DEPARTMENT OF

FINANCIAL INSTITUTIONS

(Securities Division)

For the purpose of WAC 460-44A-100, "Nationally recognized securities manual or its electronic equivalent" shall mean: Fitch Investors Service, Mergent's Investor Service, and ((Standard and Poor's Corporation Records)) OTC Markets Group Inc. (with respect to securities included in the OTCQX and OTCQB markets).

Any security which would otherwise be exempt from registration under RCW 21.20.310(1) except that it is payable from a nongovernmental industrial or commercial enterprise shall be exempt from registration if it meets the requirements of either subsection (1) or (2) of this section:

(1) The security receives a rating of "AA" or better from Standard and Poor's Corporation or an equivalent rating from ((Moody's Investors Service)) Mergent, Inc.; or

(2)(a) The security is issued to fund a single-family mortgage loan program established and operated by a state housing finance agency; and

(b) The security receives a rating of at least "A+" from Standard and Poor's Corporation or an equivalent rating from ((Moody's Investors Service)) Mergent, Inc.

(1) Any security meeting all of the following conditions is exempted under RCW 21.20.310(8):

(a) The securities are:

(i) Equity securities except options, warrants, preferred stock, subscription rights, securities convertible into equity securities or any right to subscribe to or purchase such options, warrants, convertible securities or preferred stock;

(ii) Units consisting of equity securities permitted by (a)(i) of this subsection and warrants to purchase the same equity security being offered in the unit;

(iii) Nonconvertible debt securities that are rated in one of the four highest rating categories of Standard and Poor's((, Moody's)) Corporation, Mergent, Inc., Dominion Bond Rating Services ((of)), Canadian Bond Rating Services or such other rating organization which the administrator by rule or order may designate. For purposes of this subsection (1)(a)(iii) of this section, nonconvertible debt securities means securities that cannot be converted for at least one year from the date of issuance and then only into equity shares of the issuer or its parent; or

(iv) American Depository receipt representing securities described in (a)(i), (ii) or (iii) of this subsection.

(b) The issuer is not organized under the laws of the United States, or of any state, territory or possession of the United States, or of the District of Columbia or Puerto Rico.

(c) The issuer, at the time an offer or sale is made under this subsection, has been a going concern engaged in continuous business operations for the immediate past five years and during that period, has not been the subject of a proceeding relating to insolvency, bankruptcy, involuntary administration, receivership or similar proceeding. For purposes of this subsection (1)(c) of this section, the operating history of any predecessor that represented more than fifty percent of the value of the assets of the issuer that otherwise would have met the conditions of this section may be used toward the five year requirement.

(d) The issuer, at the time an offer or sale is made under this subsection (1)(d) of this section, has public float of one billion dollars (United States) or more.

(e) The market value of the issuer's equity shares, at the time an offer or sale is made under this subsection, is three billion dollars (United States) or more.

(f) The issuer, at the time an offer or sale is made under this subsection (1)(f) of this section, has a class of equity securities listed for trading on or through the facilities of a foreign securities exchange or recognized foreign securities market included in Rule 902 (a)(1) or successor rule promulgated under the Securities Act of 1933 or designated by the U.S. Securities and Exchange Commission under Rule 902 (a)(2) promulgated under the Securities Act of 1933.

(2) For purposes of this section:

(a) "Public float" means the market value of all outstanding equity shares owned by nonaffiliates.

(b) "Equity shares" means common shares, nonvoting equity shares and subordinate or restricted voting equity shares, but does not include preferred shares.

(c) An "affiliate" of a person is anyone who beneficially owns, directly or indirectly, or exercises control or direction over, more than ten percent of the outstanding equity shares of such person.

Any nonissuer transaction by a registered salesperson of a registered broker-dealer, and any resale transaction by a sponsor of a unit investment trust registered under the Investment Company Act of 1940, in a security of a class that has been outstanding in the hands of the public for at least ninety days shall be exempt pursuant to RCW 21.20.320(2) provided that, at the time of the transaction:

(1) The issuer of the security is actually engaged in business and not in the organizational stage, bankruptcy, or receivership;

(2) The issuer is not a blank check, blind pool or shell company ((whose)) that has no specific business plan or purpose or has indicated that its primary ((plan of)) business plan is to engage in a merger or combination of the business with, or an acquisition of, an unidentified person ((or persons));

(3) The security is sold at a price reasonably related to ((the)) its current market price ((of the security));

(4) The security does not constitute ((all)) the whole or part of an unsold allotment to, or a subscription or participation by, the broker-dealer as an underwriter of the security or a redistribution;

(5) A nationally recognized securities manual or its electronic equivalent designated by the director pursuant to WAC 460-10A-160 or a document filed with and publicly available through the U.S. Securities ((&)) and Exchange ((Commission's Electronic Data Gathering and Retrieval System (EDGAR))) Commission that is publicly available contains:

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

(b) The names of the issuer's executive officers and the names of the issuer's directors, if any, or, in the case of a non-U.S. issuer, the corporate equivalents of such persons in the issuer's country of domicile;

(c) An audited balance sheet of the issuer as of a date within eighteen months before the date of the transaction or, in the case of a reorganization or merger ((where)) when the parties to the reorganization or merger each had ((such)) an audited balance sheet, a pro forma balance sheet for the combined organization; and

(d) An audited income statement for each of the issuer's two immediately ((preceding two)) previous fiscal years((,)) or for the period of existence of the issuer, ((if in existence for less than two years)) whichever is shorter or, in the case of a reorganization or merger where the parties to the reorganization or merger had such audited income statement, a pro forma income statement; and

(6) The issuer of the security has a class of equity securities listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, or designated for trading on the National Association of Securities Dealers Automated Quotation System (NASDAQ), unless:

(a) The issuer of the security is a unit investment trust registered under the Investment Company Act of 1940;

(b) The issuer of the security, including its predecessors, 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 $2,000,000 based on an audited balance sheet as of a date within eighteen months before the date of the transaction or, in the case of a reorganization or merger where parties to the reorganization or merger each had such an audited balance sheet, a pro forma balance sheet for the combined organization.