Exhibit 10.22
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into as
of June 3, 1998, by and between VALUE AMERICA, INC. (the "Company"), a Virginia
corporation, and CAPITAL ADVISERS, L.L.C., a Virginia limited liability company
("Investor").
R E C I T A L S
A. Concurrently with entering into this Agreement, the Company and
Investor are entering into a Stock Purchase Agreement as defined below bearing
the same date as this Agreement under which Investor is agreeing to purchase
48,054 shares of the Company's Common Stock, as defined below (the "Shares"),
from ▇▇▇▇▇ ▇. ▇▇▇▇, a resident of the Commonwealth of Virginia and the Chairman
and Chief Executive Officer of the Company, on the terms and subject to the
conditions appearing therein, and under which ▇▇▇▇▇ ▇. ▇▇▇▇ is granting Investor
an option to purchase an additional 48,053 shares of Common Stock.
B. The execution and delivery of this Agreement by the parties
hereto are a condition to Investor's obligation to purchase the Shares from
▇▇▇▇▇ ▇. ▇▇▇▇.
C. The Company is entering into this Agreement in consideration for the
Investor's assistance to the Company in securing investors in the Company's
Series B Preferred Stock.
A G R E E M E N T
THEREFORE, the parties hereto hereby agree as follows:
1. Definitions. Unless the context otherwise requires, the terms defined
in this Section 1 shall have the meanings herein specified for all purposes of
this Agreement, applicable to both the singular and plural forms of any of the
terms herein defined.
"Agreement" means this Registration Rights Agreement.
"Board" means the Board of Directors of the Company.
"Common Stock" means the common stock of the Company, without par
value per share.
"Commission" means the Securities and Exchange Commission.
"Equity Security" has the meaning assigned to it in the Preferred Stock
Purchase Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" of any security means the record or beneficial owner of such
security.
"Holders of a Majority of the Registrable Securities" means the Person or
Persons who are the Holders of greater than 50% of the shares of Registrable
Securities then outstanding.
"Initiating Holders" means with respect to each registration pursuant to
Section 2 the Holder or Holders of at least 100% of the shares of Registrable
Securities then outstanding.
"Investor" has the meaning assigned to it in the introductory paragraph
of this Agreement.
"Person" includes any natural person, corporation, trust, association,
company, partnership, joint venture and other entity and any government,
governmental agency, instrumentality or political subdivision.
"Stock Purchase Agreement" means the Stock Purchase Agreement dated as
of June 3, 1998 between ▇▇▇▇▇ ▇. ▇▇▇▇ and Investor.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means (1) 48,054 shares of Common Stock purchased
by Investor pursuant to the Stock Purchase Agreement, and, if Investor has
exercised the Option, as defined in the Stock Purchase Agreement, the 48,053
shares of Common Stock representing the Option Shares, as defined in the Stock
Purchase Agreement, and (2) any securities issued or issuable with respect to
the Common Stock referred to in clause (1) above by way of a stock dividend or
stock split or in connection with a combination of shares, reclassification,
recapitalization, merger or consolidation or reorganization; provided, however,
that such shares of Common Stock shall (a) only be treated as Registrable
Securities if and so long as they have not been sold or transferred to any
Person other than the Investor, and (b) not be treated as Registrable Securities
after the Company has completed its initial firmly underwritten public offering
registered under the Securities Act if the Holder thereof is lawfully able to
sell such shares of Common Stock without registration and in compliance with all
other applicable securities laws and in reliance upon Rule 144 (k) of the
Commission and has received a reasonably satisfactory opinion of the Company's
counsel (which counsel is reasonably satisfactory to such Holder) and its own
counsel to this effect and all transfer restrictions and restrictive legends
have been removed from the certificates evidencing such shares.
