Exhibit 10.2
Form of Aplindore CVR
Agreement
CONTINGENT VALUE RIGHTS
AGREEMENT
THIS CONTINGENT VALUE RIGHTS
AGREEMENT , dated as of
[ —
], 2009 (this “
Agreement ”, is entered into by and among
Ligand Pharmaceuticals Incorporated, a Delaware corporation
(“ Buyer ”), Neurogen Corporation, a
Delaware corporation (“ Target ”), and
[ —
], a [ —
], as Rights Agent (the “
Rights Agent ”) and as initial Aplindore CVR
Registrar (as defined herein).
Preamble
Buyer, Neon Signal, LLC, a Delaware
limited liability company and wholly-owned subsidiary of Buyer
(“ Sub ”), and Target have entered into
an Agreement and Plan of Merger dated as of August 23, 2009
(the “ Merger Agreement ”), pursuant to
which Sub will merge with and into Target (the “
Merger ”), with Target surviving the Merger as
a subsidiary of Buyer.
Pursuant to the Merger Agreement,
Buyer agreed to create and issue to Target’s stockholders of
record immediately before the effective time of the Merger,
contingent value rights as hereinafter described.
The parties have done all things
necessary to make the contingent value rights, when issued pursuant
to the Merger Agreement and hereunder, the valid obligations of
Buyer and to make this Agreement a valid and binding agreement of
Buyer, in accordance with its terms.
NOW, THEREFORE, for and in
consideration of the premises and the consummation of the
transactions referred to above, it is mutually covenanted and
agreed, for the equal and proportionate benefit of all Holders (as
hereinafter defined), as follows:
ARTICLE I
DEFINITIONS
Section 1.1.
Definitions .
(a) For all purposes of this
Agreement, except as otherwise expressly provided or unless the
context otherwise requires:
(i) the terms defined in this
Article have the meanings assigned to them in this Article, and
include the plural as well as the singular;
(ii) all accounting terms used
herein and not expressly defined herein shall have the meanings
assigned to such terms in accordance with United States generally
accepted accounting principles, as in effect on the date
hereof;
(iii) the words
“herein,” “hereof” and
“hereunder” and other words of similar import refer to
this Agreement as a whole and not to any particular Article,
Section or other subdivision;
(iv) unless the context otherwise
requires, words describing the singular number shall include the
plural and vice versa, words denoting any gender shall include all
genders and words denoting natural Persons shall include
corporations, partnerships and other Persons and vice versa;
and
(v) all references to
“including” shall be deemed to mean including without
limitation.
(b) Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed thereto
in the Merger Agreement. The following terms shall have the
meanings ascribed to them as follows:
“ Achievement
Certificate ” has the meaning set forth in
Section 2.4(a).
“ Aplindore Expense Reserve
Balance ” means the balance, if any, as of the CVR
Outside Date of funds not paid or payable from the Expense Reserve
Amount received by Buyer as provided in Section 5.15(a) of the
Merger Agreement.
“ Aplindore CVR Payment
Amount ” means an amount equal to (x) the aggregate
cash proceeds and/or (to the extent such shares of stock received
are listed for trading on a U.S. national securities exchange)
shares of stock received by Buyer, or any of its subsidiaries,
after the effective time of the Merger and before the CVR Outside
Date, from any purchaser (other than Buyer) of all or substantially
all of the assets and property of the Aplindore Program, with
respect to a purchase thereof which closed or closes on or before
the CVR Outside Date, plus (y) any Aplindore Expense Reserve
Balance, less (i) any costs and expenses reasonably incurred
by the Buyer, or any of its subsidiaries, in connection with the
sale of all or substantially all of the assets and property of the
Aplindore Program (including commissions and amounts paid to the
Consulting Committee as contemplated by Section 5.15(c) of the
Merger Agreement) and (ii) any amounts previously paid to the
Holders pursuant to the Aplindore CVRs. For the avoidance of doubt,
any amounts deducted from Net Cash Amount as accounts payable
relating to the Aplindore Program and any amounts paid by Buyer
from the Expense Reserve Amount shall not be considered
“costs and expenses” incurred by Buyer
hereunder.
