EXHIBIT 10.36
STOCK PURCHASE AGREEMENT
between
SmithKline ▇▇▇▇▇▇▇ Corporation
and
NPS Pharmaceuticals, Inc.
dated November 26, 1997
NPS PHARMACEUTICALS, INC.
A DELAWARE CORPORATION
AND
SMITHKLINE ▇▇▇▇▇▇▇ CORPORATION
A PENNSYLVANIA CORPORATION
STOCK PURCHASE AGREEMENT
NOVEMBER 26, 1997
Page 5
TABLE OF CONTENTS
PAGE
1. Purchase and Sale of Stock.......................................... 1
1.1 Initial Sale and Issuance of Stock.................................. 1
1.2 First Option to Purchase Shares..................................... 1
1.3 Second Option to Purchase Shares.................................... 2
1.4 Collective Terms.................................................... 3
2. Representations and Warranties of the Company....................... 3
2.1 Organization........................................................ 3
2.2 Authorization....................................................... 3
2.3 Valid Issuance...................................................... 4
2.4 Non-Contravention................................................... 4
2.5 Governmental Consents............................................... 4
2.6 Litigation.......................................................... 5
2.7 Registration Rights................................................. 5
2.8 SEC Filings......................................................... 5
2.9 Voting Arrangements................................................. 5
2.10 Disclosure.......................................................... 5
3. Representations and Warranties of the Investor...................... 6
3.1 Organization........................................................ 6
3.2 Authorization....................................................... 6
3.3 Purchase Entirely for Own Account................................... 6
3.4 Restricted Securities............................................... 6
3.5 Accredited or Foreign Investor...................................... 7
4. Conditions to Closing............................................... 7
4.1 Conditions of the Investor's Obligations at Closing................. 7
a. Representations and Warranties...................................... 7
b. Performance......................................................... 7
c. Compliance Certificate.............................................. 7
d. Opinion of Company Counsel.......................................... 8
e. License Agreement................................................... 8
f. HSR Act............................................................. 8
4.2 Conditions of the Company's Obligations at Closing.................. 8
a. Representations and Warranties...................................... 8
b. Performance......................................................... 8
c. Payment of Purchase Price by the Investor........................... 8
d. License Agreement................................................... 8
e. HSR Act............................................................. 9
5. Covenant to Register Shares......................................... 9
Page 6
5.1 Definitions........................................................ 9
5.2 Shelf Registration................................................. 10
a. Shelf Registration................................................. 10
b. Effectiveness...................................................... 11
c. Notice of Sale..................................................... 11
5.3 Piggy-Back Registration Rights..................................... 12
a. Registration....................................................... 12
b. Underwriting....................................................... 12
5.4 Holdback Agreement................................................. 13
a. Restrictions on Public Sale by Holders of Registrable Securities... 13
5.5 Expenses of Registration........................................... 14
5.6 Obligations of the Company......................................... 14
5.7 Indemnification.................................................... 18
5.8 Information by Holder.............................................. 21
5.9 Transfer of Registration Rights.................................... 21
5.10 Rule 144 Reporting................................................. 21
5.11 No Superior Rights................................................. 22
5.12 Termination of Registration Rights................................. 22
6. Miscellaneous...................................................... 22
6.1 Public Disclosure.................................................. 22
6.2 Successors and Assigns............................................. 23
6.3 Notices............................................................ 23
6.4 Survival........................................................... 24
6.5 Finders or Brokers................................................. 24
6.6 Expenses........................................................... 24
6.7 Waivers............................................................ 24
6.8 Severability....................................................... 25
6.9 Specific Enforcement............................................... 25
6.10 Entire Agreement; Amendments....................................... 25
6.11 Governing Law...................................................... 25
6.12 Counterparts....................................................... 25
6.13 Titles and Subtitles............................................... 26
6.14 Delivery of Information............................................ 26
Page 7
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made as of the 26th day
of November, 1997 by and between NPS PHARMACEUTICALS, INC., a Delaware
corporation (the "Company") and SMITHKLINE ▇▇▇▇▇▇▇ CORPORATION (the "Investor").
The Company and the Investor have today separately agreed to an Amendment
Agreement to the Collaborative Research and License Agreement between them dated
November 1, 1993, which agreement as amended is referred to herein as the "CRL
Agreement."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Stock.
--------------------------
1.1 Initial Sale and Issuance of Stock. (a) Subject to the terms and
----------------------------------
conditions of this Agreement, the Investor agrees to purchase at the Initial
Closing (as defined below) and the Company agrees to sell, issue and deliver to
the Investor at the Closing 160,000 shares of the Company's common stock, $0.001
par value (the "Common Stock") at a price of $12.2125 per share, or $1,954,000
in the aggregate (the "Initial Purchase Price"). The shares of Common Stock to
be purchased by the Investor hereunder are referred to herein as the "Initial
Shares."
(b) The closing of the purchase and sale of the Initial Shares
(the "Initial Closing") shall take place at the offices of the Company, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, at 11:00 a.m., Mountain Standard Time
on December 5, 1997 or at such other time and place as the Company and Investor
mutually agree upon. The date on which the Initial Closing takes place is
referred to as the "Initial Closing Date." At the Initial Closing, the Company
shall deliver to the Investor a certificate representing the Initial Shares
against payment of the Initial Purchase Price by wire transfer in immediately
available funds to an account designated in writing by the Company.
1.2 First Option to Purchase Shares. (a) Subject to the terms and
-------------------------------
conditions of this Agreement, the Investor shall have the right and obligation
to purchase an additional 210,000 shares of Common Stock from the Company (the
"First Option Shares") at the First Option Share Price (as defined in Section
1.2(b) below). The aggregate purchase price for the First Option Shares (the
"First Option Purchase Price") shall be equal to the product of 204,000
multiplied by the First Option Share Price. If by October 1, 1998 the Investor
has not given notice to the Company that the Investor will discontinue the
funding of the Company's research under the CRL Agreement as of October 31,
1998, then the Investor shall exercise the option described in this Section 1.2.
