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                                                                    Exhibit 4.1

THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE UPON EXERCISE  HEREOF HAVE
NOT  BEEN  REGISTERED  UNDER  THE  SECURITIES  ACT  OF  1933,  AS  AMENDED  (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE  DISPOSED OF UNLESS  REGISTERED  UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE  SECURITIES LAWS OR VALUE AMERICA,  INC. SHALL HAVE RECEIVED AN
OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT  AND  UNDER  THE  PROVISIONS  OF  APPLICABLE  STATE  SECURITIES  LAWS IS NOT
REQUIRED.  THIS WARRANT MAY NOT BE SOLD,  TRANSFERRED  OR OTHERWISE  DISPOSED OF
WITHOUT THE PRIOR WRITTEN CONSENT OF VALUE AMERICA, INC.

                               WARRANT TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                               VALUE AMERICA, INC.

                              Expires May 17, 2003

No.: W-1                                               Number of Shares: 250,000
Date of Issuance:   May 17, 2000

     FOR VALUE RECEIVED,  subject to the provisions  hereinafter set forth,  the
undersigned,  VALUE  AMERICA,  INC., a Virginia  corporation  (together with its
successors and assigns,  the "Issuer"),  hereby  certifies that ACQUA WELLINGTON
NORTH AMERICAN EQUITIES FUND, LTD. (the "Investor") or its registered assigns is
entitled to  subscribe  for and  purchase,  during the period  specified in this
Warrant, up to 250,000 shares (subject to adjustment as hereinafter provided) of
the duly authorized,  validly issued,  fully paid and  non-assessable  shares of
Common Stock of the Issuer,  at an exercise price per share equal to the Warrant
Price then in effect, subject, however, to the provisions and upon the terms and
conditions hereinafter set forth. Capitalized terms used in this Warrant and not
otherwise defined herein shall have the respective meanings specified in Section
8 hereof.

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     1. Term.  The right to subscribe  for and purchase  shares of Warrant Stock
represented  hereby shall commence on the earlier of consummation of the initial
Draw Down or September 14, 2000 and shall expire at 5:00 p.m.,  eastern time, on
May 17, 2003 (such period being the "Term").  All or part of this Warrant may be
subject to cancellation as provided in Section 7 prior to the end of the Term.

     2.  Method of  Exercise  Payment:  Issuance of New  Warrant:  Transfer  and
Exchange.

     (a) Time of Exercise.  The purchase rights  represented by this Warrant may
be  exercised  in whole or in part at any time and from time to time  during the
Term,  provided,  however,  that  this  Warrant  may  not  be  exercised  on any
Settlement  Date (as  defined  in the  Purchase  Agreement)  or if the number of
shares of Warrant Stock  issuable upon such  exercise when  aggregated  with the
number of shares  currently held by the Holder at such time of exercise  exceeds
9.9%  of the  number  of  shares  of  the  Company's  Common  Stock  issued  and
outstanding on the date of exercise.

     (b) Method of Exercise.  The Holder hereof may exercise  this  Warrant,  in
whole or in part,  by the  surrender  of this Warrant  (with the  exercise  form
attached hereto duly executed) at the principal office of the Issuer, and by the
payment  to the  Issuer  of an  amount of  consideration  therefor  equal to the
Warrant Price in effect on the date of such exercise multiplied by the number of
shares of  Warrant  Stock  with  respect  to which  this  Warrant  is then being
exercised,  payable by certified or official  bank check.  In any case where the
consideration  payable  upon  such  exercise  is being  paid in whole or in part
pursuant to the provisions of clause (ii) of this  subsection (b), such exercise
shall  be  accompanied  by  written  notice  from  the  Holder  of this  Warrant
specifying the manner of payment  thereof and  containing a calculation  showing
the number of shares of Warrant  Stock  with  respect to which  rights are being
surrendered  thereunder  and the net number of shares to be issued  after giving
effect to such surrender.

     (c)  Issuance of Stock  Certificates.  In the event of any  exercise of the
rights  represented by this Warrant in accordance  with and subject to the terms
and  conditions  hereof,  (i)  certificates  for the shares of Warrant  Stock so
purchased  shall be dated the date of such  exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three (3) Trading Days after such
exercise,  and the  Holder  hereof  shall be deemed for all  purposes  to be the
Holder  of the  shares  of  Warrant  Stock so  purchased  as of the date of such
exercise,  and (ii) unless this Warrant has expired, a new Warrant  representing
the  number of shares of  Warrant  Stock,  if any,  with  respect  to which this
Warrant shall not then have been exercised  (less any amount thereof which shall
have been  canceled  in  payment  or partial  payment  of the  Warrant  Price as
hereinabove  provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.

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     (d)  Transferability of Warrant.  Subject to Section 2(e), this Warrant may
not be  transferred  by a  Purchaser  without  the  consent  of the  Issuer.  If
transferred  pursuant  to this  paragraph  with the  consent  of the  Issuer and
subject to the  provisions of subsection (e) of this Section 2, this Warrant may
be  transferred  on the books of the Issuer by the Holder hereof in person or by
duly authorized attorney, upon surrender of this Warrant at the principal office
of the Issuer,  properly  endorsed (by the Holder executing an assignment in the
form attached  hereto) and upon payment of any  necessary  transfer tax or other
governmental charge imposed upon such transfer.  This Warrant is exchangeable at
the  principal  office of the Issuer for  Warrants  for the purchase of the same
aggregate  number of shares of Warrant Stock,  each new Warrant to represent the
right to purchase  such number of shares of Warrant  Stock as the Holder  hereof
shall  designate at the time of such exchange.  All Warrants issued on transfers
or exchanges  shall be dated the Original Issue Date and shall be identical with
this  Warrant  except  as to the  number of shares  of  Warrant  Stock  issuable
pursuant hereto.

         (e)      Compliance with Securities Laws.

                      (i) The  Holder of this  Warrant,  by  acceptance  hereof,
         acknowledges  that this  Warrant and the shares of Warrant  Stock to be
         issued upon exercise  hereof are being acquired solely for the Holder's
         own  account  and  not as a  nominee  for  any  other  party,  and  for
         investment,  and that the  Holder  will not  offer,  sell or  otherwise
         dispose of this  Warrant  or any  shares of Warrant  Stock to be issued
         upon  exercise  hereof  except  pursuant to an  effective  registration
         statement, or an exemption from registration,  under the Securities Act
         and any applicable state securities laws.

                     (ii) Except as  provided in  paragraph  (iii)  below,  this
         Warrant  and all  certificates  representing  shares of  Warrant  Stock
         issued upon exercise hereof shall be stamped or imprinted with a legend
         in substantially the following form:

                           THIS WARRANT AND THE SHARES OF COMMON STOCK  ISSUABLE
                  UPON  EXERCISE  HEREOF  HAVE NOT  BEEN  REGISTERED  UNDER  THE
                  SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"), OR
                  ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,  TRANSFERRED OR
                  OTHERWISE  DISPOSED OF UNLESS  REGISTERED UNDER THE SECURITIES
                  ACT AND  UNDER  APPLICABLE  STATE  SECURITIES  LAWS  OR  VALUE
                  AMERICA,  INC.  SHALL HAVE  RECEIVED AN OPINION OF ITS COUNSEL
                  THAT  REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
                  AND UNDER THE PROVISIONS OF APPLICABLE  STATE  SECURITIES LAWS
                  IS NOT REQUIRED.  THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR

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                  OTHERWISE  DISPOSED  OF WITHOUT THE PRIOR  WRITTEN  CONSENT OF
                  VALUE AMERICA, INC.

                    (iii) The  restrictions  imposed by this subsection (e) upon
         the  transfer  of this  Warrant or the  shares of  Warrant  Stock to be
         purchased upon exercise hereof shall terminate (A) when such securities
         shall have been resold pursuant to being  effectively  registered under
         the  Securities  Act,  (B) upon the  Issuer's  receipt of an opinion of
         counsel, in form and substance  reasonably  satisfactory to the Issuer,
         addressed  to the Issuer to the effect  that such  restrictions  are no
         longer required to ensure  compliance with the Securities Act and state
         securities  laws or (C) upon the  Issuer's  receipt  of other  evidence
         reasonably  satisfactory  to the  Issuer  that  such  registration  and
         qualification  under state  securities laws is not required;  provided,
         that the  restrictions  imposed by the last sentence of the legend with
         respect to the transfer of this Warrant shall not  terminate.  Whenever
         such restrictions  shall cease and terminate as to any such securities,
         the Holder thereof shall be entitled to receive from the Issuer (or its
         transfer agent and  registrar),  without expense (other than applicable
         transfer  taxes,  if any),  new Warrants  (or, in the case of shares of
         Warrant Stock,  new stock  certificates)  of like tenor not bearing the
         applicable  legend  required by  paragraph  (ii) above  relating to the
         Securities Act and state securities laws.

         3.      Stock Fully Paid: Reservation and Listing of Shares: Covenants.

         (a) Stock Fully Paid. The Issuer  represents,  warrants,  covenants and
agrees that all shares of Warrant Stock which may be issued upon the exercise of
this Warrant or otherwise  hereunder  will, upon issuance,  be duly  authorized,
validly issued, fully paid and non-assessable and free from all taxes, liens and
charges  created by or through  the Issuer.  The Issuer  further  covenants  and
agrees that during the period  within which this Warrant may be  exercised,  the
Issuer will at all times have  authorized  and  reserved  for the purpose of the
issue upon  exercise  of this  Warrant a  sufficient  number of shares of Common
Stock to provide for the exercise of this Warrant.

         (b) Reservation.  If any shares of Common Stock required to be reserved
for issuance  upon exercise of this Warrant or as otherwise  provided  hereunder
require registration or qualification with any governmental  authority under any
federal or state law before  such  shares may be so issued,  the Issuer  will in
good faith use its reasonable best efforts as  expeditiously  as possible at its
expense to cause such shares to be duly  registered or qualified.  If the Issuer
shall list any shares of Common  Stock on any  securities  exchange or market it
will, at its expense,  list thereon,  maintain and increase when  necessary such
listing,  of, all shares of Warrant Stock from time to time issued upon exercise
of  this  Warrant  or as  otherwise  provided  hereunder,  and,  to  the  extent
permissible under the applicable  securities exchange rules, all unissued shares
of Warrant Stock which are at any time issuable hereunder, so long as any shares
of  Common  Stock  shall be so  listed.  The  Issuer  will  also so list on each
securities  exchange or market,  and will  maintain  such  listing of, any other
securities  which the Holder of this  Warrant  shall be entitled to receive upon
the  exercise of this  Warrant if at the time any  securities  of the same class
shall be listed on such securities exchange or market by the Issuer.

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         (c) Covenants.  The Issuer shall not by any action  including,  without
limitation, amending the Articles of Incorporation or the by-laws of the Issuer,
or  through  any  reorganization,  transfer  of assets,  consolidation,  merger,
dissolution,  issue or sale of securities or any other action,  avoid or seek to
avoid the  observance or  performance  of any of the terms of this Warrant,  but
will at all times in good faith assist in the carrying out of all such terms and
in the taking of all such actions as may be necessary or  appropriate to protect
the rights of the Holder  hereof  against  dilution (to the extent  specifically
provided  herein)  or  impairment.   Without  limiting  the  generality  of  the
foregoing,  the Issuer will (i) not permit the par value,  if any, of its Common
Stock to exceed the then  effective  Warrant Price and (ii) take all such action
as may be reasonably  necessary in order that the Issuer may validly and legally
issue fully paid and nonassessable shares of Common Stock, free and clear of any
liens,  claims,  encumbrances and  restrictions  (other than as provided herein)
upon the exercise of this Warrant.

         (d) Loss,  Theft,  Destruction  of  Warrants.  Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft,  destruction
or  mutilation  of any  Warrant  and,  in the  case of any such  loss,  theft or
destruction,  upon receipt of indemnity or security  satisfactory  to the Issuer
or, in the case of any such mutilation,  upon surrender and cancellation of such
Warrant,  the  Issuer  will  make and  deliver,  in lieu of such  lost,  stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.

         4. Adjustment of Warrant Price and Warrant Share Number. The number and
kind of Securities purchasable upon the exercise of this Warrant and the Warrant
Price shall be subject to  adjustment  from time to time upon the  happening  of
certain events as follows:

         (a)      Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale.

                      (i) In case the Issuer after the Original Issue Date shall
         do any of the following (each, a "Triggering  Event"):  (a) consolidate
         with or merge into any other  Person  and the  Issuer  shall not be the
         continuing or surviving corporation of such consolidation or merger, or
         (b)  permit  any other  Person to  consolidate  with or merge  into the
         Issuer and the Issuer shall be the continuing or surviving  Person but,
         in connection with such  consolidation or merger,  any Capital Stock of
         the Issuer  shall be changed into or exchanged  for  Securities  of any
         other  Person or cash or any other  property,  or (c)  transfer  all or
         substantially  all of its properties or assets to any other Person,  or
         (d) effect a capital  reorganization or reclassification of its Capital
         Stock,  then,  and in the case of each such  Triggering  Event,  proper
         provision  shall be made so that,  upon the  basis and the terms and in

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         the manner  provided in this Warrant,  the Holder of this Warrant shall
         be entitled upon the exercise hereof at any time after the consummation
         of such  Triggering  Event, to the extent this Warrant is not exercised
         prior to such  Triggering  Event,  to receive at the  Warrant  Price in
         effect  at the  time  immediately  prior  to the  consummation  of such
         Triggering  Event  in lieu  of the  Common  Stock  issuable  upon  such
         exercise  of  this  Warrant  prior  to  such  Triggering   Event,   the
         Securities,  cash and  property  to which such  Holder  would have been
         entitled upon the  consummation of such Triggering Event if such Holder
         had exercised the rights represented by this Warrant  immediately prior
         thereto,  subject to adjustments  (subsequent to such corporate action)
         as nearly  equivalent  as possible to the  adjustments  provided for in
         Section 4.

                     (ii) Notwithstanding  anything contained in this Warrant to
         the contrary,  the Issuer will not effect any Triggering  Event unless,
         prior to the consummation  thereof, each Person (other than the Issuer)
         which may be required to deliver any Securities,  cash or property upon
         the  exercise  of this  Warrant as provided  herein  shall  assume,  by
         written  instrument  delivered to, and reasonably  satisfactory to, the
         Holder of this Warrant,  (A) the  obligations  of the Issuer under this
         Warrant  (and if the Issuer  shall  survive  the  consummation  of such
         Triggering  Event,  such assumption  shall be in addition to, and shall
         not release the Issuer from, any  continuing  obligations of the Issuer
         under this  Warrant) and (B) the  obligation  to deliver to such Holder
         such shares of Securities,  cash or property as, in accordance with the
         foregoing  provisions  of this  subsection  (a),  such Holder  shall be
         entitled to receive.

         (b)  Subdivision or Combination of Shares.  If the Issuer,  at any time
while this  Warrant is  outstanding,  shall  subdivide  or combine any shares of
Common Stock,  (i) in case of subdivision of shares,  the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer  shall take a record of Holders of its Common Stock for the purpose of so
subdividing,  as at the applicable record date, whichever is earlier) to reflect
the  increase in the total  number of shares of Common  Stock  outstanding  as a
result of such subdivision,  or (ii) in the case of a combination of shares, the
Warrant Price shall be  proportionately  increased (as at the effective  date of
such  combination or, if the Issuer shall take a record of Holders of its Common
Stock  for the  purpose  of so  combining,  as at the  applicable  record  date,
whichever is earlier) to reflect the  reduction in the total number of shares of
Common Stock outstanding as a result of such combination.

         (c)      Certain Dividends and Distributions.  If the Issuer, at any
time while this Warrant is outstanding, shall:

                      (i) Stock Dividends.  Pay a dividend in, or make any other
         distribution to its stockholders (without  consideration  therefor) of,
         shares of Common Stock, the Warrant Price shall be adjusted,  as at the

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         date the  Issuer  shall take a record of the  Holders  of the  Issuer's
         Capital  Stock for the  purpose of  receiving  such  dividend  or other
         distribution  (or if no such  record is  taken,  as at the date of such
         payment or other distribution), to that price determined by multiplying
         the Warrant Price in effect  immediately  prior to such record date (or
         if no such record is taken,  then immediately  prior to such payment or
         other distribution),  by a fraction (1) the numerator of which shall be
         the total  number of shares  of Common  Stock  outstanding  immediately
         prior to such record  date (or if no such  record  date is taken,  then
         immediately  prior  to  such  dividend  or  distribution),  and (2) the
         denominator  of which  shall be such  number of  shares  plus the total
         number  of  shares  of  Common  Stock  constituting  such  dividend  or
         distribution; or

                     (ii)  Other  Dividends.  Pay a  dividend  on,  or make  any
         distribution of its assets upon or with respect to (including,  but not
         limited to, a distribution of its property as a dividend in liquidation
         or  partial  liquidation  or by way of return of  capital),  the Common
         Stock (other than as described in clause (i) of this  subsection  (c)),
         or in the  event  that the  Issuer  shall  offer  options  or rights to
         subscribe for shares of Common Stock at a per share price less than the
         Per Share Market Value,  or issue any Common Stock  Equivalents  with a
         conversion or exercise  price less than the Per Share Market Value,  to
         all of its  holders  of  Common  Stock,  then upon  exercise  hereof as
         provided in Section 2, the Holder  shall  receive what the Holder would
         have received had it exercised this Warrant in full  immediately  prior
         to the record date of such  payment,  distribution  or offer or, in the
         absence  of a  record  date,  immediately  prior  to the  date  of such
         payment, distribution or offer.

