WAC 460-44A-505
Uniform offering exemption for limited
offers and sales of securities not exceeding $5,000,000. (1)
Exemption. Offers and sales of securities by an issuer in
compliance with the Securities Act of 1933, Regulation D,
Rules 230.501 through 230.503; 230.505; and 230.508 as made
effective in Release No. 33-6389, and as amended in Release
Nos. 33-6437, 33-6663, 33-6758, 33-6825, 33-6863, 33-6949, 33-6996, and 33-8891 that satisfy the conditions in
subsection (2) of this section shall be exempt transactions
under RCW 21.20.320(17).
(2) Conditions to be met.
(a) General conditions. To qualify for exemption under
this section, offers and sales must satisfy all the terms and
conditions of WAC 460-44A-501 through 460-44A-503.
Note:
In order to comply with this section the issuer must comply with the provisions of Rule 505 (17 CFR Sec. 230.505) of
the Federal Securities and Exchange Commission.
(b) Specific conditions.
(i) No commission, fee, or other remuneration shall be
paid or given directly or indirectly, to any person for
soliciting any prospective purchaser that is not an accredited
investor in the state of Washington unless such person is
registered in this state as a broker-dealer or salesperson.
(ii) It is a defense to a violation of (b)(i) of this
subsection if the issuer sustains the burden of proof to
establish that he did not know and in the exercise of
reasonable care could not have known that the person who
offered or sold the security was not appropriately registered
in this state.
(c) In all sales to nonaccredited investors in this state
under this section the issuer and any person acting on its
behalf shall have reasonable grounds to believe and after
making reasonable inquiry shall believe that, as to each
purchaser, one of the following conditions, (i) or (ii) of
this subsection, is satisfied:
(i) The investment is suitable for the purchaser upon the
basis of the facts, if any, disclosed by the purchaser as to
his other security holdings and as to his financial situation
and needs. For the purpose of this condition only, it may be
presumed that if the investment does not exceed ten percent of
the purchaser's net worth, it is suitable. This presumption
is rebuttable; or
(ii) The purchaser either alone or with his purchaser
representative(s) has such knowledge and experience in
financial and business matters that he is or they are capable
of evaluating the merits and risks of the prospective
investment.
(d) No exemption under this rule shall be available for
the securities of any issuer if any of the parties described
in Securities Act of 1933, Regulation A, Rule 230.262:
(i) Has filed a registration statement which is the
subject of a currently effective registration stop order
entered pursuant to the Securities Act of Washington, chapter 21.20 RCW, or any other state's securities law, within five
years prior to the filing of the notice required under this
exemption.
(ii) Has been convicted within ten years prior to the
filing of the notice required under this exemption of any
felony or misdemeanor in connection with the offer, purchase
or sale of any security or any felony involving fraud or
deceit, including but not limited to forgery, embezzlement,
obtaining money under false pretenses, larceny, or conspiracy
to defraud.
(iii) Is currently subject to any state administrative
enforcement order or judgment entered by the Washington state
administrator of securities or any other state's securities
administrator within five years prior to the filing of the
notice required under this section or is subject to any
state's administrative enforcement order or judgment in which
fraud or deceit, including but not limited to making untrue
statements of material facts and omitting to state material
facts, was found and the order or judgment was entered within
five years prior to the filing of the notice required under
this exemption.
(iv) Is subject to an order or judgment of the Washington
state administrator of securities or any other state's
administrative enforcement order or judgment which prohibits,
denies or revokes the use of any exemption from registration
in connection with the offer, purchase or sale of securities.
(v) Is currently subject to any order, judgment, or
decree of any court of competent jurisdiction temporarily or
preliminarily restraining or enjoining, or is subject to any
order, judgment or decree of any court of competent
jurisdiction, permanently restraining or enjoining, such party
from engaging in or continuing any conduct or practice in
connection with the purchase or sale of any security or
involving the making of any filing with this or any state
entered within five years prior to the filing of the notice
required under this exemption.
(vi) The prohibitions of (d)(i), (ii), (iii), and (v) of
this subsection shall not apply if the person subject to the
disqualification is duly licensed or registered to conduct
securities related business in this state and the Form B-D
filed with this state discloses the order, conviction,
judgment or decree relating to such person. No person
disqualified under (d) of this subsection may act in a
capacity other than that for which the person is licensed or
registered.
(vii) Any disqualification caused by (d) of this
subsection is automatically waived if the Washington state
administrator of securities or the state securities
administrator or other agency which created the basis for
disqualification determines upon a showing of good cause that
it is not necessary under the circumstances that the exemption
of this section be denied.
(viii) It is a defense to a violation of this paragraph
(d) if the issuer sustains the burden of proof to establish
that the issuer did not know and in the exercise of reasonable
care could not have known that a disqualification under this
paragraph existed.
(e) The issuer shall file a notice, with a consent to
service of process, and pay a filing fee as set forth in WAC 460-44A-503.
(3) Transactions which are exempt under this section may
not be combined with offers and sales exempt under any other
rule or section of the Securities Act of Washington, however,
nothing in this limitation shall act as an election. Should
for any reason the offer and sale fail to comply with all of
the conditions for the exemption of this section, the issuer
may claim the availability of any other applicable exemption.
(4) The Washington state administrator of securities may,
by rule or order, waive the conditions of this section.
(5) The exemption authorized by this section shall be
known and may be cited as the "Washington uniform limited
offering exemption."