If the Investor has given notice by October 1, 1998 of its determination to
discontinue funding of the Company's research under the CRL Agreement effective
October 31, 1998, then the Investor shall have no further right or duty to
purchase any shares of Common Stock under this Section 1.2.
(b) The "First Option Share Price" per share shall be equal to
the sum of (I) the average of the closing prices for Common Stock on the NASDAQ
National Market
Page 8
System as reported in the Wall Street Journal for the 20 trading days ending
with October 28, 1998 and (ii) $2.50.
(c) The closing for the purchase and sale of the First Option
Shares (the "First Option Closing") shall take place at the offices of the
Company, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, at 11:00 a.m., Mountain
Standard Time on November 2, 1998 or at such other time and place as the Company
and Investor mutually agree upon. The date on which the First Option Closing
takes place is referred to as the "First Option Closing Date." At the First
Option Closing, the Company shall deliver to the Investor a certificate
representing the First Option Shares against payment of the First Option
Purchase Price by wire transfer in immediately available funds to an account
designated in writing by the Company.
1.3 Second Option to Purchase Shares. (a) Subject to the terms and
--------------------------------
conditions of this Agreement, the Investor shall have the right and obligation
to purchase an additional 250,000 shares of Common Stock from the Company (the
"Second Option Shares") at the Second Option Share Price (as defined in Section
1.3(b) below). The aggregate purchase price for the Second Option Shares (the
"Second Option Purchase Price") shall be equal to the product of 249,000
multiplied by the Second Option Share Price. If by October 1, 1999 the Investor
has not given notice to the Company that the Investor will discontinue the
funding of the Company's research under the CRL Agreement as of October 31,
1999, then the Investor shall exercise the option described in this Section 1.3.
If the Investor has given notice by October 1, 1999 of its determination to
discontinue funding of the Company's research under the CRL Agreement effective
October 31, 1999, then the Investor shall have no further right or duty to
purchase any shares of Common Stock under this Section 1.3.
(b) The "Second Option Share Price" per share shall be equal to
the sum of (I) the average of the closing prices for Common Stock on the NASDAQ
National Market System as reported in the Wall Street Journal for the 20 trading
days ending with October 27, 1999 and (ii) $2.50.
(c) The closing for the purchase and sale of the First Option
Shares (the "Second Option Closing") shall take place at the offices of the
Company, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, at 11:00 a.m., Mountain
Standard Time on November 1, 1999 or at such other time and place as the Company
and Investor mutually agree upon. The date on which the Second Option Closing
takes place is referred to as the "Second Option Closing Date." At the Second
Option Closing, the Company shall deliver to the Investor a certificate
representing the Second Option Shares against payment of the Second Option
Purchase Price by wire transfer in immediately available funds to an account
designated in writing by the Company.
1.4 Collective Terms. The Initial Shares, First Option Shares and
----------------
Second Option Shares are referred to collectively in this Agreement as the
"Shares." The Initial Closing, the First Option Closing and the Second Option
Closing are referred to collectively in this Agreement as the "Closings." The
Initial Closing Date, the First Option Closing Date and the Second Option
Closing Date are referred to collectively in this Agreement as the "Closing
Dates."
Page 9
2. Representations and Warranties of the Company. Except as set forth on
---------------------------------------------
the Schedule of Exceptions attached hereto as Schedule A, the Company hereby
represents and warrants to the Investor as follows:
2.1 Organization. The Company is a corporation duly organized,
------------
validly existing and in good standing under the laws of the State of Delaware.
The Company has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as currently conducted. The
Company has furnished to the Investor true and complete copies of the Amended
and Restated Certificate of Incorporation and Amended and Restated Bylaws, each
as amended to date and presently in effect.
2.2 Authorization. All corporate action on the part of the Company
-------------
necessary for the authorization, execution and delivery of this Agreement and
the issuance, sale and delivery of the Shares and for the performance of all
obligations of the Company hereunder has been taken or will be taken on or prior
to the Closing. This Agreement constitutes and, as of the date of the Closing
will constitute, a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except for (a) the
effect of bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting the rights of creditors generally, and (b)
limitations imposed by federal or state law or equitable principles upon the
specific enforceability of any of the remedies, covenants or other provisions of
this Agreement and the Shares and upon the availability of injunctive relief or
other equitable remedies. Without limiting the generality of the foregoing, the
Company will specifically seek approval and authorization from its Board of
Directors at the Board of Directors meeting on December 2, 1997.
2.3 Valid Issuance. The Shares, when issued, sold and delivered in
--------------
accordance with the terms hereof for the consideration expressed herein, will be
duly and validly issued, fully paid and nonassessable and not subject to pre-
emptive or any other similar rights and, based in part upon the representations
of the Investor in this Agreement, will be issued in compliance with all
applicable federal and state securities laws. Upon registration and
qualification of the Shares as set forth in Section 5 hereof, the Shares may be
sold by Investor pursuant to such registration and qualification provisions to
any person other than an affiliate of the Company free of all restrictions on
transfers imposed by the Company or the federal securities laws, other than such
restrictions as are set forth in Section 5 hereof.
2.4 Non-Contravention. The execution and delivery of this Agreement,
-----------------
the issuance, sale and delivery of the Shares, and the consummation of the
transactions contemplated hereby will not conflict with, or result in any breach
or violation of the Articles of Incorporation or the By-laws of the Company or
conflict with or constitute a breach of, or default (or an event which with
notice of lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien, charge or encumbrance on any property, capital stock
or asset of the Company or its Subsidiaries pursuant to any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the Company
or any of its Subsidiaries is a party or by which it or any of its properties,
assets or capital stock may be bound, or violate any law, administrative
regulation or
Page 10
court decree, except for conflicts, breaches, defaults or violations which
either individually or in the aggregate, would not have a material adverse
effect on the business, properties, operations or financial condition of the
Company and its Subsidiaries taken as a whole.
