exv10w8



 





Exhibit 10.8




TranS1 Inc.




SERIES C PREFERRED STOCK PURCHASE AGREEMENT




          THIS SERIES C PREFERRED STOCK PURCHASE AGREEMENT (the “Agreement”) is entered into on
September 20, 2005, by and among TranS1 Inc., a Delaware corporation (the
“Company”), and each of the persons listed on Exhibit A hereto (individually, an
“Investor” and collectively, the “Investors”), who hereby agree as follows:





	1.	 	PURCHASE AND SALE OF STOCK.






	 	1.1	 	Sale and Issuance of Series C Preferred Shares.





               (a)     The Company shall adopt and file with the Secretary of State of the State of Delaware on
or before the Closing (as defined below) the Fourth Amended and Restated Certificate of
Incorporation in the form attached hereto as Exhibit B (the “Restated Charter”).



               (b)     Subject to the terms and conditions of this Agreement, each Investor agrees to purchase at
the Closing, and the Company agrees to sell and issue to each Investor at the Closing, severally
and not jointly, a total of 3,887,879 shares (each a “Share” and collectively, the
“Shares”) of the Company’s Series C Preferred Stock, $0.0001 par value per share (the
“Series C Preferred Stock”), in the amounts set forth opposite the names of the respective
Investors on Exhibit A hereto at a purchase price of $6.60 per Share. The Shares will have
the rights, preferences, privileges and restrictions set forth in the Restated Charter.




	 	1.2	 	Closing.





               (a)     The separate purchases and sales of an aggregate of 3,887,879 Shares, for an aggregate
purchase price of $25,660,001.40, shall take place at the closing (the “Closing”) to be
held at the offices of Stradling Yocca Carlson & Rauth, counsel to the Company, in Newport Beach,
California, at 10:00 a.m. (PDT) on September 20, 2005 or at such other time and place as the
Company and the Investors listed on Exhibit A hereto shall mutually agree, either orally or
in writing (the “Closing Date”).



               (b)     At the Closing, the Company shall deliver to each Investor a certificate representing the
Shares of Series C Preferred that such Investor is purchasing, against payment of the purchase
price therefor by check, wire transfer or such other form of payment as shall be mutually agreed
upon by such Investor and the Company.




	2.	 	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.





        The Company hereby represents and warrants to and covenants with each Investor that, except as
set forth on a Schedule of Exceptions attached hereto as Exhibit C, specifically
identifying the relevant subparagraph(s) hereof, which exceptions shall be deemed to be
representations and warranties as if made hereunder:



 









 






	 	2.1	 	Organization, Qualification and Good Standing.





         The Company is a corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware, has all requisite corporate power and authority to own and operate
its properties and assets and to carry on its business as now conducted and as presently proposed
to be conducted, to execute and deliver this Agreement, the Third Amended and Restated Investors’
Rights Agreement in the form attached hereto as Exhibit D (the “Investors’ Rights
Agreement”) and the Third Amended and Restated Right of First Refusal and Co-Sale Agreement in
the form attached hereto as Exhibit E (the “Co-Sale Agreement”) (this Agreement
together with the Investors’ Rights Agreement and the Co-Sale Agreement being collectively referred
to herein as the “Transaction Documents”) and any other ancillary agreements, to issue and
sell the Shares of Series C Preferred and the shares of Common Stock issuable upon conversion of
the Shares (the “Conversion Stock” and together with the Shares, the “Securities”),
and to carry out the provisions of the Transaction Documents, the Restated Charter and any other
ancillary agreements. The Company is duly qualified and is authorized to transact business in
North Carolina and is in good standing as a foreign corporation in each jurisdiction in which the
failure to so qualify would have a material adverse effect on its business, properties or financial
condition.




	 	2.2	 	Authorization.





         All corporate action on the part of the Company, its officers, directors and stockholders
necessary for the authorization, execution and delivery of this Agreement and the other Transaction
Documents, the performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance (or reservation for issuance) sale and delivery of the Securities has been
taken or will have been taken prior to the Closing, and the Transaction Documents, when executed
and delivered by the Company, shall constitute valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other laws of general
application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other equitable remedies, and
(iii) to the extent that the indemnification provisions contained in the Investors’ Rights
Agreement may be limited by applicable laws or public policy considerations.




	 	2.3	 	Valid Issuance of Securities.





         The Shares that are being purchased by the Investors hereunder, when issued, sold, and
delivered in accordance with the terms of this Agreement for the consideration expressed herein,
will be duly and validly issued, fully paid, and nonassessable, and will be free of restrictions on
transfer other than restrictions on transfer under the Transaction Documents and applicable state
and federal securities laws. The Conversion Stock has been duly and validly reserved for issuance,
and upon issuance in accordance with the terms of the Restated Charter, will be duly and validly
issued, fully paid and nonassessable and will be free of restrictions on transfer other than
restrictions on transfer under the Transaction Documents and under applicable state and federal
securities laws. Except pursuant to the Investors’ Rights Agreement, the Securities are not
subject to any preemptive rights or rights of first refusal.



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	 	2.4	 	Governmental Consents.





         No consent, approval, qualification, order or authorization of, or filing with, any local,
state, or federal governmental authority is required on the part of the Company in connection with
the Company’s valid execution, delivery, or performance of this Agreement, the offer, sale or
issuance of the Securities by the Company, except (i) the filing of the Restated Charter with the
Secretary of State of the State of Delaware, and (ii) such filings as have been made prior to the
Closing, except any notices of sale required to be filed with the Securities and Exchange
Commission under Regulation D of the Securities Act of 1933, as amended (the “Securities
Act”), or such post-closing filings as may be required under applicable state securities laws,
which will be timely filed in the applicable periods therefor.




	 	2.5	 	Capitalization and Voting Rights.





         Following the filing of the Restated Charter with the Secretary of State of the State of
Delaware, the authorized capital of the Company consists, or will consist immediately prior to the
Closing, of:



               (a)     Preferred Stock. 11,992,424 shares of Preferred Stock, $0.0001 par value, of which (i)
1,250,000 shares have been designated Series A Preferred Stock, all of which are currently issued
and outstanding, (ii) 1,400,000 shares have been designated Series AA Preferred Stock, all of which
are currently issued and outstanding, (iii) 5,454,545 shares have been designated Series B
Preferred Stock, all of which are currently issued and outstanding, and (iv) 3,887,879 shares have
been designated Series C Preferred Stock, all of which will be issued and outstanding immediately
after the Closing (collectively, the Series A Preferred Stock, Series AA Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock shall be referred to herein as the “Preferred
Stock”). The Preferred Stock shall have the rights, preferences, and privileges set forth in
the Restated Charter.



               (b)     Common Stock. 19,000,000 shares of common stock, $0.0001 par value (the “Common
Stock”), of which 2,386,706 shares are issued and outstanding.



               (c)     The outstanding shares of Common Stock and Preferred Stock are owned by the stockholders
specified in Exhibit F attached hereto in the amounts set forth opposite each stockholder’s
name.



               (d)     The outstanding shares of Common Stock and Preferred Stock have been duly authorized and
validly issued, are fully paid and nonassessable, and were issued in accordance with the
registration or qualification provisions of the Securities Act and any relevant state securities
laws or pursuant to valid exemptions therefrom.



               (e)     Except for (i) the conversion privileges of the Preferred Stock, (ii) the rights provided
in paragraph 3.1 of the Investors’ Rights Agreement, and (iii) 1,596,029 stock options granted to
consultants and employees pursuant to the Company’s 2000 Stock Incentive Plan (the “Plan”),
there are no outstanding options, warrants, rights (including conversion or preemptive rights and
rights of first refusal), proxy or stockholder agreements or agreements of any kind for the
purchase or acquisition from the Company of any of its securities. The Company has reserved a
total of 3,432,735 shares of its Common Stock for purchase upon exercise of options granted
pursuant to the Plan, of which 1,250,000 remain available for future grants. Except as set forth
in the Investors’



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Rights Agreement, the Company is not a party or subject to any agreement or understanding, and
there is no agreement or understanding between any of the stockholders, that affects or relates to
the voting or giving of written consents with respect to any security or the voting by a director
of the Company.




	 	2.6	 	Subsidiaries.





         The Company has no subsidiaries. The Company is not a participant in any joint venture,
partnership, or similar arrangement.




	 	2.7	 	Contracts and Other Commitments.





               (a)     Except as expressly contemplated by this Agreement, or as set forth in the Schedule of
Exceptions, as of the Closing the Company will not be a party to, or bound by, any then-effective
written or oral:



                         (i)     pension, profit sharing, stock option, employee stock purchase or other plan providing for
deferred, incentive or other compensation to employees or any other employee benefit plan, or any
contract with any labor union;



                         (ii)     contract for the employment of any officer, individual employee, or other person or
entity on a full-time, part-time, consulting or other basis which provides for acceleration of
vesting or severance payments upon termination or a change of control (or any combination thereof),
or in any way, restricts or limits the Company’s right to terminate such contract at will (but the
Company need not disclose the existence of any law, public policy, or any oral discussions, or oral
statements of policy which might, under current law, be interpreted as imposing upon the Company
any covenant of good faith and fair dealing, or otherwise generally restrict the Company’s ability
to terminate its employees other than on an “at-will” basis or within sixty (60) days following
delivery of a notice of termination);



                         (iii)     agreement or indenture relating to the borrowing or loaning of money by the Company or
to the mortgaging, pledging, transfer of a security interest, or otherwise placing a lien on any
material asset or material group of assets of the Company, or otherwise relating to the sale,
exchange, or disposition of a material asset or right of the Company;



                         (iv)     guarantee of any obligation;



                         (v)     lease or agreement under which it is the lessee of or holds or operates any property, real
or personal, owned by any other party; provided that there may be excluded from such schedule
leases or agreements under which the aggregate annual rental payments of the Company do not, in the
aggregate, exceed $25,000;



                         (vi)     agreement or group of related agreements with the same party or any group of parties who
are affiliated, which requires an aggregate payment by or to the Company in an amount in excess of
$25,000 or which involves an obligation (contingent or otherwise) in excess of $25,000;



                         (vii)     warranty agreement of the Company with respect to products or services provided by the
Company;



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                         (viii)     contract or agreement prohibiting it from freely engaging in any business or competing
anywhere in the world; or



                         (ix)     letter of intent, memorandum of understanding or other similar document with any
representative of any corporation or corporations regarding the merger of the Company with or into
any such corporation or corporations or with any representative of any partnership, association or
other business entity or any individual regarding the sale, conveyance or disposition of all or
substantially all of the assets of the Company or a transaction or series of related transactions
in which more than fifty percent (50%) of the voting power of the Company would be disposed of, or
regarding any other form of liquidation, dissolution or winding up of the Company.



               (b)     The Company has performed in all material respects all obligations required to be
performed by it and is not in default under, or in material breach of, or after due inquiry, in
receipt of any claim of default under or breach of, any material agreement to which it is a party
or to which its assets are subject; the Company has no present expectation or intention of not
fully performing in all material respects all such obligations; the Company does not have any
knowledge of any material breach or anticipatory breach by the other parties to any material
contract or commitment. To the Company’s knowledge, there are no existing claims under completed
contracts which are reasonably likely to result in a material loss to the Company which are not
reserved against in the Financial Statements. The consummation of the transactions contemplated
under this Agreement does not require the consent of any third party under any material contract
which has not been properly obtained.



