SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

FORM 10-K/A2

 [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR  15(D)  OF THE SECURITIES EXCHANGE ACT OF 1934  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001  OR  [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)  OF THE SECURITIES EXCHANGE ACT OF 1934

 COMMISSION FILE NUMBER 0-18311

NEUROGEN CORPORATION(Exact name of registrant as specified in its charter)

| DELAWARE        (State or other jurisdiction of        incorporation or organization) | 22-2845714        (I.R.S. Employer        Identification No.) |
|---------------------------------------------------------------------------------------|---------------------------------------------------------------|

 35 NORTHEAST INDUSTRIAL ROAD  BRANFORD, CONNECTICUT 06405  (Address of principal executive offices) (Zip Code)

 (203) 488-8201  (Registrant's telephone number, including area code)

 Securities registered pursuant to Section 12(b)  of the Act:  None

 Securities registered pursuant to Section 12(g)  of the Act: Common Stock, par value $.025 per share (the "Common Stock")  (Title of Class)

| YES | X | NO | _ |
|-----|---|----|---|

Neurogen is filing this Form 10K/A to amend Item 14 to include  a revised version of Exhibit 10.35. In accordance with Rule 12b-15 of the Securities  Exchange Act of 1934, Neurogen is including the complete text of Item 14 in  this 10K/A.

**Part IV**
Item 14.(a) (3)Exhibit NumberDescription3.1 -Restated Certificate of Incorporation, filed      June 17, 1994 (incorporated by reference to Exhibit 4.1 to Registration      Statement No. 33-81268 on form S-8).3.2 -By-Laws, as amended (incorporated by reference to Exhibit      3.6 to the Company's Form 10-K for the fiscal year ended December 31, 1993).10.1 -Neurogen Corporation Stock Option Plan, as amended (incorporated      by reference to Exhibit 10.1 to the Company's Form 10-K for the fiscal year      ended December 31, 1991).10.2 -Form of Stock Option Agreement currently used in connection      with the grant of options under Neurogen Corporation Stock Option Plan (incorporated      by reference to Exhibit 10.2 to the Company's Form 10-K for the fiscal year      ended December 31, 1992).10.3 - Neurogen Corporation 1993 Omnibus Incentive Plan, as amended      (incorporated by reference to Exhibit 10.3 to the Company's Form 10-K for      the fiscal year ended December 31, 1993).10.4 -Form of Stock Option Agreement currently used in connection      with the grant of options under Neurogen Corporation 1993 Omnibus Incentive      Plan (incorporated by reference to Exhibit 10.4 to the Company's Form 10-K      for the fiscal year ended December 31, 1993).10.5 -Neurogen Corporation 1993 Non-Employee Directors Stock      Option Program (incorporated by reference to Exhibit 10.5 to the Company's      Form 10-K for the fiscal year ended December 31, 1993).10.6 - Form of Stock Option Agreement currently used in connection      with the grant of options under Neurogen Corporation 1993 Non-Employee Directors      Stock Option Program (incorporated by reference to Exhibit 10.6 to the Company's      Form 10-K for the fiscal year ended December 31, 1993).10.7 -Employment Contract between the Company and Harry H. Penner,      Jr., dated as of October 12, 1993 (incorporated by reference to Exhibit      10.7 to the Company's Form 10-K for the fiscal year ended December 31, 1993).10.8 - Employment Contract between the Company and John F. Tallman,      dated as of December 1, 1993 (incorporated by reference to Exhibit 10.25      to the Company's Form 10-Q for the quarterly period ended September 30,      1994).10.9 - Form of Proprietary Information and Inventions Agreement(incorporated      by reference to Exhibit 10.31 to Registration Statement No. 33-29709 on      Form S-1).10.10 - Collaborative Research Agreement and License and Royalty      Agreement between the Company and Pfizer Inc, dated as of January 1, 1992      (CONFIDENTIAL TREATMENT REQUESTED) (incorporated by reference to Exhibit      10.35 to the Company's Form 10-K for the fiscal year ended December 31,      1991).10.11 -Letter Agreement between the Company and Barry M. Bloom,      dated January 12, 1994 (incorporated by reference to Exhibit 10.25 to the      Company's Form 10-K for the fiscal year ended December 31, 1993).10.12 -Letter Agreement between the Company and Robert H. Roth,      dated April 14, 1994 (incorporated by reference to Exhibit 10.26 to the      Company's Form 10-K for the fiscal year ended December 31, 1994).10.13 -Collaborative Research Agreement and License and Royalty      Agreement between the Company and Pfizer Inc, dated as of July 1, 1994 (CONFIDENTIAL      TREATMENT REQUESTED) (incorporated by reference of Exhibit 10.1 to the Company's      Form 10-Q for the quarterly period ended June 30, 1994).10.14 - Stock Purchase Agreement between the Company and Pfizer      dated as of July 1, 1994 (incorporated by reference to Exhibit 10.2 to the      Company's Form 10-Q for the quarterly period ended June 30, 1994).10.15 -Collaboration and License Agreement and Screening Agreement      between the Company and Schering-Plough Corporation (CONFIDENTIAL TREATMENT      REQUESTED) (incorporated by reference to Exhibit 10.1 to the Company's Form      8-K dated July 28, 1995).10.16 -Lease Agreement between the Company and Commercial Building      Associates dated as of August 30, 1995 (incorporated by reference to Exhibit      10.27 to the Company's Form 10-Q for the quarterly period ended September      30, 1995).10.17 -Collaborative Research Agreement between the Company and      Pfizer dated as of November 1, 1995 (CONFIDENTIAL TREATMENT REQUESTED) (incorporated      by reference to Exhibit 10.1 of the Company's Form 8-K dated November 1,      1995).10.18 -Development and Commercialization Agreement between the      Company and Pfizer dated as of November 1, 1995 (CONFIDENTIAL TREATMENT      REQUESTED) (incorporated by reference to Exhibit 10.2 of the Company's Form      8-K dated November 1, 1995).10.19 -Stock Purchase Agreement between the Company and Pfizer      dated as of November 1, 1995 (incorporated by reference to Exhibit 10.3      of the Company's Form 8-K dated November 1, 1995).10.20 - 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) (incorporated by reference to Exhibit 10.1 of the Company's Form      8-K dated March 31, 1997).10.21 -Technology agreement between the Company and Pfizer Inc,      dated as of June 15, 1999 (CONFIDENTIAL TREATMENT REQUEST) (Incorporated      by reference to Exhibit 10.27 to the Company's Form 10-Q for the quarterly      period ended June 30, 1999).10.22 -Employment Contract between the Company and Alan J. Hutchison,      dated as of December 1, 1997 (incorporated by reference to Exhibit 10.28      to the Company's Form 10-K for the fiscal year ended December 31, 1999).10.23 - Employment Contract between the Company and Stephen R.      Davis, dated as of December 1, 1997 (incorporated by reference to Exhibit      10.29 to the Company's Form 10-K for the fiscal year ended December 31,      1999).10.24 -Employment Contract between the Company and Kenneth R.      Shaw, dated as of December 1, 1999 (incorporated by reference to Exhibit      10.30 to the Company's Form 10-K for the fiscal year ended December 31,      1999).10.25 -Neurogen Corporation 2000 Non-Employee Directors Stock      Option Program (incorporated by reference to Exhibit 10.31 to the Company's      Form 10-Q for the quarterly period ended June 30, 2000).10.26 -Form of the Non-Qualified Stock Option Agreement currently      used in connection with the grant of options under the Neurogen Corporation      2000 Non-Employee Directors Stock Option Program (incorporated by reference      to Exhibit 10.32 to the Company's Form 10-Q for the quarterly period ended      June 30,2000).10.27 -Registration Rights Agreement dated as of June 26, 2000      between the Company and the Purchasers listed on Exhibit A thereto (incorporated      by reference to Exhibit 10.33 to the Company's Form 10-Q for the quarterly      period ended June 30, 2000).10.28 -Severance Agreement between the Company and John F. Tallman,      dated as of January 15, 2001 (incorporated by reference to Exhibit 10.28      to the Company's Form 10-Q for the quarterly period ended March 31, 2001).10.29 -Amended and Restated Neurogen Corporation 2001 Stock Option      Plan, as amended and restated effective September 4, 2001 (incorporated      by reference to Exhibit 10.29 to the Company's Form 10-Q for the quarterly      period ended September 30, 2001).10.30 -Form of Incentive Stock Option Agreement currently used      in connection with the grant of options under the Amended and Restated Neurogen      Corporation 2001 Stoc k Option Plan (incorporated by reference to Exhibit      10.30 to the Company's Form 10-Q for the quarterly period ended September      30, 2001).10.31 -Form of the Non-Qualified Stock Option Agreement currently      used in connection with the grant of options under the Amended and Restated      Neurogen Corporation 2001 Stock Option Plan (incorporated by reference to      Exhibit 10.31 to the Company's Form 10-Q for the quarterly period ended      September 30, 2001).10.32 -Form of Neurogen Special Committee Stock Option Plan (incorporated      by reference to Exhibit 10.32 to the Company's Form 10-Q for the quarterly      period ended September 30, 2001).10.33 -Employment Agreement between the Company and William H.      Koster, dated as of September 4, 2001 (incorporated by reference to Exhibit      10.33 to the Company's Form 10-Q for the quarterly period ended September      30, 2001).10.34 -Severance Agreement between the Company and Harry H. Penner,      Jr., dated as of September 7, 2001 (incorporated by reference to Exhibit      10.34 to the Company's Form 10-Q for the quarterly period ended September      30, 2001).10.35 -Collaboration and License Agreement dated as of December      11, 2001 between the Company and Aventis Pharmaceuticals Inc. (CONFIDENTIAL      TREATMENT REQUESTED Incorporated by reference to Form 10-K for the period      Ended December 31, 2001).10.36 -Modification Agreement dated as of December 1, 2000 between      Neurogen Properties LLC and Connecticut Innovations, Incorporated.10.37 -Construction Loan Agreement dated as of October 22, 1999      between Neurogen Properties LLC and Connecticut Innovations, Incorporated.10.38 -Commercial Term Note dated as of December 21, 2001 held      by the Company and payable to Webster Bank.10.39 -Commercial Loan Agreement dated as of December 21, 2001      between Webster Bank and the Company.21.1 -Subsidiary of the registrant(incorporated by reference      to Exhibit 21.1 to the Company's Form 10-K for the fiscal year ended December      31, 1999).23.1 -Consent of PricewaterhouseCoopers LLP, Independent Accountants.24.1 -Powers of Attorney of Frank C. Carlucci, Robert H. Roth,      John Simon, John F. Tallman, Robert N. Butler, Jeffrey J. Collinson , Suzanne      H. Woolsey, Mark Novitch, Barry M. Bloom, Julian C. Baker, Felix J. Baker      and Craig Saxton.(b)Reports on Form 8-K The Company filed two current reports on Form 8-K on December      21, 2001 to submit for filing News Releases of the Company dated December      20, 2001 announcing an exclusive worldwide collaboration agreement between      Neurogen and Aventis Pharma to develop new drugs for the treatment of several      disorders based on specified Company compounds, and the preliminary results      from a Phase IIA clinical study of the Company's lead drug candidate for      the treatment of anxiety disorders, where the subjects tested showed a trend      toward efficacy that did not achieve statistical significance.
**SIGNATURES**
 Pursuant to the requirements of Section 13 or 15(d) of the  Securities Exchange Act of 1934, the registrant has duly caused this report  to be signed on its behalf by the undersigned, thereunto duly authorized.
 NEUROGEN CORPORATION

 /S/ WILLIAM H. KOSTER  By:______________________________  William H. Koster  President and Chief Executive Officer
October 31, 2002Exhibit 10.35 EXECUTION COPY 
COLLABORATION AND LICENSE AGREEMENT

  DATED DECEMBER 11, 2001

  BETWEEN

  AVENTIS PHARMACEUTICALS INC.

  AND

  NEUROGEN CORPORATION

  ARTICLE 1 DEFINITIONS 1  ARTICLE 2 LICENSES AND EXCLUSIVITY 14  2.1 Development and Commercialization License Grant to Aventis 14  2.2 Reciprocal Research License 14  2.3 Exclusivity 15  2.4 Lock-Up Period 17  2.5 Use of Compounds Outside the Research Program and Product Development Plan  18  2.6 Back-Up Reserve 18  ARTICLE 3 JOINT COMMITTEES 19  3.1 Research Committee 19  3.2 Product Development Committee 20  ARTICLE 4 RESEARCH PROGRAM AND RESEARCH FUNDING 21  4.1 Research Program 21  4.2 Term of the Research Program 22  4.3 Creation and Update of the Research Plan 22  4.4 Conduct of the Research Program 23  4.5 Funding of the Research Program 24  4.6 Invention Assignment Agreements 26  4.7 Reporting and Disclosure 26  4.8 Materials and Compounds 26  ARTICLE 5 DEVELOPMENT, MANUFACTURING AND COMMERCIALIZATION 27  5.1 Aventis Development Responsibilities; Aventis Funding of External Costs  27  5.2 Neurogen Development Responsibilities 27  5.3 Aventis Diligence Requirement 27  5.4 Payments and Progress Reports 29  5.5 Manufacturing 30  5.6 Regulatory Matters 30  ARTICLE 6 NON-Exclusive CONSEQUENCE OF CONFIDENTIALITY AND NON-USE VIOLATION  31  6.1 Certain Remedies 31  ARTICLE 7 INITIAL PAYMENT AND MILESTONE PAYMENTS 32  7.1 Initial Payment 32  7.2 Milestone Payments 32  ARTICLE 8 ROYALTIES 33  8.1 Royalty Rates; Terms; Reduction 33  8.2 Reports and Payments 36  8.3 Taxes and Withholding 36  8.4 Currency Exchange 36  8.5 Maintenance of Records; Audit 37  ARTICLE 9 REPRESENTATIONS, WARRANTIES AND COVENANTS 38  9.1 Mutual Representations and Warranties 38  9.2 Additional Neurogen Representations, Warranties and Covenants 39  9.3 Non-Solicitation 40  ARTICLE 10 CONFIDENTIALITY, PUBLICATION AND PUBLIC ANNOUNCEMENTS 40  10.1 Confidentiality 40  10.2 Authorized Disclosure 41  10.3 SEC Filings 41  10.4 Publications 41  10.5 Public Announcements 41  ARTICLE 11 INDEMNIFICATION 42  11.1 Aventis 42  11.2 Neurogen 42  11.3 Insurance Proceeds 43  11.4 Insurance 43  ARTICLE 12 TERM AND TERMINATION 44  12.1 Term 44  12.2 Voluntary Termination by Aventis 44  12.3 Material Breach 44  12.4 Consequences of Termination or Material Breach 44  12.5 Change of Control 49  12.6 Bankruptcy 50  12.7 Certain Termination at the end of the Research Program 50  12.8 Liabilities 51  ARTICLE 13 INTELLECTUAL PROPERTY 51  13.1 Ownership of Technology and Patent Rights 51  13.2 Patent Prosecution and Maintenance 52  13.3 Enforcement of Patent Rights 54  13.4 Infringement Defense 55  13.5 Cooperation Between the Parties 55  13.6 Marks for Collaboration Products 55  13.7 Listing of CRF1 Receptor Modulatory Compounds 56  ARTICLE 14 MISCELLANEOUS 56  14.1 Disputes 56  14.2 Assignment 57  14.3 Further Actions 57  14.4 Force Majeure 57  14.5 Notices 57  14.6 Amendment 58  14.7 Waiver 58  14.8 Counterparts 58  14.9 Descriptive Headings 59  14.10 Governing Law 59  14.11 Severability 59  14.12 Entire Agreement of the Parties 59  14.13 Independent Contractors 59  14.14 No Trademark Rights 59  14.15 Accrued Rights; Surviving Obligations 59  14.16 Compliance with Export Regulations 59  14.17 No Third Party Beneficiaries 60  14.18 No Strict Construction 60

  Schedules

Schedule 1.1(a) Procedure for Neurogen’s  Standard Screening Assay  Schedule 1.1(c) Examples of Determination of Active Compound  Schedule 1.8 Aventis Project Progression Manual  Schedule 1.29 Examples of Determination of CRF1 Receptor Modulatory Compound  Schedule 1.31 EDC Program Candidates  Schedule 1.56 Neurogen CRF Receptor Technology  Schedule 1.58 Neurogen Initial Report  Schedule 3.2 Product Development Plan  Schedule 4.3 Research Plan  Schedule 7 Examples of Determination of Milestone Payments  Schedule 9.2(b) Neurogen Patent Rights

**COLLABORATION AND LICENSE AGREEMENT**

  THIS COLLABORATION AND LICENSE AGREEMENT (the “Agreement”), dated  as of December 11, 2001, is made by and between Aventis Pharmaceuticals Inc.,  a corporation organized and existing under the laws of the State of Delaware  and having its principal office at Route 202-206, P. O. Box 6800, Bridgewater,  New Jersey 08807 (“Aventis”), and Neurogen Corporation, a corporation  organized and existing under the laws of the State of Delaware and having its  principal office at 35 Northeast Industrial Road, Branford, Connecticut 06405  (“Neurogen”).

**INTRODUCTION**

WHEREAS, Aventis is engaged in the research, development and  commercialization of human pharmaceutical products in a broad range of therapeutic  fields;

WHEREAS, Neurogen has an ongoing research program in the field  of CRF1 Receptors and has developed certain intellectual property in this field;  

WHEREAS, the Parties desire to engage in a collaborative program  to discover, research and develop drugs, which work through modulating CRF1  Receptors;

WHEREAS, it is expected that the resulting compounds from such  ongoing and collaborative research may have a broad range of applications, including,  but not limited to, the therapeutic treatment and prevention of certain CNS  disorders and diseases, such as anxiety and depression; and

WHEREAS, the Parties desire for Aventis to develop and commercialize  CRF1 Receptor-related compounds resulting from such ongoing and collaborative  research.

NOW, THEREFORE, Aventis and Neurogen agree as follows:

**ARTICLE 1  DEFINITIONS**
When used in this Agreement, each of the following capitalizedterms shall have the meanings set forth in this Article 1.
1.1 “Active Compound” shall mean an Aventis Compound, a  Neurogen Compound, or a Joint Compound that is not an Unavailable Compound and  {_______________}(a) The phrase “Activity at a CRF1 Receptor”  shall mean {_____________________}.(b) The phrase “CRF1 Receptor specific”  shall mean not having demonstrated activity or affinity at any receptor, ion  channel or other drug target other than the CRF1 Receptor with a value of less  than {_____________________________________}.(c) For clarity, Schedule 1.1(c) contains examples  which illustrate the application of the Active Compound criteria.1.2 “Affiliate” shall mean a Person that, directly or indirectly,through one or more intermediates, controls, is controlled by, or is under commoncontrol with the Person specified. For the purposes of this definition, controlshall mean the direct or indirect ownership of (i) in the case of corporate entities,securities authorized to cast more than fifty percent (50%) of the votes in anyelection for directors, or (ii) in the case of non-corporate entities, more thanfifty percent (50%) ownership interest with the power to direct the managementand policies of such non-corporate entity. Notwithstanding the foregoing, theterm “Affiliate” shall not include subsidiaries in which a Personor its Affiliates owns a majority of the ordinary voting power to elect a majorityof the board of directors, but is restricted from electing such majority by contractor otherwise, until such time as such restriction is no longer in effect.1.3 “Aventis Compound” shall mean any Compound that (i) iswithin Aventis’ Proprietary Chemical Library and (ii) is screened for activityagainst a CRF1 Receptor for purposes of the Research Program.1.4 “Aventis Confidential Information” shall mean ConfidentialInformation owned by Aventis or its Affiliates or otherwise designated as AventisConfidential Information hereunder but shall not include Joint Confidential Information.1.5 “Aventis Contributed Technology” shall mean the AventisCRF1 Compound Technology and Aventis CRF1 Receptor Technology, each as definedbelow. Notwithstanding any other provision of this Agreement, it is understoodand agreed to by the Parties that the Aventis Contributed Technology does notinclude any of Aventis’ proprietary screening, pharmaceutical development,regulatory or commercialization Technology that is not specific to CRF1.(a) “Aventis CRF1 Compound Technology”  shall mean all Technology (other than Joint Technology) owned or Controlled  by Aventis on the Effective Date or during the Research Program, which (i) is,  relates specifically to, claims or describes any Aventis Compound that qualifies  as an Active Compound or (ii) that is particular to CRF1 Receptor Antagonist/Agonists  and is necessary to research, develop, make, use or sell any Aventis Compound,  Neurogen Compound, or Joint Compound that qualifies as an Active Compound.(b) “Aventis CRF1 Receptor Technology”  shall mean all Technology (other than Joint Technology) owned or Controlled  by Aventis on the Effective Date or during the term of the Research Program  that relates specifically to, claims or describes a CRF1 Receptor or the use  thereof, or that is necessary to determine if a Compound has Activity at a CRF1  Receptor.  1.6 “Aventis Indemnified Party” shall mean Aventis and its  Affiliates and their respective directors, officers, employees and agents entitled  to indemnification from Neurogen in accordance with Section 11.2 below.  1.7 “Aventis Invention” shall have the meaning set forth  in Section 13.1 hereof.  1.8 “Aventis Project Progression Manual” shall mean the internal  Aventis manual and policy for the progression of research and development projects  in use as of the Effective Date and attached hereto as Schedule 1.8 with such  changes as Aventis shall make to it as notified to the Research Committee; provided  that, if any such change alters any right to receive milestone payments or royalties  by either Party under this Agreement, such right shall continue as provided  for by the manual in use prior to such change, unless otherwise mutually agreed  to by the Par ties.  1.9 “Aventis Personnel” shall mean professional researchers  and scientists, and regulatory, clinical, and managerial personnel, who are  employees of Aventis (or whose services were contracted for by Aventis) and  having at least a Bachelors Degree in science and other academic or professional  credentials demonstrating appropriate expertise for the tasks to be performed  under the Research Plan or Product Development Plan, as the case may be.  1.10 “Breach Notice” shall mean a written notice of material  breach as provided for in Section 12.3 below.  1.11 “Breaching Party” shall have the meaning set forth in  Section 12.3 below.  1.12 “Burdened Compound” shall mean a Compound as to which  there exists Third Party rights or other limitations on use, manufacture or  sale, including, without limitation, such that licensing, royalty or other similar  fees or payments must be made to a Third Party in connection with the use, manufacture  or sale of such Compound.  1.13 “Business Day” shall mean any day except a Saturday,  Sunday, or any other day on which a commercial bank in New York, New York is  authorized to close. Any reference in this agreement to “day” whether  or not capitalized shall refer to a calendar day, not a Business Day.  1.14 “Change of Control of Neurogen” shall mean (i) the acquisition,  directly or indirectly, by a Significant Pharmaceutical Enterprise, of securities  entitled to cast fifty percent (50%) or more of the votes in any election of  directors of Neurogen, (ii) the sale or other transfer to a Significant Pharmaceutical  Enterprise of all or substantially all of Neurogen’s assets to which this  Agreement relates or (iii) a business combination transaction with a Significant  Pharmaceutical Enterprise, whether by means of merger, consolidation, reverse  stock split or otherwise, which results in the voting securities of Neurogen  outstanding immediately prior thereto ceasing to represent at least fifty percent  (50%) of the combined voting power of the surviving entity immediately after  such business combination transaction.  1.15 “Collaboration Product” shall mean any CRF1 Receptor  Antagonist/Agonist, the manufacture, import, use, marketing, offer for sale  or sale of which, if done by a Third Party (without a license to any CRF1 Patent  Rights) would infringe CRF1 Patent Rights.  1.16 “Combination Product” shall mean:(a) with respect to a Collaboration Product, a Collaboration    Product that is combined with one or more active ingredients that are not    CRF1 Receptor Antagonist/Agonists covered by the CRF1 Patent Rights; and(b) with respect to an Ex-Program Product, an Ex-Program    Product, for which Aventis has made an election to pay Royalties pursuant    to Section 2.3(b)(i)(A), that is combined with one or more active ingredients    that are not CRF1 Receptor Antagonist/Agonists obtained by Aventis pursuant    to Section 2.3(b)(i).(c) with respect to a Competing Product, a Competing    Product that is combined with one or more active ingredients that are not    CRF1 Receptor Antagonist/Agonists.  1.17 “Commercially Reasonable Efforts” shall mean, with respect  to a Party, the efforts and resources which would be used (including without  limitation the promptness in which such efforts and resources would be applied)  by that Party consistent with its normal business practices, which in no event  shall be less than the level of efforts and resources standard in the pharmaceutical  industry for a pharmaceutical company similar in size to such Party with respect  to product or potential product at a similar stage in its development or product  life and of similar market potential taking into account mechanism of action,  efficacy, safety, the anticipated Regulatory Authority approved labeling, the  competitiveness of alternative products {_________}that are in the marketplace  or under development, the patent and other proprietary position of the product,  the likelihood of Regulatory Approval, the profitability of the product and  other relevant factors. For clarity, the efforts required by a Party necessary  to constitute Commercially Reasonable Efforts shall {_____________________}.  1.18 “Commercially Reasonable Indications” shall mean, those  therapeutic indications designated by the Product Development Committee as being  a pharmaceutical indication where reasonable scientific and commercial evidence  exist supporting the research, development and commercialization of CRF1 Receptor  Antagonist/Agonists for the treatment of such indication.   1.19 “Competing Indication” shall have the meaning set forth  in Section 2.3(b)(i).  1.20 “Competing Product” shall have the meaning set forth  in Section 2.3(b)(i)(B).  1.21 “Compound” shall mean a chemical compound or substance  and prodrugs, enantiomers, salt forms, hydrates, stereo-isomers and racemates  thereof.  1.22 “Confidential Information” shall mean all proprietary  materials, know-how or other information (whether or not patentable) regarding  a Party’s technology, products, business information or objectives, which  is designated as confidential in writing by the disclosing Party, whether by  letter or by the use of an appropriate stamp or legend, prior to or at the time  any such material, know-how or other information is disclosed by the disclosing  Party to the other Party. Notwithstanding anything contained in the foregoing  to the contrary, materials, know-how or other information which is orally, electronically  or visually disclosed by a Party, or is disclosed in writing without an appropriate  letter, stamp or legend, shall constitute Confidential Information of a Party  (i) if the disclosing Party, within thirty (30) days after such disclosure,  delivers to the other Party a written document or documents describing the materials,  know-how or other information and referencing the place and date of such oral,  visual, electronic or written disclosure and the names of the persons to whom  such disclosure was made, or (ii) such information is of the type that is customarily  considered to be confidential information by persons engaged in activities that  are substantially similar to the activities being engaged in by the Parties.  Notwithstanding the foregoing, any technical or financial information of a Party  disclosed at a meeting of the Research Committee or the Product Development  Committee (or any subcommittee) or disclosed through an audit report shall constitute  Confidential Information of that Party unless otherwise specified.  1.23 “Control,” “Controls,” or “Controlled”  shall mean with respect to Technology, the possession of the ability to grant  licenses or sublicenses without violating the terms of any agreement or other  arrangement with, or the rights of, any other Person.   1.24 “CRF” shall mean corticotropin releasing factor.  1.25 “CRF Family Member” shall mean CRF, urocortin I, urocortin  II, sauvagine, or urotensin or any fragments thereof that bind to a CRF1 Receptor.  1.26 “CRF1 Patent Rights” shall mean Patent Rights owned  or Controlled by a Party which relate to the composition or use of (i) (a) a  CRF1 Receptor Antagonist/Agonist that is within the Neurogen Contributed Technology,  the Aventis Contributed Technology or the Joint Technology and (b) assert a  priority date no later than twelve (12) months after the expiration of the Research  Program, (ii) a CRF1 Receptor Antagonist/Agonist that is required to be recorded  by the Party on the list specified in Section 13.7, other than Unavailable Compounds,  or (iii) a CRF1 Receptor Antagonist/Agonist that would be an “obvious”  (as such term is used in 35 USC §103(a)) variant of a Compound described  in preceding clause ii, other than Unavailable Compounds. Notwithstanding the  foregoing, in no event shall CRF1 Patent Rights include any rights obtained  by Aventis to participate in the development or commercialization of an Ex-Program  Product.  1.27 “CRF1 Receptor” shall mean the subtype-1 transmembrane  corticotropin releasing factor receptor found in humans and other species of  animal that{______________________}.  1.28 “CRF1 Receptor Antagonist/Agonist” shall mean {______________________}.  1.29 “CRF1 Receptor Modulatory Compound” shall mean an Aventis  Compound, Neurogen Compound or Joint Compound that has been shown to bind to  a CRF1 Receptor with an affinity value of {_______________________}. For clarity,  Schedule 1.29 contains examples which illustrate the application of the CRF1  Receptor Modulatory Compound criteria.  1.30 “Disclosing Party” shall mean a Party disclosing Confidential  Information as provided in Section 10.1.  1.31 “EDC Program Candidates” shall mean the Neurogen Compounds  designated as NDT 9514579, NDT 9514530, NDT 9514519, NDT 9514750 and NDT 9521084,  each as more fully described in Schedule 1.31. These EDC Program Candidates  shall be deemed Lead Program Compounds for purposes of this Agreement and may  be designated as EDC Program Compounds upon qualification as such in accordance  with the Aventis Project Progression Manual and selection by the Product Development  Committee.  1.32 “EDC Program Compound” shall mean a Lead Program Compound  (i) that meets the “EDC” criteria of Aventis as contained in the  Aventis Project Progression Manual, and (ii) that is selected as an EDC Program  Compound by the Product Development Committee in accordance with Article 3.  1.33 “Effective Date” shall mean the date first above written.  1.34 “Enforcing Party” shall mean a Party enforcing Patent  Rights in accordance with Section 13.3(c).  1.35 “European Union” shall mean, from time to time, those  countries that are members of the European Union.  1.36 “Ex-Program Product” shall have the meaning set forth  in Section 2.3(b)(i).  1.37 “FDA” shall mean the United States Food and Drug Administration,  or any successor agency thereof.  1.38 “First Commercial Sale” shall mean, with respect to  any product approved by a Regulatory Authority for commercial sale as a drug,  the first sale by the applicable Party or its Affiliates or sublicensees of  such product to a Third Party.  1.39 “Force Majeure” shall mean any occurrence beyond the  reasonable control of a Party that prevents or substantially interferes with  the performance by the Party of any of its obligations hereunder, if such occurs  by reason of any act of God, flood, fire, explosion, earthquake, strike, lockout,  labor dispute, casualty or accident; or war, revolution, civil commotion, acts  of public enemies, blockage or embargo; or any injunction, law, order, proclamation,  regulation, ordinance, demand or requirement of any government (to the extent  such government has ruling authority over such Party) or of any subdivision,  authority or representative of any such government; or breakdown of plant, inability  to procure or use materials, labor, equipment, transportation, or energy sufficient  to meet manufacturing needs without the necessity of allocation; or any other  cause whatsoever, whether similar or dissimilar to those above enumerated, beyond  the reasonable control of such Party, if and only if the Party affected shall  have used reasonable efforts to avoid such occurrence and to remedy it promptly  if it shall have occurred.  1.40 “FTE” shall mean a full time equivalent person year  (consisting of a total of 1,760 hours per calendar year, or 440 hours per calendar  quarter) of scientific, technical or managerial work on or directly related  to the Research Program or the clinical development of Collaboration Products.  1.41 “Hit Program Compound” shall mean any Compound that  is designated as a Hit Program Compound by the Research Committee pursuant to  Section 4.1(b) below, which designation has not been cancelled pursuant to Section  4.1(c).  1.42 “IAC” shall mean the Independent Arbitration Council  described in Section 5.3(c).  1.43 “IND” shall mean an Investigational New Drug Application,  as defined in the U.S. Federal Food, Drug, and Cosmetic Act, as amended, and  the regulations promulgated thereunder, or the equivalent thereto as specified  in any succeeding legislation, or its foreign equivalent for initiating clinical  trials in the United States or any foreign country.  1.44 “Joint Compounds” shall mean Compounds invented and  synthesized in the conduct of the Research Program, provided however that Joint  Compounds shall not include any (i) Compounds which were, prior to such invention  and synthesis, contained in a Party’s Proprietary Chemical Library or  (ii) Compounds invented or synthesized in the screening and optimization chemistry  activities contemplated by Section 4.1(a)(ii) and (iii).  1.45 “Joint Confidential Information” shall mean Confidential  Information owned jointly by Aventis and Neurogen or otherwise designated as  Joint Confidential Information hereunder.  1.46 “Joint Inventions” shall have the meaning set forth  in Section 13.1.  1.47 “Joint Technology” shall mean Technology that is particular  to the use of a CRF1 Receptor, or is necessary to research, develop, make, use,  or sell a Collaboration Product, which Technology (i) is invented during the  term of the Research Program in the course of carrying out the Research Program,  or (ii) is invented jointly by the Parties during the term of the Product Development  Program in the course of carrying out the Product Development Program.  1.48 “Lead Program Compound” shall mean a Hit Program Compound  that meets the “Lead Selection” criteria of Aventis as contained  in the Aventis Project Progression Manual.  1.49 “Mark” shall have the meaning set forth in Section 13.6.  1.50 “Materials” shall mean proprietary clones, cell lines,  assays, reagents and materials derived therefrom useful in the conduct of the  Research Program. For clarity, Materials shall not include Compounds.  1.51 “Milestone Payments” shall mean the payments to be made  by Aventis to Neurogen upon occurrence of certain events as set forth in Article  7.  1.52 “NDA” shall mean a New Drug Application pursuant to  21 U.S.C. Section 505(b)(1) submitted to the FDA or any successor application  or procedure or any foreign counterpart of a U.S. New Drug Application for approval  to market, including, where applicable, applications for pricing and reimbursement  approval.  1.53 “Net Sales” shall mean:(a) with respect to Aventis, the gross amounts invoiced    by any of Aventis or its Affiliates or sublicensees on account of sales of    a Collaboration Product or Ex-Program Product, as applicable, to Third Parties    (including without limitation Third Party distributors and wholesalers), less    the total of:(i) Trade, cash and/or quantity discounts actually    allowed which are not already reflected in the amount invoiced;(ii) Excise, sales and other consumption taxes (including    VAT on the sale of Collaboration Products or Ex-Program Products, as applicable)    and custom duties to the extent included in the invoice price and to the extent    such taxes are remitted to the applicable taxing authority;(iii) Freight, insurance and other transportation    charges to the extent included in the invoice price and separately identified    on the invoice or other documentation maintained in the ordinary course of    business;(iv) Amounts repaid or credited by reason of returns,    rejections, defects or recalls or because of chargebacks, retroactive price    reductions, refunds or billing errors; and(v) Compulsory payments and rebates directly related    to the sale of Collaboration Products or Ex-Program Products, as applicable,    accrued, paid or deducted in a manner consistent with generally accepted accounting    principles, pursuant to agreements (including, but not limited to, managed    care agreements) or governmental regulations.  Use of Collaboration Products and Ex-Program Products for promotional or sampling  purposes and for use in clinical trials contemplated under this Agreement shall  not be considered in determining Net Sales. In the case of any sale of a Collaboration  Product or Ex-Program Product between or among Aventis and its Affiliates or  sublicensees for resale, Net Sales shall be calculated as above only on the  first arm’s length sale thereafter to a Third Party.
In the event a Collaboration Product or Ex-Program Product, as applicable,  is sold as part of a Combination Product, the Net Sales from the Combination  Product, for the purposes of determining royalty payments, shall be determined  by multiplying the Net Sales of the Combination Product (as defined in the standard  Net Sales definition), during the applicable royalty reporting period, by the  fraction, A/A+B, where A is the average per unit sale price of active ingredient  contained in the Collaboration Product or Ex-Program Product, as applicable,  when sold separately in finished form in the country in which the Combination  Product is sold and B is the average per unit sale price of active ingredient  contained in the other product(s) included in the Combination Product when sold  separately in finished form in the country in which the Combination Product  is sold, in each case during the applicable royalty reporting period or, if  sales of the Collaboration Product or Ex-Program Product, as applicable, alone  did not occur in such period, then in the most recent royalty reporting period  in which arms length fair market sales of such Collaboration Product or Ex-Program  Product, as applicable, occurred. In the event that such average sale price  cannot be determined for both the Collaboration Product or Ex-Program Product,  as applicable, on the one hand, and all other product(s) included in the Combination  Product, on the other, Net Sales for the purposes of determining royalty payments  shall be mutually agreed upon by the Parties based on the relative value contributed  by each component, such agreement not to be unreasonably withheld
(b) With respect to Neurogen, the gross amounts invoiced  by any of Neurogen or its Affiliates or sublicensees on account of sales of  a Competing Product to Third Parties (including without limitation Third Party  distributors and wholesalers), less the total of:(i) Trade, cash and/or quantity discounts actually  allowed which are not already reflected in the amount invoiced;(ii) Excise, sales and other consumption taxes (including  VAT on the sale of Competing Products) and custom duties to the extent included  in the invoice price and to the extent such taxes are remitted to the applicable  taxing authority;(iii) Freight, insurance and other transportation  charges to the extent included in the invoice price and separately identified  on the invoice or other documentation maintained in the ordinary course of business;(iv) Amounts repaid or credited by reason of returns,  rejections, defects or recalls or because of chargebacks, retroactive price  reductions, refunds or billing errors; and(v) Compulsory payments and rebates directly related  to the sale of Competing Products, accrued, paid or deducted in a manner consistent  with generally accepted accounting principles, pursuant to agreements (including,  but not limited to, managed care agreements) or governmental regulations.Use of Competing Products for promotional or sampling purposes and for use inclinical trials contemplated under this Agreement shall not be considered in determiningNet Sales. In the case of any sale of a Competing Product between or among Neurogenand its Affiliates or sublicensees for resale, Net Sales shall be calculated asabove only on the first arm’s length sale thereafter to a Third Party.
In the event a Competing Product is sold as part of a Combination Product,  the Net Sales from the Combination Product, for the purposes of determining  royalty payments, shall be determined by multiplying the Net Sales of the Combination  Product (as defined in the standard Net Sales definition), during the applicable  royalty reporting period, by the fraction, A/A+B, where A is the average per  unit sale price of active ingredient contained in the Competing Product when  sold separately in finished form in the country in which the Combination Product  is sold and B is the average per unit sale price of active ingredient contained  in the other product(s) included in the Combination Product when sold separately  in finished form in the country in which the Combination Product is sold, in  each case during the applicable royalty reporting period or, if sales of the  Competing Product alone did not occur in such period, then in the most recent  royalty reporting period in which arms length fair market sales of such Competing  Product occurred. In the event that such average sale price cannot be determined  for both the Competing Product and all other product(s) included in the Combination  Product, Net Sales for the purposes of determining royalty payments shall be  mutually agreed upon by the Parties based on the relative value contributed  by each component, such agreement not to be unreasonably withheld.

