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EXHIBIT 10.12
NON-CONVERTIBLE PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT
DATED AS OF
MARCH 3, 1997
BY AND AMONG
TRANSCEND THERAPEUTICS, INC.
AND
ADVENT INTERNATIONAL INVESTORS II
LIMITED PARTNERSHIP
ADVENT PERFORMANCE MATERIALS
LIMITED PARTNERSHIP
GLOBAL PRIVATE EQUITY II
LIMITED PARTNERSHIP
ROVENT II LIMITED PARTNERSHIP
XXXX X. XXXXXXX
XXXXXXX XXX
XXXXXX HEALTHCARE CORPORATION
THE VENTURE CAPITAL FUND OF NEW ENGLAND III, L.P.
SPROUT CAPITAL VI, L.P.
DLJ CAPITAL CORPORATION
XXXXXX X. XXXXX, M.D.
XXXX X. XXXXXX, M.D.
XXXXX X. XXXXXXX
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TABLE OF CONTENTS
1. Authorization and Sale of Non-Convertible Preferred Stock.............. 1
1.1. Authorization of Non-Convertible Preferred Stock................. 1
1.2. Sale of Non-Convertible Preferred Stock.......................... 1
2. The Closing............................................................ 1
3. Representations of Transcend........................................... 2
3.1. Organization and Corporate Power................................. 2
3.2. Authorization.................................................... 2
3.3. Capitalization................................................... 3
3.4. Stockholder List and Agreements.................................. 4
3.5. Financial Statements............................................. 4
3.6. Absence of Undisclosed Liabilities............................... 4
3.7. Absence of Certain Developments.................................. 4
3.8. Title to Properties.............................................. 5
3.9. Tax Matters...................................................... 5
3.10. Contracts and Commitments........................................ 5
3.11. Proprietary Rights; Employee Restrictions........................ 6
3.12. Effect of Transactions........................................... 6
3.13. Litigation....................................................... 7
3.14. Business; Compliance with Laws................................... 7
3.15. Books and Records................................................ 7
3.16. Brokerage........................................................ 7
3.17. Employee Benefit Plans........................................... 7
4. Representations of the Purchasers...................................... 8
4.1. Investment Representation........................................ 8
4.2. Authority........................................................ 9
4.3. Experience....................................................... 9
4.4. Accredited Investor.............................................. 9
5. Conditions to the Obligations of the Purchasers........................ 9
5.1. Accuracy of Representations and Warranties....................... 9
5.2. Performance...................................................... 9
5.3. Blue Sky Approvals............................................... 9
5.4. Certificates and Documents....................................... 9
5.5. Compliance Certificate........................................... 10
5.6. Other Agreements................................................. 10
5.7. Minimum Investment............................................... 10
5.8. Other Matters.................................................... 10
6. Conditions to the Obligations of Transcend............................. 10
6.1. Accuracy of Representations and Warranties....................... 10
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7. Certain Covenants of Transcend......................................... 11
7.1. Financial Statements............................................. 11
7.2. Budget, Operating Plan; Other Reporting.......................... 11
7.3. Conduct of Business.............................................. 12
7.4. Payment of Taxes, Compliance with Laws, etc...................... 12
7.5. Insurance........................................................ 12
7.6. Key Man Life Insurance........................................... 12
7.7. Maintenance of Properties........................................ 12
7.8. Affiliated Transactions.......................................... 13
7.9. Inspection....................................................... 13
7.10. Integration...................................................... 13
7.11. Material Changes and Litigation.................................. 13
7.12. Audit and Compensation Committees................................ 13
7.13. Reservation of Common Stock...................................... 14
8. Transfers of Certain Rights............................................ 14
9. Successors and Assigns................................................. 14
10. Waivers................................................................ 14
11. Survival of Representations and Warranties............................. 15
12. Notices................................................................ 15
13. Brokers................................................................ 16
14. No Conditions to Effectiveness; Entire Agreement....................... 16
15. Amendments and Waivers................................................. 16
16. Counterparts........................................................... 16
17. Captions............................................................... 17
18. Severability........................................................... 17
19. Governing Law.......................................................... 17
Exhibit A -- List of Purchasers
Exhibit B -- Certificate of Amendment of Restated Certificate of
Incorporation
Exhibit C -- Form of Common Stock Purchase Warrant
Exhibit D -- State of Incorporation or Residence of Purchaser
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NON-CONVERTIBLE PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT
This Agreement dated as of March 3, 1997 is by and among Transcend
Therapeutics, Inc., a Delaware corporation ("Transcend"), and those purchasers
identified on EXHIBIT A attached hereto (individually, a "PURCHASER" and
collectively, the "PURCHASERS").
In consideration of the mutual promises and covenants contained in this
Agreement, and intending to be legally bound by the terms and conditions of this
Agreement, the parties hereto hereby agree as follows:
1. Authorization and Sale of Non-Convertible Preferred Stock.
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1.1. AUTHORIZATION OF NON-CONVERTIBLE PREFERRED STOCK. Transcend
has, or before the Closing (as defined in Section 2) will have, duly authorized
(i) the issuance and sale of up to 1,039,000 shares of its Non-Convertible
Preferred Stock, par value $.01 per share (the "NON-CONVERTIBLE PREFERRED
STOCK"), having the rights, restrictions, privileges and preferences set forth
in the Certificate of Amendment of Restated Certificate of Incorporation, as
amended (the "Restated Certificate"), attached hereto as EXHIBIT B, and (ii) the
issuance and sale of warrants in substantially the form attached hereto as
EXHIBIT C (the "Warrants") to purchase the number of shares (the "Warrant
Shares") of Transcend's Common Stock, par value $.01 per share (the "Common
Stock") equal to the quotient of $346,300 divided by the initial public offering
price of the Common Stock of Transcend pursuant to a registration statement
filed under the Securities Act of 1933, as amended (the "Act"), covering the
offer and sale of Common Stock to the public in a firm commitment underwriting
(the "IPO Price") or, in the event such an initial public offering is not
consummated on or before the six-month anniversary of the date of issuance by
the Company of the Warrants hereunder, the number of Warrant Shares equal to the
quotient of $346,300 divided by $11.75.
