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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) November 25, 1996
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NEUROGEN CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 0-18311 22-2845714
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
35 Northeast Industrial Road, Branford, Connecticut 06405
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 488-8201
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None
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(Former name or former address, if changed since last report)
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Item 5. Other Events
------------
On November 25, 1996, American Home Products Corporation, acting
through its Wyeth-Ayerst Laboratories Division ("American Home Products"),
entered into an agreement with Neurogen Corporation providing for the
outlicensing to American Home Products of the world-wide commercial rights to
ADCI and related compounds that Neurogen Corporation has been developing for the
treatment of epilepsy and related disorders. Neurogen Corporation inlicensed
ADCI from the National Institutes of Health in 1992. A copy of this agreement
is attached hereto as Exhibit 10.1. In connection with entering into this
agreement, Neurogen and Wyeth-Ayerst entered into the stock purchase agreement
attached hereto as Exhibit 10.2.
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits
10.1 Licensing Agreement dated as of November 25, 1996 between
American Home Products Corporation, acting through its
Wyeth-Ayerst Laboratories Division, and Neurogen
Corporation. CONFIDENTIAL TREATMENT REQUESTED.
10.2 Stock Purchase Agreement dated as of November 25, 1996
between American Home Products Corporation, acting through
its Wyeth-Ayerst Laboratories Division, and Neurogen
Corporation. CONFIDENTIAL TREATMENT REQUESTED.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NEUROGEN CORPORATION
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(Registrant)
March 31, 1997 /s/ STEPHEN R. DAVIS
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DATE Stephen R. Davis
Vice President-Finance and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
Number Exhibit
- ------ -------
10.1 Licensing Agreement dated as of November 25, 1996 between
American Home Products Corporation, acting through its Wyeth-
Ayerst Laboratories Division, and Neurogen Corporation.
CONFIDENTIAL TREATMENT REQUESTED.
10.2 Stock Purchase Agreement dated as of November 25, 1996 between
American Home Products Corporation, acting through its Wyeth-
Ayerst Laboratories Division, and Neurogen Corporation.
CONFIDENTIAL TREATMENT REQUESTED.
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EXHIBIT 10.1
CONFIDENTIAL TREATMENT REQUESTED
AGREEMENT
This AGREEMENT ("Agreement"), effective this 25th day of November, 1996 is
----
between AMERICAN HOME PRODUCTS CORPORATION, a corporation of Delaware acting
through its WYETH-AYERST LABORATORIES division ("Wyeth-Ayerst") and NEUROGEN
CORPORATION, a corporation having a place of business in Branford, CT.
("Neurogen")
WHEREAS, Neurogen has entered into an exclusive license agreement ("NTIS
Agreement", which is attached hereto as Exhibit 1) on January 1, 1992 with the
National Technical Information Service ("NTIS"), a primary operating unit of the
United States Department of Commerce pursuant to which Neurogen has certain
rights under patents owned by the United States of America as represented by the
Department of Health and Human Services to make, have made, use, sell, and have
sold the compound designated ADCI (hereinafter fully defined) and to practice a
process for the preparation of ADCI; and
WHEREAS, the said Agreement with NTIS as amended by the National Institutes
of Health ("NIH") on July 20, 1996, (attached hereto as Exhibit 2) grants
Neurogen the right to sublicense its license rights to a nonaffiliated company
during the term of that Agreement with the prior approval of the NTIS; and
WHEREAS, Neurogen also owns patent rights on improved processes for the
preparation of ADCI, as well as certain other rights in Technological Data (as
defined below), which rights can be directly licensed to a Neurogen sublicensee;
and
WHEREAS Neurogen wishes to sublicense its rights under the NTIS Agreement
to ADCI and to license its patent rights in improved processes for preparing
ADCI and other rights in Technological Data to Wyeth-Ayerst; and
WHEREAS Wyeth-Ayerst wishes to he granted a sublicense to Neurogen's
licensed rights to ADCI and a license to Neurogen's patent rights to improved
processes for the preparation of ADCI and other rights in Technological Data;
NOW, THEREFORE, Wyeth-Ayerst and Neurogen agree as follows:
ARTICLE 1. DEFINITIONS
1.1 "ADCI" shall mean [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION]
1.2 "Affiliate" shall mean any corporation or other business entity, which
either directly or indirectly controls a party to this Agreement, is controlled
by such party, or is under common control of such party. As used herein, the
term "control"
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means possession of the power to direct or cause the direction of the management
and policies of a corporation or other entity whether through the ownership of
voting securities, by contract or otherwise. As relates to this Agreement,
Affiliate shall not mean [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION] unless American Home Products
Corporation (AHPC) shall have acquired all of the voting stock thereof, or if
governance covenants currently limiting AHPC control of said companies are
otherwise lifted.
1.3 ""Neurogen Patents" shall mean any and all patents and patent
applications for letters patent licensed to or owned by Neurogen as of the date
of this Agreement, which are directed to ADCI and the processes for the
preparation thereof and which are listed in Schedule A attached hereto, any
patents issuing from such applications, all divisions, continuations,
continuations-in-part and all patents granted thereon; as well as all other
patents, including any reissues, renewals, reexaminations, extensions or patents
of addition thereto, all of which have not lapsed, become abandoned or been
declared invalid or unenforceable by a final decision or judgment of a court or
tribunal of competent jurisdiction.
1.4 "Wyeth-Ayerst Patents" shall mean any and all patents and patent
applications which are licensed to or owned by Wyeth-Ayerst, which are directed
to any Improvements to ADCI, the processes for the preparation thereof, or to
Product, any patent issuing from such applications, all divisions,
continuations, continuations-in-part and all patents granted thereon; as well as
all other patents, including any reissues, renewals, reexaminations, extensions
or patents of addition thereto, all of which have not lapsed, become abandoned
or been declared invalid or unenforceable by a final decision or judgment of a
court or tribunal of competent jurisdiction.
1.5 "Improvements" shall mean [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
1.6 "Technological Data" shall mean any technical data or information
which Neurogen possesses and has rights to license hereunder relating to ADCI,
the processes for the preparation thereof and Product which may be necessary or
useful to exercise the rights granted under this Agreement and to obtain
regulatory approval of the Product in the Territory. The term includes without
limitation specifications or equipment necessary for preparation of ADCI,
manufacture, methods of production, and formulation of the Product, the chemical
and physical properties of ADCI, preclinical and clinical studies including
safety and efficacy data relative to current and future therapeutic indications
for the Product, procedures of testing and requirements of control. The term
shall also include copies of all registration dossiers submitted to drug
regulatory authorities relating to the Product.
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1.7 "Product" shall mean [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
1.8 "Net Sales" shall mean [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
1.9 "Territory" shall mean the entire world
1. 10 "Trademark" shall have the meaning set forth in Article 17.
ARTICLE 2. GRANT OF LICENSE
2.1 Neurogen hereby grants to Wyeth-Ayerst for the consideration specified
hereinafter, an exclusive sublicense of all rights under Neurogen Patents
arising from the NTIS Agreement and under Technological Data to make and have
made ADCI and to make, have made, use, sell, and have sold Products formulated
with ADCI in the Licensed Territory (as such term is defined in the NTIS
Agreement).
2.2 Neurogen hereby grants to Wyeth-Ayerst for consideration specified
hereinafter an exclusive license under Neurogen Patents and Technological Data
directed to improved processes for the preparation of ADCI to make and have made
ADCI in the Territory.
2.3 Wyeth-Ayerst hereby accepts the grants made in Article 2.1 and 2.2 and
recognizes and accepts the reservations of rights by and on behalf of the United
States Government provided for in Article III of the NTIS Agreement.
ARTICLE 3. REPRESENTATIONS, WARRANTIES AND COVENANTS
Each party hereby represents and warrants to the other party as follows:
3.1 Such party (a) is a corporation duly organized, validly existing and
in good standing under the laws of the state in which it is incorporated, (b)
has the corporate power and authority and the legal right to own and operate its
property and assets, to lease the property and assets it operates under lease,
and to carry on its business as it is now being conducted, and (c) is in
compliance with all requirements of applicable law, except to the extent that
any noncompliance would not have a material adverse effect on the properties,
business, financial or other condition of such party and would not materially
adversely affect such party's ability to perform its obligations under this
Agreement.
3.2 Such party (a) has the corporate power and authority and the legal
right to enter into this Agreement and to perform its obligations hereunder, and
(b) has taken all necessary corporate action on its part to authorize the
execution and delivery of this
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Agreement and the performance of its obligations hereunder. This Agreement has
been duly executed and delivered on behalf of such party, and constitutes a
legal, valid, binding obligation, enforceable against such party in accordance
with its terms.
3.3 All necessary consents, approvals and authorizations of all
governmental authorities and other persons required to be obtained by such party
in connection with the execution, delivery and performance of this Agreement
have been and shall be obtained.
3.4 Notwithstanding anything to the contrary in this Agreement, the
execution and delivery of this Agreement and the performance of such party's
obligations hereunder (a) do not conflict with or violate any requirement of
applicable laws or regulations and (b) do not and shall not conflict with,
violate or breach or constitute a default or require any consent under, any
contractual obligation of such party, except such consents as have been received
prior to the date hereof.
3.5 All royalties (but not other payments) that are or may become due by
Neurogen to the National Technical Information Services (NTIS) as a result of
Section 4.3 of the NTIS Agreement shall remain the sole responsibility of
Neurogen, except as may be specifically provided for otherwise in this
Agreement, it being further understood that the royalty payments to be made by
Wyeth-Ayerst to Neurogen are inclusive of the royalty payments payable by
Neurogen to NTIS. Neurogen agrees to indemnify Wyeth-Ayerst against any loss,
damage or other liability which may be sustained by Wyeth-Ayerst as a
consequence of any failure of Neurogen to make any such payment; provided that
Wyeth-Ayerst has made all royalty payments due to Neurogen hereunder within the
required time.
