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NEUROGEN
CORPORATION
REGISTRATION RIGHTS AGREEMENT
This
REGISTRATION RIGHTS AGREEMENT (this “ Agreement
”) is made as of April 7, 2008, by and among Neurogen
Corporation, a Delaware corporation (the “ Company
”) and each person listed on Exhibit A
attached hereto (collectively, the “ Investors
” and each individually, an “ Investor
”). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed to them in Section
9(q) herein.
BACKGROUND
The
Company has agreed to issue and sell to the Investors, and the
Investors have agreed to purchase from the
Company: (i) up to an aggregate of 981,411 shares
of the Company’s Series A Exchangeable Preferred Stock,
par value $0.025 per share (the “ Exchangeable
Preferred Stock ”) and (ii) warrants (the “
Warrants
”) initially exercisable to purchase up to an aggregate
of 12,758,343 shares of the Company’s common stock, par
value $0.025 per share (the “ Common
Stock ”), all upon the terms and conditions set
forth in that certain Securities Purchase Agreement, dated of
even date herewith, by and among the Company and the Investors
(the “ Purchase
Agreement ”). The Common Stock issuable upon
Exchange shall be referred to herein as the “
Exchange
Shares ” and the shares of Common Stock
underlying the Warrants shall be referred to herein as the
“ Warrant
Shares .”
AGREEMENT
1.
Common Shelf Registration . So long as any
Registrable Shares are outstanding, the Company shall take the
following actions:
(a)
The
Company shall, as soon as practicable but in any event by the
Filing Deadline, file with the Securities and Exchange Commission
(the “ Commission
”), and thereafter use its best efforts to cause to be
declared effective as soon as practicable but in any event no later
than the Effectiveness Deadline a registration statement (the
“ Common Shelf
Registration Statement ”) on an appropriate form under
the Securities Act relating to the offer and sale of the
Registrable Common Shares by the Holders thereof from time to time
in accordance with the methods of distribution set forth in the
Common Shelf Registration Statement and Rule 415 under the
Securities Act (hereinafter, the “ Common Shelf
Registration ”).
Notwithstanding
the foregoing, if the Commission prevents the Company from
including any or all of the Registrable Common Shares on the
Common Shelf Registration Statement due to limitations on the
use of Rule 415 of the Securities Act for the resale of the
Registrable Common Shares by the Holders (a “
Rule
415 Limitation ”), the Common Shelf Registration
Statement shall register the resale of a number of shares of
Common Stock which is equal to the maximum number of shares as
is permitted by the Commission, and, subject to the provisions
of this Section 1(a), the Company shall continue to its use
reasonable best efforts to register all remaining Registrable
Common Shares
as set forth in this Section 1. In such event, the
number of shares of Common Stock to be registered for each
Holder in the Common Shelf Registration Statement shall be
reduced pro rata among all Holders. The Company
shall continue to use its reasonable best efforts to register
all remaining Registrable Common Shares as promptly as
practicable in accordance with the applicable rules,
regulations and guidance of the Commission, but in no event
will the Company file a subsequent Common Shelf Registration
Statement with respect to the registration of the resale of
Registrable Common Shares held by the Holders earlier than 180
calendar days following the effective date of the initial
Common Shelf Registration
Statement. Notwithstanding anything herein to the
contrary, if the Commission, by written or oral comment or
otherwise, limits the Company’s ability to file, or
prohibits or delays the filing of, a Common Shelf Registration
Statement with respect to any or all the Registrable Common
Shares which were not included in the initial Common Shelf
Registration Statement (a “ Subsequent Shelf
Limitation ”), it shall not be a breach or
default by the Company under this Agreement, shall not be
deemed a failure by the Company to use “reasonable
efforts,” “reasonable best efforts” or
“best efforts” as set forth above or elsewhere in
this Agreement and shall not require the payment of any
liquidated damages by the Company under this Agreement
(including pursuant to Section 1(e)).
