Stock Purchase Agreement

EXHIBIT 10.26


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STOCK PURCHASE AGREEMENT


dated as of January 12, 2001


by and between


BAYER AG
a corporation of the Federal Republic of Germany


and


CURAGEN CORPORATION
a Delaware corporation


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STOCK PURCHASE AGREEMENT


This Stock Purchase Agreement (the "Agreement") is made as of January 12, 2001 by and between CuraGen Corporation, a Delaware corporation (the "Company"), and Bayer AG, a corporation organized under the laws of the Federal Republic of Germany ("Purchaser").


WHEREAS, the Company and Purchaser are parties to that certain Agreement, dated as of the date hereof (the "Pharmacogenomics Agreement"), which contains the terms and conditions on which the parties have agreed to collaborate on toxicogenomic and pharmacogenomic services for use in the development of drugs; and


WHEREAS, Bayer Corporation, an Indiana corporation and a wholly-owned subsidiary of Purchaser, and the Company are parties to that certain Agreement, dated as of the date hereof (the "Metabolic Disorder Collaboration Agreement," and, together with the Pharmacogenomics Agreement, the "Collaboration Agreements"), which contains the terms and conditions on which the parties have agreed to collaborate on drug discovery and development for metabolic disorders; and


WHEREAS, in connection with the execution of these Collaboration Agreements, Purchaser wishes to purchase from the Company, and the Company wishes to sell to Purchaser, shares of the Company's Common Stock on the terms and subject to the conditions set forth herein;


WHEREAS, in connection with such sale and purchase of shares of Common Stock, the Company and Purchaser wish to enter into a registration rights agreement (the "Registration Rights Agreement"), substantially in the form attached hereto as Exhibit A.


NOW, THEREFORE, in consideration of the premises and the mutual covenants set forth herein, the Company and Purchaser agree as follows:


ARTICLE 1. PURCHASE AND SALE OF SHARES


Section 1.1 Purchase and Sale. Subject to the terms and conditions of
----------------- this Agreement, the Company agrees to issue and sell to Purchaser and Purchaser agrees to purchase from the Company 3,112,482 shares of the Company's Common Stock (the "Shares"), at a purchase price of $27.3094 per share (which purchase price reflects the average closing price of the Company's Shares during the twenty (20) day trading period preceding the date of this Agreement) for an aggregate purchase price of eighty-five million fifteen dollars and ninety-three cents ($85,000,015.93) (the "Purchase Price").


Section 1.2 Closing Date. The closing of the purchase and sale of the
------------ Shares hereunder (the "Closing") shall be held at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Boston, Massachusetts, at 10:00 a.m., Boston time, on the third Business Day following the first date on which all the conditions to Closing set forth in Article 6 have been satisfied or waived, or at such other, place, time and date as the Company and Purchaser shall agree. The Company shall give Purchaser three (3) Business Days prior notice of the date the Closing is scheduled to occur. The date of the Closing is hereinafter referred to as the "Closing Date."


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Section 1.3 Transactions at Closing. At the Closing, subject to the
----------------------- terms and conditions of this Agreement, (a) the Company shall issue and sell to Purchaser and Purchaser shall purchase the Shares; (b) the Company shall deliver to Purchaser a certificate representing the Shares, registered in the name of Purchaser against payment of the Purchase Price by wire transfer of immediately available funds to an account or accounts previously designated by the Company no less than five (5) Business Days prior to the Closing Date; and (c) the Company and Purchaser shall enter into the Registration Rights Agreement.