1.2. SALE OF NON-CONVERTIBLE PREFERRED STOCK. Subject to the terms
and conditions of this Agreement, at the Closing Transcend shall sell and issue
to the Purchasers, and the Purchasers shall purchase from Transcend, an
aggregate of 1,039,000 shares of the Non-Convertible Preferred Stock (the
"Shares"), and Warrants to purchase the Warrant Shares, allocated among the
Purchasers as set forth on EXHIBIT A hereto, at a purchase price of $1.00 per
share for an aggregate purchase price of $1,039,000, payable as set forth in
Section 2 of this Agreement and in the respective amounts set forth in
EXHIBIT A.
2. THE CLOSING. The closing of the sale and purchase of the Shares and
the Warrants pursuant to this Agreement shall take place at the offices of Xxxx
and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, immediately upon the
execution and delivery of that certain Development and License Agreement by and
between Transcend and Boehringer Ingelheim International GmbH by the parties
thereto, or at
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such other time, date, and place as are mutually agreeable to Transcend and the
Purchasers (the "CLOSING"). The date of the Closing is hereinafter referred to
as the "CLOSING DATE." At the Closing, Transcend shall deliver to each Purchaser
a certificate representing the number of Shares to be purchased by such
Purchaser and a Warrant for the number of Warrant Shares to be purchased by such
Purchaser, registered in the name of such Purchaser. The purchase price for the
Shares and Warrants shall be paid by the Purchasers by wire transfer to an
account maintained by Xxxx and Xxxx LLP pursuant to wire instructions attached
hereto as SCHEDULE 2, or by any other method acceptable to Transcend. If at the
Closing any of the conditions specified in Section 5 of this Agreement shall not
have been fulfilled, each Purchaser shall, at its election, be relieved of all
of its obligations under this Agreement without thereby waiving any other rights
it may have by reason of such failure or such non-fulfillment. If at the Closing
any of the conditions specified in Section 6 of this Agreement shall not have
been fulfilled, Transcend shall, at its election, be relieved of all of its
obligations under this Agreement without thereby waiving any other rights it may
have by reason of such failure or such non-fulfillment.
3. REPRESENTATIONS OF TRANSCEND. Subject to and except as disclosed by
Transcend in the Disclosure Schedule attached hereto or as otherwise provided in
the Financing Documents (as defined below), Transcend hereby represents and
warrants to each of the Purchasers as follows:
3.1. ORGANIZATION AND CORPORATE POWER. Transcend is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and is qualified to do business as a foreign corporation in
each jurisdiction in which such qualification is required, except where the
failure to so qualify would not have a material adverse effect on the condition
(financial or otherwise) of Transcend. Transcend has all required corporate
power and authority to own its property, to carry on its business as presently
conducted or contemplated, to enter into and perform this Agreement and the
other agreements, documents and instruments contemplated hereby (collectively,
the "FINANCING DOCUMENTS"), and generally to carry out the transactions
contemplated hereby. The copies of the Restated Certificate and By-laws of
Transcend, as amended to date, which have been furnished to the Purchasers by
Transcend, are correct and complete at the date hereof. Transcend is not in
violation of any term of its Restated Certificate or By-laws, or in violation of
any term of any agreement, instrument, judgment, decree, order, statute, rule or
government regulation applicable to Transcend or to which Transcend is a party
except where such a violation would not have a material adverse effect on the
condition (financial or otherwise) of Transcend.
3.2. AUTHORIZATION. The Financing Documents are valid and binding
obligations of Transcend, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and other laws
applicable to creditors' rights and remedies and to the exercise of judicial
discretion in accordance with general principles of equity. The execution,
delivery and
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performance of the Financing Documents have been duly authorized by all
necessary corporate or other action of Transcend. The issuance, sale and
delivery of the Shares and the Warrants in accordance with this Agreement, and
the issuance and delivery of the Warrant Shares issuable upon exercise of the
Warrants, have been, or will be prior to the Closing, duly authorized and
reserved for issuance, as the case may be, by all necessary corporate action on
the part of Transcend. The Shares and the Warrants when so issued, sold and
delivered against payment therefor in accordance with the provisions of this
Agreement, and the Warrant Shares when issued upon exercise of the Warrants,
will be duly and validly issued, fully paid and non-assessable. Except state
securities law filings, if any, no consent, approval or authorization of, or
designation, declaration or filing with, any governmental authority or any other
person or entity is required of Transcend in connection with the execution and
delivery of the Financing Documents, or the issuance and delivery of the Shares,
Warrants or Warrant Shares in accordance with the terms of this Agreement or the
consummation of any other transaction contemplated hereby or by the other
Financing Documents.