“ Aplindore CVR Payment
Date ” means the date (if any and if ever) that an
Aplindore CVR Payment Amount is payable by Buyer to the Holders,
which date shall be established pursuant to
Section 2.4.
“ Aplindore CVR Payment
Event ” means the receipt by Buyer of cash proceeds
and/or (to the extent such shares of stock received are listed for
trading on a U.S. national securities exchange) shares of stock of
any purchaser (other than Buyer) from the sale of all or
substantially all of the assets and property of the Aplindore
Program.
“ Aplindore CVR
Register ” has the meaning set forth in
Section 2.3(b).
“ Aplindore CVR
Registrar ” has the meaning set forth in
Section 2.3(b).
“ Aplindore CVRs
” means the Aplindore Contingent Value Rights issued by Buyer
pursuant to the Merger Agreement and this Agreement.
“ Aplindore Sale
” means the sale of all or substantially all of the assets
and property of the Aplindore Program to a Person other than
Buyer.
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“ Board of Directors
” means the board of directors of Buyer.
“ Board Resolution
” means a copy of a resolution certified by the secretary or
an assistant secretary of Buyer to have been duly adopted by the
Board of Directors and to be in full force and effect on the date
of such certification, and delivered to the Rights
Agent.
“ Business Day ”
means any day other than a Saturday, Sunday or a day on which
banking institutions in New York, New York are authorized or
obligated by law or executive order to remain closed.
“ CVR Outside Date
” means [insert date that is six months from the Effective
Date].
“ Holder ” means
a Person in whose name an Aplindore CVR is registered in the
Aplindore CVR Register.
“ Non-Achievement
Certificate ” has the meaning set forth in
Section 2.4(b).
“ Notice of Objection
” has the meaning set forth in
Section 2.4(d).
“ Objection Period
” has the meaning set forth in
Section 2.4(d).
“ Officer’s
Certificate ” means a certificate signed by the chief
executive officer, president, chief financial officer, any vice
president, the controller, the treasurer or the secretary, in each
case, of Buyer, in his or her capacity as such an officer, and
delivered to the Rights Agent.
“ Permitted Transfer
” means: (i) the transfer of any or all of the Aplindore
CVRs (upon the death of the Holder) by will or intestacy;
(ii) transfer by instrument to an inter vivos or testamentary
trust in which the Aplindore CVRs are to be passed to beneficiaries
upon the death of the trustee; (iii) transfers made pursuant
to a court order of a court of competent jurisdiction (such as in
connection with divorce, bankruptcy or liquidation); (iv) if
the Holder is a partnership or limited liability company, a
distribution by the transferring partnership or limited liability
company to its partners or members, as applicable; (v) a
transfer made by operation of law (including a consolidation or
merger) or in connection with the dissolution, liquidation or
termination of any corporation, limited liability company,
partnership or other entity; (vi) a transfer from a
participant’s account in a tax-qualified employee benefit
plan to the participant or to such participant’s account in a
different tax-qualified employee benefit plan or to a tax-qualified
individual retirement account for the benefit of such participant;
or (vii) a transfer from a participant in a tax-qualified
employee benefit plan, who received the Aplindore CVRs from such
participant’s account in such tax-qualified employee benefit
plan, to such participant’s account in a different
tax-qualified employee benefit plan or to a tax-qualified
individual retirement account for the benefit of such
participant.
“ Person ” means
any natural person, corporation, partnership, limited liability
company, trust, estate, other firm or entity, or governmental
body.
“ Rights Agent ”
means the Rights Agent named in the first paragraph of this
Agreement, until a successor Rights Agent shall have become such
pursuant to the applicable provisions of this Agreement, and
thereafter “Rights Agent” shall mean such successor
Rights Agent.