"Securities Act" means the Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
2. Required Registration.
(a) If and whenever the Company shall receive a written request
therefor from Initiating Holders, the Company agrees to prepare and file
promptly a registration statement under the Securities Act covering the
shares of Registrable Securities which are the subject of such request and
agrees to use its best efforts to cause such registration statement to
become effective as expeditiously as possible. Upon the receipt of such
request, the Company agrees to give promptly written notice to all Holders
of Registrable Securities that such registration is to be effected. The
Company agrees to include in such registration statement such shares of
Registrable Securities for which it has received written requests to
register such shares by the Holders thereof within thirty (30) days after
the receipt of written notice from the Company.
(b) The Company shall be obligated to prepare, file and cause to
become effective only one Form S-3 registration statements pursuant to
this Section 2.
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(c) The Company shall not be required by this Section 2 to effect a
registration of Registrable Securities pursuant to any registration
statement, other than on Form S-3.
(d) If the Holders initiating a request for the registration of
Registrable Securities pursuant to this Section 2 intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they agree to provide the Company with the name of the
managing underwriter or underwriters (the "managing underwriter") that a
majority interest of the Initiating Holders requesting such registration
propose to employ, as a part of their request made pursuant to this
Section 2, and the Company agrees to include such information in its
written notice referred to in Section 2(a). In such event the right of any
Holder to registration pursuant to this Section 2 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent
requested (unless otherwise mutually agreed by the Holders of a Majority
of the Registrable Securities initiating such request for registration and
such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting agree to enter into
(together with the Company) an underwriting agreement with the underwriter
or underwriters selected for such underwriting, in the manner set forth
above, provided that such underwriting agreement is in customary form and
is reasonably acceptable to the Holders of a majority of the shares of
Registrable Securities to be included in such registration.
(e) Notwithstanding any other provision of this Section 2, if the
managing underwriter of an underwritten distribution advises the Company
and the Holders of Registrable Securities participating in such
registration in writing that in its good faith judgment the number of
shares of Registrable Securities requested to be included in such
registration exceeds the number of shares of Registrable Securities which
can be sold in such offering, then (i) the number of shares of Registrable
Securities and other securities so requested to be included in the
offering shall be reduced to that number of shares which in the good faith
judgment of the managing underwriter can be sold in such offering (except
for shares to be included pursuant to demand registration rights granted
by the Company in accordance with Section 7 of the December 17, 1997
Agreement, as may be amended and restated from time to time, as defined in
Section 7 hereof, in an offering initiated upon the exercise of such
rights, and except for shares to be issued by the Company in an offering
initiated by the Company, which shall have priority over the shares of
Registrable Securities), and (ii) such reduced number of shares shall be
allocated among all participating Holders of Registrable Securities and
the holders of other securities in proportion, as nearly as practicable,
to the respective number of shares of Registrable Securities and other
securities held by such Holders and other holders at the time of filing
the registration statement. Those Registrable Securities and other
securities which are excluded from the underwriting by reason of the
managing underwriter's marketing limitation and all other Registrable
Securities not originally requested to be so included shall not be
included in such registration and shall be withheld from the market by the
Holders thereof for a period, not to exceed one hundred and eighty (180)
days, which the managing underwriter reasonably determines is necessary to
effect the underwritten public offering.
(f) If the managing underwriter has not limited the number of
Registrable Securities to be underwritten, the Company and, subject to the
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requirements of Section 7 hereof, other holders of the Company's
securities may include securities for its (or their) own account in such
registration if the managing underwriter so agrees and if the number of
Registrable Securities which would otherwise have been included in such
registration and underwriting will not thereby be limited.
3. Incidental Registration.
(a) Each time the Company shall determine to file a registration
statement under the Securities Act other than pursuant to Section 2 hereof
and other than on Form S-4 or S-8 in connection with the proposed offer
and sale for money of any of its securities either for its own account or
on behalf of any other security holder, the Company agrees to give
promptly written notice of its determination to all Holders of Registrable
Securities. Upon the written request of a Holder of any shares of
Registrable Securities given within thirty (30) days after the receipt of
such written notice from the Company, subject to a maximum of two such
written requests, the Company agrees to cause all such Registrable
Securities, the Holders of which have so requested registration thereof,
to be included in such registration statement and registered under the
Securities Act, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Registrable
Securities to be so registered.