3.3. CAPITALIZATION. The authorized capital stock of Transcend
(immediately prior to the Closing) will consist of (a) 25,000,000 shares of
Common Stock, 787,382 of which are issued and outstanding, and (b) 21,285,319
shares of Preferred Stock, par value $.01 per share, consisting of (i)
12,991,000 shares of Series A Convertible Preferred Stock, par value $.01 per
share (the "SERIES A PREFERRED STOCK"), 9,916,330 of which are issued and
outstanding, (ii) 3,000,000 shares of Series B Convertible Preferred Stock, par
value $.01 per share (the "SERIES B PREFERRED STOCK"), 690,775 of which are
issued and outstanding, (iii) 4,255,319 shares of Series C Convertible Preferred
Stock, par value $.01 per share (the "SERIES C PREFERRED STOCK"), all of which
are issued and outstanding and (iv) 1,039,000 shares of Non-Convertible
Preferred Stock, none of which are issued and outstanding. All of the issued and
outstanding shares of Transcend's capital stock have been duly authorized and
validly issued and are fully paid and nonassessable and have been issued in
compliance with applicable Federal and state securities laws. Except as set
forth on SCHEDULE 3.3 hereto or as provided in this Agreement, (i) no
subscription, warrant, option, convertible security or other right (contingent
or otherwise) to purchase or acquire any shares of capital stock of Transcend is
authorized or outstanding, (ii) there is not any commitment or offer of
Transcend to issue any subscription, warrant, option, convertible security or
other such right or to issue or distribute to holders of any shares of its
capital stock any evidences of indebtedness or assets of Transcend, (iii)
Transcend has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof and (iv)
there are no restrictions on the transfer of Transcend's capital stock other
than those arising from securities laws. Except as set forth on SCHEDULE 3.3
hereto, no person or entity is entitled to (i) any preemptive or similar right
with respect to the issuance of any capital stock of Transcend, or (ii) any
rights with respect to the registration of any capital stock of Transcend under
the Act.
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3.4. STOCKHOLDER LIST AND AGREEMENTS. Included as part of SCHEDULE
3.4 hereto is a complete and accurate list of the stockholders of Transcend as
of the date hereof. Except as set forth on SCHEDULE 3.4 hereto, there are no
agreements, written or oral, between Transcend and any holder of its capital
stock, or, to the best knowledge of Transcend, between or among any holders of
its capital stock, relating to the acquisition, disposition or voting of the
capital stock of Transcend.
3.5. FINANCIAL STATEMENTS. Transcend has furnished to each of the
Purchasers the audited balance sheet of Transcend as of December 31, 1996 (the
"BALANCE SHEET DATE") and the related audited statements of operations,
statements of stockholders' equity and statements of cash flows for the year
ending December 31, 1996 (collectively, the "FINANCIAL STATEMENTS"). The
Financial Statements (including the footnotes thereto) were prepared in
accordance with generally accepted accounting principles consistently applied
during the period covered thereby, are correct, complete and in accordance with
the books and records of Transcend in all material respects, and fairly and
accurately present the financial position of Transcend on the dates of such
statements and the results of its operations for the periods covered thereby.
3.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
expressly disclosed in the Financial Statements, Transcend has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to the Balance Sheet Date and (ii) obligations
under contracts and commitments incurred in the ordinary course of business and
not required under generally accepted accounting principles to be reflected in
the Financial Statements which, in both cases, are not material to the financial
condition or operating results of Transcend.
3.7. ABSENCE OF CERTAIN DEVELOPMENTS. Since the Balance Sheet Date,
there has been (i) no material adverse change in the condition (financial or
otherwise) of Transcend or in the assets, liabilities, properties or business of
Transcend, (ii) no declaration, setting aside or payment of any dividend or
other distribution with respect to, or any direct or indirect redemption or
acquisition of, any of the capital stock of Transcend, (iii) no waiver of any
valuable right of Transcend or cancellation of any debt or claim held by
Transcend, (iv) no loan by Transcend to any officer, director, employee or
stockholder of Transcend, or any agreement or commitment therefor, (v) no
material increase, direct or indirect, in the compensation paid or payable to
any officer, director, employee or agent of Transcend, (vi) no material loss,
destruction or damage to any property of Transcend whether or not insured, (vii)
no labor disputes involving Transcend and no material change in the personnel of
Transcend or the terms and conditions of their employment, and (viii) no
acquisition or disposition of any assets (or any contract or arrangement
therefor), nor any other transaction by Transcend otherwise than for fair value
in the ordinary course of business.
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3.8. TITLE TO PROPERTIES. Transcend has good and marketable title to
all of its properties and assets, free and clear of all material liens,
restrictions or encumbrances, except as disclosed in the Financial Statements.
All machinery and equipment included in such properties which is necessary to
the business of Transcend is in good condition and repair, and all leases of
real or personal property to which Transcend is a party are fully effective and
afford Transcend peaceful and undisturbed possession of the subject matter of
the lease. Transcend is not in violation of any zoning, building or safety
ordinance, regulation or requirement or other law or regulation applicable to
the operation of its owned properties; Transcend, in its capacity as lessee, is
not in violation of any zoning, building or safety ordinance, regulation or
requirement or other law or regulation applicable to the operation of its leased
properties, nor has it received any notice of violation with which it has not
complied.
