Document:

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                                                                   Exhibit 10.36

                              PURCHASE AGREEMENT

     THIS AGREEMENT is made as of the 3rd day of February 2000, by and between
NPS Pharmaceuticals Inc. (the "Company"), a corporation organized under the laws
of the State of Delaware, with its principal offices at 420 Chipeta Way, Salt
Lake City, Utah, 84108, and the purchaser whose name and address is set forth on
the signature page hereof (the "Purchaser").

     IN CONSIDERATION of the mutual covenants contained in this Agreement, the
Company and the Purchaser agree as follows:

     SECTION 1.  Authorization of Sale of the Shares.  Subject to the terms and
                 -----------------------------------
conditions of this Agreement, the Company has authorized the sale of up to
4,000,000 shares (the "Shares") of common stock, par value US$0.001 per share
(the "Common Stock"), of the Company.

     SECTION 2.  Agreement to Sell and Purchase the Shares.  At the Closing (as
                 -----------------------------------------
defined in Section 3), the Company will sell to the Purchaser, and the Purchaser
will buy from the Company, upon the terms and conditions hereinafter set forth,
the number of Shares (at the purchase price) shown below:

     Number to Be       Price Per Share         Aggregate Purchase Price
      Purchased         In U.S. Dollars             in U.S. Dollars
     ------------       ---------------         ------------------------

     The Company proposes to enter into this same form of purchase agreement
with certain other investors (the "Other Purchasers") and expects to complete
sales of the Shares to them. The Purchaser and the Other Purchasers are
hereinafter sometimes collectively referred to as the "Purchasers," and this
Agreement and the agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements."  The term "Placement
Agent" shall mean Prudential Vector Healthcare Group, a unit of Prudential
Securities Incorporated.

     SECTION 3.  Delivery of the Shares at the Closing.  The completion of the
                 -------------------------------------
purchase and sale of the Shares (the "Closing") shall occur as soon as
practicable and as agreed by the parties hereto following notification by the
staff of the U.S. Securities and Exchange Commission (the "Commission") to the
Company of the staff's willingness to declare effective the registration
statement to be filed by the Company pursuant to Section 7.1 hereof (the
"Registration Statement") at a place and time (the "Closing Date") to be agreed
upon by the Company and the Placement Agent and of which the Purchasers will be
notified by facsimile transmission or otherwise.

     At the Closing, the Company shall deliver to the Purchaser one or more
stock certificates registered in the name of the Purchaser, or in such nominee
name(s) as may be designated by the Purchaser in writing, representing the
number of Shares set forth in Section 2 above and bearing an appropriate legend
referring to the fact that the Shares were sold in reliance upon the exemption
from registration under the Securities Act of 1933, as amended (the "Securities
Act") provided by Section 4(2) thereof and Rule 506 thereunder.  The Company
will promptly substitute one or more replacement certificates without the legend
at such time as the Registration State-

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ment becomes effective. The name(s) in which the stock certificates are to be
registered are set forth in the Stock Certificate Questionnaire attached hereto
as part of Appendix I. The Company's obligation to complete the purchase and
sale of the Shares and deliver such stock certificate(s) to the Purchaser at the
Closing shall be subject to the following conditions, any one or more of which
may be waived by the Company: (a) receipt by the Company of same-day funds in
the full amount of the purchase price for the Shares being purchased hereunder;
(b) completion of the purchases and sales under the Agreements with all of the
Other Purchasers; and (c) the accuracy of the representations and warranties
made by the Purchasers and the fulfillment of those undertakings of the
Purchasers to be fulfilled prior to the Closing. The Purchaser's obligation to
accept delivery of such stock certificate(s) and to pay for the Shares evidenced
thereby shall be subject to the following conditions: (a) the staff of the
Commission having notified the Company of the staff's willingness to declare the
Registration Statement effective on or prior to the 75th day after the date the
Registration Statement was filed by the Company; and (b) the accuracy in all
material respects of the representations and warranties made by the Company
herein and the fulfillment in all material respects of those undertakings of the
Company to be fulfilled prior to Closing, including the Company's undertaking to
prepare and file the Registration Statement pursuant to Section 7.1(a) hereof.
The Purchaser's obligations hereunder are expressly not conditioned on the
purchase by any or all of the Other Purchasers of the Shares that they have
agreed to purchase from the Company.

     SECTION 4.  Representations, Warranties and Covenants of the Company.  The
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Company hereby represents and warrants to, and covenants with, the Purchaser, as
of the date hereof and as of the Closing, as follows:

     4.1  Organization and Qualification.  The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware.  NPS Holdings Company, a wholly owned subsidiary of the Company, is an
unlimited liability company existing under the laws of the Province of Nova
Scotia, and is validly existing and in good standing under the laws of Nova
Scotia.  NPS Allelix Inc., a direct wholly-owned subsidiary of NPS Holdings, is
a company limited by shares, existing under the laws of the Province of Nova
Scotia, and is validly existing and in good standing under the laws of Nova
Scotia.  NPS Allelix Corp. is a majority owned subsidiary of NPS Allelix Inc.,
existing under the laws of the Province of Ontario, and is validly existing and
in good standing under the laws of Ontario.  Allelix Neuroscience, Inc. is a
wholly owned subsidiary of NPS Allelix Corp., existing under the laws of the
State of New Jersey, and is a corporation duly organized, validly existing and
in good standing under the laws of the State of New Jersey.  The Company has no
subsidiaries (as defined in the Securities Act) other than NPS Holdings Company,
NPS Allelix Inc., NPS Allelix Corp, and Allelix Neuroscience Inc.  (collectively
referred to herein as the "Subsidiaries").  The Company and each of its
Subsidiaries has the power and authority, corporate or otherwise, as
appropriate, to own, lease and operate its properties and to conduct its
business as described in the Confidential Private Placement Memorandum, dated
January 27, 2000 prepared by the Company, including all Exhibits, supplements
and amendments thereto and documents expressly incorporated by reference in any
Exhibits (the "Private Placement Memorandum") and to enter into and perform its
obligations under this Agreement; and the Company and each of its Subsidiaries
is duly qualified as a foreign corporation or other appropriate entity to
transact business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not individually or in the aggregate have a material adverse effect on the
condition (fi-

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nancial or otherwise), earnings, properties, business, prospects or results of
operations of the Company and the Subsidiaries (a "Material Adverse Effect").

     4.2  Authorized Capital Stock.  The Company had authorized and outstanding
          ------------------------
capital stock as set forth under the heading "Capitalization" in the Private
Placement Memorandum as of the date set forth therein; the issued and
outstanding shares of the Company's Common Stock have been duly authorized and
validly issued, are fully paid and nonassessable, have been issued in compliance
with all U.S. federal and state securities laws, were not issued in violation of
or are not otherwise subject to any preemptive or other similar rights or other
rights to subscribe for or purchase securities, and conform in all material
respects to the description thereof contained in the Private Placement
Memorandum.  Except as disclosed in the Private Placement Memorandum and options
issued under the Company's stock plans after January 27, 2000, the Company does
not have outstanding any options or warrants to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, any securities or
obligations convertible into, or any contracts or commitments to issue or sell,
shares of its capital stock or any shares of capital stock of any subsidiary and
there is no commitment, plan or arrangement to issue any securities or
obligations convertible into any shares of capital stock of the Company or its
Subsidiaries or any such options, rights, convertible securities or obligations.
The description of the Company's capital stock, stock bonus and other stock
plans or arrangements and the options or other rights granted and exercised
thereunder, contained in the Private Placement Memorandum accurately and fairly
presents the information required to be shown with respect to such capital
stock, plans, arrangements, options and rights.

     4.3  Issuance, Sale and Delivery of the Shares.  The Shares have been duly
          -----------------------------------------
authorized and, when issued, delivered and paid for in the manner set forth in
this Agreement, will be duly authorized, validly issued, fully paid and
nonassessable, and will conform in all material respects to the description
thereof set forth in the Private Placement Memorandum.  The issued shares of
capital stock of each of the Company's Subsidiaries have been duly authorized
and validly issued, are fully paid and nonassessable and are owned by the
Company free and clear of any perfected security interest, or any other security
interests, liens, encumbrances, equities or claims. No preemptive rights or
other rights to subscribe for or purchase exist with respect to the issuance and
sale of the Shares by the Company pursuant to this Agreement.  Except for rights
disclosed in the Private Placement Memorandum, no stockholder of the Company has
any right (which has not been waived or has not expired by reason of lapse of
time following notification of the Company's intent to file the Registration
Statement) to request or require the Company to register the sale of any shares
owned by such stockholder under the United States Securities Act in the
Registration Statement.  No further approval or authority of the stockholders or
the Board of Directors of the Company will be required for the issuance and sale
of the Shares to be sold by the Company as contemplated herein.

     4.4  Due Execution, Delivery and Performance of the Agreements.  The
          ---------------------------------------------------------
Company has full legal right, corporate power and authority to enter into the
Agreements and perform the transactions contemplated hereby and thereby.  The
Agreements have been duly authorized, executed and delivered by the Company.
The execution, delivery and performance of the Agreements by the Company and the
consummation of the transactions herein and therein contemplated will not
violate any provision of the organizational documents of the Company or any of
its Subsidiaries and will not result in the creation of any lien, charge,
security interest or encumbrance upon any assets or property of the Company or
any of its Subsidiaries pursuant to the

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terms or provisions of, or will not conflict with, result in the breach or
violation of, or constitute, either by itself or upon notice or the passage of
time or both, a default under any agreement, mortgage, deed of trust, lease,
franchise, license, indenture, permit or other instrument to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or any of their respective assets or properties may be bound or
affected or, to the Company's knowledge, any statute or any authorization,
judgment, decree, order, rule or regulation of any court or any regulatory body,
administrative agency or other governmental body applicable to the Company or
any of its Subsidiaries or any of their respective properties. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the execution,
delivery and performance of the Agreements or the consummation of the
transactions contemplated hereby or thereby, except for compliance with the Blue
Sky laws and U.S. federal securities laws applicable to the offering of the
Shares. Upon their execution and delivery, and assuming the valid execution
thereof by the respective Purchasers, the Agreements will constitute legal,
valid and binding obligations of the Company, enforceable in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally and except as enforceability may be subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and except as the
indemnification agreements of the Company in Section 7.3 hereof may be legally
unenforceable.

     4.5  Accountants.  KPMG LLP have expressed their opinion with respect to
          -----------
the audited consolidated financial statements to be incorporated by reference
into the Registration Statement and the Prospectus which forms a part thereof
from the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1998, and are independent accountants as required by the Securities Act and
the rules and regulations promulgated thereunder (the "Rules and Regulations").
The financial statements consisting of the Allelix and NPS Unaudited Pro Forma
Condensed Consolidated Financial Statements and the Allelix Audited Consolidated
Financial Statements for the year ended August 31, 1999 (including all notes and
schedules thereto) included in the Private Placement Memorandum present fairly
the financial position, the results of operations, the statements of cash flows
and the statements of stockholders' equity and the other information purported
to be shown therein of the Company and its Subsidiaries at the respective dates
and for the respective periods to which they apply and such consolidated
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved.

     4.6  No Defaults.  Neither the Company nor any of its Subsidiaries is (i)
          -----------
in violation or default of any provision of its certificate of incorporation,
bylaws or other organizational documents, or (ii) in breach of or default with
respect to any provision of any agreement, judgment, decree, order, mortgage,
deed of trust, lease, franchise, license, indenture, permit or other instrument
to which it is a party or by which it or any of its assets or properties are
bound, except for violations, breaches and defaults which individually or in the
aggregate would not have a Material Adverse Effect; and there does not exist any
state of fact which, with notice or lapse of time or both, would constitute an
event of default on the part of the Company or any of its Subsidiaries as
defined in such documents, except such defaults which individually or in the
aggregate would not have a Material Adverse Effect.

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     4.7  Contracts.  The contracts described in the Private Placement
          ---------
Memorandum as being in effect on the date hereof that are material to the
Company, are in full force and effect on the date hereof, and neither the
Company nor any of its Subsidiaries, nor to the Company's knowledge, is any
other party in breach of or default under any of such contracts which would have
a Material Adverse Effect.

     4.8  No Actions.  There are no legal or governmental actions, suits or
          ----------
proceedings pending or, to the Company's knowledge, threatened to which the
Company or any of its Subsidiaries are or may be a party or of which property
owned or leased by the Company or any of its Subsidiaries are or may be the
subject, or related to environmental or discrimination matters, which actions,
suits or proceedings, individually or in the aggregate, might prevent or might
reasonably be expected to materially and adversely affect the transactions
contemplated by this Agreement or result in a material adverse change in the
condition (financial or otherwise), properties, business, prospects or results
of the operations of the Company and its Subsidiaries, taken as a whole (a
"Material Adverse Change"); and no labor disturbance by the employees of the
Company or any of its Subsidiaries exists or, to the Company's knowledge, is
imminent which might reasonably be expected to have a Material Adverse Effect.
Except as disclosed in the Private Placement Memorandum, neither the Company nor
any of its Subsidiaries is a party to or subject to the provisions of any
material injunction, judgment, decree or order of any court, regulatory body
administrative agency or other governmental body.

