Exhibit 10.1

 

THERAVANCE, INC.

 

COMMON STOCK PURCHASE AGREEMENT

 

April 2, 2012

 

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TABLE OF CONTENTS

 

 

 

 

Page

 

 

 

 

1.

Purchase and Sale of Stock

1

 

1.1

Sale and Issuance of Common Stock

1

 

1.2

Closing

1

 

 

 

 

2.

Representations and Warranties of the Company

1

 

2.1

Organization, Good Standing and Qualification

2

 

2.2

Capitalization and Voting Rights

2

 

2.3

Subsidiaries

2

 

2.4

Authorization

2

 

2.5

Valid Issuance of Common Stock

3

 

2.6

Governmental Consents

3

 

2.7

Offering

4

 

2.8

Litigation

4

 

2.9

Patents and Trademarks

4

 

2.10

Compliance with Other Instruments

5

 

2.11

SEC Reports; Financial Statements

5

 

2.12

Internal Controls

6

 

2.13

Absence of Certain Events and Changes

6

 

2.14

No Undisclosed Liabilities

6

 

2.15

Related-Party Transactions

7

 

2.16

Permits

7

 

2.17

Disclosure

7

 

2.18

Corporate Documents

7

 

2.19

Title to Property and Assets

7

 

2.20

Tax Returns, Payments and Elections

7

 

2.21

Environmental Law

7

 

2.22

Proprietary Information and Employment Agreements

8

 

2.23

Registration Rights

8

 

2.24

Real Property Holding Corporation

8

 

2.25

Labor Agreements

8

 

2.26

Insurance

8

 

 

 

 

3.

Representations and Warranties of the Investor

8

 

3.1

Authorization

8

 

3.2

Purchase Entirely for Own Account

8

 

3.3

Disclosure of Information

9

 

3.4

Investment Experience

9

 

3.5

Accredited Investor

9

 

3.6

Restricted Securities

9

 

3.7

Governance Agreement

9

 

 

 

 

4.

Covenants

9

 

4.1

Conduct of the Business

9

 

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4.2

No Solicitation

10

 

4.3

Antitrust Approval

10

 

4.4

Stockholder Approval

11

 

 

 

 

5.

Conditions of Investor’s Obligations at Closing

12

 

5.1

Performance

12

 

5.2

Representations and Warranties

12

 

5.3

Compliance Certificate

13

 

5.4

Qualifications

13

 

5.5

Proceedings and Documents

13

 

5.6

Section 203 of DGCL

13

 

5.7

Stockholder Approval

13

 

5.8

HSR Act

13

 

5.9

No Injunction

13

 

 

 

 

6.

Conditions of the Company’s Obligations at Closing

13

 

6.1

Representations and Warranties

13

 

6.2

Qualifications

13

 

6.3

Stockholder Approval

14

 

6.4

HSR Act

14

 

6.5

No Injunction

14

 

 

 

 

7.

Miscellaneous

14

 

7.1

Survival of Warranties

14

 

7.2

Successors and Assigns

14

 

7.3

Governing Law

14

 

7.4

WAIVER OF JURY TRIAL

15

 

7.5

Counterparts

15

 

7.6

Titles and Subtitles

15

 

7.7

Notices

15

 

7.8

Finder’s Fee

15

 

7.9

Expenses

15

 

7.10

Amendments and Waivers

15

 

7.11

Severability

16

 

7.12

Confidentiality

16

 

7.13

Publicity

16

 

7.14

Entire Agreement

17

 

7.15

Legends

17

 

7.16

Nasdaq Listing

17

 

7.17

Existing Agreements Between GSK and the Company

17

 

7.18

Authorization

17

 

7.19

Registrable Securities

18

 

7.20

Agreement to Vote for Private Placement

18

 

7.21

Termination

18

 

7.22

Effect of Termination

18

 

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THERAVANCE, INC.

 

COMMON STOCK PURCHASE AGREEMENT

 

THIS COMMON STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of the 2nd day
of April, 2012, by and among Theravance, Inc., a Delaware corporation (the
“Company”), Glaxo Group Limited, a limited liability company organized under the
laws of England and Wales (the “Investor”), and solely for the purposes of
Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.9, 7.10, 7.11, 7.12, 7.13,
7.14, 7.17, 7.18 and 7.20 hereof, GlaxoSmithKline LLC, a Delaware limited
liability company, the successor entity to SmithKline Beecham Corporation, a
Pennsylvania corporation (“GSK”).

 

THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1.             Purchase and Sale of Stock.

 

1.1          Sale and Issuance of Common Stock.

 

(a)           On or prior to the Closing (as defined below), the Company shall
have authorized the sale and issuance to the Investor of shares of its Common
Stock (the “Shares”).  The Shares shall have the rights, preferences, privileges
and restrictions set forth in the Company’s Amended and Restated Certificate of
Incorporation (the “Restated Certificate”).

 

(b)           Subject to the terms and conditions of this Agreement, the
Investor agrees to purchase at the Closing and the Company agrees to sell and
issue to the Investor at the Closing, Ten Million (10,000,000) Shares for
Twenty-One Dollars Twenty-Eight and Eighty-Seven Hundredths Cents ($21.2887) per
Share, resulting in an aggregate purchase price of Two Hundred Twelve Million
Eight Hundred Eighty-Seven Thousand Dollars ($212,887,000.00) (the “Aggregate
Purchase Price”).  The purchase and sale of the Shares is referred to in this
Agreement as the “Purchase.”

 

1.2          Closing.  The Purchase shall take place at the offices of the
Company, 901 Gateway Boulevard, South San Francisco, CA 94080. Within
one (1) Business Day after satisfaction of the closing conditions set forth in
Sections 5 and 6 hereof, the Investor will initiate an irrevocable wire transfer
in the amount of the Aggregate Purchase Price to an account designated in
writing by the Company.  Immediately upon the Company’s receipt of the Aggregate
Purchase Price the Purchase shall be consummated (which time is designated as
the “Closing”).  As promptly as practicable following the Closing, the Company
shall use all commercially reasonable efforts to arrange for the Company’s
transfer agent to deliver to the Investor a certificate representing the Shares
that the Investor has purchased pursuant to this Agreement.  As used herein,
“Business Day” shall mean any weekday that is not a day on which banking
institutions in San Francisco, California or London, United Kingdom are
authorized or obligated to close.