“ Rights Agent Fee
” means the agreed-upon fee of the Rights Agent to act in
such capacity pursuant to the terms of this Agreement.
“ Surviving Person
” has the meaning set forth in
Section 6.1(a)(i).
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ARTICLE II
CONTINGENT VALUE
RIGHTS
Section 2.1. Issuance of
Aplindore CVRs; Appointment of Rights Agent .
(a) The Aplindore CVRs shall be
issued pursuant to the Merger Agreement at the time and in the
manner set forth in the Merger Agreement.
(b) Buyer hereby appoints [
—
] as the Rights Agent to act as
rights agent for Buyer in accordance with the instructions
hereinafter set forth in this Agreement, and the Rights Agent
hereby accepts such appointment.
Section 2.2.
Nontransferable .
The Aplindore CVRs shall not be
sold, assigned, transferred, pledged, encumbered or in any other
manner transferred or disposed of, in whole or in part, other than
through a Permitted Transfer.
Section 2.3. No Certificate;
Registration; Registration of Transfer; Change of
Address .
(a) The Aplindore CVRs shall not be
evidenced by a certificate or other instrument.
(b) The Rights Agent shall keep a
register (the “ Aplindore CVR Register ”)
for the registration of Aplindore CVRs. The Rights Agent is
hereby initially appointed “ Aplindore CVR
Registrar ” for the purpose of registering Aplindore
CVRs and transfers of Aplindore CVRs as herein provided. Upon any
change to the identity of the Rights Agent, the successor Rights
Agent shall automatically also become the successor Aplindore CVR
Registrar.
(c) Subject to the restriction on
transferability set forth in Section 2.2, every request made
to transfer an Aplindore CVR must be in writing and accompanied by
a written instrument or instruments of transfer and any other
requested documentation in a form reasonably satisfactory to Buyer
and the Aplindore CVR Registrar, duly executed by the registered
Holder or Holders thereof or by the duly appointed legal
representative thereof or by a duly authorized attorney, such
signature to be guaranteed by a participant in a recognized
Signature Guarantee Medallion Program. A request for a transfer of
an Aplindore CVR shall be accompanied by such documentation
establishing that the transfer is a Permitted Transfer as may be
reasonably requested by Buyer and/or the Aplindore CVR Registrar
(including opinions of counsel), if appropriate. Upon receipt of
such written request and materials, the Aplindore CVR Registrar
shall, subject to its reasonable determination that the transfer
instrument is in proper form and the transfer otherwise complies
with the other terms and conditions herein, register the transfer
of the Aplindore CVRs in the Aplindore CVR Register. All duly
transferred Aplindore CVRs registered in the Aplindore CVR Register
shall be the valid obligations of Buyer, evidencing the same right
and shall entitle the transferee to the same benefits and rights
under this Agreement, as those previously held by the transferor.
No transfer of an Aplindore CVR shall be valid until registered in
the Aplindore CVR Register, and any transfer not duly registered in
the Aplindore CVR Register will be void ab initio. Any transfer or
assignment of the Aplindore CVRs shall be without charge (other
than the cost of any transfer tax which shall be the responsibility
of the transferor) to the Holder.
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(d) A Holder may make a written
request to the Aplindore CVR Registrar to change such
Holder’s address of record in the Aplindore CVR Register. The
written request must be duly executed by the Holder. Upon receipt
of such written notice, the Aplindore CVR Registrar shall promptly
record the change of address in the Aplindore CVR
Register.
Section 2.4. Payment
Procedures .
(a) Promptly following the
occurrence of any Aplindore CVR Payment Event, but in no event
later than five Business Days after the occurrence of such
Aplindore CVR Payment Event, Buyer shall deliver to the Rights
Agent a certificate (the “
Achievement Certificate ”), certifying
that the Holders are entitled to receive such Aplindore CVR Payment
Amount. No transaction described in Section 6.1(a) hereof
shall give the Holders the right to receive an Aplindore CVR
Payment Amount.