3.6 Neurogen shall not take any action provided for in Article VIII of the
NTIS Agreement to terminate the NTIS Agreement, including without limitation
modification or termination of the NTIS Agreement, without the express written
approval or consent of Wyeth-Ayerst, unless required by regulation or law, in
which case Neurogen shall immediately notify Wyeth-Ayerst in writing of the
action so required. Any action taken by Neurogen contemplated by this Article
3.6 without such written consent and approval shall be deemed a breach and basis
for immediate termination of this Agreement as provided for in Article 22
hereof.
3.7 Such party (a) owns or is the licensee of the patent applications
listed on the attached Schedule A; (b) has received no notice of infringement or
misappropriation of any alleged rights asserted by any third party in relation
to any technology to be used by it in connection with the grant of the licenses
herein; (c) is not in default with respect to any license agreement related to
the grant of the licenses herein; and (d) is not aware of any patent, trade
secret or other right of any third party which could materially adversely affect
its ability to carry out its responsibilities under this Agreement or the other
party's ability to exercise or exploit any license granted to it under this
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Agreement. Such party agrees to immediately notify the other party in writing in
the event such party hereafter receives a notice of the type referred to in (b)
above, becomes in default under any license agreement referred to in (c) above,
or becomes aware of any patent, trade secret or other right of the nature
referred to in (d) above.
3.8 Nothing in this Agreement shall be construed as a representation made,
or warranty given, by Neurogen or AHPC (a) that any patent will issue based upon
any pending patent application within the patent rights, (b) that any patent
within the patent rights which issues will be valid, or (c) that, except for the
provisions of Article 3.7 herein which shall not be affected by this Article
3.8, the use of any license granted hereunder or the use of any patent rights
will not infringe the patent or proprietary rights of any other person.
Furthermore, neither Neurogen nor AHPC makes any representations or warranties,
express or implied, with respect to the patent rights except as provided in
Article 3.7.
ARTICLE 4. IMPROVEMENTS
4.1 It is hereby mutually agreed that any Improvement, whether believed to
be patentable or unpatentable, shall be communicated by the party making or
discovering the Improvement to the other party to this Agreement within sixty
(60) days after the Improvement is first reduced to writing.
4.2 All Neurogen or joint Neurogen/Wyeth-Ayerst Improvements, whether
patented or not, shall be part of the patent rights sublicensed and licensed by
Neurogen to Wyeth-Ayerst during the term of this Agreement.
4.3 Each party has sole right, title, and interest in and to any
patentable Improvement [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]
4.4 Neurogen and Wyeth-Ayerst both agree to submit to the other for
consideration and advice all patent applications for any Improvement before
filing same, to transmit promptly to the other each action and
correspondence as soon as received from the relevant patent office, to submit to
the other for consideration and advice all responses to and correspondence with
the relevant patent office before filing same, and to give due consideration to
the advice of the other in this regard. The party having title to the
Improvement, however, shall have ultimate authority and responsibility for all
patent applications, responses to and correspondence with the relevant patent
offices.
4.5 If a party does not desire to obtain or maintain patent protection on
any patentable Improvement invented solely or jointly by its employees or
consultants, then it shall notify the other party of such decision and, unless
there is reason to maintain the
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Improvement as a trade secret, the other party shall have the right, but not the
obligation, to obtain and maintain patent protection [CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] and
shall have sole right, title, and interest in and to any patents on the
Improvement.
ARTICLE 5. NTIS AGREEMENT
5.1 Wyeth-Ayerst acknowledges Neurogen's obligations under the NTIS
Agreement, and all of the limitations, restrictions and conditions on Neurogen's
rights under the NTIS Agreement. Notwithstanding any other terms of this
Agreement. Wyeth-Ayerst agrees to honor all such limitations, restrictions and
conditions as if it were Neurogen and to perform on Neurogen's behalf all of the
obligations of Neurogen under the NTIS Agreement, other than the payment of
royalties pursuant to Articles 4.3 through 4.9 of the NTIS Agreement (which
shall be paid by Neurogen out of the royalties Neurogen receives from Wyeth-
Ayerst). [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION].
ARTICLE 6. WYETH-AYERST'S DEVELOPMENT OBLIGATIONS
6.1 Wyeth-Ayerst acknowledges Neurogen's obligations regarding development
of ADCI as provided for in Article VII of the NTIS Agreement and [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION]. To the extent that NTIS agrees to modify the requirements of that
Article VII, or to waive any failure to perform the requirements thereof Wyeth-
Ayerst's obligations to Neurogen hereunder shall similarly be modified or
waived.
6.2 As soon as practical and not later than one (1) month after execution
of this Agreement, Neurogen shall disclose to Wyeth-Ayerst all Technological
Data (to the extent not previously made available to Wyeth-Ayerst) relating to
ADCI.
6.3 As regards the development to be conducted for the registration of the
Product in the U.S.A., the parties agree that filing IND by the end of
[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] and NDA in [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] represents a reasonable
goal, and Wyeth-Ayerst shall endeavor to achieve each of the aforesaid steps in
due time. Three months prior to each of the above mentioned dates, the parties
will meet in order to examine the stage of the development and if any delay has
occurred, examine the reasons thereof and/or seek possible remedies thereto. If
Wyeth-Ayerst can provide no reasonable justification for such delay, Neurogen
shall be entitled to provide written notice to Wyeth-Ayerst of Wyeth-Ayerst's
failure of adequate performance, and if Wyeth-Ayerst within 60 days cannot
provide a plan reasonably acceptable to Neurogen to rectify the alleged
unfounded delay
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Neurogen shall [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]. Nothing in this Article 6.3 shall be
interpreted to modify Article 6.1 or excuse any failure to perform Article 6.1
6.4 It is hereby understood and agreed that with respect to [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION], Wyeth-Ayerst shall be [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION].
ARTICLE 7. APPROVAL
7.1 Wyeth-Ayerst shall use its [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] efforts to secure
registrations for the Product in all countries of the Territory, [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION].
7.2 Neurogen shall be entitled to inspect the registration dossiers prior
to the filing of the application. Three months after filing, at the latest,
Wyeth-Ayerst shall provide Neurogen with a copy of the registration dossier.
7.3 Wyeth-Ayerst shall provide Neurogen with copies of all approvals
granted by regulatory authorities throughout the world to Wyeth-Ayerst regarding
the Product.
ARTICLE 8. PAYMENTS
8.1 Wyeth-Ayerst agrees to pay Neurogen, subject to Neurogen's option to
forego the equity payments described in Article 8.1(b) below as set forth in the
Stock Purchase Agreement, the following amounts upon the achievement of the
events indicated:
a) upon execution of this Agreement, $750,000 in cash and $750,000 in
equity, which latter payment shall be effectuated as provided in Article
1.1(a) of the Stock Purchase Agreement entered into by the parties on even
date with this Agreement (the Stock Purchase Agreement);
b) as equity payments as provided in Articles 1.1(b) and (c) of the Stock
Purchase Agreement:
[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION]
c) as cash payments:
[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
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None of the payments or equity investments described in this Article 8.1
shall be refundable.
ARTICLE 9. DIRECT LICENSES
9.1 If necessary for commercialization of the Product, Wyeth-Ayerst may at
any time request from Neurogen and Neurogen agrees to grant directly to Wyeth-
Ayerst Affiliates in any countries of the Territory equivalent rights as granted
to Wyeth-Ayerst, subject to any approval by NTIS required under the NTIS
Agreement. Accordingly, upon receipt of Wyeth-Ayerst's request, Neurogen shall
enter into and sign a separate direct sublicense/license agreement or
agreements with the companies designated by Wyeth-Ayerst in the request. All
direct sublicense/license agreements entering into force under this paragraph
shall be prepared by Wyeth-Ayerst and shall contain terms and conditions which
are consistent with those of this Agreement, subject only to such modifications
as may be required by the laws or regulations of the country to be demonstrated
by Wyeth-Ayerst in which such direct sublicense/license still be exercised,
including, but not limited to changes in the rate of royalty restrictions
against the remittance thereof, and limitations upon the term of duration of
said direct sublicense/license agreement. Notwithstanding the foregoing,
Neurogen shall not be required to enter into any agreement on terms which, in
the aggregate, are less favorable than those set forth in this Agreement. In
those countries in which the validity of such a direct sublicense/license
agreement requires prior government approval or registration, such direct
sublicense/license agreement shall not be binding or have any force or effect
until the required governmental approval or registration has been granted.
ARTICLE 10. ADCI AND PRODUCT MANUFACTURE
Wyeth-Ayerst shall have the exclusive right to make or have made all of its
requirements of ADCI and Product for development and commercial marketing
purposes throughout the Territory, based on its exclusive rights granted
pursuant to this Agreement.
10.1 Wyeth-Ayerst represents and warrants that its production and quality
control of ADCI and Product shall meet all appropriate standards set by the Food
and Drug Administration (FDA) and other appropriate regulatory agencies,
including those of Good Manufacturing Practices (GMP). Wyeth-Ayerst shall
maintain the registration of the manufacturing facilities with the appropriate
regulatory authorities insofar as necessary or advisable in order to maintain
the supply of ADCI.
10.2 Wyeth-Ayerst or its Affiliate shall manufacture, analyze and store the
Product in accordance with the Technological Data and by applying manufacturing,
analytical and storage instructions as defined by GMP standards.