 

2.             Representations and Warranties of the Company.  The Company
hereby represents and warrants to the Investor that, as of the date hereof,
except as set forth in the SEC Reports (as defined below, but excluding for the
purposes of Section 2, other than Section 2.11,

 

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any risk factor disclosures contained in such documents under the heading “Risk
Factors” and any disclosure of risks included in any “forward-looking
statements” disclaimer or other statements that are similarly non-specific and
are predictive or forward-looking in nature), which exceptions shall be deemed
to be representations and warranties as if made hereunder:

 

2.1          Organization, Good Standing and Qualification.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
(i) execute, deliver and perform its obligations under this Agreement, (ii) to
issue and sell the Common Stock hereunder, (iii) to perform its obligations
under the Restated Certificate, and (iv) to carry on its business as now
conducted and as proposed to be conducted.  The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its business or
properties.

 

2.2          Capitalization and Voting Rights.  The authorized capital stock of
the Company consists of 230,230,000 shares, with a par value of $0.01 per share,
of which:

 

·                  200,000,000 shares are designated as Common Stock;

 

·                  30,000,000 shares are designated as Class A Common Stock; and

 

·                  230,000 shares are designated as Preferred Stock.

 

At February 17, 2012, the Company had outstanding 86,149,162 shares of Common
Stock, no shares of Class A Common Stock and no shares of Preferred Stock. In
addition, as of February 17, 2012, an aggregate of 8,946,346 shares of the
Company’s Common Stock were subject to outstanding options and restricted stock
unit awards.  Except for stock option grants and restricted stock unit awards
made since February 17, 2012 in the aggregate amount not exceeding 2,000 shares,
outstanding convertible subordinated notes with an aggregate principal amount of
$172.5 million that mature on January 15, 2015, and other than as set forth
above in this Section 2.2 or pursuant to this Agreement or the Governance
Agreement (as defined below), there are no other securities convertible into or
exchangeable for, or options, warrants, calls, subscriptions, rights, contracts,
commitments, arrangements or understandings of any kind to which the Company is
a party or by which it is bound obligating the Company to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company.

 

2.3          Subsidiaries.  The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association or
other business entity, other than Advanced Medicine East, Inc., a Delaware
corporation, and Theravance UK Limited, each a direct wholly-owned subsidiary of
the Company (together, the “Company Subsidiaries”).  The Company is not a
participant in any joint venture, partnership, or similar arrangement.

 

2.4          Authorization.

 

(a)           All corporate action on the part of the Company, its officers,
directors and stockholders necessary for the authorization, execution and
delivery of this Agreement, the performance of all obligations of the Company
hereunder, and the authorization,

 

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issuance (or reservation for issuance), sale and delivery of the Common Stock
being sold hereunder has been taken, subject, in the case of the issuance of the
Shares, to receipt of the Stockholder Approval (as defined below). This
Agreement constitutes a valid and legally binding obligation of the Company,
enforceable in accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors’ rights generally and (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies.

 

(b)           To the Company’s knowledge, all shares of Common Stock outstanding
on the record date for the meeting of the stockholders to approve the Voting
Proposal (as defined below) (the “Stockholders’ Meeting”) shall be eligible to
vote on the Voting Proposal.  The only vote of the stockholders of the Company
required to approve the issuance of the Shares in connection with the Purchase
is the affirmative vote of the holders of not less than a majority of the
outstanding shares of Common Stock present at the Stockholders’ Meeting and
eligible to vote.

 

(c)           The Board of Directors of the Company (the “Board of Directors”)
has (i) approved the entry by the Company into this Agreement, the performance
of the Company’s obligations hereunder and consummation of the transactions
contemplated hereby for purposes of paragraph (a)(1) of Section 203 of the
Delaware General Corporation Law (“DGCL Section 203”), and, to the Company’s
knowledge, no other “moratorium”, “control share acquisition”, “business
combination”, “fair price” or other form of anti-takeover or similar law of any
jurisdiction is applicable to the Company and the transactions contemplated by
this Agreement and (ii) directed that the Voting Proposal be submitted to the
stockholders of the Company for their approval and resolved to recommend that
the stockholders of the Company vote in favor of the Voting Proposal.

 

2.5          Valid Issuance of Common Stock.  The Common Stock that is being
purchased by the Investor hereunder, when issued, sold and delivered in
accordance with the terms of this Agreement for the consideration expressed
herein, will be duly and validly issued, fully paid, and nonassessable, and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement, the Amended and Restated Governance Agreement dated June 4,
2004, as amended April 25, 2007 and November 29, 2010, by and among the Company,
GSK, and solely with respect to Articles III, IV and VI thereof, GlaxoSmithKline
plc, an English public limited company, and the Investor (the “Governance
Agreement”) and under applicable state and federal securities laws.  The Common
Stock that is being purchased by the Investor hereunder will not be subject to
preemptive rights or rights of first refusal that have not been waived or
complied with.

 

2.6          Governmental Consents.  No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except (i) a filing under the Hart Scott Rodino
Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and (ii) certain
post-closing filings as may be required pursuant to federal securities laws and
under the “Blue Sky” laws of the various states.

 

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2.7          Offering.  Subject in part to the truth and accuracy of the
Investor’s representations set forth in Section 3 of this Agreement, the offer,
sale and issuance of the Common Stock as contemplated by this Agreement are
exempt from the registration requirements of any applicable state and federal
securities laws, and neither the Company nor any authorized agent acting on its
behalf will take any action (including any offering of any securities of the
Company under circumstances which would require the integration of such offering
with the offering of any of the Securities to be issued pursuant to this
Agreement under the Securities Act and the rules and regulations of the
Commission thereunder) hereafter that would cause the loss of such exemption.

 

2.8          Litigation.  There is no action, suit, proceeding or investigation
pending or, to the Company’s knowledge, currently threatened against the Company
that questions the validity of this Agreement, or the right of the Company to
enter into this Agreement, or to consummate the transactions contemplated
hereby, or if determined adversely, might result, either individually or in the
aggregate, in (i) any material adverse changes in the assets, business or
prospects of the Company, financially or otherwise or (ii) any change in the
current equity ownership of the Company, nor is the Company aware that there is
any basis for the foregoing.  The Company is not a party or subject to the
provisions of any order, writ, injunction, judgment or decree of any court or
government agency or instrumentality.  There is no material action, suit,
proceeding or investigation by the Company currently pending or that the Company
intends to initiate.