     4.9  Properties.  Each of the Company and its Subsidiaries has good and
          ----------
marketable title to all the properties and assets required for the continued
conduct of its business as described in the Private Placement Memorandum,
subject to no lien, mortgage, pledge, charge or encumbrance of any kind except
(i) those, if any, reflected in the Financial Statements (including the notes
thereto), or (ii) those which are not material in amount and do not materially
and adversely affect the use made and intended to be made of such property by
the Company or its Subsidiaries.  Each of the Company and its Subsidiaries holds
its leased properties under valid and binding leases, with such exceptions as
are not materially significant in relation to the business of the Company and
its Subsidiaries, taken as a whole.  Except as disclosed in the Private
Placement Memorandum, each of the Company and its Subsidiaries owns or leases
all such properties as are necessary to its operations as now conducted.

     4.10 No Material Change.  Since September 30, 1999 (i) neither the Company
          ------------------
nor its Subsidiaries have incurred any liabilities or obligations, indirect, or
contingent, or entered into any verbal or written agreement or other transaction
which is not in the ordinary course of business or which could reasonably be
expected to result in a material reduction in the future earnings of the Company
or its Subsidiaries or in a Material Adverse Effect; (ii) neither the Company
nor its Subsidiaries have sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident or other calamity
not covered by insurance; (iii) neither the Company nor its Subsidiaries have
paid or declared any dividends or other distributions with respect to its
capital stock and neither the Company nor its Subsidiaries is in default in the
payment of principal or interest on any outstanding debt obligations; (iv) there
has not been any change in the capital stock of the Company or any of its
Subsidiaries other than the issuance of capital stock in connection with the
acquisition of Allelix Biopharmaceuticals Inc., the sale of the Shares hereunder
and shares or options issued pursuant to exercise of outstanding warrants or
employee and director stock option plans approved by the Company's or such
Subsidiaries' Board of Directors, as the case may be, or indebtedness material
to the Company or any of its

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Subsidiaries (other than in the ordinary course of business); and (v) there has
not been a change that would result in a Material Adverse Change.

     4.11 Intellectual Property.  Except as otherwise specifically disclosed in
          ---------------------
the Private Placement Memorandum, (i) the Company and its Subsidiaries own or
have obtained valid licenses, options or rights to use for the material
inventions, patent applications, patents, trademarks (both registered and
unregistered), trade names, copyrights and trade secrets necessary for the
conduct of the Company's and its Subsidiaries' respective businesses as
currently conducted and as the Private Placement Memorandum indicates the
Company and its Subsidiaries contemplate conducting in all material respects
(collectively, the "Intellectual Property"); (ii) neither the Company nor any of
its Subsidiaries has received notice of any third parties who have any ownership
rights to any Intellectual Property that is owned by, or has been licensed to,
the Company or its Subsidiaries for the product indications described in the
Private Placement Memorandum that would preclude the Company or its Subsidiaries
from conducting their respective businesses as currently conducted and as the
Private Placement Memorandum indicates the Company and its Subsidiaries
contemplate conducting in all material respects; (iii) to the Company's
knowledge there are currently no sales of any products that would constitute an
infringement by third parties of any material Intellectual Property owned,
licensed or optioned by the Company or its Subsidiaries; (iv) there is no
pending or, to the Company's knowledge, threatened action, suit, proceeding or
claim by others challenging the rights of the Company or its Subsidiaries in or
to any material Intellectual Property owned, licensed or optioned by the Company
or its Subsidiaries; (v) there is no pending or, to the Company's knowledge,
threatened action, suit, proceeding or claim by others challenging the validity
or scope of any material Intellectual Property owned, licensed or optioned by
the Company or its Subsidiaries; and (vi) there is no pending or, to the
Company's knowledge, threatened action, suit, proceeding or claim by others that
the Company or its Subsidiaries infringe or otherwise violate any patent,
trademark, copyright, trade secret or other proprietary right of others as would
reasonably be expected to result in a Material Adverse Effect.

     4.12 Compliance.  Neither the Company nor any of its Subsidiaries has been
          ----------
advised, and has no reason to believe, that it is not conducting its business in
compliance with all applicable laws, rules and regulations of the jurisdictions
in which it is conducting business, including, without limitation, all
applicable local, state and federal environmental laws and regulations; except
where failure to be so in compliance would not individually or in the aggregate
have a Material Adverse Effect.

     4.13 Taxes.  Each of the Company and its Subsidiaries has filed or obtained
          -----
filing extensions with respect to all federal, state, provinical, local and
foreign income and franchise tax returns material to the Company and the
Subsidiaries, and has paid or accrued all taxes shown as due thereon, and
neither the Company nor any of its Subsidiaries has knowledge of a tax
deficiency which has been or might be asserted or threatened against it which
would reasonably be expected to have a Material Adverse Effect.

     4.14 Transfer Taxes.  On the Closing Date, all stock transfer or other
          --------------
taxes (other than income taxes) which are required to be paid in connection with
the sale and transfer of the Shares to be sold to the Purchaser hereunder will
be, or will have been, fully paid or provided for by the Company and all laws
imposing such taxes will be or will have been fully complied with.

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     4.15 Insurance.  Each of the Company and its Subsidiaries maintains
          ---------
insurance of the type and in the amount that the Company reasonably believes is
adequate for its business, including, but not limited to, insurance covering all
real and personal property owned or leased by the Company or its Subsidiaries
against risks customarily insured against by similarly situated companies, all
of which insurance is in full force and effect.

     4.16 Contributions.  Neither the Company at any time since its
          -------------
incorporation nor its Subsidiaries at any time since they were acquired or
formed by the Company have, directly or indirectly, (i) made any unlawful
contribution to any candidate for public office, or failed to disclose fully
where required by law any contribution in violation of law, or (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof.

     4.17 Investment Company.  The Company is not an "investment company" or an
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"affiliated person" of, or "promoter" or "principal underwriter" for an
investment company, within the meaning of the United States Investment Company
Act of 1940, as amended.

     4.18 Offering Materials.  The Company has not distributed and will not
          ------------------
distribute prior to the Closing Date any offering material in connection with
the offering and sale of the Shares other than the Private Placement Memorandum
or any amendment or supplement thereto.  The Company has not nor will it take
any action independent of the Placement Agent to sell, offer for sale or solicit
offers to buy any securities of the Company which would bring the offer,
issuance or sale of the Shares, as contemplated by this Agreement, within the
provisions of Section 5 of the Securities Act.

     4.19 Related Party Transactions.  No transaction has occurred between or
          --------------------------
among the Company and its affiliates, officers or directors or any affiliate or
affiliates of any such officer or director that is required to be described in
the Company's reports and other filings under the United States Securities
Exchange Act of 1934 (the "Exchange Act") attached as Exhibits to the Private
Placement Memorandum that is not so described.

     4.20 Books and Records.  The books, records and accounts of the Company
          -----------------
accurately and fairly reflect, in reasonable detail, the transactions in, and
dispositions of, the assets of, and the results of operations of, the Company,
all to the extent required by generally accepted accounting principles.  The
Company maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions are recorded
as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management's general
or specific authorization and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

     4.21 Additional Information.  The Company represents and warrants that each
          ----------------------
of the following documents, which the Placement Agent has furnished to the
Purchaser, or will furnish prior to the Closing, as of its date (or date of
filing with the Commission, as applicable), does not or will not contain an
untrue statement of a material fact or omit or will omit to state a material

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fact necessary in order to make the statements therein, in the light of the
circumstances under which they were or will be made, not misleading:

     (a)  the Company's Annual Report on Form 10-K for the fiscal year ended
          December 31, 1998;

     (b)  the Company's Quarterly Reports on Form 10-Q for the periods ended
          March 31, 1999, June 30, 1999 and September 30, 1999;

     (c)  the Company's Proxy Statement dated April 21, 1999 for the 1999 Annual
          Meeting of Stockholders;

     (d)  the Company's Proxy Statement dated November 17, 1999 for the special
          Meeting of Stockholders related to the acquisition by NPS of Allelix
          Biopharmaceuticals Inc.;

     (e)  the Company's current reports on Form 8-K filed with the Commission on
          October 1, 1999, November 12, 1999, November 18, 1999 and January 10,
          2000;

     (f)  the Resale Registration Statement on Form S-3;

     (g)  the Private Placement Memorandum, including all addenda and exhibits
          thereto (other than the Appendices); and

     (h)  all other documents, if any, filed by the Company with the Securities
          and Exchange Commission since January 27, 2000, pursuant to the
          reporting requirements of the Exchange Act.

     4.23 Legal Opinions.  Prior to the Closing and as a condition to the
          --------------
Purchaser's obligation hereunder, counsel to the Company will deliver to the
Placement Agent said counsel's legal opinion concerning the issuance of the
Shares in form and substance as agreed with the Placement Agent.  The opinion
shall also state that each of the Purchasers may rely thereon as though it were
addressed directly to such Purchaser.

     4.24 Certificate.  At the Closing, the Company will deliver to the
          -----------
Purchaser a certificate executed by the Chairman of the Board or President and
the chief financial or accounting officer of the Company, dated the Closing
Date, in form and substance reasonably satisfactory to the Purchasers, to the
effect that the representations and warranties of the Company set forth in this
Section 4 are true and correct in all material respects as of the date of this
Agreement and as of the Closing Date and the Company has complied with all the
agreements and satisfied all the conditions herein on its part to be performed
or satisfied on or prior to such Closing Date.

     4.25 Year 2000 Compliance.  The Company has not experienced, nor does the
          --------------------
Company have reason to believe that one will arise, a Year 2000 Problem that
would have a Material Adverse Effect on the Company.  The "Year 2000 Problem" as
used herein means any significant risk that computer hardware or software used
in the receipt, transmission, processing, manipulation, storage, retrieval,
retransmission or other utilization of data or in the operation of mechanical or
electrical systems of any kind will not, in the case of dates or time periods
occurring after

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December 31, 1999, function at least as effectively as in the case of dates or
time periods occurring prior to January 1, 2000.

     SECTION 5.  Representations, Warranties and Covenants of the Purchaser.
                 ----------------------------------------------------------

     (a)  The Purchaser represents and warrants to, and covenants with, the
          Company that: (i) the Purchaser is knowledgeable, sophisticated and
          experienced in making, and is qualified to make, decisions with
          respect to investments in shares representing an investment decision
          like that involved in the purchase of the Shares, including
          investments in securities issued by the Company, and has requested,
          received, reviewed and considered all information it deems relevant in
          making an informed decision to purchase the Shares; (ii) the Purchaser
          is acquiring the number of Shares set forth in Section 2 above in the
          ordinary course of its business and for its own account for investment
          (as defined for purposes of the Hart-Scott-Rodino Antitrust
          Improvement Act of 1976 and the regulations thereunder) only and with
          no present intention of distributing any of such Shares or any
          arrangement or understanding with any other persons regarding the
          distribution of such Shares within the meaning of Section 2(11) of the
          Securities Act; (iii) the Purchaser will not directly or indirectly,
          offer, sell, pledge, transfer or otherwise dispose of (or solicit any
          offers to buy, purchase or otherwise acquire or take a pledge of) any
          of the Shares except in compliance with the Securities Act and the
          Rules and Regulations thereunder; (iv) the Purchaser has completed or
          caused to be completed the Registration Statement Questionnaire and
          the Stock Certificate Questionnaire, both attached hereto as Appendix
          I, for use in preparation of the Registration Statement, and the
          answers thereto are true and correct as of the date hereof and will be
          true and correct as of the effective date of the Registration
          Statement; (v) the Purchaser has, in connection with its decision to
          purchase the number of Shares set forth in Section 2 above, relied
          solely upon the Private Placement Memorandum and the documents
          included therein and the representations and warranties of the Company
          contained herein and not on any other information concerning the
          Company or the offering; (vi) the Purchaser is an "accredited
          investor" within the meaning of Rule 501(a) of Regulation D
          promulgated under the Securities Act.

     (b)  The Purchaser hereby covenants with the Company not to make any sale
          of the Shares under the Registration Statement without effectively
          causing the prospectus delivery requirement under the Securities Act,
          and the Purchaser acknowledges and agrees that such Shares are not
          transferable on the books of the Company unless the certificate
          submitted to the transfer agent evidencing the Shares is accompanied
          by a separate officer's certificate: (i) in the form of Appendix II
          hereto, (ii) executed by an officer of, or other authorized person
          designated by, the Purchaser, and (iii) to the effect that (A) the
          Shares have been sold in accordance with the Registration Statement,
          the Securities Act and the Rules and Regulations and any applicable
          state securities or blue sky laws and (B) the requirement of
          delivering a current prospectus has been satisfied. The Purchaser
          acknowledges that there may occasionally be times when the Company
          must suspend the use of the prospectus forming a part of the
          Registration Statement until such time as an amendment or supplement
          to the Registration Statement or the Prospectus has

                                       9
<PAGE>

          been filed by the Company and any such amendment to the Registration
          Statement is declared effective by the Commission, or until such time
          as the Company has filed an appropriate report with the Commission
          pursuant to the Exchange Act. The Purchaser hereby covenants that it
          will not sell any Shares pursuant to said prospectus during the period
          commencing at the time at which the Company gives the Purchaser
          written notice of the suspension of the use of said prospectus and
          ending at the time the Company gives the Purchaser written notice that
          the Purchaser may thereafter effect sales pursuant to said prospectus.
          The Purchaser further covenants to notify the Company promptly of the
          sale of all of its Shares.