               (c)     A true and correct copy of each of the written contracts and a description of the oral
contracts which are referred to in the Schedule of Exceptions, together with all amendments,
waivers or other changes thereto, have been provided to the Investors’ counsel.




	 	2.8	 	Related-Party Transactions.





         No employee, officer, stockholder or director of the Company or member of his or her immediate
family is indebted to the Company, nor is the Company indebted (or committed to make loans or
extend or guarantee credit) to any of them, other than (i) for payment of salary for services
rendered, (ii) reimbursement for reasonable expenses incurred on behalf of the Company, and (iii)
for other standard employee benefits made generally available to all employees including stock
option agreements outstanding under any stock option plan approved by the Board of Directors of the
Company). None of such persons has any direct or indirect ownership interest in any firm or
corporation with which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except that employees,
stockholders, officers, or directors of the Company and members of their immediate families may own
up to 5% of the common stock of any publicly traded company that may compete with the Company. No
officer, director or stockholder or any member of their immediate families is, directly or
indirectly, interested in any contract with the Company (other than such contracts as relate to any
such person’s ownership of capital stock or other securities of the Company, copies of which have
been provided to counsel for the Investors).



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	 	2.9	 	Registration Rights.





         Except as provided in the Investors’ Rights Agreement, the Company is presently not under any
obligation and has not granted any rights to register under the Securities Act any of its presently
outstanding securities or any of its securities that may subsequently be issued.




	 	2.10	 	Permits.





         The Company has all franchises, permits, licenses, and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which would materially and
adversely affect the business, properties or financial condition of the Company, and believes it
can obtain, without undue burden or expense, any similar authority for the conduct of its business
as presently planned to be conducted. The Company is not in default in any material respect under
any of such franchises, permits, licenses or other similar authority.




	 	2.11	 	Compliance With Other Instruments.





         The Company is not in violation or default of any provision of its Restated Charter or bylaws
or in any material respect of any provision of any material contract, or of any federal or state
judgment, order, writ, decree or, to the Company’s knowledge, any statute, rule, regulation or
restriction applicable to the Company. The execution, delivery, and performance by the Company of
the Transaction Documents, and any other ancillary agreements, and the consummation of the
transactions contemplated hereby and thereby, will not result in any such violation or be in
conflict with or constitute, with or without the passage of time or giving of notice, either a
material default under any such provision or an event that results in the creation of any material
lien, charge, or encumbrance upon any assets of the Company or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit, license, authorization, or approval
applicable to the Company, its business or operations, or any of its assets or properties.




	 	2.12	 	Litigation.





         There is no action, suit, proceeding, or investigation pending or, to the Company’s knowledge,
currently threatened against the Company or any officer of the Company. The Company is not a party
to or named in or, to the Company’s knowledge, subject to any order, writ, injunction, judgment, or
decree of any court, government agency, or instrumentality. There is no action, suit, proceeding
or investigation by the Company currently pending or that the Company currently intends to
initiate.




	 	2.13	 	Offering.





         Subject in part to the truth and accuracy of the Investors’ representations set forth in this
Agreement, the offer, sale and issuance of the Securities as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act and the registration or
qualification requirements of applicable state securities laws, and neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would cause the loss of
such exemption.




	 	2.14	 	Title to Property and Assets; Leases.





         Except (i) as reflected in the Schedule of Exceptions, (ii) for liens for current taxes not
yet delinquent, (iii) for liens imposed by law and incurred in the ordinary course of business for



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obligations not past due to carriers, warehousemen, laborers, materialmen and the like, (iv)
for liens in respect of pledges or deposits under workers’ compensation laws or similar legislation
or (v) for liens in respect of minor defects in title, none of which, individually or in the
aggregate, materially interfere with the value or use of such property, the Company has good and
marketable title to its assets and property, both real and personal, free and clear of all
mortgages, liens, claims, and encumbrances. With respect to the property and assets it leases, the
Company is in material compliance with such leases and holds a valid leasehold interest free of any
liens, claims, or encumbrances, subject to clauses (i)-(v) above. Set forth on the Schedule of
Exceptions is a correct and complete list of all material leases under which the Company is a
lessee. The Company enjoys peaceful and undisturbed possession under all such leases, all of such
leases are valid and subsisting, and the Company is not in default of such leases in any material
respect.




	 	2.15	 	No Outstanding Indebtedness; Dividends.





         The Company has no outstanding indebtedness. The Company has not declared or paid any
dividends or authorized or made any distribution upon or with respect to any class or series of its
stock or purchased or otherwise acquired any of its stock.




	 	2.16	 	Changes.





         Since June 30, 2005, there has not been any event or condition of any character that might
materially and adversely affect the business, properties, prospects or financial condition of the
Company.




	 	2.17	 	Patents and Trademarks.





               (a)     The attached Schedule of Exceptions contains a complete and accurate list of all (i)
patented or registered Intellectual Property (as defined below) owned, used or proposed to be used
by the Company in the conduct of its business (in each case distinguishing owned from licensed
Intellectual Property), (ii) pending patent applications and applications for other registrations
of Intellectual Property filed by or on behalf of the Company, and (iii) material unregistered
Intellectual Property owned, used or proposed to be used by the Company. The attached Schedule of
Exceptions also contains a complete and accurate list of all material licenses and other rights
granted by the Company to any third party with respect to any Intellectual Property, all material
licenses and other rights granted by any third party to the Company with respect to any
Intellectual Property and all other agreements affecting the Company’s ability to use or disclose
any Intellectual Property, in each case specifically identifying the subject Intellectual Property.
The Company owns and possesses all right, title and interest to, or has the right to use pursuant
to a valid, enforceable license set forth on the Schedule of Exceptions, all Intellectual Property
necessary for the operation of the business as presently conducted and as presently proposed to be
conducted, free and clear of all liens, security interests, governmental or other third-party
rights or other encumbrances and without restrictions as to use or disclosure other than pursuant
to a written license set forth on the Schedule of Exceptions (the “Company Intellectual
Property”). Except as set forth on the attached Schedule of Exceptions, the prior loss or
expiration of any Intellectual Property or related group of Intellectual Property owned or used by
the Company has not had and would not reasonably be expected to have a material adverse effect on
the business, properties, prospects or financial condition of the Company, and, to the Company’s
knowledge, no loss or expiration of any Intellectual Property is threatened, pending or reasonably
foreseeable. The Company has taken all commercially reasonably steps to maintain and protect the
Intellectual Property which it owns and uses. To the Company’s knowledge, the
owners of any Intellectual Property licensed to the Company have taken all commercially
reasonable action to maintain and protect the Intellectual Property which is subject to such
licenses.




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               “Intellectual Property” means all (i) patents, patent applications, patent disclosures
and inventions, (ii) internet domain names, trademarks, service marks, trade dress, trade names,
logos and corporate names and registrations and applications for registration thereof together with
all of the goodwill associated therewith, (iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for registration thereof, (iv) mask works
and registrations and applications for registration thereof, (v) computer software (including, but
not limited to, source code and executable code), data, data bases and documentation thereof, (vi)
trade secrets and other confidential information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and whether or not reduced to practice), know-how,
manufacturing and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data, copyrightable works, financial
and marketing plans and customer and supplier lists and information), and (vii) copies and tangible
embodiments thereof (in whatever form or medium).



               (b)     To the knowledge of the Company after reasonable inquiry, the Company believes it can
obtain, on commercially reasonable terms, any additional rights necessary for the operation of the
business as presently conducted and as presently proposed to be conducted, and the conduct of such
business by the Company does not, and will not, conflict with or constitute an infringement of the
rights of others.



               (c)     There are no outstanding options, licenses, or agreements of any kind relating to the
Company Intellectual Property, no claims of infringement or claims of misappropriation of the
Intellectual Property rights of others, and there is no known infringement of any valid third party
patent rights or misappropriation of the Intellectual Property rights of others. There are no
grants of rights to any other person to manufacture, license, produce, assemble, market or sell the
Company’s products, and the Company is not bound by or a party to any options, licenses, or
agreements of any kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights, and processes of any other
person or entity.



               (d)     To the Company’s knowledge, the attorneys, inventors, and others involved in prosecuting
the patents or patent applications owned by the Company have not made any misrepresentations to, or
concealed any material fact from, a U.S. or foreign patent office, or concealed any material prior
art reference from the U.S. Patent Office, during the filing, prosecution or revival of the patents
or patent applications owned by the Company in violation of applicable U.S. or foreign patent law.
The Company is not aware of any claim of a third party to a non-joined inventorship interest in any
of the patents or patent applications owned by the Company.



               (e)     (e) Except as specifically set forth on the attached Schedule of Exceptions or in the
course of patent prosecution, (a) there have been no communications made to the Company or its
employees asserting the invalidity, misuse or unenforceability of any of the Intellectual Property
owned or used by the Company, and to the Company’s knowledge, there is no basis for such
assertions, (b) neither the Company nor any of its employees has received any notices of, or has
knowledge of any facts which indicate a likelihood of, any infringement or misappropriation by, or
conflict with, any third party with respect to any Intellectual Property (including any demand or
request that the Company license any rights from a third party), (c) to the Company’s knowledge,
the conduct of the Company’s businesses as presently conducted and as



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proposed to be conducted has not infringed, and will not infringe, any valid third party
patent right, and has not misappropriated or conflicted with, and will not, misappropriate or
conflict with any patented or registered Intellectual Property of third parties, (d) the Company
has not agreed to indemnify any third party for or against any interference, infringement,
misappropriation or other conflict with respect to any Intellectual Property, and (e) to the
Company’s knowledge, the Company Intellectual Property has not been infringed, misappropriated or
conflicted by third parties. The transactions contemplated by this Agreement will not adversely
affect the Company’s right, title or interest in and to the Company Intellectual Property and all
of such Intellectual Property shall be owned or available for use by the Company on identical terms
and conditions immediately after the Closing.



               (f)     All persons or parties who have participated in the creation or development of any of the
Company Intellectual Property have executed and delivered or will execute and deliver to the
Company a valid and enforceable agreement prior to the Closing (i) providing for the non-disclosure
by such person or parties of any confidential information of the Company, and (ii) providing for
the assignment by such person or parties to the Company of all Company Intellectual Property and
any Intellectual Property arising out of such person’s or party’s employment by or contract with
the Company.



               (g)     To the knowledge of the Company after reasonable inquiry, no employee is obligated under
any applicable law or under any contract (including licenses, covenants, or commitments of any
nature) or other agreement, or subject to any judgment, decree, or order of any court or
administrative agency, that would interfere with the performance of the employee’s work for the
Company, use of such employee’s best efforts to promote the interests of the Company, or ability of
the employee to enter into and perform such employee’s obligations under the agreements referenced
in Section 2.17(e), or that would conflict with the Company’s business as presently conducted and
as presently proposed to be conducted; and



               (h)     Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s
business by the employees of the Company, nor the conduct of the Company’s business as contemplated
at the Closing, will, to the Company’s knowledge after reasonable inquiry, conflict with or result
in a breach of the terms, conditions, or provisions of, or constitute a default under, any
contract, covenant, or instrument under which any of such employees is now obligated. The Company
does not believe it is, or will be, necessary to utilize any inventions of any of its employees (or
people it currently intends to hire) made prior to their employment by the Company.