 

2.9          Patents and Trademarks.  The Company owns, or has rights to use
pursuant to a valid license, all patents, trademarks, service marks, trade
names, copyrights, trade secrets, information, proprietary rights and processes
necessary for its business as now conducted.  The use, modification, licensing,
sublicensing, sale, or any other exercise of rights involving such intellectual
property does not infringe any copyright, trade secret, trademark, service mark,
trade name, firm name, logo, trade dress, mask work, moral right, other
intellectual property right, right of privacy or right in personal data, or to
the knowledge of the Company, any patent, of any person.  No claims
(i) challenging the validity, effectiveness, or ownership by the Company of any
of the Company’s intellectual property, or (ii) to the effect that the use,
reproduction, modification, manufacturing, distribution, licensing,
sublicensing, sale or any other exercise of rights in any product, work,
technology, service or process as used, provided or offered at any time, or as
proposed for use, reproduction, modification, distribution, licensing,
sublicensing, sale or any other exercise of rights, by the Company infringes or
will infringe on any intellectual property or other proprietary or personal
right of any person have been asserted or, to the knowledge of the Company,
(A) are threatened by any person nor (B) are there any valid grounds for any
bona fide claim of any such kind.  To the knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of the Company’s
intellectual property by any third party, employee or former employee.  The
Company’s employees are not obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of his or her best efforts to promote the interests of
the Company or that would conflict with the Company’s business as proposed to be
conducted.  Neither the execution nor delivery of this Agreement, nor the
carrying on of the Company’s business by the employees of the Company, nor the
conduct of the Company’s business as proposed, will, to the best of the
Company’s knowledge, conflict with or result in a

 

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breach of the terms, conditions or provisions of, or constitute a default under,
any contract, covenant or instrument under which any of such employees is now
obligated.  The Company does not believe it is or will be necessary to utilize
any inventions of any of its employees made prior to their employment by the
Company unless such inventions are properly assigned to the Company.

 

2.10        Compliance with Other Instruments.  The Company is not in violation
or default in any material respect of any provision of its Restated Certificate
or Bylaws, or in any material respect of any instrument, judgment, order, writ,
decree or contract to which it is a party or by which it is bound, or, to the
best of its knowledge, of any provision of any statute, rule or regulation
applicable to the Company.  The execution, delivery and performance of this
Agreement, and the consummation of the transactions contemplated hereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event that results in the creation of any lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture, or
nonrenewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations or any of its assets or
properties.  Without limiting the foregoing, the purchase of the Shares
contemplated by this Agreement has been approved by a majority of the
“Independent Directors” as defined in the Governance Agreement.

 

2.11        SEC Reports; Financial Statements.

 

(a)           The Company has filed all reports, schedules, forms, statements
and other documents required to be filed by the Company under the Securities Act
of 1933, as amended (the “Securities Act”) or the Securities Exchange Act of
1934, as amended (the “Exchange Act”), including pursuant to Section 13(a) or
15(d) thereof, for the three (3) years preceding the date hereof (the foregoing
materials being collectively referred to herein as the “SEC Reports”) on a
timely basis or has received a valid extension of such time of filing and has
filed any such SEC Reports prior to the expiration of any such extension.  As of
their respective dates, the SEC Reports complied in all material respects with
the requirements of the Securities Act and the Exchange Act and the rules and
regulations of the Securities and Exchange Commission (the “Commission”)
promulgated thereunder, as applicable, and none of the SEC Reports, when filed,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. To the knowledge of the Company, except as disclosed to counsel to
the Investor, there are no outstanding comments from the Commission with respect
to any SEC Report.

 

(b)           No executive officer of the Company has failed in any respect to
make the certifications required of him or her under Section 302 or 906 of the
Sarbanes-Oxley Act of 2002.  The financial statements of the Company included in
the SEC Reports comply in all material respects with applicable accounting
requirements and the rules and regulations of the Commission with respect
thereto as in effect at the time of filing.  Such financial statements have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (“GAAP”),
except as may be otherwise specified in such financial statements or the notes
thereto and except that unaudited financial

 

5

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statements may not contain all footnotes required by GAAP, and fairly present in
all material respects the financial position of the Company and its consolidated
subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited
statements, to normal, immaterial, year-end audit adjustments.

 

2.12        Internal Controls.  The Company (i) has implemented and maintains
disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange
Act) to reasonably assure that material information relating to the Company is
made known to the chief executive officer and the chief financial officer of the
Company by others within the Company; and (ii) has disclosed, based on its most
recent evaluation of internal controls over financial reporting prior to the
date hereof, to the Company’s outside auditors and the audit committee of the
Board of Directors (A) any significant deficiencies and material weaknesses in
the design or operation of internal controls over financial reporting (as
defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to
adversely affect the Company’s ability to record, process, summarize and report
financial information; and (B) to the knowledge of the Company, any fraud,
whether or not material, that involves management or other employees who have a
significant role in the Company’s internal controls over financial reporting. 
For the three (3) years preceding the date hereof, (i) neither the Company nor,
to the knowledge of the Company, any director, officer, employee, auditor or
accountant of the Company has received or otherwise had or obtained knowledge of
any material complaint, allegation, assertion or claim, whether written or oral,
regarding the accounting or auditing practices, procedures, methodologies or
methods of the Company or its internal accounting controls, including any
material complaint, allegation, assertion or claim that the Company has engaged
in questionable accounting or auditing practices; and (ii) no attorney
representing the Company, whether or not employed by the Company, has reported
evidence of a material violation of securities laws, breach of fiduciary duty or
similar violation by the Company or any of its officers, directors, employees or
agents to the Board of Directors or any committee thereof or to any director or
officer of the Company.

 

2.13        Absence of Certain Events and Changes.  Since December 31, 2011,
(i) the Company has conducted its businesses in all material respects in the
ordinary course consistent with past practice; (ii) there has not been any
event, change or development which, individually or in the aggregate, has had or
is reasonably likely to have a material adverse effect on the Company; (iii) the
Company has not incurred any material liabilities (contingent or otherwise)
other than trade payables and accrued expenses incurred in the ordinary course
of business consistent with past practice; (iv) the Company has not declared or
made any dividend or distribution of cash or other property to its stockholders;
and (v) other than the surrender to the Company of shares of Common Stock by
employees of the Company in connection with the Company’s payment of withholding
taxes due upon the vesting or settlement of employees’ equity awards, the
Company has not purchased, redeemed or made any agreements to purchase or redeem
any shares of its capital stock.

 

2.14        No Undisclosed Liabilities.  The Company does not have any
liabilities (contingent or otherwise), except for (i) liabilities reflected or
reserved against in financial statements of the Company included in the SEC
Reports filed prior to the date of this Agreement; and (ii) liabilities that
have not had and are not reasonably likely to have a material adverse effect on
the Company.