     (c)  The Purchaser further represents and warrants to, and covenants with,
          the Company that (i) the Purchaser has full right, power, authority
          and capacity to enter into this Agreement and to consummate the
          transactions contemplated hereby and has taken all necessary action,
          obtained all necessary consents and has satisfied or will satisfy all
          notification and filing requirements necessary to authorize the
          execution, delivery and performance of this Agreement by the
          Purchaser, and (ii) upon the execution and delivery of this Agreement,
          this Agreement shall constitute a legal, valid and binding obligation
          of the Purchaser, enforceable in accordance with its terms, except as
          enforceability may be limited by applicable bankruptcy, insolvency,
          reorganization, moratorium or similar laws affecting creditors' rights
          generally and except as enforceability may be subject to general
          principles of equity (regardless of whether such enforceability is
          considered in a proceeding in equity or at law) and except as the
          indemnification agreements of the Purchaser in Section 7.3 hereof may
          be legally unenforceable.

     (d)  If the Purchaser is resident in Canada, then such Purchaser hereby
          represents and warrants, together with the other representations and
          warranties herein, to the Company and every agent who is receiving a
          commission in respect of the sale of Shares to such Purchaser and any
          ultimate purchaser for whom such Purchaser is acting as agent:

          (A)  is resident in the Province of Ontario, Quebec or British
               Columbia (collectively, the "Private Placement Provinces");

          (B)  is entitled under applicable provincial securities laws to
               purchase Shares without the benefit of a prospectus qualified
               under the securities laws of the relevant Private Placement
               Province and, in the case of Private Placement Province other
               than Ontario, without the services of a dealer registered
               pursuant to such securities laws;

          (C)  has reviewed the terms referred to in the Private Placement
               Memorandum under the heading "Resale Restrictions", and
               understands that the Shares have not been qualified for
               distribution to the public in any province or territory of
               Canada, and that any resale of the Shares must be made (i)
               through an appropriately registered dealer or in accordance with
               an exemption from the registration requirements of applicable
               securities laws, and (ii) in accordance with, or pursuant to an
               exemption from, the prospectus requirements of such laws, which
               vary depending on the province,

                                       10
<PAGE>

               provided that such resale restrictions may not apply to resales
               made outside of Canada, depending on the circumstances;

          (D)  if in Ontario, (i) is purchasing Shares as principal having an
               aggregate acquisition cost of not less than Cdn.$150,000, (ii)
               has been recognized by the Ontario Securities Commission as an
               "exempt purchaser" and is purchasing as principal, or (iii) is a
               "portfolio adviser" within the meaning of Ontario Securities
               Commission Rule 45-504 ("Rule 45-504") and is purchasing Shares
               on behalf of a "managed account" within the meaning of Rule 45-
               504;

          (E)  if in Quebec, (i) is purchasing Shares for his own account with
               an aggregate acquisition cost of not less than Cdn.$150,000, in
               accordance with section 51 of the Securities Act (Quebec), and is
               not a company established solely to purchase securities on the
               basis of the prospectus exemption provided for therein; (ii) is a
               "sophisticated purchaser" within the meaning of Section 44 of the
               Securities Act (Quebec) purchasing as principal, or (iii) is a
               "sophisticated purchaser" within the meaning of Section 45 of the
               Securities Act (Quebec) purchasing for the portfolio of a person
               managed solely by it;

          (F)  if in British Columbia, is not an individual and (i) is
               purchasing as principal Shares having an aggregate acquisition
               cost of not less than Cdn.$97,000, or (ii) has been designated as
               an "exempt purchaser" in an order made by the executive director
               of the British Columbia Securities Commission and is purchasing
               Shares as principal; provided that the Purchaser shall be deemed
               to be acting as principal where the Purchaser is a portfolio
               manager purchasing Shares as agent for an account that is fully
               managed by the Purchaser; and

          (G)  it is the Purchaser's express wish, and the Purchaser agrees,
               that all documents evidencing or relating in any way to the sale
               of the Shares be drafted in the English language only. L'acheteur
               des action reconnait que c'est sa volonte expresse que tous les
               documents faisant foi ou se rapportant de quelque maniere a la
               vente des actions soient rediges uniquement en anglais.

     SECTION 6.  Survival of Representations, Warranties and Agreements.
                 ------------------------------------------------------
Notwithstanding any investigation made by any party to this Agreement or by the
Placement Agent, all covenants, agreements, representations and warranties made
by the Company and the Purchaser herein and in the certificates for the Shares
delivered pursuant hereto shall survive the execution of this Agreement, the
delivery to the Purchaser of the Shares being purchased and the payment
therefor.

                                       11
<PAGE>

     SECTION 7.  Registration of the Shares; Compliance with the Securities Act.
                 --------------------------------------------------------------

     7.1  Registration Procedures and Expenses.  The Company shall:
          ------------------------------------

     (a)  as soon as practicable, prepare and file with the Commission the
          Registration Statement on Form S-3 relating to the sale of the Shares
          by the Purchaser from time to time on the Nasdaq National Market or
          the facilities of any national securities exchange on which the
          Company's Common Stock is then traded or in privately-negotiated
          transactions;

     (b)  use its reasonable efforts, subject to receipt of necessary
          information from the Purchasers, to cause the staff of the Commission
          to notify the Company of the staff's willingness to declare the
          Registration Statement effective within 75 days after the Registration
          Statement is filed by the Company;

     (c)  prepare and file with the Commission such amendments and supplements
          to the Registration Statement and the prospectus used in connection
          therewith as may be necessary to keep the Registration Statement
          effective until the earlier of (i) two years after the effective date
          of the Registration Statement or (ii) the date on which the Shares may
          be resold by the Purchasers without registration by reason of Rule
          144(k) under the Securities Act or any other rule of similar effect;

     (d)  furnish to the Purchaser with respect to the Shares registered under
          the Registration Statement (and to each underwriter, if any, of such
          Shares) such number of copies of prospectuses and such other documents
          as the Purchaser may reasonably request, in order to facilitate the
          public sale or other disposition of all or any of the Shares by the
          Purchaser; provided, however, that the obligation of the Company to
          deliver copies of prospectuses to the Purchaser shall be subject to
          the receipt by the Company of reasonable assurances from the Purchaser
          that the Purchaser will comply with the applicable provisions of the
          Securities Act and of such other securities or blue sky laws as may be
          applicable in connection with any use of such prospectuses;

     (e)  file documents required of the Company for normal blue sky clearance
          in states specified in writing by the Purchaser; provided, however,
          that the Company shall not be required to qualify to do business or
          consent to service of process in any jurisdiction in which it is not
          now so qualified or has not so consented; and

     (f)  bear all expenses in connection with the procedures in paragraphs (a)
          through (e) of this Section 7.1 and the registration of the Shares
          pursuant to the Registration Statement, other than fees and expenses,
          if any, of counsel or other advisers to the Purchaser or the Other
          Purchasers or underwriting discounts, brokerage fees and commissions
          incurred by the Purchaser or the Other Purchasers, if any.

     7.2  Transfer of Shares After Registration.  The Purchaser agrees that it
          -------------------------------------
will not effect any disposition of the Shares or its right to purchase the
Shares that would constitute a sale within the meaning of the Securities Act,
except as contemplated in the Registration Statement

                                       12
<PAGE>

referred to in Section 7.1, and that it will promptly notify the Company of any
changes in the information set forth in the Registration Statement regarding the
Purchaser or its plan of distribution.

     7.3  Indemnification. For the purpose of this Section 7.3:
          ---------------

          (i)  the term "Purchaser/Affiliate" shall mean the Purchaser and any
               person who controls the Purchaser within the meaning of Section
               15 of the Securities Act; and
          (ii) the term "Registration Statement" shall include any final
               prospectus, exhibit, supplement or amendment included in or
               relating to the Registration Statement referred to in Section
               7.1.

     (a)  The Company agrees to indemnify and hold harmless each of the
          Purchasers and each Purchaser/Affiliate, against any losses, claims,
          damages, liabilities or expenses, joint or several, to which such
          Purchasers or such Purchaser/Affiliate may become subject, under the
          Securities Act, the Exchange Act, or any other federal or state
          statutory law or regulation, or at common law or otherwise (including
          in settlement of any litigation, if such settlement is effected with
          the written consent of the Company), insofar as such losses, claims,
          damages, liabilities or expenses (or actions in respect thereof as
          contemplated below) arise out of or are based upon any untrue
          statement or alleged untrue statement of any material fact contained
          in the Registration Statement, including the prospectus, financial
          statements and schedules, and all other documents filed as a part
          thereof, as amended at the time of effectiveness of the Registration
          Statement, including any information deemed to be a part thereof as of
          the time of effectiveness pursuant to paragraph (b) of Rule 430A, or
          pursuant to Rule 434, of the Rules and Regulations, or the prospectus,
          in the form first filed with the Commission pursuant to Rule 424(b) of
          the Regulations, or filed as part of the Registration Statement at the
          time of effectiveness if no Rule 424(b) filing is required (the
          "Prospectus"), or any amendment or supplement thereto, or arise out of
          or are based upon the omission or alleged omission to state in any of
          them a material fact required to be stated therein or necessary to
          make the statements in any of them not misleading in light of the
          circumstances under which they were made, or arise out of or are based
          in whole or in part on any inaccuracy in the representations and
          warranties of the Company contained in this Agreement, or any failure
          of the Company to perform its obligations hereunder or under law, and
          will reimburse the Purchaser and each such Purchaser/Affiliate for any
          legal and other expenses as such expenses are reasonably incurred by
          such Purchaser or such Purchaser/Affiliate in connection with
          investigating, defending, settling, compromising or paying any such
          loss, claim, damage, liability, expense or action; provided, however,
          that the Company will not be liable in any such case to the extent
          that any such loss, claim, damage, liability or expense arises out of
          or is based upon (i) an untrue statement or alleged untrue statement
          or omission or alleged omission made in the Registration Statement,
          the Prospectus or any amendment or supplement thereto in reliance upon
          and in conformity with written information furnished to the Company by
          the Purchaser expressly for use therein, or (ii) the failure of such
          Purchaser to comply with the covenants and agreements contained in
          Sections 5(b) or 7.2 hereof re-

                                       13
<PAGE>

          specting the sale of the Shares, or (iii) the inaccuracy of any
          representations made by such Purchaser herein or (iv) any statement or
          omission in any Prospectus that is corrected in any subsequent
          Prospectus that was delivered to the Purchaser prior to the pertinent
          sale or sales by the Purchaser.

     (b)  Each of the Purchasers will severally indemnify and hold harmless the
          Company, each of its directors, each of its officers who signed the
          Registration Statement and each person, if any, who controls the
          Company within the meaning of the Securities Act against any losses,
          claims, damages, liabilities or expenses to which the Company, each of
          its directors, each of its officers who signed the Registration
          Statement or controlling person may become subject, under the
          Securities Act, the Exchange Act, or any other federal or state
          statutory law or regulation, or at common law or otherwise (including
          in settlement of any litigation, if such settlement is effected with
          the written consent of such Purchaser) insofar as such losses, claims,
          damages, liabilities or expenses (or actions in respect thereof as
          contemplated below) arise out of or are based upon (i) any failure to
          comply with the covenants and agreements contained in Sections 5(b) or
          7.2 hereof respecting the sale of the Shares or (ii) the inaccuracy of
          any representation made by such Purchaser herein or (iii) any untrue
          or alleged untrue statement of any material fact contained in the
          Registration Statement, the Prospectus, or any amendment or supplement
          thereto, or arise out of or are based upon the omission or alleged
          omission to state therein a material fact required to be stated
          therein or necessary to make the statements therein not misleading, 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 the Registration Statement, the Prospectus, or any
          amendment or supplement thereto, in reliance upon and in conformity
          with written information furnished to the Company by or on behalf of
          any Purchaser expressly for use therein, and will reimburse the
          Company, each of its directors, each of its officers who signed the
          Registration Statement or controlling person for any legal and other
          expense reasonably incurred by the Company, each of its directors,
          each of its officers who signed the Registration Statement or
          controlling person in connection with investigating, defending,
          settling, compromising or paying any such loss, claim, damage,
          liability, expense or action.