	 	2.18	 	Employees; Employee Compensation.





         There has not been and currently is no strike, labor dispute or union organization activities
pending or, to the knowledge of the Company, threatened between it and its employees. None of the
Company’s employees belongs to any union or collective bargaining unit. The Company has complied
in all material respects with all applicable state and federal equal opportunity and other laws
related to employment. To the Company’s knowledge, no employee of the Company is or will be in
material violation of any judgment, decree, or order, or any term of any employment contract,
patent disclosure agreement, confidentiality agreement, non-compete agreement, or other contract or
agreement relating to the relationship of any such employee with the Company, or any other party
because of the nature of the business conducted or presently proposed to be conducted by the
Company or to the use by the employee his or her best efforts with respect to such business. The
Company is not aware that any officer or employee, or that any group of employees, intends to



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terminate their employment with the Company, nor does the Company have a present intention to
terminate the employment of any of the foregoing. Subject to general principles related to
wrongful termination of employees and limitations imposed under any applicable federal, state or
local law, the employment of each officer and employee of the Company is terminable at the will of
the Company.




	 	2.19	 	ERISA.





         Except as set forth in the Schedule of Exceptions, the Company does not have any (i) labor
agreement to which it is a party, or by which it is bound, including “employee pension benefit
plans” as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”)(“ERISA Plans”); (ii) employment, profit sharing, deferred
compensation, bonus, pension, retainer, consulting, retirement, welfare or incentive plan or
contract to which it is a party, or by which it is bound; (iii) written or other formal personnel
policies; or (iv) plan or agreement under which “fringe benefits” (including, but not limited to,
vacation plans or programs, sick leave plans or programs, and related benefits) are afforded to its
employees over and above those usual and customary in the Company’s industry (the agreements and
plans referred to in clauses (i) through (iv) being referred to collectively as the “Benefit
Plans”). True and correct copies of all such Benefit Plans have been made available to
Investors. The Internal Revenue Service has issued a favorable determination or opinion letter, or
the Company has time remaining to apply for such favorable determination or opinion letter, with
respect to each ERISA Plan intended to be qualified under Section 401(a) of the Internal Revenue
Code of 1986, as amended (the “Code”), which has not been revoked or modified, and the Company has
no knowledge that anything has occurred or any change or amendment has been made which would
adversely effect the qualification of any ERISA Plan under Section 401 of the Code or any of the
trusts maintained pursuant thereto under Section 501 of the Code. All contributions required by
law to have been made under each ERISA Plan prior to the Closing Date have been made or accrued.
No event of the type set forth in Section 4043(b) of ERISA has occurred and is continuing with
respect to any ERISA Plan other than as may result from the transactions contemplated hereby.
There are no material claims, investigations or lawsuits which had been asserted or instituted
against the assets of any of the trusts under any Benefit Plan, and no reasonable basis for any
such claim or lawsuit exists. Each ERISA Plan has been maintained, operated and administered in
all material respects, in accordance with its terms and all provisions of ERISA (including rules
and regulations thereunder) and other applicable laws, and each Benefit Plan has been maintained,
operated and administered in all material respects, in accordance with its terms.




	 	2.20	 	Proprietary Information and Inventions Agreements.





         Each employee of the Company has executed a Proprietary Information and Inventions Agreement
in the form delivered to counsel for the Investors. No such employee has excluded works or
inventions made prior to his or her employment with the Company on the Proprietary Information and
Inventions Agreement. Each consultant and advisor of the Company has executed a consulting
agreement in the forms delivered to counsel for the Investors.




	 	2.21	 	Tax Returns, Payments, and Elections.





         The Company has timely filed all tax returns and reports (federal, state and local) as
required by applicable law. These returns and reports are true and correct in all material
respects. The Company has paid all taxes and other assessments due. The Company has not elected
pursuant to the Code, to be treated as an S corporation or a collapsible corporation pursuant to
Section 1362(a) or



10









 







Section 341(f) of the Code. The Company has not been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code. The Company has never had any tax deficiency
proposed or assessed against it and has not executed any waiver of any statute of limitations on
the assessment or collection of any tax or governmental charge. None of the Company’s federal
income tax returns and none of its state income or franchise tax or sales or use tax returns has
ever been audited by governmental authorities. Since the date of the Company’s incorporation, the
Company has made adequate provisions on its books of account for all taxes, assessments, and
governmental charges with respect to its business, properties, and operations for such period. The
Company has withheld or collected from each payment made to each of its employees, the amount of
all taxes, including, but not limited to, federal income taxes, Federal Insurance Contribution Act
taxes and Federal Unemployment Tax Act taxes required to be withheld or collected therefrom, and
has paid the same to the proper tax receiving officers or authorized depositaries.




	 	2.22	 	Insurance.





         The Company has insurance policies with coverage customary for companies that are similarly
situated to the Company.




	 	2.23	 	Environmental and Safety Laws.





         The Company has not, contrary to applicable statutes and regulations, stored or disposed of,
on, under or about any real property owned or leased by the Company, hazardous materials, and to
the knowledge of the Company, no other person has stored or disposed of hazardous materials on,
under or about any real property owned or leased by the Company. As used in this Agreement, the
term “hazardous materials” shall mean substances defined as “hazardous substances” or “hazardous
materials” or “toxic substances” in the Comprehensive Environmental Response and Compensation
Liability Act of 1980, as amended, 42 U.S.C., Section 9601, et seq.; The Hazardous Materials
Transportation Act, 49 U.S.C., Section 1801, et seq.; The Resource Conservation Recovery Act, 42
U.S.C., Section 6901, et seq.; and those substances defined as hazardous wastes or hazardous
substances in any applicable California statutes or codes and any regulations or publication
promulgated pursuant to any of said laws or regulations.




	 	2.24	 	Minute Books.





         The copy of the minute books of the Company provided to counsel for the Investors contains
complete minutes of all meetings of directors and stockholders and all actions by written consent
without a meeting by the directors and stockholders since the date of incorporation and accurately
reflects all actions by the directors (and any committee of directors) and stockholders with
respect to all transactions referred to in such minutes in all material respects.




	 	2.25	 	Margin Regulations; Use of Proceeds.





         The Company neither owns nor intends to acquire any “margin stock” as defined in Regulation G
of the Board of Governors of the Federal Reserve System (12 CFR 207).



11









 






	 	2.26	 	Disclosure.





         No representation or warranty made by the Company in this Agreement, in any written
certificate or statement required by this Agreement to be furnished to the Investors or their
counsel pursuant to this Agreement, including the Financial Statements, in the Business Plan dated
July 6, 2005 delivered to the Investors by the Company, or in the slide presentations made by the
Company to the Investors on July 20, 2005 (when read together) contains any untrue statement of
material fact or taken together with all information furnished to Investors or their
representatives, omits to state a material fact necessary to make the statements made herein or
therein, in light of the circumstances under which they were made, not misleading. The Company
believes it has provided the Investors with all information that it considers reasonably necessary
or reasonably appropriate for the Investors’ decision to purchase the Shares.




	 	2.27	 	Brokers and Finders.





         The Company has not retained and does not have any liability or obligation to pay any fees or
commissions to any investment banker, broker, or finder in connection with the transactions
contemplated by this Agreement.




	 	2.28	 	Regulatory Matters.





         All regulatory filings made with respect to the Company’s products have been complete and
correct and have complied in all material respects with all applicable laws and regulations. All
clinical trials of investigational products are being conducted by the Company according to the
applicable laws and regulations along with appropriate monitoring of clinical investigation trial
sites for their compliance. The Company has disclosed to the Investors all regulatory filings and
all material communications between representatives of the Company and any regulatory agency.




	 	2.29	 	Qualified Small Business Stock.





         As of and immediately following the Closing, the Shares will meet each of the requirements for
qualification as “qualified small business stock” set forth in Sections 1202(c)(1) and (3)(B) of
the Code, including without limitation the following: (i) the Company will be a domestic C
corporation, (ii) the Company will not have made any purchases of its own stock described in Code
Section 1202(c)(3)(B) during the one-year period preceding the Closing (and the Company does not
intend to make any such repurchases during the one-year period subsequent to the Closing), and
(iii) the Company’s (and any predecessor’s) aggregate gross assets, as defined by Code Section
1202(d)(2), at no time from the date of incorporation of the Company and through the Closing have
exceeded or will exceed $50 million, taking into account the assets of any corporations required to
be aggregated with the Company in accordance with Code Section 1202(d)(3). As of the Closing, at
least 80% (by value) of the assets of the Company are used by it in the active conduct of one or
more qualified trades or businesses, as defined by Code Section 1202(e)(3), and the Company is an
eligible corporation, as defined by Code Section 1202(e)(4).




	 	2.30	 	Financial Statements.





         The Company has made available to each Investor or an agent thereof its audited financial
statements for the fiscal years ended December 31, 2003 and 2004 and its unaudited financial
statements for the six month period ended June 30, 2005 (the “Financial Statements”). The
Financial



12









 







Statements are complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles (“GAAP”) applied on a consistent
basis throughout the periods indicated, except that the unaudited Financial Statements do not
contain any footnotes required by GAAP. The Financial Statements fairly present the financial
condition and operating results of the Company as of the dates and during the periods indicated
therein in accordance with GAAP as in effect for such periods. Except as disclosed in the
Financial Statements, the Company is not a guarantor or indemnitor of any indebtedness of any other
person or entity. The Company maintains and will continue to maintain a standard system of
accounting established and administered in accordance with GAAP.



         Except as set forth in the Financial Statements, the Company has no material liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business
subsequent to June 30, 2005, and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under GAAP to be reflected in the Financial
Statements, which, in both cases, individually or in the aggregate, are not material to the
financial condition of the Company.




	 	2.31	 	83(b) Elections.





         To the Company’s knowledge, all individuals who have purchased shares of the Company’s Common
Stock under agreements providing for the vesting of such shares have timely filed elections under
Section 83(b) of the Code and analogous provisions of applicable state tax laws.




	3.	 	REPRESENTATIONS AND WARRANTIES OF THE INVESTORS.





         Each Investor hereby represents and warrants to the Company that:




	 	3.1	 	Authorization.





         Such Investor has full power and authority to enter into the Transaction Documents, and any
other agreement to which such Investor is a party the execution and delivery of which is
contemplated hereby and that each such agreement, when executed and delivered, will constitute a
valid and legally binding obligation of such Investor enforceable against such Investor in
accordance with their respective terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other laws of general application affecting
enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of
specific performance, injunctive relief, or other equitable remedies, and (iii) to the extent that
the indemnification provisions contained in the Investors’ Rights Agreement may be limited by
applicable laws or public policy considerations.