ARTICLE 11. MARKETING OF THE PRODUCT
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11.1 Wyeth-Ayerst shall use [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] efforts to promote the
sales of the Product in the Territory.
11.2 As soon as practical before NDA approval, and by the first day of each
calendar year at the latest, Wyeth-Ayerst shall provide Neurogen with Wyeth-
Ayerst's good faith sales forecast for the forthcoming two (2) year period. Such
forecast shall include Wyeth-Ayerst's intended promotional activities for each
ensuing year of reference. Thereafter on an annual basis until the sixth year of
sales in major countries of the world, Wyeth-Ayerst will continue to provide to
Neurogen such rolling two (2) year sales forecasts.
11.3 In its written and verbal information to the medical profession and
patients, Wyeth-Ayerst shall represent the Product in a manner consistent with
the Technological Data.
ARTICLE 12. ROYALTIES
12.1 In consideration of the rights granted to Wyeth-Ayerst by Neurogen
under Article 2 hereof, Wyeth-Ayerst shall pay Neurogen a royalty for Product
sold in the Territory by Wyeth-Ayerst, Wyeth-Ayerst's Affiliates and all direct
and indirect sublicenses under such rights.
12.2 During the term of this Agreement, and subject to the potential
limitation set forth in this Article 12.2, Wyeth-Ayerst shall continue to pay to
Neurogen royalties equivalent to the specific percentages of the Net Sales of
Wyeth-Ayerst, its Affiliates and all direct and indirect sublicenses, as
indicated below, in the Territory:
[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION]
12.3 No royalties as set forth in this Article shall be payable on
intercompany sales transactions as between or among Wyeth-Ayerst or by sale of
Product by Wyeth-Ayerst to its distributors, the final vendee sale to the trade,
alone being used for the purposes of determining the royalty payments due
hereunder. The Product, subject to royalty payment, shall be deemed sold when
invoiced or if not invoiced, when the same shall he shipped or delivered to the
third party.
12.4 The royalties provided for herein shall accrue and be payable by
Wyeth-Ayerst in national currency, where earned, and shall be paid to Neurogen
within forty-five (45) days following the end of each calendar quarter in which
the royalty is earned, provided that:
a) if law or regulation permits the conversion of such currency into
U.S. dollars, the same shall be converted into
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the equivalent value in U.S. currency in accordance with Article 4.6 of the
NTIS Agreement and paid in U.S. currency to Neurogen;
b) if the conversion into and/or remittance of U.S. currency is
subject to administrative authorization, appropriate action will be taken
with the competent authorities applying diligent efforts to obtain such
authorization so as to pay the royalty in U.S. currency within the time
stipulated for payment of the royalty; and
c) if by law, regulations or fiscal policy of a country, conversion
into or transfer of U.S. currency is restricted or forbidden, the payment
of such royalty by Wyeth-Ayerst shall be made in U.S. Dollars out of
separate Wyeth-Ayerst funds; and
d) if any royalty payments are overdue, late charges will be applied
on the full amount of the late payment at the rates required by the
Department of Treasury and imposed on Neurogen's payments to NTIS, as
provided in Article 4.6 of the NTIS Agreement.
12.5 Each royalty payment shall be accompanied by a report in writing
showing for each country the period for which said payment is made, the Net
Sales of the Product during said period, the number of units sold (separately
listed according to the presentations and packing sizes) and the amount of
royalty accrued thereon. Within forty-five (45) days after each June 30th and
December 31st, Wyeth-Ayerst shall submit to Neurogen reports as required under
Article 4.5 of the NTIS Agreement.
12.6 Wyeth-Ayerst shall keep records as provided in Article 4.7 of the NTIS
Agreement and make them available for inspection by NTIS and Neurogen in
accordance with that Article 4.7.
12.7 All taxes, assessments, fees and charges, if any, levied under income
tax laws or regulations with respect to payments due to Neurogen hereunder
(other than such amounts levied with respect to the [CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION]
royalty owed by Neurogen to NTIS) shall be for the account of Neurogen and will
be deducted by Wyeth-Ayerst and Wyeth International Limited (serving as Wyeth-
Ayerst's agent for administering the rights and obligations of Wyeth-Ayerst
arising under this Agreement in countries outside the United States, its
territories, possessions, and the Commonwealth of Puerto Rico) and/or the Wyeth-
Ayerst Affiliates from such payments due to Neurogen. Amounts levied with
respect to the [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] royalty owed by Neurogen to NTIS shall be
for the account of Wyeth-Ayerst and will not be so deducted from royalty
payments due to Neurogen. Receipts for all such taxes, assessments, fees and
charges advanced by
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Wyeth-Ayerst, Wyeth-Ayerst International Inc., and/or the Wyeth-Ayerst
Affiliates to the taxing authorities will be secured by Wyeth-Ayerst, Wyeth
International, and/or the Wyeth-Ayerst Affiliates and sent to Neurogen.
ARTICLE 13. EXCHANGE OF EXPERIENCE
13.1 The parties hereto shall promptly and fully inform each other of any
side effects or adverse reactions or suspected side effects or adverse reactions
encountered by, or reported to them in respect of the Product. They shall confer
regarding the best measures to be taken in view thereof; provided, however, that
either party shall be free to report such adverse reactions or suspected side
effects to governmental agencies as required by law or regulation.
ARTICLE 14. IMPROVEMENTS
14.1 All Improvements to the Product owned by either party during the term
of the Agreement, if not patented, shall be disclosed to the other party and,
on Wyeth-Ayerst's request, Neurogen shall grant to Wyeth-Ayerst a royalty-free
license to utilize such Neurogen Improvements with regard to the manufacture,
use or sale of the Product. Such improvements which are patented by either party
during the term of the Agreement shall be disclosed to the other party and, on
Wyeth-Ayerst's request, during the term of this Agreement, Neurogen shall grant
to Wyeth-Ayerst a royalty-free license to utilize such Neurogen Improvements
with regard to the manufacture, use or sale of the Product for the term of the
Agreement. Prior to termination of the Agreement, the parties shall negotiate an
agreement (which shall survive this Agreement) for a license at a royalty not to
exceed [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] of Net Sales in the aggregate for any Product dominated
by such Improvement patent or patents for the balance of their term.
ARTICLE 15. PATENT RIGHTS
15.1 Neurogen shall retain full title to all Neurogen Patents licensed
hereunder, except that NTIS retains title to the patents covered by the NTIS
Agreement.
15.2 [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] shall he responsible for maintaining all Neurogen
Patents sublicensed and licensed to Wyeth-Ayerst hereunder, at its own expense.
[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION] shall be responsible for making payments to NTIS to
compensate NTIS for the prosecution and maintenance of the NTIS patents as
provided in Articles 4.2 and 4.10 of the NTIS Agreement. [CONFIDENTIAL PORTION
OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] shall
be responsible for prosecuting and maintaining at its own expense any patents
and patent applications that may hereafter be filed in its own name.
11
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15.3 Should Neurogen wish to abandon any licensed Neurogen Patent, it will
first offer Wyeth-Ayerst the opportunity of continuing at its own expense with
the maintenance of the patents involved.
15.4 Wyeth-Ayerst shall be entitled on a country basis to terminate its
sublicense or license to any Neurogen Patent and/or any Neurogen Improvement
patent which, in its sole opinion, it shall deem unnecessary to its commercial
interests with respect to Product; provided however that if Wyeth-Ayerst
continues to sell Product in any country where it has terminated its license or
sublicense hereunder, and so long as there is an unexpired or valid patent
licensed or sublicensed hereunder, Wyeth-Ayerst shall continue to pay royalties
as provided in Article 12, and that termination of payments to NTIS under
Article 4.2 of 4.10 of the NTIS Agreement with respect to any NTIS patent shall
be a breach of this Agreement. In the event Wyeth-Ayerst so terminates, Wyeth-
Ayerst shall not be further responsible for the maintenance of any such
terminated patent right(s).
15.5 With respect to any Neurogen Patent (other than the NTIS patents),
Neurogen will designate Wyeth-Ayerst as its agent for obtaining an extension of
such patent or governmental equivalent which extends the exclusivity of any of
the patent subject matter where available in any country in the Territory, or if
not feasible, at [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] option, permit Wyeth-Ayerst to file in
Neurogen's name or diligently obtain such extension for Wyeth-Ayerst or its
Affiliate(s) at [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION] expense. Furthermore, Neurogen agrees to
provide reasonable assistance, at no out-of-pocket expense, to facilitate Wyeth-
Ayerst's efforts to obtain any extensions of any Neurogen Patent, including the
NTIS patents.
ARTICLE 16. TRADEMARKS
16.1 During the term of development of Product using ADCI, and before
actual marketing of Product, Wyeth-Ayerst shall select trademark(s) for
Products.
16.2 Wyeth-Ayerst shall bear the cost of the filing and renewal of
trademark applications for the trademark(s) and the costs associated with any
other activities relating to perfecting rights in and to trademark(s) in any
country of the Territory. Wyeth-Ayerst shall own all rights, title, and interest
in and to the trademark(s) in its own name or that of its Affiliates during and
after the term of this Agreement.
ARTICLE 17. MARKINGS
17.1 Wyeth-Ayerst shall identify Product in accord with the provisions of
Article V of the NTIS Agreement.