ARTICLE 2. REPRESENTATIONS AND WARRANTIES


Section 2.1 Representations and Warranties of the Company. The Company
--------------------------------------------- hereby represents and warrants to Purchaser as follows:


(a) Corporate Organization. The Company is a corporation duly
---------------------- organized, validly existing and in good standing under the laws of the State of Delaware. The Subsidiary is duly organized and validly existing and, if applicable, is in good standing, under the laws of the jurisdiction of its incorporation or organization. Each of the Company and its Subsidiary is duly qualified or licensed and, if applicable, is in good standing as a foreign corporation, in each jurisdiction in which the properties owned, leased or operated, or the business conducted, by it require such qualification or licensing, except for any such failure so to qualify or be in good standing which, individually or in the aggregate, would not have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole. The Subsidiary has the requisite power and authority to carry on its business as it is now being conducted. The Company has heretofore made available to Purchaser complete and correct copies of the Certificate of Incorporation of the Company (the "Company Charter") and the By-laws of the Company (the "Company By-Laws") and the certificate of incorporation and by-laws, or the comparable organizational documents, of its Subsidiary, each as amended to date and currently in full force and effect.


(b) Corporate Authority. The Company has the requisite corporate
------------------- power and authority to execute, deliver and perform this Agreement and the Registration Rights Agreement and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Registration Rights Agreement by the Company, the issuance and sale by the Company of the Shares and the performance by the Company of the other transactions contemplated hereby and thereby have been duly authorized by the Company's Board of Directors, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or the Registration Rights Agreement or for the Company to consummate the transactions so contemplated herein and therein. This Agreement is, and the Registration Rights Agreement, when executed or delivered will be, valid and binding agreements of the Company, enforceable against the Company in accordance with their respective terms, assuming that this Agreement and the Registration Rights Agreement are valid and binding agreements of Purchaser, subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors' rights and subject to a court's discretionary authority with respect to the granting of a decree ordering specific performance or other equitable remedies.


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(c) No Violations; Consents and Approvals.
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(i) Neither the execution, delivery or performance by the Company of this Agreement or the Registration Rights Agreement or the consummation by the Company of the transactions contemplated hereby or thereby (A) will result in a violation or breach of the Company Charter or the Company By-Laws or the charter or by-laws of the Company's Subsidiary or (B) will result in a violation or breach of (or give rise to any right of termination, revocation, cancellation or acceleration under or increased payments under), or constitute a default (with or without due notice or lapse of time or both) under, or result in the creation of any lien, mortgage, charge, encumbrance or security interest of any kind (a "Lien") upon any of the properties or assets of the Company or its Subsidiary under, (1) any of the terms, conditions or provisions of any note, bond, mortgage, indenture, contract, agreement, obligation, instrument, offer, commitment, understanding or other arrangement (each a "Contract") or of any license, waiver, exemption, order, franchise, permit or concession (each a "Permit") to which the Company of its Subsidiary is a party or by which any of their properties or assets may be bound, or (2) subject to the governmental filings and other matters referred to in clause (ii) below, any judgment, order, decree, statute, law, regulation or rule applicable to the Company or its Subsidiary, except, in the case of clause (B), for violations, breaches, defaults, rights of cancellation, termination, revocation, acceleration or increased payments or Liens that would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole.


(ii) Except for filings as may be required under, and other applicable requirements of (x) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and (y) Regulation D of the Securities Act of 1933, as amended (the "Securities Act"), no consent, approval, order or authorization of, or registration, declaration or filing with, any government or any court, administrative agency or commission or other governmental authority or agency, federal, state or local (a "Governmental Entity"), is required with respect to the Company in connection with the execution, delivery or performance by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby (except where the failure to obtain such consents, approvals, orders or authorizations, or to make such filings would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole).


(d) Capital Stock. The authorized capital stock of the Company
------------- consists of (i) 250,000,000 shares of Common Stock, $.01 par value per share, of which an aggregate 44,050,017 shares of Common Stock were issued and outstanding as of December 31, 2000, (ii) 3,000,000 shares of Nonvoting Common Stock, $.01 par value per share, of which an aggregate 1,270,272 shares of Nonvoting Common Stock were issued and outstanding as of December 31, 2000, (iii) 5,000,000 shares of Preferred Stock, $.01 par value per share, of which none were issued and outstanding as of December 31, 2000. As of December 31, 2000, the Company had reserved 30,000 shares of Common Stock pursuant to outstanding warrants, and 7,000,000 shares of Common Stock for issuance pursuant to the 1997 Employee, Director and Consultant Stock Plan (the "1997 Stock Plan"). As of December 31, 2000, the Company had reserved another 937,500 shares of Common Stock pursuant to warrants associated with the formation of 454 Corporation. All of the outstanding shares of Common Stock and Nonvoting Common Stock have been duly authorized and validly issued, and are fully paid and nonassessable. As of