	 	3.2	 	Purchase Entirely for Own Account.





         This Agreement is made with such Investor in reliance upon such Investor’s representation to
the Company, which by its execution of this Agreement it hereby confirms, that the Securities, will
be acquired for investment for its own account, not as a nominee or agent, and not with a view to
the resale or distribution of any part thereof. Except for transfers to affiliated funds under
common control (a) such Investor has no present intention of selling, granting any participation
in, or otherwise distributing the same and (b) by executing this Agreement, such Investor further
represents that it does not have any contract, undertaking, agreement or arrangement with any
person to sell,
transfer or grant participations to such person or to any third person, with respect to any of
the Securities.




13










 






	 	3.3	 	Reliance Upon Investors’ Representations.





         Such Investor understands that the Shares are not, and any Conversion Stock at the time of
issuance may not be, registered under the Securities Act because of the fact that the sale provided
for in this Agreement and the issuance of the Securities hereunder are exempt from registration
under the Securities Act pursuant to an exemption from the registration provisions thereof, and
that the Company’s reliance on such exemption is predicated on the bona fide nature of the
investment intent and the accuracy of the representations of the Investors set forth herein.




	 	3.4	 	Receipt of Information.





         Such Investor believes it has received all the information that it considers necessary or
appropriate for deciding whether to purchase the Shares. Such Investor further represents that it
has had an opportunity to ask questions and receive answers from the Company regarding the terms
and conditions of the offering of the Shares and the business, properties, prospects and financial
condition of the Company and to obtain additional information (to the extent the Company possessed
such information or could acquire it without unreasonable effort or expense) necessary to verify
the accuracy of any information furnished to such Investor or to which it had access. The
foregoing, however, does not limit or modify the representations and warranties of the Company in
Section 2 of this Agreement or the right of the Investors to rely thereon.




	 	3.5	 	Investment Experience; Economic Risk.





         Such Investor represents that it is experienced in evaluating and investing in private
placement transactions of securities of companies in a similar stage of development as the Company
and acknowledges that such Investor is able to fend for itself, can bear the economic risk of its
investment, and has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of the investment in the Shares. Such Investor
understands that the purchase of the Shares hereunder is a speculative investment that involves a
high degree of risk of such Investor’s entire investment therein. Such Investor is able to bear
the economic risks of its investment in the Shares for an indefinite period of time, including the
risks of a complete loss of such Investor’s investment in such securities. Such Investor also
represents it has not been organized for the purpose of acquiring the Shares.




	 	3.6	 	Accredited Investor.





         Such Investor further represents to the Company that it is an Accredited Investor as defined
in Rule 501(a) promulgated under the Securities Act.




	 	3.7	 	Restricted Securities.





         Such Investor understands that the Securities may not be sold, transferred, or otherwise
disposed of without registration under the Securities Act or an exemption therefrom, and that in
the absence of an effective registration statement covering the Securities, or an available
exemption from registration under the Securities Act, the Securities must be held indefinitely. In
particular, such Investor is aware that the Securities may not be sold pursuant to Rule 144
promulgated under the



14









 







Securities Act unless all of the conditions of that Rule are met. Among the conditions for
use of Rule 144 may be the availability of current information to the public about the Company.
Such information is not now available and the Company has no present plans to make such information
available.




	 	3.8	 	Legends.





         Such Investor understands that, to the extent applicable, each certificate or other document
evidencing any of the Securities shall be endorsed with the legends substantially in the form set
forth below:



               (a) The following legend under the Securities Act:




“THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO THE COMPANY
AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.”



               (b) Any legend imposed or required by the Company’s bylaws or applicable state securities
laws.




	4.	 	CONDITIONS TO INVESTORS’ OBLIGATIONS AT CLOSING.





         The obligations of each Investor under subparagraph 1.1(b) of this Agreement are subject to
the fulfillment on or before the Closing of each of the following conditions:




	 	4.1	 	Representations and Warranties.





         The representations and warranties of the Company contained in Section 2 shall be true on and
as of the Closing with the same effect as though such representations and warranties had been made
on and as of the date of the Closing.




	 	4.2	 	Performance.





         The Company shall have performed and complied with all agreements, obligations, and conditions
contained in this Agreement that are required to be performed or complied with by it on or before
the Closing.




	 	4.3	 	Deliverables.





               (a)     Compliance Certificate. The President of the Company shall deliver to the Investors at
the Closing a certificate dated as of the Closing, satisfactory in form and substance to counsel
for the Investors certifying that the conditions specified in paragraphs 4.1 and 4.2 have been
fulfilled.



15









 





               (b)     Good Standing Certificates. The Company shall deliver to the Investors at the Closing a
certificate of the Secretary of State of the States of Delaware and North Carolina, dated as of a
date within five days of the date of the Closing, with respect to the good standing of the Company.



               (c)     Secretary’s Certificate. The Secretary of the Company shall deliver to the Investors at
the Closing a certificate dated as of the Closing, satisfactory in form and substance to counsel
for the Investors, attaching and certifying to the truth, correctness, and effectiveness of (1) the
Restated Charter, (2) the Bylaws and (3) the board and stockholder resolutions adopted in
connection with the transactions contemplated by this Agreement.



               (d)     Legal Opinion. The Investors shall have received from Stradling Yocca Carlson & Rauth,
counsel for the Company, an opinion, dated as of the Closing, in the form attached hereto as
Exhibit G.




	 	4.4	 	Qualifications.





         All authorizations, approvals, or permits, if any, of any governmental authority or regulatory
body of the United States or of any state that are required in connection with the lawful issuance
and sale of the Shares pursuant to this Agreement shall be duly obtained and effective as of the
Closing.




	 	4.5	 	Proceedings and Documents.





         All corporate and other proceedings in connection with the transactions contemplated at the
Closing and all documents incident thereto shall be reasonably satisfactory in form and substance
to counsel for the Investors, who shall have received all such counterpart original and certified
or other copies of such documents as such counsel may reasonably request.




	 	4.6	 	Investors’ Rights Agreement.





         The Company and the Investors (as defined in the Investors’ Rights Agreement) shall have
executed and delivered the Investors’ Rights Agreement.




	 	4.7	 	Right of First Refusal and Co-Sale Agreement.





         The Company, Founders, Investors, and Major Holders (each as defined in the Co-Sale Agreement)
shall have executed and delivered the Co-Sale Agreement.




	 	4.8	 	Management Rights Letter.





         The Company shall have executed and delivered the Management Rights Letter in the form
attached hereto as Exhibit H.




	 	4.9	 	Indemnification Agreement.





         The Company shall have entered into its standard form of directors’ indemnification agreement
with James Shapiro.



16









 






	 	4.10	 	Board Observation Rights Letter.





         The Company shall have entered into a board observation rights letter with Cutlass Capital,
L.P.




	5.	 	CONDITIONS TO THE COMPANY’S OBLIGATIONS AT CLOSING.





     The obligations of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by the Investors
purchasing Shares at such Closing.




	 	5.1	 	Representations and Warranties.





         The representations and warranties of each Investor contained in Section 3 shall be true on
and as of the Closing, with the same effect as though such representations and warranties had been
made on and as of the date of such Closing.




	 	5.2	 	Qualifications.





         All authorizations, approvals, or permits, if any, of any governmental authority or regulatory
body of the United States or of any state that are required in connection with the lawful issuance
and sale of the Shares pursuant to this Agreement shall be duly obtained and effective as of the
Closing.




	 	5.3	 	Purchase of Shares.





         The Company shall have received payment for all of the Shares being sold to such Investor
pursuant to this Agreement.




	6.	 	MISCELLANEOUS.






	 	6.1	 	Entire Agreement.





         This Agreement and the documents referred to herein constitute the entire agreement among the
parties and no party shall be liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or therein.




	 	6.2	 	Survival of Warranties.





         The warranties and representations of the Company and the Investors contained in or made
pursuant to this Agreement shall survive the execution and delivery of this Agreement and the
Closing.




	 	6.3	 	Successors and Assigns.





         Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and assigns of the parties (including
permitted transferees of any of the Securities). Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.



17









 






	 	6.4	 	Governing Law.





         This Agreement shall be governed by and construed under the laws of the State of Delaware as
applied to agreements among Delaware residents entered into and to be performed entirely within
Delaware.




	 	6.5	 	Counterparts.





         This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same instrument.




	 	6.6	 	Titles and Subtitles.





         The titles and subtitles used in this Agreement are used for convenience only and are not to
be considered in construing or interpreting this Agreement.




	 	6.7	 	Notices.





         Unless otherwise provided, all notices and other communications required or permitted under
this Agreement shall be in writing and shall be mailed by United States first-class mail, postage
prepaid, sent by facsimile or delivered personally by hand or by a nationally recognized courier
addressed to the party to be notified at the address or facsimile number indicated for such person
on the signature page hereof, or at such other address or facsimile number as such party may
designate advance written notice to the other parties hereto. All such notices and other written
communications shall be effective on the fifth business day after the date of mailing, or on the
date of confirmed facsimile transfer or delivery.




	 	6.8	 	Finder’s Fees.





         Each party represents that it neither is nor will be obligated for any finder’s fee or
commission in connection with this transaction. Each Investor agrees to indemnify and to hold
harmless the Company from any liability for any commission or compensation in the nature of a
finder’s fee (and the cost and expenses of defending against such liability or asserted liability)
for which such Investor or any of its officers, partners, employees, or representatives is
responsible. The Company agrees to indemnify and hold harmless each Investor from any liability
for any commission or compensation in the nature of a finder’s fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or any of its
officers, employees, or representatives is responsible.




	 	6.9	 	Expenses.





         The Company and each Investor shall pay all costs and expenses that they incur with respect to
the negotiation, execution, delivery, and performance of this Agreement and the transactions
contemplated hereby; provided, however, that the Company shall pay the reasonable
fees and expenses of counsel for the Investors, in an aggregate amount not to exceed $50,000.




	 	6.10	 	Attorneys’ Fees.





         If any action at law or in equity is necessary to enforce or interpret the terms of any of the
Transaction Documents, any ancillary agreement or the Restated Charter, the prevailing party shall
be entitled to reasonable attorneys’ fees, costs, and disbursements in addition to any other
relief to which such party may be entitled.



18









 






	 	6.11	 	Amendments and Waivers.





         Any term of this Agreement may be amended and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively or prospectively),
only with the written consent of the Company and the holders of more than fifty percent (50%) of
the Shares (including shares of the Conversion Stock); provided that if any amendment or
waiver which affects any Investor or group of similarly situated Investors disproportionately
relative to the other Investors, then such amendment or waiver shall also require the written
consent of the holders of a majority of the Shares (including shares of the Conversion Stock) held
by such Investors so affected; and provided further that if any such amendment or
waiver is to a provision in this Agreement that requires a specific vote or approval to take an
action thereunder or to take an action with respect to the matters described therein, such
amendment or waiver shall not be effective unless such vote or approval is obtained with respect to
such amendment or waiver. Any amendment or waiver effected in accordance with this paragraph shall
be binding upon each holder of any Securities purchased under this Agreement at the time
outstanding, each future holder of all such Securities, and the Company.




	 	6.12	 	Severability.





         If one or more provisions of this Agreement are held to be unenforceable under applicable law,
such provision shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in accordance with its
terms.



[signature page follows]





19










 





     IN WITNESS WHEREOF, the parties have executed this Series C Preferred Stock Purchase Agreement
as of the date first written above.



	 	 	 	 	 
	COMPANY: 	TranS1 Inc. 