         (d) Issuance of Additional  Shares of Common Stock.  If the Issuer,  at
any time while this Warrant is outstanding, shall issue any Additional Shares of
Common  Stock  (otherwise  than as provided  in the  foregoing  subsections  (a)
through  (c) of this  Section  4), at a price per share  less than the Per Share
Market  Value then in effect or without  consideration,  then the Warrant  Price
upon each such issuance  shall be adjusted to that price (rounded to the nearest
cent) determined by multiplying the Warrant Price then in effect by a fraction:

                      (i) the  numerator  of which  shall be equal to the sum of
         (A) the number of shares of Common Stock outstanding  immediately prior
         to the issuance of such Additional  Shares of Common Stock plus (B) the
         number of shares of Common Stock  (rounded to the nearest  whole share)
         which  the  aggregate  consideration  for  the  total  number  of  such
         Additional  Shares of Common Stock so issued would  purchase at a price
         per share equal to the Per Share Market Value then in effect, and

                     (ii) the  denominator of which shall be equal to the number
         of shares of Common Stock outstanding immediately after the issuance of
         such Additional Shares of Common Stock.

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The  provisions  of  this  subsection  (d)  shall  not  apply  under  any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No  adjustment  of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional  Shares of Common Stock which
are issued pursuant to any Common Stock  Equivalent if upon the issuance of such
Common Stock  Equivalent  (x) any  adjustment  shall have been made  pursuant to
subsection (e) of this Section 4 or (Y) no adjustment  was required  pursuant to
subsection  (e) of this Section 4. No  adjustment  of the Warrant Price shall be
made under this  subsection  (d) in an amount less than $.01 per share,  but any
such lesser  adjustment  shall be carried  forward and shall be made at the time
and together with the next  subsequent  adjustment,  if any, which together with
any  adjustments  so  carried  forward  shall  amount to $.01 per share or more,
provided  that  upon any  adjustment  of the  Warrant  Price as a result  of any
dividend or  distribution  payable in Common Stock or Convertible  Securities or
the reclassification,  subdivision or combination of Common Stock into a greater
or smaller  number of shares,  the  foregoing  figure of $.01 per share (or such
figure as last  adjusted)  shall be adjusted (to the nearest  one-half  cent) in
proportion to the adjustment in the Warrant Price.

         (e) Issuance of Common Stock  Equivalents.  If the Issuer,  at any time
while this  Warrant is  outstanding,  shall  issue any Common  Stock  Equivalent
(other than any shares of  Preferred  Stock or up to  $20,000,000  of any Common
Stock  Equivalent  after the date of the Purchase  Agreement)  and the price per
share for which  Additional  Shares of Common  Stock may be issuable  thereafter
pursuant to such Common Stock Equivalent shall be less than the Per Share Market
Value  then  in  effect,  or  if,  after  any  such  issuance  of  Common  Stock
Equivalents, the price per share for which Additional Shares of Common Stock may
be issuable  thereafter is amended or adjusted (other than pursuant to the terms
of any anti-dilution provisions contained therein), and such price as so amended
shall be less  than the Per  Share  Market  Value in  effect at the time of such
amendment,  then the Warrant Price upon each such issuance or amendment shall be
adjusted as provided in the first  sentence of subsection  (d) of this Section 4
on the basis that (1) the maximum  number of  Additional  Shares of Common Stock
issuable  pursuant to all such Common Stock  Equivalents shall be deemed to have
been issued  (whether or not such Common Stock  Equivalents  are  actually  then
exercisable,  convertible or exchangeable in whole or in part) as of the earlier
of (A) the date on which the Issuer  shall  enter into a firm  contract  for the
issuance of such Common Stock Equivalent,  or (B) the date of actual issuance of
such Common  Stock  Equivalent,  and (2) the  aggregate  consideration  for such
maximum  number of  Additional  Shares of Common Stock shall be deemed to be the
minimum  consideration  received or receivable by the Issuer for the issuance of
such Additional Shares of Common Stock pursuant to such Common Stock Equivalent.
No adjustment of the Warrant Price shall be made under this  subsection (e) upon
the  issuance  of any  Convertible  Security  which is  issued  pursuant  to the
exercise of any warrants or other  subscription or purchase rights therefor,  if
any  adjustment  shall  previously  have been made in the Warrant  Price then in
effect upon the  issuance  of such  warrants  or other  rights  pursuant to this
subsection  (e). If no adjustment  is required  under this  subsection  (e) upon
issuance of any Common Stock Equivalent or once an adjustment is made under this
subsection  (e) based upon the Per Share  Market  Value in effect on the date of
such adjustment,  no further  adjustment shall be made under this subsection (e)
based solely upon a change in the Per Share Market Value after such date.

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         (f)      Other  Provisions  Applicable to Adjustments  Under this
Section 4. The following  provisions  shall be applicable to the making of
adjustments in the Warrant Price hereinbefore provided in Section 4:

                      (i)  Computation  of   Consideration.   The  consideration
         received  by the  Issuer  shall be deemed to be the  following:  to the
         extent that any  Additional  Shares of Common Stock or any Common Stock
         Equivalents shall be issued for a cash consideration, the consideration
         received by the Issuer therefor, or if such Additional Shares of Common
         Stock or  Common  Stock  Equivalents  are  offered  by the  Issuer  for
         subscription,  the subscription price, or, if such Additional Shares of
         Common Stock or Common Stock  Equivalents  are sold to  underwriters or
         dealers for public offering without a subscription offering, the public
         offering  price,  in any  such  case  excluding  any  amounts  paid  or
         receivable  for  accrued  interest  or accrued  dividends  and  without
         deduction of any compensation, discounts, commissions, or expenses paid
         or incurred by the Issuer for or in  connection  with the  underwriting
         thereof or  otherwise  in  connection  with the issue  thereof;  to the
         extent that such issuance shall be for a consideration other than cash,
         then, except as herein otherwise  expressly  provided,  the fair market
         value of such  consideration at the time of such issuance as determined
         in good faith by the Board. The consideration for any Additional Shares
         of Common Stock issuable pursuant to any Common Stock Equivalents shall
         be the  consideration  received by the Issuer for  issuing  such Common
         Stock  Equivalents,  plus the additional  consideration  payable to the
         Issuer upon the  exercise,  conversion or exchange of such Common Stock
         Equivalents.  In  determining  the fair  market  value of any shares of
         Common Stock issued in any transaction, consideration shall be given to
         any fees paid to the investor and/or warrants issued in connection with
         such  Common  Stock  issuance  and the per share  market  value of such
         Common Stock shall be equal to the  quotient of (a) the gross  proceeds
         received by the  Company  minus any fees paid to the  investor  and the
         value (based on the Black  Scholes  method) of the  warrants  issued in
         connection  with  such  transaction,  and (b) the  number  of shares of
         Common Stock issued in connection with such transaction.

                     (ii)  Readjustment of Warrant Price. Upon the expiration or
         termination  of the right to convert,  exchange or exercise  any Common
         Stock  Equivalent  the issuance of which  effected an adjustment in the
         Warrant  Price,  if such Common  Stock  Equivalent  shall not have been
         converted, exercised or exchanged in its entirety, the number of shares
         of Common  Stock deemed to be issued and  outstanding  by reason of the
         fact that they were issuable upon  conversion,  exchange or exercise of
         any such  Common  Stock  Equivalent  shall no longer be computed as set
         forth above,  and the Warrant Price shall  forthwith be readjusted  and

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         thereafter  be the price which it would have been (but  reflecting  any
         other  adjustments in the Warrant Price made pursuant to the provisions
         of this Section 4 after the  issuance of such Common Stock  Equivalent)
         had the  adjustment of the Warrant  Price been made in accordance  with
         the issuance or sale of the number of Additional Shares of Common Stock
         actually  issued upon  conversion,  exchange or issuance of such Common
         Stock Equivalent and thereupon only the number of Additional  Shares of
         Common Stock actually so issued shall be deemed to have been issued and
         only the consideration  actually received by the Issuer (computed as in
         clause  (i) of this  subsection  (f))  shall  be  deemed  to have  been
         received by the Issuer.

                    (iii)  Outstanding  Common  Stock.  The  number of shares of
         Common Stock at any time  outstanding  shall (A) not include any shares
         thereof then directly or indirectly owned or held by or for the account
         of the Issuer or any of its Subsidiaries,  and (B) be deemed to include
         all shares of Common Stock then issuable upon  conversion,  exercise or
         exchange of any then outstanding  Common Stock Equivalents or any other
         evidences of Indebtedness,  shares of Capital Stock (including, without
         limitation,  the Preferred  Stock) or other Securities which are or may
         be at any time  convertible  into or exchangeable  for shares of Common
         Stock or Other Common Stock.

         (g) Other Action  Affecting  Common  Stock.  In case after the Original
Issue Date the Issuer shall take any action  affecting its Common  Stock,  other
than an action described in any of the foregoing  subsections (a) through (f) of
this  Section 4,  inclusive,  and the failure to make any  adjustment  would not
fairly  protect the purchase  rights  represented  by this Warrant in accordance
with the  essential  intent and  principle  of this  Section 4, then the Warrant
Price shall be adjusted in such manner and at such time as the Board may in good
faith determine to be equitable in the circumstances.

         (h)  Adjustment of Warrant Share  Number.  Upon each  adjustment in the
Warrant Price pursuant to any of the foregoing provisions of this Section 4, the
Warrant Share Number shall be adjusted,  to the nearest one hundredth of a whole
share,  to  the  product  obtained  by  multiplying  the  Warrant  Share  Number
immediately  prior to such  adjustment in the Warrant  Price by a fraction,  the
numerator of which shall be the Warrant Price  immediately  before giving effect
to such  adjustment  and the  denominator  of which shall be the  Warrant  Price
immediately  after giving effect to such  adjustment.  If the Issuer shall be in
default  under any  provision  contained  in  Section 3 of this  Warrant so that
shares  issued at the Warrant Price  adjusted in accordance  with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing  sentence shall  nonetheless be made and the Holder of this
Warrant  shall be  entitled  to purchase  such  greater  number of shares at the
lowest price at which such shares may then be validly  issued  under  applicable
law. Such exercise  shall not  constitute a waiver of any claim arising  against
the Issuer by reason of its default under Section 3 of this Warrant.

                                       10
<PAGE>
         (i) Form of Warrant  after  Adjustments.  The form of this Warrant need
not be changed because of any adjustments in the Warrant Price or the number and
kind of Securities purchasable upon the exercise of this Warrant.

         5. Notice of  Adjustments.  Whenever the Warrant Price or Warrant Share
Number  shall be adjusted  pursuant  to Section 4 hereof  (for  purposes of this
Section  5, each an  "adjustment"),  the Issuer  shall,  at its  expense,  cause
independent  accountants of recognized  standing selected by the Issuer (who may
be the independent  public accountants then auditing the books of the Issuer) to
compute such adjustment and prepare and execute a certificate  setting forth, in
reasonable  detail,  the  event  requiring  the  adjustment,  the  amount of the
adjustment,  the method by which such  adjustment  was  calculated  (including a
description of the basis on which the Board made any  determination  hereunder),
and the Warrant  Price and Warrant  Share  Number  after  giving  effect to such
adjustment,  and shall cause copies of such  certificate  to be delivered to the
Holder of this Warrant promptly after each adjustment.

         6.  Fractional  Shares.  No fractional  shares of Warrant Stock will be
issued in connection  with and exercise  hereof,  but in lieu of such fractional
shares,  the Issuer  shall make a cash payment  therefor  equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.

         7. Cancellation. The Issuer, at its option, may cancel all or a portion
of this Warrant if the initial  Holder of this Warrant  fails to accept any Draw
Down Notice (as such term is defined in the  Purchase  Agreement)  issued by the
Issuer in accordance  with the Purchase  Agreement or purchase any Shares on any
Settlement Date (as such term is defined in the Purchase Agreement).

         8.       Definitions.  For the purposes of this Warrant, the following
terms have the following meanings:

         "Additional  Shares of Common  Stock"  means all shares of Common Stock
issued by the Issuer  after the  Original  Issue  Date,  and all shares of Other
Common,  if any, issued by the Issuer after the Original Issue Date,  except the
Warrant Stock,  shares of Common Stock or Other Common Stock issued  pursuant to
the Purchase  Agreement,  the Other  Purchase  Agreement,  up to  $20,000,000 of
Common Stock or Other Common issued after the date of the Purchase  Agreement in
an equity  financing,  and shares of Common  Stock  issued upon the  exercise of
warrants and options outstanding on the date hereof.

         "Articles of Incorporation"  means the Articles of Incorporation of the
Issuer as in effect on the Original  Issue Date,  and as hereafter  from time to
time amended,  modified,  supplemented  or restated in accordance with the terms
hereof and thereof and pursuant to applicable law.

                                       11
<PAGE>
         "Board" shall mean the Board of Directors of the Issuer.

         "Capital  Stock" means and includes (i) any and all shares,  interests,
participations  or other  equivalents  of or interests  in (however  designated)
corporate  stock,  including,   without  limitation,   shares  of  preferred  or
preference stock, (ii) all partnership interests (whether general or limited) in
any Person which is a  partnership,  (iii) all  membership  interests or limited
liability  company  interests  in any limited  liability  company,  and (iv) all
equity or ownership interests in any Person of any other type.

         "Common Stock" means the Common Stock,  no par value, of the Issuer and
any other Capital Stock into which such stock may hereafter be changed.

         "Common Stock  Equivalent"  means any Convertible  Security or warrant,
option or other right to  subscribe  for or purchase  any  Additional  Shares of
Common Stock or any Convertible Security.

         "Convertible  Securities"  means evidences of  Indebtedness,  shares of
Capital Stock or other  Securities  which are or may be at any time  convertible
into  or  exchangeable   for  Additional   Shares  of  Common  Stock.  The  term
"Convertible Security" means one of the Convertible Securities.

         "Draw Down  Warrants"  shall have the meaning  assigned to such term in
the Purchase Agreement.

         "Governmental   Authority"  means  any   governmental,   regulatory  or
self-regulatory  entity,  department,  body,  official,  authority,  commission,
board, agency or instrumentality,  whether federal,  state or local, and whether
domestic or foreign.

         "Holder" means Acqua Wellington North American Equities Fund, Ltd.

         "Independent Appraiser" means a nationally recognized or major regional
investment  banking firm or firm of independent  certified public accountants of
recognized standing (which may be the firm that regularly examines the financial
statements  of  the  Issuer)  that  is  regularly  engaged  in the  business  of
appraising  the Capital  Stock or assets of  corporations  or other  entities as
going concerns, and which is not affiliated with either the Issuer or the Holder
of any Warrant.

         "Issuer" means Value America, Inc., a Virginia corporation, and its
         successors.

         "NASDAQ" means the National Association of Securities Dealers Automated
         Quotation System.

         "Original Issue Date" means May 17, 2000.

                                       12
<PAGE>
         "Other Common" means any other Capital Stock of the Issuer of any class
which shall be authorized at any time after the date of this Warrant (other than
Common Stock) and which shall have the right to participate in the  distribution
of earnings and assets of the Issuer without limitation as to amount.

         "Other  Purchase  Agreement"  means the  Preferred  Stock  and  Warrant
Purchase Agreement,  to be entered into by the Issuer,  certain  stockholders of
the Issuer and certain other entities.

         "Person" means an individual,  corporation,  limited liability company,
partnership,  joint stock company,  trust,  unincorporated  organization,  joint
venture, Governmental Authority or other entity of whatever nature.

         "Per Share Market Value" means on any  particular  date (a) the closing
bid price  per share of the  Common  Stock on such date on The  Nasdaq  National
Market,  The Nasdaq SmallCap Market or other registered  national stock exchange
on which the  Common  Stock is then  listed or if there is no such price on such
date,  then the closing bid price on such  exchange or  quotation  system on the
date nearest  preceding such date, or (b) if the Common Stock is not listed then
on The Nasdaq  National  Market,  The Nasdaq  SmallCap  Market or any registered
national  stock  exchange,  the closing bid price for a share of Common Stock as
reported by NASDAQ or in the National  Quotation Bureau  Incorporated or similar
organization or agency  succeeding to its functions of reporting  prices) at the
close of business on such date,  or (c) if the Common Stock is not then reported
by NASDAQ or the National Quotation Bureau Incorporated (or similar organization
or agency succeeding to its functions of reporting prices),  then the average of
the "Pink Sheet" quotes for the relevant period,  as determined in good faith by
the  holder,  or (d) if the Common  Stock is not then  publicly  traded the fair
market  value  of a share  of  Common  Stock  as  determined  by an  Independent
Appraiser selected by the Issuer;  provided,  however that all determinations of
the Per  Share  Market  Value  shall be  appropriately  adjusted  for any  stock
dividends,  stock splits or other similar  transactions  during such period. The
determination  of fair market value by an Independent  Appraiser  shall be based
upon the fair market value of the Issuer  determined on a going concern basis as
between a willing  buyer  and a willing  seller  and  taking  into  account  all
relevant  factors  determinative of value, and shall be final and binding on all
parties.  In determining the fair market value of any shares of Common Stock, no
consideration shall be given to any restrictions on transfer of the Common Stock
imposed by agreement or by federal or state securities laws, or to the existence
or absence of, or any limitations on, voting rights.

         "Preferred  Stock"  means  the  5%  Cumulative   Convertible  Series  D
Preferred Stock to be issued pursuant to the Other Purchase Agreement.