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December 31, 2000, the Company had completed an offering of 6% Convertible Subordinated Debentures due 2007 in the aggregate amount of $150,000,000, these Debentures being convertible into shares of the Company's Common Stock. Except for the Common Stock, Nonvoting Common Stock, Convertible Subordinated Debentures and the above referenced Options and Warrants, the Company has outstanding no bonds, debentures, notes or other obligations or securities the holders of which have the right to vote (or are convertible or exchangeable into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. Except as discussed in this paragraph or in Section 2.1(e), as of the date of this Agreement, there are no securities convertible into or exchangeable for, or options, warrants, calls, subscriptions, rights, contracts, commitments, arrangements or understandings of any kind to which the Company or its Subsidiary is a party or by which any of them is bound obligating the Company or its Subsidiary contingently or otherwise to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company or of its Subsidiary. There are no outstanding agreements of the Company or its Subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock of the Company or its Subsidiary.


(e) Subsidiary. Schedule 2.1(e) contains a complete and correct
---------- description of the shares of stock or other equity interests that are authorized, or issued and outstanding, of the Company's Subsidiary. Series A and Series B of the Subsidiary's Preferred Stock are convertible into common stock of the Subsidiary. The Company has no equity interests with a value of $100,000 or more in any Person other than its Subsidiary, and there are no commitments on the part of the Company or its Subsidiary to contribute additional capital in respect of any equity interest in any Person. Each of the outstanding shares of capital stock of the Subsidiary has been duly authorized and validly issued, and is fully paid and nonassessable. Except as set forth on Schedule 2.1(e), all of the outstanding shares of capital stock of the Subsidiary are owned, either directly or indirectly, by the Company free and clear of all Liens.


(f) SEC Filings. The Company has timely filed all reports,
----------- schedules, forms, statements and other documents required to be filed by it with the SEC under the Securities Act and the Exchange Act since March 17, 1998 (the "Company SEC Documents"). As of its filing date, each Company SEC Document filed, as amended or supplemented, if applicable, (i) complied in all material respects with the applicable requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations thereunder and (ii) did not, at the time it was filed, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.


(g) Absence of Certain Events and Changes. Except as disclosed in
------------------------------------- the Company SEC Documents filed with the SEC and publicly available prior to the date hereof, or as otherwise contemplated or permitted by this Agreement, since September 30, 2000, the Company and its Subsidiary have conducted their respective businesses in the ordinary course consistent with past practice and there has not been any event, change or development which, individually or in the aggregate, would have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole.


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(h) Compliance with Applicable Law. Except as disclosed in the
------------------------------ Company SEC Documents, each of the Company and its Subsidiary is in compliance with all statutes, laws, regulations, rules, judgments, orders and decrees of all Governmental Entities applicable to it that relate to its respective business, and neither the Company nor its Subsidiary has received any notice alleging noncompliance except, with reference to all the foregoing, where the failure to be in compliance would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole. This Section 2.1(h) does not relate to employee benefits matters (for which Section 2.1(l) is applicable), environmental matters, (for which Section 2.1(m) is applicable) or tax matters (for which Section 2.1(k) is applicable). The Company and its Subsidiary have all Permits that are required in order to permit it to carry on its business as it is presently conducted, except where the failure to have such Permits or rights would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole. To the Knowledge of the Company, all such Permits are in full force and effect and the Company and its Subsidiary are in compliance with the terms of such Permits, except where the failure to be in full force and effect or in compliance would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole.