 	 
	Address:	By:  	                                 /s/ Richard Randall
 	 
	411 Landmark Drive	 	                              Richard Randall, President and            	 
	Wilmington, NC 28412	 	                            Chief Executive Officer 	 
	 



INVESTORS:



(see attached signature pages)




[Company Signature Page to Series C Preferred Stock Purchase Agreement]




20









 









     IN WITNESS WHEREOF, the undersigned Investor has executed this Series C Preferred Stock
Purchase Agreement as of the date first written above.



	 	 	 
	INVESTOR:
	 	 
	 

	 	 
	 

	 	(print name of Investor, exactly as it should appear on the share
certificate)






	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	(signature of authorized signatory and title, if any)	 
	 



[Investor Signature Page to Series C Preferred Stock Purchase Agreement]




21









 








EXHIBIT A

SCHEDULE OF INVESTORS








	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Name
	 	 	Series C Shares
	 	 	Amount Invested
	 
	 	Thomas Weisel

Healthcare Venture

Partners, L.P.

	 	 	 	1,060,606	 	 	 	$	6,999,999.60	 	 
	 	Advanced Technology

Ventures VII, L.P.

	 	 	 	995,521	 	 	 	$	6,570,438.60	 	 
	 	Advanced Technology

Ventures VII (B),

L.P.

	 	 	 	39,950	 	 	 	$	263,670.00	 	 
	 	Advanced Technology

Ventures VII (C),

L.P.

	 	 	 	19,203	 	 	 	$	126,739.80	 	 
	 	ATV Entrepreneurs

VII, L.P.

	 	 	 	5,932	 	 	 	$	39,151.20	 	 
	 	Delphi Ventures VI,

L.P.

	 	 	 	750,075	 	 	 	$	4,950,495.00	 	 
	 	Delphi BioInvestments VI,

L.P.

	 	 	 	7,501	 	 	 	$	49,506.60	 	 
	 	Cutlass Capital, L.P.

	 	 	 	399,762	 	 	 	$	2,638,429.20	 	 
	 	Cutlass Capital

Principals Fund,

L.L.C.

	 	 	 	28,719	 	 	 	$	189,545.40	 	 
	 	Cutlass Capital

Affiliates Fund,

L.P.

	 	 	 	26,065	 	 	 	$	172,029.00	 	 
	 	Sapient Capital, L.P.

	 	 	 	272,500	 	 	 	$	1,798,500.00	 	 
	 	Paul E. Colombo

	 	 	 	15,000	 	 	 	$	99,000.00	 	 
	 	C-Two, L.L.C.

	 	 	 	31,000	 	 	 	$	204,600.00	 	 
	 







A-1









 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Name

	 	 	Series C Shares
	 	 	Amount Invested
	 
	 	Bobby I. Griffin

	 	 	 	31,000	 	 	 	$	204,600.00	 	 
	 	Imagine Capital

Partners VI

	 	 	 	2,500	 	 	 	$	16,500.00	 	 
	 	Prime Petroleum

Profit Sharing Trust

	 	 	 	11,000	 	 	 	$	72,600.00	 	 
	 	Noel P. Rahn

	 	 	 	4,500	 	 	 	$	29,700.00	 	 
	 	Steve Ramee, M.D.

	 	 	 	4,500	 	 	 	$	29,700.00	 	 
	 	Rancho Partners III

	 	 	 	48,000	 	 	 	$	316,800.00	 	 
	 	GDN Holdings, LLC

	 	 	 	24,000	 	 	 	$	158,400.00	 	 
	 	Sands Partnership

No. 1 Money Purchase

Pension Plan and

Trust

	 	 	 	9,000	 	 	 	$	59,400.00	 	 
	 	Schloss Bros., L.P.

	 	 	 	4,500	 	 	 	$	29,700.00	 	 
	 	William A. Schreyer

	 	 	 	7,500	 	 	 	$	49,500.00	 	 
	 	James Barrile

	 	 	 	30,300	 	 	 	$	199,980.00	 	 
	 	Ricardo J. Simmons

	 	 	 	30,300	 	 	 	$	199,980.00	 	 
	 	Luiz Pimenta, M.D.

	 	 	 	7,575	 	 	 	$	49,995.00	 	 
	 






A-2









 




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Name

	 	 	Series C Shares
	 	 	Amount Invested
	 
	 	Sasso Brothers

Enterprises, LLC

	 	 	 	7,575	 	 	 	$	49,995.00	 	 
	 	MLPFS Custodian for

Scott Kitchel IRA

	 	 	 	7,575	 	 	 	$	49,995.00	 	 
	 	Madison Venture

Partners, LLC

	 	 	 	 6,220	 	 	 	$	41,052.00	 	 
	 	Total

	 	 	 	3,887,879	 	 	 	$	25,660,001.40	 	 
	 





A-3








 





EXHIBIT B





FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION








B-1









 








EXHIBIT C



SCHEDULE OF EXCEPTIONS



     The Schedule of Exceptions (hereinafter called the “Schedule,” and specific sections within
this Schedule may be referred to by Schedule number) is furnished by TranS1 Inc., a
Delaware corporation (the “Company”) pursuant to that certain Series C Preferred Stock Purchase
Agreement, dated as of September 20, 2005 (the “Agreement”) by and among the Company and the
investors party thereto (collectively, the “Investors”). Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings ascribed to them in the Agreement.



     Any response under any section below which clearly and reasonably incorporates, refers to or
is clearly applicable to the response in another section shall be deemed to incorporate the
response of the other section in its entirety. Terms of documents summarized herein are qualified
in their entirety by the documents themselves, provided that nothing is misleading in such
summaries. Each section of this Schedule qualifies the correspondingly numbered subsection in
Section 2 of the Agreement and any other Schedule that references such section or subsection. The
titles and headings used herein are for reference purposes only and shall not in any manner limit
the construction of the Schedule, and any disclosure made under any subheading hereunder is deemed
made for all provisions of that corresponding section in the Agreement.






C-1









 








Schedule 2.7




Employee Benefit Plans





	(a)	 	The Company is a party to, or bound by, the following:





     (i) Employee benefit plans:



          1. 2000 Stock Incentive Plan, as amended.



          2. Employee Health Plan (Blue Cross/Blue Shield of North Carolina).



          3. 401-K Plan (American United Life).



          4. Group Term Life Insurance (Principal Life).



          5. Short Term & Long Term Disability Insurance (GE Life Insurance Company).



     (ii) The vesting on all outstanding stock options under the 2000 Stock Incentive Plan may
fully accelerate upon a change of control of the Company at the discretion of the Company’s Board
of Directors.



     (iii) Promissory Note, dated March 12, 2003, in the aggregate principal amount of $38,111.85,
payable to the Company by Richard Randall.



     The Company advanced $7,500 to an employee for relocation costs. Such amount is expected to
be repaid as an offset to future performance related income payable by the Company.



     (v) Lease of real property for 411 Landmark Drive, Wilmington, North Carolina 28412. The
lease has a term of five years and expires on July 30, 2010, with a three-year buyout option. The
lease amount per month is initially $12,136.



     (vi) Contracts with aggregate annual payments over $25,000:



          1. Contractor Agreement dated April 18, 2005 by and between Coastal Construction Services Inc.
and the Company.



          2. Consulting Agreement dated January 1, 2003 by and between Andrew Cragg, M.D. and the
Company.



          3. Consulting Agreement dated May 18, 2005 by and between Chester Sutterlin, M.D. and the
Company.



 









 





          4. Consulting Agreement dated April 1, 2004 by and between Isador Lieberman, M.D. and the
Company.



          5. Consulting Agreement dated March 12, 2003 by and between Gene Dickhudt and the Company.



          6. Lab Agreement by and between Gustilo Medical Education Center and the Company.




 









 








Schedule 2.8




Related-Party Transactions



See Schedule 2.7(a)(iii) hereof.



The Company does not have any information regarding the ownership of securities other competitive
businesses by its investors.





 









 








Schedule 2.14




Title to Property and Assets; Leases



See Schedule 2.7(a)(v) hereof.



The Company has a copier lease with Wells Fargo Financial Leasing, Inc. for a term of 60 months at
$92.72 per month.





 









 








Schedule 2.15




No Outstanding Indebtedness; Dividends



The Company has outstanding accounts payable incurred in the ordinary course of business.



See Schedule 2.7(a)(iii) hereof.





 









 








Schedule 2.19




ERISA



(ii) See Schedule 2.7(a)(i) hereof.



(iii) Employee Manual, effective as of February 25, 2004.





 












 








EXHIBIT D



THIRD AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT





D-1









 








EXHIBIT E




TranS1 Inc.




THIRD AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND

CO-SALE AGREEMENT




     This Third Amended and Restated Right of First Refusal and Co-Sale Agreement (the
“Agreement”) is made and entered into as of September 20, 2005 by and among George Wallace,
Andrew Cragg, M.D., Bruce Feuchter, and Richard Randall (each individually a “Founder,” and
collectively, the “Founders”), TranS1 Inc., a Delaware corporation (the
“Company”), the holders of not less than 400,000 shares of the Company’s Preferred Stock as
of the date of the Closing (the “Measurement Date”) (as adjusted for stock splits, stock
dividends, reverse stock splits, recapitalizations and the like) listed on Exhibit A hereto
(the “Investors”), and certain of the holders of not less than 50,000 shares of the
Company’s Common Stock or Preferred Stock or any combination thereof, in the aggregate, as of the
Measurement Date (as adjusted for stock splits, stock dividends, reverse stock splits,
recapitalizations and the like) listed on Exhibit B hereto (each a “Major Holder”
and together the “Major Holders”).



R E C I T A L S




     A. The Company and certain holders of the Series A Preferred Stock, Series AA Preferred Stock
and Series B Preferred Stock (the “Prior Investors”) are party to that certain Second
Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of April 17, 2003 (the
“Prior Agreement”);



     B. The Prior Investors are holders of more than 50% of the Conversion Shares (as defined in
the Prior Agreement) and desire to terminate the Prior Agreement and to accept the rights created
pursuant hereto in lieu of the rights granted to them under the Prior Agreement;



     C. The Investors have agreed to purchase from the Company, and the Company has agreed to sell
to the Investors, shares of the Company’s Series C Preferred Stock on the terms and conditions set
forth in the Series C Preferred Stock Purchase Agreement among the Company, the Investors and
certain other investors of even date herewith (the “Purchase Agreement”); and



     D. The Purchase Agreement provides that, as a condition to the Investors’ purchase of Series C
Preferred Stock thereunder, the Company and the Investors will enter into this Agreement and the
Investors will be granted the rights set forth herein.



     NOW, THEREFORE, in consideration of the mutual covenants set forth herein, the parties agree
as follows:



     1. Definitions.



          (a) “Shares” shall mean shares of the Company’s capital stock now owned or
subsequently acquired by the Founders or the Major Holders, as applicable.



          (b) “Preferred Stock” shall mean the Company’s Series A Preferred Stock, Series AA
Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.



          (c) “Common Stock” shall mean the Company’s Common Stock.