2.5 Governmental Consents. No consent, approval, order or
---------------------
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, local or provincial governmental authority on
the part of the Company is required in connection with the execution and
delivery of this Agreement, the offer, issue, sale and delivery of the Shares
and consummation of the transactions contemplated by this Agreement, except for
such filings as may be required to be made pursuant to applicable federal or
state securities laws or with any stock exchange on which the Shares will be
listed, and except for such filings as may be required to comply with any
applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act"), and except consents, approvals, authorizations
or orders the absence of which, either individually or in the aggregate, would
not have a material adverse effect on the business, properties, operations or
financial conditions of the Company and its Subsidiaries taken as a whole.
2.6 Litigation. There is no litigation or governmental proceeding or
----------
investigation pending or, to the best knowledge of the Company, threatened
against the Company materially and adversely affecting execution and delivery of
this Agreement or the performance by the Company of its obligations under this
Agreement.
2.7 Registration Rights. No person has demand or other rights to
-------------------
cause the Company to file any registration statement under the Securities Act of
1933, as amended (the "Securities Act") relating to any securities of the
Company or any rights to participate in any such registration statement.
2.8 SEC Filings. The information contained in the Company's 1996
-----------
Annual Report on Form 10-K and the Company's Quarterly Reports on Form 10-Q for
the quarters ended March 31, June 30 and September 30, 1997 and the Current
Report on Form 8-K dated September 12, 1997 (or with respect to either the First
Option Closing or the Second Option Closing, the Company's Annual Report on Form
10-K for the immediately preceding calendar year and the Quarterly Reports on
Form 10-Q and any Current Reports on Form 8-K filed subsequent to the date of
such Annual Report on Form 10-K)(the "SEC Reports") filed by the Company
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as of the date thereof, did not misrepresent a material fact or omit to
state any material fact necessary in order to make the statements contained
therein that pertain to the Company not misleading.
2.9 Voting Arrangements. To the Company's knowledge, there are no
-------------------
outstanding stockholder agreements, voting trusts, proxies or other arrangements
or understandings among the stockholders of the Company relating to the voting
of their respective shares.
Page 11
2.10 Disclosure. None of this Agreement or any Schedule, Exhibit or
----------
certificate delivered in accordance with the terms hereof, which has been
supplied by or on behalf of the Company, or by any of its Subsidiaries,
directors or officers, in connection with the transactions contemplated hereby,
contains an untrue statement of a material fact, or omits any statement of a
material fact necessary in order to make the statements contained herein or
therein that pertain to the Company not misleading. There is no fact known to
the Company that materially and adversely affects the business, prospects,
properties, operations or financial condition of the Company and its
Subsidiaries taken as a whole that has not been set forth in the Company's
reports filed under the Exchange Act or provided to Investor in writing.
3. Representations and Warranties of the Investor. The Investor hereby
----------------------------------------------
represents and warrants to the Company that:
3.1 Authorization. All action on the part of the Investor necessary
-------------
for the authorization, execution and delivery of this Agreement and for the
performance of all obligations of the Investor hereunder has been taken or will
be taken on or prior to the Closing. This Agreement constitutes and, as of the
date of the Closing will constitute, a legal, valid and binding agreement of the
Investor, enforceable against the Investor in accordance with its terms, except
for (a) the effect of bankruptcy, insolvency, reorganization moratorium and
other similar laws relating to or affecting the rights of creditors and (b)
limitations imposed by federal or state law or equitable principles upon the
specific enforceability of any of the remedies, covenants or other provisions of
this Agreement and upon the availability of injunctive relief or other equitable
remedies.
3.2 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Shares will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same.
By executing this Agreement, the Investor further represents that the Investor
does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such persons or to any third
person, with respect to any of the Shares.
3.3 Restricted Securities. The Investor understands that the Shares
---------------------
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations the Shares may be resold without registration under the
Securities Act only in certain limited circumstances. The Investor agrees that
it will not sell or otherwise dispose of any of the Shares unless such sale or
other disposition has been registered or is exempt from registration under the
Securities Act and has been registered or qualified or is exempt from
registration or qualification under applicable state securities laws. The
Investor understands that the certificates evidencing the Shares will bear a
restrictive legend to the effect that the Shares have not been registered under
the Securities Act and may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in effect
Page 12
with respect to the Shares under the Securities Act or an opinion of counsel
reasonably satisfactory to the Company that such registration is not required.
3.4 Accredited or Foreign Investor. The Investor is an accredited
------------------------------
investor as defined in Rule 501(a) of Regulation D of the SEC under the
Securities Act.
4. Conditions to Closing.
---------------------
4.1 Conditions of the Investor's Obligations at Closing. The
---------------------------------------------------
obligations of the Investor to purchase the Shares at any Closing are subject to
the fulfillment on or before such Closing as to the Shares to be purchased and
sold at such Closing of each of the following conditions:
a. Representations and Warranties. The representations and
------------------------------
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of Closing.
b. Performance. The Company shall have performed and complied
-----------
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
c. Compliance Certificate. An executive officer of the Company
----------------------
shall deliver to the Investor at the Closing a certificate certifying that the
conditions specified in subsections 4.1(a)and 4.1(b) have been fulfilled and
stating that there has been no material adverse change in the business, affairs,
prospects, operations, properties, assets or conditions of the Company since the
date of the Agreement.
d. Opinion of Company Counsel. The Investor shall have
--------------------------
received from Woodbury & ▇▇▇▇▇▇, P.C., counsel from the Company, an opinion,
dated as of the Closing, in form and substance reasonably satisfactory to
counsel for the Investor, dated as of the Closing Date and relating to the
issuance of the Shares issuable at such Closing.
e. HSR Act. All waiting periods applicable to the Closing
-------
under the HSR Act (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated and no action
shall have been instituted, or shall be threatened or pending, by the United
States Justice Department or the Federal Trade Commission challenging or seeking
to enjoin the consummation of the transactions contemplated at the Closing,
which action shall not have been withdrawn or terminated.
f. Approval by Board of Directors of the Company. The Board of
---------------------------------------------
Directors of the Company shall have adopted one or more resolutions authorizing
and directing the transactions contemplated herein and in the CRL Agreement at
its meeting on December 2, 1997.
