business organization andthe state in which the issuer is organized or incorporated;(D) A brief description of the business of the issuer;(E) If the issuer retains ownership or becomes the beneficiary of theinsurance policy, an audit report from an independent certified public accountanttogether with a balance sheet and related statements of income, retained earnings,and cash flows that reflect the issuer's financial position, the results ofthe issuer's operations, and the issuer's cash flows as of a date within fifteenmonths before the date of the initial issuance of the securities describedin this subdivision. The financial statements shall be prepared in conformitywith generally accepted accounting principles. If the date of the audit reportis more than one hundred twenty days before the date of the initial issuanceof the securities described in this subdivision, the issuer shall provideunaudited interim financial statements;(F) The names of all directors, officers, partners, members, or trusteesof the issuer;(G) A description of any order, judgment, or decree that is final asto the issuing entity of any state, federal, or foreign governmental agencyor administrator, or of any state, federal, or foreign court of competentjurisdiction (I) revoking, suspending, denying, or censuring for cause anylicense, permit, or other authority of the issuer or of any director, officer,partner, member, trustee, or person owning or controlling, directly or indirectly,ten percent or more of the outstanding interest or equity securities of theissuer, to engage in the securities, commodities, franchise, insurance, realestate, or lending business or in the offer or sale of securities, commodities,franchises, insurance, real estate, or loans, (II) permanently restraining,enjoining, barring, suspending, or censuring any such person from engagingin or continuing any conduct, practice, or employment in connection with theoffer or sale of securities, commodities, franchises, insurance, real estate,or loans, (III) convicting any such person of, or pleading nolo contendereby any such person to, any felony or misdemeanor involving a security, commodity,franchise, insurance, real estate, or loan, or any aspect of the securities,commodities, franchise, insurance, real estate, or lending business, or involvingdishonesty, fraud, deceit, embezzlement, fraudulent conversion, or misappropriationof property, or (IV) holding any such person liable in a civil action involvingbreach of a fiduciary duty, fraud, deceit, embezzlement, fraudulent conversion,or misappropriation of property. This subdivision does not apply to any order,judgment, or decree that has been vacated or overturned or is more than tenyears old;(H) Notice of the purchaser's right to rescind or cancel the investmentand receive a refund;(I) A statement to the effect that any projected rate of return to thepurchaser from the purchase of a viatical settlement contract or any fractionalizedor pooled interest therein is based on an estimated life expectancy for theperson insured under the life insurance policy; that the return on the purchasemay vary substantially from the expected rate of return based upon the actuallife expectancy of the insured that may be less than, may be equal to, ormay greatly exceed the estimated life expectancy; and that the rate of returnwould be higher if the actual life expectancy were less than, and lower ifthe actual life expectancy were greater than, the estimated life expectancyof the insured at the time the viatical settlement contract was closed;(J) A statement that the purchaser should consult with his or her taxadvisor regarding the tax consequences of the purchase of the viatical settlementcontract or any fractionalized or pooled interest therein; and(K) Any other information as may be prescribed by rule of the director;and(ii) The purchaser receives in writing at least five business days priorto closing the transaction:(A) The name, address, and telephone number of the issuing insurancecompany and the name, address, and telephone number of the state or foreigncountry regulator of the insurance company;(B) The total face value of the insurance policy and the percentageof the insurance policy the purchaser will own;(C) The insurance policy number, issue date, and type;(D) If a group insurance policy, the name, address, and telephone numberof the group and, if applicable, the material terms and conditions of convertingthe policy to an individual policy, including the amount of increased premiums;(E) If a term insurance policy, the term and the name, address, andtelephone number of the person who will be responsible for renewing the policyif necessary;(F) That the insurance policy is beyond the state statute for contestabilityand the reason therefor;(G) The insurance policy premiums and terms of premium payments;(H) The amount of the purchaser's money that will be set aside to paypremiums;(I) The name, address, and telephone number of the person who will bethe insurance