E-1









 





          (d) “Conversion Shares” shall mean (i) the Company’s Series A Preferred Stock, and the
shares of Common Stock issuable upon conversion of such outstanding shares of Series A Preferred
Stock, (ii) the Company’s Series AA Preferred Stock, and the shares of Common Stock issued or
issuable upon conversion of such outstanding shares of Series AA Preferred Stock, (iii) the
Company’s Series B Preferred Stock, and the shares of Common Stock issued or issuable upon
conversion of such outstanding shares of Series B Preferred Stock, (iv) the Company’s Series C
Preferred Stock, and the shares of Common Stock issued or issuable upon conversion of such
outstanding shares of Series C Preferred Stock, (v) shares of the Company’s capital stock acquired
by the Investors pursuant to their rights under Section 3 below or Section 3 of that certain Third
Amended and Restated Investors’ Rights Agreement dated as of the date hereof, and (v) shares of the
Company’s capital stock issued to the Investors in respect of any of the shares listed in clauses
(i) through (v) above.



     2. Restrictions on Transfer. In the event that a Founder or Major Holder (each a
“Selling Holder” and collectively, the “Selling Holders”) desires, at any time, to
sell, transfer, assign or otherwise dispose of any Shares (whether now held or hereafter acquired),
such Selling Holder shall deliver a notice of intent to transfer (the “Notice”) to the
Company, which Notice shall describe in reasonable detail the proposed sale or transfer including,
without limitation, the number of Shares to be sold or transferred, the nature of the sale or
transfer, the consideration to be paid, and the name of each prospective transferee, if then known.
In the event that the sale or transfer of the Shares is being made pursuant to the provisions of
Section 5 hereof, the Notice shall state under which paragraph and subparagraph the sale or
transfer is being made. The Company shall promptly distribute copies of the Notice to the
Investors. In the event that the proposed sale or transfer of Shares by such Selling Holder is not
being made pursuant to the provisions of Section 5 hereof, the Notice shall specify the bona fide
terms upon which such Selling Holder intends to offer such Shares (the “Offered Shares”)
for sale or transfer to third parties (the “Purchase Offer”). Within fifteen (15) days
after receipt of the Notice, each Investor (as defined below) may elect to either (a) exercise such
Investor’s right of first refusal with respect to the Offered Shares, as more particularly set
forth in Section 3 below, or (b) exercise such Investor’s right of co-sale with respect to the
Offered Shares as more particularly set forth in Section 4 below.



3. Right of Refusal with Respect to the Selling Holders’ Shares.




          (a) Right of First Refusal. The Company may elect to purchase all or any part of the Offered
Shares (the “Company Shares”) to which the Notice refers, upon the same price per share and
the other terms and provisions of sale contained in the Purchase Offer. To the extent the Company
does not elect to purchase any or all of the Offered Shares within a period of fifteen (15) days
following receipt of the Notice, each Investor may elect to purchase all or any remaining part of
the Offered Shares not constituting Company Shares (the “Investor Shares”). If the
Investors, in the aggregate, elect to purchase more shares than the Investor Shares, each Investor
electing to purchase the Investor Shares shall be allocated a number of the Investor Shares equal
to the lesser of (a) the number of the Investor Shares which that Investor has offered to purchase,
or (b) the number of the Investor Shares which bears the same ratio to the total number of the
Investor Shares as the number of Conversion Shares owned by that Investor bears to the total number
of Conversion Shares owned by all Investors who have elected to purchase the Investor Shares. Each
Investor electing to purchase Investor Shares may also elect to purchase all or any part of any
Investor Shares remaining in the event the Investors do not elect to purchase all of the Investor
Shares (such remaining Investor Shares, the “Overallotment Shares”). In the event the
Investors, in the aggregate, elect to purchase more shares than the Overallotment Shares, each
Investor electing to purchase the Overallotment



2









 







Shares shall be allocated a number of the Overallotment Shares equal to the lesser of (a) the
number of the Overallotment Shares which that Investor has offered to purchase, or (b) the number
of the Overallotment Shares which bears the same ratio to the total number of the Overallotment
Shares as the number of Conversion Shares owned by that Investor bears to the total number of
Conversion Shares owned by all Investors who have elected to purchase the Overallotment Shares.
After such final allocation of Investor Shares and Overallotment Shares, if applicable, the Company
shall deliver to the Selling Holder and each of the Investors who have elected to purchase such
Investor Shares and Overallotment Shares, if applicable, within five (5) days, a written notice
(the “Allocation Notice”) indicating the number of Company Shares to be purchased by the
Company and the number of Investor Shares and Overallotment Shares, if applicable, to be purchased
by each Investor. The closing shall then be held on the latest of: (i) twenty (20) days
following the receipt by the Company of the original Notice with respect to the Offered Shares;
(ii) ten (10) days after a cash valuation has been made pursuant to Section 3(b) below (if any part
of such consideration is other than cash or evidence of indebtedness); (iii) upon the closing of
the sale of Offered Shares to such third parties specified in the Purchase Offer, or (iv) five (5)
days following the receipt by the Investor of the Allocation Notice. Full payment for the Offered
Shares which the Company and each Investor elects to purchase shall be made by cash or check to the
Selling Holder upon transfer of such shares unless the Purchase Offer provides for different terms.



          (b) Valuation of Consideration. In the event that the purchase price for the Offered Shares
as specified in the Purchase Offer is payable in property other than cash or cancellation of
evidence of indebtedness, the Company and the Investors shall have the right to pay such purchase
price in the form of cash equal in amount to the value of such property. If the Selling Holder,
the Company and, if applicable, the Investors electing to purchase the Offered Shares cannot agree
on such cash value within ten (10) days after the Investors’ receipt of the Notice, the valuation
shall be made by an appraiser of recognized standing selected by such Selling Holder, the Company,
and, if applicable, the electing Investors or, if they cannot agree on an appraiser within fifteen
(15) days after the Investors’ receipt of such Notice, the Company shall select an appraiser of
recognized standing. The costs of the appraiser shall be borne equally by the Selling Holder, the
Company, and, if applicable, the Investors electing to participate.



          (c) Effect of Failure to Exercise Right of First Refusal. If any Offered Shares to which the
Notice refers are not elected to be purchased, as provided in Section 3(a) above, subject to the
rights of the Investors pursuant to Section 4 below, then the Selling Holder may sell such
remaining unpurchased Offered Shares specified in the Purchase Offer at the price and on the terms
specified in the Purchase Offer or at a higher price, provided that such sale or transfer is
consummated within ninety (90) days after the expiration of the last option of the Company and the
Investors to acquire such shares pursuant to Section 3(a), and provided further that such sale is
in accordance with all the terms and conditions hereof.



          (d) Judicial Transfers. All proposed judicial transfers and sales of the Shares by order of
any court or referee in bankruptcy (an “Order”) shall be subject to the terms and
provisions of this Section 3. In the event that a sale or transfer is proposed pursuant to an
Order, all of the terms of this Section 3 shall apply, with the following modification: instead of
a notice of intent to transfer being delivered to the Company by such Selling Holder (for
distribution to the Investors), a copy of the Order shall be delivered to the Company by such
Selling Holder (which shall be distributed to the Investors) which shall state the name of the
proposed transferee and shall specify the number of the Shares to be sold and the consideration per
Share. For other purposes of this Section 3, the receipt of the Order shall be treated as the
receipt of the Notice of intended disposition as set forth in



3









 







Section 3(a) above. Each of the Company and the Selling Holder agrees to use their best efforts to
ensure that each of the Investors effectively has a right of first refusal to purchase such Shares
specified in the Order which is substantially equivalent to the one set forth in this Section 3.



     4. Right of Co-Sale with Respect to the Selling Holders’ Shares.



          (a) If any Selling Holder proposes to sell or transfer any Offered Shares, each Investor who
did not exercise its right of first refusal with respect to such Offered Shares under Section 3
hereof shall have the right, exercisable upon written notice to such Selling Holder within fifteen
(15) days after receipt of the Notice, to participate in such sale upon the same terms and
conditions set forth in the Purchase Offer in accordance with the provisions set forth below, and
the number of Offered Shares that such Selling Holder may sell in such proposed transaction shall
be correspondingly reduced.



          (b) Each such Investor may sell all or any part of that number of shares of Common Stock equal
to the product obtained by multiplying (i) the aggregate number of Offered Shares covered by the
Notice by (ii) a fraction, the numerator of which is the number of shares of Common Stock
(including the conversion of shares of Preferred Stock) owned by such Investor at the time of the
sale or transfer, and the denominator of which is the total number of shares of Common Stock
(including the conversion of shares of Preferred Stock) owned by such Selling Holder and such
Investors at the time of the sale or transfer.



          (c) If any such Investor fails to elect to fully participate in such Selling Holder’s sale
pursuant to this Section 4, then such Selling Holder shall give notice of such failure to each
Investor who properly elected to participate in such proposed sale of Offered Shares by such
Selling Holder (a “Participant”) and the aggregate amount initially declined by such other
Investors who were not Participants. Such notice may be made by facsimile or electronic mail.
Each Participant shall then have five (5) business days from the date such notice was given to
agree to sell any number of additional shares of Common Stock up to the full aggregate amount
initially declined by such other Investors (“Additional Shares”). In the event that the
Participants then agree to sell more Additional Shares, in the aggregate, than the total amount
initially declined by the other Investors, then such aggregate amount initially declined by the
other Investors shall be allocated, and reallocated if necessary, among the Participants who
properly agreed to sell additional shares of Common Stock pursuant to this Section 4 in direct
proportion to the number of Additional Shares that each such Participant agreed to sell, up to the
full number of Additional Shares so requested.



          (d) Each Participant shall effect its participation in such Selling Holder’s sale pursuant to
this Section 4 by promptly delivering to the Selling Holder for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer, which represent:



               (i) the type and number of shares of Common Stock which such Participant elects to sell; or



               (ii) that number of shares of Preferred Stock which is at such time then convertible into the
number of shares of Common Stock which such Participant elects to sell; provided,
however, that if the prospective purchaser objects to the delivery of shares of Preferred
Stock in lieu of Common Stock, such Participant shall convert such Preferred Stock into Common
Stock and deliver such Common Stock as provided in subsection 4(d)(i) above. The Company



4









 







agrees to make any such conversion of shares of Preferred Stock concurrent with the actual
transfer of such shares of Common Stock to the purchaser.



          (e) The stock certificate or certificates that the Participant delivers to the Selling Holder
(as applicable) pursuant to Section 4(d) shall be transferred to the prospective purchaser in
consummation of the sale of the Shares pursuant to the terms and conditions specified in the
Notice, and the Selling Holder shall concurrently therewith remit to such Participant that portion
of the sale proceeds to which such Participant is entitled by reason of its participation in such
sale. To the extent that any prospective purchaser prohibits such assignment or otherwise refuses
to purchase shares or other securities from a Participant exercising its rights of co-sale
hereunder the Selling Holder shall not sell to such prospective purchaser or purchasers any Offered
Shares unless and until, simultaneously with such sale, the Selling Holder shall purchase such
shares or other securities from such Participant.



          (f) The exercise or non-exercise of the rights of the Investors hereunder to participate in
one or more sales of Offered Shares made by the Selling Holders shall not adversely affect the
rights of such Investors to participate in subsequent sales of Shares subject to Section 4(a).