         "Purchase Agreement" means the Common Stock Purchase Agreement dated as
of May 10, 2000 between the Issuer and Acqua Wellington North American  Equities
Fund, Ltd.

                                       13
<PAGE>
         "Securities" means any debt or equity securities of the Issuer, whether
now or hereafter authorized, any instrument convertible into or exchangeable for
Securities or a Security,  and any option, warrant or other right to purchase or
acquire any Security. "Security" means one of the Securities.

         "Securities  Act" means the Securities Act of 1933, as amended,  or any
similar federal statute then in effect.

         "Subsidiary"  means any  corporation at least 50% of whose  outstanding
Voting Stock shall at the time be owned  directly or indirectly by the Issuer or
by one or  more of its  Subsidiaries,  or by the  Issuer  and one or more of its
Subsidiaries.

         "Trading  Day" means (a) a day on which the  Common  Stock is traded on
The Nasdaq National Market or the Nasdaq SmallCap  Market,  or (b) if the Common
Stock is not listed on The Nasdaq National Market or the Nasdaq SmallCap Market,
a day on which the Common Stock is traded on any other registered national stock
exchange,  or (c) if the  Common  Stock is not  quoted  on  NASDAQ  or any other
registered national stock exchange, a day on which the Common Stock is quoted in
the  over-the-counter  market  as  reported  by the  National  Quotation  Bureau
Incorporated (or any similar  organization or agency succeeding its functions of
reporting prices); provided, however, that in the event that the Common Stock is
not listed or quoted as set forth in (a),  (b) and (c) hereof,  then Trading Day
shall mean any day except  Saturday,  Sunday and any day which  shall be a legal
holiday  or a day on which  banking  institutions  in the  State of New York are
authorized or required by law or other government action to close.

         "Term" has the meaning specified in Section 1 hereof.

         "Voting  Stock",  as applied to the Capital  Stock of any  corporation,
means Capital Stock of any class or classes (however designated) having ordinary
voting  power for the  election  of a  majority  of the  members of the Board of
Directors  (or other  governing  body) of such  corporation,  other than Capital
Stock having such power only by reason of the happening of a contingency.

         "VWAP"  means the  daily  volume  weighted  average  price  (based on a
Trading Day from 9:30 a.m. to 4:00 p.m.,  eastern time) of the Company on Nasdaq
National Market (or any successor thereto) (or, if the Common Stock ceases to be
traded on the Nasdaq  National  Market,  but is traded on any Other Exchange (as
defined  in the  Purchase  Agreement),  such price on such  Other  Exchange)  as
reported by Bloomberg Financial LP using AQR function.

                                       14
<PAGE>
         "Warrants"  means the Warrants issued and sold pursuant to the Purchase
Agreement,  including,  without limitation, this Warrant, and any other warrants
of like tenor issued in substitution or exchange for any thereof pursuant to the
provisions  of  Section  2(c),  2(d) or  2(e)  hereof  or of any of  such  other
Warrants.

         "Warrant Price" means initially  $2.35;  provided,  however,  that such
exercise  price  shall be reduced  to the  exercise  price of the first  250,000
shares of Common Stock  issuable  upon exercise of the Draw Down Warrants if the
exercise price of such Draw Down Warrants would have been less than the exercise
price of this Warrant had such Draw Down Warrant been issued,  as such price may
be adjusted from time to time as shall result from the adjustments  specified in
Section 4 hereof.

         "Warrant Share Number" means at any time the aggregate number of shares
of Warrant  Stock  which may at such time be  purchased  upon  exercise  of this
Warrant,  after giving  effect to all prior  adjustments  and  increases to such
number made or required to be made under the terms hereof.

         "Warrant  Stock"  means  Common  Stock  issuable  upon  exercise of any
Warrant or Warrants or otherwise issuable pursuant to any Warrant or Warrants.

         9.       Other Notices.  In case at any time:
                  -------------

                                    (A)     the Issuer shall make any
                                            distributions to the holders of
                                            Common Stock; or

                                    (B)     the  Issuer  shall   authorize   the
                                            granting   to  all  holders  of  its
                                            Common  Stock of rights to subscribe
                                            for  or   purchase   any  shares  of
                                            Capital Stock of any class or of any
                                            Common    Stock    Equivalents    or
                                            Convertible   Securities   or  other
                                            rights; or

                                    (C)     there shall be any reclassification
                                            of the Capital Stock of the Issuer;
                                           or

                                    (D)     there shall be any capital
                                            reorganization by the Issuer; or

                                    (E)     there shall be any (i) consolidation
                                            or merger  involving  the  Issuer or
                                            (ii)   sale,   transfer   or   other
                                            disposition of all or  substantially
                                            all of the Issuer's property, assets
                                            or  business  (except  a  merger  or
                                            other  reorganization  in which  the
                                            Issuer   shall   be  the   surviving

                                       15
<PAGE>
                                            corporation   and  its   shares   of
                                            Capital  Stock shall  continue to be
                                            outstanding and unchanged and except
                                            a   consolidation,   merger,   sale,
                                            transfer   or   other    disposition
                                            involving       a       wholly-owned
                                            Subsidiary); or

                                    (F)     there  shall  be  a   voluntary   or
                                            involuntary dissolution, liquidation
                                            or  winding-up  of the Issuer or any
                                            partial liquidation of the Issuer or
                                            distribution  to  holders  of Common
                                            Stock;

then, in each of such cases,  the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer  shall close or a record  shall
be taken for such dividend,  distribution  or  subscription  rights or (ii) such
reorganization,    reclassification,    consolidation,    merger,   disposition,
dissolution,  liquidation or  winding-up,  as the case may be, shall take place.
Such notice also shall  specify the date as of which the holders of Common Stock
of record shall  participate  in such  dividend,  distribution  or  subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities   or   other   property   deliverable   upon   such   reorganization,
reclassification,  consolidation, merger, disposition,  dissolution, liquidation
or  winding-up,  as the case may be. Such notice  shall be given at least twenty
days prior to the action in question  and not less than twenty days prior to the
record  date or the date on which the  Issuer's  transfer  books  are  closed in
respect thereto.

         10. Amendment and Waiver. Any term, covenant, agreement or condition in
this  Warrant may be amended,  or  compliance  therewith  may be waived  (either
generally   or  in  a   particular   instance   and  either   retroactively   or
prospectively),  by a written instrument or written instruments  executed by the
Issuer and the Holder; provided, however, that no such amendment or waiver shall
reduce the Warrant Share Number,  increase the Warrant Price, shorten the period
during  which this  Warrant may be  exercised  or modify any  provision  of this
Section 10 without the consent of the Holder of this Warrant.

         11.      Governing  Law.  THIS  WARRANT  SHALL BE GOVERNED BY AND
CONSTRUED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO PRINCIPLES OF CONFLICTS OF LAW.

         12. Notices.  Any and all notices or other communications or deliveries
required or permitted to be provided  hereunder shall be in writing and shall be
deemed given and  effective on the earlier of (i) the date of  transmission,  if
such  notice or  communication  is  delivered  via  facsimile  at the  facsimile
telephone number specified for notice prior to 5:00 p.m., eastern standard time,
on a Business Day, (ii) the Business Day after the date of transmission, if such
notice or  communication  is delivered via facsimile at the facsimile  telephone
number specified for notice later than 5:00 p.m.,  eastern standard time, on any
date and earlier than 11:59 p.m., eastern standard time, on such date, (iii) the
Business Day  following the date of mailing,  if sent by  nationally  recognized
overnight  courier  service  or (iv)  actual  receipt  by the party to whom such
notice is required to be given. The addresses for such  communications  shall be
with respect to the Holder of this Warrant or of Warrant  Stock issued  pursuant
hereto,  addressed to such Holder at its last known address or facsimile  number
appearing  on the books of the  Issuer  maintained  for such  purposes,  or with
respect to the Issuer, addressed to:

                                       16
<PAGE>

                               Value America, Inc.
                                  337 Rio Road
                            Charlottesville, VA 22902
                          Attention: Glenda M. Dorchak
                          Facsimile No.: (804) 817-7884

     or to such other address or addresses or facsimile number or numbers as any
such party may most  recently  have  designated  in writing to the other parties
hereto by such notice.  Copies of notices to the Issuer shall be sent to Simpson
Thacher & Bartlett,  425 Lexington Avenue, New York 10017,  Attention:  Marni J.
Lerner,  Esq.,  Facsimile no.: (212) 455-2502.  Copies of notices to the Holders
shall be sent to Parker Chapin LLP, The Chrysler Building, 405 Lexington Avenue,
New York, New York 10174,  Attention:  Christopher S. Auguste,  Esq.,  Facsimile
no.: (212) 704-6288.

         13. Warrant Agent.  The Issuer may, by written notice to each Holder of
this  Warrant,  appoint an agent having an office in New York,  New York for the
purpose  of issuing  shares of Warrant  Stock on the  exercise  of this  Warrant
pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant pursuant
to  subsection  (d) of Section 2 hereof or replacing  this  Warrant  pursuant to
subsection (d) of Section 3 hereof, or any of the foregoing,  and thereafter any
such  issuance,  exchange or  replacement,  as the case may be, shall be made at
such office by such agent.

         14.  Remedies.  The Issuer  stipulates  that the remedies at law of the
Holder of this Warrant in the event of any default or threatened  default by the
Issuer in the performance of or compliance with any of the terms of this Warrant
are not and will not be adequate and that,  to the fullest  extent  permitted by
law,  such  terms may be  specifically  enforced  by a decree  for the  specific
performance  of any agreement  contained  herein or by an  injunction  against a
violation of any of the terms hereof or otherwise.

         15.      Successors  and Assigns.  This Warrant and the rights
evidenced  hereby shall inure to the benefit of and be binding upon the
successors and assigns of the Issuer, the Holder hereof and shall be enforceable
by any such Holder.

         16.  Modification and Severability.  If, in any action before any court
or agency  legally  empowered to enforce any  provision  contained  herein,  any
provision  hereof is found to be  unenforceable,  then such  provision  shall be
deemed modified to the extent  necessary to make it enforceable by such court or
agency.  If any such provision is not  enforceable as set forth in the preceding
sentence,  the  unenforceability  of such  provision  shall not affect the other
provisions  of this  Warrant,  but this  Warrant  shall be  construed as if such
unenforceable provision had never been contained herein.

                                       17
<PAGE>

         17.      Headings.  The headings of the Sections of this Warrant are
for  convenience of reference only and shall not, for any purpose, be deemed a
part of this Warrant.

                                       18
<PAGE>

         IN WITNESS WHEREOF,  the Issuer has executed this Warrant as of the day
and year first above written.

                                               VALUE AMERICA, INC.

                                               By:_/s/ Glenda M. Dorchak
                                                  Name: Glenda M. Dorchak
                                                  Title: Chief Executive Officer

                                       19
<PAGE>

                                  EXERCISE FORM

[NAME OF ISSUER]

The  undersigned  _______________,  pursuant  to the  provisions  of the  within
Warrant,   hereby   elects  to  purchase   _____   shares  of  Common  Stock  of
___________________ covered by the within Warrant.

Dated: _________________                Signature        _______________________

                                        Address  _____________________
                                                 _____________________

                           FOR USE BY THE ISSUER ONLY:

This Warrant No. W-_____  canceled (or transferred or exchanged) this _____ day
of  ___________,  _____,  shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.

                                       20<PAGE>

                                                                    Exhibit 10.1

                         COMMON STOCK PURCHASE AGREEMENT

                            Dated as of May 10, 2000

                                 by and between

                               VALUE AMERICA, INC.

                                       and

                                ACQUA WELLINGTON
                       NORTH AMERICAN EQUITIES FUND, LTD.

                                       1
<PAGE>

                                TABLE OF CONTENTS

                                                                            Page

ARTICLE I         Definitions                                                 1

   SECTION 1.1    DEFINITIONS.                                                1

ARTICLE II        Purchase and Sale of Common Stock                           3

   SECTION 2.1    PURCHASE AND SALE OF STOCK3
   SECTION 2.2    THE SHARES                                                  3
   SECTION 2.3    THE WARRANTS                                                3
   SECTION 2.4    CLOSING                                                     4

ARTICLE III       Representations and Warranties                              4

   SECTION 3.1    REPRESENTATIONS AND WARRANTIES OF THE COMPANY               4
   SECTION 3.2    REPRESENTATION, WARRANTIES AND COVENANTS OF THE PURCHASER  11

ARTICLE IV        Covenants                                                  13

   SECTION 4.1    SECURITIES                                                 13
   SECTION 4.2    REGISTRATION AND LISTING                                   13
   SECTION 4.3    REGISTRATION STATEMENT.                                    13
   SECTION 4.4    COMPLIANCE WITH LAWS.                                      14
   SECTION 4.5    KEEPING OF RECORDS AND BOOKS OF ACCOUNT                    14
   SECTION 4.6    REPORTING REQUIREMENTS                                     14
   SECTION 4.7    OTHER AGREEMENTS                                           14
   SECTION 4.8    NON-PUBLIC INFORMATION                                     15
   SECTION 4.9    NO STOP ORDERS                                             15
   SECTION 4.10   AMENDMENTS TO THE REGISTRATION STATEMENT                   16
   SECTION 4.11   PROSPECTUS DELIVERY                                        16
   SECTION 4.12   LEGENDS                                                    16
   SECTION 4.13   CONFIRMATION OF OWNERSHIP                                  16

ARTICLE V         Conditions to Closing, Draw Downs and Warrant Exercise     17

   SECTION 5.1    CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER
                  TO ENTER THIS AGREEMENT                                    17
   SECTION 5.2    CONDITIONS PRECEDENT TO THE OBLIGATION OF THE PURCHASER
                  TO ACCEPT A DRAW DOWN OR PURCHASE SHARES UPON EXERCISE
                  OF THE WARRANTS AND PURCHASE THE SHARES                    17
   SECTION 5.3    CONDITIONS  PRECEDENT TO THE OBLIGATION OF THE COMPANY
                  TO ISSUE SHARES PURSUANT TO A DRAW DOWN OR EXERCISE
                  OF WARRANTS                                                18

                                       i
<PAGE>
ARTICLE VI        Draw Down Terms; Warrants                                  19

   SECTION 6.1    DRAW DOWN TERMS                                            19
   SECTION 6.2    DRAW DOWN WARRANTS                                         21
   SECTION 6.3    WARRANT A AND WARRANT B                                    21

ARTICLE VII       Legends                                                    22

   SECTION 7.1    LEGEND                                                     22
   SECTION 7.2    NO OTHER LEGEND OR STOCK TRANSFER RESTRICTIONS             23
   SECTION 7.3    PURCHASER'S COMPLIANCE                                     23

ARTICLE VIII      Termination                                                24

   SECTION 8.1    TERMINATION BY MUTUAL CONSENT                              24
   SECTION 8.2    OTHER TERMINATION                                          24
   SECTION 8.3    EFFECT OF TERMINATION                                      24

ARTICLE IX        Indemnification                                            24

   SECTION 9.1    GENERAL INDEMNITY.                                         24
   SECTION 9.2    INDEMNIFICATION PROCEDURES                                 26

ARTICLE X         Miscellaneous                                              27

   SECTION 10.1   FEES AND EXPENSES                                          27
   SECTION 10.2   SPECIFIC ENFORCEMENT, CONSENT TO JURISDICTION.             27
   SECTION 10.3   ENTIRE AGREEMENT; AMENDMENT                                27
   SECTION 10.4   NOTICES                                                    27
   SECTION 10.5   WAIVERS                                                    28
   SECTION 10.6   HEADINGS                                                   29
   SECTION 10.7   SUCCESSORS AND ASSIGNS                                     29
   SECTION 10.8   GOVERNING LAW                                              29
   SECTION 10.9   SURVIVAL                                                   29
   SECTION 10.10  COUNTERPARTS                                               29
   SECTION 10.11  PUBLICITY                                                  29
   SECTION 10.12  SEVERABILITY                                               29
   SECTION 10.13  FURTHER ASSURANCES                                         30
   SECTION 10.14  CONFIDENTIALITY                                            30

                                       ii
<PAGE>

                         COMMON STOCK PURCHASE AGREEMENT

         This COMMON STOCK PURCHASE  AGREEMENT (this "Agreement") is dated as of
May 10, 2000 by and between Value  America,  Inc., a Virginia  corporation  (the
"Company"),  and Acqua Wellington North American  Equities Fund, Ltd., a company
organized under the laws of the Commonwealth of The Bahamas (the "Purchaser").

         WHEREAS,  the parties  desire  that,  upon the terms and subject to the
conditions  contained herein, the Company shall issue and sell to the Purchaser,
from time to time as provided  herein,  and the Purchaser shall purchase,  up to
$60,000,000 of the Common Stock (as defined below); and

         WHEREAS,  such investments will be made in reliance upon the provisions
of Section 4(2) and ("Section  4(2)") and Regulation D  ("Regulation  D") of the
United States  Securities Act of 1933, as amended and the rules and  regulations
promulgated  thereunder (the "Securities Act"), and/or upon such other exemption
from the  registration  requirements  of the  Securities Act as may be available
with respect to any or all of the purchases of Common Stock to be made hereunder
from time to time.

         NOW, THEREFORE, the parties hereto agree as follows:

                                   Definitions
                                  Definitions.
     (a)  "Commission"  shall have the meaning  assigned to such term in Section
3.1(f) hereof.

     (b) "Commission  Documents" shall have the meaning assigned to such term in
Section 3.1(f) hereof.

     (c) "Commission Filings" means the Company's Form 10-K (as amended) for the
fiscal year ended  December 31, 1999,  and all other filings made by the Company
after the date hereof pursuant to the Securities Exchange Act of 1934.