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ARTICLE 18. ENFORCEMENT
18.1 Wyeth-Ayerst is cognizant of the obligations of Neurogen and the
United States Government, as the respective parties to the NTIS Agreement,
regarding the issue of elimination of possible infringement of the United States
Government-owned patents licensed to Neurogen under the NTIS Agreement. In the
event Wyeth-Ayerst becomes aware of possible infringement of any Neurogen Patent
licensed to Neurogen by the United States Government, Wyeth-Ayerst will then
proceed in accordance with Article VI of the NTIS Agreement as a sublicensee of
Neurogen, and in accordance with any modifications to the terms and conditions
of Article VI of the NTIS Agreement, which arise as a result of the modification
to the exclusivity term of the NTIS Agreement as a result of the July 20, 1996
NIH Amendment of the NTIS Agreement.
18.2 With respect to any Neurogen Patents owned directly by Neurogen or any
Neurogen Improvement patents, if Wyeth-Ayerst becomes aware of possible
infringement thereof, Wyeth-Ayerst will so notify Neurogen. Wyeth-Ayerst can by
itself take proceedings, in the name of Neurogen and/or Wyeth-Ayerst, to
restrain such infringement. Such proceedings are at Wyeth-Ayerst's sole expense,
and Neurogen shall reasonably cooperate, at Wyeth-Ayerst's expense, with Wyeth-
Ayerst in these proceedings. Any damages and costs recovered are for Wyeth-
Ayerst's sole benefit, except that Wyeth-Ayerst shall pay to Neurogen from such
damages and costs an amount equal to the royalties which would have been due
Neurogen if the infringing sales had been made by Wyeth-Ayerst or its
Affiliates. At said proceedings, Neurogen can be represented by its own counsel,
at Neurogen's own expense.
If Wyeth-Ayerst reasonably concludes that a license under any third party patent
is necessary in order to make, use or sell Products in the Territory, and if
neither Wyeth-Ayerst nor Neurogen are able to obtain such license on terms
reasonably acceptable to both, then Wyeth-Ayerst and Neurogen shall negotiate in
good faith to reach an agreement on the return of all or a portion of the
payments made, and the related shares of common stock issued, pursuant to
Article 8 and a termination of the licenses granted hereunder in the case where
Wyeth-Ayerst reasonably concludes that Wyeth-Ayerst, without such license, would
be precluded from selling Products in the Territory.
ARTICLE 19. INDEMNITY
19.1 Wyeth-Ayerst shall indemnify and hold Neurogen and its Affiliates
harmless, and hereby forever releases and discharges Neurogen, and its
Affiliates, from and against all claims, demands, liabilities, damages and
expenses, including attorneys' fees and costs (collectively, "Liabilities")
arising out of the development, manufacture, use or sale of Products hereunder
including but not limited to all Liabilities suffered or incurred in connection
with third party claims for personal injuries or any product recall; except in
each case to the extent such Liabilities resulted from
13
<PAGE>
gross negligence, recklessness or intentional misconduct of Neurogen. Neurogen
shall indemnify and hold Wyeth-Ayerst and its Affiliates and direct
licensees/sublicenses harmless and forever release and discharge Wyeth-Ayerst
and its Affiliates and direct licensees/sublicenses from and against all claims,
demands, liabilities, damages and expenses, including attorney's fees and costs
(collectively, "Liabilities") arising out of any gross negligence, recklessness
or intentional misconduct by Neurogen during Neurogen's development of ADCI up
to the effective date of this Agreement, including all toxicology and other
preclinical studies done by Neurogen or its agents and subcontractors, including
but not limited to Liabilities suffered or incurred in connection with third
party claims for personal injuries or any product recall. The provisions of
this Article 19 shall remain in force indefinitely following the term of this
Agreement.
ARTICLE 20. CONFIDENTIALITY
20.1 All confidential information relating to each of ADCI and Product made
available by or on behalf of Neurogen to Wyeth-Ayerst or by Wyeth-Ayerst to
Neurogen shall be kept secret and confidential by Wyeth-Ayerst and Neurogen,
respectively, and, except as hereinafter specifically provided, shall not be
disclosed other than to the respective directors, officers and employees of
Wyeth-Ayerst and Neurogen, and, if and to Neurogen's and Wyeth-Ayerst's
consultants and manufacturing agents engaged directly or indirectly in its
operations relating to ADCI and Product, who have first been properly
instructed, respectively, by Wyeth-Ayerst and Neurogen to maintain such
information in confidence.
20.2 Each of Wyeth-Ayerst and Neurogen shall take all such steps as are
reasonable necessary to ensure that its directors, officers and employees and
those of its Affiliates, consultants, and manufacturing agents to whom it shall
disclose any said information shall not disclose the same to any unauthorized
person.
20.3 Either party, however, may disclose information received from the
other
a) to the extent necessary to obtain governmental approvals on the
part of Wyeth-Ayerst, Neurogen, and their respective Affiliates;
b) to the extent necessary to inform the medical profession,
pharmacists and the consumers of the Product;
c) if the information, according to the records of the receiving
party, was known to that party before receipt thereof from or on behalf of
the divulging party;
d) if the information was in the public domain at the time of its
receipt, or entered the public domain thereafter through no fault of the
receiving party hereunder; and
14
<PAGE>
e) if the information, subsequent to its receipt, was also disclosed
to the recipient party hereunder by a third party who was under no
obligation of confidentiality to the divulging party hereunder.
20.4 The provisions of this Article shall remain in force during the period
of this Agreement and for a further period of five (5) years after the
termination of this Agreement.
ARTICLE 21. PUBLICITY
21.1 The parties to this Agreement agree that public announcement of the
execution of this Agreement shall be substantially in the form of the press
release attached as Exhibit 3 hereto, and thereafter, each party shall be
entitled to make and publish any public statement consistent with the contents
thereof. Neurogen and Wyeth-Ayerst will jointly discuss and agree on any
statement to the public regarding this Agreement or any aspect of this
Agreement, subject in each case to disclosure otherwise required by law or
regulation as determined in good faith by each party. The terms of this
agreement may not be disclosed except to 1) government agencies where required
by law, or 2) legal or financial advisors and accountants of a party hereto.
ARTICLE 22. TERM AND TERMINATION
22.1 This Agreement shall come into effect on the date first above
written. It shall continue in full force and effect in each country of the
Territory for the longer of (a) [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] or (b) [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] each country and the obligation to pay royalties according to
Article 11 shall not be extended by virtue of patentable Improvements to the
Product which shall be made known by Neurogen to Wyeth-Ayerst. Upon expiration
of this Agreement with respect to any country of the Territory, Wyeth-Ayerst
shall be deemed to have a fully-paid, royalty-free (except with respect to
royalties payable on Improvements covered by unexpired Neurogen patents) license
to the Technological Data to make or have made, use or sell ADCI and Product as
well as to freely utilize all data generated hereunder or received from Neurogen
by Wyeth-Ayerst without Wyeth-Ayerst's having further obligation to Neurogen.
22.2 Wyeth-Ayerst shall be free to terminate this Agreement in its own
discretion at any time upon 60 days' written notice.
22.3 Either party hereto shall be entitled to terminate this Agreement
immediately by written notice to the other party if the other party shall commit
a breach of any material condition herein contained and shall not within sixty
(60) days from receipt of notice of such breach by the complaining party take
steps to remedy the same (if capable of remedy), offer full compensation
15
<PAGE>
therefor, or submit a plan for rectification if the alleged breach cannot in
fact be rectified within the 60-day period.
22.4 This Agreement may be terminated at once by either party giving notice
to the other if the other is insolvent or has committed an act of bankruptcy or
an offer is made or resolution passed for the winding up of either party or if
either party shall have disposed of its business or principal interest or been
sequestrated or confiscated.
22.5 Upon termination of this Agreement pursuant to Articles 22.2, 22.3,
22.4, or prior to its coming to full term, Wyeth-Ayerst undertakes:
a) to return to Neurogen or to a company designated by Neurogen all
Technological Data disclosed by Neurogen to Wyeth-Ayerst within thirty (30)
days and without charge,
b) to furnish to Neurogen or to a company designated by Neurogen all
Technological Data which Wyeth-Ayerst may have obtained or compiled on ADCI
and the Product since the beginning of Wyeth-Ayerst's evaluation, and,
c) not to use directly or indirectly all said Technological data for
the benefit of itself or of any third party in any way whatsoever without
prior written consent of Neurogen.
22.6 In the event that this Agreement is terminated prior to its full term,
either voluntarily by Wyeth-Ayerst pursuant to Article 22.2, or involuntarily
pursuant to Article 22.3 or 22.4, Wyeth-Ayerst shall authorize the transfer of
all governmental approvals for the Product to Neurogen or a third party
designated by Neurogen.
22.7 Upon the termination by Neurogen of this Agreement for cause or upon
Wyeth-Ayerst's voluntarily relinquishing its rights under this Agreement,
Neurogen, its Affiliates and/or Neurogen's other licensees shall continue to
have the right to use any of Wyeth-Ayerst's Technological Data and Patents in
the Territory.
22.8 Termination of this Agreement shall not relieve either party of any
accrued rights or obligations hereunder, including but not limited to accrued
rights and obligations under Articles 3, 5, 8, 12,19 or 20.
ARTICLE 23. HART-SCOTT-RODINO DETERMINATION
23.1 This Agreement shall be binding on the parties, but shall have no
force or effect until either Wyeth-Ayerst determines that a filing under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR) is not required or if
Wyeth-Ayerst determines that such a filing is required, the waiting period shall
have
16
<PAGE>
expired or been terminated. If so filed, and if an HSR determination by the U.S.
Government shall hold that the terms and conditions of this Agreement are
invalid, then Neurogen shall immediately return all payments made by Wyeth-
Ayerst under Article 8 of this Agreement, provided, however, if the objections
registered by the U.S. Government, in Wyeth-Ayerst's determination, may be
resolved, the parties shall, in good faith, negotiate new terms and conditions
related to this Agreement, to the extent possible, before termination of this
Agreement and return of payments under Article 8.