(b) If the registration of which the Company gives written notice
pursuant to Section 3(a) is for a public offering involving an
underwriting, the Company agrees to so advise the Holders as a part of its
written notice. In such event the right of any Holder to registration
pursuant to this Section 3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their Registrable Securities through
such underwriting agree to enter into (together with the Company and the
other holders distributing their securities through such underwriting) an
underwriting agreement with the underwriter or underwriters selected for
such underwriting by the Company, provided that such underwriting
agreement is in customary form and is reasonably acceptable to the Holders
of a majority of the shares of Registrable Securities requested to be
included in such registration.
(c) Notwithstanding any other provision of this Section 3, if the
managing underwriter of an underwritten distribution advises the Company
and the Holders of the Registrable Securities participating in such
registration in writing that in its good faith judgment the number of
shares of Registrable Securities and the other securities requested to be
registered exceeds the number of shares of Registrable Securities and
other securities which can be sold in such offering, then (i) the number
of shares of Registrable Securities and other securities so requested to
be included in the offering shall be reduced to that number of shares
which in the good faith judgment of the managing underwriter can be sold
in such offering (except for shares to be included pursuant to demand
registration rights granted by the Company in an offering initiated upon
the exercise of such rights, and except for shares to be issued by the
Company in an offering initiated by the Company, which shall have priority
over the shares of Registrable Securities), and (ii) such reduced number
of shares shall be allocated among all participating Holders of
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Registrable Securities and the holders of other securities in proportion,
as nearly as practicable, to the respective number of shares of
Registrable Securities and other securities held by such Holders and other
holders at the time of filing the registration statement. All Registrable
Securities and other securities which are excluded from the underwriting
by reason of the underwriter's marketing limitation and all other
Registrable Securities not originally requested to be so included shall
not be included in such registration and shall be withheld from the market
by the Holders thereof for a period, not to exceed one hundred and eighty
(180) days, which the managing underwriter reasonably determines is
necessary to effect the underwritten public offering.
4. Registration Procedures. If and whenever the Company is required
by the provisions of Section 2 or 3 hereof to effect the registration of
Registrable Securities under the Securities Act, the Company, at its
expense and as expeditiously as possible, agrees to:
(a) In accordance with the Securities Act and all applicable rules
and regulations, prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to
cause such registration statement to become and remain effective until the
securities covered by such registration statement have been sold, and
prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus contained therein as may be
necessary to keep such registration statement effective and such
registration statement and prospectus accurate and complete until the
securities covered by such registration statement have been sold;
(b) If the offering is to be underwritten in whole or in part, enter
into a written underwriting agreement in form and substance reasonably
satisfactory to the managing underwriter of the public offering and the
Holders of a majority of the Registrable Securities participating in such
offering;
(c) Furnish to the Holders of securities participating in such
registration and to the underwriters of the securities being registered
such number of copies of the registration statement and each amendment and
supplement thereto, preliminary prospectus, final prospectus and such
other documents as such underwriters and Holders may reasonably request in
order to facilitate the public offering of such securities;
(d) Use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or blue
sky laws of such jurisdictions as such participating Holders and
underwriters may reasonably request within ten (10) days prior to the
original filing of such registration statement, except that the Company
shall not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign corporation
in any jurisdiction where it is not so qualified;
(e) Notify the Holders participating in such registration, promptly
after it shall receive notice thereof, of the date and time when such
registration statement and each post-effective amendment thereto has
become effective or a supplement to any prospectus forming a part of such
registration statement has been filed;
(f) Notify such Holders promptly of any request by the Commission
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(g) Prepare and file with the Commission, promptly upon the request
of any such Holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such Holders,
is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Registrable
Securities by such Holders;