     (d) "Draw  Down"  shall have the  meaning  assigned to such term in Section
6.1(a) hereof.

     (e)  "Draw  Down  Amount"  means  the  actual  amount  of a Draw Down up to
$16,000,000.
<PAGE>
     (f) "Draw Down Discount Percentage" means (i) 90% if the Threshold Price is
equal to and greater  than $.35 but less than $1.00,  (ii) 93% if the  Threshold
Price is equal to or  greater  than  $1.00 but less than or equal to $3.00,  and
(iii) for every $1.00 increase of the Threshold  Price above $3.00 up to $16.00,
such draw down discount percentage shall increase by 0.10%.

     (g) "Draw Down Exercise Date" shall have the meaning  assigned to such term
in Section 5.3 hereof.

     (h) "Draw Down  Notice"  shall have the  meaning  assigned  to such term in
Section 6.1(i) hereof.

     (i)  "Draw  Down  Pricing  Period"  shall  mean a  period  of  twenty  (20)
consecutive  trading days on the Nasdaq  National  Market or any other  relevant
market on which the Common Stock is listed  starting  with the first trading day
specified in a Draw Down Notice or such other period of consecutive trading days
as mutually agreed upon by the Company and the Purchaser.

     (j)  "Material  Adverse  Effect"  shall  mean any  effect on the  business,
results of operations,  properties, assets or financial condition of the Company
that is material  and adverse to the  Company and its  subsidiaries,  taken as a
whole and/or any condition,  circumstance,  or situation that would prohibit the
Company to enter into and perform any of its obligations under this Agreement in
any material respect.

     (k) "Maximum  Commitment"  shall have the meaning  assigned to such term in
Section 2.1 hereof.

     (l) "Prospectus" as used in this Agreement means the prospectus in the form
included  in the  Registration  Statement,  as  supplemented  from  time to time
pursuant to Rule 424(b) of the Securities Act.

     (m) "Registration  Statement" shall mean the registration statement on Form
S-3,  to  be  filed  with  the  Securities  and  Exchange   Commission  for  the
registration  for resale of the Shares,  as such  Registration  Statement may be
amended from time to time.

     (n) "Settlement  Amount" shall mean the sum of the Draw Down Amount and the
exercise price of any Warrants which have been exercised.

     (o)  "Settlement  Date"  shall have the  meaning  assigned  to such term in
Section 6.1(d) hereof.

     (p) "Shares"  shall mean the shares of Common Stock of the Company that may
be  purchased  hereunder  pursuant to Draw Down and/or upon the  exercise of the
Warrants.

     (q)  "Threshold  Price" is the lowest VWAP at which the  Company  will sell
Shares during each Draw Down Pricing Period.

                                       2
<PAGE>
    (r) "VWAP" shall mean the daily volume  weighted  average price (based on a
trading day from 9:30 a.m. to 4:00 p.m.,  eastern time) of the Company's  Common
Stock on the Nasdaq  National  Market (or any  successor  thereto)  (or,  if the
Common Stock ceases to be traded on the Nasdaq National Market, but is traded on
an Other  Exchange (as defined in Section 4.2 hereof),  such price on such Other
Exchange) as reported by Bloomberg Financial LP using the AQR function.

     (s)  "Warrants"  shall mean the Closing  Warrants,  the Draw Down Warrants,
Warrant A and Warrant B.

     Section 2.1 Purchase  and Sale of Common Stock  Purchase and Sale of Stock.
Subject to the terms and conditions of this  Agreement,  the Company shall issue
and sell to the Purchaser and the Purchaser  shall purchase from the Company (i)
up to $60,000,000  (the "Maximum  Commitment") of the Company's common stock, no
par value per share (the "Common Stock"), based on Draw Downs in accordance with
Section 6.1 hereof and (ii) the Warrants in accordance  with Section 6.2 hereof.
In no event shall the amount of Common  Stock  required to be  purchased  by the
Purchaser  exceed (x)  $16,000,000  per Draw Down  during any Draw Down  Pricing
Period or (y) in total the Maximum Commitment.

     Section 2.2 The Shares.  The Company has  authorized  and has  reserved and
covenants  to continue to reserve,  subject to Section  4.4(b)  hereof,  free of
preemptive  rights  and  other  similar   contractual  rights  of  stockholders,
21,850,000  shares  of its  Common  Stock to cover  the  Shares  to be issued in
connection with all Draw Downs and the exercise of all Warrants.

     Section 2.3 The Warrants. Within five business days of the date hereof, the
Company  shall issue to the  Purchaser a warrant to purchase  250,000  shares of
Common Stock (the "Closing  Warrants") at an exercise price of the lesser of (i)
$3.50 and (ii) 120% of the VWAP on the Closing Date,  which shall be exercisable
for a period of three (3) years  commencing  on the earlier of (x) the date that
Purchaser  has  consummated  one  Draw  Down or (y) 120  days  from  the date of
issuance;  provided,  however,  that the exercise price of the Closing  Warrants
shall be reduced to the exercise  price for the first  250,000  shares of Common
Stock  issuable  upon  exercise of the Draw Down  Warrants  that would have been
issued  pursuant to Section 6.2 hereof if the  exercise  price of such Draw Down
Warrants is less than the exercise  price of the Closing  Warrants.  The Closing
Warrants shall not be subject to rescission or  cancellation  by the Company for
any reason,  including,  but not limited to, the  Company  never  providing  the
Purchaser with a Draw Down Notice; provided, however, the Company may rescind or
cancel the Closing  Warrants if the Purchaser  fails to purchase Shares pursuant
to a Draw Down Notice made in accordance with the terms hereof. In addition, the
Company will issue the Draw Down  Warrants,  Warrant A and Warrant B pursuant to
Sections 6.2 and 6.3 hereof.  The Closing  Warrants will be credited against the
Draw Down Warrants issuable pursuant to Section 6.2 hereof.

                                       3
<PAGE>
     Section 2.4 Closing.  In  consideration of and in express reliance upon the
representations,  warranties, covenants, terms and conditions of this Agreement,
the Company  agrees to issue and sell to the Purchaser and the Purchaser  agrees
to  purchase  from the  Company,  that  number  of the  Shares  to be  issued in
connection  with each Draw Down.  The closing of the  execution  and delivery of
this Agreement (the "Closing")  shall take place at the offices of Parker Chapin
LLP, The Chrysler  Building,  405 Lexington  Avenue,  New York, NY 10174 at 5:00
p.m.  Eastern  Time on (i) the date  that the  closing  conditions  set forth in
Sections 5.1 and 5.2 hereof have been  satisfied  or waived,  or (ii) such other
time and place or on such date as the  Purchaser  and the Company may agree upon
(the "Closing  Date").  Each party shall deliver all documents,  instruments and
writings required to be delivered by such party pursuant to this Agreement at or
prior to the Closing.  On the date hereof,  the Purchaser shall have received an
opinion of one or more  counsels to the Company,  dated the date hereof,  in the
forms attached as Exhibit A hereto. At or prior to the Closing,  the Irrevocable
Transfer Agent  Instructions,  in the form of Exhibit B attached  hereto,  shall
have  been  delivered  to the  Purchaser  and  acknowledged  in  writing  by the
Company's transfer agent.

                                  ARTICLE III

                         Representations and Warranties

     Section 3.1  Representations  and  Warranties  of the Company.  The Company
hereby makes the following  representations  and  warranties  to the  Purchaser:

     (a)  Organization,  Good  Standing and Power.  The Company is a corporation
duly  incorporated,  validly  existing  and in good  standing  under the laws of
Virginia and has the  requisite  corporate  power to own,  lease and operate its
properties and assets and to conduct its business as it is now being  conducted.
As of the date hereof, the Company does not have any subsidiaries (as defined in
Section  3.1(g))  except as set forth in the  Company's  most  recent Form 10-K,
including the accompanying  financial  statements (as amended, the "Form 10-K"),
or in the  Company's  most  recent Form 10-Q (the "Form  10-Q"),  or on Schedule
3.1(g) attached  hereto.  The Company and each such subsidiary is duly qualified
to do  business  as a  foreign  corporation  and is in good  standing  in  every
jurisdiction in which the nature of the business  conducted or property owned by
it makes such  qualification  necessary except for any jurisdiction in which the
failure to be so qualified would not have a Material Adverse Effect.

     (b)  Authorization;  Enforcement.  The Company has the requisite  corporate
power and  authority to enter into and perform this  Agreement  and to issue and
sell the Shares in accordance with the terms hereof. The execution, delivery and
performance of this Agreement by the Company and the  consummation  by it of the
transactions  contemplated  hereby have been duly and validly  authorized by all
necessary  corporate  action,  and, except as contemplated by Section 3.1(e) and
except  that the  Company  cannot  issue more than 19.9% of the number of shares
outstanding  on the date hereof to the Purchaser  (including,  for this purpose,
shares issuable upon exercise of the Warrants) (the "Nasdaq Number") without the
approval  of the  holders of a majority  of the votes cast by the holders of the
Common Stock or a waiver by Nasdaq (the "Nasdaq  Approval"),  no further consent
or  authorization  of the Company or its Board of Directors or  stockholders  is
required.  This  Agreement  has been duly executed and delivered by the Company.

                                       4
<PAGE>
This  Agreement  constitutes  a valid  and  binding  obligation  of the  Company
enforceable  against the Company in  accordance  with its terms,  except as such
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,   moratorium,  liquidation,  conservatorship,   receivership  or
similar laws relating to, or affecting  generally the  enforcement of creditor's
rights and remedies or by other equitable principles of general application.

     (c)  Capitalization.  The  authorized  capital stock of the Company and the
shares  thereof  issued and  outstanding  as of April 28,  2000 are set forth on
Schedule 3.1(c) attached hereto.  All of the outstanding shares of the Company's
Common  Stock  have been duly and  validly  authorized,  and are fully  paid and
non-assessable. Except as set forth in this Agreement, the Commission Documents,
the Commission  Filings or on Schedule 3.1(c) attached  hereto,  as of April 28,
2000,  no  shares  of  Common  Stock  are  entitled  to  preemptive   rights  or
registration  rights  and there are no  outstanding  options,  warrants,  scrip,
rights to subscribe to, call or commitments of any character whatsoever relating
to, or securities or rights convertible into, any shares of capital stock of the
Company.  Furthermore,  except as set forth in this  Agreement,  the  Commission
Documents,  the Commission  Filings or on Schedule 3.1(c) attached hereto, as of
the  date  hereof,  there  are no  contracts,  commitments,  understandings,  or
arrangements  by which the  Company is or may become  bound to issue  additional
shares of the  capital  stock of the Company or  options,  securities  or rights
convertible  into shares of capital  stock of the Company.  Except for customary
transfer  restrictions  contained in  agreements  entered into by the Company in
order to sell restricted securities and as set forth on Schedule 3.1(c) attached
hereto,  as of the date  hereof,  the  Company  is not a party to any  agreement
granting  registration rights to any person with respect to any of its equity or
debt securities.  The Company is not a party to, and it has no knowledge of, any
agreement  restricting the voting or transfer of any shares of the capital stock
of the Company. The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing complied
with all applicable  federal and state securities laws, and no stockholder has a
right of rescission or damages with respect  thereto which would have a Material
Adverse  Effect.  The Company has  furnished or made  available to the Purchaser
true and correct copies of the Company's  Articles of Incorporation as in effect
on the date hereof (the  "Articles"),  and the Company's  Bylaws as in effect on
the date hereof (the "Bylaws").

     (d) Issuance of Shares.  Assuming the accuracy of the  representations  and
warranties  of the  Purchaser  contained  herein,  the sale and  issuance of the
Shares in accordance with the terms and on the basis of the  representations and
warranties  set forth in this  Agreement  will be exempt  from the  registration
requirements  of the Securities Act. The Shares have been duly authorized by all
necessary corporate action (subject,  in the case of the Shares in excess of the
Nasdaq  Number the Nasdaq  Approval)  and, when paid for or issued in accordance
with the terms hereof, the Shares shall be validly issued and outstanding, fully
paid and  non-assessable,  and the  Purchaser  shall be  entitled  to all rights
accorded to a holder of Common Stock.

     (e) No Conflicts.  Except as set forth on Schedule 3.1(e) attached  hereto,
the execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions  contemplated  herein do not (i)
violate any provision of the Company's  Articles or Bylaws,  (ii) conflict with,
or  constitute a default (or an event which with notice or lapse of time or both
would  become a default)  under,  or give to others  any rights of  termination,

                                       5
<PAGE>
amendment,  acceleration or cancellation of, any material  agreement,  mortgage,
deed of trust,  indenture,  note, bond, license, lease agreement,  instrument or
obligation  to which  the  Company  is a party,  (iii)  create or impose a lien,
charge or  encumbrance on any property of the Company under any agreement or any
commitment  to which the  Company is a party or by which the Company is bound or
by which any of its respective properties or assets are bound, or (iv) result in
a violation of any federal,  state, local or foreign statute,  rule, regulation,
order,  judgment  or decree  (including  federal and state  securities  laws and
regulations)  applicable to the Company or any of its  subsidiaries  or by which
any  property  or asset of the Company or any of its  subsidiaries  are bound or
affected,  except,  in all cases,  for such conflicts,  defaults,  terminations,
amendments,   acceleration,   cancellations   and   violations   as  would  not,
individually or in the aggregate, have a Material Adverse Effect. The Company is
not required under federal, state or local law, rule or regulation to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency in order for it to execute,  deliver or perform any
of its  obligations  under  this  Agreement,  or issue  and sell the  Shares  in
accordance  with the terms hereof  (other than any filings which may be required
to be made by the  Company  with the  Commission,  or Nasdaq  subsequent  to the
Closing,  and, any registration  statement which may be filed pursuant  hereto);
provided that,  for purpose of the  representation  made in this  sentence,  the
Company  is  assuming   and   relying   upon  the   accuracy  of  the   relevant
representations and agreements of the Purchaser herein.

     (f) Commission  Documents,  Financial  Statements.  The Common Stock of the
Company  is  registered  pursuant  to Section  12(b) or 12(g) of the  Securities
Exchange Act of 1934,  as amended  (the  "Exchange  Act"),  and, the Company has
timely filed all  reports,  schedules,  forms,  statements  and other  documents
required to be filed by it with the  Securities  and  Exchange  Commission  (the
"Commission")  pursuant  to the  reporting  requirements  of the  Exchange  Act,
including  material filed pursuant to Section 13(a) or 15(d) of the Exchange Act
(all of the foregoing including filings  incorporated by reference therein being
referred to herein as the "Commission Documents").  The Company has not provided
to the Purchaser any  information  which,  according to applicable  law, rule or
regulation, should have been disclosed publicly by the Company but which has not
been so disclosed. The Form 10-K for the year ended December 31, 1999, as of its
date of filing,  complied in all material  respects with the requirements of the
Exchange  Act  and the  rules  and  regulations  of the  Commission  promulgated
thereunder  and  other  federal,  state and local  laws,  rules and  regulations
applicable to such document, and, as of its date, such Form 10-K did not contain
any  untrue  statement  of a  material  fact or omit to  state a  material  fact
required  to be stated  therein  or  necessary  in order to make the  statements
therein,  in  light  of the  circumstances  under  which  they  were  made,  not
misleading.  The financial  statements of the Company included in the Commission
Documents  complied  as  to  form  in  all  material  respects  with  applicable
accounting   requirements  and  the  published  rules  and  regulations  of  the
Commission or other applicable rules and regulations with respect thereto.  Such
financial  statements have been prepared in accordance  with generally  accepted
accounting  principles ("GAAP") applied on a consistent basis during the periods
involved (except (i) as may be otherwise indicated in such financial  statements
or the notes thereto or (ii) in the case of unaudited interim statements, to the
extent  they  may  not  include   footnotes  or  may  be  condensed  or  summary
statements),  and fairly present in all material respects the financial position
of the Company and its  subsidiaries  as of the dates thereof and the results of
operations  and cash flows for the periods then ended  (subject,  in the case of
unaudited statements, to normal year-end audit adjustments).

                                       6
<PAGE>
    (g)  Subsidiaries.  The Commission  Documents or Schedule  3.1(g)  attached
hereto set forth each  subsidiary of the Company as of the date hereof,  showing
the jurisdiction of its incorporation or organization and showing the percentage
of each person's  ownership of the outstanding  stock or other interests of such
subsidiary.  For the  purposes of this  Agreement,  "subsidiary"  shall mean any
corporation  or other entity of which at least a majority of the  securities  or
other  ownership   interest   having   ordinary  voting  power   (absolutely  or
contingently) for the election of directors or other persons  performing similar
functions are at the time owned directly or indirectly by the Company and/or any
of its other  subsidiaries.  Except as set forth in the Commission  Documents or
the Commission Filings, none of such subsidiaries is a "significant  subsidiary"
as defined in Regulation S-X.

     (h) No  Material  Adverse  Effect.  Since May 1, 2000,  the Company has not
experienced or suffered any Material  Adverse Effect,  except  continued  losses
from operations and except as set forth on Schedule 3.1(h) attached hereto.

     (i)  No  Undisclosed  Liabilities.  Neither  the  Company  nor  any  of its
subsidiaries  has  any  liabilities,  obligations,  claims  or  losses  (whether
liquidated or unliquidated,  secured or unsecured, absolute, accrued, contingent
or  otherwise)  that would be required to be disclosed on a balance sheet of the
Company or any subsidiary  (including the notes thereto) in conformity with GAAP
and are not disclosed in the Commission  Documents or Commission Filings,  other
than those incurred in the ordinary course of the Company's or its subsidiaries'
respective businesses since December 31, 1999, and which, individually or in the
aggregate, do not or would not have a Material Adverse Effect.