(b) If the Aplindore Sale has not
occurred on or before the CVR Outside Date, then, within five
Business Days after the CVR Outside Date, Buyer shall deliver to
the Rights Agent a certificate (the “ Non-Achievement
Certificate ”), stating that the Aplindore Sale has
not occurred on or before the CVR Outside Date and no Aplindore CVR
Payment Event can occur.
(c) Except as otherwise requested by
any Holder, the Rights Agent shall promptly (and in no event later
than five Business Days after receipt thereof) send each Holder a
copy of any Achievement Certificate or Non-Achievement Certificate
at its registered address.
(d) Upon demand by any Holder or
Holders of at least 20% in the aggregate of the outstanding
Aplindore CVRs within 45 calendar days after distribution by
the Rights Agent of a Non-Achievement Certificate (the “
Objection Period ”), the Rights Agent shall
deliver a written notice to Buyer prepared by such Holder or
Holders specifying that such Holder or Holders object to the
determination of Buyer that the Aplindore Sale did not timely occur
(a “ Notice of Objection ”) and stating
the reason upon which such Holder or Holders have determined that
the Aplindore Sale occurred on or before the CVR Outside Date. Any
dispute arising from a Notice of Objection shall be resolved in
accordance with the procedure set forth in Section 7.12, which
decision shall be binding on the parties hereto and every Holder
(including Holders not participating therein).
(e) If a Notice of Objection has not
been delivered to Buyer within the Objection Period, then the
Holders shall have no right to receive any Aplindore CVR Payment
Amount, and Buyer and the Rights Agent shall have no further
obligations with respect to the Aplindore CVR Payment
Amount(s).
(f) If (i) Buyer delivers an
Achievement Certificate to the Rights Agent or (ii) an
Aplindore CVR Payment Amount is determined to be payable pursuant
to Section 2.4(d) above or (iii) an Aplindore Expense
Reserve Balance exists at the CVR Outside Date, then Buyer shall
establish an Aplindore CVR Payment Date that is within 15 calendar
days after the date of the Achievement Certificate or the date of
final determination pursuant to Section 2.4(d) above, as
applicable. At least five Business Days before such Aplindore CVR
Payment Date, Buyer shall cause the Aplindore CVR Payment Amount to
be delivered to the Rights Agent, who will in turn, on the
Aplindore CVR Payment Date, distribute the Aplindore CVR Payment
Amount to the Holders (each Holder being
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entitled to receive its pro rata share of
the Aplindore CVR Payment Amount based on the number of Aplindore
CVRs held (as of the date of the Achievement Certificate or the
date of final determination pursuant to Section 2.4(d) above,
as applicable) by such Holder as reflected on the Aplindore CVR
Register) (i) by check mailed to the address of each such
respective Holder as reflected in the Aplindore CVR Register as of
the close of business on the last Business Day before such
Aplindore CVR Payment Date, or, (ii) with respect to any
Holder that is due payment pursuant to this Agreement in excess of
$1,000,000 who has provided the Rights Agent with wire transfer
instructions, by wire transfer of immediately available funds to
such account.
(g) Buyer shall be entitled to
deduct and withhold, or cause to be deducted or withheld, from each
Aplindore CVR Payment Amount otherwise payable pursuant to this
Agreement, such amounts as Buyer or the applicable subsidiary of
Buyer is required to deduct and withhold with respect to the making
of such payment under the Internal Revenue Code, or any provision
of state, local or foreign tax law. To the extent that amounts are
so withheld or paid over to or deposited with the relevant
governmental entity, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the Holder in
respect of which such deduction and withholding was
made.
(h) Subject to prior execution and
delivery by the Rights Agent of a reasonable and customary
confidentiality/nonuse agreement, Buyer shall promptly furnish to
the Rights Agent all information and documentation in connection
with this Agreement and the Aplindore CVRs th