Page 13
4.2 Conditions of the Company's Obligations at Closing. The
--------------------------------------------------
obligations of the Company to issue and sell the Shares to the Investor at any
Closing are subject to the fulfillment on or before such Closing of each of the
following conditions:
a. Representations and Warranties. The representations and
------------------------------
warranties of the Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of Closing.
b. Performance. The Investor shall have performed and complied
-----------
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by it on or before the Closing.
c. Payment of Purchase Price by the Investor. The Investor
-----------------------------------------
shall have delivered to the Company the relevant Purchase Price specified in
Section 1 in accordance with the terms of Section 1 and the proceeds shall have
been received by the Company.
d. HSR Act. All waiting periods applicable to the Closing
-------
under the HSR Act (including any extension thereof by reason of a request for
additional information) shall have expired or been terminated and no action
shall have been instituted, or shall be threatened or pending, by the United
States Justice Department or the Federal Trade Commission challenging or seeking
to enjoin the consummation of the transactions contemplated at the Closing,
which action shall not have been withdrawn or terminated.
e. Approval by Board of Directors of the Company. The Board of
---------------------------------------------
Directors of the Company shall have adopted one or more resolutions authorizing
and directing the transactions contemplated herein and in the CRL Agreement at
its meeting on December 2, 1997.
5. Covenant to Register Shares.
---------------------------
5.1 Definitions. The following terms shall have the following
-----------
meanings for purposes of this Section 5:
a. The term "Holder" or "Holders" shall mean (I) the Investor,
and (ii) any other person holding or having the right to acquire Registrable
Securities to whom these rights have been transferred pursuant to Section 5.9
hereof.
b. The terms "register," "registered" and "registration" refer
to a registration effected by filing with the SEC a registration statement (the
"Registration Statement") in compliance with the Act and the declaration or
ordering by the SEC of the effectiveness of such Registration Statement.
c. Prospectus: The prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a
Page 14
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A under the Act), as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any portion of the
Registrable Securities covered by such Registration Statement and all other
amendments and supplements to the prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
d. Registration Expenses: All reasonable expenses incurred by
the Company in complying with Sections 5.2 and 5.3 hereof, including, without
limitation, all registration and filing fees, listing fees for the Shares,
printing expenses, fees and disbursements of counsel for the Company, and blue
sky fees and expenses in all states. "Registration Expenses" shall also include
the reasonable fees and expenses of one counsel for the holders of securities
covered by a Registration Statement filed pursuant to 5.2 hereof, but only to
the extent such fees and expenses are incurred after the date such Registration
Statement is first filed with the SEC.
e. Registrable Securities: All Shares purchased and any Common
Stock issued or issuable in respect of the Shares pursuant to any split, stock
dividend, recapitalization, or similar event; provided however, that Registrable
Securities shall cease to be Registrable Securities to the extent that any such
Registrable Securities may be sold during any 90-day period pursuant to Rule 144
under the Act.
f. Registration Statement: Any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
g. Restricted Securities: The Shares upon original issuance
thereof, and at all times subsequent thereto, until, in the case of any such
security, it is no longer required to bear the legends set forth on such
security pursuant to the terms of this Agreement and applicable law.
h. Rule 144: Rule 144 under the Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC (excepting Rule 144A).
5.2 Shelf Registration.
------------------
a. Shelf Registration. The Company shall, not later than 150
------------------
business days after the Initial Closing Date (the "Filing Date"), either prepare
and file with the SEC a Registration Statement pursuant to Rule 415 (or any
appropriate similar rule that may be adopted by the SEC) under the Securities
Act (the "Act") covering the Registrable Securities (the "Shelf Registration")
or amend the Form S-3 Registration Statement previously filed by the Company
with the SEC so as to include the Registrable Securities. The Shelf
Registration shall
Page 15
be on Form S-3 or another appropriate form permitting registration of such
Registrable Securities for resale by Investor from time to time in the manner or
manners designated by it (including, without limitation, one or more
underwritten offerings). Any underwriters in such underwritten offering shall be
chosen by Holder subject to the reasonable satisfaction of the Company.
b. Effectiveness. The Company shall use its best efforts to
-------------
cause the Shelf Registration to become effective under the Act for the Shares
purchased by the Investor at each Closing as soon as practicable following the
filing of such Registration Statement and any post-effective amendments.
Subject to the requirements of the Act including, without limitation,
requirements relating to updating through post-effective amendments or
otherwise, the Company shall use its best efforts to keep the Shelf Registration
continually effective as to each of the Shares not then exempt from registration
under paragraph 5.12 hereof until the second anniversary of the later or last
Closing Date, provided, that in the event of a Suspension Period, as set forth
in Section 5.2(d) hereof, or a Holdback Period as set forth in Section 5.4(a),
the Company shall extend the period of effectiveness of such Shelf Registration
by the number of days of each such Suspension Period and Holdback Period. The
Company shall, as soon as practicable, use its best efforts to take such actions
under the laws of Pennsylvania and Utah as may be required to cause the resale
of the Registrable Securities pursuant to the Shelf Registration to be lawful.
c. Notice of Sale. The Investor shall provide Company with at
--------------
least 10 business days prior notice of its intent to sell Shares pursuant to the
Shelf Registration. Promptly following the sale of any Shares pursuant to the
Shelf Registration, the Investor will give the Company notice of the number of
shares sold and the date of such sale.
d. Following the effectiveness of a Registration Statement
filed pursuant to this section, the Company may, at any time, suspend the
effectiveness of such Registration Statement for up to 60 days, as appropriate
(a "Suspension Period"), by giving notice to Investor, if the Company shall
have determined that the Company may be required to disclose any material
corporate development which disclosure may have a material adverse effect on the
Company. Notwithstanding the foregoing, no more than two Suspension Periods
(i.e., 120 days) may occur in immediate succession. The period of any such
suspension of the Registration Statement shall be added to the period of time
the Company agrees to keep the Registration Statement effective as provided in
Section 5.2(b). The Company shall use its best efforts to limit the duration
and number of any Suspension Periods. Investor agrees that, upon receipt of any
notice from the Company of a Suspension Period, Investor shall forthwith
discontinue disposition of shares covered by such registration statement or
prospectus until Investor (I) is advised in writing by the Company that the use
of the applicable prospectus may be resumed, (ii) has received copies of a
supplemental or amended prospectus, if applicable, and (iii) has received copies
of any additional or supplemental filings which are incorporated or deemed to be
incorporated by reference in such prospectus.