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(h) Prepare and file promptly with the Commission, and promptly
notify such Holders of the filing of, such amendments or supplements to
such registration statement or prospectus as may be necessary to correct
any statements or omissions if, at the time when a prospectus relating to
such securities is required to be delivered under the Securities Act, any
event has occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(i) In case any of such Holders or any underwriter for any such
Holders is required to deliver a prospectus at a time when the prospectus
then in circulation is not in compliance with the Securities Act or the
rules and regulations of the Commission, prepare promptly upon request
such amendments or supplements to such registration statement and such
prospectus as may be necessary in order for such prospectus to comply with
the requirements of the Securities Act and such rules and regulations;
(j) Advise such Holders, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement or
the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order or
to obtain its withdrawal if such stop order should be issued;
(k) Not file any registration statement or prospectus or any
amendment or supplement to such registration statement or prospectus to
which the Holders of a majority of the Registrable Securities included or
to be included in a registration have reasonably objected on the grounds
that such registration statement or prospectus or amendment or supplement
thereto does not comply in all material respects with the requirements of
the Securities Act or the rules and regulations thereunder, after having
been furnished with a copy thereof at least five (5) business days prior
to the filing thereof; provided, however, that the failure of such Holders
or their counsel to review or object to any registration statement or
prospectus or any amendment or supplement to such registration statement
or prospectus shall not affect the rights of such Holders or their
respective officers, directors, partners, legal counsel, accountants or
controlling Persons or any underwriter or any controlling Person of such
underwriter under Section 6 hereof;
(l) Make available for inspection upon request by any Holder of
Registrable Securities covered by such registration statement, by any
managing underwriter of any distribution to be effected pursuant to such
registration statement and by any attorney, accountant or other agent
retained by any such Holder or any such underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company, and cause all of the Company's officers, directors and employees
to supply all information reasonably requested by any such Holder,
underwriter, attorney, accountant or agent in connection with such
registration statement; and
(m) At the request of any Holder of Registrable Securities covered
by such registration statement, furnish to such Holder on the effective
date of the registration statement or, if such registration includes an
underwritten public offering, at the closing provided for in the
underwriting agreement, (i) an opinion dated such date of the counsel
representing the Company for the purposes of such registration, addressed
to the underwriters, if any, and to the Holder or Holders making such
request, covering such matters with respect to the registration statement,
the prospectus and each amendment or supplement thereto, proceedings under
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state and federal securities laws, other matters relating to the Company,
the securities being registered and the offer and sale of such securities
as are customarily the subject of opinions of issuer's counsel provided to
underwriters in underwritten public offerings, and such opinion of counsel
shall additionally cover such legal matters with respect to the
registration as such requesting Holder or Holders may reasonably request,
and (ii) letters dated each of such effective date and such closing date,
from the independent certified public accountants of the Company,
addressed to the underwriters, if any, and to the Holder or Holders making
such request, stating that they are independent certified public
accountants within the meaning of the Securities Act and dealing with such
matters as the underwriters may request, or if the offering is not
underwritten that in the opinion of such accountants the financial
statements and other financial data of the Company included in the
registration statement or the prospectus or any amendment or supplement
thereto comply in all material respects with the applicable accounting
requirements of the Securities Act, and additionally covering such other
accounting and financial matters, including information as to the period
ending not more than five (5) business days prior to the date of such
letter with respect to the registration statement and prospectus, as such
requesting Holder or Holders may reasonably request.
5. Expenses.
(a) With respect to each registration effected pursuant to Section 2
hereof and with respect to each inclusion of shares of Registrable
Securities in a registration statement pursuant to Section 3 hereof, the
Company agrees to bear all fees, costs and expenses of and incidental to
such registration and the public offering in connection therewith;
provided, however, that security holders participating in any such
registration agree to bear their pro rata share of the underwriting
discount and commissions.