3.9. TAX MATTERS. Transcend has filed all foreign, federal, state
and local income, excise or franchise tax returns, real estate and personal
property tax returns, sales and use tax returns and other tax returns required
to be filed by it and has paid all taxes owed by it, except taxes which have not
yet accrued or otherwise become due. The provision for taxes on the Financial
Statements is sufficient as of its date for the payment of all accrued and
unpaid federal, state, county and local taxes of any nature of Transcend, and
any applicable taxes owing to any foreign jurisdiction, whether or not assessed
or disputed. All taxes and other assessments and levies which Transcend is
required to withhold or collect have been withheld and collected and have been
paid over to the proper governmental authorities. With regard to the income tax
returns of Transcend, Transcend has not received notice of any audit or of any
proposed deficiencies from any taxing authority, and no controversy with respect
to taxes of any type is pending or, to the knowledge of Transcend, threatened.
There are in effect no waivers of applicable statutes of limitations with
respect to any taxes owed by Transcend for any year.
3.10. CONTRACTS AND COMMITMENTS. Included as part of SCHEDULE 3.10
hereto is a list of all agreements of any nature to which Transcend is a party
or by which it or any of its properties is bound after August 21, 1996 which are
material to the conduct and operations of such business and properties including
without limitation (a) each agreement which requires future expenditures by
Transcend in excess of $50,000 or which might result in payments to Transcend in
excess of $50,000, (b) all employment and consulting agreements, employee
benefit, bonus, pension, profit-sharing, stock option, stock purchase and
similar plans and arrangements, and distributor and sales representative
agreements, (c) any agreement with any stockholder, officer or director of
Transcend, or any "affiliate" or "associate" of such persons (as such terms are
defined in the rules and regulations promulgated under the Securities Act),
including without limitation any agreement or other arrangement providing for
the furnishing of services by, rental of real or personal property from, or
otherwise requiring payments to, any such person or entity and (d) any agreement
relating to the Proprietary Rights (as defined in Section 3.11). All
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such agreements are valid, binding and in full force and effect. Neither
Transcend nor, to the best of Transcend's knowledge, any of its employees,
officers or directors, is a party to any oral or written contract or agreement
prohibiting them from freely competing or engaging in the business or businesses
of Transcend and its employees. Transcend is not in default under any contract,
obligation or commitment, and to the best knowledge of Transcend, there is no
state of facts which upon notice or lapse of time or both would constitute such
a default. To the best of Transcend's knowledge, no key employee of Transcend is
in default under any contract, obligation or commitment with any of their former
employers, and to the best knowledge of Transcend, there is no state of facts
which upon notice or lapse of time or both would constitute such a default.
3.11. PROPRIETARY RIGHTS; EMPLOYEE RESTRICTIONS. Transcend has
ownership of or license to use all patent, copyright, trademark or other
proprietary rights (collectively, the "PROPRIETARY RIGHTS") used or to be used
in its business as presently conducted or contemplated, and, to Transcend's
knowledge, neither the present nor contemplated business, activities or products
of Transcend infringe any such patent, copyright, trademark or other proprietary
rights of others. Transcend has not received any notice or other claim from any
person asserting that any of Transcend's present or contemplated activities
infringe or may infringe any such rights of such person. Transcend has, to its
knowledge, the right to use, free and clear of claims or rights of others, all
trade secrets, programming processes, software and other information required
for or incident to its products or its business as presently conducted or
contemplated. Transcend has taken all steps required to establish and preserve
its ownership of all copyright, trade secret and other proprietary rights with
respect to its products and technology, except such rights as Transcend has
reasonably determined are not material to Transcend's continuing business
operations. Transcend is not making unlawful use of any confidential information
or trade secrets of any past or present employees of Transcend. Neither
Transcend nor, to the best knowledge of Transcend, any of Transcend's employees,
have any agreements or arrangements with former employers of such employees
relating to confidential information or trade secrets of such employers. The
activities of Transcend's employees on behalf of Transcend do not violate any
agreements or arrangements known to Transcend which any such employees have with
former employers.
3.12. EFFECT OF TRANSACTIONS. The execution, delivery and performance
by Transcend of the Financing Documents does not and will not conflict with or
result in any default under any material contract, obligation or commitment of
Transcend, or any charter provision, by-law or corporate restriction of
Transcend or the creation of any lien, charge or encumbrance of any nature upon
any of the properties or assets of Transcend, except pursuant to this Agreement,
or violate any instrument, agreement, judgment, decree, order, statute, rule or
regulation of any federal, state or local government or agency applicable to
Transcend.
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3.13. LITIGATION. Except as set forth on SCHEDULE 3.13 hereto, there
is no litigation or governmental proceeding or investigation pending or, to the
best of Transcend's knowledge, threatened (a) against Transcend affecting any of
its properties or assets, or (b) against any officer or key employee of
Transcend, or (c) which may adversely affect the business, properties, assets or
financial condition of Transcend or (d) which may call into question the
validity, or materially hinder the enforceability or performance, of the
Financing Documents, nor, to the best of Transcend's knowledge, has there
occurred any event nor does there exist any condition which could reasonably be
expected to be the basis upon which any litigation, proceeding or investigation
might properly be instituted.
3.14. BUSINESS; COMPLIANCE WITH LAWS. Transcend has all material
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its property and to conduct its business as is presently
conducted. Transcend is not in material violation of any law, regulation,
authorization or order of any public authority relevant to the ownership of its
properties or the carrying on of its business as it is presently conducted.