5.3 Piggy-Back Registration Rights.
------------------------------
Page 16
a. Registration. If at any time or from time to time the
------------
Company shall determine to register any of its securities, either for its own
account or the account of security holders (other than the Holders), other than
a registration relating solely to employee benefit plans or a registration on
Form S-4 relating solely to an SEC Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof
(which shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within twenty (20) calendar days after receipt of such written
notice from the Company, by any Holder or Holders, except as set forth in
Subsection 5.3(b) below.
b. Underwriting. If the registration of which the Company
------------
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 5.3(a)(I). In such event the right of any Holder to
registration pursuant to this Section 5.3 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 securities through such underwriting
shall, together with the Company and the other parties distributing their
securities through such underwriting, enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
Subsection 5.3, if the underwriter determines, in good faith, that marketing
factors require a limitation of the number of shares to be underwritten, the
underwriter may limit the number of Registrable Securities to be included in the
registration and underwriting, or may exclude Registrable Securities entirely
from such registration and underwriting subject to the terms of this paragraph.
The Company shall so advise all holders of the Company's securities that would
otherwise be registered and underwritten pursuant hereto, and the number of
shares of such securities, including Registrable Securities, that may be
included in the registration and underwriting shall be allocated in the
following manner: shares, other than Registrable Securities and other
securities carrying registration rights, requested to be included in such
registration by stockholders shall be excluded, and, if a limitation on the
number of shares is still required, the number of securities that may be
included shall be allocated, first, among the holders of piggyback registration
rights having priority over those set forth herein as of the date hereof (a
schedule of which holders and the registration rights to which they are entitled
are set forth in a letter to the Investor of even date herewith signed by an
officer of the Company), if any, in proportion, as nearly as practicable, to the
respective amounts of such securities held by such holders, and, second, among
the Holders and holders of securities having pari passu registration rights, if
any, in proportion, as nearly as possible, to the respective amounts of such
securities held by each such holder, in each case at the time of filing the
Registration Statement. In the event of any underwriter cutback, any selling
stockholder that is a Holder of Registrable Securities and that is
Page 17
a partnership or corporation, the partners, retired partners and stockholders of
such Holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling Holder," and any pro rata reduction with respect
to such "selling Holder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such "selling Holder," as defined in this sentence. No securities excluded from
the underwriting by reason of the underwriter's marketing limitation shall be
included in such registration. If any Holder disapproves of the terms of the
underwriting, it may elect to withdraw therefrom by written notice to the
Company and the underwriter. The Registrable Securities so withdrawn shall also
be withdrawn from registration.
5.4 Holdback Agreement.
------------------
a. Restrictions on Public Sale by Holders of Registrable
-----------------------------------------------------
Securities. Each Holder of Registrable Securities, if requested by the Company
----------
and the managing underwriter in an underwritten offering, shall agree not to
sell or otherwise transfer or dispose of any Registrable Securities (except
those that are included in a piggyback registration pursuant to Section 5.3) for
a specified period of time (the "Holdback Period") in the event that the Company
notifies the Holders that it desires to file a registration statement (the
"Company Registration Statement") to register the sale of shares of common stock
for its own account in an underwritten offering (other than a registration
relating solely to employee benefit plans or a registration on Form S-4 relating
solely to an SEC Rule 145 transaction); provided, that all officers and
directors of the Company and all other persons with registration rights enter
into similar agreements or are otherwise similarly bound. The Holdback Period
shall commence on the date the Company Registration Statement is first filed
with the SEC and shall terminate 90 days from the date the Company Registration
Statement is declared effective by the SEC; provided, however, that the Holdback
Period shall not exceed a total of 135 days.
The foregoing provisions shall not apply to any holder of
Registrable Securities if such holder is prevented by applicable statute or
regulation from entering into any such agreement; provided, however, that any
such holder shall undertake in its request to participate in any such
underwritten offering not to effect any public sale or distribution of the class
of Registrable Securities covered by such Registration Statement (except as part
of such underwritten offering) during such period unless it has provided five
(5) business days prior written notice of such sale or distribution to the
managing underwriter or underwriters.
5.5 Expenses of Registration. All Registration Expenses shall be
------------------------
borne by the Company; provided, however, that the term Registration Expenses
shall not include, and in no event will the Company be obligated to pay, stock
transfer taxes or underwriters' discounts or commissions relating to Registrable
Securities. The Company shall bear the cost of reasonable expenses and fees of
one counsel for the holders of securities covered by a Registration Statement
filed pursuant to Section 5.3 hereof.
Page 18
5.6 Obligations of the Company. Whenever required under this Section
--------------------------
5 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
a. prepare and file with the SEC a Registration Statement with
respect to such Registrable Securities and use its best efforts to cause such
Registration Statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
Registration Statement effective for up to the earlier of ninety (90) days or
until the Holder or Holders have completed the distribution relating thereto;
provided, however, that if such Registration Statement is filed pursuant to
Section 5.2 hereof, the Company shall keep such Registration Statement effective
for the period set forth therein.
b. Prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such Registration Statement.
c. Furnish to the Holders and the underwriters, if any, such
numbers of copies of a Prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and the Registration Statement and
such other documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
d. Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
e. In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
f. Promptly notify each Holder of Registrable Securities
covered by such Registration Statement, and the managing underwriter, if any,
(I) at any time when a prospectus relating thereto is required to be delivered
under the Act, of the happening of any event as a result of which the Prospectus
included in such Registration Statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances then existing; (ii) when the Prospectus or any
supplement or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective; (iii) of any request by the SEC for amendments or supplements to the
Registration Statement or the Prospectus or for additional information; (iv) of
the issuance by the SEC of any stop order suspending the effectiveness of the
Page 19
Registration Statement or the initiation of any proceedings for that purpose;
(v) if at any time the representations and warranties of the Company
contemplated by this Section 5 in favor of the Holders or the managing
underwriter cease to be accurate in all material aspects; and (vi) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
g. Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 5, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 5, if such securities
are being sold through underwriters, on the date that the Registration Statement
with respect to such securities becomes effective, (I) an opinion, dated such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities, and (ii) a letter
dated such date, from the independent accountants of the Company, in form and
substance as is customarily given by independent accountants to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities.
h. Make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible time.