     (c)  Promptly after receipt by an indemnified party under this Section 7.3
          of notice of the threat or commencement of any action, such
          indemnified party will, if a claim in respect thereof is to be made
          against an indemnifying party under this Section 7.3 promptly notify
          the indemnifying party in writing thereof; but the omission so to
          notify the indemnifying party will not relieve it from any liability
          which it may have to any indemnified party for contribution or
          otherwise than under the indemnity agreement contained in this Section
          7.3 or to the extent it is not prejudiced as a result of such failure.
          In case any such action is brought against any indemnified party and
          such indemnified party seeks or intends to seek indemnity from an
          indemnifying party, the indemnifying party will be entitled to
          participate in, and, to the extent that it may wish, jointly with all
          other indemnifying parties similarly notified, to assume the defense
          thereof with counsel reasonably satisfactory to such indemnified
          party; provided, however, if the defendants in any such action include
          both the indemnified party and the indemnifying party and the indemni-

                                       14
<PAGE>

          fied party shall have reasonably concluded that there may be a
          conflict between the positions of the indemnifying party and the
          indemnified party in conducting the defense of any such action or that
          there may be legal defenses available to it and/or other indemnified
          parties which are different from or additional to those available to
          the indemnifying party, the indemnified party or parties shall have
          the right to select separate counsel to assume such legal defenses and
          to otherwise participate in the defense of such action on behalf of
          such indemnified party or parties. Upon receipt of notice from the
          indemnifying party to such indemnified party of its election so to
          assume the defense of such action and approval by the indemnified
          party of counsel, the indemnifying party will not be liable to such
          indemnified party under this Section 7.3 for any legal or other
          expenses subsequently incurred by such indemnified party in connection
          with the defense thereof unless (i) the indemnified party shall have
          employed such counsel in connection with the assumption of legal
          defenses in accordance with the proviso to the preceding sentence (it
          being understood, however, that the indemnifying party shall not be
          liable for the expenses of more than one separate counsel, approved by
          such indemnifying party in the case of paragraph (a), representing all
          of the indemnified parties who are parties to such action, or (ii) the
          indemnified party shall not have employed counsel reasonably
          satisfactory to the indemnified party to represent the indemnified
          party within a reasonable time after notice of commencement of action,
          in each of which cases the reasonable fees and expenses of counsel
          shall be at the expense of the indemnifying party.

     (d)  If the indemnification provided for in this Section 7.3 is required by
          its terms but is for any reason held to be unavailable to or otherwise
          insufficient to hold harmless an indemnified party under paragraphs
          (a), (b) or (c) of this Section 7.3 in respect to any losses, claims,
          damages, liabilities or expenses referred to herein, then each
          applicable indemnifying party shall contribute to the amount paid or
          payable by such indemnified party as a result of any losses, claims,
          damages, liabilities or expenses referred to herein (i) in such
          proportion as is appropriate to reflect the relative benefits received
          by the Company and the Purchaser from the placement of Common Stock or
          (ii) if the allocation provided by clause (i) above is not permitted
          by applicable law, in such proportion as is appropriate to reflect not
          only the relative benefits referred to in clause (i) above but the
          relative fault of the Company and the Purchaser in connection with the
          statements or omissions or inaccuracies in the representations and
          warranties in this Agreement that resulted in such losses, claims,
          damages, liabilities or expenses, as well as any other relevant
          equitable considerations. The relative benefits received by the
          Company on the one hand and each Purchaser on the other shall be
          deemed to be in the same proportion as the amount paid by such
          Purchaser to the Company pursuant to this Agreement for the Shares
          purchased by such Purchaser that were sold pursuant to the
          Registration Statement bears to the difference (the "Difference")
          between the amount such Purchaser paid for the Shares that were sold
          pursuant to the Registration Statement and the amount received by such
          Purchaser from such sale. The relative fault of the Company on the one
          hand and each Purchaser on the other shall be determined by reference
          to, among other things, whether the untrue or alleged statement of a
          material fact or the omission or alleged omission to state a material
          fact or the inaccurate or the alleged inaccurate representation and/or
          war-

                                       15
<PAGE>

          ranty relates to information supplied by the Company or by such
          Purchaser and the parties' relative intent, knowledge, access to
          information and opportunity to correct or prevent such statement or
          omission. The amount paid or payable by a party as a result of the
          losses, claims, damages, liabilities and expenses referred to above
          shall be deemed to include, subject to the limitations set forth in
          paragraph (c) of this Section 7.3, any legal or other fees or expenses
          reasonably incurred by such party in connection with investigating or
          defending any action or claim. The provisions set forth in paragraph
          (c) of this Section 7.3 with respect to the notice of the threat or
          commencement of any threat or action shall apply if a claim for
          contribution is to be made under this paragraph (d); provided,
          however, that no additional notice shall be required with respect to
          any threat or action for which notice has been given under paragraph
          (c) for purposes of indemnification. The Company and each Purchaser
          agree that it would not be just and equitable if contribution pursuant
          to this Section 7.3 were determined solely by pro rata allocation
          (even if the Purchaser were treated as one entity for such purpose) or
          by any other method of allocation which does not take account of the
          equitable considerations referred to in this paragraph.
          Notwithstanding the provisions of this Section 7.3, no Purchaser shall
          be required to contribute any amount in excess of the amount by which
          the Difference exceeds the amount of any damages that such Purchaser
          has otherwise been required to pay by reason of such untrue or alleged
          untrue statement or omission or alleged 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.

     The Purchasers' obligations to contribute pursuant to this Section 7.3 are
several and not joint.

     7.4  Termination of Conditions and Obligations.  The restrictions imposed
          -----------------------------------------
by Section 5 or this Section 7 upon the transferability of the Shares shall
cease and terminate as to any particular number of the Shares on the date all
such Shares are eligible for sale under Rule 144(k) or at such time as an
opinion of counsel satisfactory in form and substance to the Company shall have
been rendered to the effect that such conditions are not necessary in order to
comply with the Securities Act.

     7.5  Information Available.  So long as the Registration Statement is
          ---------------------
effective covering the resale of Shares owned by the Purchaser, the Company will
furnish to the Purchaser:

     (a)  as soon as practicable after available (but in the case of the
          Company's Annual Report to Stockholders, within 120 days after the end
          of each fiscal year of the Company), one copy of (i) its Annual Report
          to Stockholders (which Annual Report shall contain financial
          statements audited in accordance with generally accepted accounting
          principles by a national firm of certified public accountants), (ii)
          if not included in substance in the Annual Report to Stockholders, its
          Annual Report on Form 10-K, (iii) its Quarterly Reports on Form 10-Q,
          (iv) its Current Reports on Form 8-K, and (v) a full copy of the
          particular Registration Statement covering the Shares (the foregoing,
          in each case, excluding exhibits);

                                       16
<PAGE>

     (b)  upon the reasonable request of the Purchaser, all exhibits excluded by
          the parenthetical to subparagraph (a)(v) of this Section 7.5;

     (c)  upon the reasonable request of the Purchaser, a reasonable number of
          copies of the prospectuses to supply to any other party requiring such
          prospectuses; and

     (d)  upon the reasonable request of the Purchaser, the Company will meet
          with the Purchaser or a representative thereof at the Company's
          headquarters to discuss information relevant for disclosure in the
          Registration Statement covering the Shares, subject to appropriate
          confidentiality limitations as the Company may reasonably require.

     SECTION 8.  Broker's Fee.  The Purchaser acknowledges that the Company
                 ------------
intends to pay to the Placement Agent a fee in respect of the sale of the Shares
to the Purchaser and that the Placement Agent intends to enter into agreements
with the parties listed on Exhibit A attached hereto, and that such parties may
receive a portion of the fee payable by the Company to the Placement Agent. Each
of the parties hereto hereby represents that, on the basis of any actions and
agreements by it, there are no other brokers or finders entitled to compensation
in connection with the sale of the Shares to the Purchaser.

     SECTION 9.  Notices.  All notices, requests, consents and other
                 -------
communications hereunder shall be in writing, shall be mailed by first-class
registered or certified airmail, confirmed facsimile or nationally recognized
overnight express courier postage prepaid, and shall be deemed given when so
mailed and shall be delivered as addressed as follows:

     (a)  if to the Company, to:

          NPS Pharmaceuticals, Inc.
          420 Chipeta Way
          Salt Lake City, UT 84108
          Attention:  V.P. Corporate Development and Legal Affairs
          Facsimile:  (801) 583-4961

     or to such other person at such other place as the Company shall designate
to the Purchaser in writing; and

     (b)  if to the Purchaser, at its address as set forth at the end of this
          Agreement, or at such other address or addresses as may have been
          furnished to the Company in writing.

     SECTION 10.  Changes.  This Agreement may not be modified or amended except
                  -------
pursuant to an instrument in writing signed by the Company and the Purchaser.

     SECTION 11.  Headings.  The headings of the various sections of this
                  --------
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.

                                       17
<PAGE>

     SECTION 12.  Severability.  In case any provision contained in this
                  ------------
Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.

     SECTION 13.  Governing Law.  This Agreement shall be governed by and
                  -------------
construed in accordance with the laws of the State of New York and the federal
law of the United States of America, without regard to conflicts of law
provisions.

     SECTION 14.  Counterparts.  This Agreement may be executed in two or more
                  ------------
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.

                                      NPS PHARMACEUTICALS, INC.

                                      By:_______________________________________
                                      Name:_____________________________________
                                      Title:____________________________________

Print or Type:

     Name of Purchaser (Individual or Institution):

     ________________________________________

     Name of Individual representing Purchaser (if an Institution)

     ________________________________________

     Title of Individual representing Purchaser (if an Institution)

     ________________________________________

Signature by:

     Individual Purchaser or Individual
     representing Purchaser:

     ________________________________________

     Address:    ____________________________
                 ____________________________
     Telephone:  ____________________________
     Facsimile:  ____________________________

                                       18
<PAGE>

                                  Appendix I
                                 (one of two)

                           NPS PHARMACEUTICALS, INC.

                        STOCK CERTIFICATE QUESTIONNAIRE

     Pursuant to Section 3 of this Agreement, please provide us with the
following information:

1.   The exact name that your Shares are to be registered in (this is the name
     that will appear on your stock certificate(s)). You may use a nominee name
     if appropriate:

     ___________________________________________________________________________

1.   The relationship between the Purchaser of the Shares and the Registered
     Holder listed in response to item 1 above:

     ___________________________________________________________________________

1.   The mailing address of the Registered Holder listed in response to item 1
     above:

     ___________________________________________________________________________

1.   The Social Security Number or Tax Identification Number of the Registered
     Holder listed in response to item 1 above:

     ___________________________________________________________________________

                                       19
<PAGE>

                           NPS PHARMACEUTICALS INC.

                     REGISTRATION STATEMENT QUESTIONNAIRE

     In connection with the preparation of the Registration Statement, please
provide us with the following information:

1.   Pursuant to the "Selling Stockholder" section of the Registration
     Statement, please state your or your organization's name exactly as it
     should appear in the Registration Statement:

2.   Please provide the number of shares that you or your organization will own
     immediately after Closing, including those Shares purchased by you or your
     organization pursuant to this Agreement and those shares purchased by you
     or your organization through other transactions:

3.   Have you or your organization had any position, office or other material
     relationship within the past three years with the Company or its
     affiliates?

                      _____  Yes               _____  No

     If yes, please indicate the nature of any such relationships below:

     ___________________________________________________________________________

     ___________________________________________________________________________

     ___________________________________________________________________________

<PAGE>

                                  APPENDIX II

Attention:

                  PURCHASER'S CERTIFICATE OF SUBSEQUENT SALE

     The undersigned, [an officer of, or other person duly authorized by]
__________________ [fill in official name of individual or institution] hereby
certifies that he/she [said institution] is the Purchaser of the shares
evidenced by the attached certificate, and as such, sold such shares on ________
[date] in accordance with Registration Statement number _______ [fill in the
number of or otherwise identify Registration Statement] and the requirement of
delivering a current prospectus by the Company has been complied with in
connection with such sale.

Print or Type:

     Name of Purchaser
     (Individual or Institution):

     ________________________________________

     Name of Individual representing Purchaser (if an  Institution)

     ________________________________________

     Title of Individual representing Purchaser (if an Institution):

     ________________________________________

Signature by:

     Individual Purchaser or Individual representing Purchaser:

     ________________________________________<PAGE>   1
                                                                   Exhibit 10.19

                              DEVELOPER AGREEMENT

THIS DEVELOPER AGREEMENT (the "Developer Agreement" or the "Agreement") is
entered into as of the 26th day of January, 1996, by and between SONY COMPUTER
ENTERTAINMENT AMERICA, a division of Sony Interactive Entertainment Inc.,
formerly known as Sony Electronic Publishing Company, with offices at 550
Madison Avenue, New York, New York 10022 (hereinafter "Sony"), and The Lightspan
Partnership, Inc., with offices at 2382 Faraday Avenue, Suite 300, Carlsbad, CA
92008-7218 (hereinafter "Developer").

WHEREAS, Sony and/or its affiliates have developed a CD-based interactive
console for playing video games and for other entertainment purposes known as
PlayStation(TM) (formerly known under the development code name "PS-X(TM)")
(hereinafter referred to as the "Player") and also own or have the right to
grant licenses to certain intellectual property rights used in connection with
the Player.

WHEREAS, Developer desires to be granted a non-exclusive license to develop
Products (as defined below) for the School Market (as defined below) pursuant to
the terms and conditions set forth in this Agreement.

WHEREAS, Sony and Developer have entered into a Sale and License Agreement,
dated as of January 12, 1996, regarding the distribution of PlayStation consoles
and accessories and Products to the School Market (hereinafter the "License
Agreement").

WHEREAS, Sony is willing, on the terms and subject  to the conditions of this
Agreement, to grant Developer the desired non-exclusive license to develop
Products for the School Market.