(i) Litigation. Except as disclosed in the Company SEC Documents
---------- filed with the SEC and publicly available prior to the date hereof, there are no civil, criminal or administrative actions, suits, or proceedings pending or, to the Knowledge of the Company, threatened, against the Company or its Subsidiary that, individually or in the aggregate, are likely to have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole. Except as disclosed in the Company SEC Documents filed with the SEC and publicly available prior to the date hereof, there are no outstanding judgments, orders, decrees, or injunctions of any Governmental Entity against the Company or its Subsidiary that, insofar as can reasonably be foreseen, individually or in the aggregate, in the future would have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole.


(j) Contracts.
---------


(i) The Company has filed as exhibits to the Company SEC Documents all material agreements required to be filed under the rules and regulations of the SEC (the "Material Contracts").


(ii) All Material Contracts are legal, valid, binding, in full force and effect and enforceable against the Company, unless otherwise disclosed in the Company's SEC Documents except to the extent that any failure to be enforceable, individually or in the aggregate, would not reasonably be expected to have or result in a Material Adverse Effect on the Company and its Subsidiary, taken as a whole, provided that no representation is made as to the
-------- enforceability of any non-competition provision in any employment agreement and subject as to enforcement of remedies to applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting generally the enforcement of creditors' rights and subject to a court's discretionary authority with respect to the granting of a decree ordering specific performance or other equitable remedies. Unless otherwise disclosed in the Company's SEC documents, there does not exist under any Material Contract any violation, breach or event


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of default, or event or condition that, after notice or lapse of time or both, would constitute a violation, breach or event of default thereunder, on the part of the Company or its Subsidiary or, to the Knowledge of the Company or its Subsidiary, any other Person, other than such violations, breaches or events of default as would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole. The enforceability of all Material Contracts will not be adversely affected in any manner by the execution, delivery or performance of this Agreement or the Registration Rights Agreement or the consummation of the transactions contemplated hereby or thereby, and no Material Contract contains any change in control or other terms or conditions that will become applicable or inapplicable as a result of the consummation of such transactions. Except as set forth on Schedule 2.1(j), neither the Company nor the Subsidiary are a party to any contract prohibiting or materially restricting the ability of the Company or its Subsidiary to conduct its business, to engage in any business or operate in any geographical area or compete with any person.


(k) Taxes. (A) all Tax Returns required to be filed by or on behalf
----- of each of the Company and its Subsidiary have been filed except to the extent that a failure to file, individually or in the aggregate, would not have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole; (B) all such filed Tax Returns are complete and accurate in all respects, other than any incompleteness or any inaccuracy that would not, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole, and all Taxes shown to be due on such Tax Returns have been paid; (C) no written claim (other than a claim that has been finally settled) has been made by a taxing authority that any of the Company or its Subsidiary is subject to an obligation to file Tax Returns or to pay or collect Taxes imposed by any jurisdiction in which either the Company or its Subsidiary does not file Tax Returns or pay or collect Taxes, other than any such claim that would not have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole, or for which adequate reserves have been provided on the balance sheets contained in the Company SEC Documents filed with the SEC and publicly available prior to the date hereof; (D) there is no deficiency with respect to any Taxes which would, individually or in the aggregate, have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole, other than any such deficiency for which adequate reserves have been provided on the balance sheet contained in the financial statements in the SEC Company Documents filed with the SEC and publicly available prior to the date hereof; and (E) all material assessments for Taxes due with respect to completed and settled examinations or concluded litigation have been paid which, individually or in the aggregate, exceed $100,000. As used in this Agreement, "Taxes" shall include any and all taxes, sums or amounts assessed or assessable, levied and due by any U.S. or non-U.S. national, federal, state or county or other local governmental authority or agency, including without limitation, real and personal property taxes, income taxes, whether measured by gross or net income or profit, franchise, excise, sales and use taxes, value added taxes, employee withholding, social security, unemployment taxes and any other taxes required to be paid by the Company or any Subsidiary, including interest and penalties in respect thereof whether disputed or not, and whether accrued, contingent, due, absolute, deferred, unknown or other, together with any and all penalties, interests and additions to all such taxes, sums or amounts. "Tax Returns" shall mean all returns, consolidated or otherwise (including without limitation any declaration, report, claim for refund or information return), required to be filed with any governmental authority with respect to Taxes. "Taxable" shall mean subject to Tax.