     (j) No Undisclosed  Events or  Circumstances.  No event or circumstance has
occurred or exists  with  respect to the  Company or its  subsidiaries  or their
respective  businesses,  properties,  operations or financial condition,  which,
under  applicable  law,  rule  or  regulation,  requires  public  disclosure  or
announcement  by the  Company but which has not been so  publicly  announced  or
disclosed  and  which,  individually  or in the  aggregate,  do or would  have a
Material Adverse Effect.

     (k) Indebtedness.  The Commission  Documents or the Commission  Filings set
forth as of December 31, 1999 all outstanding secured and unsecured Indebtedness
of the Company or any subsidiary, or for which the Company or any subsidiary has
commitments.  For the purposes of this Agreement,  "Indebtedness" shall mean (a)
any  liabilities for borrowed money or amounts owed in excess of $100,000 (other
than trade accounts  payable  incurred in the ordinary course of business),  (b)
all  guaranties,  endorsements  and other  contingent  obligations in respect of
Indebtedness  of others,  whether or not the same are or should be  reflected in
the  Company's  balance  sheet  (or the notes  thereto),  except  guaranties  by
endorsement  of  negotiable  instruments  for deposit or  collection  or similar
transactions  in the ordinary  course of business;  and (c) the present value of
any lease  payments  in excess of  $100,000  due  under  leases  required  to be
capitalized in accordance  with GAAP.  Neither the Company nor any subsidiary is
in default with respect to any Indebtedness.

     (l) Title to Assets.  Each of the Company and the subsidiaries has good and
marketable  title to all of its  real and  personal  property  reflected  in the
Commission Documents,  free of any mortgages,  pledges, charges, liens, security
interests  or other  encumbrances.  All  leases of the  Company  and each of its
subsidiaries  are  valid and  subsisting  and in full  force  and  effect in all
material respects.

                                       7
<PAGE>
     (m) Actions  Pending.  There is no action,  suit,  claim,  investigation or
proceeding  pending or, to the knowledge of the Company,  threatened against the
Company or any subsidiary  which questions the validity of this Agreement or the
transactions  contemplated  hereby or any action  taken or to be taken  pursuant
hereto except for any such actions, suits, claims, investigations or proceedings
which  would  not have a  Material  Adverse  Effect.  Except as set forth in the
Commission  Documents  or the  Commission  Filings  and  except  as set forth on
Schedule  3.1(m)  hereto,  there is no action,  suit,  claim,  investigation  or
proceeding pending or, to the knowledge of the Company,  threatened,  against or
involving the Company,  any subsidiary or any of their respective  properties or
assets and which is reasonably likely to result in a Material Adverse Effect.

     (n) Compliance  with Law. The business of the Company and the  subsidiaries
has been and is presently  being  conducted in  accordance  with all  applicable
federal,  state and local governmental laws, rules,  regulations and ordinances,
except as set forth in the Commission  Documents,  the Commission  Filings or on
Schedule 3.1(n)  attached hereto or such that would not have a Material  Adverse
Effect.  The Company and each of its subsidiaries have all franchises,  permits,
licenses,  consents and other  governmental  or  regulatory  authorizations  and
approvals  necessary  for the conduct of its business as now being  conducted by
it,  except  for  such  franchises,   permits,  licenses,   consents  and  other
governmental or regulatory  authorizations and approvals, the failure to possess
which,  individually  or in the  aggregate,  could not reasonably be expected to
have a Material Adverse Effect.

     (o) Certain Fees.  Except as set forth on Schedule 3.1(o) attached  hereto,
no brokers, finders or financial advisory fees or commissions will be payable by
the Company or any subsidiary with respect to the  transactions  contemplated by
this Agreement.

     (p) Operation of Business.  Except as set forth on Schedule 3.1(p) attached
hereto,  the Company or one of the  subsidiaries  owns or possesses all patents,
trademarks,  domain  names  (whether  or  not  registered)  and  any  patentable
improvements   or   copyrightable   derivative   works  thereof,   websites  and
intellectual  property  rights  relating  thereto,  service marks,  trade names,
copyrights, licenses and authorizations as set forth in the Commission Documents
or the Commission  Filings and all rights with respect to the  foregoing,  which
are  necessary  for the  conduct of its  business as now  conducted  without any
conflict  with the  rights  of  others,  except to the  extent  set forth in the
Commission  Documents or that a Material  Adverse Effect could not reasonably be
expected to result from such conflict.

     (q) Environmental Compliance. The Company and each of its subsidiaries have
obtained  all  material  approvals,   authorization,   certificates,   consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws.  "Environmental  Laws"  shall mean all  applicable  laws  relating  to the
protection of the environment  including,  without limitation,  all requirements
pertaining to reporting, licensing,  permitting,  controlling,  investigating or
remediating emissions,  discharges, releases or threatened releases of hazardous
substances, chemical substances,  pollutants,  contaminants or toxic substances,
materials or wastes,  whether solid,  liquid or gaseous in nature, into the air,

                                       8
<PAGE>
surface water, groundwater or land, or relating to the manufacture,  processing,
distribution,  use,  treatment,  storage,  disposal,  transport  or  handling of
hazardous  substances,  chemical substances,  pollutants,  contaminants or toxic
substances,  material  or wastes,  whether  solid,  liquid or gaseous in nature.
Except for such instances as would not  individually  or in the aggregate have a
Material  Adverse  Effect,  there  are no past or  present  events,  conditions,
circumstances,  incidents,  actions  or  omissions  relating  to or in  any  way
affecting the Company or its subsidiaries  that violate any Environmental Law or
that could reasonably be expected to give rise to any  environmental  liability,
or otherwise  form the basis of any claim,  action,  demand,  suit,  proceeding,
hearing, study or investigation under any Environmental Law.

     (r) Material Agreements. Except as disclosed in the Commission Documents or
the Commission Filings, neither the Company nor any subsidiary is a party to any
written or oral contract, instrument, agreement, commitment, obligation, plan or
arrangement,  a copy of which would be required to be filed with the  Commission
as an exhibit to a Commission Filing  (collectively,  "Material  Agreements") if
the Company or any subsidiary were  registering  securities under the Securities
Act immediately  prior to the  effectiveness  of this  Agreement.  Except as set
forth  on  Schedule  3.1(r)  attached  hereto,  the  Company  and  each  of  its
subsidiaries has in all material respects performed all the obligations required
to be performed by them to date under the foregoing agreements, have received no
notice of default  and,  are not in default in any  material  respect  under any
Material Agreement now in effect.

     (s)  Transactions  with  Affiliates.  Except as set forth in the Commission
Documents or the Commission  Filings,  there are no loans,  leases,  agreements,
contracts,  royalty  agreements,  management  contracts or arrangements or other
continuing   transactions  exceeding  $100,000  between  (a)  the  Company,  any
subsidiary or any of their respective customers (excluding agreements related to
the purchase or lease of the  Company's  products) or suppliers on the one hand,
and (b) on the other hand, any officer, employee,  consultant or director of the
Company, or any of its subsidiaries,  or any person who would be covered by Item
404(a) of Regulation S-K or any  corporation or other entity  controlled by such
officer, employee, consultant, director or person.

     (t)  Securities  Act of 1933.  The  Company has  complied  in all  material
respects with all  applicable  federal and state  securities  laws in connection
with the offer, issuance and sale of the Shares hereunder. The Company meets the
requirements  for the use of Form S-3 under the Securities  Act. The Company has
not  distributed  and,  prior to the completion of the sale of the Shares to the
Purchaser,  will not  distribute  any offering  material in connection  with the
offer  and  sale of the  Shares  other  than  the  Registration  Statement,  the
Prospectus or other materials, if any, permitted by the Securities Act.

     (u) No Integrated Offering. Neither the Company, nor any of its affiliates,
nor any person acting on its or their behalf has,  directly or indirectly,  made
any  offers or sales of any  security  or  solicited  any offers or sales of any
security or solicited  any offers to buy any  security,  other than  pursuant to
this  Agreement,  under  circumstances  that would require  registration  of the
Common  Stock  under the  Securities  Act.  Neither  the  Company nor any of its
affiliates  nor any person  acting on its or their behalf has  conducted or will
conduct  any  general  solicitation  (as  that  term is used in Rule  502(c)  of
Regulation D) or general advertising with respect to any of the Shares.

                                       9
<PAGE>
     (v)  Employees.  As of  the  date  hereof,  neither  the  Company  nor  any
subsidiary has any collective bargaining arrangements or agreements covering any
of its  employees,  except  as set  forth  in the  Commission  Documents  or the
Commission  Filings.  Each of the  Company  and its  subsidiaries  requires  its
officers,  employees and certain consultants to enter into agreements  regarding
proprietary information,  noncompetition,  nonsolicitation,  confidentiality, or
other  similar  agreements  containing  restrictive  covenants.  As of the  date
hereof,  except as disclosed in Schedule 3.1(v),  no officer,  consultant or key
employee of the Company or any subsidiary whose termination, either individually
or in the  aggregate,  could  reasonably be expected to have a Material  Adverse
Effect,  has  terminated  or, to the  knowledge of the Company,  has any present
intention of terminating his or her employment or engagement with the Company or
any subsidiary.

     (w) Use of Proceeds.  The proceeds from the sale of the Shares will be used
by the Company and its subsidiaries for the purposes set forth in the Prospectus
under "Use of Proceeds."

     (x) Public Utility Holding  Company Act and Investment  Company Act Status.
The  Company is not a "holding  company" or a "public  utility  company" as such
terms are defined in the Public Utility Holding Company Act of 1935, as amended.
The Company is not, and as a result of and immediately upon Closing will not be,
an "investment  company" or a company  "controlled" by an "investment  company,"
within the meaning of the Investment Company Act of 1940, as amended.

     (y) ERISA.  No liability to the Pension  Benefit  Guaranty  Corporation has
been incurred with respect to any Plan by the Company or any of its subsidiaries
which is or would have a Material Adverse Effect.  The execution and delivery of
this  Agreement  and the  issue  and sale of the  Shares  will not  involve  any
transaction  which is subject to the  prohibitions of Section 406 of ERISA or in
connection  with which a tax could be imposed  pursuant  to Section  4975 of the
Internal  Revenue  Code  of  1986,  as  amended,  provided  that,  if any of the
Purchaser, or any person or entity that owns a beneficial interest in any of the
Purchaser,  is an "employee pension benefit plan" (within the meaning of Section
3(2) of ERISA)  with  respect  to which  the  Company  is a "party in  interest"
(within the meaning of Section  3(14) of ERISA),  the  requirements  of Sections
407(d)(5) and 408(e) of ERISA,  if applicable,  are met. As used in this Section
3.1(y),  the term  "Plan"  shall mean an  "employee  pension  benefit  plan" (as
defined in Section 3 of ERISA) which is or has been  established  or maintained,
or to  which  contributions  are  or  have  been  made,  by the  Company  or any
subsidiary  or by any trade or  business,  whether or not  incorporated,  which,
together  with the  Company  or any  subsidiary,  is under  common  control,  as
described in Section 414(b) or (c) of the Code.

     (z) Acknowledgment  Regarding  Purchaser's  Purchase of Shares. The Company
acknowledges  and agrees that the  Purchaser is acting solely in the capacity of
arm's length  purchaser  with  respect to this  Agreement  and the  transactions
contemplated  hereunder.  The Company further acknowledges that the Purchaser is
not acting as a financial advisor or fiduciary of the Company (or in any similar
capacity)  with  respect to this  Agreement  and the  transactions  contemplated
hereunder and any advice given by the Purchaser or any of its representatives or
agents in  connection  with this  Agreement  and the  transactions  contemplated
hereunder is merely incidental to the Purchaser's purchase of the Shares.

                                       10
  <PAGE>
     Section 3.2 Representation,  Warranties and Covenants of the Purchaser. The
Purchaser hereby makes the following  representations,  warranties and covenants
to the Company:

     (a) Organization and Standing of the Purchaser.  The Purchaser is a limited
liability  company duly organized,  validly  existing and in good standing under
the laws of the Commonwealth of The Bahamas.

     (b)  Authorization  and Power.  The Purchaser  has the requisite  corporate
power and authority to enter into and perform this Agreement and to purchase the
Shares  in  accordance  with the  terms  hereof.  The  execution,  delivery  and
performance  of this  Agreement by Purchaser and the  consummation  by it of the
transactions  contemplated  hereby have been duly  authorized  by all  necessary
corporate action, and no further consent or authorization of the Purchaser,  its
Board of Directors or  stockholders  is required.  This  Agreement has been duly
executed and delivered by the Purchaser.  This Agreement constitutes a valid and
binding  obligation  of the  Purchaser  enforceable  against  the  Purchaser  in
accordance  with its  terms,  except as such  enforceability  may be  limited by
applicable  bankruptcy,  insolvency,  reorganization,  moratorium,  liquidation,
conservatorship,  receivership,  or  similar  laws  relating  to,  or  affecting
generally  the  enforcement  of  creditor's  rights  and  remedies  or by  other
equitable principles of general application.

     (c) Acquisition for Investment.  The Purchaser is purchasing the Shares and
the Warrants  solely for its own account for the purpose of  investment  and not
with a view to or for sale in connection with a distribution.  The Purchaser has
no  present  intention  to  sell  the  Shares  or the  Warrants,  nor a  present
arrangement  (whether or not legally  binding) to effect any distribution of the
Shares or the  Warrants to or through any person or entity;  provided,  however,
that by making the representations  herein, the Purchaser does not agree to hold
the Common Stock for any minimum or other  specific  term and reserves the right
to dispose of the Common Stock at any time in accordance  with federal and state
securities laws applicable to such disposition.

     (d) Sophisticated  Investor.  The Purchaser is a sophisticated investor (as
described in Rule 506(b) (2) (ii) of Regulation  D) and an  accredited  investor
(as defined in Rule 501 of Regulation D), and the Purchaser has such  experience
in business and financial  matters that it is capable of  evaluating  the merits
and risks of an investment in Common Stock. The Purchaser  acknowledges  that an
investment  in the Common  Stock is  speculative  and  involves a high degree of
risk.

     (e) General.  The Purchaser  understands  that the Shares are being offered
and  sold  in  reliance  on a  transactional  exemption  from  the  registration
requirement of federal and state securities laws and the Company is relying upon
the  truth  and  accuracy  of  the  representations,   warranties,   agreements,
acknowledgments and understandings of the Purchaser set forth herein in order to
determine  the  applicability  of such  exemptions  and the  suitability  of the
Purchaser to acquire the Shares.

                                       11
<PAGE>
     (f) No Conflicts. The execution, delivery and performance of this Agreement
and the consummation by the Purchaser of the transactions contemplated hereby or
relating  hereto do not and will not (i) result in a  violation  of  Purchaser's
charter  documents or bylaws or (ii) conflict  with, or constitute a default (or
an event  which  with  notice or lapse of time or both  would  become a default)
under, or give to others any rights of termination,  amendment,  acceleration or
cancellation  of any material  agreement,  mortgage,  deed of trust,  indenture,
note,  bond,  license,  lease  agreement,  instrument or obligation to which the
Purchaser is a party,  (iii) create or impose any lien, charge or encumbrance on
any property of the Purchaser under any agreement or any commitment to which the
Purchaser  is party  or by  which  the  Purchaser  is on or by which  any of its
respective  properties  or assets are bound or (iv) result in a violation of any
law,  rule or  regulation,  or any  order,  judgment  or  decree of any court or
governmental  agency  applicable to the Purchaser or its properties,  except for
such  conflicts,  defaults and violations as would not,  individually  or in the
aggregate,  prohibit or otherwise interfere with the ability of the Purchaser to
enter into and perform its  obligations  under this  Agreement  in any  material
respect.  The Purchaser is not required to obtain any consent,  authorization or
order of, or make any filing or  registration  with,  any court or  governmental
agency in order for it to  execute,  deliver or perform  any of its  obligations
under this  Agreement  or to purchase  the Shares in  accordance  with the terms
hereof,  provided that for purposes of the representation made in this sentence,
the  Purchaser  is  assuming  and  relying  upon the  accuracy  of the  relevant
representations and agreements of the Company herein.

     (g)  Information.  The  Purchaser  and  its  advisors,  if any,  have  been
furnished with all materials  relating to the business,  finances and operations
of the Company and materials  relating to the offer and sale of the Shares which
have been  requested by the Purchaser.  The Purchaser and its advisors,  if any,
have  been  afforded  the  opportunity  to ask  questions  of the  Company.  The
Purchaser has sought such accounting,  legal and tax advice as it has considered
necessary  to  make  an  informed   investment  decision  with  respect  to  its
acquisition of the Shares.  Purchaser  understands that it (and not the Company)
shall be responsible for its own tax  liabilities  that may arise as a result of
this investment or the transactions contemplated by this Agreement.

     (h) No  Shorting.  The  Purchaser  has  the  right  to sell  shares  of the
Company's  Common  Stock  equal in number to the number of Shares that have been
purchased at the time of any such sale pursuant to this Agreement. The Purchaser
covenants,  however,  that prior to and during the term of any Draw Down Pricing
Period,  neither the Purchaser nor any of its  affiliates nor any entity managed
by the Purchaser  will ever be in a net short position with respect to shares of
the Common Stock of the Company in any accounts  directly or indirectly  managed
by the Purchaser or any affiliate of the Purchaser or any entity  managed by the
Purchaser.  The Purchaser shall not sell any Shares on any trading day in excess
of 25% of the day's  trading  volume,  as such volume is  reported by  Bloomberg
Financial  LP, using the HP function for such trading day. The  Purchaser  shall
not sell any Shares in block lots or block trades.