I. If requested by the managing underwriter or a Holder of
Registrable Securities being sold in connection with an underwritten offering,
immediately incorporate in a supplement or post-effective amendment such
information as the managing underwriter and the Holders of a majority of the
Registrable Securities being sold agree should be included therein relating to
the sale of the Registrable Securities, including, without limitation,
information with respect to the number of shares of Registrable Securities being
sold to underwriters, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the underwritten offering of
the Registrable Securities to be sold in such offering; and make all required
filings of such supplement or post-effective amendment as soon as notified of
the matters to be incorporated in such supplement or post-effective amendment.
j. Cooperate with the selling Holders of Registrable Securities
and the managing underwriter, if any, to facilitate the timely preparation and
delivery of certificates not bearing any restrictive legends representing the
Registrable Securities to be sold and cause such Registrable Securities to be in
such denominations and registered in such names as the managing underwriter may
request at least three business days prior to any sale of Registrable Securities
to the underwriters.
k. Use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities.
Page 20
l. Cause all Registrable Securities covered by the Registration
Statement to be listed on the same national securities exchange (or listed for
quotation on the NASDAQ Stock Market) as the Company's other then-outstanding
shares of common stock.
m. Provide a CUSIP number for all Registrable Securities not
later than the effective date of the Registration Statement.
n. Enter into such agreements and take such actions as are
customary and reasonable in order to expedite or facilitate the disposition of
such Registrable Securities, and in such connection, whether or the not the
registration is an underwritten registration:
(i) make such representations and warranties to the Holders
of such Registrable Securities and the underwriters, if any, in form, substance
and scope as are customarily made by issuers to selling shareholders and
underwriters in underwritten offerings; and
(ii) deliver such documents and certificates as may be
requested by the Holders of a majority of the Registrable Securities being sold
and the managing underwriter, if any, to evidence compliance with the clause (I)
above and with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company.
The above shall be done at each closing under such underwriting or similar
agreement or as to and to the extent otherwise reasonably requested by the
Holders of a majority of the Registrable Securities being sold.
o. Make available for inspection by representatives of the
Holders of a majority of the Registrable Securities being sold, any underwriter
participating in any disposition pursuant to such Registration Statement, and
any attorney or accountant retained by the sellers or any such underwriter, all
financial and other records and pertinent corporate documents and properties of
the Company, and cause the Company's officers, directors and employees to supply
all information reasonably requested by any such representative, underwriter,
attorney or accountant in connection with the Registration; provided that any
records, information or documents that are designated by the Company in writing
as confidential shall be kept confidential by such persons unless disclosure of
such records, information or documents is required by court or administrative
order.
5.7 Indemnification.
---------------
a. The Company will, and does hereby undertake to, indemnify
and hold harmless each Holder of Registrable Securities, each of such Holder's
officers, directors, employees, partners and agents, and each person controlling
such Holder, with respect to any registration, qualification, compliance or
other matters effected pursuant to this Section 5, against all claims, losses,
damages, and liabilities (or actions in respect thereto) to which they may
become subject under the Act, the Exchange Act, or other federal or state law
arising out of or
Page 21
based on (i) any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular, or other similar document
(including any related Registration Statement, notification, or the like)
incident to any such registration, qualification, or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) any violation or alleged violation by the Company of any federal, state or
common law rule or regulation applicable to the Company in connection with any
such registration, qualification or compliance, and will reimburse, as incurred,
each such Holder, and each such director, officer, employee, partner, agent and
controlling person, for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability or expense,
arises out of or is based on any untrue statement or omission based upon written
information furnished to the Company by an instrument duly executed by such
Holder or underwriter and stated to be specifically for use therein. The Company
shall also indemnify underwriters participating in a distribution covered by a
Registration Statement, their officers and directors and each person who
controls such persons to the same extent as provided above with respect to the
indemnification of the Holders of Registrable Securities.
b. Each Holder will, if Registrable Securities held by or
issuable to such Holder are included in such registration, qualification, or
compliance, indemnify the Company, each of its directors, and each officer who
signs a Registration Statement in connection therewith, and each person
controlling the Company, each underwriter, if any, and each person who controls
any underwriter, of the Company's securities covered by such a Registration
Statement, and each other Holder, each of such other Holder's officers,
partners, directors and agents and each person controlling such other Holder,
against all claims, losses, damages, and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement), prospectus, offering circular, or other document, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse, as incurred, the Company, each such underwriter, each such other
Holder, and each such director, officer, partner, and controlling person, for
any legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action, 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 made in such
Registration statement, prospectus, offering circular, or other document, in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein. In no event, however, shall the liability
hereunder of any selling Holder of Registrable Securities be greater than the
dollar amount of the proceeds received by such Holder upon the sale of the
Registrable Securities giving rise to such indemnification obligation. In no
event will any Holder be required to enter into any agreement or undertaking in
connection with any registration under this Section 5 providing for any
indemnification or contribution obligations on the part of such Holder greater
than such Holder's obligations under this Section 5.
Page 22
c. Each party entitled to indemnification under this Section 5
(the "Indemnified Party") shall give notice to the party required to provide
such indemnification (the "Indemnifying Party") of any claim as to which
indemnification may be sought promptly after such Indemnified Party has actual
knowledge thereof, and shall permit the Indemnifying Party to assume the defense
of any such claim or any litigation resulting therefrom; provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be subject to approval by the Indemnified Party (whose
approval shall not be unreasonably withheld); provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 5, except to the extent
that such failure to give notice shall materially adversely affect the
Indemnifying Party in the defense of any such claim or any such litigation.