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(i) Each of the Company and its Subsidiary has duly and timely withheld all Taxes required to be withheld in connection with its business and assets, and such withheld Taxes have been either duly and timely paid to the proper governmental authorities or properly set aside in accounts for such purpose, except to the extent that any failure to do so would not have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole.


(ii) (A) all taxable periods of each of the Company and its Subsidiary ending before December 31, 1995 are closed or no longer subject to audit; (B) neither the Company nor its Subsidiary is currently under any audit by any taxing authority as to which such taxing authority has asserted in writing any claim which, if adversely determined, could have a Material Adverse Effect on the Company and its Subsidiary, taken as a whole; and (C) no waiver of the statute of limitations is in effect with respect to any taxable year of the Company or its Subsidiary.


(iii) (A) none of the Company or its Subsidiary is a party to or bound by or has any obligation under any Tax allocation, sharing, indemnification or similar agreement or arrangement with any Person which might result in a Material Adverse Effect to the Company or Subsidiary which entered into such agreement or arrangement; and (B) none of the Company or its Subsidiary is or has been at any time a member of any group of companies filing a consolidated, combined or unitary income tax return other than any such group the common parent of which is the Company.


(l) Employee Benefit Plans and Related Matters; ERISA.
-------------------------------------------------


(i) Employee Benefit Plans. Each Employee Benefit Plan that
---------------------- provides for equity-based compensation or that has associated costs that are expected to be material to the Company or its Subsidiary in the aggregate and that is expected to provide for contributions to be made by the Company or its Subsidiary or their Employees after the date hereof or to permit the accrual of additional benefits by any Employee of the Company or its Subsidiary after the date hereof has been filed with the SEC as a material contract (collectively, the "Plans").


(ii) Qualification. Except to the extent that failure to meet
------------- the requirements of Section 401(a) of the Code would not result in any material liability as to which adequate reserves have not been established, each Employee Benefit Plan intended to be qualified under section 401(a) of the Code, and the trust (if any) forming a part thereof, (A) has received a favorable determination letter or opinion letter from the IRS as to its qualification under the Code and to the effect that each such trust is exempt from taxation under section 501(a) of the Code, and nothing has occurred since the date of such determination letter that could adversely affect such qualification or tax- exempt status (other than changes in legal requirements applicable to such Employee Benefit Plan necessitating amendments for which the applicable remedial amendment period has not yet expired)or (B) a timely application for such a favorable determination letter or opinion letter was filed and the Company has no reason to believe that such a favorable determination letter or opinion letter will not be granted.


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(iii) Compliance; Liability.
---------------------


(A) No liability has been or is reasonably expected to be incurred under or pursuant to Title I or IV of ERISA or the penalty, excise Tax or joint and several liability provisions of the Code relating to employee benefit plans that is or would be material to the Company and its Subsidiary, taken as a whole.


(B) Each of the Employee Benefit Plans has been operated and administered in all respects in compliance with its terms, all applicable laws and all applicable collective bargaining agreements, except for any failure so to comply that, individually and in the aggregate, could not reasonably be expected to result in a material liability or obligation on the part of the Company and its Subsidiary in the aggregate. There are no pending or threatened claims by or on behalf of any of the Employee Benefit Plans, by any Employee or otherwise involving any such Employee Benefit Plan or the assets of any Employee Benefit Plan (other than routine claims for benefits or actions seeking qualified domestic relations orders or qualified medical child support orders, all of which have been fully reserved for on the regularly prepared balance sheets of the Company or its Subsidiary, as applicable to the extent required by GAAP) which would reasonably be expected to result in any material liability to the Company and its Subsidiary in the aggregate.


(C) Except to the extent that it would not give rise to a material liability or obligation on the part of the Company and it Subsidiary in the aggregate, no Employee is or will become entitled to post-employment benefits of any kind by reason of employment with the Company or its Subsidiary, including, without limitation, death or medic ...