WHEREAS, the Developer desires to obtain from Sony, and Sony is willing to
provide Developer with, certain software, hardware and documentation for use by
Developer in the development of application software for the Player (the
"Development Tools").

NOW, THEREFORE, in consideration of the representations, warranties and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Developer and Sony
hereby agree as follows:

1.   DEFINITION OF TERMS.

     1.1 "Developer Software" means Developer's application object code and data
(including audio and video material) developed by Developer in accordance with
this Agreement, which, when linked to any software provided by Sony, create
Executable Software. All Developer Software shall be educational in nature.

     1.2 "Documentation" means any document, including the Tool Catalog,
regarding usage of the Hardware Tools or the Software Tools and provided by Sony
to the Developer in writing, on floppy discs, on CD-ROM discs or through
electronic media.

     1.3 "Executable Software" means Developer's object code software which
includes the Developer Software and any software (whether in object code or
source code form) provided by Sony which is intended to be combined with
Developer Software for execution on a Player and has the ability to communicate
with the software resident in the Player.

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<PAGE>   2
     1.4  "Hardware Tools" means the hardware described in the Tool Catalog
which was developed by Sony for use in the creation of Executable Software.

     1.5  "Intellectual Property Rights" means, by way of example but not by way
of limitation, all current and future worldwide patents and other patent
rights, copyrights, trademarks, service marks, trade names, mask work rights,
trade secret rights, technical information, know-how, and the equivalents of
the foregoing under the laws of any jurisdiction, and all other proprietary or
intellectual property rights throughout the universe, including without
limitation all applications and registrations with respect thereto, and all
renewals and extensions thereof.

     1.6  "Products" shall mean the Executable Software embodied on CD-ROM
media.

     1.7  "Software Tools" means the software described in the Tool Catalog
which may be provided to the Developer by Sony for use in the creation of
Executable Software on floppy discs, CD-ROM discs or through electronic media.

     1.8  "Sony Materials" means any data, object code, source code,
documentation, and hardware provided or supplied to Developer by Sony,
including, without limitation, any portion or portions of the Development Tools.

     1.9  "Sony Trademarks" means the trademarks, service marks and logos
designated by Sony. Nothing contained in this Agreement shall in any way grant
Developer the right to use the trademark "Sony" in any manner as a trademark,
trade name, service mark or logo other than as expressly permitted by Sony. Sony
may amend such Sony Trademarks upon reasonable notice to Developer.

     1.10 "Tool Catalog" means the PS-X Development Tool Catalog prepared by
Sony and provided separately to the Developer.

     1.11 "School Market" shall mean distribution directly by Licensee to and
for elementary and secondary (i.e., K-12) students, through distribution and
sale to elementary and secondary (i.e., K-12) public and private schools in the
United States and Canada.

2.   LICENSE AND PROVISION OF DEVELOPMENT TOOLS.

     2.1 LICENSE. Sony hereby grants to Developer, and Developer hereby
accepts, for the term of this Agreement, within the United States and Canada,
under Sony's Intellectual Property Rights, including without limitation any
relevant patents Sony may own or have acquired by license, a non-exclusive,
nontransferable license, without the right to sublicense (except as
specifically provided herein) to use the object code version of any software
supplied by Sony that is intended to be combined with Developer Software and
executed on a Player internally as may reasonably be necessary to develop
Products for the School Market. Developer agrees that all rights to
manufacture, market, distribute and sell Products shall be governed by the
terms and conditions of the License Agreement.

     2.2 SOFTWARE TOOLS. Sony herby agrees to provide to Developer, and
Developer hereby accepts, for the term and subject to the conditions set forth
herein, the Software Tools. Developer will not, except as provided herein,
permit, directly or indirectly, any third party to use all or any part of the
Software Tools or the Documentation. Developer will only use the Software Tools
internally for the sole purpose of developing the Executable Software in
accordance with the Developer Agreement, and will only use the Documentation
supplied with the Software Tools to

                                      -2-                       CONFIDENTIAL

<PAGE>   3
support such efforts. Developer shall not sell, lease, license or otherwise
transfer or dispose of the Software Tools, or permit any lien or other
encumbrance with respect to the Software Tools. Developer shall not make any
alterations, additions or modifications to the Software Tools without the
written permission of Sony in its discretion, and, if such permission is
granted, all right, title and interest in alterations or modifications shall
become the property of, and are hereby assigned to, Sony. Developer shall
execute such additional documents as reasonably necessary to effectuate any such
assignment.

         2.3 HARDWARE TOOLS. Sony hereby agrees to provide to Developer, and
Developer hereby accepts, for the term and subject to the conditions set forth
herein, the Hardware Tools. Developer will only use the Hardware Tools
internally for the sole purpose of developing the Executable Software in
accordance with the Developer Agreement, and will only use the Documentation
supplied with the Hardware Tools to support such efforts. Sony shall retain
title to the Hardware Tools, and Developer shall keep such system free of all
security interests, liens and other encumbrances. Developer will not, except as
provided herein, permit, directly or indirectly, any third party to use all or
any part of the Hardware Tools. Developer shall not sell, lease or otherwise
transfer or dispose of the Hardware Tools, or permit any lien or other
encumbrance with respect to the Hardware Tools. Developer shall not make any
alterations, additions or modifications to the Hardware Tools without the
written permission of Sony in its discretion, and, if such permission is
granted, all right, title and interest in alterations or modifications shall
become the property of, and are hereby assigned to, Sony. Developer shall
execute such additional documents as reasonably necessary to effectuate any such
assignment.

3.       CONSIDERATION AND DELIVERY.

         3.1 CONSIDERATION. Sony agrees to provide such number of copies of the
Software Tools, Documentation and other Sony Materials and provide such number
of units of the Hardware Tools as Developer may reasonably request, subject to
availability, during the term of this Developer Agreement. The nonrefundable
amount to be paid by Developer (the "Nonrefundable Payment") for each such copy
and/or unit shall be set forth in the Tool Catalog. The Nonrefundable Payment
for Development Tools may be changed by Sony from time to time without notice to
Developer. Any Nonrefundable Payments are exclusive of any withholding taxes or
other assessments which may be imposed by any governmental authority or any
other U.S. or foreign federal, state or local sales or value-added tax, use or
excise tax, customs duties or other similar taxes or duties, which Sony may be
required to collect or pay. Developer shall be solely responsible for the
payment or reimbursement of any such taxes, fees, and other such charges or
assessments applicable to the payment by Developer of any such Nonrefundable
Payment. In addition, Developer shall pay or reimburse Sony for all personal
property taxes or similar charges, however imposed, on the ownership, use and
possession of the Development Tools during the term of the Developer Agreement.

         3.2 DELIVERY. Sony shall deliver the Development Tools and any other
requisite Sony Materials to Developer, when available, at the site listed in
Exhibit A hereto (the "Development Site") for use only at such Development Site,
subject to receipt of the Nonrefundable Payment. Developer shall bear all
transport costs, including but not limited to, any insurance costs, related
thereto and risk of loss or damage in transit to any and all of the Development
Tools shall vest in Developer immediately upon delivery to the carrier.

4.       LIMITATIONS ON LICENSES; RESERVATION OF RIGHTS.

         4.1 REVERSE ENGINEERING PROHIBITED. Developer hereby agrees not to
disassemble, peel

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<PAGE>   4
semiconductor components, decompile, or otherwise reverse engineer or attempt
to reverse engineer or derive source code from, all or any portion of the Sony
Materials (whether or not all or any portion of the Sony Materials are
integrated with the Developer Software), or permit or encourage any third party
to do so, or use or acquire any materials from any third party who does so.
Developer shall not use, modify, reproduce, sublicense, distribute, create
derivative works from, or otherwise provide to third parties, the Sony
Materials, in whole or in part, other than as expressly permitted by this
Developer Agreement. Developer shall be required in all cases to pay royalties
in accordance with payments made under the License Agreement to Sony on any
products which are in any way derived from the disassembly, decompilation,
reverse engineering of, or use of source code derived from the Sony Materials.

     4.2  RESERVATION OF SONY'S RIGHTS. The licenses granted in this Developers
Agreement extend only to development of Products for the School Market for use
on the Player, in such format as may be designated by Sony. Without limiting
the generality of the foregoing and except as otherwise provided herein,
Developer shall not have the right to publish, manufacture, market, promote,
distribute, sell or transmit the Executable Software or the Products in any
manner, including, but not limited to, distribution or sale outside the School
Market (including without limitation to or through retail channels of
distribution) or via electronic means or any other means now known or hereafter
devised, including without limitation, via wireless, cable, fiber optic means,
telephone lines, microwave and/or radio waves, or over a network of
interconnected computers or other devices. This Developer Agreement does not
grant any right or license, under any Intellectual Property Rights of Sony or
otherwise, except as expressly provided herein, and no other right or license
is to be implied by or inferred from any provision of this Developer Agreement
or the conduct of the parties hereunder. Developer shall not make use of any of
the Development Tools, other Sony Materials or the Player or any Intellectual
Property Rights related to the Sony Materials and Player (or any portion
thereof) except as authorized by and in compliance with the provisions of this
Developer Agreement or as may be otherwise expressly authorized in writing by
Sony. No right, license or privilege has been granted to Developer hereunder
concerning the development of any collateral product or other use or purpose
of any kind whatsoever which displays or depicts any of the Sony Trademarks.

     4.3  RESERVATION OF DEVELOPER'S RIGHTS. Developer retains all rights, title
and interest in and to the Developer Software, including without limitation,
Developer's Intellectual Property Rights therein, and nothing in this Agreement
shall be construed to restrict the right of Developer to develop products
incorporating the Developer Software (separate and apart from the Sony
Materials) for any hardware platform or service other than the Player.

     4.4  THIRD PARTY DEVELOPMENT. Developer may develop Products under
contract for a third party provided that such third party is: (i) an authorized
developer that has executed a Developer Agreement, or (ii) an authorized
subcontractor that is in compliance with the provisions of Section 15.5.
Developer shall notify Sony in writing of the identity of any such third party
within thirty (30) days of entering into an agreement or other arrangement with
the third party. Developer shall have the responsibility for determining that
such third parties meet the criteria set forth herein. Developer shall not have
the right to develop, publish, manufacture, market, promote, distribute, sell
or transmit the Executable Software or the Products in any manner for end user
or any third parties not in compliance with the above criteria unless Developer
directly enters into a License Agreement with Sony. Developer agrees that,
pursuant to the License Agreement, any publication, marketing, distribution or
sale of Products outside of the School Market may only be made upon negotiation
of a separate agreement with Sony for such rights, and that Sony shall have a
right of first refusal to distribute, publish, market or sell such Products.

                                      -4-                     CONFIDENTIAL
<PAGE>   5
5.   TITLE TO DEVELOPMENT TOOLS. Subject to the rights granted by Sony to
Developer hereunder, all rights with respect to the Development Tools,
including, without limitation, all of Sony's Intellectual Property Rights
therein, are and shall be the exclusive property of Sony. Nothing herein shall
give Developer any right, title or interest in or to the Development Tools (or
any portion thereof), or any Intellectual Property Rights therein other than the
right to use the Development Tools for the development of the Executable
Software solely in accordance with the provisions of this Developer Agreement.
Developer shall not do or cause to be done any act or thing contesting or
in any way impairing or tending to impair any of Sony's rights, title, and/or
interests in or to the Development Tools (or any portion thereof).

6.   CONFIDENTIALITY.

     6.1 NONDISCLOSURE AGREEMENT. Developer hereby acknowledges that the
Nondisclosure Agreement dated September 28, 1995 between Sony and Developer
("Nondisclosure Agreement") will remain in full force and effect with respect to
the Confidential Information of Sony throughout the term of this Agreement.
Except as otherwise specified herein, the terms and provisions of the
Nondisclosure Agreement shall apply with respect to the Confidential Information
of Sony.

     6.2  CONFIDENTIAL INFORMATION OF DEVELOPER. For the purposes of this
Developer Agreement, "Confidential Information" of Developer shall mean the
Developer Software as provided to Sony pursuant to this Developer Agreement and
all documentation and information relating thereto that is disclosed in writing
or in any other form by Developer to Sony if the information is designated as
(or is provided under circumstances indicating the information is) confidential
or proprietary.

     6.3  PRESERVATION OF CONFIDENTIALITY: NON-DISCLOSURE. Sony shall take all
steps necessary to preserve the confidentiality of the Confidential Information
of the Developer, and except as may be expressly authorized by Developer or
unless one of the exceptions set forth in Section 6.5 applies, Sony shall not at
any time, either before or after any termination of this Developer Agreement,
directly or indirectly: (i) disclose any Confidential Information to any person
other than an employee or subcontractor of the receiving party who needs to know
or have access to such Confidential Information for the purposes of this
Developer Agreement, and only to the extent necessary for such purposes; (ii)
except as otherwise provided in this Developer Agreement, duplicate the
Confidential Information for any purpose whatsoever; (iii) use the Confidential
Information for any reason or purpose other than as expressly permitted in this
Developer Agreement; or (iv) remove any copyright notice, trademark notice
and/or other proprietary legend set forth on or contained within any of the
Confidential Information.