 

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2.15         Related-Party Transactions.  No executive officer or director of
the Company or member of his or her immediate family is indebted to the Company,
nor is the Company indebted (or committed to make loans or extend or guarantee
credit) to any of them.  To the Company’s knowledge, none of such persons has
any direct or indirect ownership interest in any firm or corporation with which
the Company is affiliated or with which the Company has a business relationship,
or any firm or corporation that competes with the Company, except that executive
officers or directors of the Company and members of their immediate families may
own stock in publicly traded companies that may compete with the Company.  No
member of the immediate family of any executive officer or director of the
Company is directly or indirectly interested in any material contract with the
Company.

 

2.16         Permits.  The Company has all material franchises, permits,
licenses, and any similar authority necessary for the conduct of its business as
now being conducted by it, and the Company believes it can obtain, without undue
burden or expense, any similar authority for the conduct of its business as
planned to be conducted.  The Company is not in default in any material respect
under any of its franchises, permits, licenses, or other similar authority.

 

2.17         Disclosure.  The Company has provided the Investor with all
information requested by the Investor in connection with its decision to
purchase the Common Stock, including all information the Company believes is
reasonably necessary to make such investment decision.  To the Company’s
knowledge, neither this Agreement, nor any other statements or certificates made
or delivered in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements herein
not misleading.

 

2.18         Corporate Documents.  The Restated Certificate and Bylaws of the
Company are in the form as set forth as exhibits in the SEC Reports.

 

2.19         Title to Property and Assets.  The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens that arise in the ordinary course of business and do
not materially impair the Company’s ownership or use of such property or assets,
and has good and marketable title to such property.  With respect to the
property and assets it leases, the Company is in compliance with such leases and
holds a valid leasehold interest free of any liens, claims or encumbrances.

 

2.20         Tax Returns, Payments and Elections.  The Company has timely filed
all tax returns and reports as required by law.  These returns and reports are
true and correct in all material respects.  The Company has paid all taxes and
assessments due, except those contested by it in good faith, if any.  The
Company has not been advised (a) that any of its federal, state or local returns
are being audited as of the date hereof, or (b) of any deficiency in assessment
or proposed judgment to its federal, state or other taxes.  The Company has no
knowledge of any tax liabilities due with respect to the Company or its
properties or assets as of the date of this Agreement that are not adequately
provided for.

 

2.21         Environmental Law.  To the Company’s knowledge, the Company is not
in violation of and has no liability or potential liability under any applicable
statute, law, or regulation relating to the environment, and to the best of its
knowledge, no material expenditures are or will be required in order to comply
with any such existing statute, law, or regulation.

 

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2.22         Proprietary Information and Employment Agreements.  Each current
and former employee and officer of the Company has executed a standard
Proprietary Information and Inventions Agreement.  Each consultant of the
Company has executed a standard Consulting Agreement containing invention
assignment provisions.  The Company is not aware that any of its employees,
officers or consultants is in violation thereof, and the Company will use its
best efforts to prevent any such violation.  The Company has not entered into
any employment agreements with any executive officers of the Company.

 

2.23         Registration Rights.  Except as required pursuant to the Amended
and Restated Investors’ Rights Agreement dated May 11, 2004, by and among the
Company and the investors who are parties thereto (the “Investors’ Rights
Agreement”), the Company is not presently under any obligation, and has not
granted, any rights to register any of the Company’s presently outstanding
securities or any of its securities that may hereafter be issued.

 

2.24         Real Property Holding Corporation.  The Company is not a real
property holding corporation within the meaning of Section 897(c)(2) of the
Internal Revenue Code of 1986 (the “Code”), as amended, and any regulations
promulgated thereunder.

 

2.25         Labor Agreements.  The Company is not bound by or subject to (and
none of its assets or properties is bound by or subject to) any written or oral,
express or implied, contract, commitment or arrangement with any labor union,
and no labor union has requested or, to the Company’s knowledge, has sought to
represent any of the employees, representatives or agents of the Company.  There
is no strike or other labor dispute involving the Company pending, or to the
Company’s knowledge, threatened, that could have a material adverse effect on
its business or properties, nor is the Company aware of any labor organization
activity involving its employees.

 

2.26         Insurance.  The Company maintains in full force and effect such
types and amounts of insurance issued by insurers of recognized responsibility
insuring the Company with respect to its business and properties, in such
amounts and against such losses and risks which are usual and customary in the
Company’s business as to amount and scope.

 

3.             Representations and Warranties of the Investor.  The Investor
hereby represents and warrants that:

 

3.1           Authorization.  The Investor has full power and authority to enter
into this Agreement, and this Agreement constitutes a valid and legally binding
obligation, enforceable in accordance with its terms except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors’ rights generally and
(ii) as limited by laws relating to the availability of specific performance,
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 Common Stock to be received by the Investor (the
“Securities”) 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,

 

8

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and that the Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same in violation of applicable
securities laws.  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
person or to any third person, with respect to any of the Securities.

 

3.3           Disclosure of Information.  The Investor further represents that
it has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Common Stock and the
business, properties, prospects and financial condition of the Company.  The
Investor acknowledges that it has read the “Risk Factors” Section contained in
the Company’s Annual Report on Form 10-K filed on February 27, 2012 and
understands the Company’s business and recognizes that a purchase of the
Company’s Common Stock involves risks and uncertainties.  The foregoing,
however, does not limit or modify the representations and warranties of the
Company in Section 2 of this Agreement or the right of the Investor to rely
thereon.

 

3.4           Investment Experience.  The Investor is an investor in securities
of companies in the development stage and acknowledges that it is able to fend
for itself, can bear the economic risk of its investment, and has such knowledge
and experience in financial or business matters that it is capable of evaluating
the merits and risks of the investment in the Common Stock.  The Investor also
represents that it has not been organized for the purpose of acquiring the
Common Stock.

 

3.5           Accredited Investor.  The Investor is an “accredited investor”
within the meaning of Rule 501 of Regulation D adopted pursuant to the Act, as
presently in effect.

 

3.6           Restricted Securities.  The Investor understands that the
Securities 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 such securities may be resold without registration under
the Act, only in certain limited circumstances.  In this connection, the
Investor represents that it is familiar with Rule 144 adopted pursuant to the
Act, as presently in effect, and understands the resale limitations imposed
thereby and by the Act.

 

3.7           Governance Agreement.  The Investor acknowledges and agrees that
(a) the Shares it is purchasing hereunder are “Voting Stock” (as defined in the
Governance Agreement), (b) the Shares are subject to the terms and conditions of
the Governance Agreement, including, but not limited to, the resale restrictions
and voting obligations contained therein, and (c) it is a GSK Affiliate under
the Governance Agreement.

