-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AnSSaTF1C9m+Q9067P4RaSq8XQ3dqDrglyW3EaqQhw32Ni/xjx9Z70EpBsdrsrPd 0jrTWbt+YS2CJrmit421JA== 0000950130-97-001397.txt : 19970401 0000950130-97-001397.hdr.sgml : 19970401 ACCESSION NUMBER: 0000950130-97-001397 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961125 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970331 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEUROGEN CORP CENTRAL INDEX KEY: 0000849043 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 222845714 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-18311 FILM NUMBER: 97569009 BUSINESS ADDRESS: STREET 1: 35 NORTHEAST INDUSTRIAL RD CITY: BRANFORD STATE: CT ZIP: 06405 BUSINESS PHONE: 2034888201 MAIL ADDRESS: STREET 1: 35 NORTHEAST INDUSTRIAL RD CITY: BRANFORD STATE: CT ZIP: 06405 8-K 1 FORM 8-K 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 ------------------------------ NEUROGEN CORPORATION - ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 0-18311 22-2845714 - ----------------------------------------------------------------------------- (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 --------------------------- None ----------------------------------------------------------------------------- (Former name or former address, if changed since last report) 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. 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 ---------------------------------------- (Registrant) March 31, 1997 /s/ STEPHEN R. DAVIS - ------------------------- ----------------------------------------- DATE Stephen R. Davis Vice President-Finance and Chief Financial Officer 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. EX-10.1 2 LICENSING AGREEMENT DATED 11/25/96 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" 1 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. 2 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 3 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 4 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 5 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 6 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] 7 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 8 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 9 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 10 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 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. 12 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 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 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 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 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. 17 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. 18 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 EX-10.2 3 STOCK PURCHASE AGREEMENT DATED 11/25/96 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 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 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 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 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 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 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 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 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 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 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 (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 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 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 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 (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 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 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 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 SCHEDULE 2.9 GOVERNMENT CONSENTS - NONE - 20 SCHEDULE 2.10 LITIGATION - NONE - 21 -----END PRIVACY-ENHANCED MESSAGE-----