(b)
The
Company shall use its reasonable best efforts to keep the Common
Shelf Registration Statement continuously effective, in order to
permit the prospectus included therein to be lawfully delivered by
the Holders of the Registrable Common Shares included therein,
until the date on which all Registrable Common Shares cease to be
Registrable Common Shares (such period being called the “
Common
Shelf Registration Period ”). The Company
shall be deemed not to have used its reasonable best efforts to
keep the Common Shelf Registration Statement effective during the
Common Shelf Registration Period if it voluntarily takes any action
that would directly result in Holders of Registrable Common Shares
covered thereby not being able to offer and sell such Registrable
Common Shares during such period, unless such action is required by
applicable law or except as provided in Section 3(h).
(c)
Notwithstanding
any other provisions of this Agreement to the contrary, the Company
shall cause (i) the Common Shelf Registration Statement (as of the
effective date of the Common Shelf Registration Statement), any
amendment thereof (as of the effective date thereof) or supplement
thereto (as of its date), (A) to comply in all material respects
with the applicable requirements of the Securities Act and the
rules and regulations of the Commission and (B) not to contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make
the statements therein not misleading, and (ii) any related
prospectus, preliminary prospectus or Free Writing Prospectus and
any amendment thereof or supplement thereto, as of its date, (A
) to comply
in all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the Commission and
(B) not to contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, the Company shall have no such obligations or liabilities
with respect to any written
(d)
information
pertaining to any Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion
therein.
(e)
The
Company shall use its reasonable best efforts to cause the
Registrable Common Shares included in the Common Shelf Registration
Statement to be, upon resale thereunder, listed on the NASDAQ
Global Market (“ NASDAQ Stock
Market ”) or, if the Common Stock is not then listed
on the NASDAQ Stock Market, on the principal national securities
exchange on which the Common Stock is then listed, or if the Common
Stock is not then listed on a national securities exchange,
authorized for quotation on any automated quotation system on which
the Common Stock is then quoted.
(f)
If
(i) the Common Shelf Registration Statement is not filed by the
Filing Deadline or declared effective by the Commission by the
Effectiveness Deadline for any
reason, including by reason of Section 3(h) hereof, or (ii)
following effectiveness, the Common Shelf Registration Statement is
unavailable for any reason, including by reason of Section 3(h)
hereof, for use in the sale of Registrable Common Shares, then in
each such case
the Company will make pro rata payments to
each Investor that continues to hold Registrable Common Shares, as
liquidated damages and not as a penalty, in an amount equal to 1.5%
of the aggregate purchase price paid by such Investor to acquire
the Registrable Common Shares then held by such Investor (taking
into account the amounts paid by the Investor to acquire the
Exchangeable Preferred Stock or Warrants pursuant to which such
Registrable Common Shares were issued) for each 30-calendar day
period (or pro
rata portion thereof) following the Filing Deadline or
Effectiveness Deadline or during which the Common Shelf
Registration Statement is unavailable, as applicable, (for the
purposes of this paragraph, each such period shall be referred to
as a “ Blackout
Period ” for such Registration Statement);
provided ,
however
that in no event shall the aggregate liquidated damages payable by
the Company to any Investor exceed 7.5% of the aggregate purchase
price paid by such Investor for all Exchangeable Preferred Stock
and Warrants acquired by such Investor pursuant to the Purchase
Agreement. The amounts payable as liquidated damages pursuant to
this paragraph shall be paid in lawful money of the United States
within three Business Days of the last day of each 30-calendar day
period following the commencement of a Blackout Period until the
termination of such Blackout Period.
2.
Exchangeable Shelf Registration . If any
Registrable Exchangeable Shares are outstanding on the one-year
anniversary of this Agreement (the “ Outside Date
”), the Company shall take the following
actions:
(a)
The
Company shall, on the Outside Date, file with the Commission, and
thereafter use its reasonable best efforts to cause to be declared
effective as soon as practicable but in any event no later than
ninety (90) days after the Outside Date, a registration statement
(the “ Exchangeable Shelf
Registration Statement ”) on an appropriate form under
the Securities Act relating to the offer and sale of the
Registrable Exchangeable Shares by the Holders thereof from time to
time in accordance with the methods of distribution set forth in
the Exchangeable Shelf Registration Statement and Rule 415 under
the Securities Act (hereinafter, the “ Exchangeable Shelf
Registration ”).