     6.4  OBLIGATIONS UPON UNAUTHORIZED DISCLOSURE. If at any time either Sony
or Developer (the "receiving party") becomes aware of any unauthorized
duplication, access, use, possession or knowledge of any Confidential
Information of the other party (the "disclosing party"), the receiving party
shall immediately notify the disclosing party. The receiving party shall provide
any and all reasonable assistance to the disclosing party to protect the
disclosing party's proprietary rights in any Confidential Information that the
receiving party or its employees or permitted publishers or subcontractors may
have directly or indirectly disclosed or made available and that may be
duplicated, accessed, used, possessed or known in a manner or for a purpose not
expressly authorized by this Developer Agreement including but not limited to
enforcement of confidentiality agreements, commencement and prosecution in good
faith (alone or with the disclosing party) of legal action, and reimbursement
for all reasonable attorneys' fees (and all related costs), costs and expenses
incurred by the disclosing party to protect its proprietary rights in the
Confidential Information. The receiving party shall take all reasonable steps
requested by the disclosing party to prevent the recurrence of any unauthorized
duplication, access, use, possession or knowledge of

                                      -5-                          CONFIDENTIAL

<PAGE>   6
the Confidential Information.

     6.5  EXCEPTIONS.  The foregoing restrictions will not apply to information
to the extent that the receiving party can demonstrate such information: (i) was
known to the receiving party at the time of disclosure to the receiving party by
the disclosing party as shown by the files of the receiving party in existence
at the time of disclosure; (ii) becomes part of information in the public domain
through no fault of the receiving party; (iii) has been rightfully received from
a third party authorized by the disclosing party to make such disclosure without
restriction; or (iv) has been disclosed by court order or as otherwise required
by law (including without limitation to the extent that disclosure may be
required under Federal or state securities laws), provided that the receiving
party has notified the disclosing party immediately upon learning of the
possibility of any such court order or legal requirement and has given the
disclosing party a reasonable opportunity (and cooperated with the disclosing
party) to contest or limit the scope of such required disclosure (including
application for a protective order). Information shall not be deemed known to
the receiving party or publicly known for purposes of the above exceptions (A)
merely because it is embraced by more general information in the prior
possession of the receiving party or others, or (B) merely because it is
expressed in public material in general terms not specifically the same as
Confidential information.

     6.6  CONFIDENTIALITY OF AGREEMENT.  The terms and conditions of this
Developer Agreement shall be treated as Confidential Information; provided that
each party may disclose the terms and conditions of this Developer Agreement:
(i) to legal counsel; (ii) in confidence, to accountants, banks and financing
sources and their advisors; and (iii) in confidence, in connection with the
enforcement of this Developer Agreement or rights under this Developer
Agreement. Both parties shall treat the fact that the parties have entered into
this Developer Agreement as Confidential Information until a public announcement
regarding this Developer Agreement is released by Sony, at its sole discretion,
announcing that Developer has become a Developer under this Developer Agreement.
Notwithstanding the foregoing, Developer shall not disclose any Confidential
Information or any of the terms of this Agreement to TCI (Telecommunications
Inc.), Microsoft or any other investors in Licensee without Sony's prior written
approval.

7.   USAGE.

     7.1  LOCATION AND ACCESS. Developer agrees to use and store the Sony
Materials solely at the Development Site or other location approved in writing
by Sony and insure that they are accessible only to those employees and
subcontractors entitled to use such Sony Materials. Developer agrees to restrict
access to the Sony Materials so that only those employees and subcontractors
entitled to access to such Sony Materials pursuant to the terms of the
Nondisclosure Agreement may see or use the Sony Materials. In the event that
Developer wishes to change the Development Site, it shall obtain Sony's prior
written approval thereto. Developer shall affix to and maintain on the Hardware
Tools, in a conspicuous location, a notice stating that such hardware is owned
by Sony. In addition, Developer must preserve any other proprietary rights
notices placed on the Sony Materials by Sony and must place all such notices on
any copies made as permitted by the terms hereof.

     7.2  DEVELOPER DESIGNEE. Developer agrees that the individual named in
Exhibit A hereto shall act as the designated caretaker of the Sony Materials
(the "Developer Designee"). The Developer Designee shall be responsible for
receiving all Sony Materials, overseeing that the terms of this Section 7 are
fulfilled and shall act as Developer's contact for matters related to the Sony
Materials. In the event that Developer wishes to appoint a new Developer
Designee, it shall give Sony written notice ten (10) days prior to the change.

                                      -6-                       CONFIDENTIAL
<PAGE>   7
     7.3  COPIES. Developer agrees that it shall not make, nor allow anyone else
to make, a copy of any Software Tools or Documentation; provided, however, that
Developer may, without payment of any additional license fee, make one (1) copy
of each set of Software Tools and Documentation licensed from Sony for backup
purposes only. In addition, if Sony chooses to provide, or permits Developer to
obtain, any Software Tools or Documentation via electronic media, Developer may
copy such Software Tools and/or Documentation from the electronic media subject
to the payment of the applicable fees for each such copy. Any copies permitted
pursuant to the terms of this Section 7.3 shall be used pursuant to the terms
and conditions hereof.

     7.4  VERIFICATION OF COMPLIANCE. Developer agrees that authorized Sony
representatives may at any time or times upon reasonable notice to Developer
inspect the Development Site, the Development Tools and copies of other Sony
Materials during Developer's normal business hours in order to verify that
Developer is complying with its obligations under this Developer Agreement.

     7.5  CARE. Developer undertakes, at all times until the Hardware Tools are
returned to Sony, to: (i) take all reasonable and proper care of the Hardware
Tools; (ii) keep the Hardware Tools in good and serviceable condition; (iii)
ensure the full compliance with all instructions relating to the maintenance,
security or operation of the Hardware Tools; (iv) maintain and service with all
due care the Hardware Tools at its expense in accordance with any written
instructions given by Sony; (v) take all such further steps as are necessary to
ensure that the Hardware Tools are safe and constituting no risk to the health
or safety of any person or property; (vi) inform Sony immediately or any failure
or breakdown in the Hardware Tools howsoever caused.

     7.6  LIMITATION ON USE. In developing the Executable Software, Developer
shall fully comply in all respects with any and all technical specifications
which may from time to time be issued by Sony or forwarded by Licensed
Publishers to Developer at the instruction of Sony. For purposes of this
Agreement, such technical specifications, whenever issued, shall be deemed to be
Documentation. Developer shall not develop or attempt to develop Executable
Software other than by the use of the Development Tools strictly in accordance
with all the terms and provisions of this Agreement.

8.   REPAIRS AND ENHANCEMENTS.

     8.1  NOTIFICATION OF DEFECTS. Developer will notify Sony of any material
reproducible errors, bugs or defects that Developer uncovers in the Development
Tools, and in the event that within the first six (6) months of delivery of such
Development Tools to Developer, such Development Tools are found to have such
material errors, bugs or defects (not due to the negligence or fault of
Developer), then Sony shall make such efforts as Sony in its discretion deems
reasonable to fix such errors, bugs or defects in such Development Tools.

     8.2  ENHANCEMENTS. During the term of this Developer Agreement, Sony will
notify Developer if and when (i) any revised or updated version of the Software
Tools or Documentation are generally released to Sony's Developers and the terms
of the license therefor, and Developer shall be entitled to license from Sony
such revisions or updates on such terms, and (ii) any updated, modified or
enhanced version or component for the Hardware Tools are generally released to
Sony's Developers, and the terms of delivery therefor, and Developer shall be
entitled to obtain from Sony such update, modification, enhancement or component
on such terms.

                                      -7-                      CONFIDENTIAL
<PAGE>   8
9. REPRESENTATIONS AND WARRANTIES.

     9.1 REPRESENTATIONS AND WARRANTIES OF SONY. Sony represents and warrants
solely for the benefit of Developer that Sony has the right, power and
authority to enter into this Developer Agreement and to fully perform its
obligations hereunder.

     9.2 REPRESENTATIONS AND WARRANTIES OF DEVELOPER. Developer represents and
warrants that: (i) there is no threatened or pending action, suit, claim or
proceeding alleging that the use by Developer of all or any part of the
Developer Software or any underlying work or content embodied therein, or any
name, designation or trademark used in conjunction with the Products infringes
or otherwise violates any Intellectual Property Right or other right or interest
of any kind whatsoever of any third party, or otherwise contesting any right,
title or interest of Developer in or to the Developer Software or any
underlying work or content embodied therein, or any name, designation or
trademark used in conjunction with the Products; (ii) Developer has the right,
power and authority to enter into this Developer Agreement and to fully perform
its obligations hereunder; (iii) the making of this Developer Agreement by
Developer does not violate any separate agreement, rights or obligations
existing between Developer and any other person or entity, and, throughout the
term of this Developer Agreement, Developer shall not make any separate
agreement with any person or entity that is inconsistent with any of the
provisions of this Developer Agreement; (iv) Developer shall not make any
representation or give any warranty to any person or entity expressly or
impliedly on Sony's behalf, or to the effect that the Products are connected in
any way with Sony (other than that the Products have been developed under
license from Sony); (v) the Executable Software shall be delivered to
Publishers by Developer solely in object code or source code form; (vi) each of
the Products shall be developed in an ethical manner and in accordance with all
applicable laws and regulations and will not contain any obscene matter; and
(vii) Developer's policies and practices with respect to the development of the
Products shall in no manner reflect adversely upon the name, reputation or
goodwill of Sony.

10. INDEMNITIES; LIMITED LIABILITY.

     10.1 INDEMNIFICATION BY SONY. Sony shall indemnify and hold Developer
harmless from and against any and all claims, losses, liabilities, damages,
expenses and costs, including, without limitation, reasonable fees for
attorneys, expert witnesses and litigation costs, and including costs incurred
in the settlement or avoidance of any such claim which result from or are in
connection with a breach of any of the warranties provided by Sony herein;
provided, however, that Developer shall give prompt written notice to Sony of
the assertion of any such claim, and provided, further, that Sony shall have
the right to select counsel and control the defense and/or settlement thereof,
subject to the right of Developer to participate in any such action or
proceeding at its own expense with counsel of its own choosing. Sony shall have
the exclusive right, at its discretion, to commence and prosecute at its own
expense any lawsuit or to take such other action with respect to such matters
as shall be deemed appropriate by Sony. Developer agrees to provide Sony, at no
expense to Developer, reasonable assistance and cooperation concerning any such
matter; and Developer shall not agree to the settlement of any such claim,
action or proceeding without Sony's prior written consent.

     10.2 INDEMNIFICATION BY DEVELOPER. Developer shall indemnify and hold Sony
harmless from and against any and all claims, losses, liabilities, damages,
expenses and costs, including, without limitation, reasonable fees for
attorneys, expert witnesses and litigation costs, and including costs incurred
in the settlement or avoidance of any such claim, which result from or are
in connection with (i) a breach of any of the representations or warranties
provided by Developer herein, including without limitation claims resulting
from Developer's failure to timely pay any

                                                                    CONFIDENTIAL
                                      -8-
<PAGE>   9
withholding taxes or other assessments as set forth in Section 3.1 hereto or
any breach of Developer's confidentiality obligations as set forth in Section 6
hereto; or (ii) any claim of infringement or alleged infringement of any third
party's Intellectual Property Rights with respect to the Developer Software; or
(iii) any claims of or in connection with any bodily injury (including death)
or property damage, by whomsoever such claim is made, arising out of, in whole
or in part, the development of the Products or any use of any of the
Development Tools hereunder, unless due to the negligence of Sony in performing
any of the specific duties and/or providing any of the specific services
required of it hereunder; provided, however, that Sony shall give prompt
written notice to Developer of the assertion of any such claim, and provided,
further, that Developer shall have the right to select counsel and control the
defense and/or settlement thereof, subject to the right of Sony to participate
in any such action or proceeding at its own expense with counsel of its own
choosing. Developer shall have the exclusive right, at its discretion, to
commence and/or prosecute at its own expense any lawsuit or to take such other
action with respect to such matter as shall be deemed appropriate by Developer.
Sony shall provide Developer, at no expense to Sony, reasonable assistance and
cooperation concerning any such matter. If Sony is joined as a party to any
lawsuit initiated by or against Developer, Developer shall indemnify and hold
Sony harmless from and against all claims, losses, liabilities, damages,
expenses and costs, including, without limitation, reasonable fees for
attorneys and court costs, incurred in connection with any such lawsuit. Sony
shall not agree to the settlement of any such claim, action or proceeding
without Developer's prior written consent.