ARTICLE 24. FORCE MAJEURE
24.1 In the event that the performance of this Agreement or of any
obligation hereunder, other than payment of money as herein provided by either
party hereto is prevented, restricted or interfered with by reason of any cause
not within the control of the respective party, and which, could not by
reasonable diligence have been avoided by such party, the party so affected,
upon giving prompt notice to the other party, as to the nature and probable
duration of such event shall he excused from such performance of the extent and
for the duration of such prevention, restriction or interference, provided that
the party so affected shall use its reasonable efforts to avoid or remove such
cause of non-performance and shall fulfill and continue performance hereunder
with the utmost dispatch whenever and to the extent such cause or causes are
removed.
24.2 For the purpose of the preceding subsection but without limiting the
generality thereof the following shall be considered as not within the control
of the respective party: acts of God, acts of omissions of a governmental
agency, compliance with the request, recommendations, rules, regulations or
orders of any governmental authority or any officer, department, agency or
instrument thereof, flood, storm, earthquake, fire, war, riots,
insurrection, accidents, acts of the public enemy, invasion, quarantine
restrictions, strike, lockout, differences with workmen, embargoes, delays or
failures in transportation and acts of similar nature.
ARTICLE 25. NON-ASSIGNABILITY
25.1 Except with respect to Affiliates, this Agreement and the rights and
obligations hereunder shall not be assignable by either of the parties without
the previous written consent of the other party.
ARTICLE 26. AMENDMENTS
26.1 This Agreement constitutes the entire agreement between the parties
and, except as expressly permitted, the provisions of this Agreement shall not
be changed or amended except by an instrument in writing.
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<PAGE>
ARTICLE 27. SEVERABILITY
27.1 Should any provision of this Agreement become or prove to be null and
void, this will be without effect on the validity of the Agreement as a whole.
Both parties will, however, endeavor to replace the void provisions by a valid
one which in its commercial effect will satisfy the spirit and intention of the
Agreement.
ARTICLE 28. GOVERNING LAWS
28.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to conflict of laws
principles.
ARTICLE 29. WYETH-AYERST INTERNATIONAL INC.
29.1 Wyeth-Ayerst hereby appoints Wyeth-Ayerst International Inc., a New
York Corporation, with its principal offices at St. Davids Center, 150 Radnor-
Chester Road, St. Davids, Pennsylvania 19087 as its agent for purpose of
administering the rights and obligations of Wyeth-Ayerst for all activities
attendant to the exercise of the rights accruing to Wyeth-Ayerst hereunder for
all counties of the world, aside from the United States of America, its
territories, possessions, and the Commonwealth of Puerto Rico, including but not
limited to the collection, payment and reporting of royalties accrued on sales
in countries under the jurisdiction of Wyeth International Limited as well as
the manufacture, registration, sale or distribution of the Product as covered by
the terms of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
be duly executed by their duly authorized officers as of the day, month, and
year first above written.
AMERICAN HOME PRODUCTS CORPORATION NEUROGEN CORPORATION
BY: GERALD A. JIBILIAN BY: HARRY H. PENNER, JR.
-------------------------------- ---------------------------------
The undersigned Wyeth-Ayerst International Inc., hereby accepts the designation
and appointment as agent for American Home Products Corporation as set forth in
Article 27 hereof.
WYETH-AYERST INTERNATIONAL INC.
BY: PHILIP A. JOHNSON
---------------------------
19
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EXHIBIT 10.2
CONFIDENTIAL TREATMENT REQUESTED
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT is made as of the 25th day of November, 1996,
by and between Neurogen Corporation, a Delaware corporation (the "Company"), and
American Home Products Corporation, a Delaware corporation acting through its
Wyeth-Ayerst Laboratories Division (the "Investor").
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Purchase and Sale of Shares and Future Installments.
---------------------------------------------------
1.1 Sale and Issuance of Shares and Future Installments.
---------------------------------------------------
(a) First Installment. Subject to the terms and conditions of this
-----------------
Agreement, the Company agrees to sell and issue to Investor at the Closing (as
defined below) the number of whole shares rounded up to the nearest share of the
Company's Common Stock (as defined below) (the "Shares") equal to [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION] and Investor agrees to pay $750,000 to the Company at the Closing
(the "First Installment"). Any fractional share which is rounded up as a result
of such calculation shall be sold and issued to Investor at no cost.
(b) Second Installment. Subject to the terms and conditions of this
------------------
Agreement, Investor agrees to pay [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] (the "Second
Installment") to the Company and the Company agrees to sell, issue and promptly
deliver to Investor upon payment of the Second Installment the number of Shares
equal to [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] (the "Second Installment Market Price"), provided,
however, that if such sale (when aggregated with the Shares sold in the First
Installment) would result in the Investor owning 20% or more of the Company's
outstanding capital stock, the Company shall sell, and the Investor shall buy,
at the Second Installment Market Price provided for in this Section 1.1(b), such
number of Shares that would make the Investor's aggregate ownership of the
Company's outstanding capital stock equal to not more than 19.9%. Any factional
share which is rounded up as a result of such calculation shall be sold and
issued to Investor at no cost. Investor shall pay the Second Installment to the
Company if and when the milestone set forth in Section 8.1(b)(i) of the License
Agreement between the parties hereto and of even date herewith (the "License
Agreement") is achieved (the "First Milestone"). The Investor shall provide
written notice to the Company of the achievement of the First Milestone within
thirty (30) days of such achievement. Promptly upon the Company's receipt of
such
1
<PAGE>
notice, the parties will select a mutually agreeable date to close the Second
Installment share purchase (the "Second Closing"), which date shall be no more
than thirty (30) days after the Company's receipt of the notice described in the
immediately preceding sentence. Investor shall deliver the Second Installment
to the Company in accordance with Section 1.2.
(c) Third Installment. Subject to the terms and conditions of this
-----------------
Agreement, Investor agrees to pay [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION] (the "Third
Installment") to the Company and the Company agrees to sell, issue and promptly
deliver to Investor upon payment of the Third Installment the number of Shares
equal to [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION] (the "Third Installment Market Price"), provided,
however, that if such sale (when aggregated with the Shares sold in the First
and Second Installments) would result in the Investor owning 20% or more of the
Company's outstanding capital stock, the Company shall sell, and the Investor
shall buy, at the Third Installment Market Price provided for in this Section
1.1(b), such number of Shares that would make the Investor's aggregate ownership
of the Company's outstanding capital stock equal to not more than 19.9%. Any
factional share which is rounded up as a result of such calculation shall be
sold and issued to Investor at no cost. Investor shall pay the Third Installment
to the Company when the milestone set forth in Section 8.1(b)(ii) of the License
Agreement is achieved (the "Second Milestone"). The Investor shall provide
written notice to the Company of the achievement of the Second Milestone within
thirty (30 days of such achievement. Promptly upon the Company's receipt of such
notice, the parties will select a mutually agreeable date to close the Third
Installment share purchase (the "Third Closing"), which date shall be no more
than thirty (30) days after the Company's receipt of the notice described in the
immediately preceding sentences. Investor shall pay the Third Installment in
accordance with Section 1.2.
[CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND
EXCHANGE COMMISSION]
1.2 Closing. The closing for the purchase and sale of the
-------
Shares required to be purchased and sold pursuant to the First Installment shall
take place at the offices of Investor, 5 Giralda Farms, Madison, New Jersey
07940, on November 20, 1996, or at such other time and place as the Company and
Investor mutually agree upon orally or in writing (which shall be designated as
the "Closing"). At the Closing the Company shall deliver to Investor a
certificate representing the Shares. In consideration of such delivery,
Investor shall make payment for the Shares by delivery to the Company of the
share purchase price in immediately available funds in the form of certified or
cashier's check payable to the Company's order or by wire transfer of funds to
the Company's designated bank account (which
2
<PAGE>
shall be designated in writing no less than 48 hours prior to Closing). Such
deliveries and the conditions set forth in this Section 1.2 shall likewise apply
to the Second Installment and the Third Installment.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to Investor that:
2.1 Organization, Good Standing and Qualification. The Company is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would be reasonably expected to
have a material adverse effect on the business, operations, properties, assets,
prospects or condition (financial or otherwise) of the Company (a "Material
Adverse Effect"). Except as disclosed in the Form 10-K (as defined herein), the
Company has no subsidiaries.
2.2 Authorization. The Company has all requisite corporate power and
--------------
authority (i) to execute, deliver and perform its obligations under this
Agreement and the License Agreement between the parties hereto and dated of even
date herewith (the "License Agreement") (ii) to issue the Securities (as defined
herein) in the manner and for the purpose contemplated by this Agreement, and
(iii) to execute, deliver and perform its obligations under all other agreements
and instruments executed and delivered by it pursuant to or in connection with
this Agreement and the License Agreement. All corporate action on the part of
the Company, its officers, directors and shareholders necessary for the
authorization, execution and delivery of this Agreement, the License Agreement,
the performance of all obligations of the Company hereunder and thereunder and
the authorization, issuance (or reservation for issuance) and delivery of the
Shares, being sold and to be sold hereunder has been taken or will be taken
prior to each Closing, and this Agreement and the License Agreement constitute
valid and legally binding obligations of the Company, enforceable in accordance
with their respective terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
2.3 Valid Issuance of Shares. The Shares which are being purchased
------------------------
hereunder, when issued, sold and delivered in accordance with the terms hereof
for the consideration expressed herein, will be duly and validly issued, fully
paid and nonassessable and, based in part upon the representations of Investor
in this Agreement, the Shares will be issued in compliance with all applicable
federal and state securities laws
3
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and will be approved for quotation on the Nasdaq Stock Market's National Market
(the "Nasdaq National Market").