(b) The fees, costs and expenses of registration to be borne as
provided in paragraph (a) above, shall include, without limitation, all
registration, filing and NASD fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, fees and
disbursements of counsel for the underwriter or underwriters of such
securities (if the Company and/or selling security holders are otherwise
required to bear such fees and disbursements), all legal fees and
disbursements and other expenses of complying with state securities or
blue sky laws of any jurisdictions in which the securities to be offered
are to be registered or qualified, reasonable fees and disbursements of
one firm of counsel for the selling security holders, selected by the
Holders of a majority of the shares of Registrable Securities to be
included in such registration, and the premiums and other costs of
policies of insurance against liability arising out of such public
offering.
6. Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless each
Holder of Registrable Securities which are included in a registration
statement pursuant to the provisions of this Agreement and each of such
Holder's officers, directors, partners, legal counsel and accountants, and
each Person who controls such Holder within the meaning of the Securities
Act and any underwriter (as defined in the Securities Act) for such
Holder, and any Person who controls such underwriter within the meaning of
the Securities Act, from and against, and agrees to reimburse such Holder,
its officers, directors, partners, legal counsel, accountants and
controlling Persons and each such underwriter and controlling Person of
such underwriter with respect to, any and all claims, actions (actual or
threatened), demands, losses, damages, liabilities, costs and expenses to
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which such Holder, its officers, directors, partners, legal counsel,
accountants or controlling Persons, or any such underwriter or controlling
Person of such underwriter may become subject under the Securities Act or
otherwise, insofar as such claims, actions, demands, losses, damages,
liabilities, costs or expenses arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
such registration statement, any prospectus contained therein, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that the Company will not be liable in any
such case to the extent that any such claim, action, demand, loss, damage,
liability, cost or expense is caused by an untrue statement or alleged
untrue statement or omission or alleged omission so made in strict
conformity with written information furnished by such Holder, such
underwriter or such controlling Person specifically for use in the
preparation thereof.
(b) Each Holder of shares of Registrable Securities which are
included in a registration statement pursuant to the provisions of this
Agreement hereby agrees, severally (in the proportion that the number of
shares sold by it bears to the total number of shares sold in the
applicable registration) and not jointly, to indemnify and hold harmless
the Company, its officers, directors, legal counsel and accountants and
each Person who controls the Company within the meaning of the Securities
Act, from and against, and agrees to reimburse the Company, its officers,
directors, legal counsel, accountants and controlling Persons with respect
to, any and all claims, actions, demands, losses, damages, liabilities,
costs or expenses to which the Company, its officers, directors, legal
counsel, accountants or such controlling Persons may become subject under
the Securities Act or otherwise, insofar as such claims, actions, demands,
losses, damages, liabilities, costs or expenses are caused by any untrue
or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment
or supplement thereto, or are caused by the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, in each case to the extent, but only
to the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was so made in reliance upon and in strict
conformity with written information furnished by such Holder specifically
for use in the preparation thereof. Notwithstanding the foregoing, no
Holder of Registrable Securities shall be obligated hereunder to pay more
than the net proceeds realized by it upon its sale of Registrable
Securities included in such registration statement.
(c) Promptly after receipt by a party indemnified pursuant to the
provisions of subsection (a) or (b) of this Section 6 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions, such indemnified party will, if a claim therefor is
to be made against the indemnifying party pursuant to the provisions of
subsection (a) or (b), notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not
relieve it from any liability which it may have to an indemnified party
otherwise than under this Section 6 and shall not relieve the indemnifying
party from liability under this Section 6 unless such indemnifying party
is prejudiced by such omission. In case any such action is brought against
any indemnified party, and it notifies the indemnifying party of the
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commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying parties similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party; provided,
however, that if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available
to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified
party or parties shall have the right to select separate counsel (in which
case the indemnifying party shall not have the right to direct the defense
of such action on behalf of the indemnified party or parties). Upon the
permitted assumption by the indemnifying party of the defense of such
action, and approval by the indemnified party of counsel, the indemnifying
party shall not be liable to such indemnified party under subsection (a)
or (b) for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof (other than
reasonable costs of investigation) unless (i) the indemnified party shall
have employed separate counsel in connection with the assertion of legal
defenses in accordance with the proviso to the next preceding sentence,
(ii) the indemnifying party shall not have employed counsel satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time, (iii) the indemnifying party and its counsel do not
actively and vigorously pursue the defense of such action, or (iv) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. No
indemnifying party shall be liable to an indemnified party for any
settlement of any action or claim without the consent of the indemnifying
party and no indemnifying party may unreasonably withhold its consent to
any such settlement. No indemnifying party will consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability with respect to such
claim or litigation.