          (g) If none of the Investors elects to participate in the sale of the Shares subject to the
Notice (and subject to the rights of the Investors pursuant to Section 3), then such Selling Holder
may sell or otherwise transfer such Offered Shares specified in the Purchase Offer at the price and
on the terms specified in the Purchase Offer, provided that such sale or transfer is consummated
within ninety (90) days after the expiration of the last option of the Investors to participate in
such sale of Shares pursuant to Section 4(a). Any proposed sale or transfer of the Offered Shares
on terms and conditions more favorable to such Selling Holder than those described in the Notice,
as well as any subsequent proposed transfer of any of the Shares by such Selling Holder, shall
again be subject to the co-sale rights of the Investors and shall require compliance by such
Selling Holder with the procedures described in this Section 4.



     5. Exempt Transfers.



          (a) Notwithstanding the foregoing, the provisions of Sections 3 and 4 shall not apply to:



               (i) any sale, transfer or gift of Shares to Selling Holders’ ancestors, descendants or spouse,
or to trusts or family limited partnerships for the benefit of such persons or the Selling Holders
for estate or gift tax planning purposes, provided that the transferee or donee enters into a
written agreement to be bound by, and comply with, all provisions of this Agreement as if such
transferee or donee were a “Selling Holder” hereunder. Such transferred Shares shall remain
“Shares” hereunder, and such transferee or donee shall be treated as a “Selling Holder” for all
purposes of this Agreement;



               (ii) any transfer by a Selling investor who is an investment fund to such Selling Holders’
investment fund affiliates;



               (iii) the sale or transfer of any Shares (A) to the public pursuant to a registration
statement filed with, and declared effective by, the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the “Securities Act”); (B) pursuant to a transaction to



5









 







which Section 3(c)(i) of Article 4 of the Company’s Fourth Amended and Restated Certificate of
Incorporation applies; or (C) to the Company; and



               (iv) any pledge of the Shares pursuant to a bona fide loan transaction that creates a mere
security interest, provided the pledgee enters into a written agreement to be bound by, and comply
with, all provisions of this Agreement.



          (b) Notwithstanding the foregoing, the provisions of Section 4 shall not apply to one or more
sales or transfers of any Shares by a Selling Holder to any person or entity, whether in a single
transaction or a series of related transactions, provided that the total cumulative number of
Shares so sold or transferred by the Selling Holder does not exceed five percent (5%) of the number
of Shares owned by such Selling Holder, calculated on an as-converted basis as of the date of this
Agreement (as adjusted for stock splits, stock dividends, recapitalizations and the like).



6. Prohibited Transfers.




          (a) In the event that any Selling Holder attempts to sell or otherwise transfer any Offered
Shares in contravention of the right of first refusal of the Company and the Investors, as provided
by Section 3 hereunder, such transfer shall be void and the Company agrees it will not effect such
transfer nor will it treat any alleged transferee as the holder of such shares without the written
consent of a majority in interest of the Investors.



          (b) In the event that any Selling Holder sells any Shares in contravention of the co-sale
rights of the Investors, as provided by Section 4 hereunder (a “Prohibited Transfer”), each
Investor, in addition to such other remedies as may be available at law, in equity or hereunder,
shall have the put option provided below, and the Selling Holder shall be bound by the applicable
provisions of such option.



          (c) In addition to other available remedies, in the event of a Prohibited Transfer, each
Investor shall have the right to sell to such Selling Holder that number of shares of Common Stock
equal to the number of shares that such Investor would have been entitled to transfer to the
purchaser as if such Prohibited Transfer had been effected pursuant to, and in compliance with the
terms of Section 4 hereof. Such sale to the Selling Holder by the applicable Investors shall be
made on the following terms and conditions:



               (i) The price per share at which the shares are to be sold to the Selling Holder shall be
equal to the price per share paid by the purchaser to the Selling Holder in the Prohibited
Transfer. The Selling Holder shall also reimburse each such Investor for any and all fees and
expenses, including legal fees and expenses, incurred pursuant to the exercise or the attempted
exercise of the Investor’s rights under Section 4 and this Section 6.



               (ii) Within ninety (90) days after the later of the dates on which the Investors (A) received
notice of the Prohibited Transfer or (B) otherwise became aware of the Prohibited Transfer, each
Investor shall, if exercising the option created hereby, deliver to the Selling Holders the
certificate or certificates representing such shares to be sold, each certificate to be properly
endorsed for transfer, together with a notice of such exercise.



               (iii) Such Selling Holder shall, upon receipt of the certificate or certificates for the
shares to be sold by a Investor pursuant to Section 6(b), pay the aggregate



6









 







purchase price therefor and the amount of reimbursable fees and expenses, as specified in
subsection 6(c)(i), in cash or by other means acceptable to the Investor.



               (iv) Notwithstanding the foregoing, any attempt by a Selling Holder to transfer the Shares in
violation of Section 4 hereof shall be void and the Company agrees it will not effect such a
transfer nor will it treat any alleged transferee as the holder of such shares without the written
consent of a majority in interest of the Investors.



     7. Legends.



          (a) In addition to any other applicable legend, each certificate representing Shares owned by
Selling Holders, or issued to any person in connection with a transfer pursuant to Section 5
hereunder, shall be endorsed with a legend substantially in the form as follows:



“THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND
THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF
THE COMPANY”



          (b) The Selling Holders agree that the Company may instruct its transfer agent to impose
transfer restrictions on the shares represented by certificates bearing the legend referred to in
Section 7(a) above to enforce the provisions of this Agreement and the Company agrees to promptly
do so. Such legend may be removed upon the termination of this Agreement.



     8. Miscellaneous.



          (a) Conditions to Exercise of Rights. Exercise of the Investors’ rights under this Agreement
shall be subject to and conditioned upon, and the Selling Holders and the Company shall use their
best efforts to assist each Investor in compliance with, applicable laws.



          (b) Governing Law. This Agreement shall be governed by and construed under the laws of the
State of Delaware without regard to conflicts of law provisions. The parties hereto agree to
submit to the exclusive jurisdiction of the federal and state courts of the State of Delaware with
respect to the interpretation of this Agreement or for the purposes of any action arising out of or
relating to this Agreement.



          (c) Amendment. Any provision may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retrospectively or prospectively), only by the
written consent of (i) as to provisions affecting the Company, by the Company, (ii) as to
provisions affecting the Investors, by persons holding more than fifty percent (50%) in interest of
the Conversion Shares held by the Investors and their assignees pursuant to Section 8(d) hereof,
(iii) as to provisions affecting the Founders, by persons holding more than fifty percent (50%) in
interest of the Shares held by the Founders, including the proper transferees and assignees
hereunder, and (iv) as to provisions affecting the Major Holders, by persons holding more than
fifty percent (50%) in interest of the Shares held by the Major Holders, including the proper
transferees and assignees hereunder, provided that any Investor may waive any of such Investor’s
rights hereunder without obtaining the consent of any other Investor. Any amendment or waiver
effected in accordance with



7









 







clauses (i), (ii) and (iii) of this paragraph shall be binding upon each Investor, such
Investor’s successor and assigns, the Company, the Founders and the Major Holders in question.



          (d) Assignment of Rights. This Agreement and the rights and obligations of the parties
hereunder shall inure to the benefit of, and be binding upon, the parties’ respective successors,
assigns and legal representatives; provided, however, that the rights of the
Investors hereunder are only assignable (i) by each of such Investors to any other Investor or any
constituent partner (including limited partners) or any affiliated partnership or investment fund
of such Investor in connection with the proper transfer of Conversion Shares, or (ii) to an
assignee or transferee who acquires twenty-five percent (25%) of the Conversion Shares owned by a
Investor as of the date of this Agreement, or all of the Conversion Shares then owned by such
Investor; provided further that such transferee or assignee executes a written
agreement agreeing to become a party to this Agreement as if such transferee or assignee were a
“Investor” hereunder.



          (e) Term. This Agreement shall terminate upon the earlier of (i) the closing of a firm
commitment underwritten public offering pursuant to an effective registration statement filed under
the Securities Act, covering the sale of shares of the Company’s Common Stock which results in a
conversion of all Preferred Stock into Common Stock (to which this Agreement shall not apply) at an
offering price per share that is not less than $16.50, with aggregate offering proceeds of not less
than $40,000,000, or (ii) the closing of the Company’s sale of all or substantially all of its
assets or the acquisition of the Company by another entity by means of a merger or consolidation
resulting in the exchange of the outstanding shares of the Company’s capital stock for securities
or consideration issued, or caused to be issued, by the acquiring entity or its subsidiary.



          (f) Ownership. Each of the Founders and Major Holders represents and warrants that such
Founder or Major Holder, as applicable, is the sole legal and beneficial owner of the shares of
stock subject to this Agreement and that no other person has any interest (other than a community
property interest, if applicable) in such shares.



          (g) Notices. Unless otherwise specifically provided for herein, all notices and other
communications required or permitted hereunder shall be in writing and shall be addressed (a) if to
an Investor, at such respective address as set forth on Exhibit A to the Purchase Agreement
or at such other address as the Investor shall have properly furnished in writing to the Company;
(b) if to the Company, at the address set forth on the signature page hereof or at such other
address as the Company shall have properly furnished in writing to the Investors; (c) if to a
Founder, at the address set forth on the signature page hereof or at other such address as such
Founders shall have properly furnished in writing to the Company and the Investors; or (d) if to a
Major Holder, at the address set forth on the signature page hereof or at other such address as
such Major Holders shall have properly furnished in writing to the Company and the Investors. Such
notices shall be deemed effective upon (i) personal delivery to the party to be notified; (ii) the
next business day if sent by confirmed telex or facsimile; (iii) one business day, if properly
addressed, after deposit with a nationally recognized overnight carrier, specifying next day
delivery; or (iv) five business days, if properly addressed, after having been sent by registered
or certified mail, postage prepaid.



          (h) Severability. In the event that one or more of the provisions of this Agreement should,
for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not effect or impair any other provisions of this Agreement,
and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.



8









 





          (i) Attorneys Fees. In the event that any dispute among the parties to this Agreement should
result in litigation, the prevailing party in such dispute shall be entitled to recover from the
losing party all fees, costs and expenses of enforcing the right of such prevailing party under or
with respect to this Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include without limitation, all fees, costs and expenses of
appeals.



          (j) Counterparts. This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original, and all of which together shall constitute one and the same
instrument.



          (k) Entire Agreement. This Agreement and the Purchase Agreement, including all exhibits
thereto, constitute the full and entire understanding and agreement between the parties relative to
the specific matter hereof and thereof. Any prior agreements among the parties relative to the
specific subject matter hereof are superseded by this Agreement.



          (l) Aggregation. For the purposes of this Agreement, the number of shares of capital stock of
the Company held by an Investor or Major Holder shall include the holdings of its affiliates, and
such holdings shall be aggregated together.



[Remainder of this Page Intentionally Left Blank]




9









 








     IN WITNESS WHEREOF, the parties have executed the foregoing Third Amended and Restated Right
of First Refusal and Co-Sale Agreement as of the date first written above.



	 	 	 	 	 	 	 	 	 
	COMPANY:	 	 	 	TranS1 Inc.
	 