2.4 Capitalization. The authorized capital stock the Company consists of
--------------
(a) 30,000,000 shares of Common Stock, par value $.025 per share (the "Common
Stock"), of which, as of September 30, 1996, fourteen million two hundred two
thousand four hundred eighty two were issued and outstanding, and (b) 2,000,000
shares of Preferred Stock, par value $.025 per share (the "Preferred Stock"),
none of which were outstanding, as of September 30, 1996, and, except for the
transactions contemplated hereby, since September 30, 1996, the Company has not
issued any shares of Common Stock or Preferred Stock, granted any option (except
for stock options granted under the Company's employee consultant and director
stock option plans), warrants, rights (including conversion or preemptive
rights, except for stock purchased under the Company's stock purchase plans), or
similar rights to any person or entity to purchase or acquire any rights with
respect to any shares of capital stock of the Company. The outstanding shares
of Common Stock have been duly authorized and validly issued and are fully paid
and nonassessable; and none of the outstanding shares of Common Stock was issued
in violation of the preemptive rights, if any, of any stockholder of the
Company.
2.5 SEC Reports. (a) The Company has heretofore filed with the
-----------
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), all reports and other
documents required to be filed, including an Annual Report on Form 10-K for the
year ended December 31, 1995 (the "Form 10-K"). None of such reports, or any
other reports, documents, registration statements, definitive proxy materials
and other filings required to be filed with the SEC under the rules and
regulations of the SEC ("SEC Filings") contains any untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary in order to make the statements made, at the time and in light of the
circumstances under which they were made, not misleading.Since December 31,
1995, the Company has timely filed with the SEC all SEC Filings and all such SEC
Filings complied with all applicable requirements of the Securities Act of 1933,
as amended (the "Securities Act"), and the Exchange Act, as applicable and the
rules thereunder. The audited financial statements of the Company included or
incorporated by reference in the Form 10-K and the unaudited financial
statements contained in the quarterly reports on Form 10-Q each have been
prepared in accordance with such acts and rules and with United States generally
accepted accounting principles applied on a consistent basis throughout the
periods indicated therein and with each other, except as may be indicated
therein or in the notes thereto and fairly present the financial condition of
the Company as at the dates thereof and the results of its operations and
statements of cash flows for the periods then ended, subject, in the case of
unaudited interim financial statements, to normal year-end adjustments. Except
as reflected in such financial
4
<PAGE>
statements, the Company has no material liabilities, absolute or contingent,
other than ordinary course liabilities incurred since the date of the last such
financial statements in connection with the conduct of the business of the
Company.
(b) Since September 30, 1996, and except as previously disclosed to
the Investor in writing there has been no:
(i) change in the assets, liabilities, financial condition or
operating results of the Company from that reflected in the Form 10-K,
except changes in the ordinary course of business that have not,
individually or in the aggregate, resulted in and are not reasonably
expected to result in a Material Adverse Effect (and except that the
Company expects to continue to incur substantial operating losses, which
may be material);
(ii) damage, destruction or loss, whether or not covered by insurance,
materially and adversely affecting the business, properties or financial
condition of the Company (and except that the Company expects to continue
to incur substantial operating losses, which may be material);
(iii) waiver or compromise by the Company of a material right or of a
material debt owed to it;
(iv) satisfaction or discharge of any lien, claim or encumbrance by
the Company, except in the ordinary course of business and which is not
material to the business, properties or financial condition of the Company
(as such business is presently conducted);
(v) material change to a material contract or arrangement by which the
Company or any of its assets is bound or subject;
(vi) sale, assignment or transfer to a third party that is not an
Affiliate (as hereafter defined) of any material patents, trademarks,
copyrights, trade secrets or other intangible assets for compensation which
is less than fair value;
(vii) mortgage, pledge, transfer of a security interest in, or lien,
created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable; or
(viii) declaration, setting aside or payment or other distribution in
respect of any of the Company's capital stock, except any direct or
indirect redemption, purchase or other acquisition of any such stock by the
Company; or
5
<PAGE>
For purposes of this Section 2.5 of the Agreement, the term
"Affiliate" shall mean, with respect to any person, any person which directly or
indirectly through stock ownership or through other arrangements either
controls, is controlled by or is under common control with such person;
provided, however, that for purposes of this Agreement the term "Affiliate"
- -------- -------
shall not include subsidiaries or other entities in which a person owns a
majority of the ordinary voting power to elect a majority of the board of
directors or other governing board but is restricted from electing such majority
by contract or otherwise, until such time as such restrictions are no longer in
effect.
2.6 Contracts. Except for the Company's default under Section 7.5 of the
---------
NTIS Agreement as defined in the License Agreement, with respect to each of the
material contracts, commitments and agreements of the Company, the Company is
not, and has no actual knowledge that any other party is, in default under or in
respect of any such material contract, commitment or agreement, the result of
which default would have a Material Adverse Effect. No party to any such
material contract, commitment or agreement, would be authorized or permitted to
terminate its obligations thereunder by reason of the execution and delivery of
this Agreement or any of the transactions contemplated herein.
2.7 Compliance. Except as disclosed in the SEC Filings, the Company has
----------
complied with, and is not in default under or in violation of its Certificate of
Incorporation, By-laws or any and all laws, ordinances and regulations or other
governmental restrictions, orders, judgments or decrees directly applicable to
the Company, where any such default or violation would have a Material Adverse
Effect. Except as disclosed in the SEC Filings, the Company has not received
notice of any possible or actual violation of any applicable law, ordinance,
regulation, or order, the result of which violation would be reasonably expected
to have a Material Adverse Effect. Neither the execution and delivery of this
Agreement or the License Agreement nor the consummation of the transactions
contemplated hereby or thereby will violate, conflict with or result in a breach
or result in the acceleration or termination of, or the creation in any third
party of the right to accelerate, terminate, modify or cancel, any material
indenture, contract, lease, sublease, loan agreement, note or other material
obligation or liability to which the Company is a party or is bound or to which
any of its assets are subject.
2.8 Compliance with Other Instruments. The execution, delivery and
---------------------------------
performance of this Agreement and of the transactions contemplated hereby will
not result in any violation of or constitute, with or without the passage of
time and the giving of notice, either a default under any provision of its
Certificate of Incorporation or By-laws of the Company or any material provision
of any material indenture, agreement or other instrument by which the Company or
any of its properties or
6
<PAGE>
assets is bound, or result in the creation or imposition of any lien, or
encumbrance upon any of the material properties or assets of the Company or
result in the acceleration or termination of, or the creation in any party of,
the right to accelerate, terminate, modify or cancel, any indenture, lease,
sublease, loan agreement, note or other obligation or liability to which the
Company is a party or is bound.
2.9 Governmental Consents. Except for any notification required to be
---------------------
filed or supplied pursuant to the Hart-Scott Rodino Antitrust Improvements Act
of 1976, as amended (the "HSR Act"), and except as set forth in Schedule 2.9, no
------------
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state or local
governmental authority is required on the part of the Company in connection with
the Company's valid execution, delivery and performance of this Agreement and
the License Agreement. The filings under state securities laws, if any, will be
effected by the Company at its cost within the applicable stipulated statutory
period.
2.10 Litigation. Except at set forth in Schedule 2.10, there is no action,
---------- -------------
suit, proceeding or investigation pending or currently threatened against the
Company which questions the validity of this Agreement, the License Agreement,
or the right of the Company to enter into such instruments or to consummate the
transactions contemplated hereby or thereby. There is no action, suit,
proceeding or investigation pending or currently threatened against the Company,
which singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would materially adversely affect the business, properties,
operations, financial condition, income or business prospects of the Company as
presently being conducted.
2.11 Permits. Except as disclosed in SEC Filings, the Company has, and is
-------
not in default in any material respect under, all governmental franchises,
permits, licenses, and any similar authority necessary for the conduct of its
business as now being conducted by it or as proposed to be conducted by it, the
lack of which would be reasonably expected to have a Material Adverse Effect.
2.12 Taxes. The Company has filed all federal, state and other tax returns
-----
which are required to be filed and has heretofore paid all taxes which have
become due and payable, except where the failure to file or pay would not be
reasonably expected to have a Material Adverse Effect. The provision for taxes
on the balance sheet as of December 31, 1995 is sufficient for the payment of
all material accrued and unpaid taxes of the Company with respect to the period
then ended.
2.13 Title. Except as otherwise set forth in the SEC Filings, the Company
-----
has good and marketable title to all
7
<PAGE>
material property and assets reflected in the financial statements to the Form
10-K (or as described in the SEC Filings).
2.14 Intellectual Property. Except as disclosed in the SEC Filings, to the
---------------------
knowledge of the Company and in the Company's reasonable opinion, the Company
owns, or possesses adequate rights to use, all of their patents, patent rights,
trade secrets, know-how, proprietary techniques, including processes and
substances, trademarks, service marks, trade names and copyrights described or
referred to in the SEC Filings or owned or used by it or which is necessary for
the conduct of its business as presently conducted, except where the failure to
own or possess such patents, patent rights, trade secrets, know-how, proprietary
techniques, including processes and substances, trademarks, service marks, trade
names and copyrights would not have a Material Adverse Effect. Except as
disclosed in the SEC Filings, the Company has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
patents, patent rights, trade secrets, know-how, proprietary techniques,
including processes and substances, trademarks, service marks, trade names and
copyrights which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would be reasonably expected to have a Material
Adverse Effect.