(d) If the indemnification provided for in subsection (a) or (b) of
this Section 6 is held by a court of competent jurisdiction to be
unavailable to a party to be indemnified with respect to any claims,
actions, demands, losses, damages, liabilities, costs or expenses referred
to therein, then each indemnifying party under any such subsection, in
lieu of indemnifying such indemnified party thereunder, hereby agrees to
contribute to the amount paid or payable by such indemnified party as a
result of such claims, actions, demands, losses, damages, liabilities,
costs or expenses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or
omissions which resulted in such claims, actions, demands, losses,
damages, liabilities, costs or expenses, as well as any other relevant
equitable considerations. The relative fault of the indemnifying party and
of the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount any Holder of Registrable
Securities shall be obligated to contribute pursuant to this subsection
(d) shall be limited to an amount equal to the per share public offering
price (less any underwriting discount and commissions) multiplied by the
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number of shares of Registrable Securities sold by such Holder pursuant to
the registration statement which gives rise to such obligation to
contribute (less the aggregate amount of any damages which such Holder has
otherwise been required to pay in respect of such claim, action, demand,
loss, damage, liability, cost or expense or any substantially similar
claim, action, demand, loss, damage, liability, cost or expense arising
from the sale of such Registrable Securities).
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution hereunder
from any person who was not guilty of such fraudulent misrepresentation.
(e) In addition to its other obligation under this Section 6, the
Company further agrees to reimburse each Holder of Registrable Securities
included in a registration statement pursuant to this Agreement (and each
of such Holder's controlling Persons, officers, directors, parties, legal
counsel, accountants and underwriters (and controlling Persons of such
underwriters)) on a semi-annual basis for all reasonable legal fees and
other expenses incurred in connection with investigating or defending any
claim, action, investigation, inquiry or other proceeding arising out of
or based upon any statement or omission, or any alleged statement or
admission, described in subsection (a) of this Section 6, notwithstanding
the possibility that such payments might later be held to be improper. To
the extent that any payment is ultimately held to be improper, each Person
receiving such payment shall promptly refund such payment.
7. Limitation on Registration Rights. The Investor hereby acknowledges and
agrees that the rights granted under this Agreement are subject to and
restricted by Section 7 of that certain Registration Rights Agreement, by and
between the Company and The Union Labor Life Insurance Company, a Maryland
Corporation acting on behalf of its Separate Account P (which is not a separate
entity) dated as of December 17, 1997 (the "December 17, 1997 Agreement"), as
may be amended and restated from time to time, which Section 7 is incorporated
herein by reference and which December 17, 1997 Agreement is attached hereto as
Appendix A.