	 	 	 	 	 	 	 	 
	Address:	 	 	 	By:	 	/s/ Richard Randall
	 

	 	411 Landmark Drive

Wilmington, NC 28412
	 	 	 	 	 	 

Richard Randall, Chief Executive Officer






[Signature Page to Right of First Refusal and Co-Sale Agreement (Company)]




10









 





     IN WITNESS WHEREOF, the parties have executed the foregoing Third Amended and Restated Right
of First Refusal and Co-Sale Agreement as of the date first written above.



	 	 	 	 	 	 	 	 	 
	FOUNDER:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	(print name of Founder)

	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(signature of authorized signatory and title, if any)






[Signature Page to Right of First Refusal and Co-Sale Agreement (Founder)]




11









 








     IN WITNESS WHEREOF, the parties have executed the foregoing Third Amended and Restated Right
of First Refusal and Co-Sale Agreement as of the date first written above.



	 	 	 	 	 	 	 	 	 
	MAJOR HOLDER:	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	(print name of Major Holder)

	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(signature of authorized signatory and title, if any)






[Signature Page to Right of First Refusal and Co-Sale Agreement (Major Holders)]




12









 








     IN WITNESS WHEREOF, the parties have executed the foregoing Third Amended and Restated Right
of First Refusal and Co-Sale Agreement as of the date first written above.



	 	 	 	 	 	 	 	 	 
	INVESTOR:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 	 	 	 	 	 	(print name of Investor)

	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	(signature of authorized signatory and title, if any)






[Signature Page to Right of First Refusal and Co-Sale Agreement (Investors)]





13









 








EXHIBIT A




Investors




Thomas Weisel Healthcare Venture Partners, L.P.




Advanced Technology Ventures VII, L.P.




Advanced Technology Ventures VII (B), L.P.




Advanced Technology Ventures VII (C), L.P.




ATV Entrepreneurs VII, L.P.




ATV Alliance 2002, L.P.




Delphi Ventures VI, L.P.




Delphi BioInvestments VI, L.P.




Cutlass Capital, L.P.




Cutlass Capital Principals Fund, L.L.C.




Cutlass Capital Affiliates Fund, L.P.




Sapient Capital, L.P.





A-1









 








EXHIBIT B




Major Holders (not including Founders)




Flavio Castaneda, Trustee, Flavio Castaneda Living Trust 11/4/98




Navarro Holdings, LLC




NG Cap Partners E LLC




Niagara Gorge Partners, LLC




William N. Starling, Jr. and Dana Gregory Starling




Michael J. Strauss and Marguerite Strauss





B-1












 





EXHIBIT F

COMMON STOCKHOLDERS




	 	 	 	 	 	 	 	 
	 	Common Stockholders

	 	 	Number of Shares of Common Stock Held
	 
	 	Andrew Cragg, M.D.

	 	 	 	973,650	 	 
	 	Wallace Partners, L.P.

	 	 	 	720,000	 	 
	 	Bruce W. Feuchter and Karen O.
Feuchter, as Co-Trustees of the Feuchter Family Trust, U/D/T March 20, 2003

	 	 	 	180,000	 	 
	 	Jonathan Kagan & Gail Brottman-Kagan

	 	 	 	20,000	 	 
	 	Michael O’Tousa

	 	 	 	18,056	 	 
	 	J. Costello Associates, Inc.

	 	 	 	12,000	 	 
	 	J.J. Donohue

	 	 	 	17,500	 	 
	 	Richard Randall

	 	 	 	381,500	 	 
	 	L. Nelson Hopkins, M.D.

	 	 	 	40,000	 	 
	 	W. Allen Putnam

	 	 	 	24,000	 	 
	 	TOTAL

	 	 	 	2,386,706	 	 
	 





SERIES A PREFERRED STOCKHOLDERS




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Name

	 	 	Series A Preferred Shares
	 	 	Amount
	 
	 	Andrew Cragg, M.D.

	 	 	 	125,000	 	 	 	$	100,000	 	 
	 	George B. Wallace and
Jane F. Wallace, as Co-Trustees of the Wallace Family
Trust, U/D/T March 26, 2002

	 	 	 	62,500	 	 	 	$	50,000	 	 
	 	Bruce W. Feuchter and
Karen O. Feuchter, as Co-Trustees of the Feuchter Family Trust,
U/D/T March 20, 2003

	 	 	 	37,500	 	 	 	$	30,000	 	 
	 	Gilbert F. Jemmott and
Deborah E. Love Jemmott, as Trustees of the Twinhancements Inc.
Defined Contribution Plan

	 	 	 	6,250	 	 	 	$	5,000	 	 
	 	Jonathan Kagan and Gail
Brottman-Kagan

	 	 	 	12,500	 	 	 	$	10,000	 	 
	 	Michael O’Tousa

	 	 	 	12,500	 	 	 	$	10,000	 	 
	 	Flavio Castaneda, Trustee,
Flavio Castaneda Living Trust, Dated 11/4/98

	 	 	 	125,000	 	 	 	$	100,000	 	 
	 	Niagara Gorge Partners, LLC

	 	 	 	31,250	 	 	 	$	25,000	 	 
	 	Sapient Capital, L.P.

	 	 	 	437,500	 	 	 	$	350,000	 	 
	 	William N. Starling, Jr.
and Dana Gregory Starling

	 	 	 	93,750	 	 	 	$	75,000	 	 
	 	Michael J. Strauss and
Marguerite Strauss

	 	 	 	62,500	 	 	 	$	50,000	 	 
	 	Navarro Holdings, LLC

	 	 	 	50,000	 	 	 	$	40,000	 	 
	 	Michael K. Brawer, Michael
K. Brawer, M.D., MPP Keough

	 	 	 	31,250	 	 	 	$	25,000	 	 
	 	Karen L. Davis 2003 Trust
Dated December 9, 2003

	 	 	 	31,250	 	 	 	$	25,000	 	 
	 	Cass Pinkerton Estate

	 	 	 	31,250	 	 	 	$	25,000	 	 
	 	Tony Smith

	 	 	 	12,500	 	 	 	$	10,000	 	 
	 	Paul Buckman

	 	 	 	31,250	 	 	 	$	25,000	 	 
	 	Scott Wong

	 	 	 	12,500	 	 	 	$	10,000	 	 
	 	Steven Almany, M.D., as
Trustee for the Steven L. Almany Trust, Dated 12/30/96

	 	 	 	18,750	 	 	 	$	15,000	 	 
	 	John Rush

	 	 	 	12,500	 	 	 	$	10,000	 	 
	 	Kevin T. Campion

	 	 	 	12,500	 	 	 	$	10,000	 	 
	 	TOTAL

	 	 	 	1,250,000	 	 	 	$	1,000,000	 	 
	 





F-1









 







SERIES AA PREFERRED STOCKHOLDERS







	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Name

	 	 	Series AA Shares
	 	 	Amount Invested
	 
	 	Sapient Capital, L.P.

	 	 	 	600,000	 	 	 	$	750,000	 	 
	 	Cutlass Capital, L.P.

	 	 	 	372,962	 	 	 	 	466,202.50	 	 
	 	Cutlass Capital Principals
Fund, L.L.C.

	 	 	 	27,038	 	 	 	 	33,797.50	 	 
	 	Andrew Cragg, M.D.

	 	 	 	100,000	 	 	 	 	125,000	 	 
	 	George B. Wallace and Jane
F. Wallace, as Co-Trustees of the Wallace Family
Trust, U/D/T March 26, 2002

	 	 	 	100,000	 	 	 	 	125,000	 	 
	 	Flavio Castaneda Living
Trust, Flavio Castaneda MD, Trustee

	 	 	 	80,000	 	 	 	 	100,000	 	 
	 	Niagara Gorge Partners, LLC

	 	 	 	60,000	 	 	 	 	75,000	 	 
	 	Bruce W. Feuchter and
Karen O. Feuchter, as Co-Trustees of the
Feuchter Family Trust, U/D/T March 20, 2003

	 	 	 	40,000	 	 	 	 	50,000	 	 
	 	Gerard von Hoffman

	 	 	 	20,000	 	 	 	 	25,000	 	 
	 	TOTAL

	 	 	 	1,400,000	 	 	 	$	1,750,000	 	 
	 





F-2









 






SERIES B PREFERRED STOCKHOLDERS







	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	Name

	 	 	Series B Shares
	 	 	Amount Invested
	 
	 	Advanced Technology Ventures
VII, L.P.

	 	 	 	1,701,488	 	 	 	$	3,743,273.60	 	 
	 	Advanced Technology Ventures
VII (B), L.P.

	 	 	 	68,280	 	 	 	$	150,216.00	 	 
	 	Advanced Technology Ventures
VII (C), L.P.

	 	 	 	32,820	 	 	 	$	72,204.00	 	 
	 	ATV Entrepreneurs VII, L.P.

	 	 	 	10,139	 	 	 	$	22,305.80	 	 
	 	ATV Alliance 2002, L.P.

	 	 	 	5,455	 	 	 	$	12,001.00	 	 
	 	Delphi Ventures VI, L.P.

	 	 	 	1,624,662	 	 	 	$	3,574,256.40	 	 
	 	Delphi BioInvestments VI, L.P.

	 	 	 	16,247	 	 	 	$	35,743.40	 	 
	 	Cutlass Capital, L.P.

	 	 	 	1,199,285	 	 	 	$	2,638,427.00	 	 
	 	Cutlass Capital Principals
Fund, LLC

	 	 	 	86,157	 	 	 	$	189,545.40	 	 
	 	Cutlass Capital Affiliates
Fund, L.P.

	 	 	 	78,194	 	 	 	$	172,026.80	 	 
	 	Sapient Capital, L.P.

	 	 	 	454,545	 	 	 	$	999,999.00	 	 
	 	Bruce W. Feuchter and Karen
O. Feuchter, as Co-Trustees of the Feuchter Family Trust, U/D/T March 20, 2003

	 	 	 	18,182	 	 	 	$	40,000.40	 	 
	 	Gerard von Hoffmann

	 	 	 	11,364	 	 	 	$	25,000.80	 	 
	 	Andrew Cragg, M.D.

	 	 	 	22,727	 	 	 	$	49,999.40	 	 
	 	NG Cap Partners E, LLC

	 	 	 	56,818	 	 	 	$	124,999.60	 	 
	 	Emily Breese, Trustee of the
Brawer Irrevocable Family
Trust

	 	 	 	4,545	 	 	 	$	9,999	 	 
	 	Michael K. Brawer, M.D.
MPP Keogh

	 	 	 	18,182	 	 	 	$	40,000.40	 	 
	 	Flavio Castaneda, Trustee of
the Flavio Castaneda Living Trust dated 11/04/98

	 	 	 	22,727	 	 	 	$	49,999.40	 	 
	 	William N. Starling, Jr.
Dana Gregory Starling

	 	 	 	11,364	 	 	 	$	25,000.80	 	 
	 	Paul Buckman

	 	 	 	11,364	 	 	 	$	25,000.80	 	 
	 	Total

	 	 	 	5,454,545	 	 	 	$	11,999,999	 	 
	 





F-3









 






EXHIBIT G





OPINION OF COMPANY COUNSEL








G-1