2.15 Nasdaq National Market Designation. The Common Stock of the Company
----------------------------------
is currently included in the Nasdaq National Market and the Company knows of no
reason or set of facts which is likely to result in the termination of the
Common Stock in the Nasdaq National Market or the inability of such stock to
continue to be included in the Nasdaq National Market. Nothing in this Section
shall be interpreted to preclude the Company from listing its Common Stock on a
national securities exchange in lieu of the Nasdaq National Market.
3. Representations and Warranties of Investor. Investor hereby
------------------------------------------
represents and warrants that:
3.1 Organization, Good Standing and Qualification. Investor is a
---------------------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted.
3.2 Authorization. All corporate action on the part of Investor, its
-------------
officers and directors necessary for the authorization, execution and delivery
of this Agreement and the License Agreement, the performance of all obligations
of Investor hereunder and thereunder has been taken or will be taken prior to
each Closing, and this Agreement and the License Agreement, constitute valid and
legally binding obligations of Investor enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting the
8
<PAGE>
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief, or other equitable
remedies.
3.3 Purchase Entirely for Own Account. This Agreement is made with
---------------------------------
Investor in reliance upon Investor's representation to the Company, which by
Investor's execution of this Agreement Investor hereby confirms, that the Shares
and the shares which are to be purchased by Investor pursuant the Second
Installment and Third Installment will be acquired for investment for Investor's
own account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that Investor has no present intention of
selling, granting any participation in, or otherwise distributing the same in
violation of the Securities Act of 1933, as amended, or applicable state
securities or blue sky laws. By executing this Agreement, Investor further
represents that Investor does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to such
person or to any third person, with respect to any of the Securities. Investor
represents that it has full power and authority to enter into this Agreement.
3.4 Investment Experience. Investor acknowledges that it is able to
---------------------
fend for itself, can bear the economic risk of its investment and has such
knowledge and experience in financial or business matters that it is capable of
evaluating the merits and risks of the investment in the Securities. Investor
also represents it has not been organized for the purpose of acquiring the
Securities. The Company has supplied to the Investor information concerning the
Company and the Investor has been given the opportunity to review each of the
Company's books and records and make such inquiries of the Company's officers,
as the Investor has in its discretion deemed appropriate in connection with the
transactions contemplated in this Agreement.
3.5 Accredited Investor. Investor is an "accredited investor" within
-------------------
the meaning of SEC Rule 501 of Regulation D, as presently in effect.
3.6 Restricted Securities. Investor understands that the Securities
---------------------
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such Securities may be resold without registration under
the Securities Act, only in certain limited circumstances. In this connection,
Investor represents that it is familiar with SEC Rule 144, as presently in
effect, and understands the resale limitations imposed thereby and by the
Securities Act.
9
<PAGE>
3.7 Legends. It is understood that the certificates evidencing the
-------
Securities may bear one or all of the following legends:
(a) "These securities have not been registered under the Securities
Act of 1933, as amended, (the "Act") or the securities laws of any other
jurisdiction. They may not be sold, offered for sale, pledged or hypothecated
in the absence of a registration statement in effect with respect to the
securities under such Act or an opinion of counsel satisfactory to Neurogen
Corporation that such registration is not required or unless sold pursuant to
Rule 144 of such Act."
To the extent that such legends are no longer applicable, the Company
shall cause its transfer agent to remove the legends upon a permitted transfer
by Investor.
3.8 Governmental Consents. Other than matters contemplated by this
---------------------
Agreement and the License Agreement and any notifications required to be filed
or supplied pursuant to the HSR Act, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority is required on
the part of Investor in connection with Investor's valid execution, delivery and
performance of this Agreement, the License Agreement or the issuance of the
Shares which are to be purchased by Investor hereunder.
4. Filings and Authorizations. The Company and the Investor will, as
--------------------------
promptly as practicable, file or supply, or cause to be filed or supplied, all
notifications and information required to be filed or supplied pursuant to the
HSR Act in connection with the transactions contemplated by this Agreement. The
Company and the Investor, as promptly as practicable, (a) will make, or cause to
be made, all such other filings and submissions under laws, rules and
regulations applicable to them as may be required for them to consummate the
transactions contemplated hereby in accordance with the terms of this Agreement,
and (b) will use reasonable efforts to obtain, or cause to be obtained, all
authorizations, approvals, consents and waivers from all governmental
authorities necessary to be obtained by them in order for them so to consummate
such transactions.
5. Conditions to Obligation of Each Party to Effect the Transactions
-----------------------------------------------------------------
Contemplated by this Agreement. The obligation of each party to effect the
- ------------------------------
transactions contemplated by this Agreement shall be subject to the fulfillment
at or prior to each Closing Date of the following conditions:
(a) all governmental and other consents and approvals, if any,
necessary to permit the consummation of the transactions contemplated by this
Agreement shall have been obtained and any waiting period (and any extension
thereof) applicable to the
10
<PAGE>
consummation of the Agreement under the HSR Act shall have expired or been
terminated; and
(b) No stop order or other order enjoining the sale of the Shares to
be purchased and sold at each Closing shall have been issued and no proceedings
for such purpose shall be pending or, to the knowledge of the Company,
threatened by the SEC or any commissioner of corporations or similar officer of
any state having jurisdiction over this transaction and no preliminary or
permanent injunction or other order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory or administrative agency
or commission nor any statute, rule, regulation or executive order promulgated
or enacted by any governmental authority shall be in effect that would restrain
or otherwise prevent the consummation of the transactions contemplated by the
Agreement.
6. (a) Conditions of Investor's Obligations at First Closing. The
-----------------------------------------------------
obligations of Investor under subsection 1.1 of this Agreement are subject to
the fulfillment on or before the First Closing of each of the following
conditions, the waiver of which shall not be effective without the consent of
Investor thereto:
(i) Representations and Warranties. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
First Closing with the same effect as though such representations and warranties
had been made on and as of the date of the First Closing.
(ii) Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the First Closing,
and all corporate or other proceedings in connection with the transactions
contemplated at the First Closing and all documents incident thereto shall be
reasonably satisfactory in form and in substance to Investor.
(iii) Compliance Certificate. An officer of the Company
shall have delivered to Investor a certificate certifying that (a) the
conditions specified in Sections 6(a)(i) and 6(a)(ii) have been fulfilled.
(iv) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at the First Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investor and they shall have received all such counterpart original
and certified or other copies of such documents as they may reasonably request.
(v) The License Agreement. The Company and Investor shall have
entered into the License Agreement of even date herewith.
11
<PAGE>
(vi) Opinion of Company Counsel. Investor shall have received an
opinion from Cooley Goodward L.L.P., counsel to the Company, dated as of the
First Closing, in the form of Exhibit A.
(vii) Certificate. The Company shall have furnished to the
Investor a certificate, signed by an authorized officer of the Company,
certifying: (i) the due organization and good standing of the Company; (ii) the
corporate resolutions of the Company authorizing the transactions contemplated
by this Agreement; and (iii) the incumbency of officers of the Company executing
this Agreement and the other instruments or certificates delivered upon the
First Closing.
(viii) Share Certificates. The Company shall have furnished to the
Investor a certificate or certificates representing the Shares (free and clear
of all liens, claims and other encumbrances except as otherwise provided herein)
to be purchased and sold at the First Closing, accompanied by the requisite
stock transfer tax stamps or funds for the purchase thereof;
(ix) Other Documentation. The Company shall have furnished to the
Investor such other instruments and documents, in form and substance reasonably
acceptable to the Investor, as may be necessary to effect the First Closing.
(b) Conditions of Investor's Obligations at the Second and Third
------------------------------------------------------------
Closings. The obligations of Investor under subsection 1.1 of this Agreement
- --------
are subject to the fulfillment on or before the Second and Third Closing of each
of the following conditions, the waiver of which shall not be effective without
the consent of Investor thereto:
(i) Representations and Warranties. The representations and
warranties of the Company contained in Sections 2.1 through 2.3, 2.5(a), 2.7
through 2.9, 2.11 and 2.12 shall be true on and as of each of the Second and
Third Closings with the same effect as though such representations and
warranties had been made on and as of the date of each such Closing;
(ii) Performance. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before each such Closing,
and all corporate or other proceedings in connection with the transactions
contemplated at each such Closing and all documents incident thereto shall be
reasonably satisfactory in form and in substance to Investor;
(iii) Compliance Certificate. An officer of the Company shall have
delivered to Investor a certificate, dated as
12
<PAGE>
of each of the dates of the Second and Third Closings, certifying that (a) the
conditions specified in Sections 6(a)(i) and 6(a)(ii) have been fulfilled;
(iv) Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated at each such Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investor and they shall have received all such counterpart original
and certified or other copies of such documents as they may reasonably request;
(v) Opinion of Company Counsel. Investor shall have received an
opinion, from counsel to the Company (which counsel shall be reasonably
satisfactory to the Investor), dated as of each of the dates of such Closings;
(vi) Certificate. The Company shall have furnished to the Investor
at each such Closing a certificate, dated as of each of the dates of the Second
and Third Closings, signed by an authorized officer of the Company, certifying:
(i) the due organization and good standing of the Company; (ii) the corporate
resolutions of the Company authorizing the transactions contemplated by this
Agreement; and (iii) the incumbency of officers of the Company executing this
Agreement and the other instruments or certificates delivered upon each such
Closing;
(vii) Share Certificates. The Company shall have furnished to the
Investor at each such Closing a certificate or certificates representing the
Shares (free and clear of all liens, claims and other encumbrances except as
otherwise provided herein) to be purchased and sold at each such Closing,
accompanied by the requisite stock transfer tax stamps or funds for the purchase
thereof;
(viii) [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION]; and
(ix) Other Documentation. The Company shall have furnished to the
Investor at each such Closing such other instruments and documents, in form and
substance reasonably acceptable to the Investor, as may be necessary to effect
each such Closing.