3.15. BOOKS AND RECORDS. The minute books of Transcend contain
complete and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The stock ledger
of Transcend is complete and reflects all issuances, transfers, repurchases and
cancellations of shares of capital stock of Transcend.
3.16. BROKERAGE. There are no claims for and no person is entitled to
any brokerage commissions, finder's fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement or
agreement made by or on behalf of Transcend.
3.17. EMPLOYEE BENEFIT PLANS. Except as contemplated by the Financing
Documents or as set forth on SCHEDULE 3.17 hereto, Transcend does not maintain
or contribute to any employee benefit plans. Transcend is and has been in
material compliance with the provisions of all laws or rules or regulations
applicable to any employee benefit plan maintained or contributed to by
Transcend for the benefit of its employees and, to the best knowledge of
Transcend, there are no claims pending or threatened with respect to any of such
employee benefit plans. Transcend does not maintain or contribute to, and has
never maintained or contributed to, any qualified retirement plan that is
subject to the minimum funding requirements of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Internal Revenue Code of 1986, as amended. There are no unfunded obligations of
Transcend under any retirement, pension, profit-sharing or deferred compensation
plan or program. Transcend is not required to make any payments or contributions
to any employee benefit plan pursuant to any collective bargaining agreement.
Transcend has never maintained or contributed to any employee benefit plan
providing or promising any health or other non-pension benefits to terminated
employees. For purposes of this Section, the term "Company"
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includes all entities that have controlled, have been under the control of, or
have been under common control with, Transcend.
4. Representations of the Purchasers.
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Each of the Purchasers, severally and not jointly, represents and warrants
to Transcend as follows:
4.1. Investment Representation.
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(a) Each Purchaser has not relied upon the advice of a "purchaser
representative," as defined in Regulation D under the Securities Act in
evaluating the risks and merits of the Shares and the Warrants.
(b) Each Purchaser has had an opportunity to ask questions of and
receive answers from Transcend, or a person or persons acting on Transcend's
behalf, concerning the terms and conditions of the Shares and the Warrants.
(c) Each Purchaser understands that the Shares, the Warrants and
the Warrant Shares have not been registered under the Securities Act or under
the securities laws of any state or other jurisdiction in reliance upon
exemptions for private offerings, and that, while Transcend may in the future
register the Shares, the Warrants or the Warrant Shares, it is under no
obligation to do so except as set forth in the Registration Rights Agreement (as
hereinafter defined), and each Purchaser further understands that such Purchaser
is acquiring the Shares and the Warrants without being furnished any offering
literature or prospectus.
(d) Each Purchaser represents that the Shares and the Warrants are
being acquired solely for its own account, for investment and not with a view to
or for the resale, distribution, subdivision, or fractionalization thereof. Each
Purchaser has no present plans to enter into any contract, undertaking,
agreement, or arrangement relating thereto.
(e) Each Purchaser acknowledges and is aware that there are
substantial restrictions on the transferability of the Shares, the Warrants and
the Warrant Shares; the Shares, the Warrants and the Warrant Shares cannot be
resold unless such Shares, Warrants or Warrant Shares are registered under the
Securities Act and any applicable securities law of any state or other
jurisdiction, or an exemption from registration is available; except as set
forth in the Registration Rights Agreement each Purchaser has no rights to
require that the Shares, the Warrants or the Warrant Shares be registered under
the Securities Act; and there currently is no and there may never be, a public
market for the Shares, the Warrants and the Warrant Shares.
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(f) Each Purchaser has such knowledge and experience in financial
and business matters that it is capable of evaluating the relative risks and
merits of the Shares and the Warrants and the Warrant Shares.
(g) Each corporate or partnership Purchaser is organized and with
its principal place of business in, and each individual Purchaser is a resident
of, the state set forth opposite its or his name on EXHIBIT D hereto.
4.2. AUTHORITY. Each Purchaser has full power and authority to
execute, deliver and perform this Agreement and each other Financing Document to
which such Purchaser is a party in accordance with its terms. No Purchaser has
been organized, reorganized, or recapitalized specifically for the purpose of
investing in Transcend.
4.3. EXPERIENCE. Each Purchaser has adequate net worth and means to
provide for its current needs and contingencies and the financial capacity to
sustain a complete loss of its investment in Transcend.
4.4. ACCREDITED INVESTOR. Each Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) under the Act.
5. Conditions to the Obligations of the Purchasers.
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The obligations of the Purchasers under this Agreement are subject to
the fulfillment, or the waiver by the Purchasers, of the conditions set forth in
this Section 5 on or before the Closing Date.
5.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each representation
and warranty of Transcend contained in this Agreement shall be true on and as of
the Closing Date with the same effect as though such representation and warranty
had been made on and as of that date.
5.2. PERFORMANCE. Transcend shall have performed and complied with
all agreements and conditions contained in this Agreement required to be
performed or complied with by Transcend prior to or at the Closing.
5.3. BLUE SKY APPROVALS. Transcend shall have received all requisite
approvals, if any, of the securities authorities of each jurisdiction in which
such approval is required, and such approvals shall be in full force and effect
on the Closing Date.