8. Reporting Requirements Under the Exchange Act. When it is first legally
required to do so, the Company agrees to register its Common Stock under Section
12 of the Exchange Act and agrees to keep effective such registration and to
file timely such information, documents and reports as the Commission may
require or prescribe under Section 13 of the Exchange Act. From and after the
effective date of the first registration statement filed by the Company under
the Securities Act, the Company agrees to file timely (whether or not it shall
then be required to do so) such information, documents and reports as the
Commission may require or prescribe under Section 13 or 15(d) (whichever is
applicable) of the Exchange Act. Upon becoming subject to the reporting
requirements of either Section 13 or 15(d) of the Exchange Act, the Company
forthwith upon request agrees to furnish to any Holder of Registrable Securities
(a) a written statement by the Company that it has complied with such reporting
requirements, (b) a copy of the most recent annual or quarterly report of the
Company and (c) such other reports and documents filed by the Company with the
Commission as such Holder may reasonably request in availing itself of an
exemption for the sale of Registrable Securities without registration under the
Securities Act. The Company acknowledges and agrees that the purposes of the
requirements contained in this Section 8 are (a) to enable any such Holder to
comply with the current public information requirement contained in paragraph
(c) of Rule 144 under the Securities Act should such Holder ever wish to dispose
of any of the securities of the Company acquired by it without registration
10
under the Securities Act in reliance upon Rule 144 (or any other similar
exemptive provision) and (b) to qualify the Company for the use of registration
statements on Form S-3. In addition, the Company agrees to take such other
measures and file such other information, documents and reports, as shall be
required of it hereafter by the Commission as a condition to the availability of
Rule 144 under the Securities Act (or any similar exemptive provision hereafter
in effect) and the use of Form S-3. The Company also covenants to use its best
efforts, to the extent that it is reasonably within its power to do so, to
qualify for the use of Form S-3.
9. Shareholder Information. The Company may request each Holder of
Registrable Securities as to which any registration is to be effected pursuant
to this Agreement to furnish the Company with such information with respect to
such Holder and the distribution of such Registrable Securities as the Company
may from time to time reasonably request in writing and as shall be required by
law or by the Commission in connection therewith, and each Holder of Registrable
Securities as to which any registration is to be effected pursuant to this
Agreement agrees to furnish the Company with such information.
10. Forms. All references in this Agreement to particular forms of
registration statements are intended to include, and shall be deemed to include,
references to all successor forms which are intended to replace, or to apply to
similar transactions as, the forms herein referenced.
11. Miscellaneous.
(a) Waivers and Amendments. With the written consent of the Holders
of a Majority of the Registrable Securities, the obligations of the
Company and the rights of Investor under this Agreement may be waived
(either generally or in a particular instance, either retroactively or
prospectively and either for a specified period of time or indefinitely),
and with the same consent the Company, when authorized by resolution of
its Board, may enter into a supplementary agreement for the purpose of
adding any provisions to or changing in any manner or eliminating any of
the provisions of this Agreement or of any supplemental agreement or
modifying in any manner the rights and obligations hereunder of Investor
and the Company; provided, however, that no such waiver or supplemental
agreement shall reduce the aforesaid proportion of Registrable Securities,
the Holders of which are required to consent to any waiver or supplemental
agreement, without the consent of the Holders of all of the Registrable
Securities. Upon the effectuation of each such waiver, consent or
agreement of amendment or modification, the Company agrees to give
promptly written notice thereof to the Holders of the Registrable
Securities who have not previously consented thereto in writing. Neither
this Agreement nor any provision hereof may be changed, waived, discharged
or terminated orally or by course of dealing, but only by a statement in
writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought, except to the extent provided
in this Section 12(a). Specifically, but without limiting the generality
of the foregoing, the failure of Investor at any time or times to require
performance of any provision hereof by the Company shall in no manner
affect the right of Investor at a later time to enforce the same. No
waiver by any party of the breach of any term or provision contained in
this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this
Agreement.
(b) Effect of Waiver or Amendment. Investor acknowledges that by
operation of Section 12(a) hereof the Holders of a Majority of the
Registrable Securities will, subject to the limitations contained in such
Section 12(a), have the right and power to diminish or eliminate certain
rights of Investor under this Agreement.
(c) Rights of Investor Inter Se. Investor shall have the absolute
right to exercise or refrain from exercising any right or rights which
Investor may have by reason of this Agreement or any Registrable Security,
including, without limitation, the right to consent to the waiver of any
obligation of the Company under this Agreement and to enter into an
agreement with the Company for the purpose of modifying this Agreement or
11
any agreement effecting any such modification; and Investor shall not
incur any liability to any Holder or Holders of Registrable Securities
with respect to exercising or refraining from exercising any such right or
rights.