1.54 “Neurogen Compound” shall mean any Compound that (i)  is within Neurogen’s Proprietary Chemical Library and (ii) is described  in the Neurogen Initial Report or screened for activity against a CRF1 Receptor  for purposes of the Research Program.  1.55 “Neurogen Confidential Information” shall mean Confidential  Information owned by Neurogen or its Affiliates or otherwise designated as Neurogen  Confidential Information hereunder but shall not include Joint Confidential  Information.  1.56 “Neurogen Contributed Technology” shall mean the Neurogen  CRF1 Compound Technology and Neurogen CRF1 Receptor Technology, each as defined  below. Notwithstanding any other provision of this Agreement, it is understood  and agreed by the Parties that the Neurogen Contributed Technology does not  include any of Neurogen’s proprietary screening or pharmaceutical development  Technology that is not specific to CRF1. For example, Neurogen Contributed Technology  does not include Neurogen’s AIDDTM Technology.(a) “Neurogen CRF1 Compound Technology”  shall mean all Technology (other than Joint Technology) owned or Controlled  by Neurogen on the Effective Date or during the Research Program, which (i)  are the EDC Program Candidates, (ii) is, relates specifically to, claims or  describes any Neurogen Compound that qualifies as an Active Compound or (iii)  that is particular to CRF1 Receptor Antagonist/Agonists and is necessary to  research, develop, make, use or sell any Neurogen Compound, Aventis Compound,  or Joint Compound that qualifies as an Active Compound. Neurogen CRF1 Compound  Technology will specifically include, without limitation, information regarding  CRF1 Receptor-related pharmacophores and the Patent Rights set forth on Schedule  1.56 hereto, which schedule may be amended, updated or replaced by the Non-Referable  decision of the Research Committee.(b) “Neurogen CRF1 Receptor Technology”  shall mean all Technology (other than Joint Technology) owned or Controlled  by Neurogen on the Effective Date or during the Research Program that relates  specifically to, claims or describes a CRF1 Receptor or the use thereof, or  that is reasonably necessary to determine if a Compound has Activity at a CRF1  Receptor, including without limitation, Neurogen’s standard screening  assay, the procedure for which is set forth in Schedule 1.1(a).1.57 “Neurogen Indemnified Party” shall mean Neurogen and itsAffiliates and their respective directors, officers, employees and agents entitledto indemnification from Aventis in accordance with Section 11.1 below.1.58 “Neurogen Initial Report” shall mean a report deliveredby Neurogen prior to the Effective Date containing (i) the number, structure andscreening results (including structure activity relationship data) of all Compoundsscreened by Neurogen through the date of such report which have Activity at aCRF1 Receptor and are not Unavailable Compounds and, to the extent any such Compoundis known to be a Burdened Compound, the nature of the circumstances resultingin such status; (ii) the number of Compounds which would have been required tohave been listed pursuant to item (i) above but for the fact that such Compoundsare Unavailable Compounds and the nature of the circumstances resulting in suchstatus; and (iii) the structure of all Compounds screened by Neurogen in Neurogen’sstandard screening assay (the procedure for which is set forth in Schedule 1.1(a))through the date of such report which have been shown not to have Activity ata CRF1 Receptor and that fall within the generic scope of a claim (within Neurogen’sPatent Rights) that includes within its scope any EDC Program Candidate, whichreport shall be attached to this Agreement as Schedule 1.58.1.59 “Neurogen Invention” shall have the meaning set forthin Section 13.1 hereof.1.60 “Neurogen Researchers” shall mean professional researchersand scientists who are employees of Neurogen and having at least a Bachelors Degreein science and other academic or professional credentials demonstrating appropriateexpertise for the task to be performed under the Research Plan or the ProductDevelopment Plan, as the case may be.1.61 “Non-Breaching Party” shall mean a Party sending a BreachNotice in accordance with Section 12.3 below.1.62 “Non-Enforcing Party” shall mean, where one Party is enforcingPatent Rights against a Third Party, the other Party.1.63 “Non-Referable” shall have the meaning set forth in Section3.1(c) hereof.1.64 “Party” shall mean Aventis or Neurogen, as the case maybe, and “Parties” shall mean Aventis and Neurogen.1.65 “Patent Rights” shall mean the rights and interests inand to all issued patents and pending patent applications in any country, includingwithout limitation, all provisional applications, substitutions, continuations,continuations-in-part, divisions, and renewals, all letters patent granted thereon,and all patents-of-addition, reissues, reexaminations and extensions or restorationsby existing or future extension or restoration mechanisms.1.66 “Person” shall mean any individual, firm, corporation,partnership, limited liability company, trust, unincorporated organization orother entity or a government agency or political subdivision thereto, and shallinclude any successor (by merger or otherwise) of such Person.1.67 “Phase I Study” shall mean a clinical study in human subjectsto generally evaluate the pharmacokinetic and safety properties of a drug candidate.One or more of the following properties may be evaluated: maximum tolerated dose;dosing interval; exposure; and absorption, distribution, metabolism and excretion(ADME).1.68 “Phase IIA Study” shall mean a clinical study in a targetpatient population to evaluate preliminary efficacy and/or further safety of adrug candidate. One or more of the following properties may be evaluated: exploration,dose response, duration of effect and kinetic/dynamic relationship.1.69 “Phase IIB Study” shall mean a controlled dose rangingclinical trial to evaluate further the efficacy and safety of a candidate drugin the targeted patient population and to attempt to define an appropriate dosingregimen.1.70 “Phase III Study” shall mean a controlled clinical trialto confirm with statistical significance the efficacy and safety of the drug inlarger, targeted patient populations, performed to obtain Regulatory Approvalof an NDA, or to enhance the profile of a product for a non-approved indicationand not required or pivotal for Regulatory Approval of an NDA.1.71 “Product Development Committee” shall have the meaningset forth in Section 3.2.1.72 “Product Development Plan” shall have the meaning setforth in Section 3.2.1.73 “Proprietary Chemical Library” shall mean those Compoundsthat a Party owns or Controls as of the Effective Date, or that come into theParty’s ownership or Control (other than by licenses granted in this Agreement)during the term of the Research Program (other than those Joint Compounds thatwere not within a Party’s ownership or Control prior to the invention orsynthesis of such Joint Compound in the Research Program).1.74 “Provider Lock-Up Period.” shall have the meaning setforth in Section 2.4(c)(ii).1.75 “Providing Party” shall have the meaning set forth inSection 2.4(a).1.76 “Receiver Lock-Up Period” shall have the meaning set forthin Section 2.4(c)(i).1.77 “Receiving Party” shall have the meaning set forth inSection 2.4(a).1.78 “Recipient” shall have the meaning set forth in Section10.1.1.79 “Regulatory Approval” shall mean the technical, medicaland scientific licenses, registrations, authorizations and approvals (including,without limitation, approvals of NDAs, supplements and amendments, pre- and post-approvals, pricing and third party reimbursement approvals, and labeling approvals)of any national, supra-national, regional, state or local regulatory agency, department,bureau, commission, council or other governmental entity, necessary for the development(including the conduct of clinical trials), manufacture, distribution, marketing,promotion, offer for sale, use, import, export or sale of Collaboration Product(s)in a regulatory jurisdiction.1.80 “Regulatory Authority” shall mean any national (e.g.,the FDA), supra-national (e.g., the European Commission or the European Agencyfor the Evaluation of Medicinal Products), regional, state or local regulatoryagency, department, bureau, commission, council or other governmental entity ineach country of the territory involved in the granting of Regulatory Approval.1.81 “Research Committee” shall have the meaning set forthin Section 3.1.1.82 “Research Plan” shall have the meaning set forth in Section4.3.1.83 “Research Program” shall mean the collaborative researchprogram conducted in accordance with the provisions of Article 4 below duringthe Initial Term and any extension thereof.1.84 “Retained Indications” shall have the meaning set forthin Section 2.3(b)(i)(B).1.85 “Royalties” shall mean those royalties payable by Aventisto Neurogen, or Neurogen to Aventis, as the case may be, pursuant to this Agreement.1.86 “Significant Pharmaceutical Enterprise” shall mean (a)company (other than Aventis or an Aventis Affiliate) which, together with itsAffiliates, had worldwide annual gross revenues from the sale of pharmaceuticalproducts in excess of $5.0 billion during its most recently completed fiscal yearand (b) any Affiliate of such company.1.87 “Technology” shall mean proprietary data, information,Compounds, Materials, intellectual property, including but not limited to, tradesecrets, know-how, inventions and technology, whether patentable or not, and PatentRights directed to any of the foregoing.1.88 “Third Party(ies)” shall mean any Person other than Neurogen,Aventis and their respective Affiliates.1.89 “Unavailable Compound” shall mean a Compound that hasbeen reported by one Party to the other as not being available for research anddevelopment in the Research Program because (x) prior to the screening or optimizationof the Compound (as contemplated by Section 4.1(a)(ii) and (iii)) to determinewhether it could be an Active Compound or (y) with respect to Compounds disclosedin the Neurogen Initial Report, prior to the date of the Neurogen Initial Report,in either case (i) rights were granted by Aventis (or any Affiliate of Aventis)or Neurogen (or any Affiliate of Neurogen) to a Third Party that would be violatedby such research or development or (ii) the Compound was committed to anotherinternal program (non-CRF1) of Aventis (or any Affiliate of Aventis) or Neurogen(or any Affiliate of Neurogen). Such report may be made on a Compound by Compoundbasis or by a generic description applicable to a group or class of Compounds.1.90 “Valid Claim” shall mean a claim of an issued and unexpiredpatent or a claim of a pending patent application, which claim has not been heldinvalid or unenforceable by a court or other government agency of competent jurisdictionfrom which no appeal can be or has been taken and has not been admitted to beinvalid or unenforceable through re-examination or disclaimer or otherwise; provided,however, that if a claim of a pending patent application shall not have issuedwithin five years after the filing date from which such claim takes priority suchclaim shall not constitute a Valid Claim for the purposes of this Agreement unlessand until such claim shall issue.1.91 “Weighted Average Royalty Rate” shall mean the amountA divided by B (A/B) where A is the sum of (i) the product of the aggregate NetSales of a Collaboration Product up to and including {_______} in a calendar yearmultiplied by {____}, plus (ii) the product of the incremental aggregate Net Salesof the Collaboration Product over {_____} up to and including {_________} in acalendar year multiplied by {____}, plus (iii) the product of the incrementalaggregate Net Sales of the Collaboration Product over {______} up to and including{__________} in a calendar year multiplied by {_____}, plus (iv) the product ofthe incremental aggregate Net Sales of the Collaboration Product over {__________}in a calendar year multiplied by {____}, and B is the aggregate Net Sales of theCollaboration Product in a calendar year.
**ARTICLE 2   LICENSES AND EXCLUSIVITY**2.1 Development and Commercialization License Grant to Aventis. Subjectto the obligations, conditions, and termination rights set forth herein, Neurogenhereby grants to Aventis the sole and exclusive worldwide right and license, withthe right to sublicense, under the Neurogen Contributed Technology, Neurogen’sinterest in any Joint Technology and Neurogen’s interest in the CRF1 PatentRights, to develop, have developed, make, have made, use, import, market, havemarketed, offer for sale, sell and have sold Collaboration Products. For purposesof clarification, unless otherwise expressly provided for herein, there shallbe no limitation on the licenses granted pursuant to this Section 2.1 regardingindications for which Collaboration Products may be used.2.2 Reciprocal Research License.(a) Neurogen grants to Aventis a co-exclusive worldwide  right and license, with no right to sublicense, under the Neurogen Contributed  Technology and Neurogen’s interest in any Joint Technology, to conduct  the Research Program in accordance with the Research Plan.(b) Aventis grants to Neurogen a co-exclusive worldwide  right and license, with no right to sublicense, under the Aventis Contributed  Technology, and Aventis' interest in any Joint Technology, to conduct the Research  Program in accordance with the Research Plan.(c) The licenses granted pursuant to this Section  2.2 and Section 2.1 above include the right of each licensee thereunder to use  its Affiliates in exercising such rights and carrying out its obligations under  this Agreement; provided that in the event any such Affiliate ceases to meet  the definition of an Affiliate (whether due to the transfer or sale of all or  substantially all of the assets or stock of such Affiliate or otherwise) then  such right with respect to such Affiliate shall terminate.2.3 Exclusivity.(a) During the term of the Research Program, neither  Party nor its Affiliates shall conduct any other (i.e., other than those activities  specified by this Agreement or by the Research Committee pursuant hereto) research,  development, manufacturing or commercialization activity, alone or with others,  directed to CRF1 Receptor Antagonist/Agonists; provided that the activity of  a Party directed toward discovering Active Compounds for purposes of the Research  Program as contemplated by Section 4.1(a)(ii) and (iii) shall not be a violation  of this Section 2.3(a).(b) Following the term of the Research Program, Aventis  and any Affiliates of Aventis may conduct an independent program related to  CRF1, provided that: (i) So long as Aventis retains the rights and responsibilities  to pursue the research, development or commercialization of Collaboration Products  as set forth herein, if Aventis or any of its Affiliates acquires by in-licensing,  merger or acquisition rights to participate in the development or commercialization  (including without limitation a right to pursue, directly or through any Third  Party, clinical development or marketing) of any CRF1 Receptor Antagonist/Agonist  which is not a Collaboration Product (an “Ex-Program Product”),  then prior to pursuing or participating in any such development or commercial  activities for any indication, Aventis shall identify in writing to Neurogen  each indication which Aventis expects to pursue for the Ex-Program Product (each  such indication, a “Competing Indication”) and shall either:(A) pay to Neurogen, for any and all Net Sales of  such Ex-Program Product, {_________} of the Royalties that would be due to Neurogen  in accordance with Article 8 if such Ex-Program Product were a Collaboration  Product. Any obligation to pay Royalties which arises under this subsection  (A) prior to the termination of this Agreement shall survive such termination,  unless Neurogen elects to forfeit such Royalties pursuant to Section 12.4(a)(xi);  or(B) transfer to Neurogen exclusively (even as to Aventis)  all rights Aventis has under this Agreement to research, develop and commercialize  Collaboration Products for any and all such Competing Indications, including  without limitation, any Collaboration Product which is then being developed  or commercialized for a Competing Indication. Any Collaboration Product developed  by Neurogen for a Competing Indication is herein referred to as a “Competing  Product.” All indications, other than Competing Indications for which  Aventis has not elected to pay Royalties pursuant to Section 2.3(b)(i)(A) above,  are herein referred to as “Retained Indications.” To the extent  that responsibilities for certain patent filings, regulatory filings and the  like relate to Competing Indications and Retained Indications the Parties will  coordinate their efforts to jointly administer, maintain and prosecute such  matters.(ii) If any rights are transferred to Neurogen in  accordance with Section 2.3(b)(i)(B), and Neurogen subsequently, either itself  or through an Affiliate or Third Party, commercializes a Competing Product,  Neurogen will make the following payments to Aventis:(A) If Neurogen, either itself or through an Affiliate  or Third Party, markets a Competing Product that was the subject of a NDA filed  by Aventis or approved by a Regulatory Authority prior to transfer to Neurogen,  Neurogen shall pay to Aventis {______} of the Royalties that (if such Competing  Product were a Collaboration Product sold by Aventis) would be due to Neurogen  in accordance with Article 8;(B) If Neurogen, either itself or through an Affiliate  or Third Party, markets a Competing Product that was the subject of a Phase  III Study completed by Aventis prior to transfer to Neurogen, Neurogen shall  pay to Aventis {____} of the Royalties that (if such Competing Product were  a Collaboration Product sold by Aventis) would be due to Neurogen in accordance  with Article 8;(C) If Neurogen, either itself or through an Affiliate  or Third Party, markets a Competing Product that was the subject of a Phase  IIB Study completed by Aventis prior to transfer to Neurogen, Neurogen shall  pay to Aventis {____} of the Royalties that (if such Competing Product were  a Collaboration Product sold by Aventis) would be due to Neurogen in accordance  with Article 8;(D) If Neurogen, either itself or through an Affiliate  or Third Party, markets a Competing Product that was the subject of a Phase  IIA Study completed by Aventis prior to transfer to Neurogen, Neurogen shall  pay to Aventis {____} of the Royalties that (if such Competing Product were  a Collaboration Product sold by Aventis) would be due to Neurogen in accordance  with Article 8;(E) If Neurogen, either itself or through an Affiliate  or Third Party, markets a Competing Product containing an EDC Program Compound  that was the subject of a Phase I Study completed by Aventis prior to transfer  to Neurogen, Neurogen shall pay to Aventis a Royalty of {____} of aggregate  Net Sales; and(F) If Neurogen, either itself or through an Affiliate  or Third Party, develops and commercializes a Competing Product which was not  the subject of a clinical trial completed by Aventis, Neurogen shall pay to  Aventis, upon First Commercial Sale of the Competing Product, {____________________}.(iii) With respect to any obligation on the part of  Neurogen to pay Royalties to Aventis on account of Net Sales of a Competing  Product, the provisions of Sections 8.2, 8.3, 8.4 and 8.5 shall apply mutatis  mutandis.(c) Neither Neurogen nor any Affiliate may commence  discussions with a Third Party regarding a potential CRF1 program with such  Third Party without giving Aventis at least sixty (60) days advance written  notice of the commencement of such discussions. For clarity, once Neurogen has  given notice and commenced such discussions with any Third Party, no further  notice need be given before commencing additional discussions with the same  or other Third Parties.(d) For clarity, it is understood and agreed that,  except as set forth in Sections 2.4, 2.5, and 2.6 below, during the term of  this Agreement and thereafter, each Party may screen any Joint Compound against  any target.2.4 Lock-Up Period. (a) In the event that one Party (the “ProvidingParty”) discloses Confidential Information delineating Compound structureswithin such Party’s Proprietary Chemical Library, the other Party (the “ReceivingParty”) will not perform any chemical synthesis using such ConfidentialInformation, unless such synthesis is done as part of the Research Plan and iswithin the scope of a specific chemical optimization plan approved by a Non-Referabledecision of the Research Committee. All Compounds synthesized by the ReceivingParty in performing such chemical optimization plan shall be referred to hereinas an “Aventis Series” (if Aventis is the Providing Party) or a “NeurogenSeries” (if Neurogen is the Providing Party); provided that the ResearchCommittee may approve, by Non-Referable decision, a specific chemical optimizationplan that results in the creation of one or more Compounds that are within neitherthe Aventis Series nor the Neurogen Series, as the case may be, and such Compoundor Compounds so identified by the Research Committee shall be Joint Compoundsand not be subject to the restrictions contained in this Section 2.4.(b) Should the Providing Party reasonably believe  that proposed or ongoing synthesis by the Receiving Party is likely to result  in the synthesis of one or more Unavailable Compounds, the Providing Party may  so inform the Research Committee. Should the Research Committee be so informed,  such synthesis shall be transferred to the Providing Party or suspended until  the chemical optimization plan is modified by a Non-Referable decision of the  Research Committee to avoid the likelihood of synthesis of Unavailable Compounds.(c) In the event that a Neurogen Series or Aventis  Series exists, then:(i) With regard to the Receiving Party, during the  term of the Research Program and for one (1) year thereafter, without regard  to any early termination of the Research Program (such period being referred  to as the “Receiver Lock-Up Period”), the Receiving Party may not  use any Compound within the Neurogen Series (if the Receiving Party is Aventis)  or the Aventis Series (if the Receiving Party is Neurogen), in either case for  any purpose whatsoever other than:(A) for carrying out its responsibilities under the  Research Program, or(B) for carrying out its responsibilities under the  Product Development Plan, orC) for such other research and development purposes  that do not involve the use of Confidential Information (in accordance with  Section 10.1, and specifically including, but not restricted to Confidential  Information protected by the provisions of Sections 4.1(d), 13.2(e)(ii) or 13.7),  but then only if the structure of such Compound shall have become publicly known,  other than as a result of a breach of confidentiality by the Receiving Party.  In particular, unless authorized by a Non-Referable decision of the Research  Committee, no such Compound may be screened during the Lock-Up Period against  any target other than a CRF1 Receptor. Furthermore, should the Receiving Party  obtain Patent Rights in the form of one or more issued patents (in any jurisdiction)  claiming such a Compound as a composition of matter, and, for each such issued  patent should there be no co-inventorship by the Providing Party, and should  the Providing Party obtain Patent Rights in the form of issued use patent(s)  in the same jurisdiction for one or more non-CRF1 uses of such a Compound, then  the Receiving Party shall grant the Providing Party an exclusive, royalty-free,  fully paid-up, irrevocable right and license, with the right to sublicense,  under such Patent Rights, in such jurisdiction to develop, have developed, make,  have made, use, import, market, have marketed, offer for sale, sell and have  sold such Compound(s) for such non-CRF1 use(s). This Section 2.4(c)(i) shall  remain in effect for such period of time as would have been the remaining Receiver  Lock-Up Period, in the event of any termination of this Agreement.(ii) With regard to the Providing Party, during a  period that is the shorter of (x) until one year from the synthesis of such  a Compound, or (y) until the end of the Research Program (the “Provider  Lock-Up Period”), the Providing Party may not use any Compound within  the Neurogen Series (if the Providing Party is Neurogen) or the Aventis Series  (if the Providing Party is Aventis), in either case for any purpose whatsoever  other than:(A) for carrying out its responsibilities under the  Research Program, or(B) for carrying out its responsibilities under the  Product Development Plan, or(C) for any other research and development purposes  but only if the structure of such Compound shall have become publicly known,  other than as a result of a breach of confidentiality by the Providing Party.(d) After the end of the Provider Lock-Up Period,  at the request of the Providing Party, the Receiving Party shall provide to  the Providing Party samples of all Compounds in the Neurogen Series (if the  Providing Party is Neurogen) or the Aventis Series (if the Providing Party is  Aventis) for screening for non-CRF uses, provided that the Receiving Party shall  not be required to deliver more than five (5) milligrams of such sample per  Compound.2.5 Use of Compounds Outside the Research Program and Product Development Plan.During the term of this Agreement, any Compound designated as an EDC Program Compoundshall not be used for any purpose other than those activities specified by theResearch Committee or Product Development Committee.2.6 Back-Up Reserve. The Research Committee shall have the discretion toselect as back-ups for a particular EDC Program Compound or Collaboration Product,by Non-Referable decision, any Active Compounds, Hit Program Compounds or LeadCompounds. Until the termination of this Agreement, or until the Research Committee,by Non-Referable Decision or the Product Development Committee, in its sole discretion,releases such Compounds from such restrictions, neither Party may use any Compoundselected as a back-up for any purpose whatsoever other than:(a) for carrying out its responsibilities under the  Research Program, or(b) for carrying out its responsibilities under the  Product Development Plan, or(c) for such other research and development purposes  that do not involve the use of Confidential Information (in accordance with  Section 10.1, and specifically including but not restricted to Confidential  Information protected by the provisions of Sections 4.1(d), 13.2(e)(ii) or 13.7),  but then only if the structure of such Compound shall have become publicly known  other than as a result of breach of confidentiality by such Party.
**ARTICLE 3  JOINT COMMITTEES**
3.1 Research Committee. Immediately following the Effective Date, Aventisand Neurogen will establish a research committee (the “Research Committee”)consisting of at least three (3) members from each of Aventis and Neurogen. Eachmember of the Research Committee shall have the authority, experience and seniorityto enable him or her to carry out the responsibilities of the Research Committee.The Research Committee will be responsible for developing, monitoring and reviewingthe implementation of the Research Plan by the Parties and for determining themechanisms for exchange of information and materials between the Parties. Fromtime to time, the Research Committee may establish subcommittees to oversee specificprojects or activities and such subcommittees shall be constituted as the ResearchCommittee shall determine. The Research Committee will exist until the expirationor earlier termination of the Research Program unless the Parties otherwise agreein writing.(a) Chairperson. The Research Committee shall  appoint a chairperson from among its members, which shall rotate semi-annually  between representatives from Neurogen and representatives from Aventis. The  chairperson will be responsible for scheduling meetings of the Research Committee,  preparing agendas for meetings and sending to all Research Committee members  notices of all regular meetings and agendas for such meetings. The chairperson  shall appoint a secretary for each meeting who will record the minutes of the  meeting, circulate copies of meeting minutes to the Parties and each Research  Committee member promptly following the meeting for review, comment and approval  and finalize approved meeting minutes.(b) Meetings. The Research Committee shall  meet at least once each calendar quarter and may meet at additional times as  the Parties shall agree. Meetings will alternate between the offices of the  Parties, unless otherwise agreed, or may be held telephonically or by video-conference.  Each Party shall be responsible for expenses incurred by its employees and its  members of the Research Committee incurred in attending or otherwise participating  in Research Committee meetings.(c) Decisions of the Committee. The responsibility  of the Research Committee shall be the timely identification and development  of Hit Program Compounds and Lead Program Compounds and recommendation of EDC  Program Compounds. All decisions of the Research Committee shall be by unanimous  vote, with each Party having one (1) vote. The Parties may vote at meetings  in person, or by telephone, and may vote by proxy. In those instances where  a Non-Referable decision of the Research Committee is specifically provided  for elsewhere in this Agreement, such right to a Non-Referable decision shall  be exercised in good faith and in a reasonable manner, and a lack of unanimity  shall bar further referral. In any other event where a decision cannot be reached  by the Research Committee, the matter shall be referred for resolution as set  forth in Section 14.1.3.2 Product Development Committee. Immediately following the EffectiveDate, Aventis and Neurogen will establish a product development committee (the“Product Development Committee”) consisting of at least two(2) members from each of Aventis and Neurogen. Each member of the Product DevelopmentCommittee shall have the authority, experience and seniority to enable him orher to carry out the responsibilities of the Product Development Committee. TheProduct Development Committee will be responsible for determining selection ofLead Program Compounds as EDC Program Compounds based on the recommendation ofthe Research Committee, developing a plan for, monitoring and reviewing the pre-clinicaland clinical development of the Collaboration Products by the Parties and fordetermining the mechanisms for exchange of information and materials between theParties. From time to time, the Product Development Committee may establish subcommitteesto oversee specific projects or activities and such subcommittees shall be constitutedas the Product Development Committee shall determine. The Product DevelopmentCommittee will exist during the clinical development of Collaboration Productsfrom EDC Program Compound designation through launch unless the Parties otherwiseagree in writing. Within sixty (60) days of the Effective Date, an initial productdevelopment plan shall be agreed to and attached to this Agreement as Schedule3.2 (“Product Development Plan”). The Product DevelopmentPlan shall be updated quarterly by the Product Development Committee. It is understoodand agreed that the sharing of information and other activities and responsibilitiesof the Product Development Committee may need to be modified if necessary to complywith applicable antitrust laws, and only shall be so modified by mutual agreementafter good faith negotiations.(a) Designation of EDC Program Compounds During  Term of Research Program. EDC Program Compounds may be recommended by the  Research Committee and designated by the Product Development Committee, subject  to prior and continuing Aventis internal approvals of such selection, during  the term of the Research Program.(b) Designation of EDC Program Compounds After  Term of Research Program. EDC Program Compounds may be designated by the  Product Development Committee after the term of the Research Program at its  discretion.(c) Chairperson. The chairperson of the Product  Development Committee shall be designated by Aventis. The chairperson will be  responsible for scheduling meetings of the Product Development Committee, preparing  agendas for meeting and sending to all Product Development Committee members  notices of all regular meetings and agendas for such meeting. The chairperson  shall appoint a secretary for each meeting who will record the minutes of the  meeting, circulate copies of meeting minutes to the Parties and each Product  Development Committee member promptly following the meeting for review, comment  and approval and finalize approved meeting minutes.(d) Meetings. The Product Development Committee  shall meet at least once each calendar quarter during the clinical development  of Collaboration Products and may meet at additional times as the Parties shall  agree. Meetings will alternate between the offices of the Parties, unless otherwise  agreed, or may be held telephonically or by video-conference. Each Party shall  be responsible for expenses incurred by its employees and its members of the  Product Development Committee incurred in attending or otherwise participating  in Product Development Committee meetings.(e) Decisions of the Committee. The responsibility  of the Product Development Committee shall be the oversight of the implementation  of the Product Development Plan for EDC Program Compounds and of Collaboration  Products. Unless otherwise specified herein, all decisions of the Product Development  Committee shall be made by majority vote, with Aventis having two (2) votes  and Neurogen having one (1) vote. The Parties may vote at meetings in person,  or by telephone, and may vote by proxy.