5.4. CERTIFICATES AND DOCUMENTS. Transcend shall have delivered to
counsel to the Purchasers:
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(a) A copy of the Restated Certificate, as in effect
immediately prior to the Closing, certified by the Secretary of State of the
State of Delaware and a certificate, as of the most recent practicable date, of
the Secretary of State of the State of Delaware as to Transcend's good standing;
and
(b) A certificate of the Secretary or Assistant Secretary of
Transcend dated as of the Closing Date, certifying as to (i) the incumbency of
officers of Transcend executing the Financing Documents and all other documents
executed and delivered in connection herewith, (ii) a copy of the By-Laws of
Transcend, as in effect on and as of the Closing Date, and (iii) a copy of the
resolutions of the Board of Directors of Transcend authorizing and approving
Transcend's execution, delivery and performance of the Financing Documents, all
matters in connection with the Financing Documents, and the transactions
contemplated thereby.
5.5. COMPLIANCE CERTIFICATE. Transcend shall have delivered to the
Purchasers a certificate, executed by the President of Transcend as of the
Closing Date, certifying to the fulfillment of all of the conditions to the
Purchasers' obligations under this Agreement, as set forth in this Section 5.
5.6. Other Agreements.
----------------
(a) Amendment No. 1 to the Second Amended and Restated
Registration Rights Agreement, of even date herewith, shall have been executed
and delivered by Transcend and the requisite number of shareholders of Transcend
required to amend such agreement.
(b) The Warrants, substantially in the form of EXHIBIT C
hereto, shall have been executed by Transcend and delivered to the Purchasers.
5.7. MINIMUM INVESTMENT. Purchasers shall have tendered at the
Closing aggregate consideration of not less that $1,039,000 for the purchase of
the Shares and the Warrants.
5.8. OTHER MATTERS. All corporate and other proceedings in
connection with the transactions contemplated by this Agreement, and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Purchasers and their counsel and the
Purchasers and their counsel shall have received all such counterpart originals
or certified or other copies of such documents as they may reasonably request.
6. Conditions to the Obligations of Transcend.
------------------------------------------
The obligations of Transcend under this Agreement are subject to the
fulfillment, or the waiver by Transcend, of the conditions set forth in this
Section 6 on or before the Closing Date.
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14
6.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Purchasers contained in Section 4 shall be true on and as
of the Closing Date with the same effect as though such representations and
warranties had been made on and as of that date.
7. Certain Covenants of Transcend.
------------------------------
Transcend covenants and agrees that, so long as any shares of
Non-Convertible Preferred Stock issued hereunder are outstanding, it will
perform and observe the following covenants and provisions:
7.1. FINANCIAL STATEMENTS. Transcend will maintain books of account
in accordance with generally accepted accounting principles applied on a
consistent basis, keep full and complete financial records and furnish to the
Purchasers the following reports:
(a) within 90 days after the end of each fiscal year, a copy
of the balance sheet of Transcend as at the end of such year, together with
statements of operations, stockholders' equity and cash flows of Transcend for
such year, audited and certified by Ernst & Young or other independent public
accountants of recognized national standing reasonably satisfactory to the
Purchasers, prepared in accordance with generally accepted accounting principles
and practices consistently applied;
(b) within 25 days after the end of month, an unaudited
balance sheet of Transcend as at the end of such month and unaudited statements
of operations, stockholders' equity, cash flows, summaries of bookings and
backlogs of Transcend for such month;
(c) within 45 days after the end of each quarter, commencing
March 31, 1997, an unaudited balance sheet of Transcend as at the end of such
quarter and for the year to date, and unaudited statements of operations,
stockholders' equity, cash flows, summaries of bookings and backlogs for such
period and for the current fiscal year to the end of such period, each of the
foregoing financial statements described in clauses (a), (b) and (c) hereof to
be prepared on a consolidated basis if Transcend then has any subsidiaries, to
set forth in comparative form the corresponding figures for the prior fiscal
period and the forecasts for such period and to include a brief written
discussion and analysis by the President of such annual and quarterly financial
statements, including a comparison of the performance against the operating plan
and corresponding periods in prior years; and
(d) such other financial information, as the Purchasers may
reasonably request, including, without limitation, certificates of the principal
financial officer of Transcend concerning compliance with the covenants of
Transcend under this Section 7.
11
15
7.2. BUDGET, OPERATING PLAN; OTHER REPORTING. Transcend will prepare
and submit to the Board of Directors of Transcend a monthly budget for Transcend
for each fiscal year of Transcend, at least 30 days prior to the beginning of
such fiscal year together with management's monthly projected results for the
fiscal year and a written discussion and analysis of such budget. The budget
shall be accepted as the budget for such fiscal year when it has been approved
by a majority of the full Board of Directors of Transcend. Transcend shall
review the budget periodically to compare actual monthly results against
projected results and shall promptly advise the Board of Directors of all
material changes in the budget and all material deviations therefrom. Transcend
will also prepare and deliver to each Purchaser within 30 days after the start
of each fiscal year an annual operating plan (the "OPERATING PLAN") prepared on
a monthly basis and, promptly after preparation, any revisions to such Operating
Plan. In addition, Transcend will promptly provide to each Purchaser other
customary information and materials, including, without limitation, reports of
adverse developments, management letters, communications with stockholders or
directors, press releases and registration statements.
7.3. CONDUCT OF BUSINESS. Transcend will continue to engage
principally in the business now conducted by Transcend. Transcend will keep in
full force and effect its corporate existence and all patents and other
intellectual property rights used or useful in its business (except such rights
as the Board of Directors of Transcend, in its reasonable business judgment, has
determined are not material to Transcend's continuing operations).