                                       12
<PAGE>
                                   ARTICLE IV

                                    Covenants

     The Company  covenants with the Purchaser as follows,  which  covenants are
for the  benefit  of the  Purchaser  and its  permitted  assignees  (as  defined
herein).

     Section 4.1 Securities. The Company shall notify the Commission and Nasdaq,
if  applicable,  in  accordance  with  their  rules  and  regulations,   of  the
transactions  contemplated by this Agreement, and shall take all other necessary
actions and proceedings as may be required and permitted by applicable law, rule
and regulation, for the legal and valid issuance of the Shares to the Purchaser.

     Section 4.2  Registration  and  Listing.  The Company  will take all action
necessary to cause its Common Stock to continue to be registered  under Sections
12(b) or 12(g) of the Exchange  Act,  will comply in all material  respects with
its reporting and filing  obligations  under the Exchange Act, and will not take
any action or file any document  (whether or not permitted by the Securities Act
or the rules  promulgated  thereunder) to terminate or suspend such registration
or to  terminate  or suspend  its  reporting  and filing  obligations  under the
Exchange Act or Securities Act, except as permitted herein. The Company will use
its commercially reasonable efforts to take all action necessary to continue the
listing or trading of its Common  Stock and the listing of the Shares  purchased
by Purchaser  hereunder on the Nasdaq  National Market or any relevant market or
system on which the Common Stock  hereafter  becomes traded or listed (which may
include the American Stock Exchange and Nasdaq Small Cap Market,  or in the case
of the OTC  Bulletin  Board,  if  mutually  agreed  upon by the  Company and the
Purchaser (collectively,  an "Other Exchange")),  if applicable, and will comply
in all  material  respects  with  the  Company's  reporting,  filing  and  other
obligations  under  the  bylaws or rules of the NASD or any  relevant  market or
system.

     Section 4.3 Registration Statement.

     (a) On or before June 16, 2000 (the "Filing Date"), the Company shall cause
to be filed with the  Commission  a  Registration  Statement on Form S-3 (or any
other  comparable  form) to register  for resale the Shares  (pursuant to a Draw
Down or the exercise of any Warrant) to be purchased by the  Purchaser  pursuant
to this Agreement. The Company shall use its reasonable best efforts to take all
steps necessary to cause the Registration  Statement to be declared effective by
September  10, 2000,  but in no event later than 120 days after the Filing Date.
If the Registration  Statement is not declared  effective within 120 days of the
Filing  Date,  the  Company  shall file a  separate  registration  statement  to
register the shares of Common Stock  underlying the Closing  Warrants  within 30
days thereof. If a registration statement has not been filed within 30 days, the
Company  shall issue an additional  warrant to purchase  30,000 shares of Common
Stock for every 30 day period  thereafter until the  registration  statement has
been  filed or, if  earlier,  until the  Purchaser  shall have  terminated  this
Agreement.  The  Company  shall use its  reasonable  best  efforts to cause such
registration  statement to become  effective  within 90 days of filing.  If such
registration  statement  has not been  declared  effective  within 90 days,  the
Company  shall issue an additional  warrant to purchase  30,000 shares of Common
Stock for every 30 day period  thereafter until the  registration  statement has
been  declared  effective  or,  if  earlier,  until  the  Purchaser  shall  have
terminated this Agreement.

                                       13
<PAGE>
     (b) Before the Purchaser shall be obligated to accept any Draw Down request
from the Company, the Company shall have caused a sufficient number of shares of
Common  Stock to be  registered  to cover the Shares to be issued in  connection
with such Draw Down request  (including  any Warrants to be issued in connection
therewith).

     Section 4.4 Compliance with Laws.

     (a) The Company shall comply, and cause each subsidiary to comply, with all
applicable laws, rules,  regulations and orders,  noncompliance with which could
reasonably be expected to have a Material Adverse Effect.

     (b) Unless the Company obtains the requisite  approval of its  shareholders
or waiver of such approval in accordance  with the  applicable  rules of Nasdaq,
the  Company  will not be  obligated  to  issue  and the  Purchaser  will not be
obligated  to  purchase  any shares of the  Company's  Common  Stock which would
result in the issuance  under this  Agreement of Shares  representing  more than
nineteen and nine-tenths percent (19.9%) of the issued and outstanding shares of
the Company's Common Stock on the date hereof.

     Section 4.5 Keeping of Records and Books of Account. The Company shall keep
and cause each  subsidiary  to keep  adequate  records and books of account,  in
which  complete  entries  will be  made in  accordance  with  GAAP  consistently
applied,   reflecting  all  financial   transactions  of  the  Company  and  its
subsidiaries,  and in which,  for each  fiscal  year,  all proper  reserves  for
depreciation, depletion, obsolescence,  amortization, taxes, bad debts and other
purposes in connection with its business shall be made.

     Section 4.6 Reporting Requirements. Upon written request, the Company shall
furnish  the  following  to the  Purchaser  so long as such  Purchaser  shall be
obligated hereunder to purchase Shares:

     (a)  Quarterly  Reports  filed with the  Commission on Form 10-Q as soon as
available,  and in any event  within 45 days  after the end of each of the first
three fiscal quarters of the Company; and

     (b)  Annual  Reports  filed  with the  Commission  on Form  10-K as soon as
available,  and in any event within 90 days after the end of each fiscal year of
the Company.

     Section 4.7 Other  Agreements.  The Company  shall not enter into any other
financing  agreement  during a Draw Down Pricing Period (an "Other  Financing"),
without the prior written consent of the Purchaser,  except that the Company may
(i)  enter  into a loan,  credit  or  lease  facility  with a bank or  financing
institution or issue any other debt  securities so long as no equity  securities
are required to be issued in connection  therewith,  (ii)  establish an employee
stock  option  plan or  agreement  or  finance  the  acquisition  of  equipment,
technologies  or lines of business and (iii) issue shares of Common Stock and/or
preferred stock of the Company in connection  with the Company's  current option

                                       14
<PAGE>
plans, stock purchase plans,  rights plans,  currently  outstanding  warrants or
options,  acquisition  of  products,  licenses  or other  assets  and  strategic
partnerships  or joint  ventures  (the primary  purpose of which is not to raise
equity) and the issuance of shares of Common Stock  (including  upon exercise of
preemptive rights), preferred stock and warrants pursuant to the Preferred Stock
and Warrant  Purchase  Agreement with certain  existing  shareholders  and other
entities and up to an additional  $20,000,000 in a future equity financing (each
a  "Permitted  Transaction").  The  Purchaser  shall be  required  to notify the
Company as to whether it will consent  within five (5) calendar  days of written
notice from the  Company  with  respect to such Other  Financing  (a  "Financing
Notice").  If the  Purchaser  consents  to the  Company  entering  into an Other
Financing  (other than a Permitted  Transaction),  the Purchaser  shall have the
option (the "Purchase Option"),  which option shall be exercised within five (5)
calendar days of the date the Purchaser  gives such consent,  to (i) purchase up
to the same number of shares of Common Stock issued or to be issued in the Other
Financing  at the price and on such terms as the Company  would issue  Shares to
the Purchaser during such Draw Down Pricing Period, (ii) purchase up to the same
number of shares of Common Stock  issued or to be issued in the Other  Financing
at the price  and or such  terms of the Other  Financing  or (iii)  elect not to
purchase any Shares during such Draw Down Pricing Period.  If the Purchaser does
not exercise its Purchase Option in writing before 5 p.m., eastern time, on such
fifth (5th)  calendar day following the  Purchaser's  consent to the  applicable
Other Financing,  the Company shall have the right to close such Other Financing
on the  scheduled  closing  date with a third  party;  provided  that all of the
financial terms and conditions of such closing are the same as those provided to
the Purchaser prior to the Purchaser giving its consent to such Other Financing.

     Section 4.8 Non-public  Information.  Except as otherwise required pursuant
to the terms of this  Agreement,  neither the Company nor any of its  directors,
officers or agents shall disclose any material non-public  information about the
Company to the Purchaser.

     Section 4.9 No Stop Orders.  The Company will advise the Purchaser promptly
and, if requested by the Purchaser,  will confirm such advice in writing: (i) of
its receipt of notice of any request by the  Commission  for  amendment  of or a
supplement to the  Registration  Statement,  any  Prospectus  or for  additional
information;  (ii) of its receipt of notice of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration  Statement or of
the  suspension  of  qualification  of the  Shares for  offering  or sale in any
jurisdiction or the initiation of any proceeding for such purpose;  and (iii) of
its becoming aware of the happening of any event, which makes any statement of a
material  fact made in the  Registration  Statement or the  Prospectus  (as then
amended or supplemented) untrue or which requires the making of any additions to
or changes in the  Registration  Statement or the Prospectus (as then amended or
supplemented)  in order to state a material fact required by the  Securities Act
to be stated  therein or necessary in order to make the statements  therein,  in
light of the circumstances under which they were made, not misleading, or of the
necessity  to  amend  or  supplement   the   Prospectus   (as  then  amended  or
supplemented) to comply with the Securities Act or any other law. If at any time
the Commission  shall issue any stop order  suspending the  effectiveness of the
Registration Statement, the Company will make commercially reasonable efforts to
obtain the  withdrawal of such order at the earliest  possible  time.  Purchaser
agrees that, upon receipt of any notice from the Company of the happening of any
event of the kind  described  in this Section 4.9,  Purchaser  will  immediately
cease  disposition of the Shares pursuant to the Registration  Statement and the
Prospectus until receipt of copies of a supplemented or amended  Prospectus and,
at the Company's  request,  deliver to the Company copies of the Prospectus held
by Purchaser at the time of receipt of such notice.

                                       15
<PAGE>
     Section 4.10 Amendments to the Registration Statement. The Company will not
(i) other than a periodic  filing under the Exchange  Act, file any amendment to
the Registration Statement or make any amendment or supplement to the Prospectus
of which the Purchaser  shall not  previously  have been advised or to which the
Purchaser shall reasonably  object after being so advised or (ii) so long as, in
the reasonable opinion of counsel for the Purchaser, a Prospectus is required to
be  delivered in  connection  with sales by any  Purchaser  or dealer,  file any
information,   documents  or  reports  pursuant  to  the  Exchange  Act  without
delivering a copy of such  information,  documents  or reports to the  Purchaser
promptly following such filing.

     Section 4.11 Prospectus Delivery. Prior to any Settlement Date, the Company
will deliver to the Purchaser,  without charge, in such quantities as reasonably
requested by the Purchaser,  copies of the Prospectus. As soon after the Closing
as  possible  and  thereafter  from  time  to time  for  such  period  as in the
reasonable  opinion of counsel for the Purchaser a prospectus is required by the
Securities Act to be delivered in connection  with sales by the  Purchaser,  the
Company will  expeditiously  deliver to the Purchaser,  without charge,  as many
copies of the  Prospectus  (and of any amendment or  supplement  thereto) as the
Purchaser  may  reasonably  request.  The  Company  consents  to the  use of the
Prospectus  (and of any amendment or supplement  thereto) in accordance with the
provisions of the Securities Act and with the securities or Blue Sky laws of the
jurisdictions  in which the Shares may be sold by the  Purchaser,  in connection
with the offering and sale of the Shares and for such period of time  thereafter
as  the  Prospectus  is  required  by the  Securities  Act  to be  delivered  in
connection  with sales of the  Shares.  If during  such period of time any event
shall  occur that in the  judgment of the Company is required to be set forth in
the Prospectus (as then amended or  supplemented) or should be set forth therein
in order to make the statements therein, in the light of the circumstances under
which they were made,  not  misleading,  or if it is necessary to  supplement or
amend the  Prospectus  to comply with the  Securities  Act or any other law, the
Company will  forthwith  prepare and,  subject to the provisions of Section 4.10
above, file with the Commission an appropriate  supplement or amendment thereto,
and will  expeditiously  furnish to the Purchaser a reasonable  number of copies
thereof.

     Section 4.12 Legends. The certificates evidencing the Shares and the shares
of Common Stock issuable upon exercise of the Warrants shall be free of legends,
except as provided for in Article VII.

     Section 4.13  Confirmation  of Ownership.  At the Company's  request on any
Settlement  Date or any date upon which the Purchaser will be purchasing  Shares
upon exercise of any Warrants,  upon the Company  informing the Purchaser of the
number of outstanding  shares of Common Stock on such date, the Purchaser  shall
confirm whether or not it would own,  giving effect to the proposed  issuance of
Shares on such  date,  more than 10% of such  number  of  outstanding  shares of
Common Stock.

                                       16
<PAGE>
                                   ARTICLE V

             Conditions to Closing, Draw Downs and Warrant Exercise

     Section 5.1  Conditions  Precedent to the  Obligation  of the  Purchaser to
Accept a Draw Down or Purchase Shares upon Exercise of the Warrants and Purchase
the Shares.  The  obligation  hereunder  of the  Purchaser to accept a Draw Down
Notice,  to purchase Shares upon exercise of the Warrants and to acquire and pay
for the Shares is subject to the  satisfaction or waiver,  at or before the date
of each Draw Down  Notice  (the  "Draw Down  Exercise  Date") or the date of the
purchase of the Shares upon exercise of any Warrant,  of each of the  conditions
set forth below.  The conditions are for the Purchaser's sole benefit and may be
waived by the Purchaser at any time in its sole discretion.

     (a) Accuracy of the Company's  Representations and Warranties.  Each of the
representations  and  warranties of the Company shall be true and correct in all
material respects as of the date when made and as of the Draw Down Exercise Date
as though made at that time except for representations and warranties that speak
as of a particular date;  provided that this condition shall be deemed satisfied
unless all such  failures to be true and correct  would have a Material  Adverse
Effect.

     (b)  Effective   Registration   Statement.   The   Registration   Statement
registering  the Shares to be  received in  connection  with each such Draw Down
(including upon exercise of the Warrants issued in connection  therewith)  shall
have been declared  effective by the Commission and such Registration  Statement
shall  remain  effective on each  Settlement  Date,  and the Company  shall have
delivered to the Purchaser an appropriate Prospectus on each Settlement Date.

     (c) Performance by the Company. The Company shall have performed, satisfied
and  complied  in all  material  respects  with all  covenants,  agreements  and
conditions  required by this  Agreement to be  performed,  satisfied or complied
with by the Company.

     (d) No Injunction.  No statute, rule, regulation,  executive order, decree,
ruling or injunction  shall have been  enacted,  entered or  promulgated  by any
court or governmental authority of competent jurisdiction which prohibits the
consummation  of any of the  transactions  contemplated  by this  Agreement.

     (e) No  Proceedings  or  Litigation.  No action,  suit or proceeding by any
arbitrator or any governmental  authority shall have been commenced  against the
Company  or  any  subsidiary,   seeking  to  restrain,  prevent  or  change  the
transactions  contemplated by this  Agreement,  or seeking damages in connection
with such transactions.

     (f)  Material  Adverse  Effect.  No  Material  Adverse  Effect  shall  have
occurred.

     (g) Ten Percent  Limitation.  On each Settlement Date, the number of Shares
then to be purchased by the Purchaser shall not exceed the number of such shares
that,  when  aggregated  with all other shares of Common Stock then owned by the
Purchaser, would result in the Purchaser owning no more than 9.9% of all of such

                                       17
<PAGE>
Common Stock as would be outstanding on such  Settlement  Date, as determined in
accordance with Section 16 of the Exchange Act and the  regulations  promulgated
thereunder;  provided that, if the Purchaser shall decline to purchase Shares on
any  Settlement  Date or date of  purchase  of any Shares  upon  exercise of any
Warrants, the Purchaser shall provide a certificate to the Company,  executed by
an authorized officer,  certifying the number of shares of Common Stock owned by
the Purchaser on such date.  For purposes of this Section  5.3(g),  in the event
that the amount of Common Stock  outstanding  as determined  in accordance  with
Section 16 of the Exchange Act and the  regulations  promulgated  thereunder  is
greater on a  Settlement  Date than on the date upon which the Draw Down  Notice
associated  with such  Settlement  Date is  given,  the  amount of Common  Stock
outstanding  on such  Settlement  Date shall govern for purposes of  determining
whether the  Purchaser,  when  aggregating  all  purchases  of Common Stock made
pursuant  to this  Agreement  would  own  more  than  9.9% of the  Common  Stock
following such Settlement Date.

     (h)  Shareholder  Vote. The issuance of shares of Common Stock with respect
to the applicable  Settlement  Date, if any,  shall not violate the  shareholder
approval requirements of Nasdaq.

     (i) Additional  Funding. On or before issuing its initial Draw Down Notice,
the Company shall have received  proceeds of $30,000,000 in a private  placement
of 5% Cumulative  Convertible Series D Preferred Stock or on a subsequent series
of preferred stock with substantially similar terms.

     (j) Other.  On each  Settlement  Date, the Purchaser  shall have received a
certificate  in  substantially  the form and  substance  of  Exhibit  C  hereto,
executed by an  executive  officer of the Company and to the effect that all the
conditions to such  Settlement  Date shall have been satisfied as at the date of
each such certificate.