(b)
The
Company’s obligation under this Section 2 shall be subject to
any Rule 415 Limitation and Subsequent Shelf
Limitation.
(c)
The
Company shall use its reasonable best efforts to keep the
Exchangeable Shelf Registration Statement continuously effective,
in order to permit the prospectus included therein to be lawfully
delivered by the Holders of the Registrable Exchangeable Shares
included therein, until the date on which all Registrable
Exchangeable Shares covered by the Exchangeable Shelf Registration
Statement cease to be Registrable Exchangeable Shares (such period
being called the “ Exchangeable Shelf
Registration Period ”). The Company shall
be deemed not to have used its reasonable best efforts to keep the
Exchangeable Shelf Registration Statement effective during the
Exchangeable Shelf Registration Period if it voluntarily takes any
action that would directly result in Holders of Registrable
Exchangeable Shares covered thereby not being able to offer and
sell such Registrable Exchangeable Shares during such period,
unless such action is required by applicable law or except as
provided in Section 3(h).
(d)
Notwithstanding
any other provisions of this Agreement to the contrary, the Company
shall cause (i) the Exchangeable Shelf Registration Statement (as
of the effective date of the Exchangeable Shelf Registration
Statement), any amendment thereof (as of the effective date
thereof) or supplement thereto (as of its date), (A) to comply in
all material respects with the applicable requirements of the
Securities Act and the rules and regulations of the Commission and
(B) not to contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading, and (ii)
any related prospectus, preliminary prospectus or Free Writing
Prospectus and any amendment thereof or supplement thereto, as of
its date, (A) to comply in all material respects with the
applicable requirements of the Securities Act and the rules and
regulations of the Commission and (B) not to contain any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, the Company shall
have no such obligations or liabilities with respect to any written
information pertaining to any Holder and furnished to the Company
by or on behalf of such Holder specifically for inclusion
therein.
3.
Registration Procedures . In connection with a
Shelf Registration contemplated by Section 1 or Section 2 hereof,
the following provisions shall apply:
(a)
At
the time the Commission declares such Shelf Registration Statement
effective, each Holder shall be named as a selling security holder
in such Shelf Registration Statement and the related prospectus in
such a manner as to permit such Holder to deliver such prospectus
to purchasers of Registrable Shares included in the Shelf
Registration Statement in accordance with applicable law, subject
to the terms and conditions hereof. From and after the
date a Shelf Registration Statement is declared effective, the
Company shall, as promptly as practicable and in any event upon the
later of (x) five (5) Business Days after such date or (y) five (5)
Business Days after the expiration of any Deferral Period (as
defined in Section 3(h)) that is either in effect or put into
effect within five (5) Business Days of such date:
(b)
if
required by applicable law, prepare and file with the Commission a
post-effective amendment to the Shelf Registration Statement or
prepare and, if required by applicable law, file a supplement to
the related prospectus or a supplement or amendment to any document
incorporated therein by reference or file with the Commission any
other required document so that the Holder is named as a selling
security holder in the Shelf Registration Statement and the related
prospectus in such a manner as to permit such Holder to deliver
such prospectus to purchasers of such Holder’s Registrable
Shares included in the Shelf Registration Statement in accordance
with applicable law and, if the Company shall file a post-effective
amendment to the Shelf Registration Statement, use its reasonable
best efforts to cause such post-effective amendment to be declared
effective under the Securities Act as promptly as is practicable,
but in any event by the date (the “ Amendment
Effectiveness Deadline Date ”) that is sixty (60) days
after the date such post-effective amendment is required by this
clause to be filed;
(i)
provide
such Holder copies of any documents filed pursuant to Section
3(a)(i); and
(ii)
notify
such Holder as promptly as practicable after the effectiveness
under the Securities Act of any post-effective amendment filed
pursuant to Section 3(a)(i);
provided , that if the request by such Holder is delivered
during a Deferral Period, the Company shall so inform the Holder
making such request and shall take the actions set forth in clauses
(i), (ii) and (iii) above upon expiration of the Deferral Period in
accordance with this Section 3(a) and Section 3(h) of this
Agreement. Notwithstanding anything contained herein to
the contrary, the Amendment Effectiveness Deadline Date shall be
extended by five (5) Business Days from the expiration of a
Deferral Period if such Deferral Period shall be in effect on the
Amendment Effectiveness Deadline Date; and provided ,
further ,
that in no event shall the Company be required to file pursuant to
this Section 3(a) in the case where a post-effective amendment is
required, more than one post-effective amendment to the Shelf
Registration Statement in any 120-day period.