7. Conditions of the Company's Obligations at Each Closing. The obligations
-------------------------------------------------------
of the Company to Investor under this Agreement are subject to the fulfillment
on or before each Closing of each of the following conditions by Investor:
7.1 Representations and Warranties. The representa tions and
------------------------------
warranties of Investor contained in Section 3 shall be true on and as of each
Closing with the same effect as though such representations and warranties had
been made on and as of each Closing.
13
<PAGE>
7.2 Performance. Investor shall have performed and complied with all
-----------
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before each Closing, and
all corporate or other proceedings in connection with the transactions
contemplated at each Closing and all documents incident thereto shall be
reasonably satisfactory in form and in substance to the Company.
7.3 Compliance Certificate. An officer of Investor shall have
----------------------
delivered to the Company a certificate certifying that the conditions specified
in Sections 7.1 and 7.2 have been fulfilled.
7.4 Payment of Purchase Price. Investor shall have delivered the
-------------------------
purchase price required to be paid at each Closing.
7.5 License Agreement. The Company and Investor shall have entered
-----------------
into the License Agreement of even date herewith.
7.6 [CONFIDENTIAL PORTION OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION].
7 6 Other Documentation. The Investor shall have furnished to the
-------------------
Company such other instruments and documents, in form and substance reasonably
acceptable to the Company, as may be necessary to effect each Closing.
8. Limitation on Liability. The Investor agrees that, in the case of
-----------------------
claims arising out of the breach of any representation, warranty, covenant or
agreement contained herein, the Company shall not be liable for any damages,
losses, liabilities or expenses incurred or suffered by the Investor arising out
of one or more such breaches in an amount greater than the purchase price
received by the Company with respect to which such breach occurred.
9. Registration
------------
9.1 Registration. (a) Registrable Securities. The term
------------ ----------------------
"Registrable Securities" shall mean (i) the Shares to be purchased hereunder
(ii) any other securities issued in exchange for or as dividends on, or by way
of a split of, any of the shares of Common Stock listed in clauses (i) and (ii)
above. For purposes of this Agreement, Registrable Securities will cease to be
Registrable Securities when (i) a registration statement filed pursuant to the
Securities Act, covering such Registrable Securities has been declared effective
and they have been disposed of pursuant to such effective registration
statement, (ii) they are sold pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act, (iii) they are eligible to be sold
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act, (iii) they are eligible to be sold pursuant to Rule 144(k) under
the Securities Act without
14
<PAGE>
limitation as to the amount of securities to be sold or as to the manner of
sale, or (iv) they have been otherwise transferred and the Company has delivered
new certificates or other evidences of ownership for them not subject to
restrictions on further transfer under the Securities Act.
(b) Piggyback Registration. (i) If the Company proposes to file a
----------------------
registration statement under the Securities Act relating solely to a secondary
offering of Common Stock by any stockholder of the Company (a "Selling Holder")
(it being understood that a registration statement on Form S-4 or S-8 (or any
form substituting therefor) or filed in connection with an exchange offer, a
non-cash offer or an offering of securities solely to the Company's existing
stockholders or employees or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities shall not
be deemed to be a secondary offering contemplated hereby) at any time after the
first anniversary of the date hereof, the Company shall in each case give
written notice of such proposed filing to the Investor at least twenty days
before the anticipated filing date, and such notice shall offer the Investor the
opportunity to include in such registration statement (a "Secondary Piggy-back")
such number of Registrable Securities as such Investor may request in writing
within ten days after receipt of such notice; provided, that the right to
--------
register Registrable Securities as provided in this Section 9.1(b) shall not
apply to any registration statement relating to a primary offering of Common
Stock by the Company for its own account even if securityholders of the Company
exercise any rights they may have to include their securities in such
registration statement. The Company shall use reasonable efforts to cause the
managing underwriter or underwriters, if any, of a proposed underwritten
offering by such Selling Holders to permit the Investor to include its
Registrable Securities in such offering on the same terms and conditions as any
similar securities being offered by such Selling Holders and included therein.
Notwithstanding the foregoing, if any such managing underwriter or underwriters
of such offering advise the Company and the Investor in writing that in its or
their sole discretion the aggregate amount of securities requested to be
included in such offering could be expected to adversely affect the success of
such offering (including, without limitation, the price of the Common Stock to
be offered thereby) then the amount of Registrable Securities to be offered for
the account of the Investor shall be reduced to the extent necessary to reduce
the total amount of securities to be included in such offering to the amount
recommended by such managing underwriter. In connection with a Secondary Piggy-
back, the Company will bear all registration expenses, except that underwriting
commissions and expenses attributable to the Registrable Securities and fees and
disbursements of counsel, if any, for the Investor will be borne by the
Investor.
15
<PAGE>
(ii) Notwithstanding the foregoing, the Company shall not be required
to honor the request of the Investor to include Registrable Securities in a
Secondary Piggy-back pursuant to this Section 9.1(b) if (A) counsel to the
Company renders an opinion to the effect that registration under the Securities
Act is not required for the transfer by the Investor of Registrable Securities
proposed to be included in such Secondary Piggy-back, (B) such Secondary Piggy-
back shall become effective prior to the first anniversary of the date hereof,
(C) such Secondary Piggy-back shall become effective after the tenth anniversary
of the date hereof, or (D) the amount of Registrable Securities to be included
in such Piggy-back Registrable is less than $50,000 in market value at the time
the request for such registration is made to the Company.
(c) Registration Procedures. (i) Whenever the Company is required by
-----------------------
the provisions of this Section 9.1 to use its best efforts to effect a
registration or qualification of any Registrable Securities, the Company will
furnish to the Investor, such number of copies of any prospectus (including any
preliminary or summary prospectus) or other like documents as the Investor may
reasonably request in order to effect the sale of the securities to be sold by
the Investor and will use its best efforts to register or qualify such
securities under the state securities of Blue Sky laws as may be requisite for
such purpose; provided, that the Company shall not be required to qualify as a
--------
foreign corporation in any jurisdiction where it is not now so qualified or
submit to a general consent to service of process in any jurisdiction where it
is not now so subject.
(ii) The Investor agrees to furnish to the Company such information
concerning such persons as may be requested by the Company which is necessary in
connection with any such registration or qualification under this Section 9.1.
10. Covenants
---------
As long as the License Agreement is in effect, the Company covenants
as follows:
10.1 Furnishing of Information. Upon the written request of the
-------------------------
Investor, the Company will promptly furnish to the Investor all SEC filings (or
comparable information if the Company is not at the time required to file
reports pursuant to Section 13(a) of the Securities Exchange Act of 1934) and
all annual and quarterly reports furnished to stockholders.
11. Miscellaneous.
-------------
11.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and Investor contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and each
Closing and shall in no way be affected by any investigation of the subject
16
<PAGE>
matter thereof made by or on behalf of the Investor or the Company.
11.2 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any of the Shares or the shares which are to be purchased by
Investor pursuant the Second Installment and Third Installment). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
11.3 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of New Jersey without regard to the conflicts of
laws of such state.
11.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
11.6 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing by personal delivery to
the party to be notified or by Federal Express or other overnight package
delivery service or registered or certified mail, postage prepaid and addressed
to the party to be notified at the following addresses, or at such other address
as such party may designate by five (5) days' advance written notice to the
other parties (with notice deemed given upon receipt):
If to the Company:
Neurogen Corporation
35 Northeast Industrial Road
Branford, CT 06504
Attn: Vice President-Finance
Facsimile: (203) 483-7027
If to Investor:
American Home Products Corporation
5 Giralda Farms
Madison, New Jersey 07940
Attn: Senior Vice President and General Counsel
Facsimile: (201) 660-7155
17
<PAGE>
11.7 Finder's Fee. Each party represents that it neither is nor
------------
will be obligated for any finders' fee or commission in connection with this
transaction. Each party agrees to indemnify and to hold harmless the other from
any liability for any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability or asserted
liability) for which the indemnifying party or any of its officers, partners,
employees, or representatives is responsible.
11.8 Expenses. Irrespective of whether each Closing is effected, each
--------
party shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement.
Notwithstanding the foregoing, the Company shall pay any and all stamp, transfer
and other similar taxes payable or determined to be payable in connection with
the execution and delivery of this Agreement or any securities purchased
hereunder, and shall save and hold the Investor harmless from and against any
and all liabilities with respect to or resulting from any delay in paying, or
omission to pay, such taxes.
11.9 Publicity. Except for information which in the opinion of legal
---------
counsel is required to be disclosed by applicable law or rules, including but
not limited to the federal securities law or the rules of the NASDAQ or any
public exchange on which the Common Stock of the Company is publicly traded, the
Company shall not issue any press releases or public statements without first
seeking the approval of Investor with regard to this Agreement or the License
Agreement.
11.10 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and Investor. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the
time outstanding, each future holder of all such securities, and the Company.
11.11 Severability. If one or more provisions of this Agreement
------------
are held to be unenforceable under applicable law, suchprovision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
11.12 Entire Agreement. This Agreement and the documents referred
----------------
to herein constitute the entire agreement among the parties and no party shall
be liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
18
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
NEUROGEN CORPORATION
By: STEPHEN R. DAVIS
-----------------------
AMERICAN HOME PRODUCTS CORPORATION
By: GERALD A. JIBILIAN
------------------------
19
<PAGE>
SCHEDULE 2.9
GOVERNMENT CONSENTS
- NONE -
20
<PAGE>
SCHEDULE 2.10
LITIGATION
- NONE -
21
