                                 CODE OF VIRGINIA

REGISTRATION BY QUALIFICATION (§ 13.1-510)

a. Any security may be registered by qualification.

b. A registration statement under this section shall contain that part of the
following information as required by the Commission:

   1. With respect to the issuer and any significant subsidiary: its name,
   address and form of organization; the state (or foreign jurisdiction) and date
   of its organization; the general character of its business; and a description
   of its physical properties and equipment; and a statement of the general
   competitive conditions in the industry or business in which it is or will be
   engaged;

   2. With respect to every director and officer of the issuer (or person
   occupying a similar status or performing similar functions): his name, address
   and principal occupation for the past five years; the amount of securities of
   the issuer held by him as of a specified date within ninety days of the filing
   of the registration statement; the amount of the securities covered by the
   registration statement to which he has indicated his intention to subscribe;
   and a description of any material interest in any material transaction with
   the issuer or any significant subsidiary effected within the past three years
   or proposed to be effected;

   3. With respect to persons covered by subdivision (2) of this subsection: the
   remuneration paid during the past twelve months and estimated to be paid
   during the ensuing twelve months, directly or indirectly, by the issuer
   (together with all predecessors, parents, subsidiaries and affiliates) to all
   such persons in the aggregate;

   4. With respect to any person owning of record, or beneficially if known, ten
   percent or more of the outstanding shares of any class of equity security of
   the issuer: the information specified in subdivision (2) of this subsection
   other than his occupation;

   5. With respect to every promoter if the issuer was organized within the past
   three years: the information specified in subdivision (2) of this subsection,
   any amount paid to him within such period or intended to be paid to him and
   the consideration for any such payment;

   6. With respect to any person other than the issuer on whose behalf any part
   of the offering is to be made: his name and address; the amount of securities
   of the issuer held by him as of the date of the filing of the registration
   statement; a description of any material interest in any material transaction
   with the issuer or any subsidiary effected within the past three years or
   proposed to be effected; and a statement of his reasons for making the
   offering;

   7. The capitalization and long term debt (on both a current and a pro forma
   basis) of the issuer and any subsidiary, including (i) a description of each
   class of security outstanding or being registered or otherwise offered, and
   (ii) a statement of the amount and kind of consideration (whether in the form
   of cash, physical assets, services, patents, goodwill or anything else) for
   which the issuer or any such subsidiary has issued any of its securities
   within the past two years or is obligated to issue any of its securities;

   8. The kind and amount of securities to be offered; the proposed offering
   price or the method by which it is to be computed; any variation therefrom at
   which any portion of the offering is to be made to any person or class of
   persons other than the underwriters, with a specification of any such person
   or class; the basis upon which the offering is to be made if otherwise than
   cash; the estimated aggregate underwriting and selling discounts or
   commissions and finder&#8217;s fees (including separately cash, securities,
   contracts or anything else of value to accrue to the underwriters in
   connection with the offering) or, if such discounts or commissions are
   variable, the basis of determining them and their maximum and minimum amounts;
   the estimated amounts of other selling expenses, including legal, engineering
   and accounting charges; the name and address of every underwriter and every
   recipient of a finders&#8217; fee; a copy of any underwriting or selling-group
   agreement pursuant to which the distribution is to be made, or the proposed
   form of any such agreement whose terms have not yet been determined; and a
   description of the plan of distribution of any securities which are to be
   offered otherwise than through an underwriter;

   9. The estimated cash proceeds to be received by the issuer from the offering;
   the purposes for which such proceeds are to be used by the issuer; the amount
   to be used for each purpose; the order of priority in which the proceeds will
   be used for the purposes stated; the amounts of any funds to be raised from
   other sources to achieve such purposes; the sources of any such funds; and, if
   any part of the proceeds is to be used to acquire any property (including
   goodwill) otherwise than in the ordinary course of business, the names and
   addresses of the vendors, the purchase price, the names of any persons who
   have received commissions in connection with such acquisition and the amounts
   of such commissions and any other expense in connection with such acquisition
   (including the cost of borrowing money to finance such acquisition);

   10. A description of any stock options (or other security options)
   outstanding, or to be created in connection with the offering, together with
   the amount of any such options held or to be held by every person required to
   be named in subdivisions (2), (4), (5), (6) or (8) of this subsection and by
   any person who holds or will hold ten percent or more in the aggregate of any
   such options;