(c)
The
Company shall notify the Holders of the Registrable Shares included
within the coverage of the Shelf Registration Statement (which
notice may, at the discretion of the Company (or as required
pursuant to Section 3(h)), state that it constitutes a Deferral
Notice, in which event the provisions of Section 3(h) shall
apply):
(i)
when
the Shelf Registration Statement or any amendment thereto has been
filed with the Commission and when the Shelf Registration Statement
or any post-effective amendment thereto has become
effective;
(ii)
of
any request by the Commission for amendments or supplements to the
Shelf Registration Statement or the prospectus included therein or
for additional information;
(iii)
of
the issuance by the Commission of any stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation
of any proceedings for that purpose and of any other action, event
or failure to act that would cause the Shelf Registration Statement
not to remain effective;
(iv)
of
the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of
any Registrable Shares for sale in any jurisdiction or the
initiation of any proceeding for such purpose; and
(v)
of
the occurrence of any Material Event (as defined in Section
3(h)).
(d)
The
Company shall use its reasonable best efforts to obtain the
withdrawal at the earliest possible time of any stop order
suspending the effectiveness of the Shelf Registration Statement
and the elimination of any other impediment to the continued
effectiveness of the Shelf Registration Statement.
(e)
The
Company shall promptly furnish to each Holder of Registrable Shares
included within the coverage of the Shelf Registration, without
charge, if the Holder so requests in writing, at least one
conformed copy of the Shelf Registration Statement and any
post-effective amendment thereto, including financial statements
and schedules and all exhibits thereto (including those, if any,
incorporated by reference).
(f)
The
Company shall promptly deliver to each Holder of Registrable Shares
included within the coverage of the Shelf Registration Statement,
without charge, ten (10) copies of the prospectus (including each
preliminary prospectus) included in the Shelf Registration
Statement and any amendment thereof or supplement thereto and any
Free Writing Prospectus used in connection therewith as such Holder
may reasonably request. The Company consents,
subject to the provisions of this Agreement and except during such
periods that a Deferral Notice is outstanding and has not been
revoked, to the use of the prospectus and each amendment or
supplement thereto and any Free Writing Prospectus used in
connection therewith by each of the selling Holders in connection
with the offering and sale of the Registrable Shares covered by the
prospectus, or any amendment or supplement thereto, included in the
Shelf Registration Statement.
(g)
The
Company shall use reasonable best efforts to register or qualify,
or cooperate with the Holders of the Registrable Shares included in
the Shelf Registration Statement and their respective counsel in
connection with the registration or qualification of, the resale of
the Registrable Shares under the securities or “blue
sky” laws of such states of the United States as any Holder
requests in writing and to do any and all other acts or things
necessary or advisable to enable the offer and sale in such
jurisdictions of the Registrable Shares covered by the Shelf
Registration Statement; provided , however,
that the Company shall not be required to (i) qualify generally to
do business in any jurisdiction where it is not then so qualified
or (ii) take any action that would subject it to general service of
process or to taxation in any jurisdiction to which it is not then
so subject.