     10.3  LIMITATION OF LIABILITY.

           10.3.1  LIMITATION OF SONY'S LIABILITY.  IN NO EVENT SHALL SONY OR
ITS AFFILIATES, SUPPLIERS, OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS BE LIABLE
FOR PROSPECTIVE PROFITS, OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES
ARISING OUT OF OR IN CONNECTION WITH THIS DEVELOPER AGREEMENT, INCLUDING
WITHOUT LIMITATION THE BREACH OF THIS DEVELOPER AGREEMENT BY SONY, THE USE OF
THE PRODUCTS BY DEVELOPER, ANY LICENSED PUBLISHER OR ANY END USERS AND/OR THE
USE OF OR INABILITY TO USE THE DEVELOPMENT TOOLS BY DEVELOPER, WHETHER UNDER
THEORY OF CONTRACT, TORT (INCLUDING NEGLIGENCE), INDEMNITY, PRODUCT LIABILITY
OR OTHERWISE. SONY SHALL NOT BE LIABLE FOR ANY INJURY, LOSS OR DAMAGE, DIRECT
OR CONSEQUENTIAL, ARISING OUT OF THE USE OR INABILITY TO USE THE DEVELOPMENT
TOOLS. IN NO EVENT SHALL SONY'S LIABILITY ARISING UNDER OR IN CONNECTION WITH
THIS DEVELOPER AGREEMENT, INCLUDING WITHOUT LIMITATION ANY LIABILITY FOR DIRECT
DAMAGES, AND INCLUDING WITHOUT LIMITATION ANY LIABILITY UNDER SECTION 10.1 AND
ANY WARRANTY IN SECTION 9.1 HERETO, EXCEED THE TOTAL AMOUNT PAID BY DEVELOPER
TO SONY UNDER THIS DEVELOPER AGREEMENT. EXCEPT AS EXPRESSLY SET FORTH HEREIN,
NEITHER SONY NOR ANY AFFILIATE, NOR ANY OF THEIR RESPECTIVE DIRECTORS,
OFFICERS, EMPLOYEES OR AGENTS, SHALL BEAR ANY RISK, OR HAVE ANY RESPONSIBILITY
OR LIABILITY, OF ANY KIND TO DEVELOPER OR TO ANY THIRD PARTIES WITH RESPECT TO
THE QUALITY AND/OR PERFORMANCE OF ANY PORTION OF THE SONY MATERIALS, ANY
PRODUCT, ANY OF THE DEVELOPMENT TOOLS OR ANY PORTION THEREOF.

           10.3.2  LIMITATION OF DEVELOPER'S LIABILITY.  IN NO EVENT SHALL
DEVELOPER BE LIABLE TO SONY FOR ANY PROSPECTIVE PROFITS, OR SPECIAL, INCIDENTAL
OR CONSEQUENTIAL DAMAGES ARISING OUT OF OR IN CONNECTION WITH (i) THIS
DEVELOPER AGREEMENT, (ii) THE USE IN ACCORDANCE WITH THE TERMS AND CONDITIONS
OF THIS DEVELOPER AGREEMENT OF THE DEVELOPMENT TOOLS, OR (iii) THE USE OR
DISTRIBUTION IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS AGREEMENT OF
ANY OBJECT CODE PROVIDED BY SONY, IN WHOLE OR IN PART, WHETHER UNDER THEORY OF
CONTRACT,

                                      -9-                      CONFIDENTIAL
<PAGE>   10
TORT (INCLUDING NEGLIGENCE), INDEMNITY, PRODUCT LIABILITY OR OTHERWISE,
PROVIDED THAT SUCH LIMITATIONS SHALL NOT APPLY TO DAMAGES RESULTING FROM
DEVELOPER'S BREACH OF SECTIONS 2, 4, 5, 6, 10.2 OR 11.2 OF THIS AGREEMENT, AND
PROVIDED FURTHER THAT SUCH LIMITATIONS SHALL NOT APPLY TO AMOUNTS WHICH
DEVELOPER MAY BE REQUIRED TO PAY TO THIRD PARTIES UNDER SECTIONS 10.2 OR 15.9.

          10.3.3. DEVELOPER'S OBLIGATIONS. If at any time or times subsequent to
Sony's approval of the Executable Software as contemplated by the License
Agreement to be signed by Licensed Publishers, Sony identifies any bugs with
respect to the Product or any bugs are brought to the attention of Sony,
Developer shall, at no cost to Sony, promptly correct any such bugs, to Sony's
reasonable satisfaction. In the event any units of any of the Products create
any risk of loss or damage to any property or injury to any person, Developer
shall immediately take effective steps or cooperate with the appropriate
Licensed Publisher to take effective steps, at Developer's or Licensed
Publisher's sole liability and expense, to recall and/or remove such defective
product units from any affected channels of distribution. Either Developer or
the appropriate Licensed Publisher shall provide all end-user support for the
Products.

     10.4. DISCLAIMER OF WARRANTIES. NEITHER SONY NOR ITS AFFILIATES AND
SUPPLIERS MAKE, NOR DOES DEVELOPER RECEIVE, ANY WARRANTIES, EXPRESS, IMPLIED OR
STATUTORY REGARDING THE SONY MATERIALS, THE PLAYER OR THE DEVELOPMENT TOOLS
PROVIDED HEREUNDER, WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SONY AND
ITS AFFILIATES AND SUPPLIERS EXPRESSLY DISCLAIM THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE AND THEIR EQUIVALENTS
UNDER THE LAWS OF ANY JURISDICTION, REGARDING THE SONY MATERIALS, THE PLAYER OR
THE DEVELOPMENT TOOLS. ANY WARRANTY AGAINST INFRINGEMENT THAT MAY BE PROVIDED
IN SECTION 2-312(3) OF THE UNIFORM COMMERCIAL CODE AND/OR IN ANY OTHER
COMPARABLE STATUTE IS EXPRESSLY DISCLAIMED.

11.       COPYRIGHT, TRADEMARK AND TRADE SECRET RIGHTS.

          11.1 DEVELOPER RIGHTS. The copyrights with respect to the Developer
Software (exclusive of the rights licensed from Sony hereunder) and any names
or other designations used as titles for the Products are and shall be the
exclusive property of Developer or of any third party from which Developer has
been granted, or to whom Developer has granted, the license and related rights
to develop and otherwise exploit any such Developer Software or any such names
or other designations.

          11.2 SONY RIGHTS.

               11.2.1 LICENSE OF SONY MATERIALS AND PLAYER. Subject to the
rights granted by Sony to Developer hereunder, all rights with respect to the
Sony Materials and Player, including, without limitation, all of Sony's
Intellectual Property Rights therein, are and shall be the exclusive property
of Sony. Nothing herein shall give Developer any right, title or interest in or
to the Sony Materials or the Player (or any portion thereof), other than the
non-exclusive license and privilege during the term hereof to use the Sony
Materials and Player for the development of the Executable Software solely in
accordance with the provisions of this Developer Agreement. Developer shall not
to or cause to be done any act or thing contesting or in any way impairing to
tending to impair any of Sony's rights, title, and/or interests in or to the
Sony Materials or the Player (or any portion thereof).

          11.2.1 SONY TRADEMARKS. The Sony Trademarks and the goodwill
associated

                                      -10-                         CONFIDENTIAL
<PAGE>   11
therewith are and shall be the exclusive property of Sony. Nothing herein shall
give Developer any right, title or interest in or to any of the Sony Trademarks.
Developer shall not do or cause to be done any act or thing contesting or in any
way impairing or tending to impair any of Sony's rights, title, or interests in
or to any of the Sony Trademarks, nor shall Developer register any trademark in
its own name or in the name of any other person or entity which is similar to or
is likely to be confused with any of the Sony Trademarks.

     11.3 EFFECT OF TERMINATION. Upon the expiration or earlier termination of
this Developer Agreement for any reason, Developer shall immediately cease and
desist from any further use of the Sony Materials licensed hereunder.

12.  COPYRIGHT, TRADEMARK AND TRADE SECRET PROTECTION.

     In the event that either Developer or Sony discovers or otherwise becomes
aware that any of the Intellectual Property Rights of the other embodied in any
of the Developed Products have been or are being infringed upon by any third
party, then the party with knowledge of such infringement or apparent
infringement shall promptly notify the other party.

13.  TERM AND TERMINATION.

     13.1 EFFECTIVE DATE; TERM. This Developer Agreement shall not be binding
upon the parties until it has been signed by or on behalf of each party, in
which event it shall be effective as of the date first written above (the
"Effective Date"). Unless sooner terminated in accordance with the provisions
hereof, the initial term of this Developer Agreement shall be four (4) years
from the Effective Date.

     13.2 TERMINATION BY SONY. Sony shall have the right to terminate this
Developer Agreement immediately, by providing written notice of such election
to Developer, upon the occurrence of any of the following events or
circumstances: (i) If Developer breaches any of its material obligations
provided for in this Developer Agreement and such breach is not corrected or
cured within thirty (30) days after receipt of written notice of such breach;
(ii) If the License Agreement between Sony and Developer is terminated for any
reason; (iii) If, in Sony's reasonable judgment, the laws or enforcement of the
laws of the country or countries in which the Developer or the Development Site
is located do not protect Sony's Intellectual Property Rights; (iv) Developer's
failure to pay, or a statement that it is unable to pay, any amount due
hereunder, or is unable to pay its debts generally as they shall become due; or
(v) Developer's filing of an application for, or consenting to, or directing
the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of all or substantially all of Developer's property,
whether tangible or intangible, wherever located; or (vi) The making by
Developer of a general assignment for the benefit of creditors; or (vii) The
commencing by Developer or Developer's intention to commence a voluntary case
under any applicable bankruptcy laws (as now or hereafter may be in effect); or
(viii) The adjudication that Developer is a bankrupt or insolvent; or (ix) The
filing by Developer or the intent to file by Developer of a petition seeking to
take advantage of any other law providing for the relief of debtors; or (x)
Developer's acquiescence to, intention to acquiesce to, or failure to have
dismissed within ninety (90) days, any petition filed against it in any
involuntary case under any such bankruptcy law; or (xi) If control of more than
fifty percent (50%) of the ownership of Developer or substantially all of
Developer's assets are transferred to any person or entity; or (xii) If,
directly or indirectly, control of more than twenty-five percent (25%) of the
ownership of Licensee or substantially all of Licensee's assets are transferred
to any one of Acclaim Entertainment, Atari, Blockbuster, Electronic Arts,
Hasbro, Matsushita, Mattel, Microsoft, NEC, Nintendo, Philips, Sega, 3DO, Time
Warner, Viacom International, Virgin Games, Williams

                                      -11-
                                                                    CONFIDENTIAL
<PAGE>   12
Entertainment, or any other dedicated platform holder, known or unknown.

     13.3  PRODUCT-BY-PRODUCT TERMINATION BY SONY.  In addition to the events
of termination described in Section 13.2 above, Sony, at its option, shall be
entitled to terminate, on a product-by-product basis, the licenses and related
rights herein granted to Developer in the event that (i) Developer fails to
comply with the requirements of Section 4.4 in connection with the development
of any Product or (ii) any third party with whom Developer has contracted
pursuant to the provisions of Section 4.4 hereto breaches any of its material
obligations to Sony pursuant to its agreement with Sony with respect to such
Product.

     13.4  PAYMENTS NONREFUNDABLE.  In the event of the termination of this
Developer Agreement in accordance with any of the provisions of Section 13,
above, no portion of any payments of any kind whatsoever, including without
limitation any and all Nonrefundable Payments, previously provided to Sony
hereunder shall be owed or be repayable to Developer.

14.  EFFECT OF EXPIRATION OR TERMINATION.

     14.1  REVERSION OF RIGHTS.  If this Developer Agreement is terminated by
Sony as a result of any breach or default by Developer, all rights herein
granted by Sony to Developer shall immediately revert to Sony, and Developer
shall cease and desist from any further use of the Development Tools,
Documentation, other Sony Materials and any Intellectual Property Rights
therein.

     14.2  RETURN OF DEVELOPMENT TOOLS.  Upon the expiration or earlier
termination of this Developer Agreement, Developer shall immediately deliver to
Sony, or if and to the extent requested by Sony destroy, all Development Tools,
Documentation, other Sony Materials and any and all copies thereof, including,
without limitation, any Confidential Information including such information,
knowledge, or know-how of which either party, as the receiving party, was
apprised and which was reduced to tangible or written form by such party or on
its behalf at any time during the term of this Developer Agreement. Within five
(5) working days after any such destruction, Developer shall provide Sony with
an itemized statement certified to be accurate by an officer of Developer,
indicating the number of copies and/or units of the Development Tools,
Documentation and other Sony Materials which have been destroyed, the location
and date of such destruction and the disposition of the remains of such
destroyed materials.

     14.3  EFFECT OF EXPIRATION OR TERMINATION OF DEVELOPER AGREEMENT.  Sony
shall be under no obligation to renew or extend this Developer Agreement
notwithstanding any actions taken by either of the parties prior to the
expiration of this Developer Agreement. Upon the expiration of this Developer
Agreement, neither party shall be liable to the other for any damages (whether
direct, consequential, or incidental, and including, without limitation, any
expenditures, loss of profits, or prospective profits) sustained or arising out
of or alleged to have been sustained or to have arisen out of such expiration.
However, the expiration of this Developer Agreement shall not excuse either
party from its previous breach of any of the provisions of this Developer
Agreement or from any obligations surviving the expiration of this Developer
Agreement, and full legal and equitable remedies shall remain available for any
breach or threatened breach of this Developer Agreement or any obligations
arising therefrom.

     14.4  TERMINATION WITHOUT PREJUDICE.  The expiration or termination of
this Developer Agreement in accordance with the provisions of Section 13,
above, shall be without prejudice to any rights or remedies which one party may
otherwise have against the other party.