Such Indemnified Party shall have the right to employ separate counsel in any
such action and to participate in the defense thereof, but the fees and expenses
of such separate counsel shall be the expense of such Indemnified Party unless
(I) the Indemnifying Party has agreed to pay such fees and expenses; (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding or has failed to employ counsel reasonably satisfactory to such
Indemnified Party in any such action or proceeding; or (iii) the named parties
to any such action or proceeding (including any impleaded parties) include both
such Indemnified Party and the Indemnifying Party, and such Indemnified Party
shall have been advised by counsel that there may be one or more legal defenses
available to such Indemnified Party that are different from or additional to
those available to the Indemnifying Party, in which case the Indemnifying Party
shall not have the right to assume the defense of such action or proceeding on
behalf of such Indemnified Party and the Indemnifying Party shall be responsible
for such fees and expenses. The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding effected without its written
consent, which consent shall not be unreasonably withheld.
d. If the indemnification provided for in this Section 5.7 is
unavailable to an Indemnified Party under Section 5.7(a) or Section 5.7(b) above
(other than by reason of exceptions provided in those Sections) in respect of
any claims referred to in such Sections, then each applicable Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such claims 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 that resulted in such claims as well
as any other relevant equitable considerations. The amount paid or payable by a
party as a result of the claims referred to above shall be deemed to include,
subject to the limitations set forth in Section 5.7(c), any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any action or claim.
The relative fault of the Indemnifying Party on the one hand and of the
Indemnified Party on the other shall be determined by reference to, among other
things, whether the misstatement or omission or alleged misstatement or omission
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 misstatement or omission or alleged
misstatement or omission.
Page 23
The Company and each Holder of Registrable Securities agree that it would
not be just and equitable if contribution pursuant to this Section 5.7(d) were
determined by pro rata allocation or by any other method of allocation that does
not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this Section 5.7(d), an indemnified party
shall not be required to contribute any amount in excess of the amount by which
(I) the total price at which the securities that were sold by such indemnified
party and distributed to the public were offered to the public exceeds (ii) the
amount of any damages that such indemnified party has otherwise been required to
pay by reason of such misstatement or omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
5.8 Information by Holder. The Holder or Holders of Registrable
---------------------
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as the Company may reasonably request in writing and
shall be required in connection with any registration, qualification or
compliance referred to in this Section 5.
5.9 Transfer of Registration Rights. The rights contained in this
-------------------------------
Section 5 to cause the Company to register the Registrable Securities, may be
assigned or otherwise conveyed to a transferee or assignee of Registrable
Securities, who shall be considered a "Holder" for purposes of this Section 5,
provided that such transferee or assignee acquires at least 100,000 shares (as
presently constituted) of the Registrable Securities held by the Investor; and
provided further that the Company is given written notice by such Investor, at
the time of or within a reasonable time after said transfer, stating the name
and address of said transferee or assignee and identifying the securities with
respect to which such registration rights are being assigned.
5.10 Rule 144 Reporting. With a view to making available to the
------------------
Holders the benefits of certain rules and regulations of the SEC that may permit
the sale of the Registrable Securities to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to use its best
efforts to:
a. make and keep public information available, as those terms
are understood and defined in Rule 144, as long as Registrable Securities are
outstanding;
b. file with the SEC, in a timely manner, all reports and other
documents required of the Company under the Act and the Exchange Act;
c. So long as a Holder owns any Registrable Securities, furnish
to such Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 and of the Exchange
Act; a copy of the most recent annual or quarterly report of the Company; and
such other reports and documents as a Holder
Page 24
may reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration or pursuant to a
registration on Form S-3;
d. take all such action (including, without limitation, the
furnishing of the information described in Rule 144(d)(4)) as may be necessary
or helpful to facilitate a sale of Registrable Securities by a Holder to a
"qualified institutional buyer," as such term is defined in Rule 144A of the
Act.
5.11 No Superior Rights. The Company shall not grant registration
------------------
rights superior to those set forth herein without the written consent of the
holders of a majority of the Registrable Securities then outstanding, which
consent shall not unreasonably be withheld.
5.12 Termination of Registration Rights. The right of any Holder to
----------------------------------
request registration or inclusion in any registration pursuant to this Section 5
shall terminate at such time as to such shares of Registrable Securities held by
such Holder on the date when such shares may immediately be sold under Rule 144
(including Rule 144(k)) during any 90-day period. The Company agrees that it
shall promptly remove any restrictive legends on the stock certificates
representing shares of Registrable Securities as to which registration rights
have terminated by the provisions of this Section 5.12.
6. Miscellaneous.
-------------
6.1 Public Disclosure. Neither party shall make any public
-----------------
disclosure concerning the transactions contemplated hereby without prior
consultation with the other party; provided, however, that nothing herein shall
preclude either party from making such disclosure as is required by applicable
federal or state securities laws as long as the disclosing party has exercised
good faith efforts under the circumstances to consult with the other party as
provided in this Section 6.1 with a view to developing disclosure mutually
acceptable to the parties.
6.2 Successors and Assigns. The terms and conditions of this
----------------------
Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement except as expressly provided in
this Agreement. Prior to the Closing, neither the Company nor the Investor shall
assign this Agreement or any rights hereunder without the prior written consent
of the other. Following the Closing, the Investor may assign this Agreement or
any rights hereunder, provided that any assignment or transfer of the rights
contained in Section 5 hereof must comply with the requirements of Section 5.9
hereof, and provided further that any transferee agrees to be bound by the
restrictions contained herein.
6.3 Notices. Unless otherwise provided, any notice, request, demand
-------
or other communication required or permitted under this Agreement shall be given
in writing and shall be deemed effectively given upon personal delivery to the
party to be notified, or when sent by telex or telecopier (with receipt
confirmed), or upon deposit with the United States Post Office, by
Page 25
registered or certified mail, postage prepaid and addressed as follows (or at
such other address as a party may designate by notice to the other):
If to the Company:
NPS Pharmaceuticals, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ #▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
If to the Investor:
SmithKline ▇▇▇▇▇▇▇ Corporation
One Franklin Plaza (FP1935)
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
and
SmithKline ▇▇▇▇▇▇▇ Corporation
c/o SmithKline ▇▇▇▇▇▇▇ plc
New Horizons Court (2/NHC/G)
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
England
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
6.4 Survival. All representations and warranties contained or
--------
provided for herein shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the party benefiting
from any such representation or warranty, and shall survive the Closing to the
extent of applicable statutes of limitations; provided, however, that the
representations and warranties in Sections 2 and 3 of this Agreement shall not
be construed so as to constitute representations and warranties concerning
circumstances existing after any date specifically referred to therein, or the
Closing Date, as the case may be. All covenants and agreements contained herein
shall survive indefinitely until, by their respective terms, they are no longer
operative.