(h)
The
Company shall cooperate with the Holders of the Registrable Shares
to facilitate the timely preparation and delivery of certificates
representing the Registrable Shares to be delivered to a transferee
pursuant to the Shelf Registration
(i)
Statement,
which certificates shall be free of any restrictive legends and in
such denominations and registered in such names as the Holders may
request.
(j)
Upon
(i) the issuance by the Commission of a stop order suspending the
effectiveness of the Shelf Registration Statement or the initiation
of proceedings with respect to the Shelf Registration Statement
under Section 8(d) or 8(e) of the Securities Act, (ii) the
occurrence of any event or the existence of any fact (a “
Material
Event ”) as a result of which (x) the Shelf
Registration Statement shall contain any untrue statement of a
material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or (y) any prospectus included in the Shelf Registration
Statement shall contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or (iii)
the occurrence or existence of any pending corporate development
that, in the reasonable judgment of the Company, makes it necessary
to suspend the availability of the Shelf Registration Statement and
the related prospectus for a period of time:
(A)
in
the case of clause (ii) above, subject to clause (B) below, as
promptly as practicable, the Company shall prepare and file, if
necessary pursuant to applicable law, a post-effective amendment to
such Shelf Registration Statement or a supplement to the related
prospectus or any document incorporated therein by reference or
file any other required document that would be incorporated by
reference into such Shelf Registration Statement and related
prospectus so that (1) such Shelf Registration Statement does not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading and (2) such prospectus
does not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading, as thereafter delivered to
the purchasers of the Registrable Shares being sold thereunder,
and, in the case of a post-effective amendment to the Shelf
Registration Statement, subject to the next sentence, use
reasonable best efforts to cause it to be declared effective as
promptly as is practicable; and
(B)
the
Company shall give notice to the Holders with respect to such Shelf
Registration Statement, that the availability of the Shelf
Registration Statement is suspended (a “ Deferral
Notice ”) and, upon receipt of any Deferral Notice,
each Holder agrees not to sell any Registrable Shares pursuant to
the Shelf Registration Statement until such Holder’s receipt
of copies of the supplemented or amended prospectus provided for in
clause (A) above, or until it is advised in writing by the Company
that the prospectus may be used, and has received copies of any
additional or supplemental filings that are incorporated or deemed
incorporated by reference in such prospectus.
The
Company will use its reasonable best efforts to ensure that
the use of the prospectus with respect to such Shelf
Registration Statement may be resumed (x) in the case of
clause (i) above, as promptly as is practicable, (y) in the
case of clause (ii) above, as soon as,
in the reasonable judgment of the Company, public disclosure
of such Material Event would not be prejudicial to or contrary
to the interests of the Company or, as soon as practicable
thereafter and (z) in the case of clause (iii) above, as soon
as, in the reasonable judgment of the Company, such suspension
is no longer necessary; provided , that
in no event shall (A) the aggregate duration of any such
suspension arising from an event described in clause (iii)
above exceed 45 days, (B) the aggregate duration of all such
suspensions arising from events described in clause (iii)
above exceed 60 days in any 12-month period or (C) a
suspension arising from an event described in clause (ii) or
clause (iii) above be invoked more than once in any 12-month
period. Any such period during which the
availability of the Shelf Registration Statement and any
related prospectus is suspended is referred to as the “
Deferral
Period .”
(k)
Not
later than the effective date of the Shelf Registration Statement,
the Company will provide CUSIP numbers for the Registrable Shares
registered for resale under such Shelf Registration Statement and
provide the transfer agent for the Registrable Shares one or more
certificates for such Registrable Shares, in a form eligible for
deposit with The Depository Trust Company.
(l)
The
Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the
Shelf Registration and will make generally available to its
security holders (or otherwise provide in accordance with Section
11(a) of the Securities Act) an earnings statement (which need not
be audited) satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder, no later than 45 days after
the end of a 12-month period (or 90 days, if such period is a
fiscal year) beginning with the first month of the Company’s
first fiscal quarter commencing after the effective date of the
Shelf Registration Statement, which statement shall cover such
12-month period.