7.4. PAYMENT OF TAXES, COMPLIANCE WITH LAWS, ETC. Transcend will pay
and discharge all lawful taxes, assessments and governmental charges or levies
imposed upon it or upon its income or property before the same shall become in
default, as well as all lawful claims for labor, materials and supplies which,
if not paid when due, might become a lien or charge upon its property or any
part thereof; provided, however, that Transcend shall not be required to pay and
discharge any such tax, assessment, charge, levy, or claim so long as the
validity thereof is being contested by Transcend in good faith by appropriate
proceedings and an adequate reserve therefor has been established on its books.
Transcend will use its best efforts to comply with all applicable laws and
regulations in the conduct of its business including, without limitation, all
environmental laws.
7.5. INSURANCE. Transcend will keep its insurable properties
insured, upon reasonable business terms, by financially sound and reputable
insurers against liability, and the perils of casualty, fire and extended
coverage in amounts of coverage sufficient in the reasonable business judgment
of Transcend to protect Transcend. Transcend will also maintain with such
insurers insurance against other hazards and risks and liability to persons and
property which, in the reasonable business judgment of Transcend, is customary
in the industry in which Transcend operates for companies of comparable size.
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16
7.6. KEY MAN LIFE INSURANCE. Transcend will maintain term life
insurance upon the life of the Chief Executive Officer in the amount of
$2,000,000, with the proceeds payable to Transcend.
7.7. MAINTENANCE OF PROPERTIES. Transcend will maintain all
properties used or useful in the conduct of its business in good repair, working
order and condition as is reasonably necessary to permit such business to be
properly and advantageously conducted.
7.8. AFFILIATED TRANSACTIONS. Except for the Financing Documents and
the documents contemplated by the Financing Documents, all transactions by and
between Transcend and any officer, employee or stockholder of Transcend or
persons controlled by or affiliated with such officer, employee or stockholder,
shall be conducted on an arms-length basis, shall be on terms and conditions no
less favorable to Transcend than could be obtained from non-related persons and
shall be approved by the Board of Directors of Transcend after full disclosure
of the terms thereof, for which purpose the interested party, if a Director, and
any affiliate of the interested party who is a Director, shall not be entitled
to vote.
7.9. INSPECTION. Transcend shall, upon reasonable prior notice to
Transcend, permit authorized representatives of the Purchasers to visit and
inspect any of the properties of Transcend including its books of account (and
to make copies thereof and take extracts therefrom), and to discuss the affairs,
finances and accounts of Transcend with its officers, administrative employees
and independent accountants, all at the expense of the Purchasers and at such
reasonable times and as often as may be reasonably requested.
7.10. INTEGRATION. Neither Transcend nor any affiliate (as such term
is defined in Rule 501(b) of the Securities Act) of Transcend will offer, sell
or solicit offers to buy or otherwise negotiate in respect of any security (as
such term is defined in the Securities Act) that will be integrated with the
sale of the Shares in a manner that would require the registration of the Shares
under the Securities Act.
7.11. MATERIAL CHANGES AND LITIGATION. Transcend promptly (and, in
any event, not later than the date of release of such information to the public
generally) shall notify the Purchasers or their transferees of any material
adverse change in the business, properties, assets, or condition (financial or
otherwise) of Transcend and of any litigation or governmental proceeding or
investigation pending (or, to the best knowledge of Transcend, threatened)
against Transcend or against any officer, director, key employee, or principal
stockholder of Transcend, that materially adversely affects (or if adversely
determined, could materially adversely affect) its present or proposed business,
properties, assets, or condition (financial or otherwise) taken as a whole.
Transcend will also promptly notify the Purchasers or their transferees of any
facts which, if such facts had existed at the Closing, would have constituted a
material breach of the representations and warranties contained herein.
13
17
7.12. AUDIT AND COMPENSATION COMMITTEES. The Board of Directors of
Transcend shall maintain an Audit Committee and a Compensation Committee
composed of not less than three members of the Board of Directors, including, in
the case of the Compensation Committee, at least two members who are nominees of
the Purchasers and not permanent managers of Transcend and, in the case of the
Audit Committee, three members who are nominees of the Purchasers and not
permanent managers of Transcend (for as long as such nominees are willing to
serve).
7.13. RESERVATION OF COMMON STOCK. Transcend will, upon any increase
in the number of shares of Common Stock issuable upon exercise of the Warrant
Shares reserve additional shares of Common Stock for issuance upon such
exercise, so that the number of shares of Common Stock so reserved will not at
any time be less than the number of such shares issuable upon such exercise.
8. Transfers of Certain Rights.
---------------------------
(a) Subject to the provisions of the Financing Documents, the
rights granted to the Purchasers named herein may be transferred or succeeded to
only by any (i) other Purchaser or any partner, or affiliate of any Purchaser,
or (ii) any other person or entity that acquires at least 300,000 of the Shares;
PROVIDED, HOWEVER, that Transcend is given written notice by the transferee at
the time of such transfer stating the name and address of the transferee and
identifying the securities with respect to which such rights are being assigned.
(b) A transferee to whom rights are transferred pursuant to
this Section 8 may not again transfer such rights to any other person or entity,
other than as provided in paragraph (a) above.
(c) Notwithstanding anything to the contrary contained in this
Agreement, certificates representing the Shares and certificates representing
the Warrant Shares shall each bear a legend substantially in the following form
and any transfer of the Shares or the Warrant Shares shall be subject to the
restrictions described in that legend and the Financing Documents:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the "Act"), or
applicable state securities laws and may not be transferred or
otherwise disposed of unless and until such shares are registered
under the Act and such laws or (1) registration under applicable state
securities laws is not required and (2) an opinion of counsel
satisfactory to Transcend is furnished to Transcend, to the effect
that such registration under the Act is not required."