   11. The dates of, parties to and general effect concisely stated of, every
   management or other material contract made or to be made otherwise than in the
   ordinary course of business if it is to be performed in whole or in part at or
   after the filing of the registration statement or was made within the past two
   years, together with a copy of every such contract; and a description of any
   pending litigation or proceeding to which the issuer is a party and which
   materially affects its business or assets (including any such litigation or
   proceeding known to be contemplated by governmental authorities);

   12. A copy of any prospectus, pamphlet, circular, form letter, advertisement
   or sales literature intended as of the effective date to be used in connection
   with the offering;

   13. A specimen of the security being registered; a copy of the issuer&#8217;s
   articles of incorporation and bylaws (or their substantial equivalents) as
   currently in effect; and a copy of any indenture or other instrument covering
   the security to be registered;

   14. An opinion of counsel as to the legality of the security being registered
   which shall state whether the security when sold will be legally issued, fully
   paid and nonassessable, and, if a debt security, a binding obligation of the
   issuer;

   15. A balance sheet of the issuer as of a date within four months prior to the
   filing of the registration statement; a profit and loss statement and analysis
   of surplus for each of the three fiscal years preceding the date of the
   balance sheet and for any period between the close of the last fiscal year and
   the date of the balance sheet, or for the period of the issuer&#8217;s and any
   predecessor&#8217;s existence if less than three years; and if any part of the
   proceeds of the offering is to be applied to the purchase of any business, the
   same financial statements which would be required if such business were the
   registrant;

   16. Such additional information as the Commission may require.

c. A registration statement shall state the amount of securities to be offered
in this Commonwealth and shall be accompanied by a filing fee of one-tenth of
one percent of the maximum aggregate offering price at which the securities are
proposed to be offered in this Commonwealth; provided that the fee shall not be
less than $250 nor more than $500.

d. A registration statement under this section shall become effective when the
Commission so orders.

e. It shall be unlawful to sell any security registered under this section that
constitutes the whole or a part of an unsold allotment or subscription by a
broker-dealer as a participant in the underwriting of such securities except
upon delivery to the purchaser of a prospectus. The prospectus shall contain
such part of the information specified in subsection (b) as may be designated by
the Commission as necessary for the protection of investors.

f. The Commission shall have authority in its discretion to require that sales
be made only pursuant to a subscription contract the form of which shall have
been filed as an exhibit to the registration statement. If the Commission
requires a subscription contract, it shall be unlawful to sell any security
registered under this section except pursuant to such a subscription contract
duly signed by the purchaser, a copy of which shall be delivered to him.

g. [Repealed.]

h. If any prospectus, document or exhibit filed as provided in this section
discloses that any of the securities sought to be registered by qualification,
or as much as twenty-five percent of any class of the securities of the issuer
to be outstanding, were or are intended to be issued for any patent right,
copyright, trademark, process, formula, goodwill or other intangible assets, or
for organization or promotion fees or expenses, the Commission may require that
such securities shall be delivered in escrow to some satisfactory depository
under an escrow agreement. The owners of such securities shall not be entitled
to sell or transfer such securities or to withdraw such securities from escrow
until the issuer in any period of thirty-six consecutive months earns an annual
average of six percent of the public offering price times all shares of common
stock then outstanding plus those to be outstanding through the exercise of
warrants or options as computed under normal and customary accounting procedures
or upon order of the Commission, when no circumstance is apparent which, in the
opinion of the Commission, would warrant continuation of the escrow. In case of
dissolution or insolvency during the time such securities are held in escrow,
the owners of such securities shall not participate in the assets until after
the owners of all other securities shall have been paid in full. If any
securities sought to be registered by qualification are to be sold for the
account of the issuer, and not by underwriters who have or at the time of
offering shall have purchased such securities from the issuer, the Commission
may require that the proceeds from the sale of such securities be delivered in
escrow to some satisfactory depository until all or a reasonable portion of the
total securities originally proposed to be offered and sold shall have been sold
and paid for.
			For the purposes of this section, such securities shall be deemed to have
been sold and paid for at such time as the subscribers therefor deliver to, or
for the benefit of, the issuer, an amount equal to the purchase price specified
for such securities either in cash, a draft, check or note (other than any such
instrument which is drawn without recourse) or any combination thereof.

HISTORY: 1956, c. 428; 1982, c. 362; 1983, c. 517; 1984, c. 771; 1993, c. 180.