Washington Administrative Code › Title 460 - Financial Institutions, Department of (Securities Division) › Chapter 460-42A - Exempt securities › Section 460-42A-080 - Blue chip exemption

Current through Register Vol. 24-14, July 15, 2024
(1) Any security
			 that meets all of the following conditions is exempted under
			 RCW
			  21.20.310(8):
(a) If the issuer is not organized under the
			 laws of the United States or a state, it has appointed a duly authorized agent
			 in the United States for service of process and has set forth the name and
			 address of such agent in its prospectus;
(b) A class of the issuer's securities is
			 required to be and is registered under section 12 of the Securities Exchange
			 Act of 1934, and has been so registered for the three years immediately
			 preceding the offering date;
(c)
			 Neither the issuer nor a significant subsidiary has had a material default
			 during the lesser of the last seven years or the issuer's existence in the
			 payment of (i) principal, interest, dividend, or sinking fund installment on
			 preferred stock or indebtedness for borrowed money, or (ii) rentals under
			 leases with terms of three years or more. A "material default" is a failure to
			 pay, the effect of which is to cause indebtedness to become due prior to its
			 stated maturity or to cause termination or reentry under a lease prior to its
			 stated expiration, if the indebtedness or the rental obligation for the
			 unexpired term exceeds five percent of the issuer's (and its consolidated
			 subsidiaries) total assets, or if the arrearage in required dividend payments
			 on preferred stock is not cured within thirty days;
(d) The issuer has had annual consolidated
			 net income (before extraordinary items and the cumulative effect of accounting
			 changes) as follows: (i) At least one million dollars in four of its last five
			 fiscal years including its last fiscal year, and (ii) if the offering is of
			 interest bearing securities, at least one and one-half times its annual
			 interest expense, calculating net income before deduction for income taxes and
			 depreciation and giving effect to the proposed offering and the intended use of
			 the proceeds, for its last fiscal year. "Last fiscal year" means the most
			 recent year for which audited financial statements are available, provided that
			 such statements cover a fiscal period ended not more than fifteen months from
			 the commencement of the offering.
(e) If the offering is of stock or shares
			 (other than preferred stock or shares), and except as otherwise required by
			 law, the securities have voting rights at least equal to the securities of each
			 of the issuer's outstanding classes of stock or shares (other than preferred
			 stock or shares), with respect to (i) the number of votes per share, and (ii)
			 the right to vote on the same general corporate decisions;
(f) If the offering is of stock or shares
			 (other than preferred stock or shares), the securities are owned beneficially
			 or of record, on any date within six months prior to the commencement of the
			 offering, by at least twelve hundred persons, and on that date there are at
			 least seven hundred fifty thousand of the shares outstanding with an aggregate
			 market value, based on the average bid price, of at least three million seven
			 hundred fifty thousand dollars. In determining the number of persons who are
			 beneficial owners of the stock or shares, the issuer or a broker-dealer may
			 rely in good faith upon written information furnished by record
			 owners;
(g) Provided that, if the
			 securities to be issued are listed, or approved for listing upon notice of
			 issuance, on the New York Stock Exchange, Inc. or the American Stock Exchange,
			 Inc., and the current original listing standards of that exchange are satisfied
			 as of the end of the issuer's most recent fiscal year, the conditions of (c) of
			 this subsection need be met for only five years and the annual net earnings
			 requirement of (d)(i) of this subsection shall be two hundred fifty thousand
			 dollars;
(h) And provided further
			 that, if the issuer of the securities is a finance company with liquid assets
			 of at least one hundred five percent of its liabilities (other than deferred
			 income taxes, deferred investment tax credits, capital stock and surplus) at
			 the end of each of its last five fiscal years, the net income requirement of
			 (d)(ii) of this subsection, but before deduction for interest expense, shall be
			 one and one-fourth times its annual interest expense. "Finance company" means a
			 company engaged primarily in the business of wholesale, retail, installment,
			 mortgage, commercial, industrial or consumer financing, banking or factoring.
			 "Liquid assets" means cash receivables payable on demand or not more than
			 twelve years following the close of the company's last fiscal year, and readily
			 marketable securities, in each case less applicable reserves and unearned
			 income.