**ARTICLE 4  RESEARCH PROGRAM AND RESEARCH FUNDING**
4.1 Research Program.(a) General. The Research Program will be focused  on (i) further screening and development of the Neurogen Compounds referred  to in the Initial Report, (ii) the screening by Neurogen of the Neurogen Proprietary  Chemical Library to identify CRF1 Receptor Antagonist/Agonists and Neurogen’s  optimization chemistry activity to synthesize and identify Neurogen Compounds  that are Active Compounds, (iii) the screening of the Aventis Proprietary Chemical  Library by Aventis to identify CRF1 Receptor Antagonist/Agonists and Aventis’  optimization chemistry activity to synthesize and identify Aventis Compounds  that are Active Compounds, (iv) the furnishing by the Parties to each other  of certain relevant data and other information with respect to Active Compounds  from their respective libraries in furtherance of the Research Program, (v)  the review of such information by the Research Committee and the decision thereof  to designate such Compounds as Hit Program Compounds pursuant to Section 4.1(b),  (vi) a medicinal chemistry program based on the structures of Hit Program Compounds  for the development of Lead Program Compound candidates, (vii) screening and  testing of Lead Program Compound candidates to develop data and other information  for review by the Research Committee and the identification thereby of Lead  Program Compounds, (viii) further pre-clinical research and screening of Lead  Program Compounds, (ix) development of animal models, testing for efficacy and  safety, drug metabolism and pharmacokinetics analysis of Lead Program Compounds,  and (x) development of data and other information for review by the Research  Committee and the identification thereby of Lead Program Compounds for recommendation  to the Product Development Committee as EDC Program Compounds. Except to the  extent agreed to by the Party owning such Proprietary Chemical Library, any  screening and optimization work regarding Compounds within a Party’s Proprietary  Chemical Library shall be exclusively conducted by the Party owning or Controlling  such Proprietary Chemical Library. In addition, to the extent required by the  Party from whose Proprietary Chemical Library an Active Compound was identified,  any further optimization work regarding such Active Compound shall be exclusively  conducted by the Party owning or Controlling such Active Compound.(b) Designation of Hit Program Compounds. A  Compound shall become a Hit Program Compound upon its designation as such by  the Research Committee pursuant to this Section 4.1. All Active Compounds shall  be eligible for designation by the Research Committee as a Hit Program Compound.  Furthermore, the Research Committee may designate (by Non-Referable decision)  any Compound, which does not meet the criteria for an Active Compound set forth  in Section 1.1, as a Hit Program Compound if such Compound:(i) (A) is a Joint Compound, or (B) in the case of  an Aventis Compound, is presented by Aventis to the Research Committee for designation,  or (C) in the case of a Neurogen Compound, is presented by Neurogen to the Research  Committee for designation; and(ii) is a CRF1 Receptor Antagonist/Agonist that meets  the “Hit Series Criteria” of Aventis as contained in the Aventis  Project Progression Manual and any other criteria (other than any defining an  Active Compound) set forth in the Research Plan; and(iii) is not an Unavailable Compound.(c) Cancellation of Hit Program Compound Designation.  Either Party shall be entitled to cancel the Active Compound status and, if  applicable, the Hit Program Compound status of any Compound at any time after  such Compound is reported to be an Active Compound and prior to the date which  is six (6) months after such Compound’s designation as a Hit Program Compound,  if such Party discovers that such Compound is an Unavailable Compound.(d) Confidential Information and Non-CRF1 Receptor  Programs. The Parties further agree that, in accordance with Section 10.1,  each will not use any Confidential Information provided to it by the other Party  regarding any non-CRF1 activity and/or utility of any Compound derived from  the other Party’s Proprietary Chemical Library for any purpose whatsoever  other than discovering, developing, and obtaining patent protection for CRF1  Receptor Antagonist/Agonists for purposes of this Agreement.(e) Record of Screening. Each Party shall keep  a record of the Compounds it screens for activity against a CRF1 Receptor in  the conduct of the Research Program, which record shall include the date of  screening.4.2 Term of the Research Program. The initial term (the “InitialTerm”) of the Research Program will be three (3) years unless earlier terminatedin accordance with Article 12 hereof. The Initial Term of the Research Programwill begin on the Effective Date. Upon the expiration of the initial three (3)year term, the term of the Research Program may be extended for an additionalup to two (2) year term (the “Extension Term”) at the request of Aventisupon at least 90 days’ prior written notice.4.3 Creation and Update of the Research Plan. Within forty-five (45) daysfollowing the Effective Date, the Research Committee shall develop and approvea research plan and budget for the Research Program (the “Research Plan”),and attach such Research Plan to this Agreement as Schedule 4.3. The ResearchPlan shall include both detailed plans for the following year including staffinglevels, activities and estimated expenditures as well as more general plans forthe remaining term of the Research Program. The initial Research Plan shall coverthe period commencing on its approval and ending on December 31, 2002. After theapproval of the initial Research Plan, the Research Plan will be updated priorto December 31, 2002 for the following year and on an annual basis on or beforeDecember 31 of each year thereafter. The Research Plan may only be modified oramended by the action of the Research Committee in accordance with Section 3.1hereof. Except as expressly set forth in Section 4.4 or 4.5 below, each Partyshall be responsible for its own costs and expenses incurred in the conduct ofthe Research Program.4.4 Conduct of the Research Program. Neurogen and Aventis shall each useCommercially Reasonable Efforts to perform its obligations under the ResearchProgram in accordance with the Research Plan.(a) Neurogen Researcher FTE Commitment; Third Party  Costs. As part of such efforts, during the term of the Research Program,  Neurogen shall apply a minimum of {_______} Neurogen Researcher FTEs over the  three (3) year period of the Initial Term, not to exceed {_______} or be less  than {_______} Neurogen Researcher FTEs in any year in performing its obligations  under the Research Program. In addition, in the event the Research Plan calls  for more than {_______} Neurogen Researcher FTEs during the Initial Term, Aventis  will fund all of such additional FTEs at the rate of{________} per FTE per year.  During the Extension Term, if any, Neurogen shall supply at Aventis’ option  up to {______} Neurogen Researcher FTEs over the two (2) year period of the  Extension Term, not to exceed {_______} Neurogen Researcher FTEs in any quarter  in performing its obligations under the Research Program. Notwithstanding the  foregoing, to the extent agreed to by both the Research Committee and the Product  Development Committee, Neurogen Researcher FTEs may be assigned to development  activities under the Product Development Plan instead of research activities  under the Research Plan. Subject to Neurogen’s right to receive the funding  described in Section 4.5 below, Neurogen shall have the responsibility, at its  sole cost and expense, of funding the cost of each Neurogen Researcher FTE conducting  Neurogen’s responsibilities under the Research Program, including, without  limitation, all manpower, capital equipment, facilities, laboratory supplies,  research administration and management and general and administrative expenses  associated therewith and Aventis shall have no responsibility in that regard,  except to make payment when due pursuant to Section 4.5 below; provided, however,  that Aventis will reimburse Neurogen for any payments made to Third Parties  for goods or services required by the Research Plan or the Product Development  Plan approved in advance by Aventis.(b) Aventis Commitment. During the term of  the Research Program, Aventis shall apply Commercially Reasonable Efforts over  the three (3) year period of the Initial Term, in performing its obligations  under the Research Program. Notwithstanding the foregoing, to the extent agreed  to by both the Research Committee and the Product Development Committee, Aventis  Personnel FTEs may be assigned to development activities under the Product Development  Plan instead of research activities under the Research Plan. Unless otherwise  specified herein, Aventis shall be responsible for all costs of research, development  and commercialization of products or potential products which it pursues under  this Agreement.4.5 Funding of the Research Program.(a) Funding by Aventis. During the Initial  Term of the Research Program and pursuant to Section 4.5(b), Aventis will pay  to Neurogen funds in the amount of {______} per FTE per year, and shall fund  a minimum of {_____} Neurogen Researcher FTEs over the three (3) year period  of the Initial Term, provided that Neurogen applies such {______} Neurogen Researcher  FTEs during the three (3) year period. During the Extension Term, if any, of  the Research Program and, pursuant to Section 4.5(b), Aventis will pay to Neurogen  funds in an amount adjusted by use of the Producer Price Index to have the value  on the Effective Date of {_______} per FTE per year for up to {_______} Neurogen  Researcher FTEs per year unless otherwise agreed pursuant to Section 4.4.(b) Reporting by Neurogen and Payment by Aventis.  Within thirty (30) days after the beginning of each calendar quarter, Neurogen  will provide to Aventis a report setting forth the number of Neurogen Researcher  FTEs actually devoted to the Research Program or the Product Development Plan  in the previous calendar quarter, along with their names and titles, together  with an accounting of the difference between such actual use and the scheduled  use of Neurogen Researcher FTEs for that quarter. Within {____} business days  after receipt of such report, Aventis will pay to Neurogen funds equal to the  value of the Neurogen Researcher FTEs actually devoted to the Research Plan  during such quarter; provided, however, that during the three (3) year period  constituting the Initial Term Aventis shall not be obligated to reimburse Neurogen  (and Neurogen shall not be obligated to provide) for more than {______} Neurogen  Researcher FTEs, unless Aventis has agreed in advance that Neurogen should provide  such additional FTEs. Neurogen, within thirty (30) days after the beginning  of each calendar quarter, will provide Aventis with a report detailing all payments  made to Third Parties in accordance with Section 4.4(a) during the previous  calendar quarter. Subject to Aventis’ right to audit such reports using  the procedures set forth in Section 4.5(d), Aventis shall reimburse Neurogen  for such payments within {_______} days of receipt of such report.(c) Reporting by Aventis. Within thirty (30)  days after the beginning of each calendar quarter, Aventis will provide to Neurogen  a report setting forth the number of Aventis Personnel FTEs actually devoted  to each of the Research Program and the Product Development Plan in the previous  calendar quarter along with their names and titles, together with an accounting  of the difference between such actual use and the scheduled use of Aventis Personnel  FTEs for that quarter.(d) Records and Audits.(i) Of Neurogen. During the term of the Research  Program and for a period of three (3) years thereafter, Neurogen shall keep  and maintain accurate and complete records showing the time devoted and activities  performed by each Neurogen Researcher in performing Neurogen’s obligations  under the Research Program or the Product Development Plan in sufficient detail  such that the number of Neurogen Researcher FTEs applied to the Research Program  or the Product Development Plan during each calendar quarter thereof can be  accurately determined. Upon fifteen (15) days prior written notice from Aventis,  Neurogen shall permit an independent certified public accounting firm of nationally  recognized standing selected by Aventis and reasonably acceptable to Neurogen  to examine the relevant books and records of Neurogen and its Affiliates as  may be reasonably necessary to verify the accuracy of the reports submitted  to Aventis under Section 4.5(b) or 5.4 and the number of Neurogen Researcher  FTEs applied to the performance of Neurogen’s obligations under the Research  Program and, if applicable, the Product Development Plan. An examination under  this Section 4.5(d) shall not occur more than once in any calendar year. The  accounting firm shall provide both Neurogen and Aventis a written report disclosing  whether the reports submitted by Neurogen are correct or incorrect and the specific  details concerning any discrepancies. If such examination reveals the actual  Neurogen Researcher FTE utilization in the conduct of the Research Program or,  if applicable, the Product Development Plan, to be lower than that reported  by Neurogen, then Neurogen shall reimburse Aventis for any excess amounts paid  by Aventis to Neurogen pursuant to Section 4.5(b) or 5.4 and any such reimbursement  will be deducted from any payment to be made under the provisions of the final  sentence of Section 4.5(b). In addition, if such examination reveals the actual  Neurogen Researcher FTE utilization in the conduct of Neurogen’s obligations  under the Research Program and, if applicable, the Product Development Plan,  to be lower than that reported by Neurogen by ten percent (10%) or more, then  Neurogen shall reimburse Aventis for all costs incurred by Aventis in connection  with such examination and audit.(ii) Of Aventis. During the term of the Research  Program and for a period of three (3) years thereafter, Aventis shall keep and  maintain accurate and complete records showing the time devoted and activities  performed by each Aventis Personnel in performing Aventis’ obligations  under the Research Program. Upon fifteen (15) days prior written notice from  Neurogen, Aventis shall permit an independent certified public accounting firm  of nationally recognized standing selected by Neurogen and reasonably acceptable  to Aventis to examine the relevant books and records of Aventis and its Affiliates  as may be reasonably necessary to verify the number of Aventis Personnel FTEs  applied to the performance of Aventis’ obligations under the Research  Program and, if applicable, the Product Development Plan. An examination under  this Section 4.5(d) shall not occur more than once in any calendar year. The  accounting firm shall provide both Neurogen and Aventis a written report disclosing  whether the reports submitted by Aventis are correct or incorrect and the specific  details concerning any discrepancies.(iii) Retention of Lab Notebooks. During the  term of the Research Program and for so long as this Agreement has not been  terminated or expired in every country, but for at least 20 years from the date  of filing of any patent application pursuant to Article 13 hereof, each Party  shall use its best efforts to keep and maintain accurate and complete lab notebooks  reflecting the screening and other research and development activities of the  Neurogen Researchers and Aventis Personnel under the Research Plan. Upon fifteen  (15) days’ prior written notice from a Party, the other Party shall permit  a Third Party patent expert selected by the first Party and reasonably acceptable  to the other Party to examine (at the first Party’s sole cost and expense)  the relevant lab notebooks of the Neurogen Researchers or Aventis Personnel,  as applicable; provided that any such Third Party patent expert shall be required  to execute and deliver to the other Party an appropriate confidentiality agreement  covering the information contained in the lab notebooks to be examined.4.6 Invention Assignment Agreements. Each Neurogen Researcher and AventisPersonnel conducting the Research Program will have executed Neurogen’sor Aventis’ standard non-disclosure and invention assignment agreement,as applicable.4.7 Reporting and Disclosure.(a) Reports. Prior to each quarterly meeting  of the Research Committee, Neurogen and Aventis will each provide the other  with written copies of all materials they intend to present at the Research  Committee meeting plus, to the extent not set forth in such materials, a written  report summarizing any other relevant and material data and information arising  out of the conduct of the Research Program. In the event that after receipt  of any such report, either Party shall request additional data or information,  the Party to whom such request is made shall promptly provide to the other Party  such data or information related to the conduct of the Research Program. In  furtherance of the foregoing, each Party shall disclose to the other information  related to the screening activity of the Party for the preceding quarter with  respect to (i) the number of Compounds screened, (ii) the number, structure  and screening results of Active Compounds, and of Compounds synthesized at the  direction of the Research Committee for the purpose of optimizing any Active  Compound and which Compounds synthesized are not Unavailable Compounds, and  (iii) the number of Active Compounds that are Unavailable Compounds or Burdened  Compounds and the nature of the circumstances resulting in such status. Notwithstanding  the foregoing, either Party may delay disclosing an Active Compound for a period  not to exceed six (6) months from the date such Compound was determined to be  an Active Compound for the purpose of preparing and filing a provisional patent  application with respect to such Compound. Neurogen shall deliver the Neurogen  Initial Report prior to the Effective Date. Aventis represents and warrants  that, prior to the date of this Agreement, it has not screened any Compounds  for activity against the CRF1 Receptor.(b) Quarterly Meetings. At the quarterly meetings  of the Research Committee, Aventis and Neurogen will review in reasonable detail  (i) all data and information disclosed in accordance with Section 4.7(a), and  (ii) all material Joint Technology invented, developed or created by the Parties  since the last Quarterly Meeting while pursuing the Research Program.(c) Disclosure. During the term of the Research  Program, (i) the Parties will promptly disclose to one another all material  Joint Technology, (ii) Neurogen will promptly disclose to Aventis all material  Neurogen Contributed Technology and (iii) Aventis will promptly disclose to  Neurogen all material Aventis Contributed Technology.4.8 Materials and Compounds. During the term of this Agreement, each Partywill make available to the other Party such quantities of Materials or Compoundsthat are Controlled by it as shall be reasonably available in excess of its ownneeds for such other Party to carry out its respective responsibilities underthe Research Plan and the Product Development Plan.
**ARTICLE 5    DEVELOPMENT, MANUFACTURING AND COMMERCIALIZATION**
5.1 Aventis Development Responsibilities; Aventis Funding of External Costs.(a) Except as otherwise provided for in Section 5.2  below or as otherwise expressly set forth in this Agreement, Aventis shall be  responsible for conducting all clinical development and commercialization activities  of Collaboration Products.(b) Aventis will fund all external costs related to  carrying out the Product Development Plan which is incurred from and after the  Effective Date during the term of this Agreement, where external costs shall  mean all out-of-pocket costs and expenses incurred (i.e., paid to all Third  Parties or accrued therefor) by Aventis or Neurogen for all studies or activities  performed in accordance with the Product Development Plan. Reimbursement of  any such costs incurred by Neurogen shall be made by Aventis in accordance with  Section 5.4(a) below.5.2 Neurogen Development Responsibilities.(a) At the request of the Product Development Committee,  Neurogen may conduct, but shall not be required to conduct, a Phase I Study  for any EDC Program Compound. In carrying out any such development activities,  Neurogen shall (i) use Commercially Reasonable Efforts, (ii) conduct such activities  in compliance with all laws applicable to clinical development, including without  limitation GLPs and GCPs, and (iii) cooperate with Aventis pursuant to the provisions  of Section 5.6 with respect to all regulatory matters. Funding of such activities  will be in accordance with Sections 5.1(b) and 5.4(a).(b) In addition to any duties assumed by Neurogen  at the request of the Product Development Committee pursuant to Section 5.2(a)  above, Neurogen will assist Aventis in Aventis’ development activities  as reasonably requested by Aventis. If any specific developmental work is agreed  by Aventis and Neurogen to be performed by Neurogen, funding of such activities  will be in accordance with Sections 5.1(b) and 5.4(a).(c) Notwithstanding this Section 5.2, Aventis may  assume, at Aventis’ expense, operational responsibility for process development,  metabolics, pharmacokinetics, and pharmaceutics with respect to any EDC Program  Compound or Collaboration Product. Any and all development activities conducted  by Neurogen pursuant to Section 5.2 (a) or (b) above shall be performed pursuant  to a budget prepared and approved in advance by the Product Development Committee.5.3 Aventis Diligence Requirement. (a) General Diligence. Aventisshall use Commercially Reasonable Efforts to develop (as contemplated in thisAgreement), to secure Regulatory Approval for and to sell Collaboration Productsfor each Commercially Reasonable Indication designated by the Product DevelopmentCommittee. For clarity, it is understood that Aventis is not required to pursuemore than one Commercially Reasonable Indication, nor to pursue every CommerciallyReasonable Indication with every EDC Program Compound, nor to pursue multipleCommercially Reasonable Indications simultaneously, unless such pursuits wouldbe required by Commercially Reasonable Efforts. As of the Effective Date, it isagreed that each of depression and anxiety are deemed to be Commercially ReasonableIndications; provided, however, that Aventis has the discretion to pursue depressionfirst and anxiety second, so long as the Development Plan includes provisionsfor both. Any disagreement between the Parties as to any future designation ordeletion of a Commercially Reasonable Indication (or refusal to designate or deletean indication) by the Product Development Committee may be subject to a DiligenceReferral by Neurogen as set forth in sub-section (c) below.(b) Specific Diligence. Without limiting the  generality of, and in addition to, the general diligence requirements of Section  5.3(a) above, Aventis’ rights to develop and commercialize Collaboration  Products shall be subject to the specific diligence requirements of this Section  5.3(b).(i) Within ninety (90) days of the designation of  an EDC Program Compound, a Product Development Plan with respect to such EDC  Program Compound will be established by the Product Development Committee. Among  other things, such Product Development Plan will designate the indications to  be pursued with such EDC Compound and establish specific target dates and timelines  for the following phases of development:(A) Designation of EDC Program Compound to the commencement  of Phase I Studies;(B) Commencement of Phase I Studies to commencement  of Phase II Studies;(C) Commencement of Phase II Studies to commencement  of Phase III Studies;(D) Commencement of Phase III Studies to NDA filing;  and(E) NDA approval to market launch.(ii) If Neurogen, in good faith, believes such Product  Development Plan (or the refusal to adopt such plan), or the adoption of any  amendment thereto, is not consistent with Commercially Reasonable Efforts in  any material respect such that such inconsistency has resulted in, or will result  in, material loss in the value of the Collaboration Product in question, then  Neurogen shall provide Aventis with written notice informing Aventis of such  belief and setting forth Neurogen’s proposed revisions to the Product  Development Plan (or the amendment thereto). If the Parties cannot agree on  a Product Development Plan (or the amendment thereto) with respect to such EDC  Program Compound, then Neurogen may make a Diligence Referral pursuant to Section  5.3(c). If the IAC determines that the Product Development Plan (or amendment  thereto) is inconsistent with Commercially Reasonable Efforts in the manner  contemplated by this Section 5.3(b)(ii), then the IAC may impose such changes  to the Product Development Plan (or amendment thereto) as necessary to make  it so consistent with Commercially Reasonable Efforts.(iii) If Aventis fails to meet the timelines established  in a Product Development Plan with respect to an EDC Compound, Aventis will  provide Neurogen with a written explanation of the reasons for the delay. If  Neurogen, in good faith, believes that this delay was unreasonable and that  such delay has resulted, or will result, in material loss in the value of the  Collaboration Product in question, then Neurogen may make a Diligence Referral  pursuant to Section 5.3(c). If the IAC agrees that the reason for the delay  was unreasonable in the manner contemplated by this Section 5.3(b)(iii), then  the following provisions shall apply:(A) Aventis will disclose to Neurogen all material  Joint Technology and Aventis Contributed Technology related to such EDC Program  Compound in Aventis’ possession and not previously disclosed to Neurogen;  and(B) Aventis will grant to Neurogen a perpetual, irrevocable,  exclusive, royalty-free, worldwide license, with right to sublicense, under  Aventis’ interest in the Joint Technology and the Aventis Contributed  Technology, Aventis’ interest (if any) in the Neurogen Contributed Technology,  and Aventis’ interest in the CRF1 Patent Rights, to research, have researched,  develop, have developed, make, have made, use, import, market, offer for sale  and sell the particular EDC Program Compound solely for the indication to which  the failure to meet the timeline relates.(iv) Notwithstanding the provisions of this Section  5.3(b), Neurogen may not make a Diligence Referral pursuant to Section 5.3(b)(i)  or 5.3(b)(ii) if the indication to which the Product Development Plan or timeline  relates is being pursued by Aventis with another EDC Program Compound and the  provisions of this Section 5.3(b) are being met with respect thereto.(v) If Neurogen elects to make a Diligence Referral  pursuant to Section 5.3(c), then the IAC arbitration a7nd the decision of the  IAC shall be the sole and exclusive remedy of Neurogen for that failure by Aventis  to meet obligations and responsibilities with regard to a Product Development  Plan.(c) Diligence Referral. Should Neurogen believe in  good faith that any diligence matter specified in Section 5.3(b) as being subject  to a potential Diligence Referral is not being pursued by Aventis in a manner  consistent with Commercially Reasonable Efforts in any material respect such  that such inconsistency has resulted in, or will result in, material loss in  the value of the Collaboration Product in question, then Neurogen may make a  “Diligence Referral”, whereby the matter will be referred to each  Party’s designated executive officer pursuant to Section 14.1. If such  designated officers are unable to agree within thirty (30) days of referral,  the Parties will within an additional thirty (30) days name an Independent Arbitration  Council (an “IAC”), for which each Party will name two independent  members and those four members will name one additional member by unanimous  consent. Decisions of the IAC shall be by majority decision, which shall be  binding on both Parties. For each arbitration, the IAC will decide the manner  in which the Parties will bear costs.5.4 Payments and Progress Reports.(a) Payments. Neurogen, within thirty (30) days after  the beginning of each calendar quarter, will provide Aventis with a report detailing  all external costs incurred by Neurogen after the Effective Date in conducting  any development studies for the first EDC Program Candidate and any other activities  assigned to Neurogen in accordance with Section 5.2(b) during the previous calendar  quarter. Subject to Aventis’ right to audit such reports using essentially  the procedures set forth in Section 4.5(d), Aventis shall reimburse Neurogen  for such external costs within fifteen (15) days of receipt of such report,  but in no event exceeding the budget approved by the Product Development Committee  for such activities.(b) Progress Reports. Aventis and Neurogen, within  thirty (30) days after the beginning of each calendar quarter, will each provide  the Product Development Committee with a report summarizing the status of each  Party’s development activities during the previous calendar quarter, as  applicable, for Compounds under development, including but not limited to all  EDC Program Candidates, EDC Program Compounds and/or Collaboration Products,  provided, however, that either Party’s failure to achieve any of the goals  or plans set forth in any such summary shall not, in and of itself, constitute  a failure by such Party to use Commercially Reasonable Efforts. Such reports  to the Product Development Committee shall include information in reasonably  sufficient detail to evaluate each Party’s compliance with its obligation  to use Commercially Reasonable Efforts, and shall include a summary in reasonable  detail of any Phase I Study, Phase IIA Study, Phase IIB Study and/or Phase III  Study, together with any associated Regulatory Approvals, being conducted and/or  sought by such Party, with respect to Collaboration Products. In addition, each  Party shall copy the other Party on any Regulatory Filings made by a Party in  regard to Collaboration Products.5.5 Manufacturing. In furtherance of the activities contemplated by thisAgreement, as soon as is practicable, the Product Development Committee shalldevelop and agree upon a transfer plan whereby Neurogen will make available toAventis any Technology of Neurogen necessary or desirable for Aventis to performits obligations pursuant to this Article 5. Such transfer plan shall also addresstransfer to Aventis by CarboGen Laboratories (Aarau) AG and CarboGen HoldingsAG (collectively “CarboGen”) (and any other Third Party performingmanufacturing services for Neurogen) of all manufacturing know how of CarboGen(and any other such Third Party) necessary or desirable for Aventis to performits obligations pursuant to this Article 5.5.6 Regulatory Matters. Aventis will have control over, and authority andresponsibility for, the regulatory strategies relating to the development andcommercialization of all EDC Program Compounds and Collaboration Products. Aventisshall monitor and coordinate all regulatory actions, communications and filingswith and submissions to (including supplements and amendments) any RegulatoryAuthority with respect to any Collaboration Product. Neurogen shall provide toAventis on a timely basis all necessary information to enable compliance withall regulatory obligations on a global basis, including without limitation, filingupdates, information amendments, annual reports, pharmacovigilance filings andinvestigator notifications. Aventis shall be responsible for interfacing, correspondingand meeting with all Regulatory Authorities with respect to any CollaborationProduct. To the extent reasonably practicable and preferably at least thirty (30)days in advance, Aventis shall notify Neurogen of any material meeting with theFDA which is for the purpose of obtaining Regulatory Approval for a CollaborationProduct and Neurogen may elect to send one person reasonably acceptable to Aventisto participate as an observer (at Neurogen’s sole cost and expense) in suchmeeting. To the extent reasonably practicable and subject to any Third Party confidentialityobligations, Aventis shall provide Neurogen with drafts of any material documentsor correspondence pertaining to a Collaboration Product and prepared for submissionto the FDA sufficiently in advance of submission so that Neurogen may review andcomment on the substance of such material documents or correspondence. Aventisshall promptly provide Neurogen with copies of any material documents or othercorrespondence received from the FDA pertaining to a Collaboration Product. IfNeurogen has not commented on such material documents or correspondence withinfive (5) Business Days of provision of such material documents or correspondenceto Neurogen, then Neurogen shall be deemed to have no comments on such materialdocuments or correspondence. Aventis agrees to consider all comments in good faith,taking into account the best interests of the Collaboration Product on a globalbasis. The Parties shall cooperate with each other to provide all reasonable assistanceand take all actions reasonably requested by the other Party that are necessaryor desirable to comply with any law applicable to any Collaboration Product, including,but not limited to, report adverse drug experience reports (and serious adversedrug experience reports) to Regulatory Authorities.