(m)
If
requested in writing in connection with a disposition of
Registrable Shares pursuant to a Shelf Registration Statement, the
Company shall make reasonably available for inspection during
normal business hours by a representative for the holders of a
majority of the number of such Registrable Shares, any
broker-dealers, attorneys and accountants retained by such holders,
and any attorneys or other agents retained by a broker-dealer
engaged by such holders, all relevant financial and other records
and pertinent corporate documents and properties of the Company and
its subsidiaries, and cause the appropriate officers, directors and
employees of the Company and its subsidiaries to make reasonably
available for inspection during normal business hours on reasonable
notice all relevant information reasonably requested by such
representative for the Holders, or any such broker-dealers,
attorneys or accountants in connection with such disposition, in
each case as is customary for similar “due diligence”
examinations; provided , that such
persons shall first agree in writing with the Company that any
information that is reasonably and in good faith designated by the
Company in writing as confidential at the time of delivery of such
information shall be kept confidential by such persons and shall be
used solely for the purposes of exercising rights under this
Agreement, unless (i) disclosure of such information is required by
court or administrative order or is necessary to respond to
inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure
requirements
(n)
pursuant
to federal securities laws in connection with the filing of the
Shelf Registration Statement or the use of any prospectus or Free
Writing Prospectus referred to in this Agreement) or (iii) such
information becomes generally available to the public other than as
a result of a disclosure or failure to safeguard by any such
person, and provided further that the foregoing inspection and
information gathering shall, to the greatest extent possible, be
coordinated on behalf of all the Holders and the other parties
entitled thereto by one legal counsel (“ Holders
Counsel ”) designated by the Holders of a majority of
the number of Registrable Shares with respect to such Shelf
Registration Statement.
(o)
The
Company shall (i) permit such Holders Counsel to review and comment
upon (A) a Shelf Registration Statement at least five (5) Business
Days prior to its filing with the Commission and (B) all Free
Writing Prospectuses and all amendments and supplements to all
Shelf Registration Statements within a reasonable number of days
prior to their filing with the Commission, and (ii) not file any
Shelf Registration Statement or amendment thereof or supplement
thereto or any Free Writing Prospectus in a form to which such
Holders Counsel reasonably objects. The Company shall
furnish to such Holders Counsel, without charge, (x) copies of any
correspondence from the Commission or the staff of the Commission
to the Company or its representatives relating to any Shelf
Registration Statement or any document incorporated by reference
therein, (y) promptly after the same is prepared and filed with the
Commission, one copy of any Shelf Registration Statement and any
amendment(s) thereto, including financial statements and schedules,
all documents incorporated therein by reference, if requested by a
Holder, and all exhibits; and (z) promptly upon the effectiveness
of any Shelf Registration Statement, one copy of the prospectus
included in such Shelf Registration Statement and all amendments
and supplements thereto. The Company shall reasonably
cooperate with such Holders Counsel in performing the
Company’s obligations pursuant to this Section
3.
(p)
The
Company shall make such representations and warranties to any
underwriters in connection with such disposition in form, substance
and scope as are customarily made by issuers to underwriters in
primary underwritten offerings. The Company will enter
into and perform customary agreements (including underwriting and
indemnification and contribution agreements in customary form with
the managing underwriter or underwriters, as applicable) and take
such other commercially reasonable actions as are required in order
to expedite or facilitate each disposition of Registrable Shares
and shall provide all reasonable cooperation, including causing
appropriate officers to attend and participate in “road
shows” and other information meetings organized by the
managing underwriter or underwriters, if applicable.
(q)
If
reasonably requested by a Holder, the Company shall as soon as
practicable (i) incorporate in a prospectus supplement or
post-effective amendment such information as such Holder reasonably
requests to be included therein relating to the sale and
distribution of Registrable Shares, including, without limitation,
information with respect to the number of Registrable Shares being
offered or sold, the purchase price being paid therefor and any
other terms of the offering of the Registrab
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