 

4.             Covenants.

 

4.1           Conduct of the Business.  From the date of this Agreement until
the earlier of the Closing Date and the termination of this Agreement pursuant
to Section 7.21 (the “Pre-Closing Period”), the Company shall, and shall cause
each of the Company Subsidiaries to, use commercially reasonable efforts to
carry on its business in the ordinary course of business, maintain and preserve
its and the Company Subsidiaries’ business (including its organization,

 

9

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assets, properties, goodwill and insurance coverage) and preserve its business
relationships with customers, strategic partners, suppliers, distributors and
others having business dealings with it.  In addition, during the Pre-Closing
Period, the Company shall not, without the prior written consent of the
Investor, (i) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its Common Stock, (ii) split, combine, reclassify, subdivide, redeem or
purchase or otherwise acquire any shares of its Common Stock or (iii)  authorize
any of, or commit or agree, in writing or otherwise, to take any of, the
foregoing actions.

 

4.2           No Solicitation.  Prior to approval of the Voting Proposal,
without the prior written approval of the Investor, the Company shall not,
directly or indirectly:

 

(a)           solicit, initiate or knowingly encourage any inquiries or the
making of any proposal or offer that could reasonably be expected to lead to
Alternative Financing;

 

(b)           enter into, continue or otherwise participate in any discussions
or negotiations with persons other than the Company’s employees, officers,
directors and counsel regarding or furnish to any person any non-public
information with respect to any (i) Alternative Financing or (ii) inquiry,
proposal or offer that could reasonably be expected to lead to Alternative
Financing;

 

(c)           enter into any agreement, agreement in principle, letter of
intent, option agreement or similar agreement or understanding with respect to
any Alternative Financing; or

 

(d)           resolve, agree or publicly propose to do any of the foregoing.

 

“Alternative Financing” means (i) the incurrence, assumption, issuance,
modification, renewal, syndication, or refinancing of any indebtedness (other
than (A) in connection with the financing of trade receivables in the ordinary
course of business, (B) letters of credit or similar arrangements issued in the
ordinary course of business, and (C) borrowings under existing revolving credit
facilities in the ordinary course of business), (ii) the issuance, sale or
amendment of any debt securities or warrants or other rights to acquire debt
securities of the Company or any of the Company Subsidiaries (other than an
exchange of debt securities that does not increase the aggregate amount of
principal and accrued interest owed by the Company prior to the exchange), or
(iii) the sale of any of the Company’s other securities, including Common Stock
(other than Common Stock issued through the exercise of outstanding Company
options or the settlement of outstanding Company restricted stock units).

 

4.3           Antitrust Approval.  The Investor and the Company agree, and shall
cause each of their respective subsidiaries, to cooperate and to use their
respective commercially reasonable efforts to obtain any government clearances
(including by expiration or termination of the relevant waiting period) or
approvals required for the Closing and the continued exercise of GSK’s right to
purchase shares of Common Stock pursuant to Section 2.1(d)(ii) of the Governance
Agreement under the HSR Act or other applicable competition, antitrust or merger
control laws of any other jurisdictions (collectively, “Antitrust Laws”).
Without limiting the foregoing, the Company and the Investor shall prepare and
file a Notification and Report Form

 

10

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pursuant to the HSR Act no more than seven Business Days after the date of this
Agreement.  The Investor and the Company will have the right to review in
advance, and to the extent practicable each will consult with the other with
respect to, in each case subject to applicable laws relating to the exchange of
information, all the information relating to such other party, and any of their
respective subsidiaries, which appears in any filing made with, or written
materials submitted to, any third party or any governmental authority or
regulatory body in connection with the transactions contemplated by this
Agreement.  In exercising the foregoing right, each of the Investor and the
Company hereby agrees to act reasonably and as promptly as practicable and to
keep the other party apprised of the status of the matters referred to in this
Section 4.3.  Each of the Investor and the Company shall promptly furnish the
other with copies of written communications received by it or its subsidiaries
from, or delivered by any of the foregoing to, any governmental authority or
regulatory body in respect of this Section 4.3.  The parties agree that, to the
extent that the condition set forth in Sections 5.8 and 6.4 is not satisfied
prior to the date upon which GSK has the right to purchase shares of Common
Stock pursuant to Section 2.1(d)(ii) of the Governance Agreement as a result of
exercises, vestings and settlements occurring during the first quarter of 2012,
GSK and the Company will defer such purchase and sale of shares of Common Stock
until the satisfaction of such conditions.

 

4.4           Stockholder Approval.

 

(a)           The Company, acting through the Board of Directors, shall call
for, give notice of, convene and hold the Stockholders’ Meeting as promptly as
practicable following the date of this Agreement, for the purpose of considering
and voting on the proposal to approve the issuance of the Shares in connection
with the Purchase pursuant to Nasdaq Listing Rule 5635(b) (the “Voting
Proposal”, and the approval of the Voting Proposal by the majority of the
holders of the outstanding shares of Common Stock present at the Stockholders’
Meeting and eligible to vote, the “Stockholder Approval”).  In connection with
the Stockholders’ Meeting, the Company shall promptly prepare (and the Investor
will reasonably cooperate with the Company to prepare) and file (but in no event
more than seven Business Days after the date of this Agreement) with the
Commission a preliminary proxy statement (as amended or supplemented from time
to time, the “Proxy Statement”) to be sent to the stockholders of the Company in
connection with the approval of the Voting Proposal, shall use its commercially
reasonable efforts to respond to any comments of the Commission or its staff and
to cause a definitive Proxy Statement related to such Stockholders’ Meeting to
be mailed to the Company’s stockholders not more than seven Business Days after
clearance thereof by the Commission, and shall use its commercially reasonable
efforts to solicit proxies in favor of approving the Voting Proposal.  The
Company agrees that the Proxy Statement (A) will not, on the date the Proxy
Statement is first mailed to the stockholders of the Company or at the time of
the Stockholders’ Meeting or at the time of any amendment or supplement thereof,
contain any untrue statement of material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading (provided that the Company shall not be responsible for any
statements made in the Proxy Statement with respect to the Investor, based on
information supplied in writing by or on behalf of the Investor specifically for
inclusion in the Proxy Statement) and (B) will comply as to form, in all
material respects, with the requirements under the Exchange Act and the rules of
the Commission thereunder.  The Board of Directors has unanimously recommended
that the Company’s stockholders vote in favor of the Voting Proposal (the “Board
Recommendation”)

 

11

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and, subject to the following sentence, the Proxy Statement will include such
Board Recommendation.  The Board of Directors shall not withhold, withdraw or
modify, or publicly propose or resolve to withhold, withdraw or modify in a
manner adverse to the Investor, the Board Recommendation, unless the Board of
Directors has first determined in good faith, after consultation with its
outside legal counsel, that failure to change the Board Recommendation is
reasonably likely to result in a breach of its fiduciary duties.  The Company
shall provide the Investor with no less than twenty-four hours prior written
notice of any meeting of the Board of Directors at which any such action with
respect to the Board Recommendation is to be voted on.