**ARTICLE 6  NON-EXCLUSIVE CONSEQUENCE OF CONFIDENTIALITY AND NON-USE VIOLATION**6.1 Certain Remedies. It will likely be impossible to accurately determinemonetary damages resulting from violation of certain confidentiality and non-useprovisions of this Agreement. Therefore, the following remedies are specificallyprovided for and shall be in addition to any other remedy available at law orin equity. Should a Party (which for purposes of this Section 6.1 shall includethe Party and its Affiliates) develop any Patent Rights that could not have beendeveloped when and how they were but for such Party’s violation of the confidentialityand non-use provisions of any of Sections 2.4, 2.5, 4.1(d), 13.2(e)(ii), and 13.7(b)(alone or in combination) and:(a) should such violation involve or result in the  characterization of Compound activity at particular target(s), as determined  by the final, non-appealable decision of a court of competent jurisdiction,  the violating Party shall be required to grant to the other Party a sole and  exclusive, perpetual, royalty-free, fully-paid, worldwide right and license  (with the right to sublicense) under such Patent Rights to develop, have developed,  make, have made, use, import, market, have marketed, offer for sale, sell and  have sold any Compound, the primary utility of which as a pharmaceutical agent  is because such Compound has such activity at such target(s); (b) should such violation be a violation (as determined  by the final, non-appealable decision of a court of competent jurisdiction)  of the provisions of Section 2.4 requiring that all optimization work done by  the Party other than the Providing Party is to be carried out within the scope  of approved specific optimization synthesis plans, the violating Party shall  be required to grant to the Providing Party at the Providing Party’s request,  a sole and exclusive, perpetual, royalty-free, fully-paid, worldwide right and  license (with the right to sublicense) under such Patent Rights, to develop,  have developed, make, have made, use, import, market, have marketed, offer for  sale, sell and have sold, for any use involving any target(s) other than CRF1  Receptors, any Compounds within such Patent Rights that have been demonstrated  to be useful as modulators of such targets. The Providing Party may request  such a license at any time after such utility has been demonstrated, and, though  not necessary to prove that such utility has been demonstrated, such utility  will be deemed to have been demonstrated upon the grant of a use patent for  such Compound(s) for such utility.
**ARTICLE 7    INITIAL PAYMENT AND MILESTONE PAYMENTS**
7.1 Initial Payment. Aventis agrees to pay Neurogen the sum of $10,000,000by wire transfer in United States Dollars to the credit of such bank account asmay be designated in advance by Neurogen in writing to Aventis within five (5)Business Days after the Effective Date.7.2 Milestone Payments. Each of the following amounts will be payable byAventis to Neurogen within thirty (30) calendar days following the occurrenceof the specified event:(a) Additional EDC Program Compound Payments.  {_______} for each additional EDC Program Compound which is a distinct chemical  entity from any previous EDC Program Compound accepted by the Product Development  Committee after the first EDC Program Compound so accepted; providedthat (i) the aggregate payments to be made pursuant to this Section 7.2(a)  shall not exceed {________} and (ii) the payments to be made pursuant to this  Section 7.2(a) shall be paid only once per EDC Program Compound, regardless  of whether Aventis pursues the development of additional indications with respect  to such Compound.(b) First Collaboration Product Payments.(i) {________} upon commencement of enrollment of  patients for the first Phase I Study, it being understood and agreed to that  the payment to be made pursuant to this Section 7.2(b)(i) shall be made only  with respect to the first Collaboration Product to reach this stage and only  with respect to the first indication of such Collaboration Product.(ii) {________}upon the successful completion of the  first proof of concept Phase IIA Study, it being understood and agreed to that  the payment to be made pursuant to this Section 7.2(b)(ii) shall be made only  with respect to the first Collaboration Product to reach this stage and only  with respect to the first indication of such Collaboration Product.(iii) {________} upon commencement of enrollment of  patients for the first Phase III Study, it being understood and agreed to that  the payment to be made pursuant to this Section 7.2(b)(iii) shall be made only  with respect to the first Collaboration Product to reach this stage and only  with respect to the first indication of such Collaboration Product.(iv) {________} upon the acceptance for filing of  the first NDA with the FDA, it being understood and agreed to that the payment  to be made pursuant to this Section 7.2(b)(iv) shall be made only with respect  to the first Collaboration Product to reach this stage and only with respect  to the first indication of such Collaboration Product.(v) {________}upon launch of a Collaboration Product  following the first NDA approval by the FDA, it being understood and agreed  to that the payment to be made pursuant to this Section 7.2(b)(v) shall be made  only with respect to the first EDC Program Compound to reach this stage and  only with respect to the first indication of such Collaboration Product.(c) Additional Indication Payments.(i) {________} upon commencement of enrollment of  patients for each Phase III Study with respect to an indication that is (i)  different from an indication for which a payment has already been made pursuant  to either Section 7.2 (b)(iii) above or Section 7.2 (c)(i) and (ii) that is  significant and commercially viable, such that the payment of milestones under  this Section 7.2 (c) and the cost of development for such new indication would  be commercially prudent; provided that new formulations, line extensions and  formulations targeted at different patient populations for the same therapeutic  indications shall not be considered to be “new indications.”(ii) {________} upon the acceptance for filing of  each NDA with the FDA with respect to an indication that is (i) different from  an indication for which a payment has already been made pursuant to either Section  7.2(b)(iv) above or this Section 7.2 (c)(ii) and (ii) that is significant and  commercially viable, such that the payment of milestones under this Section  7.2 (c) and the cost of development for such new indication would be commercially  prudent; provided that new formulations, line extensions and formulations targeted  at different patient populations for the same therapeutic indications shall  not be considered to be “new indications.”(iii) {________} upon launch of a Collaboration Product  with respect to a new indication that is (i) different from an indication for  which a payment has already been made pursuant to either Section 7.2(b)(v) above  or this Section 7.2(c)(iii) and (ii) that is significant and commercially viable  such that the payment of milestones under this Section 7.2 (c) and the cost  of development for such new indication would be commercially prudent; provided  that new formulations, line extensions and formulations targeted at different  patient populations for the same therapeutic indications shall not be considered  to be “new indications.”(d) Examples. Examples of the Party’s  intentions regarding the payment of milestone payments under this Article 7  are illustrated in Schedule 7 attached hereto.
**ARTICLE 8    ROYALTIES**
8.1 Royalty Rates; Terms; Reduction. Aventis will pay to Neurogen Royaltieson a Collaboration Product by Collaboration Product basis, as follows:(a) Within thirty (30) days following the First Commercial  Sale of a Collaboration Product in each country, Aventis shall give written  notice to Neurogen thereof.(b) Subject to the provisions of this Article 8, for  each Collaboration Product Aventis shall pay to Neurogen Royalties on a Collaboration  Product by Collaboration Product basis based on the aggregate worldwide Net  Sales by Aventis or its Affiliates or sublicensees of such Collaboration Product,  as follows:(i) {________} of that portion of aggregate Net Sales  of the Collaboration Product, up to and including {________} in a calendar year.(ii) {________} of that portion of aggregate Net Sales  of the Collaboration Product that are greater than {________}, but less than  or equal to {________}, in a calendar year.(iii) {________} of that portion of aggregate Net  Sales of the Collaboration Product that are greater than {________}, but less  than or equal to {________}, in a calendar year.(iv) {________} of that portion of aggregate Net Sales  of the Collaboration Product that are greater than {________} in a calendar  year.Royalties shall be payable on a country-by-country basis for the term of any CRF1Patent Rights with a Valid Claim covering composition of matter or therapeuticuse of such Collaboration Product or which enables Aventis or its Affiliates toprevent Third Parties from manufacturing, using or selling such CollaborationProduct; {________}.
(c) The Royalties set forth above shall be subject  to the following reductions: (i) Aventis may deduct {________} of any payments  made to Third Parties related to {________}; provided, that notwithstanding  the foregoing reductions, in no event shall the weighted average royalties payable  to Neurogen in any calendar quarter in any such country be reduced by more than  {________} as a result of any such reduction; and(ii) in any country or countries where Aventis reasonably  demonstrates to Neurogen that a lower royalty rate is required in order to permit  Aventis, consistent with Commercially Reasonable Efforts, to commercialize the  Collaboration Product with a reasonable profit, then the Parties shall negotiate  in good faith, for a period of thirty (30) days, to determine an appropriate  reduction to the royalty rate for such Collaboration Product in such country  or countries; provided, however, that neither Party shall be obligated  to agree to a particular level of royalty reduction; provided, further,  that in the event the Parties are unable to agree on such reduction, Aventis  shall have no obligation to launch, or continue its commercialization of, such  Collaboration Product in such country or countries.
All such computations, payments and adjustments shall be on a country-by-country  basis. Aventis will provide to Neurogen a copy of any license (or amendment  thereto) obtained pursuant to 8.1(c)(i) above within thirty (30) days of executing  any such license (or amendment).
(d) Notwithstanding any other provision in this Agreement  to the contrary, Aventis shall have no obligation to make a First Commercial  Sale of any Collaboration Product in any country or to continue its commercialization  of any Collaboration Product in any country if commercialization in such country  is incompatible with Commercially Reasonable Efforts. Such incompatibility may  be due to one of several factors, including (i) financial factors that would  prevent such commercialization from being profitable, or to (ii) the requirements  of a Regulatory Agency of such country that Aventis make public sensitive Aventis  Confidential Information, but then only if Aventis has discontinued making First  Commercial Sales of any other comparable Aventis product in such country for  such reason.(e) For the first three calendar quarters of a calendar  year, the calculation of Royalties will be based on an estimated effective Weighted  Average Royalty Rate. Such estimated effective Weighted Average Royalty Rate  will be based on the Aventis business plan forecast for that calendar year.  These Royalties will be calculated by applying the actual effective Weighted  Average Royalty Rate percentage to the Net Sales for the full calendar year  and by then subtracting the Royalties made for the prior three calendar quarters.By way of example, if, for a given year, the Aventis  business plan forecast calls for Aventis to achieve {________} of Net Sales  for a Collaboration Product, the estimated effective Weighted Average Royalty  Rate would be {________}. The total expected Royalty payment due to Neurogen  for the year would equal {________}.Further, if (A) in the course of the first three quarters,  Aventis achieves actual Net Sales of {________}, respectively, during the first,  second and third calendar quarters, and Aventis pays Neurogen Royalties of {________}  respectively (e.g., {________}), and (B) in the fourth calendar quarter, Aventis  achieves Net Sales of {________}, bringing the total Net Sales for the year  to {________}, then (C) for the full calendar year, the actual effective Weighted  Average Royalty Rate would be {________}) and the total Royalty payment due  to Neurogen for the year would be {________}. Having paid Neurogen {________}  for the first three calendar quarters, Aventis would pay Neurogen {________}for  the last calendar quarter {________}.(f) Neurogen acknowledges and agrees that nothing  in this Agreement shall be construed as representing an estimate or projection  of either (i) the number of Collaboration Products that will or may be successfully  developed or commercialized or (ii) anticipated sales or the actual value of  any EDC Program Compound or Collaboration Product and that the figures set forth  in this Section 8.1 or elsewhere in this Agreement or that have otherwise been  discussed by the Parties are merely intended to define Aventis’ royalty  obligations to Neurogen in the event such sales performance is achieved.8.2 Reports and Payments.(a) Cumulative Royalties. The obligation to  pay Royalties under this Article 8 shall be imposed only once (i) with respect  to any sale of the same unit of Collaboration Product and (ii) with respect  to a single unit of Collaboration Product regardless of how many Valid Claims  or other Patent Rights included in the Neurogen Contributed Technology, Aventis  Contributed Technology or Joint Technology would, but for this Agreement, be  infringed by the making, using or selling of such Collaboration Product.(b) Statements and Payment. Within fifteen  (15) days after the beginning of each calendar quarter, Aventis will provide  to Neurogen an estimate of the Royalty due hereunder for the sale of Collaboration  Products during the previous quarter. Aventis shall deliver to Neurogen within  forty-five (45) days after the end of each calendar quarter a report setting  forth for such calendar quarter the following information on a Collaboration  Product by Collaboration Product basis: (i) Net Sales of such Collaboration  Product on a country-by-country basis, (ii) the basis for any adjustments to  the Royalty payable for the sale of such Collaboration Product in any country  and (iii) the Royalty due hereunder for the sale of such Collaboration Product.  The total Royalty due for the sale of Collaboration Products during such calendar  quarter shall be remitted at the time such report is made.8.3 Taxes and Withholding. Any payments made by Aventis to Neurogen underthis Agreement shall be reduced by the amount that Aventis is required to payor withhold pursuant to any applicable law, including, but not limited to, UnitedStates federal, state or local tax law (“Withholding Taxes”). Anysuch Withholding Taxes required by law to be paid or withheld shall be an expenseof, and borne solely by, Neurogen. Aventis shall submit reasonable proof of paymentof the Withholding Taxes together with an accounting of the calculations of suchtaxes to Neurogen within thirty (30) days after such Withholding Taxes are remittedto the proper authority. The Parties will reasonably cooperate in completing andfiling documents required under the provisions of any applicable tax laws or underany other applicable law in connection with the making of any required tax paymentor withholding payment, or in connection with any claim to a refund of or creditfor any such payment.8.4 Currency Exchange. With respect to Net Sales invoiced or expenses incurredin U.S. dollars, the Net Sales or expense amounts and the amounts due to Neurogenhereunder shall be expressed in U.S. dollars. With respect to Net Sales invoicedor expenses incurred in a currency other than U.S. dollars, the Net Sales or expenseshall be expressed in the domestic currency of the entity making the sale or incurringthe expense, together with the U.S. dollar equivalent, calculated using the arithmeticaverage of the spot rates on the last business day of each month of the calendarquarter in which the Net Sales were made or the expense was incurred. The “closingmid-point rates” found in the “Dollar spot forward against the Dollar”table published by The Financial Times or any other publication as agreed to bythe Parties shall be used as the source of spot rates to calculate the averageas defined in the preceding sentence. All payments shall be made by wire transferin U.S. dollars to the credit of such bank account as shall be designated by Neurogenin writing to Aventis.8.5 Maintenance of Records; Audit. For a period of three (3) years, Aventisshall maintain and shall cause its Affiliates and sublicensees to maintain completeand accurate books and records in connection with the sale of Collaboration Productshereunder, as necessary to allow the accurate calculation consistent with generallyaccepted accounting principles of Royalties due hereunder including any recordsrequired to calculate any Royalty adjustments hereunder. Once per calendar year,Neurogen shall have the right to engage an independent accounting firm reasonablyacceptable to Aventis, at Neurogen’s expense, which shall have the rightto examine in confidence the relevant Aventis records as may be reasonably necessaryto determine and/or verify the amount of Royalty payments due hereunder. Suchexamination shall be conducted, and Aventis shall make its records available,during Aventis’ normal business hours, after at least fifteen (15) daysprior written notice to Aventis and shall take place at the Aventis facility(ies)where such records are maintained. Each such examination shall be limited to pertinentbooks and records for any year ending not more than thirty-six (36) months priorto the date of request; provided, that Neurogen shall not be permitted to auditthe same period of time more than once. Before permitting such independent accountingfirm to have access to such books and records, Aventis may require such independentaccounting firm and its personnel involved in such audit, to sign a confidentialityagreement (in form and substance reasonably acceptable to Aventis) as to any ofAventis’, its Affiliates or sublicensees’ confidential informationwhich is to be provided to such accounting firm or to which such accounting firmwill have access, while conducting the audit under this Section 8.5. The Neurogenindependent accounting firm will prepare and provide to both Neurogen and Aventisa written report disclosing whether the Royalty reports submitted and Royaltiespaid by Aventis are correct or incorrect and the specific details concerning anydiscrepancies. Such accounting firm may reveal to Neurogen any information learnedin the course of such audit which it reasonably believes is relevant to the calculationof royalties or to Neurogen’s enforcement of its rights under this Agreement.Neurogen agrees to hold in strict confidence all such information disclosed toit, except to the extent necessary for Neurogen to enforce its rights under thisAgreement or if disclosure is required by law. In the event there was an under-paymentby Aventis hereunder, Aventis shall promptly (but in no event later than thirty(30) days after Aventis’ receipt of the independent auditor’s reportso correctly concluding) make payment to Neurogen of any short-fall. In the eventthat there was an over-payment by Aventis hereunder, Neurogen shall promptly (butin no event later than thirty (30) days after Neurogen’s receipt of theindependent auditor’s report so correctly concluding) refund to Aventisthe excess amount. In the event any payment by Aventis shall prove to have beenincorrect by more than ten percent (10%) to Neurogen’s detriment, Aventiswill pay the reasonable fees and costs of Neurogen’s independent auditorfor conducting such audit.
**ARTICLE 9  REPRESENTATIONS, WARRANTIES AND COVENANTS**
9.1 Mutual Representations and Warranties. Each Party hereby represents,warrants and covenants to the other Party that:(a) such Party is a corporation duly organized, validly  existing and in good standing under the laws of the state or other jurisdiction  of incorporation or formation and has full corporate power and authority to  enter into this Agreement and to carry out the provisions hereof;(b) such Party is duly authorized, by all requisite  corporate action, to execute and deliver this Agreement and the execution, delivery  and performance of this Agreement by such Party does not require any shareholder  action or approval, and the Person executing this Agreement on behalf of such  Party is duly authorized to do so by all requisite corporate action;(c) 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 such  Party in connection with the valid execution, delivery and performance of this  Agreement, except where the failure to obtain any of the foregoing would not  have a material adverse impact on the ability of such Party to meet its obligations  hereunder;(d) this Agreement is a legal and valid obligation  binding upon such Party and enforceable in accordance with its terms except  as (i) enforceability may be limited by bankruptcy, insolvency, reorganization,  moratorium or similar laws affecting the enforcement of creditors’ rights  and (ii) equitable principles of general applicability;(e) the execution, delivery and performance by it  of this Agreement and its compliance with the terms and provisions of this Agreement  does not and will not conflict with or result in a breach of any of the terms  or provisions of (x) any other contractual or other obligations of such Party,  (y) the provisions of its charter, operating documents or bylaws, or (z) any  order, writ, injunction or decree of any court or governmental authority entered  against it or by which it or any of its property is bound except where such  breach or conflict would not materially impact the Party’s ability to  meet its obligations hereunder;(f) it shall comply in all material respects with  all laws, rules and regulations applicable to the discovery, development, manufacture,  distribution, import and export and sale of products or potential products under  this Agreement;(g) NEITHER PARTY MAKES ANY EXPRESS OR IMPLIED WARRANTY  OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE OR PURPOSE, QUALITY OR USEFULNESS  OF ANY ACTIVE COMPOUND, HIT PROGRAM COMPOUND, LEAD PROGRAM COMPOUND, EDC CANDIDATE  COMPOUND, EDC PROGRAM COMPOUND, COLLABORATION PRODUCT, AVENTIS CONTRIBUTED TECHNOLOGY,  NEUROGEN CONTRIBUTED TECHNOLOGY, JOINT TECHNOLOGY, OR PATENT RIGHTS AND OTHER  INTELLECTUAL PROPERTY RIGHTS RESULTING FROM THE COLLABORATION CONTEMPLATED IN  THIS AGREEMENT. EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED IN THIS AGREEMENT,  NEUROGEN SHALL NOT BE LIABLE TO AVENTIS WITH RESPECT TO THE MANUFACTURE, USE  OR SALE OF ANY COLLABORATION PRODUCT.9.2 Additional Neurogen Representations, Warranties and Covenants. Neurogenrepresents, warrants and covenants to Aventis that, except to the extent thatit would have no material adverse effect on the rights and obligations of theParties contemplated under this Agreement: (a) it has the full right, power and authority to  grant the licenses granted to Aventis under Article 2 hereof with respect to  the Neurogen Contributed Technology which exists on the Effective Date; (b) all Patent Rights listed as of the Effective Date  on Schedule 1.56 are attached hereto as Schedule 9.2(b) and, as of the Effective  Date, such Patent Rights are existing and, to its best knowledge, are not invalid  or unenforceable, in whole or in part;(c) (i) to the best of its knowledge, as of the Effective  Date it is the sole and exclusive owner of the Patent Rights set forth in Schedule  9.2(b), and (ii) to the best of its knowledge, as of the Effective Date, no  Third Party has any right, title or interest in or to the CRF1 Patent Rights  within the Patent Rights set forth in Schedule 9.2(b);(d) as of the Effective Date (i) all inventors (who  are known to Neurogen as of the Effective Date) of any inventions included within  the Neurogen Contributed Technology have assigned their entire right, title  and interest in and to such inventions and the corresponding Patent Rights to  Neurogen and (ii) to the best knowledge of Neurogen after an inquiry effort  (made prior to the filing of the relevant patent application in the United States  Patent and Trademark Office) commensurate with that required by 37 CFR10.18(b)(2)(iii),  no Person, other than those Persons named as inventors on any patent or patent  application included within the Neurogen Contributed Technology, is an inventor  of the invention(s) claimed in such patent or patent application;(e) as of the Effective Date, there are no claims,  judgments or settlements against or owed by Neurogen or pending or, to its best  knowledge, threatened claims or litigation seeking to invalidate the Neurogen  Contributed Technology and during the term of this Agreement Neurogen shall  promptly notify Aventis in writing upon learning of any such actual or threatened  claim, judgment or settlement;(f) as of the Effective Date it has no knowledge that  making, using or selling EDC Program Candidates as pharmaceutical products may  or do infringe the valid Patent Rights of any Third Party, nor does it have  any knowledge that any Third Party is infringing Neurogen’s Patent Rights  relating thereto;(g) as of the Effective Date it is not aware of any  patent, patent application or other intellectual property right of any Third  Party which, in Neurogen’s reasonable opinion could materially adversely  affect the ability of either Party to carry out its respective obligations hereunder  or the ability of Aventis to exercise or exploit any of the rights or licenses  granted to it under this Agreement;(h) except as otherwise specifically provided in this  Agreement, Neurogen makes no express or implied warranties, statutory or otherwise,  concerning the success or potential success of the Research Program or the quality,  validity, commercial utility, freedom from infringement or any other characteristics  of any Active Compound, Hit Program Compound, Lead Program Compound, EDC Program  Candidate, EDC Program Compound, Collaboration Product, Neurogen Contributed  Technology, Patent Rights or intellectual property rights resulting from the  collaboration contemplated in this Agreement.9.3 Non-Solicitation. During the term of the Research Program, and fora period of one (1) year thereafter, neither Party (which for purposes of thisSection 9.3 includes a Party and its Affiliates) shall either directly or indirectlysolicit, recruit, induce, encourage or attempt to solicit, recruit, induce orencourage any employee of the other Party to terminate his or her employment relationshipwith such other Party and become employed by the other Party or become employedby an independent contractor for such other Party whether or not such employeeis a full-time employee of such other Party and whether or not such employmentrelationship is pursuant to a written agreement or is at-will.
**ARTICLE 10    CONFIDENTIALITY, PUBLICATION AND PUBLIC ANNOUNCEMENTS**10.1 Confidentiality. Except to the extent expressly authorized by thisAgreement or otherwise agreed in writing, the Parties agree that, until the laterof (i) the termination this Agreement or (ii) ten (10) years after the date ofdisclosure, each Party (the “Recipient”) receiving hereunder or underthe Secrecy Agreement between Neurogen and Aventis dated October 5, 2000, (asamended by amendments dated January 25, 2001, July 12, 2001, and December 7, 2001)or under the Confidential Disclosure Agreement between Neurogen and Aventis datedJune 26, 2001, or received or generated pursuant to the Material Transfer Agreementbetween Neurogen and Aventis dated November 19, 2001, any Confidential Informationof the other Party (the “Disclosing Party”) shall keep such informationconfidential and shall not publish or otherwise disclose or use for any purposeother than as provided for in this Agreement, except to the extent that it canbe established:(a) by the Recipient that the Confidential Information  was already known to the Recipient (other than under an obligation of confidentiality)  at the time of disclosure by the Disclosing Party, and such Recipient can so  demonstrate by documentary evidence to that effect;(b) by the Recipient that the Confidential Information  was generally available to the public or otherwise part of the public domain  at the time of its disclosure to the Recipient;(c) by the Recipient that the Confidential Information  became generally available to the public or otherwise part of the public domain  after its disclosure and other than through any act or omission in breach of  a confidentiality obligation;(d) by the Recipient that the Confidential Information  was disclosed to that Party other than under an obligation of confidentiality  by a Third Party who had no obligation to the Disclosing Party not to disclose  such information to others; or(e) by the Recipient that the Confidential Information  was independently discovered or developed by the Recipient without the use of  the Confidential Information belonging to the other Party and the Recipient  can so demonstrate by documentary evidence to that effect.10.2 Authorized Disclosure. Each Party may disclose Confidential Informationbelonging to the other Party to the extent such disclosure is reasonably necessaryto:(a) file or prosecute patent applications claiming  inventions included within, in the case of Neurogen, the Neurogen Contributed  Technology, and in the case of Aventis, the Aventis Contributed Technology,  or, in the case of either Party, the Joint Technology,(b) prosecute or defend litigation,(c) exercise rights hereunder provided such disclosure  is covered by terms of confidentiality similar to those set forth herein, and (d) comply with applicable governmental laws and  regulations, order, ruling, guidance, pronouncement and the like.In the event a Party shall deem it necessary to disclose, pursuant to this Section10.2, Confidential Information belonging to the other Party, such Party shall,to the extent possible, give reasonable advance notice of such disclosure to theother Party and cooperate with the other Party to take reasonable measures toensure confidential treatment of such information.