     Section 5.2 Conditions  Precedent to the Obligation of the Company to issue
Shares Pursuant to a Draw Down or Exercise of Warrants. The obligation hereunder
of the Company to issue the Shares  pursuant to a Draw Down or upon  exercise of
any  Warrant  is  subject  to the  satisfaction  or  waiver,  at or before  each
Settlement Date, of each of the conditions set forth below. These conditions are
for the  Company's  sole benefit and may be waived by the Company at any time in
its sole discretion.

     (a)  Accuracy  of  the  Purchaser's  Representations  and  Warranties.  The
representations and warranties of the Purchaser shall be true and correct in all
material  respects  as of the date when  made,  except for  representations  and
warranties that are expressly made as of a particular date.

     (b)  Performance  by the  Purchaser.  The Purchaser  shall have  performed,
satisfied and complied in all material  respects with all covenants,  agreements
and conditions required by this Agreement to be performed, satisfied or complied
with by the Purchaser.

     (c) No Injunction. No statute, regulation,  executive order, decree, ruling
or injunction  shall have been enacted,  entered or  promulgated by any court or
governmental   authority  of  competent   jurisdiction   which   prohibits   the
consummation of any of the transactions contemplated by this Agreement.

                                       18
<PAGE>
     (d) No  Proceedings  or  Litigation.  No action,  suit or proceeding by any
arbitrator or any governmental  authority shall have been commenced  against the
Company  or  any  subsidiary,   seeking  to  restrain,  prevent  or  change  the
transactions  contemplated by this  Agreement,  or seeking damages in connection
with such transactions.

     (e)  Shareholder  Vote. The issuance of shares of Common Stock with respect
to the applicable  Settlement  Date, if any,  shall not violate the  shareholder
approval requirements of Nasdaq.

                                   ARTICLE VI

                            Draw Down Terms; Warrants

     Section 6.1 Draw Down Terms.  Subject to the satisfaction of the conditions
set forth in this Agreement, the parties agree as follows:

     (a) The Company may, in its sole discretion,  issue a Draw Down Notice with
respect  to a draw down (a "Draw  Down") of up to  $1,000,000  if the  Threshold
Price is equal to or exceeds $0.35, and an additional $1,000,000 for every $1.00
increase of the  Threshold  Price above $1.00 up to and  including  $16.00 for a
maximum Draw Down of up to $16,000,000;  provided,  that the Company may, in its
sole  discretion,  issue a Draw Down Notice with respect to any Draw Down Amount
at any  Threshold  Price  pursuant  to such terms  mutually  agreed  upon by the
Purchaser and the Company during any Draw Down Pricing  Period,  which Draw Down
the  Purchaser  will be  obligated  to accept.  Prior to  issuing  any Draw Down
Notice, the Company shall have Shares representing at least the Draw Down Amount
registered under the Registration Statement.

     (b) The  number of Shares  to be issued in  connection  with each Draw Down
shall be equal to the sum of the  quotients  (for each  trading  day of the Draw
Down Pricing Period for which the VWAP equals or exceeds the Threshold Price) of
(x) 1/20th (or such other  fraction based upon the agreed upon Draw Down Pricing
Period) of the Draw Down Amount divided by (y) the applicable Draw Down Discount
Percentage multiplied by the VWAP for such day.

     (c) Only one Draw Down shall be allowed in each Draw Down  Pricing  Period.
Each Draw Down  Pricing  Period  shall  consist of four (4)  periods of five (5)
consecutive trading days (each, a "Settlement Period").

     (d) The number of Shares  purchased by the  Purchaser  with respect to each
Draw Down shall be  determined  on a daily basis  during each Draw Down  Pricing
Period  and  settled  on the  second  business  day  following  the  end of each
Settlement Period (the "Settlement Date").

     (e) There shall be a minimum of five (5) trading days (or such other number
of trading days mutually  agreed upon by the Purchaser and the Company)  between
the last day of a Draw Down  Pricing  Period  and the first day of a  subsequent
Draw Down Pricing Period.

                                       19
<PAGE>
     (f) There shall be a maximum of twelve  (12) Draw Downs  during the term of
this Agreement.

     (g) Each Draw Down will  expire on the last  trading  day of each Draw Down
Pricing Period.

     (h) For each trading day during the Draw Down Pricing  Period that the VWAP
is at or above the Threshold  Price,  1/20th (or such other  fraction based upon
the  agreed  upon Draw Down  Pricing  Period) of the Draw Down  Amount  shall be
allocated  to  purchase  Shares at a price  equal to the product of (x) the Draw
Down  Discount  Percentage  multiplied  by (y) the VWAP for such day. At no time
shall the Threshold Price be set below $0.35, provided, however, that at no time
shall the  Company  set the  Threshold  Price  below  $1.00 if the  Company  has
received  proceeds  of  $42,000,000,  consisting  of  $30,000,000  in a  private
placement  of  5%  Cumulative  Convertible  Series  D  Preferred  Stock  or on a
subsequent  series of  preferred  stock  with  substantially  similar  terms and
$12,000,000  under this  Agreement,  unless  agreed  upon by the Company and the
Purchaser.  If trading in the Company's Common Stock is suspended for any reason
for more than three (3) hours in any trading  day, the price of the Common Stock
shall be deemed to be below the Threshold Price for that trading day.

     (i) The Company must inform the Purchaser via facsimile  transmission as to
the Draw Down  Amount the  Company  wishes to exercise  before  commencement  of
trading on the first trading day of the Draw Down Pricing Period (the "Draw Down
Notice"), substantially in the form attached hereto as Exhibit D. In addition to
the Draw  Down  Amount,  the  Company  shall set the  Threshold  Price and shall
designate the first  trading day of the Draw Down Pricing  Period with each Draw
Down Notice.

     (j) On each Settlement Date, the Company shall deliver the Shares purchased
by the Purchaser to the Purchaser or its designees via DWAC during the Draw Down
Pricing  Period,  and upon  receipt of the  Shares,  the  Purchaser  shall cause
payment therefor to be made to the Company's designated account by wire transfer
of  immediately  available  funds  provided  that the Shares are received by the
Purchaser no later than 1:00 p.m.,  eastern time, or next day available funds if
the Shares are received thereafter.

     (k) Intentionally Omitted.

     (l) If on the  Settlement  Date, the Company fails to deliver the Shares to
be  purchased  by  the  Purchaser   (unless  the  conditions  to  the  Company's
obligations  to deliver the Shares have not been  satisfied  in which case,  the
following  provisions  shall not  apply)  and/or  issued  upon  exercise  of the
Warrants,  and such failure  continues  for ten (10) trading  days,  the Company
shall pay, in cash or restricted  shares of Common  Stock,  at the option of the
Purchaser, as liquidated damages and not as a penalty to the Purchaser an amount
equal to two  percent  (2%) of the Draw Down  Amount for such Draw Down  Pricing
Period for the  initial  thirty  (30) days and each  additional  thirty (30) day
period  thereafter  until such failure has been cured,  which shall be pro rated
for such  periods  less than  thirty  (30) days (the  "Periodic  Amount").  Cash
payments  to be made  pursuant  to this  clause  (l)  shall  be due and  payable
immediately  upon  demand in  immediately  available  cash  funds.  Certificates
evidencing the restricted shares of Common Stock shall be delivered  immediately

                                       20
<PAGE>
upon demand.  The parties agree that the Periodic Amount represents a reasonable
estimate on the part of the parties,  as of the date of this  Agreement,  of the
amount of damages that may be incurred by the  Purchaser if the Company fails to
deliver the Shares on the  Settlement  Date. If the Purchaser  elects to receive
shares of Common Stock instead of cash,  the  Purchaser  shall have the right to
demand  registration  once within  twelve (12) months of the date of issuance of
such shares of Common  Stock and  piggyback  registration  rights if the Company
files a separate registration statement.

     Section 6.2 Draw Down Warrants.

     (a) If the  Threshold  Price is set  between  $1.00 and $10.00 for any Draw
Down  Pricing  Period,  the  Company  shall issue to the  Purchaser  on the next
applicable  Settlement  Date for any  such  period,  a  warrant  (a  "Draw  Down
Warrant")  to purchase 30% of that number of Shares  purchased by the  Purchaser
during such Draw Down Pricing  Period.  Each such Draw Down Warrant shall have a
three-year  exercise  period and an exercise  price equal to 120% of the average
purchase  price per share paid by the  Purchaser  during such Draw Down  Pricing
Period (based on the aggregate  amount paid by the Purchaser on such  Settlement
Date and the number of Shares purchased).

     (b) If the  Threshold  Price is set below  $1.00 for any Draw Down  Pricing
Period, the Company shall issue a Draw Down Warrant to the Purchaser on the next
applicable  Settlement  Date for the  purchase  of 100% of that number of Shares
purchased by the Purchaser during such Draw Down Pricing Period.  Each such Draw
Down Warrant shall have a three-year exercise period and an exercise price equal
to 100% of the average  purchase  price per share paid by the  Purchaser  during
such  Draw  Down  Pricing  Period  (based on the  aggregate  amount  paid by the
Purchaser on such Settlement Date and the number of Shares purchased).

     (c) No Draw Down  Warrants  shall be issued by the Company if the Threshold
Price is set above  $10.00.  No Draw Down Warrant shall be issued by the Company
to the Purchaser until such time as the Company is required to issue a Draw Down
Warrant to purchase more than 250,000 shares of Common Stock in the aggregate.

     (d) If the  VWAP has  been  greater  than  $4.00  for ten (10)  consecutive
trading days during the Investment  Period,  the Company,  at its option,  shall
have one (1) right to call  ("Call  Notice")  40% of the  outstanding  Draw Down
Warrants  that have an exercise  price  equal to or less than $1.00,  which Draw
Down  Warrants  shall  expire  within  five (5)  trading  days after the Company
delivered the Call Notice to the Purchaser.

     Section 6.3 Warrant A and Warrant B.

     (a) Promptly after the Registration  Statement has been declared  effective
by the  Commission  and prior to the Company's  initial Draw Down  request,  the
Company  shall  issue to the  Purchaser  on a  quarterly  basis  (for up to four
quarters) one Warrant A to purchase  750,000  shares of Common Stock;  provided,
however,  that if the  Purchaser  purchases  the full amount of shares  issuable
pursuant to the exercise of a Warrant A prior to the end of the quarter in which
such Warrant A was issued,  the Company shall immediately issue to the Purchaser
another Warrant A to purchase 750,000 shares of Common Stock; provided, further,
that in no event shall the Company issue to the Purchaser more than four Warrant
As. The Warrant A shall have an exercise price equal to the greater of (x) $2.00
and (y) 93% of the VWAP on the date of exercise. If the Threshold Price is equal
to or greater than $2.00 and the VWAP is equal to or greater than such Threshold
Price, the Company shall have the right to require the Purchaser to exercise the
Warrant A to purchase up to 6,000 shares of Common Stock on such trading day.

                                       21
<PAGE>
     (b) Promptly after the Registration  Statement has been declared  effective
by the  Commission  and prior to the Company's  initial Draw Down  request,  the
Company  shall  issue to the  Purchaser  on a  quarterly  basis  (for up to four
quarters) one Warrant B to purchase  750,000  Shares of Common Stock;  provided,
however,  that if the  Purchaser  purchases  the full amount of shares  issuable
pursuant to the exercise of a Warrant B prior to the end of the quarter in which
such Warrant B was issued,  the Company shall immediately issue to the Purchaser
another Warrant B to purchase 750,000 shares of Common Stock; provided, further,
that in no event shall the Company issue to the Purchaser more than four Warrant
Bs. The Warrant B shall have an exercise price equal to the greater of (x) $1.00
and (y) 93% of the VWAP on the date of exercise.  If the Threshold  Price is set
above  $1.00  but  below  $2.00 on any  trading  day and the VWAP is equal to or
greater than the  Threshold  Price,  the Company shall have the right to require
the  Purchaser  to exercise  the  Warrant B to  purchase up to 24,000  shares of
Common Stock on such trading day.

     (c) If the Purchaser exercises any of the Warrants, the Company shall issue
the Shares  issuable upon such exercise and the Purchaser shall pay the exercise
price for such Shares on the earlier of (i) the first and fourth  Monday of each
month (if such Monday is a trading  day,  and if not a trading  day, on the next
trading day) and (ii) the second trading day after the aggregate  number of such
Shares to be issued equals or exceeds 60,000 shares of Common Stock.

     (d) Each of Warrant A and  Warrant B shall  expire on the  earliest  of (i)
ninety (90) days from the date of issuance,  (ii)  termination of this Agreement
and (iii) the date the Company shall have received  $6,000,000 in aggregate from
the exercise of each Warrant A and/or Warrant B.

                                  ARTICLE VII

                                     Legends

     Section 7.1 Legend. Each certificate representing the Shares and the shares
of Common  Stock  issuable  upon  exercise of the  Warrants  shall be stamped or
otherwise  imprinted  with a  legend  substantially  in the  following  form (in
addition to any legend  required by  applicable  state  securities or "blue sky"
laws):

         THE   SECURITIES   REPRESENTED   BY   THIS   CERTIFICATE   (THE
         "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF  1933,  AS  AMENDED  (THE  "SECURITIES  ACT")  OR ANY  STATE
         SECURITIES  LAWS AND MAY NOT BE SOLD,  TRANSFERRED OR OTHERWISE
         DISPOSED  OF  UNLESS   REGISTERED  UNDER  THAT  ACT  AND  UNDER
         APPLICABLE  STATE  SECURITIES LAWS OR VALUE AMERICA,  INC. (THE

                                       22
<PAGE>
        "COMPANY")  SHALL HAVE  RECEIVED AN OPINION OF ITS COUNSEL THAT
         REGISTRATION  OF SUCH  SECURITIES  UNDER THAT ACT AND UNDER THE
         PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED.

     The Company agrees to reissue certificates  representing the Shares without
the legend set forth above if at such time,  prior to making any transfer of any
Shares, such holder thereof shall give written notice (which notice may be given
by  facsimile) to the Company  describing  the manner and terms of such transfer
and removal as the Company may reasonably request and the Company further agrees
to deliver any such  reissued  certificates  within three (3) days of receipt of
written  notice from such holder.  Such  proposed  transfer will not be effected
until the  Company  has  notified  such holder that either (i) in the opinion of
Company counsel, the registration of such Shares under the Securities Act is not
required in  connection  with such  proposed  transfer;  or (ii) a  registration
statement  under the Securities Act covering such proposed  disposition has been
filed by the Company  with the  Commission  and has become  effective  under the
Securities Act. The  restrictions on transfer  contained in Section 7.1 shall be
in  addition  to, and not by way of  limitation  of, any other  restrictions  on
transfer contained in any other section of this Agreement.  The Company will use
its reasonable best efforts to deliver  reissued  certificates  within three (3)
days of receipt of written  notice from such  holder.  If the  Company  fails to
deliver reissued  certificates  representing the Shares pursuant to this Section
7.1 within ten (10) business days of receipt of written notice from such holder,
the Company shall issue,  as liquidated  damages,  and not as a penalty,  to the
Purchaser a number of shares of Common  Stock  equal to the  quotient of (a) two
percent  (2%)  of  the  product  of  (i)  the  VWAP  on the  date  the  reissued
certificates  representing  the applicable  Shares should have been delivered to
the Purchaser and (ii) the number of Shares the Company should have delivered to
the Purchaser on reissued  certificates  pursuant to this Section 7.1 divided by
(b) the VWAP on the trading day immediately prior to such 10th business day, for
the initial  thirty (30) day period  immediately  following any such failure and
each additional  thirty (30) day period  thereafter  until such failure has been
cured, while any periods of less than thirty (30) days shall be pro rated.

     Section 7.2 No Other Legend or Stock Transfer Restrictions. No legend other
than the one  specified  in Section 7.1 has been or shall be placed on the share
certificates  representing  the Shares and the shares of Common  Stock  issuable
upon exercise of the Warrants and no instructions or "stop transfer  orders," so
called, "stock transfer  restrictions," or other restrictions have been or shall
be given to the  Company's  transfer  agent with respect  thereto  other than as
expressly  set forth in this Article VII and as may be required  under  Delaware
law for corporations with more than one (1) class of stock outstanding.

     Section  7.3  Purchaser's  Compliance.  Nothing in this  Article  VII shall
affect in any way the Purchaser's obligations under any agreement to comply with
all  applicable  securities  laws upon  resale of the  Shares  and the shares of
Common Stock issuable upon exercise of the Warrants.

                                       23
<PAGE>
                                  ARTICLE VIII

                                  Termination

     Section 8.1 Termination by Mutual Consent. The term of this Agreement shall
be fifteen and one-half (15.5) months from the date the  Registration  Statement
was  declared  effective  by the  Commission  (the  "Investment  Period").  This
Agreement may be terminated at any time by mutual consent of the parties.

     Section 8.2 Other  Termination.  The Purchaser may terminate this Agreement
upon one (1) day's notice (v) if the Company  issues  convertible  debentures or
enters an equity  financing  facility  without  the  Purchaser's  prior  written
consent, or (w) if an event resulting in a Material Adverse Effect has occurred,
or (x) the  Registration  Statement  is not declared  effective  within 180 days
following  the Filing Date, or (y) (A) Common Stock shall cease to be registered
under  Section  12(b) or 12(g) of the Exchange Act or (B) to be listed or traded
on the Nasdaq  National Market or an Other Exchange or (z) the Company shall not
be permitted to issue  additional  Shares without  receiving the Nasdaq Approval
and such  approval  shall not have been  received  within sixty (60) days of the
date that the Company ceases to be permitted to so issue additional Shares.