 

(b)           The Company shall notify the Investor promptly of the receipt of
any comments from the Commission or its staff and of any request by the
Commission or its staff for amendments or supplements to the Proxy Statement or
for additional information (in each case limited to comments or requests
specifically related to the Voting Proposal) and will supply the Investor with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the Commission or its staff, on the other hand, with
respect to any portion of the Proxy Statement specifically related to the Voting
Proposal. If at any time prior to the Stockholders’ Meeting there shall occur
any event that is required to be set forth in an amendment or supplement to the
Proxy Statement, the Company shall as promptly as practicable prepare and mail
to its stockholders such an amendment or supplement. The Investor and the
Company agree to promptly correct any information provided by it or on its
behalf for use in the Proxy Statement if, and to the extent that, such
information shall have become false or misleading in any material respect, and
the Company shall as promptly as practicable prepare and mail to its
stockholders an amendment or supplement to correct such information to the
extent required by applicable laws and regulations. The Company shall consult
with the Investor prior to filing the Proxy Statement on matters specifically
related to the Voting Proposal, or any amendment or supplement thereto, and
provide the Investor with a reasonable opportunity to comment thereon.

 

(c)           The Investor and the Company agree, upon request, to furnish the
other party with all information concerning itself, its affiliates, directors,
officers, partners and stockholders and such other matters as may be reasonably
necessary or advisable in connection with (i) the Proxy Statement, (ii) the
Stockholders’ Meeting and (iii) any other statement, filing, notice or
application made by or on behalf of such other party to any governmental
authority in connection with the Purchase and the other transactions
contemplated by this Agreement.

 

5.             Conditions of Investor’s Obligations at Closing.  The obligations
of the Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against the Investor if it does not
consent thereto:

 

5.1           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.

 

5.2           Representations and Warranties.  The representations and
warranties of the Company contained in Sections 2.1, 2.4, 2.5, 2.6 and 2.11
shall have been true in all material respects on and as of the Closing and each
of the representations and warranties made by the

 

12

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Company in this Agreement (except those representations and warranties in
Sections 2.1, 2.4, 2.5, 2.6 and 2.11) shall have been true in all material
respects as of the date of this Agreement.

 

5.3           Compliance Certificate.  The Chief Executive Officer of the
Company shall deliver to the Investor at the Closing a certificate stating that
the conditions specified in Section 5.1 and 5.2 have been fulfilled.

 

5.4           Qualifications.  All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Securities pursuant to this Agreement shall be duly obtained and effective
as of the Closing.

 

5.5           Proceedings and Documents.  All corporate and other proceedings in
connection with the transactions contemplated at the Closing and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investor, and they shall have received all such counterpart original and
certified or other copies of such documents as they may reasonably request.

 

5.6           Section 203 of DGCL.  The Board of Directors shall have approved
the entry by the Company into this Agreement and the performance by of the
Company’s obligations hereunder and consummation of the transactions
contemplated hereby for purposes of paragraph (a)(1) of DGCL Section 203 and the
Company shall deliver to the Investor true and correct copies of resolutions
adopted by the Board of Directors to the foregoing effect.

 

5.7           Stockholder Approval.  The Stockholder Approval shall have been
obtained.

 

5.8           HSR Act.  The waiting period applicable to the consummation of the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated and no action by the Department of Justice or Federal Trade
Commission or any governmental authority challenging or seeking to enjoin the
consummation of such transactions shall have been instituted and be pending.

 

5.9           No Injunction.  No provision of any applicable law or regulation
and no judgment, injunction, order or decree shall prohibit the Closing or shall
prohibit or restrict the Investor from acquiring the Shares being sold hereunder
and no pending lawsuit shall have been commenced by any court, administrative
agency or commission or other governmental authority seeking to effect any of
the foregoing.

 

6.             Conditions of the Company’s Obligations at Closing.  The
obligations of the Company to the Investor under this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions by
the Investor:

 

6.1           Representations and Warranties.  The representations and
warranties of the Investor contained in Section 3 shall have been true on and as
of the Closing.

 

6.2           Qualifications.  All authorizations, approvals, or permits, if
any, of any governmental authority or regulatory body of the United States or of
any state that are required in

 

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connection with the lawful issuance and sale of the Securities pursuant to this
Agreement shall be duly obtained and effective as of the Closing.

 

6.3           Stockholder Approval.  The Stockholder Approval shall have been
obtained.

 

6.4           HSR Act.  The waiting period applicable to the consummation of the
transactions contemplated hereby under the HSR Act shall have expired or been
terminated and no action by the Department of Justice or Federal Trade
Commission or any governmental authority challenging or seeking to enjoin the
consummation of such transactions shall have been instituted and be pending.

 

6.5           No Injunction.  No provision of any applicable law or regulation
and no judgment, injunction, order or decree shall prohibit the Closing or shall
prohibit or restrict the Company from issuing to the Investor the Shares being
sold hereunder and no pending lawsuit shall have been commenced by any court,
administrative agency or commission or other governmental authority seeking to
effect any of the foregoing.

 

7.             Miscellaneous.

 

7.1           Survival of Warranties.  The warranties, representations and
covenants of the Company, the Investor and GSK contained in or made pursuant to
this Agreement shall survive the execution and delivery of this Agreement and
the Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor, GSK or the Company.

 

7.2           Successors and Assigns.  Except as otherwise provided herein, 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 (including
transferees of any Securities).  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.

 

7.3           Governing Law.  This Agreement shall be governed by and construed
in accordance with and governed by the law of the State of Delaware, without
regard to the conflicts of laws principles thereof.  Any action brought, arising
out of, or relating to this Agreement shall be brought in the Court of Chancery
of the State of Delaware. Each party hereby irrevocably submits to the exclusive
jurisdiction of said Court in respect of any claim relating to the validity,
interpretation and enforcement of this Agreement, and hereby waives, and agrees
not to assert, as a defense in any action, suit or proceeding in which any such
claim is made that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in such courts, or that the
venue thereof may not be appropriate or that this agreement may not be enforced
in or by such courts.  The parties hereby consent to and grant the Court of
Chancery of the State of Delaware jurisdiction over such parties and over the
subject matter of any such claim and agree that mailing of process or other
papers in connection with any such action, suit or proceeding in the manner
provided in Section 7.7, or in such other manner as may be permitted by law,
shall be valid and sufficient thereof.