10.3 SEC Filings. The Parties will agree in advance with each other  on the terms of this Agreement which the Parties agree to seek to be redacted  in any SEC filings.  10.4 Publications. During the term of the Agreement, each Party will  submit to the other Party for review and approval all proposed academic, scientific  and medical publications relating to the Research Program, EDC Program Compounds,  Collaboration Products, Neurogen Contributed Technology, Aventis Contributed  Technology and Joint Technology for review in connection with preservation of  exclusive Patent Rights or to determine whether Confidential Information should  be modified or deleted. The non-publishing Party shall have no less than sixty  (60) days to review each proposed publication. The review period may be extended  for an additional thirty (30) days in the event the non-publishing Party can  demonstrate a reasonable need for such extension including, but not limited  to, the preparation and filing of patent applications. By mutual agreement,  this period may be further extended. Aventis and Neurogen will each comply with  standard academic practice regarding authorship of scientific publications and  recognition of contribution of other parties in any publications relating to  Research Program, EDC Program Compounds, Collaboration Products, Neurogen Contributed  Technology, Aventis Contributed Technology and Joint Technology; it being agreed  to and understood that, where proper, such publications relating to the Research  Program shall be joint publications.  10.5 Public Announcements. It is agreed and understood that each Party  is a publicly owned company and, as such, may be required to make prompt public  announcements of material information. The Parties agree on the importance of  coordinating their public announcements respecting this Agreement and the subject  matter thereof. Neither Party will make any public announcement regarding this  Agreement, the Research Program, EDC Program Compounds, Collaboration Products,  Neurogen Contributed Technology, Aventis Contributed Technology or Joint Technology  (other than academic, scientific or medical publications which are subject to  the publication provision set forth above) without using its best efforts to  give the other Party at least five (5) Business Days to review, comment on and  approve such public announcement, or the maximum such lesser time as may be  necessary under an emergency situation.
**ARTICLE 11    INDEMNIFICATION**
11.1 Aventis. Aventis agrees to defend Neurogen and its Affiliates at Aventis’cost and expense, and will indemnify and hold Neurogen and its Affiliates andtheir respective directors, officers, employees and agents (the “NeurogenIndemnified Parties”) harmless from and against any and all losses, costs,damages, fees or expenses (including reasonable attorney’s fees and expenses)(“Losses”) incurred in connection with or arising out of any ThirdParty claim relating to (i) any material breach by Aventis of any of its materialrepresentations, warranties or obligations pursuant to this Agreement, (ii) anygross negligence or willful misconduct of Aventis in the performance of any rightor obligation under this Agreement, or (iii) any product liability, clinical trialliability or other claims arising from the use by any person of any CollaborationProduct or any drug candidate being developed as a Collaboration Product, in eachcase other than any Competing Products and products developed or commercializedfrom a Compound returned to Neurogen pursuant to Article 5 or Article 12. In theevent of any such claim against the Neurogen Indemnified Parties by any ThirdParty, Neurogen shall promptly notify Aventis in writing of the claim, the NeurogenIndemnified Parties shall cooperate with Aventis in the defense of such claimand Aventis shall manage and control, at its sole expense, the defense of theclaim and its settlement; provided that Aventis shall not agree to any settlementthat would admit liability on the part of Neurogen or involve relief other thanthe payment of money, without the approval of Neurogen, not to be unreasonablywithheld, and; provided further, that if the interests of a Neurogen IndemnifiedParty and Aventis conflict, the Neurogen Indemnified Party shall be allowed tocontrol its own defense (including obtaining separate legal counsel, the reasonableand necessary expenses and costs of which, with respect to one additional suchcounsel, will be borne by Aventis). Any Neurogen Indemnified Party whose interestsdo not conflict with those of Aventis may also elect at its own expense to berepresented separately in any such action or proceeding. Aventis shall not beliable for any litigation costs or expenses incurred by a Neurogen IndemnifiedParty unless such costs and expenses are authorized in writing in advance by Aventisor are the reasonable and necessary expenses of a Neurogen Indemnified Party withwhom Aventis has a conflict of interest. In addition, Aventis shall not be responsiblefor the indemnification or defense of any Neurogen Indemnified Party from andagainst any Losses to the extent any such Losses are caused by the gross negligenceor willful misconduct of such Neurogen Indemnified Party in the performance ofany right or obligation under this Agreement or the material breach by Neurogenof any representation, warranty or obligation under this Agreement, or any claimscompromised or settled without its prior written consent.11.2 Neurogen. Neurogen agrees to defend Aventis and its Affiliates atNeurogen’s cost, and will indemnify and hold Aventis and its Affiliatesand their respective directors, officers, employees and agents (the “AventisIndemnified Parties”) harmless from and against any and all losses, costs,damages, fees or expenses (including reasonable attorneys’ fees and expenses)arising out of any Third Party claim relating to (i) any material breach by Neurogenof any of its material representations, warranties or obligations pursuant tothis Agreement, (ii) any gross negligence or willful misconduct of Neurogen inthe performance of any right or obligation under this Agreement, or (iii) anyproduct liability, clinical trial liability or other claim arising from the useby any person of any Competing Product or any drug candidate being developed asa Competing Product or other product developed or commercialized from a Compoundreturned to Neurogen pursuant to Article 5 or Article 12. In the event of anysuch claim against the Aventis Indemnified Parties by any Third Party, Aventisshall promptly notify Neurogen in writing of the claim and the Aventis IndemnifiedParties shall cooperate with Neurogen in the defense of such claim and Neurogenshall manage and control, at its sole expense, the defense of the claim and itssettlement; provided that Neurogen shall not agree to any settlement that wouldadmit liability on the part of Aventis or involve relief other than the paymentof money, without the approval of Aventis, not to be unreasonably withheld, and;provided further, that if the interests of an Aventis Indemnified Party and Neurogenconflict, the Aventis Indemnified Party shall be allowed to control its own defense(including obtaining separate legal counsel, the reasonable and necessary expensesand costs of which, with respect to one additional such counsel, will be borneby Neurogen). Any Aventis Indemnified Party whose interests do not conflict withthose of Neurogen may also elect at its own expense to be represented separatelyin any such action or proceeding. Neurogen shall not be liable for any litigationcosts or expenses incurred by an Aventis Indemnified Party unless such costs andexpenses are authorized in writing in advance by Neurogen or are the reasonableand necessary expenses of an Aventis Indemnified Party with whom Neurogen hasa conflict of interest. In addition, Neurogen shall not be responsible for theindemnification or defense of any Aventis Indemnified Party from and against anyLosses, to the extent any such Losses are caused by the gross negligence or willfulmisconduct of such Aventis Indemnified Party in the performance of any right orobligation under this Agreement, or the material breach by Aventis of any representation,warranty or obligation under this Agreement, or any claims settled without itsprior written consent.11.3 Insurance Proceeds. Any indemnification hereunder shall be made netof any insurance proceeds recovered by the indemnified Party; provided, however,that if, following the payment to the indemnified Party of any amount under thisArticle 11, such indemnified Party recovers any insurance proceeds in respectof the claim for which such indemnification payment was made, the indemnifiedParty shall promptly pay an amount equal to the amount of such proceeds (but notexceeding the amount of such indemnification payment) to the indemnifying Party.11.4 Insurance. Each Party further agrees to use its Commercially ReasonableEfforts to obtain and maintain commercial general liability insurance, includingclinical trials and products liability insurance, with reputable and financiallysecure insurance carriers or self-insurance, in such amounts and subject to suchdeductibles as the Parties may agree based upon standards prevailing in the industryat the time. Each Party agrees to name the other as an additional insured undersuch insurance. Each Party shall maintain such insurance for so long as CollaborationProducts continue to be developed, manufactured or sold and thereafter for solong as is necessary to cover any and all Third Party claims which may arise fromthe development, manufacture or sale of a Collaboration Product. 
****ARTICLE 12    TERM AND TERMINATION****
12.1 Term.(a) Unless earlier terminated by mutual agreement  of the Parties or pursuant to the provisions of this Article 12, this Agreement  will continue in full force and effect on a country-by-country and product-by-product  basis until the obligation to pay Royalties with respect to the sale of such  product in such country expires or is earlier terminated in accordance with  the terms hereof.(b) On a country-by-country basis and on a product-by-product  basis, upon the scheduled expiration (as contemplated in Section 8.1(b)) of  the obligation to pay Royalties with respect to the sale of such product in  such country, the licenses granted hereunder shall become fully paid up, royalty-free,  perpetual and irrevocable.12.2 Voluntary Termination by Aventis. At any time, Aventis may elect toirrevocably terminate this Agreement upon ninety (90) days prior written noticeto Neurogen.12.3 Material Breach. Upon a material breach of this Agreement by Aventisor Neurogen (in such capacity, the “Breaching Party”), the other Party(in such capacity, the “Non-Breaching Party”) may provide writtennotice (a “Breach Notice”) to the Breaching Party specifying the materialbreach. If the Breaching Party fails to cure such material breach during the ninety(90) day period (or, if applicable, such longer period, but not to exceed onehundred and eighty (180) days, as would be reasonably necessary for a diligentparty to cure such material breach, provided the Breaching Party has commencedand continues its diligent efforts to cure, and provided further, that the Partiesshall use reasonable efforts to work together to cure any such material breach)following the date on which the Breach Notice is provided, then the provisionsof Section 12.4 (b), (c), (d), (e) or (f) shall apply as applicable. The Partiesacknowledge and agree that (i) an act or omission for which Neurogen has madea Diligence Referral shall not constitute a basis for a claim by Neurogen of abreach of this Agreement by Aventis; provided that the Parties acknowledge andagree that if Aventis fails to comply in any material respect with a determinationof the IAC, then Neurogen may, if it reasonably believes it necessary, sue toenforce such decision of the IAC, which suit may include a request for specificperformance and damages (the Parties agreeing that in any particular instancemoney damages may or may not be appropriate, may be difficult or impossible todetermine, or may not be fully compensatory), and (ii) in the event that Neurogenelects to pursue a claim for material breach rather than seek Diligence Referral,any finding that Aventis failed to meet a specific diligence requirement underSection 5.3(b) shall not in and of itself, create any presumption that Aventishas materially breached this Agreement.12.4 Consequences of Termination or Material Breach.(a) Voluntary Termination by Aventis pursuant to  Section 12.2. In the event this Agreement is voluntarily terminated by Aventis  pursuant to Section 12.2, then on or before the effective date of termination:(i) Aventis shall pay Neurogen in one lump payment  an amount equal to{________}on an annual basis for each of the Neurogen Researcher  FTEs specified to be devoted to the Research Plan for the {________} following  the delivery of Aventis’ written notice to Neurogen; provided that, in  the event that such termination notice is delivered to Neurogen prior to the  completion of the first year of this Agreement, then such payment shall be made  on a pro rata basis for each month remaining in such year that has not already  been funded by Aventis, and for the {________}; and Aventis shall have no other  funding obligation going forward for the Research Program;(ii) Subject to Section 12.4(a)(xi) below, all licenses  granted pursuant to Sections 2.1 and 2.2 will terminate;(iii) Aventis will, within thirty (30) days of the  notice provided for in Section 12.2, disclose to Neurogen all Joint Technology,  Joint Confidential Information and Aventis Contributed Technology in Aventis’  or any of its Affiliate’s possession and not previously disclosed to Neurogen,  including without limitation the list required by Section 13.7;(iv) Subject to Section 12.4(a)(xi) below, Aventis  and its Affiliates, as the case may be, will grant to Neurogen, at Neurogen’s  request, the following licenses:(A) a sole and exclusive, perpetual, irrevocable,  royalty-free, worldwide right and license under (I) the Aventis Contributed  Technology and Aventis’ or any of its Affiliates’ interest in the  Joint Technology and Joint Confidential Information, to the extent and only  to the extent that such Aventis Contributed Technology or Joint Technology relate  to the composition or use of CRF1 Receptor Antagonist/Agonists, and (II) Aventis’  or any of its Affiliates’ interest in any CRF1 Patent Rights owned or  Controlled by Aventis and Aventis’ or any of its Affiliates’ interest  (if any) in the Neurogen Contributed Technology, in each case to research, develop,  have developed, make, have made, use, import, market, have marketed, offer for  sale, sell and have sold, any pharmaceutical product which contains a CRF1 Receptor  Antagonist/Agonist as an active ingredient; and(B) a perpetual, irrevocable, royalty-free, worldwide  right and license under the Aventis Contributed Technology, Aventis’ or  any of its Affiliates’ interest in the Joint Technology and Joint Confidential  Information, other than to the extent that such Aventis Contributed Technology,  Joint Technology or Joint Confidential Information relate to the composition  or use of CRF1 Receptor Antagonist/Agonists, in each case to research, develop,  have developed, make, have made, use, import, market, have marketed, offer for  sale, sell and have sold, any pharmaceutical product which contains a CRF1 Receptor  Antagonist/Agonist as an active ingredient; provided that such license shall  be exclusive to Neurogen for three (3) years following such voluntary termination,  after which time such license shall be non-exclusive;(v) Aventis and its Affiliates shall transfer to Neurogen’s  control the filing, prosecution and maintenance of all CRF1 Patent Rights owned  or Controlled by Aventis or any of its Affiliates. Aventis and its Affiliates  shall continue to cooperate with such filing, prosecution and maintenance in  a manner consistent with Section 13.2(d), and Neurogen shall assume the costs  going forward of all filing, prosecution and maintenance of such CRF1 Patent  Rights that had been undertaken by either Party under the provisions of Article  13. Neurogen shall provide Aventis with information regarding such Patent Rights  so transferred in a manner consistent with Section 13.2(d) and if Neurogen declines  to prepare, file, prosecute or maintain such Patent Rights, then Aventis may,  with respect to any of such Patent Rights as Aventis may determine in its sole  discretion, do so at Aventis’ expense;(vi) Subject to Section 12.4(a)(xi), upon Neurogen’s  request, Aventis shall grant to Neurogen an exclusive, world-wide license to  utilize any Marks which were used primarily to market Collaboration Products  in return for a Royalty from Neurogen to Aventis of {________} of Net Sales  of such products sold by Neurogen or any of its Affiliates, licensees or sublicensees  using any such Marks;(vii) if, within three years following a termination  by Aventis pursuant to Section 12.2, Aventis or any of its Affiliates (or any  successor entity) undertakes, pursues, in-licenses or otherwise has any interest  in any CRF1 Receptor Antagonist/Agonist product or any program where the objective  is to research, develop or commercialize such products, then Aventis or any  of its Affiliates (or any successor entity) shall pursue its interest in such  product or program without utilizing any material element of any Aventis Contributed  Technology, Joint Technology, or Joint Confidential Information or any Neurogen  Contributed Technology or Neurogen Confidential Information;(viii) for clarity, it is understood and agreed that:(A) after three years following a termination by  Aventis pursuant to Section 12.2, Aventis and its Affiliates may utilize on  a perpetual, irrevocable, worldwide, royalty-free basis the Aventis Contributed  Technology, Aventis’ interest in the Joint Technology, and Aventis’  interest in the Joint Confidential Information (other than to the extent that  such Aventis Contributed Technology, Joint Technology or Joint Confidential  Information relate to the composition or use of CRF1 Receptor Antagonist/Agonists)  in each case to research, develop, have developed, make, have made, use, import,  market, have marketed, offer for sale, sell and have sold any pharmaceutical  product which contains as an active ingredient a CRF Receptor Antagonist/Agonist  that is not within the CRF1 Patent Rights; and(B) at any time following a termination by Aventis  pursuant to Section 12.2, Aventis may utilize on a perpetual, irrevocable, worldwide,  royalty-free basis the Aventis Contributed Technology, Aventis’ interest  in the Joint Technology and Joint Confidential Information to research, develop,  have developed, make, have made, use, import, market, have marketed, offer for  sale, sell and have sold any pharmaceutical product which does not contain a  CRF1 Receptor Antagonist/Agonist as an active ingredient.(ix) Subject to Section 12.4(a)(xi), it is agreed  and understood that, in the event that Aventis terminates this Agreement under  Section 12.2, Aventis shall provide or transfer to Neurogen or any sublicensee  of Neurogen, at Neurogen’s request and expense, any preclinical data,  clinical data or regulatory submissions relating to any EDC Program Compounds  and Collaboration Products;(x) the lock-up provisions of Section 2.4 shall survive  any termination of this Agreement; and(xi) if, prior to termination, Aventis has acquired  the rights to participate in the development or commercialization of an Ex-Program  Product for which Aventis made an election to pay Neurogen Royalties pursuant  to Section 2.3(b)(i)(A), then, within thirty (30) days of the notice provided  for in Section 12.2, Aventis shall provide to Neurogen all material information  (to the extent permitted under any applicable confidentiality agreements with  Third Parties) relating to the Ex-Program Product, and within sixty (60) days  of Neurogen’s receipt of such information, Neurogen shall notify Aventis  whether: (A) Neurogen desires to retain its right to the Royalties  for the Ex-Program Product, in which case (I) the licenses granted pursuant  to Section 12.4(a)(iv)(A) shall not include any Aventis Contributed Technology,  Neurogen Contributed Technology, Joint Technology or CRF1 Patent Rights in so  far as each relates solely to the indications identified to Neurogen pursuant  to Section 2.3(b)(i), (II) the licenses granted pursuant to 12.4(a)(iv)(B),  to the extent and solely to the extent necessary for, and to the extent used  by Aventis to, pursue the further research, development, and commercialization  of Ex-Program Products for which Aventis will pay Royalties to Neurogen, shall  be non-exclusive immediately and (III) the licenses granted by Neurogen to Aventis  with respect thereto shall remain in effect, or whether: (B) Neurogen desires to forfeit its right to such  Royalties, in which case the licenses granted pursuant to Section 12.4(a)(iv)  shall remain as set forth in Section 12.4(a)(iv). (b) Rights of Aventis in the Event of Neurogen  Breach with respect to the Research Program. If a material breach relates  to Neurogen’s obligations under the Research Program and is not cured  in accordance with the provisions of Section 12.3, then Aventis may, upon written  notice to Neurogen, elect to accelerate the conclusion of the Research Program  to any date at Aventis’ option. Upon such conclusion of the Research Program,  this Agreement shall continue in full force and effect with respect to Aventis’  further development and commercialization (including the payment of Milestones  and Royalties) of Collaboration Products. For purposes of clarity, if Aventis  elects to so accelerate the conclusion of the Research Program, then, upon such  conclusion:(i) Aventis will have no further funding obligations  for and Neurogen will have no further obligations to perform research with respect  to the Research Program after such conclusion;(ii) all licenses granted pursuant to Section 2.2  will terminate;(iii) the provisions of Section 2.4 will continue  to apply until one year after what would have been the entire Initial Term (and  the entire Extension Term, if already commenced) as if the conclusion of the  Research Program had not been accelerated.(c) Rights of Aventis in the Event of Neurogen’s  Breach with respect to the Development and Commercialization of Collaboration  Products. If the material breach relates to any of Neurogen’s obligations  under this Agreement with respect to the development and commercialization of  Collaboration Products and is not cured in accordance with the provisions of  Section 12.3, then this Agreement shall continue in full force and effect, including  with respect to Aventis’ further development and commercialization (including  the payment of Milestones and Royalties) of Collaboration Products, and:(i) in the event the material breach occurs during  the term of the Research Program, Aventis shall have the rights and the Parties  shall both have the obligations set forth in Section 12.4(b); (ii) the provisions of Sections 2.4, 2.5, and 2.6  shall continue to apply; and(iii) Neurogen shall cease to have the right to make  a Diligence Referral under Section 5.3(b); except that Neurogen shall continue  to have the right to make a Diligence Referral in the event the Product Development  Committee fails to adopt a Product Development Plan within ninety (90) days  of the designation of an EDC Program Compound as required by Section 5.3(b)(i).(d) Rights of Neurogen in the Event of Aventis’  Breach with respect to Research Program. If the material breach relates  to Aventis’ obligations under the Research Program and is not cured in  accordance with the provisions of Section 12.3, then Neurogen may, upon written  notice to Aventis, elect to accelerate the conclusion of the Research Program  to any date at Neurogen’s option. Upon such conclusion of the Research  Program, this Agreement shall continue in full force and effect with respect  to Aventis’ further development and commercialization (including the payment  of Milestones and Royalties) of Collaboration Products. For purposes of clarity,  if Neurogen elects to so accelerate the conclusion of the Research Program,  then, upon such conclusion:(i) Aventis will have no further funding obligations  for and Neurogen will have no further obligations to perform research with respect  to the Research Program after such conclusion(ii) the licenses granted pursuant to Section 2.2    will terminate; and(iii) the provisions of Section 2.4 shall continue    to apply until one year after what would have been the entire Initial Term    (and the entire Extension Term, if already commenced) as if the conclusion    of the Research Program had not been accelerated. (e) Rights of Neurogen for Aventis’ Breach    with respect to the Development and Commercialization of Collaboration Products.    If the material breach relates to Aventis’ obligations with respect    to the development and commercialization of Collaboration Products, then Neurogen    may, upon written notice to Aventis, terminate this Agreement and the right    to further develop and commercialize all Collaboration Products shall be transferred    to Neurogen provided, however, that if at the time of the termination, Aventis    is conducting marketing or clinical development of one or more Collaboration    Products for indications that are not the subject of any material breach,    then any such termination shall not apply to such Collaboration Products (“Retained    Collaboration Products”) and Aventis shall retain the rights and licenses    necessary to continue the marketing and clinical development as contemplated    in this Agreement of such Retained Collaboration Products and the diligence,    milestone payment and Royalty obligations relating thereto shall survive such    termination. For purposes of clarity, any such termination will include the    termination of the licenses granted by Neurogen to Aventis pursuant to Sections    2.1 (except to the extent necessary for Aventis to develop and commercialize    Retained Collaboration Products) and 2.2. In addition: (i) Aventis will disclose to Neurogen all Joint    Technology, Joint Confidential Information and Aventis Contributed Technology    in Aventis’ possession and not previously disclosed to Neurogen;(ii) Aventis will grant to Neurogen a sole and exclusive    perpetual, irrevocable, royalty-free, fully-paid, worldwide license, with    right to sublicense, under Aventis’ interest in the Joint Technology,    the Aventis Contributed Technology and any CRF1 Patent Rights (except to the    extent necessary for Aventis to develop and commercialize Retained Collaboration    Products), and Aventis’ interest (if any) in the Neurogen Contributed    Technology to research, have researched, develop, have developed, make, have    made, use, import, market, offer for sale and sell, any pharmaceutical product    that contains a CRF1 Receptor Antagonist/Agonist as an active ingredient other    than a Retained Collaboration Product; (iii) Aventis and its Affiliates shall transfer    to Neurogen’s control the filing, prosecution and maintenance of all    CRF1 Patent Rights owned or Controlled by Aventis or any of its Affiliates    other than those relating to a Retained Collaboration Product. Aventis and    its Affiliates shall continue to cooperate with such filing, prosecution and    maintenance in a manner consistent with Section 13.2(d), and Neurogen shall    assume the costs going forward of all filing, prosecution and maintenance    of such CRF1 Patent Rights that had been undertaken by either Party under    the provisions of Article 13 other than those relating to a Retained Collaboration    Product. Neurogen shall provide Aventis with information regarding such Patent    Rights so transferred in a manner consistent with Section 13.2(d) and if Neurogen    declines to prepare, file, prosecute or maintain such Patent Rights, then    Aventis may, with respect to any of such Patent Rights as Aventis may determine    in its sole discretion, do so at Aventis’ expense; and(iv) Upon Neurogen’s request, Aventis shall    grant to Neurogen a co-exclusive, world-wide license to utilize any Marks    which were used primarily to market Collaboration Products and were not used    to market any Retained Collaboration Products in return for a Royalty from    Neurogen to Aventis of {________} of Net Sales by Neurogen or any of its Affiliates,    licensees or sublicensees of products that use any such Marks.