     Section  8.3  Effect of  Termination.  In the event of  termination  by the
Company or the Purchaser, written notice thereof shall forthwith be given to the
other  party  and the  transactions  contemplated  by this  Agreement  shall  be
terminated  without  further  action  by  either  party.  If this  Agreement  is
terminated as provided in Section 8.1 or 8.2 herein, this Agreement shall become
void and of no further  force and effect,  except as  provided in Section  10.9.
Nothing  in this  Section  8.3 shall be deemed to  release  the  Company  or the
Purchaser from any liability for any breach under this  Agreement,  or to impair
the rights of the Company and the Purchaser to compel  specific  performance  by
the other party of its obligations under this Agreement.

                                   ARTICLE IX

                                Indemnification

     Section 9.1 General Indemnity.

     (a)  Indemnification  by the Company.  The Company will  indemnify and hold
harmless  the  Purchaser  and each person,  if any,  who controls the  Purchaser
within the meaning of Section 15 of the  Securities  Act or Section 20(a) of the
Exchange  Act from and against  any losses,  claims,  damages,  liabilities  and
expenses  (including  reasonable  costs of  defense  and  investigation  and all
reasonable  attorney's fees) to which the Purchaser and each person, if any, who
controls  the  Purchaser  may  become  subject,  under  the  Securities  Act  or
otherwise, insofar as such losses, claims, damages, liabilities and expenses (or
actions  in  respect  thereof)  arise out of or are based  upon,  (i) any untrue
statement  or  alleged  untrue  statement  of  a  material  fact  contained,  or
incorporated  by  reference,  in the  Registration  Statement or the  Prospectus
relating  to the  shares  being  sold  by the  Purchaser,  or any  amendment  or
supplement  to it, or (ii) the  omission  or alleged  omission  to state in that

                                       24
<PAGE>
Registration  Statement  or  any  document  incorporated  by  reference  in  the
Registration  Statement,  a  material  fact  required  to be stated  therein  or
necessary  to make the  statements  therein not  misleading,  provided  that the
Company shall not be liable under this Section 9.1(a) to the extent that a court
of competent  jurisdiction  shall have  determined by a final judgment that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures  to act,  undertaken  or omitted to be taken by the  Purchaser  or such
person through its bad faith or willful misconduct;  provided, however, that the
foregoing  indemnity shall not apply to any loss,  claim,  damage,  liability or
expense to the  extent,  but only to the extent (x) arising out of or based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity  with written  information  furnished to
the Company by the Purchaser  expressly for use in the  Registration  Statement,
any  preliminary  prospectus or the  Prospectus  (or any amendment or supplement
thereto) or (y) Purchaser is obligated to deliver a Prospectus  and such losses,
claims,  damages,  liabilities  or  expenses  resulted  from the  fact  that the
Purchaser  sold  Shares  to a  person  to whom  there  was not  sent or  given a
Prospectus at or prior to the written  confirmation of such sale and the Company
shall have previously and timely furnished  sufficient copies of the Prospectus,
as so amended or supplemented,  to Purchaser and such Prospectus,  as so amended
or  supplemented,  would have corrected  such untrue  statement or omission of a
material fact.

     The Company will reimburse the Purchaser and each such  controlling  person
promptly  upon  demand  for any  legal or other  costs  or  expenses  reasonably
incurred by the Purchaser or the controlling person in investigating,  defending
against,  or  preparing  to  defend  against  any such  claim,  action,  suit or
proceeding,  except that the Company will not be liable to the extent a claim or
action which results in a loss, claim,  damage,  liability or expense arises out
of, or is based upon, an untrue statement, alleged untrue statement, omission or
alleged  omission,  included in the Registration  Statement or any Prospectus in
reliance  upon, and in conformity  with,  written  information  furnished by the
Purchaser  to the  Company  for  inclusion  in  the  Registration  Statement  or
Prospectus.

     (b) Indemnification by the Purchaser. The Purchaser will indemnify and hold
harmless the Company,  each of its directors and officers,  and each person,  if
any, who controls the Company within the meaning of Section 15 of the Securities
Act or  Section  20(a)  of the  Exchange  Act  from  and  against  any  expenses
(including  reasonable  costs of defense and  investigation  and all  reasonable
attorneys  fees) to which the Company and any director or officer of the Company
and each person, if any, who controls the Company may become subject,  under the
Securities  Act  or  otherwise,   insofar  as  such  losses,  claims,   damages,
liabilities  and  expenses (or actions in respect  thereof)  arise out of or are
based upon, (i) any untrue  statement or alleged untrue  statement of a material
fact  contained in any  Prospectus  or (ii) the omission or alleged  omission to
state in the  Registration  Statement or any Prospectus a material fact required
to be stated therein or necessary to make the statements therein not misleading,
to the extent,  but only to the extent,  the untrue  statement,  alleged  untrue
statement,  omission  or alleged  omission  was made in  reliance  upon,  and in
conformity with, written  information  furnished by the Purchaser to the Company
for inclusion in the  Registration  Statement or  Prospectus,  and the Purchaser
will reimburse the Company and each such director, officer or controlling person
promptly  upon  demand  for any  legal or other  costs  or  expenses  reasonably
incurred by the Company or the other person in investigating, defending against,
or preparing to defend against any such claim, action, suit or proceeding.

                                       25
  <PAGE>
     Section 9.2  Indemnification  Procedures.  Promptly after a person receives
notice of a claim or the  commencement of an action for which the person intends
to seek  indemnification  under  paragraph (a) or (b) of Section 9.1, the person
will notify the  indemnifying  party in writing of the claim or  commencement of
the action,  suit or proceeding,  but failure to notify the  indemnifying  party
will not relieve the  indemnifying  party from liability  under paragraph (a) or
(b) of Section 9.1,  except to the extent it has been  materially  prejudiced by
the  failure  to  give  notice.  The  indemnifying  party  will be  entitled  to
participate in the defense of any claim,  action, suit or proceeding as to which
indemnification  is being sought,  and if the indemnifying party acknowledges in
writing the  obligation  to indemnify the party against whom the claim or action
is brought,  the indemnifying party may (but will not be required to) assume the
defense against the claim,  action,  suit or proceeding with counsel  reasonably
satisfactory  to it. After an indemnifying  party notifies an indemnified  party
that the  indemnifying  party  wishes to assume the defense of a claim,  action,
suit or proceeding  the  indemnifying  party will not be liable for any legal or
other expenses  incurred by the indemnified party in connection with the defense
against the claim,  action, suit or proceeding except that if, in the opinion of
counsel to the indemnifying party, one or more of the indemnified parties should
be separately represented in connection with a claim, action, suit or proceeding
the indemnifying party will pay the reasonable fees and expenses of one separate
counsel for the indemnified  parties.  Each indemnified party, as a condition to
receiving  indemnification  as provided in Paragraph  (a) or (b) or Section 9.1,
will cooperate in all  reasonable  respects with the  indemnifying  party in the
defense  of any  action  or claim  as to which  indemnification  is  sought.  No
indemnifying  party will be liable  for any  settlement  of any action  effected
without its prior  written  consent,  which  consent  shall not be  unreasonably
withheld.  No  indemnifying  party will without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld,  effect any
settlement  of  a  pending  or  threatened  action  with  respect  to  which  an
indemnified  party is, or is informed that it may be, made a party and for which
it would be  entitled  to  indemnification,  unless the  settlement  includes an
unconditional  release of the  indemnified  party from all  liability and claims
which are the subject matter of the pending or threatened action.

     If for any reason the indemnification provided for in this Agreement is not
available to, or is not  sufficient to hold harmless,  an  indemnified  party in
respect of any loss or liability  referred to in paragraph (a) or (b) of Section
9.1, each  indemnifying  party will,  in lieu of  indemnifying  the  indemnified
party,  contribute to the amount paid or payable by the  indemnified  party as a
result of the loss or liability,  (i) in the proportion  which is appropriate to
reflect the relative benefits received by the indemnifying party on the one hand
and by the  indemnified  party on the other from the sale of stock  which is the
subject of the claim,  action,  suit or proceeding which resulted in the loss or
liability or (ii) if that allocation is not permitted by applicable law, in such
proportion as is  appropriate  to reflect not only the relative  benefits of the
sale of stock,  but also the relative  fault of the  indemnifying  party and the
indemnified  party with respect to the  statements  or  omissions  which are the
subject of the claim,  action,  suit or proceeding  that resulted in the loss or
liability, as well as any other relevant equitable considerations.

                                       26
<PAGE>
                                   ARTICLE X

                                  Miscellaneous

     Section  10.1 Fees and  Expenses.  Except as set forth in  Article  IX, the
Company  shall  pay  (i)  all  reasonable  fees  and  expenses  related  to  the
transactions  contemplated by this Agreement;  provided,  that the Company shall
pay, at the Closing,  all reasonable  attorneys fees and expenses  (exclusive of
disbursements and out-of-pocket  expenses and reasonably  itemized)  incurred by
the Purchaser up to $50,000 in  connection  with the  preparation,  negotiation,
execution  and  delivery of this  Agreement,  and (ii) all  reasonable  fees and
expenses   incurred  by  the  Purchaser  in  connection   with  any  amendments,
modifications  or waivers of this  Agreement or incurred in connection  with the
enforcement of this Agreement,  including,  without  limitation,  all reasonable
attorneys fees and expenses.

     Section 10.2 Specific Enforcement, Consent to Jurisdiction.

     (a) The Company and the Purchaser  acknowledge  and agree that  irreparable
damage  would occur in the event that any of the  provisions  of this  Agreement
were not performed in accordance  with their  specific  terms or were  otherwise
breached.  It is  accordingly  agreed that the  parties  shall be entitled to an
injunction or  injunctions to prevent or cure breaches of the provisions of this
Agreement  and to  enforce  specifically  the  terms  and  provisions  hereof or
thereof,  this being in addition to any other remedy to which any of them may be
entitled by law or equity.

     (b) Each of the Company and the Purchaser (i) hereby irrevocably submits to
the  jurisdiction  of the United States  District  Court and other courts of the
United  States  sitting in the State of New York for the  purposes  of any suit,
action or  proceeding  arising  out of or relating  to this  Agreement  and (ii)
hereby waives,  and agrees not to assert in any such suit, action or proceeding,
any claim that it is not personally  subject to the  jurisdiction of such court,
that the suit, action or proceeding is brought in an inconvenient  forum or that
the venue of the suit, action or proceeding is improper. Each of the Company and
the  Purchaser  consents  to process  being  served in any such suit,  action or
proceeding  by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall constitute
good and  sufficient  service of process  and  notice  thereof.  Nothing in this
Section  10.2  shall  affect or limit any  right to serve  process  in any other
manner permitted by law.

     Section  10.3 Entire  Agreement;  Amendment.  This  Agreement  contains the
entire  understanding  of the parties with respect to the matters covered hereby
and,  except as  specifically  set forth  herein,  neither  the  Company nor the
Purchaser  makes any  representations,  warranty,  covenant or undertaking  with
respect to such matters. No provision of this Agreement may be waived or amended
other than by a written  instrument signed by the party against whom enforcement
of any such amendment or waiver is sought.

     Section  10.4  Notices.  Any  notice,  demand,  request,  waiver  or  other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be effective (a) upon hand  delivery,  by telex (with  correct  answer
back received),  telecopy or facsimile at the address or number designated below
(if delivered on a business day during normal  business  hours where such notice
is to be  received),  or the first  business  day  following  such  delivery (if

                                       27
<PAGE>
delivered  other than on a business day during normal  business hours where such
notice is to be received) or (b) on the second  business day  following the date
of mailing by express courier service, fully prepaid, addressed to such address,
or upon  actual  receipt of such  mailing,  whichever  shall  first  occur.  The
addresses for such communications shall be:

If to the Company:           Value America, Inc.
                             337 Rio Road
                             Charlottesville, VA  22902
                             Tel. No.: (804) 817-7700
                             Fax No.:  (804) 817-7884
                             Attention:  Glenda M. Dorchak

With copies to:              Simpson Thacher & Bartlett
                             425 Lexington Avenue
                             New York, NY  10017
                             Tel. No.: (212) 455-2000
                             Fax No.: (212) 455-2502
                             Attention:  Marni J. Lerner

If to the Purchaser:         Acqua Wellington North American Equities Fund, Ltd.
                             c/o Mees Pierson Fund Services (Bahamas) Ltd.
                             Montague Sterling Centre
                             East Bay Street, P. O. Box SS-6238
                             Nassau, Bahamas
                             Tel. No.: (242) 394-2700
                             Fax No.: (242) 394-9667
                             Attention:  Anthony L.M. Inder Rieden

With copies to:              Parker Chapin LLP
                             The Chrysler Building
                             405 Lexington Avenue
                             New York, New York 10174
                             Tel. No.: (212) 704-6000
                             Fax No.: (212) 704-6288
                             Attention:  Christopher S. Auguste

     Any party  hereto may from time to time  change its  address for notices by
giving at least ten (10) days prior  written  notice of such changed  address to
the other party hereto.

     Section 10.5 Waivers. No waiver by either party of any default with respect
to any provision,  condition or requirement of this Agreement shall be deemed to
be a  continuing  waiver in the  future  or a waiver  of any  other  provisions,
condition or requirement hereof, nor shall any delay or omission of any party to
exercise any right hereunder in any manner impair the exercise of any such right
accruing to it thereafter.

                                       28
<PAGE>
     Section 10.6 Headings. The article, section and subsection headings in this
Agreement  are for  convenience  only and  shall not  constitute  a part of this
Agreement  for any other  purpose and shall not be deemed to limit or affect any
of the provisions hereof.

     Section 10.7  Successors  and Assigns.  The  Purchaser  may not assign this
Agreement to any person without the prior written consent of the Company,  which
consent will not be unreasonably withheld.  This Agreement shall be binding upon
and inure to the benefit of the parties and their successors and assigns.  After
Closing,  the  assignment by a party to this  Agreement of any rights  hereunder
shall not affect the obligations of such party under this Agreement.

     Section  10.8  Governing  Law.  This  Agreement  shall be  governed  by and
construed in accordance with the internal laws of the State of New York, without
giving effect to the choice of law provisions.

     Section 10.9 Survival.  The  representations  and warranties of the Company
and the  Purchaser  contained  in Article  III and the  covenants  contained  in
Article IV shall survive the execution and delivery hereof and the Closing until
the termination of this Agreement, and the agreements and covenants set forth in
Article IX of this Agreement shall survive the execution and delivery hereof and
the Closing  hereunder in  accordance  with their terms.  Sections 4.3 and 10.14
shall survive the termination of this Agreement.

     Section 10.10 Counterparts. This Agreement may be executed in any number of
counterparts,  all of which taken  together  shall  constitute  one and the same
instrument and shall become effective when counterparts have been signed by each
party and delivered to the other parties  hereto,  it being  understood that all
parties  need not sign the same  counterpart.  In the  event  any  signature  is
delivered  by  facsimile  transmission,  the party  using such means of delivery
shall cause four additional executed signature pages to be physically  delivered
to the other parties within five (5) days of the execution and delivery hereof.

     Section 10.11  Publicity.  Except as required by law or any  requirement of
Nasdaq or any  other  exchange  on which the  Common  Stock may be  listed,  the
Company shall not issue any press release or otherwise make any public statement
or announcement with respect to this Agreement or the transactions  contemplated
hereby or the  existence  of this  Agreement,  without the prior  consent of the
Purchaser, which consent shall not be unreasonably withheld or delayed.

     Section 10.12 Severability.  The provisions of this Agreement are severable
and, in the event that any court of competent  jurisdiction shall determine that
any one or more of the  provisions or part of the  provisions  contained in this
Agreement shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision or part of a provision of this Agreement, and this Agreement
shall be reformed and  construed as if such invalid or illegal or  unenforceable
provision,  or part of such provision,  had never been contained herein, so that
such  provisions  would be valid,  legal and  enforceable  to the maximum extent
possible.  In addition,  if in  connection  with any review of any  Registration
Statement  hereunder,  the  Commission  determines  that  any one or more of the
provisions  or part of the  provisions  contained in this  Agreement,  including
without limitation any provision or part of any provision relating to the mutual

                                       29
<PAGE>
consent of the Company and the Purchaser  but excluding the Maximum  Commitment,
the Threshold  Price, the Draw Down Amount,  the Draw Down Discount  Percentage,
the VWAP, the numbers or terms of the Warrants to be issued under this Agreement
or Section  5.1(f) or clause (w) of Section 8.2,  shall  prevent the sale of the
Shares to the Purchaser from being deemed a completed private placement prior to
the filing of such Registration  Statement,  the Company and the Purchaser shall
agree on a revision to this Agreement to cause,  in the view of the  Commission,
such transaction to qualify as such.

     Section  10.13  Further  Assurances.  From  and  after  the  date  of  this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instrument, documents and other
writings as may be  reasonably  necessary  or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.

     Section   10.14   Confidentiality.   Purchaser   agrees  to  maintain   the
confidentiality  of all information about the Company received from any officer,
employee  or  agent  of the  Company,  until  such  time  as  that  confidential
information  is released to the public  generally  other than as a result of any
disclosure by Purchaser.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       30
<PAGE>

     IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
duly executed by their respective  authorized officer as of the date first above
written.

                                             VALUE AMERICA, INC.

                                             By: /s/ Glenda M. Dorchak
                                                 Name: Glenda M. Dorcak
                                                 Title: Chief Executive Officer

                                             ACQUA WELLINGTON NORTH
                                             AMERICAN EQUITIES FUND, LTD.

                                             By: /s/ Anthony L.M. Inder Rieden
                                                 Name: Anthony L.M. Inder Rieden
                                                 Title: Director

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