 

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7.4           WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

 

7.5           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.

 

7.6           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.

 

7.7           Notices.  All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed electronic mail or facsimile if
sent during normal business hours of the recipient, if not, then on the next
business day or (c) one (1) day after deposit with a nationally recognized
overnight courier, specifying next day delivery, with written verification of
receipt.  Notwithstanding the foregoing or any provision to the contrary in the
Investors’ Rights Agreement or the Restated Certificate, the Company agrees that
when any notice is given to the Investor or GSK, whether under this Agreement,
the Investors’ Rights Agreement or the Restated Certificate, such notice shall
not be deemed to be effectively given until a copy of such notice is transmitted
to the Investor and GSK via facsimile.  All notices and certificates will be
addressed to the Investor and GSK at their respective addresses set forth on the
signature page hereto or at such other address as the Company or the Investor or
GSK may designate by ten (10) days advance written notice to the other parties
hereto.

 

7.8           Finder’s Fee.  The Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in
the nature of a finders’ fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Investor or any of its
officers, partners, employees, or representatives is responsible.

 

The Company agrees to indemnify and hold harmless the Investor from any
liability for any commission or compensation in the nature of a finders’ fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the Company or any of its officers, employees or
representatives is responsible.

 

7.9           Expenses.  Irrespective of whether the Closing is effected, each
party shall bear their own costs and expenses incurred with respect to the
negotiation, execution, delivery and performance of this Agreement.  If any
action at law or in equity is necessary to enforce or interpret the terms of
this Agreement or the Restated Certificate, the prevailing party shall be
entitled to reasonable attorney’s fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

 

7.10         Amendments and Waivers.  Any term of this Agreement may be amended
and 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

 

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Company, the Investor and GSK.  Any amendment or waiver effected in accordance
with this paragraph shall be binding upon each holder of any securities
purchased under this Agreement at the time outstanding, each future holder of
all such securities, and the Company.

 

7.11         Severability.  If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.

 

7.12         Confidentiality.  Any confidential information obtained by the
Investor or GSK pursuant to this Agreement which is labeled or otherwise
identified as confidential or proprietary shall be treated as confidential and
shall not be disclosed to a third party without the prior written consent of the
Company and shall not be used by the Investor or GSK for any purpose other than
monitoring the Investor’s or GSK’s investment in the Company, except that the
Investor or GSK may disclose such information (i) to its attorneys, accountants,
consultants, and other professionals to the extent necessary to obtain their
services in connection with monitoring its investment in the Company, (ii) to
its affiliates, officers, directors, stockholders, members and/or partners in
the ordinary course of business or pursuant to disclosure obligation to
affiliates, stockholders, members and/or partners; provided that such
information is provided to such persons and entities with notice that such
information is confidential and should be treated as such, (iii) to any
prospective purchaser of the Investor’s or GSK’s shares of the Company, provided
(in the case of disclosure in clause (iii)) the recipient agrees to keep such
information confidential and to use such information solely for evaluation of
such proposed purchase, or (iv) as may otherwise be required by law. 
Notwithstanding the foregoing, such information shall not be deemed confidential
for the purpose of enforcement of this Agreement and said information shall not
be deemed confidential after it becomes publicly known through no fault of the
recipient.  The provisions of this Section 7.12 shall be in addition to, and not
in substitution for, the provisions of any separate confidentiality agreements
executed by the parties hereto; provided that if there is any conflict between
the provisions of this Section 7.12 and the more restrictive provisions of such
separate confidentiality agreements, the provisions of such separate
confidentiality agreements shall prevail.

 

7.13         Publicity.  No party or any affiliate of a party shall make, or
cause to be made, any publicity, news release or other such general public
announcement or make any other disclosure to any third party in respect of this
Agreement, the transactions contemplated hereby (including, without limitation,
disclosure of Investor’s or GSK’s ownership interest in the Company) or the
voting agreements without the prior written consent of the other party; provided
however, that the foregoing provision is not intended to limit communications
deemed reasonably necessary or appropriate by a party or its affiliates to its
employees, stockholders, partners, directors, officers, potential investors,
accountants and legal counsel who are under an obligation to preserve the
confidentiality of the foregoing.  Notwithstanding the foregoing provision, the
parties and their respective affiliates shall not be prohibited from making any
disclosure or release that is required by law, court order, or applicable
regulation, or is considered necessary by legal counsel to fulfill an obligation
under securities laws or the rules of a national stock exchange.

 

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7.14         Entire Agreement.  This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein.

 

7.15         Legends.  It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:

 

(a)           “The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the “Act”).  The shares
may not be sold, transferred or assigned in the absence of an effective
registration for these shares under the Act or an opinion of the corporation’s
counsel that registration is not required under the Act.”

 

(b)           “The sale, pledge, hypothecation, assignment or transfer of the
securities represented by this certificate is subject to the terms and
conditions of a Governance Agreement by and between the stockholder and the
corporation.  Copies of such agreement may be obtained upon written request to
the Secretary of the Corporation.”

 

(c)           Any legend required by the laws of any state.

 

7.16         Nasdaq Listing.  The Company shall use all commercially reasonable
efforts to have the Shares acquired by the Investor at the Closing authorized
for listing on the Nasdaq Global Market.

 

7.17         Existing Agreements Between GSK and the Company.  GSK, the
Investor, and the Company agree and acknowledge that (a) none of GSK, the
Investor nor any of their affiliates currently have any right to nominate or
designate any individual to serve as a member or observer of the Board of
Directors pursuant to section 1.1(a) of the Governance Agreement, and (b)
notwithstanding the purchase of the Shares by the Investor hereunder or any
other acquisition of shares of Voting Stock (as defined in the Governance
Agreement) by GSK, the Investor or any of their affiliates, none of GSK, the
Investor nor any of their affiliates will following the Closing have any right
to nominate or designate any individual to serve as a member or observer of the
Board of Directors pursuant to section 1.1(a) of the Governance Agreement. 
Notwithstanding the approval of the purchase of the Shares hereunder by the
Independent Directors and the Company and except as otherwise set forth herein,
GSK and the Investor agree and acknowledge that and each of them and their
affiliates continue to be subject to the limitations set forth in the Governance
Agreement with respect to acquisitions of any securities or direct or indirect
rights, warrants or options to acquire, or securities convertible into or
exchangeable for, any Equity Securities (as defined in the Governance
Agreement).  GSK, the Investor and the Company agree that neither the execution
of this Agreement nor the consummation by it of the transactions contemplated
hereby does or will, violate, conflict with or result in the breach or
termination of, or constitute a default under the terms of, any existing
agreement between GSK or any of its affiliates, on the one hand, and the Company
or any of its affiliates, on the other hand.