(d) Notices. All notices, requests, consents and other
communications required or permitted hereunder shall be in writing
(including telecopy or similar writing) and shall be given,
if to the Company to:
Value America, Inc.
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Chairman and Chief Executive
Officer
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇, A Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to Investor to:
CAPITAL ADVISERS, L.L.C.
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
The ▇▇▇▇▇▇▇▇ Companies
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Steptoe & ▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to any other Holder of Registrable Securities to such
Holder at the address or to the telecopier number as such
Holder may specify by notice to the Company from time to time,
or to such other address or telecopier number as such party may specify for the
purpose by notice to the other party or parties to this Agreement, as the case
may be. A copy of any notice to the Company or to Investor or any other Holder
12
of Registrable Securities shall also be given to each other Holder of
Registrable Securities. Any notice, request, consent or other communication
hereunder shall be deemed to have been given and received on the day on which it
is delivered (by any means including personal delivery, overnight air courier,
United States mail) or telecopied (or, if such day is not a business day or if
the notice, request, consent or communication is not telecopied during business
hours of the intended recipient, at the place of receipt, on the next following
business day).
(e) Severability. Should any one or more of the provisions of this
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this
Agreement, shall be given effect separately from the provision or
provisions determined to be illegal or unenforceable and shall not be
affected thereby.
(f) Parties in Interest. All the terms and provisions of this
Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties
hereto, whether so expressed or not and, in particular, shall inure to the
benefit of and be enforceable by the Holder or Holders at the time of any
of the Registrable Securities, provided that the Company has received
notice of any such assignment. Subject to the immediately preceding
sentence, this Agreement shall not run to the benefit of or be enforceable
by any Person other than a party to this Agreement and its successors and
assigns.
(g) Headings. The headings of the sections, subsections and
paragraphs of this Agreement have been inserted for convenience of
reference only and do not constitute a part of this Agreement.
(h) Choice of Law. It is the intention of the parties that the
internal substantive laws of the Commonwealth of Virginia, without
reference to the conflicts of law provisions of any jurisdiction, should
govern the enforceability and validity of this Agreement, the construction
of its terms and the interpretation of the rights and duties of the
parties.
(i) Expenses. The Company agrees to pay and hold Investor and
Holders of the Registrable Securities harmless from liability for the
payment of, (i) the fees and expenses incurred in connection with any
requested waiver of the right of Investor or the consent of Investor to
contemplated acts of the Company not otherwise permissible by the terms of
this Agreement, (ii) the fees and expenses incurred with respect to any
amendment to this Agreement proposed by the Company (whether or not the
same becomes effective), (iii) the fees and expenses incurred in respect
of the enforcement of the rights granted under this Agreement, and (iv)
all costs of the Company's performance of and compliance with this
Agreement.
(j) Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts,
with the same effect as if all parties had signed the same document. All
such counterparts shall be deemed an original, shall be construed together
and shall constitute one and the same instrument.
(k) Authorship. This Agreement shall not be construed for or against
any party by reason of the authorship or claimed authorship of any
provision of this Agreement or by reason of the status of the respective
parties.
13
(l) Entire Agreement. This Agreement, the Purchase Agreement and any
agreement, document or instrument referred to herein or therein,
constitute the entire agreement among the parties hereto with respect to
the subject matter hereof and thereof, and supersede all other prior
agreements or undertakings with respect thereto, both written and oral.
(m) Variations in Pronouns. All pronouns shall be deemed to refer to
masculine, feminine, neuter, singular or plural, as the identity of the
person(s) or entity(ies) may require.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
14
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers thereof as of the day and year
first above written.
VALUE AMERICA, INC.
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
_______________________
▇▇▇▇▇ ▇. ▇▇▇▇, Chairman and
Chief Executive Officer
CAPITAL ADVISERS, L.L.C.
By:/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its:_______________________
Appendix A
December 17, 1997 Agreement
A copy of the December 17, 1997 Agreement is attached hereto.