policyowner and the person who will be responsible for payingpremiums;(J) The date on which the purchaser will be required to pay premiumsand the amount of the premium, if known; and(K) Any other information as may be prescribed by rule of the director;(e) The purchaser may rescind or cancel the purchase for any reasonby giving written notice of rescission or cancellation to the issuer or theissuer's agent within (i) fifteen calendar days after the date the purchaserremits the required consideration or receives the disclosure required undersubdivision (d)(i) of this subdivision and (ii) five business days after thedate the purchaser receives the disclosure required by subdivision (d)(ii)of this subdivision. No specific form is required for the rescission or cancellation.The notice is effective when personally delivered, deposited in the UnitedStates mail, or deposited with a commercial courier or delivery service. Theissuer shall refund all the purchaser's money within seven calendar days afterreceiving the notice of rescission or cancellation;(f) A notice of the issuer's intent to sell securities pursuant to thissubdivision, signed by a duly authorized officer of the issuer and notarized,together with a filing fee of two hundred dollars, is filed with the Departmentof Banking and Finance before any offers or sales of securities are made underthis subdivision. Such notice shall include:(i) The issuer's name, the issuer's type of organization, the statein which the issuer is organized, the date the issuer intends to begin sellingsecurities within or from this state, and the issuer's principal business;(ii) A consent to service of process; and(iii) An audit report of an independent certified public accountanttogether with a balance sheet and related statements of income, retained earningsand cash flows that reflect the issuer's financial position, the results ofthe issuer's operations, and the issuer's cash flows as of a date within fifteenmonths before the date of the notice prescribed in this subdivision. The financialstatements shall be prepared in conformity with generally accepted accountingprinciples and shall be examined according to generally accepted auditingstandards. If the date of the audit report is more than one hundred twentydays before the date of the notice prescribed in this subdivision, the issuershall provide unaudited interim financial statements;(g) No commission or remuneration is paid directly or indirectly forsoliciting any prospective purchaser, except to a registered agent of a registeredbroker-dealer or registered issuer-dealer; and(h) At least ten days before use within this state, the issuer fileswith the department all advertising and sales materials that will be published,exhibited, broadcast, or otherwise used, directly or indirectly, in the offeror sale of a viatical settlement contract in this state.The director may by order deny or revoke the exemption specified insubdivision (2) of this section with respect to a specific security. Uponthe entry of such an order, the director shall promptly notify all registeredbroker-dealers that it has been entered and of the reasons therefor and thatwithin fifteen business days of the receipt of a written request the matterwill be set down for hearing. If no hearing is requested within fifteen businessdays of the issuance of the order and none is ordered by the director, theorder shall automatically become a final order and shall remain in effectuntil it is modified or vacated by the director. If a hearing is requestedor ordered, the director, after notice of and opportunity for hearing to allinterested persons, shall enter his or her written findings of fact and conclusionsof law and may affirm, modify, or vacate the order. No such order may operateretroactively. No person may be considered to have violated the provisionsof the Securities Act of Nebraska by reason of any offer or sale effectedafter the entry of any such order if he or she sustains the burden of proofthat he or she did not know and in the exercise of reasonable care could nothave known of the order. In any proceeding under the act, the burden of provingan exemption from a definition shall be upon the person claiming it. SourceLaws 1965, c. 549, § 11, p. 1787; Laws 1973, LB 167, § 6; Laws 1977, LB 263, § 5; Laws 1978, LB 760, § 2; Laws 1980, LB 496, § 1; Laws 1986, LB 909, § 11; Laws 1987, LB 93, § 1; Laws 1989, LB 60, § 3; Laws 1990, LB 956, § 10; Laws 1991, LB 305, § 5; Laws 1992, LB 758, § 2; Laws 1993, LB 216, § 7; Laws 1994, LB 1241, § 1; Laws 1995, LB 96, § 1; Laws 1996, LB 1053, § 9; Laws 1997, LB 335, § 7; Laws 2000, LB 932, § 20; Laws 2001, LB 52, § 44; Laws 2002, LB 957, § 9; Laws 2006, LB 876, § 20; Laws 2010, LB814, § 1.Effective Date: July 15, 2010AnnotationsExemption for a transaction under subsection (9) of this section contemplates only a situation where no remuneration in any form is to be given the offeror of the stock. Labenz v. Labenz, 198 Neb. 548, 253 N.W.2d 855 (1977).