(f) Remedies; Other Material Breaches. The rights    of the Non-Breaching Party set forth in Sections (b) through (e) above shall    be in addition to, and not in lieu of, any other remedies to which the Non-Breaching    Party may be entitled at law or equity. If there is a material breach alleged    other than in the scenarios covered by Sections (b) through (e) above, the    Non-Breaching Party shall be entitled to seek any remedies available at law    or equity.  12.5 Change of Control. Upon a Change of Control of Neurogen, this Agreement  shall continue in full force and effect, except that, upon the election of Aventis:(a) the decisions of the Research Committee described    in Section 1.1(a) (with respect to establishing values for affinity and activity    for Active Compounds), provided that Aventis shall exercise its rights in    establishing values for affinity and activity in good faith, Section 2.6 (with    respect to selecting back-ups), and Section 4.1(b) (with respect to designating    as a Hit Program Compound a Compound which does not meet the criteria for    Active Compound) shall cease to be Non-Referable decisions; provided that    the decisions of the Research Committee described in Section 1.57(a) (with    respect to amending, updating or replacing the schedule of Patent Rights included    in the Neurogen CRF1 Compound Technology) and Section 2.4 (with respect to    the screening and chemical optimization of Compounds in the Aventis Series    and Neurogen Series) shall continue to be Non-Referable decisions; and(b) Neurogen shall cease to have the right to make    a Diligence Referral under Section 5.3(b); provided that Neurogen shall continue    to have the right to make a Diligence Referral in the event the Product Development    Committee fails to adopt a Product Development Plan within ninety (90) days    of the designation of an EDC Program Compound as required by Section 5.3(b)(i).  12.6 Bankruptcy. Each party may, in addition to any other remedies available  to it by law or in equity, exercise the rights set forth below by written notice  to the other Party (the “Insolvent Party”), in the event  the Insolvent Party shall have become insolvent or bankrupt, or shall have made  an assignment for the benefit of its creditors, or there shall have been appointed  a trustee or receiver of the Insolvent Party or for all or a substantial part  of its property, or any case or proceeding shall have been commenced or other  action taken by or against the Insolvent Party in bankruptcy or seeking reorganization,  liquidation, dissolution, winding-up arrangement, composition or readjustment  of its debts or any other relief under any bankruptcy, insolvency, reorganization  or other similar act or law of any jurisdiction now or hereafter in effect,  or there shall have been issued a warrant of attachment, execution, distraint  or similar process against any substantial part of the property of the Insolvent  Party, and any such event shall have continued for sixty (60) days undismissed,  unbonded and undischarged. All rights and licenses granted under or pursuant  to this Agreement by each Party are, and shall otherwise be deemed to be, for  purposes of Section 365 (n) of the U.S. Bankruptcy Code, licenses of rights  to “intellectual property” as defined under Section 101 of the U.S.  Bankruptcy Code. The Parties agree that the other Party as licensee of such  rights under this Agreement shall retain and may fully exercise all of its rights  and elections under the U.S. Bankruptcy Code. The Parties further agree that,  in the event of the commencement of a bankruptcy proceeding by or against a  Party under the U.S. Bankruptcy Code, the other Party shall be entitled to a  complete duplicate of (or complete access to, as appropriate) any such intellectual  property and all embodiments of such intellectual property, and same, if not  already in the its possession, shall be promptly delivered to it (i) upon any  such commencement of a bankruptcy proceeding upon its written request therefor,  unless the bankrupt Party elects to continue to perform all of its obligations  under this Agreement or (ii) if not delivered under (i) above, upon the rejection  of this Agreement by or on behalf of the bankrupt Party upon written request  therefor by the other Party.12.7 Certain Termination at the end of the Research Program. If, at anytime, after one year following the term of the Research Program, (x) there are:(i) no designated EDC Compounds that are being developed, (ii) no Aventis Compounds,Neurogen Compounds, or Joint Compounds in clinical development, and (iii) no CollaborationProducts being marketed, and (y) such facts are not due to the failure of eitherParty to use Commercially Reasonable Efforts, then either Party may, upon ninety(90) days written notice to the other Party, terminate this Agreement in its entirety.If this Agreement is terminated pursuant to this Section 12.7, then all licensesgranted pursuant to Sections 2.1 and 2.2 will terminate and the Parties will negotiatein good faith to divide ownership of all Patent Rights regarding Joint Inventionsso that each Party receives exclusive rights of substantially equal value. Suchnegotiations will take into account, without limitation, the discovery (as permittedherein) by a party of a non-CRF1 pharmaceutical utility for compounds within thescope of particular Patent Rights, such that the Party that has discovered suchpharmaceutical utility shall preferentially receive those Patent Rights coveringsuch utility if such receipt can be accomplished while preserving equal valuefor both Parties. In the case of such preferential receipt of Patent Rights, ifthe Party not receiving such rights owns or Controls Patent Rights that dominatethe Patent Rights so received, the transfer of a license under the dominatingPatent Rights shall be made. If the Parties are unable to agree on how to dividethe Patent Rights regarding Joint Inventions within six (6) months after the effectivedate of such termination, then the matter shall be submitted to non-binding arbitration.12.8 Liabilities. Termination of this Agreement shall not release eitherParty from any obligation or liability which shall have accrued at the time oftermination, or preclude either Party from pursuing all rights at law and in equitywith respect to any breach under this Agreement. Notwithstanding the foregoing,except as may be the case under Section 11, neither Party will be liable for punitive,exemplary or consequential damages incurred by the other Party arising out ofany breach or default under this Agreement.
**ARTICLE 13  INTELLECTUAL PROPERTY**
13.1 Ownership of Technology and Patent Rights. Each of Neurogen and Aventisshall respectively own the Technology, and any Patent Rights claiming such Technology,invented, developed or discovered solely by its employees or agents in the performanceof such Party’s obligations under this Agreement (respectively, “NeurogenInventions” and “Aventis Inventions”). Inventorshipshall be determined in accordance with United States laws of inventorship. Wheninvented by inventors from both Parties (“Joint Inventions”)each Party’s employee or agent inventors shall assign their rights claimingJoint Inventions to that Party. In accordance with United States patent laws andthis Agreement, the Parties will thus jointly own any Joint Inventions, each holdingan undivided half interest in any Joint Inventions, for which there are no ThirdParty inventors who are not under an obligation of assignment of all right titleand interest in such Joint Invention to one or both Parties. Notwithstanding anythingto the contrary, each Party shall solely own all Compounds invented or synthesizedas part of the screening and optimization chemistry activities of such Party directedtoward discovering Active Compounds for purposes of the Research Program as contemplatedby Section 4.1(a)(ii) and (iii). It is the Parties’ intention to avoid anyinvolvement of such Third Party inventors in the Research Program. The Partiesshall jointly own, each receiving an undivided half interest, any Joint Inventionsfor which there are no Patent Rights. No rights or licenses are granted unlessexpressly provided for in this Agreement and each Party shall retain all rightsand licenses not expressly granted to the other.13.2 Patent Prosecution and Maintenance.(a) Aventis Inventions and Collaboration Products.  Aventis, at its expense, shall use Commercially Reasonable Efforts to prepare,  file, prosecute, and maintain worldwide (i) Patents relating to Aventis Inventions  and (ii) Patents claiming EDC Program Compounds or Collaboration Products. If  Aventis declines to prepare, file, prosecute or maintain such patents, then  Neurogen may, with respect to any of such patents as Neurogen may determine  in its sole discretion, do so at Neurogen’s expense. In the event any  such Patents also relate to a Competing Product or an EDC Compound, certain  rights to which were granted to Neurogen pursuant to Section 5.3(b)(iii)(B),  Neurogen and Aventis shall share equally the expense of preparing, filing, prosecuting  and maintaining such Patents.(b) Neurogen Inventions. Neurogen, at Aventis’  expense, will prepare, file, prosecute and maintain worldwide patents relating  to Neurogen Inventions. If Neurogen declines to prepare, file, prosecute or  maintain such patents, then Aventis may, with respect to any of such patents  as Aventis may determine in its sole discretion, do so at Aventis’ expense.  If Neurogen is preparing, filing, prosecuting or maintaining a patent relating  to a Neurogen Invention that includes pending or issued claims reading on a  Compound that is also the subject of a Neurogen patent application describing  the useful activity of the Compound as being at a pharmacological target that  is not a CRF1 Receptor, Neurogen shall pay {________} of the costs of prosecuting  such patent application relating to a Neurogen Invent ion.(c) Joint Inventions. Aventis shall have the  first right to prepare, file, prosecute, and maintain worldwide patents relating  to Joint Inventions and shall use Commercially Reasonable Efforts to do so.  If Aventis declines to prepare, file, prosecute, or maintain such a patent,  then Neurogen may do so at its expense and Aventis’ license to the patent  under Section 2.1 above will be cancelled unless and until Aventis reimburses  Neurogen for its costs relating to the prosecution of all patents relating to  Joint Inventions that Aventis declined to prepare, file, prosecute, or maintain.(d) Cooperation Regarding Patent Filings –  CRF1 Patent Rights. The Parties shall cooperate in pursuing Patent Rights  for all Neurogen Inventions, Aventis Inventions, and Joint Inventions, and shall  upon request execute such papers as are reasonably required to secure such Patent  Rights in accordance with this Section. Each Party shall provide to the other  Party a draft copy of each U.S. and WIPO patent application to be filed in accordance  with this Section 13.2 prior to filing in order, and sufficiently in advance  of filing, to obtain substantive comment of the other Party’s patent counsel.  In situations where there is an acute need for expeditious filing of a provisional  U.S. application, such application may be filed without such prior provision  to the other Party, with the understanding that additional provisional applications  may be filed to incorporate any such substantive comments. Each Party shall  provide to the other Party as-filed copies of all U.S. and WIPO patent applications  promptly after the filing of such applications. Each Party shall provide to  the other Party a copy of each U.S. Patent and Trademark Office “Office  Action” regarding any application for which at least one of the other  Party’s employees or agents are listed as inventor, and a proposed response  thereto, sufficiently in advance of the response due date (without extension),  to obtain substantive comment of the other Party’s patent counsel.(e) Coordination of Chemically Related Non-CRF1  Patent Filings. In order to protect future CRF1 Patent Rights, if, during  the term of the Research Program and the twelve month period thereafter, a Party  should prepare any patent application that falls outside the scope of CRF1 Patent  Rights and that claims a Compound which that Party’s chemists view as  being sufficiently closely chemically related to CRF1 Receptor Antagonist/Agonists  so that, upon publication, such patent application would pose a material risk  of being cited as prior art relevant to the patentability of CRF1 Receptor Antagonist/Agonist  claimed in subsequently-filed patent applications within the CRF1 Patent Rights,  then:(i) each Party shall provide the other’s patent  department with an advance (sent at least fifteen (15) days before filing) draft  copy of any such non-CRF1 patent application, which copy may be redacted to  remove any indication of the particular biological target(s) acted upon by the  Compound(s) claimed in the application;(ii) each Party agrees that any patent application  so provided to it shall be kept in strictest confidence by such Party’s  patent department and that no disclosure of any sort regarding the contents  of such application shall be made outside of such patent department;(iii) if a Party’s patent department is aware  of any invention within the CRF1 Patent Rights of such Party (for which no patent  application has been filed) which invention might reasonably be construed as  being anticipated or made obvious by the disclosure of the non-CRF1 patent application,  the other Party’s patent department shall be promptly notified;(iv) upon such notification, the Parties’ patent  departments shall confer and set a date (no more than ninety (90) days from  when the non-CRF1 patent application was provided) on which the Parties will  simultaneously file their respective patent applications, it being agreed that  once a non-CRF1 patent application provided in accordance with this Section  13.2(e) is received, no patent application claiming an invention meeting the  criteria of the preceding sub-Section 13.2(e)(iii) shall be filed prior to the  date so set, and it being further agreed that if the notification of sub-Section  13.2(e)(iii) is received within 14 days of the provision of the draft non-CRF1  patent application as per sub-Section 13.2(e)(i), then the non-CRF1 patent application  shall not be filed prior to the date so set.In no event shall the filing of any patent application be required to be delayedby more than ninety (90) days by the operation of this Section 13.2(e).(f) Patent Extensions. Aventis shall have the  right to file on behalf of Neurogen all applications and take actions necessary  to obtain patent extensions pursuant to 35 USC 156 or like foreign statutes  for Patent Rights licensed to Aventis hereunder. Neurogen agrees to sign such  further documents and take such further actions (all at Aventis’ expense)  as may be requested by Aventis in this regard.(g) Disclaimer of Claims and Abandonment of Applications  Neither Party may disclaim a claim of a patent application licensed to the other  Party hereunder, nor shall either abandon such patent application, without the  express written consent of the other Party.(h) Oppositions, Re-examinations and Maintenance  The Party prosecuting any patent application in accordance with this Article  13 shall respond to any oppositions, inter partes re-examinations, or the like  (and the parties shall cooperate in such responses in like manner to the prosecution  cooperation provisions of Section 13.2(d) above) and shall maintain in force  any patents issuing on such applications by duly filing all necessary papers  and paying any fees required by the patent laws of the country in which such  patent was granted. All costs shall be borne by the Party at whose expense the  corresponding patent application was or is being prosecuted.13.3 Enforcement of Patent Rights.(a) Aventis Inventions. Subject to subsection  (c) below, Aventis shall have the sole right but not the obligation, in its  own name and at its own expense, to enforce Patent Rights relating to Aventis  Inventions against any Third Party suspected of infringing a claim of such a  Patent Right.(b) Neurogen Inventions. Subject to subsection  (c) below, Neurogen shall have the sole right but not the obligation, in its  own name and at its own expense, to enforce Patent Rights relating to Neurogen  Inventions against any Third Party suspected of infringing a claim of such a  Patent Right. (c) Collaboration Products and EDC Program Compounds.  Aventis shall have the first right, but not the obligation, in its own name,  to enforce Patent Rights relating to any Collaboration Product or EDC Program  Compound, against any Third Party suspected of infringing a claim of such a  Patent Right. In the event Aventis shall not elect to enforce any Patent Right  relating to a Collaboration Product or EDC Program Compound, Neurogen shall  have the right to do so. The Party electing to enforce such Patent Rights (the  “Enforcing Party”) shall have exclusive control over the  conduct of any such proceedings, including the right to settle or compromise  such proceedings consistent with Aventis’ licenses hereunder, provided,  however, that the Enforcing Party may not settle or compromise any such  action in a manner which diminishes the Patent Rights relating to any Neurogen  Inventions without Neurogen’s consent or Aventis Inventions without Aventis’  consent or Joint Inventions without the consent of both Parties or which would  impose any financial obligation on the other Party without such other Party’s  consent. The expenses of any proceeding the Enforcing Party initiates, including  lawyers’ fees and costs, shall be borne by the Enforcing Party, provided,  however, that the other Party (the “Non-Enforcing Party”)  may elect to pay {________} of all such expenses. The Non-Enforcing Party will  cooperate fully with the Enforcing Party in such action upon request by the  Enforcing Party, out-of-pocket expenses incurred in carrying out such cooperation  to be paid by the enforcing party. In the event the Non-Enforcing Party has  elected to pay {________}of the expenses as set forth above, such award or recovery  paid to the Enforcing Party shall first be applied toward reimbursement of legal  fees, costs and expenses incurred by the Parties (in proportion to expenses  incurred), and the remainder, if any, shall be divided {________}to the Non-Enforcing  Party and {________} to the Enforcing Party. If Aventis lacks standing to bring  any proceeding for which it would otherwise be the Enforcing Party, and Neurogen  has standing to carry out such proceeding, then Neurogen shall do so at Aventis’  request and expense, subject to the above {________} election provisions.13.4 Infringement Defense. Aventis shall have the right, but not the obligation,to defend and control any suit against any of Aventis, Aventis’ Affiliatesor sublicensees, alleging infringement of any patent or other intellectual propertyright of a Third Party arising out of activities under this Agreement including,without limitation, the manufacture, use, sale, offer to sell or importation ofa Collaboration Product by Aventis, Aventis’ Affiliates or sublicensees;provided, however, that Aventis shall obtain Neurogen’s written consentprior to agreeing to any settlement which would require any payment by Neurogenor would adversely affect Neurogen’s business in a material way; and provided,further, that Aventis shall give Neurogen prompt written notice of the commencementof any such suit or threat of such suit and will furnish Neurogen a copy of eachcommunication relating to the alleged infringement. Aventis shall be responsiblefor the costs and expenses, including lawyer’s fees and costs, associatedwith any suit or action, and Aventis and Neurogen will consult with one anotherand cooperate in the defense of any such action. If Aventis finds it necessaryor desirable to join Neurogen as a party to any such action, Neurogen will executeall papers and perform such acts as shall be reasonably required, at Aventis expense.13.5 Cooperation Between the Parties. The Parties recognize that the designationof a Compound as an EDC Program Compound or Collaboration Product may impact thedesignation of the Party responsible for such invention under this Article 13.The Parties anticipate that patent applications may be filed on Compounds priorto designation of the Compound as EDC Program Compound or Collaboration Product,and agree to cooperate in deciding how to allocate responsibilities and expensesin the event designation of a Compound as an EDC Program Compound or CollaborationProduct impacts responsibilities under this Article 13. In addition, the Partiesagree to cooperate with each other in the preparation, filing, prosecuting, maintenance,defense and enforcement of Patent Rights included in Neurogen Contributed Technologyor Joint Technology licensed hereunder. In any action taken in the prosecutionof, or in the defense of an action by a Third Party related to patent invalidityor non-patentability of any patent application or patent claiming Neurogen ContributedTechnology or Joint Technology licensed hereunder, neither Party shall admit theinvalidity or non-patentability of any Patent Right or take any other action thatmay diminish Patent Rights within Neurogen Contributed Technology or Joint Technologylicensed hereunder without the other Party’s prior written consent. TheParties agree to cooperate with each other and to use best efforts to ensure thecooperation of any of their respective personnel and licensee(s) or licensor(s)as might reasonably be requested in any such matters, and shall sign any necessarylegal papers and provide the prosecuting party with data or other informationin support thereof. The Parties will confer on what action to take with respectto the defense of infringement proceedings naming both Aventis and Neurogen orin proceedings to enforce patents claiming Neurogen Contributed Technology orJoint Technology licensed hereunder against a Third Party.13.6 Marks for Collaboration Products. Except as otherwise expressly providedin this Agreement, Aventis shall own all trademarks and service marks associatedwith Aventis’ commercialization of a Collaboration Product (collectively,“Marks”). Aventis shall also own any domain names distinctlyincluding any Marks. Except as otherwise provided for herein, Neurogen shall nothave any right, title, interest or other license in or to any of the Marks, andall uses of such Marks shall inure solely to the benefit of Aventis. Under nocircumstances shall Aventis acquire any rights under this Section 13.6 in anytrademark, service mark, or domain name including the word “Neurogen”or “AIDD.”13.7 Listing of CRF1 Receptor Modulatory Compounds.(a) Beginning six months before the expiration of  the term of the Research Program (including any extension thereof), the patent  department of each Party shall prepare lists recording the structures and identifying  numbers of all CRF1 Receptor Modulatory Compounds that such Party has invented,  synthesized, discovered to be a CRF1 Receptor Modulatory Compound, or in-licensed  during the term of the Research Program; provided, however, that such list shall  not include any Compounds in-licensed as an Ex-Program Product; and provided  further that, with respect to Unavailable Compounds for which the disclosure  of compound structures would violate a confidentiality agreement with a Third  Party, such list will only include the identifying number of each of those Unavailable  Compounds, the nature of the circumstances resulting in such status, and the  date(s) when the Third Party confidentiality restrictions will terminate, upon  each such date an addendum to the list shall be provided disclosing the structures  of those Unavailable Compounds, which addendum shall be treated in all respects  as part of the original list. Within sixty (60) days of the end of the Research  Program, such lists shall be finalized and provided in confidence to the patent  department of the other Party. The Patent departments shall then coordinate  their efforts for developing patent strategies during the year following the  end of the Research Program.(b) Each Party agrees that the list so provided to  it shall be kept in strictest confidence by its patent department and that,  except as required to enforce such Party’s rights under this Agreement  (and even then to the most limited extent possible), no disclosure regarding  the compounds recorded on such list shall be made outside of such patent department.
**ARTICLE 14  MISCELLANEOUS**
14.1 Disputes. If, within thirty (30) days after a matter is first considered,the Parties are unable to resolve a dispute or if the Research Committee is unableto reach a decision on any matter within the scope of its responsibilities, Aventisor Neurogen, by written notice to the other, may have such dispute referred toits respective executive officer designated by each Party for attempted resolutionby good faith negotiations. Any such dispute shall be submitted to such executiveofficers no later than thirty (30) days following such request by either Aventisor Neurogen. Except for (i) disputes concerning the decisions of the ResearchCommittee (other than decisions for which this Agreement expressly requires aNon-Referable decision) and (ii) disputes concerning the Product Development Committee(other than decisions subject to a Diligence Referral pursuant to Section 5.3),in the event the designated executive officers are not able to resolve any suchdispute within thirty (30) days after submission of the dispute to such executiveofficers, the Parties may resort to available judicial or other remedies, includingthe provisions of Section 5.3(c), if applicable. Disputes concerning the decisionsof the Research Committee (except for decisions for which this Agreement expresslyrequires a Non-Referable decision) and disputes concerning the Product DevelopmentCommittee (except for decisions subject to a Diligence Referral pursuant to Section5.3) shall each ultimately be conclusively determined by Aventis. Notwithstandinganything in this Agreement to the contrary, the preceding sentence shall not bedeemed to affect in any way the obligations of either Party under this Agreement.14.2 Assignment. This Agreement shall not be assignable by either Party,other than to an Affiliate of such Party, without the prior written consent ofthe other Party, such consent not to be unreasonably withheld. This Agreementshall be binding upon the permitted successors and assigns of the Parties.14.3 Further Actions. Each Party agrees to execute, acknowledge and deliversuch further instruments, and to do all such other acts, as may be necessary orappropriate in order to carry out the purposes and intent of this Agreement.14.4 Force Majeure. No Party shall be liable to the other Party for lossor damages or shall have any right to terminate this Agreement or to seek a DiligenceReferral for any default or delay attributable to any Force Majeure, if the Partyaffected shall give prompt notice of any such cause to the other Party. The Partygiving such notice shall thereupon be excused from such of its obligations hereunderas it is thereby disabled from performing for so long as it is so disabled, provided,however, that such affected Party commences and continues to use its CommerciallyReasonable Efforts to cure such disablement.14.5 Notices. Notices to Neurogen shall be addressed to:Neurogen Corporation35 Northeast Industrial RoadBranford, Connecticut 06405Attention: Director of Business DevelopmentFacsimile No.: (203) 483-8651
with a copy to:

Neurogen Corporation  35 Northeast Industrial Road  Branford, Connecticut 06405  Attention: Legal Department  Facsimile No.: (203) 483-8651

and to:

Milbank, Tweed, Hadley & McCloy LLP  1 Chase Manhattan Plaza  New York, NY 10005  Attention: Donald B. Brant, Jr.  Facsimile No.: (212) 530-5618

Notices to Aventis shall be addressed to:

Aventis Pharmaceuticals Inc.  Route 202-206  P.O. Box 6800  Bridgewater, New Jersey 08807-0800  Attention: Vice President, Global Business Development  Facsimile No.: (908) 231-3502

with a copy to:

Aventis Pharmaceuticals Inc.  Route 202-206  P.O. Box 6800  Bridgewater, New Jersey 08807-0800

Attention: Vice President, Legal Corporate Department  Facsimile No.: (908) 231-4480

  and to:

Morgan, Lewis & Bockius LLP  502 Carnegie Center  Princeton, NJ 08540  Attention: Randall B. Sunberg  Facsimile No.: (609) 919-6639

Either Party may change the address to which notices shall be sent by giving  notice to the other Party in the manner herein provided. Any notice required  or provided for by the terms of this Agreement shall be in writing and shall  be (a) sent by registered or certified mail, return receipt requested, postage  prepaid, (b) sent via a reputable overnight courier service, or (c) sent by  facsimile transmission, in each case properly addressed in accordance with the  paragraph above. The effective date of notice shall be the actual date of receipt  by the Party receiving the same.

14.6 AmendmentM. No amendment, modification or supplement of any provision  of this Agreement shall be valid or effective unless made in writing and signed  by a duly authorized officer of each Party.  14.7 Waiver. No provision of this Agreement shall be waived by any act,  omission or knowledge of a Party or its agents or employees except by an instrument  in writing expressly waiving such provision and signed by a duly authorized  officer of the waiving Party.  14.8 Counterparts. This Agreement may be executed in counterparts and  such counterparts taken together shall constitute one and the same agreement.  14.9 Descriptive Headings. The descriptive headings of this Agreement  are for convenience only, and shall be of no force or effect in construing or  interpreting any of the provisions of this Agreement.  14.10 Governing Law. This Agreement shall be construed and the respective  rights of the Parties determined according to the substantive laws of the State  of Delaware notwithstanding the provisions governing conflict of laws under  Delaware law to the contrary.  14.11 Severability. If any provision hereof should be held invalid, illegal  or unenforceable in any respect in any jurisdiction, the Parties hereto shall  substitute, by mutual consent, valid provisions for such invalid, illegal or  unenforceable provisions which valid provisions in their economic effect are  sufficiently similar to the invalid, illegal or unenforceable provisions that  it can be reasonably assumed that the Parties would have entered into this Agreement  with such valid provisions. In case such valid provisions cannot be agreed upon,  the invalid, illegal or unenforceable of one or several provisions of this Agreement  shall not affect the validity of this Agreement as a whole, unless the invalid,  illegal or unenforceable provisions are of such essential importance to this  Agreement that it is to be reasonably assumed that the Parties would not have  entered into this Agreement without the invalid, illegal or unenforceable provisions.  14.12 Entire Agreement of the Parties. This Agreement, together with  the Schedules and Exhibits hereto, constitutes and contains the complete, final  and exclusive understanding and agreement of the Parties and cancels and supersedes  any and all prior negotiations, correspondence, understandings and agreements  whether oral or written, among the Parties respecting the subject matter hereof  and thereof.  14.13 Independent Contractors. The relationship between Aventis and Neurogen  created by this Agreement is one of independent contractors and neither Party  shall have the power or authority to bind or obligate the other except as expressly  set forth in this Agreement.  14.14 No Trademark Rights. Except as otherwise provided herein, no right,  express or implied, is granted by this Agreement to use in any manner the name  “Neurogen,” “Aventis,” or any other trade name or trademark  of the other Party or its Affiliates in connection with the performance of this  Agreement.  14.15 Accrued Rights; Surviving Obligations. Unless explicitly provided  otherwise in this Agreement, termination, relinquishment or expiration of the  Agreement for any reason shall be without prejudice to any rights, which shall  have accrued to the benefit to any Party prior to such termination, relinquishment  or expiration, including damages arising from any breach hereunder. Such termination,  relinquishment or expiration shall not relieve any Party from obligations which  are expressly indicated to survive termination or expiration of the Agreement,  including, without limitation, those obligations set forth in Articles 10, 11  and 12 hereof.  14.16 Compliance with Export Regulations. Neither Party shall export  any technology licensed to it by the other Party under this Agreement except  in compliance with U.S. export laws and regulations.  14.17 No Third Party Beneficiaries. No person or entity other than Aventis,  Neurogen and their respective Affiliates and permitted assignees hereunder shall  be deemed an intended beneficiary hereunder or have any right to enforce any  obligation of this Agreement.  14.18 No Strict Construction. This Agreement has been prepared jointly  and shall not be strictly construed against either Party.

[Signatures on Following Page]

  IN WITNESS WHEREOF, duly authorized representatives of the Parties have  duly executed this Agreement as of the date first written above to be effective  as of the Effective Date.

  AVENTIS PHARMACEUTICALS INC.

  By: ___/s/ Errol de Souza________________  Name: Name: Errol de Souza  Title: Title: Sr. VP US DI&A

NEUROGEN CORPORATION

  By: __ /s/ William H. Koster, ___________  Name: William H. Koster, Ph.D.  Title: President and CEO

Schedule 1.1(a)

Procedure for Neurogen’s Standard Screening  Assay

  Schedule 1.1(c)

Examples of Determination of Active Compounds

  Schedule 1.8

Aventis Project Progression Manual  Schedule 1.29

Examples of Determination of CRF1 Receptor  Modulatory Compound

  Schedule 1.31

Chemical Diagrams of EDC Program Candidates  to be inserted

  Schedule 1.56

Neurogen Contributed Technology

  Schedule 1.58

Neurogen Initial Report

  Schedule 3.2

Product Development Plan

  Schedule 4.3

Research Plan

Schedule 7

Examples Milestone Payments under Article  7

Schedule 9.2(b)

Neurogen Patent Rights