 

7.18         Authorization.  GSK has full power and authority to enter into this
Agreement, and this Agreement constitutes a valid and legally binding
obligation, enforceable in

 

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accordance with its terms except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors’ rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.

 

7.19         Registrable Securities.  The Shares purchased by the Investor
pursuant to this Agreement shall constitute Registrable Securities as defined
in, and in accordance with the limitations set forth in, the Investors’ Rights
Agreement.

 

7.20         Agreement to Vote for Private Placement.

 

(a)           The Investor and GSK shall ensure that all Voting Stock
beneficially owned by the Investor, GSK and/or any GSK Affiliate (as defined in
the Governance Agreement) is voted in favor of the Voting Proposal. The Investor
and GSK each hereby grant to the Board of Directors, and appoint the Board of
Directors as, its irrevocable proxy to vote all Voting Stock now owned or
hereafter acquired by the Investor or GSK, respectively, prior to the record
date of the Stockholders’ Meeting in the manner required by the preceding
sentence.  Such proxy shall be irrevocable until the earlier of (i) the Closing,
(ii) this Agreement terminates pursuant Section 7.21, or (iii) this Section 7.20
is amended to remove such grant of proxy in accordance with Section 7.10 hereof,
and is coupled with an interest in all Voting Stock owned by the Investor and
GSK, respectively.  This Agreement shall constitute the proxy granted pursuant
hereto.

 

(b)           In connection with the entry into this Agreement, certain of the
directors and executive officers of the Company have executed and delivered
voting agreements, dated as of the date hereof, in the form attached hereto as
Exhibit A.

 

7.21         Termination.  This Agreement may be terminated:

 

(a)           by the Investor or by the Company, by written notice to the other
party, if the Closing has not been consummated on or before July 15, 2012,
provided that the Company shall not have the right to terminate pursuant to this
Section 7.21(a) if it is in breach of its covenants under Section 4.4 hereof;

 

(b)           by the Investor if the closing S&P 500 index on any day during the
Pre-Closing Period is more than thirty percent (30%) less than the closing S&P
500 index on March 30, 2012;

 

(c)           by the Investor if the Board of Directors withholds, withdraws or
modifies, or publicly proposes or resolves to withhold, withdraw or modify in a
manner adverse to the Investor, the Board Recommendation; and

 

(d)           by the Investor or by the Company, by written notice to the other
party, if the Stockholder Approval is not obtained at the Stockholders’ Meeting
(or any postponement or adjournment thereof) at which a vote is taken on the
Voting Proposal.

 

7.22         Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.21, this Agreement shall immediately become
void and there shall be no

 

18

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liability or obligation on the part of the Investor or the Company, or their
respective officers, directors, stockholders or affiliates; provided that (a) no
such termination shall relieve any party from liability for fraud or any knowing
and intentional breach of this Agreement prior to such termination and (b) the
provisions of Sections 7.1 – 7.14 and this Section 7.22 shall remain in full
force and effect and survive any termination of this Agreement.

 

[Remainder of page intentionally left blank.]

 

19

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

 

 

 

THERAVANCE, INC.

 

 

 

 

 

 

 

By:

/s/ Rick E Winningham

 

 

Rick E Winningham

 

 

Chief Executive Officer

 

SIGNATURE PAGE TO APRIL 2012 COMMON STOCK PURCHASE AGREEMENT

 

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INVESTOR:

 

 

 

 

 

Glaxo Group Limited

 

Name of Investor

 

 

 

 

 

By:

/s/ Vaughn Walton

 

Signature of Authorized Person

 

Name:

Vaughn Walton

 

Title:

Authorized Signatory for and on behalf of The Welcome Foundation Limited
Corporate Director

 

 

 

Address:

980 Great West Road

Brentford, Middlesex, TW89GS

 

 

 

 

 

 

 

Fax No:

+44 208 047 6904

 

 

 

 

 

GlaxoSmithKline LLC

 

(Solely with respect to Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.9, 7.10,
7.11, 7.12, 7.13, 7.14, 7.17, 7.18 and 7.20)

 

 

 

 

 

By:

/s/ William J. Mosher

 

Signature of Authorized Person

 

Name:

William J. Mosher

 

Title:

Vice President & Secretary

 

 

 

Address:

One Franklin Plaza

200 North 16th Street

Philadelphia, PA 19102

 

 

 

 

 

 

 

Fax No:

215-751-5349

 

SIGNATURE PAGE TO APRIL 2012 COMMON STOCK PURCHASE AGREEMENT

 

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Exhibit A

Form of Voting Agreement

 

April 2, 2012

 

Glaxo Group Limited
980 Great West Road
Brentford, Middlesex, TW8 9GS
United Kingdom

 

Ladies and Gentlemen:

 

Reference is made to the Common Stock Purchase Agreement, dated as of the date
hereof, by and among yourself, GlaxoSmithKline LLC, a Delaware limited liability
company, the successor entity to SmithKline Beecham Corporation, a Pennsylvania
corporation (“GSK”) and Theravance, Inc., a Delaware corporation (the “Company”)
(as such agreement may be amended from time to time, the “Purchase Agreement”;
capitalized terms used herein without definition shall have the respective
meanings ascribed to them in the Purchase Agreement), pursuant to which, among
other things, you will purchase Shares from the Company at the Closing (the
“Purchase”), upon the terms and subject to the conditions set forth in the
Purchase Agreement.

 

At any meeting of the stockholders of the Company to vote on the proposal to
approve the issuance of the Shares to you in connection with the Purchase
pursuant to Nasdaq Listing Rule 5635(b) (the “Voting Proposal”), I commit that I
shall vote (or cause to be voted) all shares of the Company’s voting stock over
which I then have voting power in favor of the Voting Proposal.  Until such
meeting occurs, I shall not take any action with the purpose and intent of
transferring voting power over any such shares that are beneficially owned by
me; it being understood that this shall not restrict my ability to sell any such
shares (and the associated voting power) in my sole discretion prior to such
meeting.  My commitment to vote these shares will terminate automatically
(without any further action of the parties) upon the earlier to occur of (a) the
termination of the Purchase Agreement in accordance with its terms, and (b) the
Closing.

 

I acknowledge and agree your willingness to enter into and perform your
obligations under the Purchase Agreement was made in reliance of my commitments
in this letter.  This letter shall be governed by and construed in accordance
with and governed by the law of the State of Delaware, without regard to the
conflicts of laws principles thereof.

 

 

By:

 

 

 

 

Print Name:

 

 

 

 

Address:

 

 

 

 

 

Fax No:

 

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