                                      -12-                          CONFIDENTIAL

<PAGE>   13
15.  MISCELLANEOUS PROVISIONS.

     15.1 NOTICES. All notices or other communications required or desired to be
sent to either of the parties shall be in writing and shall be sent by
registered or certified mail, postage prepaid, return receipt requested, or sent
by recognized international courier service (e.g., Federal Express, DHL, etc.),
telex, telegram or facsimile, with charges prepaid and subject to confirmation
by letter sent via registered or certified mail, postage prepaid, return receipt
requested. The address for all notices or other communications required to be
sent to Sony or Developer, respectively, shall be the mailing address stated in
the preamble hereof, or such other address as may be provided by written notice
from one party to the other on at least ten (10) days' prior written notice. Any
such notice shall be effective upon the date of receipt.

     15.2 FORCE MAJEURE. Neither Sony nor Developer shall be liable for any loss
or damage or be deemed to be in breach of this Developer Agreement if its
failure to perform or failure to cure any of its obligations under this
Developer Agreement results from any event or circumstance beyond its reasonable
control, including, without limitation, any natural disaster, fire, flood,
earthquake, or other Act of God; shortage of equipment, materials, supplies, or
transportation facilities; strike or other industrial dispute; war or rebellion;
or compliance with any law, regulation, or order (whether valid or invalid) of
any governmental body, other than an order, requirement, or instruction arising
out of Developer's violation of any applicable law or regulation; provided,
however, that the party interfered with gives the other party written notice
thereof promptly, and, in any event, within fifteen (15) working days of
discovery of any such Force Majeure condition. If notice of the existence of any
Force Majeure condition is provided within such period, the time for performance
or cure shall be extended for a period equal to the duration of the Force
Majeure event or circumstance described in such notice, except that any such
cause shall not excuse the payment of any sums owed to Sony prior to, during, or
after any such Force Majeure condition.

     15.3 NO PARTNERSHIP OR JOINT VENTURE. The relationship between Sony and
Developer, respectively, is that of licensor and licensee. Developer is an
independent contractor and is not the legal representative, agent, joint
venturer, partner, or employee of Sony for any purpose whatsoever. Neither party
has any right or authority to assume or create any obligations of any kind or to
make any representation or warranty on behalf of the other party, whether
express or implied, or to bind the other party in any respect whatsoever.

     15.4 ASSIGNMENT. Sony has entered into this Developer Agreement based upon
the particular reputation, capabilities and experience of Developer and its
officers, directors and employees. Accordingly, Developer may not assign this
Developer Agreement or any of its rights hereunder, nor delegate or otherwise
transfer any of its obligations hereunder, to any third party unless the prior
written consent of Sony shall first be obtained. Any attempted or purported
assignment, delegation or other such transfer without the required consent of
Sony shall be void and a material breach of this Developer Agreement. Subject to
the foregoing, this Developer Agreement shall inure to the benefit of the
parties and their respective successors and permitted assigns. Sony shall have
the right to assign any and all of its rights and obligations hereunder to any
affiliate(s).

     15.5 SUBCONTRACTORS. Developer shall not sell, lease, assign, delegate,
subcontract, license or otherwise transfer or encumber all or any portion of the
rights herein granted. Developer shall have the right to employ suitable
subcontractors for the purposes of assisting Developer with the development of
the Products, provided that Developer must obtain the prior written consent of
Sony, which consent may not be unreasonably withheld or delayed. Developer shall
not disclose to any subcontractor any Confidential Information of Sony (as
defined herein and in the Nondisclosure

                                      -13-                     CONFIDENTIAL
<PAGE>   14
Agreement), including, without limitation, any Development Tools or other Sony
Materials, or allow any usage of the Development Tools by any such
subcontractor unless and until Developer shall have such subcontractor sign a
written agreement containing substantially identical terms to the Nondisclosure
Agreement, the confidentiality provisions of this Agreement and Section 7 of
this Agreement and shall submit a copy of such agreement to Sony. Any and all
agreements between Developer and its permitted subcontractors shall provide
that Sony is a third party beneficiary of such agreements and has the full
right to bring any actions against such subcontractors to comply in all
respects with the terms and conditions of this Agreement and the Developer
Agreement. Notwithstanding any consent which may be granted by Sony for
Developer to employ any such permitted subcontractor(s), or any such separate
agreement(s) that may be entered into by Developer with any such permitted
subcontractor, Developer shall remain fully liable for its compliance with all
of the provisions of this Developer Agreement and for the compliance of any and
all permitted subcontractors with the provisions of any agreements entered into
by such subcontractors in accordance with this Section 15.5. Developer shall
cause its subcontractors to comply in all respects with the terms and
conditions of this Developer Agreement, and hereby unconditionally guarantees
all obligations of its subcontractors. Notwithstanding the foregoing, Developer
shall not subcontract any rights under this Agreement to TCI
(Telecommunications, Inc.) or Microsoft without Sony's prior written approval.

     15.6  COMPLIANCE WITH APPLICABLE LAWS. The parties shall at all times
comply with all applicable regulations and orders of their respective countries
and all conventions and treaties to which their countries are a party or
relating to or in any way affecting this Developer Agreement and the
performance by the parties of this Developer Agreement. Each party, at its own
expense, shall negotiate and obtain any approval, license or permit required in
the performance of its obligations, and shall declare, record or take such
steps to render this Developer Agreement binding, including, without
limitation, the recording of this Developer Agreement with any appropriate
governmental authorities (if required).

     15.7  GOVERNING LAW; CONSENT TO JURISDICTION. This Developer Agreement
shall be governed by and interpreted in accordance with the laws of the State
of New York, excluding that body of law related to choice of laws, and of the
United States of America. Any action or proceeding brought to enforce the terms
of this Developer Agreement or to adjudicate any dispute arising hereunder
shall be brought in the courts of the County of New York, State of New York (if
under State law) or the Southern District of New York (if under Federal law).
Each of the parties hereby submits itself to the exclusive jurisdiction and
venue of such courts for purposes of any such action and agrees that any
service of process may be effected by delivery of the summons in the manner
provided in the delivery of notices set forth in Section 15.1 above.

     15.8  LEGAL COSTS AND EXPENSES. In the event it is necessary for either
party to retain the services of an attorney or attorneys to enforce the terms
of this Developer Agreement or to file or defend any action arising out of this
Agreement, then the prevailing party in any such action shall be entitled, in
addition to any other rights and remedies available to it at law or in equity
to recover from the other party its reasonable fees for attorneys and expert
witnesses, plus such court costs and expenses as may be fixed by any court of
competent jurisdiction. The term "prevailing party" for the purposes of this
Section shall include a defendant who has by motion, judgment, verdict or
dismissal by the court, successfully defended against any claim that has been
asserted against it.

     15.9  REMEDIES. Unless expressly set forth to the contrary, either party's
election of any remedies provided for in this Developer Agreement shall not be
exclusive of any other remedies available hereunder or otherwise at law or in
equity, and all such remedies shall be deemed to be cumulative. Any breach of
Sections 2, 4, 6, 7 and 11 of this Agreement would cause irreparable

                                      -14-                     CONFIDENTIAL
<PAGE>   15
harm to Sony, the extent of which would be difficult to ascertain. Accordingly,
Developer agrees that, in addition to any other remedies to which Sony may be
entitled, in the event of a breach by Developer or any of its employees or
permitted subcontractors of any such sections of this Agreement. Sony shall be
entitled to the immediate issuance without bond of exparte injunctive relief
enjoining any breach or threatened breach of any or all of such provisions. In
addition, Developer shall indemnify Sony for all losses, damages, liabilities,
costs and expenses (including actual attorneys' fees and all related costs)
which Sony may sustain or incur as a result of such breach.

     15.10     SEVERABILITY.  In the event that any provision of this Developer
Agreement (or portion thereof) is determined by a court of competent
jurisdiction to be invalid or otherwise unenforceable, such provision (or part
thereof) shall be enforced to the extent possible consistent with the stated
intention of the parties, or, if incapable of such enforcement, shall be deemed
to be deleted from this Developer Agreement, while the remainder of this
Developer Agreement shall continue in full force and remain in effect according
to its stated terms and conditions.

     15.11     SECTIONS SURVIVING EXPIRATION OR TERMINATION. The following
sections shall survive the expiration or earlier termination of this Developer
Agreement for any reason: 4, 6, 9.2, 10, 11, 12, 13.3, 14, 15.4, 15.5, 15.7,
15.8, 15.9, and 15.10.

     15.12     WAIVER. No failure or delay by either party in exercising any
right, power, or remedy under this Developer Agreement shall operate as a
waiver of any such right, power, or remedy. No waiver of any provision of this
Developer Agreement shall be effective unless in writing and signed by the
party against whom such waiver is sought to be enforced. Any waiver by either
party of any provision of this Developer Agreement shall not be construed as a
waiver of any other provision of this Developer Agreement, nor shall such waiver
operate as or be construed as a waiver of such provision respecting any future
event or circumstance.

     15.13     MODIFICATION. No modification of any provision of this Developer
Agreement shall be effective unless in writing and signed by both of the
parties.

     15.14     HEADINGS. The section headings used in this Developer Agreement
are intended primarily for reference and shall not by themselves determine the
construction or interpretation of this Developer Agreement or any portion
hereof.

     15.15     INTEGRATION. This Developer Agreement (together with the
Exhibits attached hereto) constitutes the entire agreement between Sony and
Developer and supersedes all prior or contemporaneous agreements, proposals,
understandings, and communications between Sony and Developer, whether oral or
written, with respect to the subject matter hereof; provided, however, that
notwithstanding anything to the contrary in the foregoing, the Nondisclosure
Agreement referred to in Section 6 hereto shall remain in full force and effect.

     15.16     COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed an original, and both of which together shall
constitute one and the same instrument.

     15.17.    CONSTRUCTION. This Developer Agreement shall be fairly
interpreted in accordance with its terms and without any strict construction in
favor of or against either of the parties.

     15.18     EXPORT. Developer shall not reexport, directly or indirectly,
any Development Tools outside of the United States or Canada. In addition,
Developer certifies that it shall not reexport,

                               -15-                                 CONFIDENTIAL
<PAGE>   16
directly or indirectly, any Development Tools in violation of U.S. law and
regulations. If for any reason Sony permits Developer to reexport Development
Tool, Developer shall be exporter of record and shall be solely responsible for
the obtaining of the compliance with any required export licenses. Developer
certifies that the Development Tools will not be resold or delivered, directly
or indirectly, to entities located in destinations prohibited under U.S. laws
and regulations or resold or delivered, directly or indirectly, to nationals
from those destinations. The prohibited destinations include Cuba, Iraq, Libya,
North Korea, Yugoslavia (Serbia and Montenegro) or any other countries that are
subsequently declared prohibited destinations under such laws or regulations.
Prohibited sales may subject Developer to fines and imprisonment under
applicable U.S. law. Violation of this certification will result in the
termination for cause of this Agreement and all licenses granted hereunder from
Sony to Developer. In addition, Developer shall, at its own expense, obtain and
arrange for the maintenance in full force and effect of all governmental
approvals, consents, licenses, authorizations, declarations, filings and
registrations as may be necessary or advisable for performance of all of the
terms and conditions of this Agreement, including, but not limited to, foreign
exchange approvals, import and offer agent licenses, fair trade approvals and
all approvals which may be required to realize the purposes of this Agreement.

IN WITNESS WHEREOF, the parties have caused this Developer Agreement to be duly
executed as of the day and year first written above.

SONY COMPUTER                       THE LIGHTSPAN PARTNERSHIP, INC.
ENTERTAINMENT AMERICA

By /s/ Bernard Stolar               By /s/ J. T. Kernan
   ----------------------              --------------------------
       Bernard Stolar                      J. T. Kernan

Title: VP Bus. Dev.                 Title: Chairman & CEO
      -------------------                 -----------------------

Date: 02-22-26                      Date: 1/30/96
     --------------------                ------------------------

NOT AN AGREEMENT UNTIL
EXECUTED BY BOTH PARTIES

                                      -16-                          CONFIDENTIAL
<PAGE>   17

                                   EXHIBIT A

Development Site:

     2352 FARADAY AVENUE
   ------------------------
     CARLSBAD, CA  92008
   ------------------------

Developer Designee:

   signature illegible
   ------------------------

                                      -17-                          CONFIDENTIAL

<PAGE>   18
[SONY COMPUTER ENTERTAINMENT AMERICA LETTERHEAD]

January 25, 2000

Etsuko Adelman
The Lightspan Partnership
444 Castro Street
Suite 1200
Mountain View, CA 94041

Etsuko,

Due to the recent delays in executing the Licensed Developer Agreement between
Sony Computer Entertainment America (SCEA) and The Lightspan Partnership, SCEA
hereby extends the Developer Agreement, entered into on January 26, 1996, by
and between SCEA and the Lightspan Partnership, for a period of thirty (30)
days. As a result, the Developer Agreement will expire February 24, 2000.

Best regards,

/s/ MASAYUKI CHATANI

Masayuki Chatani
Vice President, Business and Technology

cc:  Andrew Zaffron
     Anne Chen

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