6.5 Finders or Brokers. The Investor represents that it has not
------------------
engaged any investment banker, finder or broker, and neither is nor will be
obligated for any finder's fee or commission, in connection with the
transactions contemplated hereby. The Company represents that it has not
engaged any investment banker, finder or broker, and neither is nor will be
obligated for any finder's fee or commission, in connection with the
transactions contemplated hereby. Each party agrees to indemnify and hold
harmless the other from the liability for any fees, commissions and other
payments (and the costs and expenses may be owing as a result of such party's
breach of its representation made in this Section 6.5.
6.6 Expenses. Each party hereto shall pay all of its own costs and
--------
expenses incurred in connection with the negotiation, preparation, execution,
delivery and performance of
Page 26
this Agreement and the transactions contemplated herein, whether or not such
transactions are consummated. The Company shall pay, and will save the Investor
harmless from, any and all stamp or other taxes, if any, in respect of the
issuance of the Shares.
6.7 Waivers. The observance of any term of this Agreement may be
-------
waived (either generally or in a particular instance and either retroactively or
prospectively) only with the written consent of the party against whom such
waiver is sought to be enforced. No waiver by either party of any default with
respect to any provision, condition or requirement hereof shall be deemed to be
a continuing waiver in the future thereof or a waiver of any other provision,
condition or requirement hereof; nor shall any delay or omission of either party
to exercise any right hereunder in any manner impair the exercise of any such
right accruing to it thereafter.
6.8 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable, invalid or void by a court of competent jurisdiction,
such provision shall be excluded from this Agreement and the balance of this
Agreement shall be interpreted as if such provision were so excluded and shall
be enforceable in accordance with its terms.
6.9 Specific Enforcement. The Company and the Investor acknowledge
--------------------
and agree that if any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached, irreparable
damage would occur and it would be extremely impracticable and difficult to
measure damages. Accordingly, in addition to any other rights and remedies to
which the parties may be entitled by law or equity, the parties shall be
entitled to an injunction or injunctions to prevent or cure breached of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, and the parties expressly waive (I) the defense that a remedy
in damages will be adequate and (ii) any requirement, in an action for specific
performance, for the posting of a bond.
6.10 Entire Agreement; Amendments. Except as otherwise provided
----------------------------
herein, this Agreement contains the entire understanding of the parties with
respect to the matters covered herein and supersedes all prior agreements and
understandings, written or oral, between the parties relating to the subject
matter hereof. This Agreement may be amended only by an agreement in writing
executed by the parties hereto.
6.11 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of Delaware (irrespective of its choice of law
principles).
6.12 Counterparts. This agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.13 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
Page 27
6.14 Delivery of Information. The Company shall promptly deliver to
-----------------------
the Investor copies of all documents filed by the Company with the Securities
and Exchange Commission pursuant to the Securities Exchange Act of 1934, as
amended, and the regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
------------------
first above written.
NPS PHARMACEUTICALS, INC.
By: /k/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Its: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Title: Vice President
------------------------
SMITHKLINE ▇▇▇▇▇▇▇ CORPORATION
By: /k/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Its: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------
Title: Secretary
------------------------
Page 28
SCHEDULE "A"
SCHEDULE OF EXCEPTIONS
TO
STOCK PURCHASE AGREEMENT
BETWEEN
NPS PHARMACEUTICALS, INC.
AND
SMITHKLINE ▇▇▇▇▇▇▇ CORPORATION
____________________________________________________________
Capitalized terms used herein shall, unless otherwise defined herein or
unless the content otherwise requires, have the same defined meanings as are set
forth in the Stock Purchase Agreement.
Schedule 2.6 Litigation
-----------------------
On November 29, 1995, the Company received a letter from the EPA notifying
the Company that it may have incurred liability under section 107(a) of the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, for two barrels of radioactive waste taken by a third party contractor
to a hazardous and radioactive waste storage, treatment and disposal facility in
Denver, Colorado. Upon the EPA's request, the Company has identified the waste
and has verified that the barrels containing the waste have been removed from
the Denver, Colorado facility. Removal of wastes from the facility and
remediation of soil and groundwater at this site is currently underway. To
date, the EPA has spent $2.1 million to clean up this facility. However, the
ultimate cost of removal and remediation actions and the length of time for such
actions are difficult to estimate. Based upon its inspection of the site, the
Company is of the belief that the barrels containing the waste disposed of by
the Company were neither leaking nor damaged. Although the Company was a small
contributor to the site and the Company believes that there are a number of
other financially responsible contributors, there can be no assurance that the
Company will not be held liable for all or a portion of the cleanup cost or any
other costs or damages associated with this disposal site.
Section 2.7 Registration Rights
-------------------------------
The Company has filed a registration statement on Form S-3 for the resale
of the 1,000,000 shares of Common Stock sold to Amgen (the "Amgen Shares")
pursuant to its obligations under the related stock purchase agreement. The
Company has agreed to keep the registration statement effective for a period of
three years or until all such shares may immediately be sold under Rule 144
during any 90-day period. Amgen also has the right, subject to certain
limitations, to include such shares in any registration of Common Stock by the
Company under the Securities Act. The Company is required to bear all
registration expenses with respect to the registration of the Amgen Shares on
Form S-3 and is required to bear all
Page 29
registration expenses, other than underwriters' discounts and commissions, with
respect to any future Company-initiated registration in which Amgen may have the
right to include its shares.
In addition, the holder of a warrant to purchase 32,542 shares of Common
Stock is entitled, subject to certain limitations, to participate in a
registration initiated by the Company.
Page 30