14
18
9. Successors and Assigns.
----------------------
The provisions of this Agreement shall bind and inure to the benefit
of the respective successors, assigns, heirs, executors, and administrators of
the parties hereto.
10. WAIVER OF PROVISIONS OF SERIES A PURCHASE AGREEMENT AND SERIES C
AGREEMENT. Each Purchaser, with respect to the issuance and sale of the Shares
and the Warrants and the issuance of the Warrant Shares upon exercise of the
Warrants, hereby waives the provisions of the Right of First Refusal Agreement
dated April 5, 1994, as amended (including any notice required thereunder),
Section 8.14 of the Series A Convertible Preferred Stock and Warrant Purchase
Agreement, dated as of April 5, 1994, the provisions of the Note Purchase
Agreement dated September 13, 1995, as amended May 29, 1996, and the provisions
of Section 7.13 of the Series C Convertible Preferred Stock Purchase Agreement,
dated as of August 21, 1996.
11. Survival of Representations and Warranties.
------------------------------------------
The representations, warranties, covenants, promises and agreements
contained in this Agreement or in any other Financing Documents shall survive
and remain in full force and effect after the Closing, without regard to any
investigation made at any time by the Purchasers or on their behalf.
12. Notices.
-------
All notices, requests, consents and other communications under this
Agreement shall be in writing and shall be delivered by hand or mailed by first
class certified or registered mail, return receipt requested, postage prepaid:
(a) If to Transcend:
Transcend Therapeutics, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Executive Officer
Facsimile of Company: (000) 000-0000
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
15
19
(b) If to the Purchasers, to their respective addresses set forth on
EXHIBIT A to this Agreement (or at such other address as may have been furnished
to Transcend in writing by the Purchasers).
with a copy to:
Xxxxxx & Dodge
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
Notices provided in accordance with this Section 12 shall be deemed
delivered upon personal delivery or 48 hours after deposit in the mail in
accordance with the above.
13. Brokers.
-------
Transcend and the Purchasers, each severally and not jointly, (i)
represent and warrant to the other parties hereto that it has retained no finder
or broker in connection with the transactions contemplated by this Agreement,
and (ii) shall indemnify and hold harmless the other parties from and against
any and all claims, liabilities, or obligations with respect to brokerage or
finders' fees or commissions or consulting fees in connection with the
transactions contemplated by this Agreement, asserted by any person on the basis
of any statement or representation alleged to have been made by such
indemnifying party.
14. No Conditions to Effectiveness; Entire Agreement.
------------------------------------------------
There are no conditions to the effectiveness of this Agreement. This
Agreement, together with the instruments and other documents hereby contemplated
to be executed and delivered in connection herewith, contains the entire
agreement and understanding of the parties hereto, and supersedes any prior
agreements or understandings between or among them, with respect to the subject
matter hereof.
15. Amendments and Waivers.
----------------------
Except as otherwise expressly set forth in this Agreement, 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), with the written consent of Transcend and the
holders of at least 75% of the then outstanding shares of Non-Convertible
Preferred Stock. No waivers of or exceptions to any term, condition or provision
of this Agreement, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such term, condition or
provision.
16
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16. Counterparts.
------------
This Agreement may be executed in several counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
17. Captions.
--------
The captions of the sections, subsections and paragraphs of this
Agreement have been added for convenience only and shall not be deemed to be a
part of this Agreement.
18. Severability.
------------
Each provision of this Agreement shall be interpreted in such manner
as to validate and give effect thereto to the fullest lawful extent, but if any
provision of this Agreement is determined by a court of competent jurisdiction
to be invalid or unenforceable under applicable law, such provision shall be
ineffective only to the extent so determined and such invalidity or
unenforceability shall not affect the remainder of such provision or the
remaining provisions of this Agreement.
19. Governing Law.
-------------
This Agreement shall be governed by and interpreted and construed in
accordance with the laws of the Commonwealth of Massachusetts, without regard to
the conflicts of law rules of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, Transcend and the Purchasers have executed and
delivered this Agreement as of the date first above written.
TRANSCEND THERAPEUTICS, INC.
By: /a/ Xxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxx, M.D., Ph.D.
Title: President
ADVENT INTERNATIONAL INVESTORS II
LIMITED PARTNERSHIP
By: Advent International Corporation,
General Partner
By: /s/ Xxxxxx X. Moufflet
---------------------------------
Name: Xxxxxx X. Moufflet
Title: Senior Vice President
17
21
ADVENT PERFORMANCE MATERIALS LIMITED
PARTNERSHIP
By: Advent International Limited
Partnership, General Partner
By: Advent International Corporation,
General Partner
By: /s/ Xxxxxx X. Moufflet
---------------------------------
Name: Xxxxxx X. Moufflet
Title: Senior Vice President
GLOBAL PRIVATE EQUITY II LIMITED
PARTNERSHIP
By: Advent International Limited
Partnership, General Partner
By: Advent International Corporation,
General Partner
By: /s/ Xxxxxx X. Moufflet
---------------------------------
Name: Xxxxxx X. Moufflet
Title: Senior Vice President
ROVENT II LIMITED PARTNERSHIP
By: Advent International Limited
Partnership, General Partner
By: Advent International Corporation,
General Partner
By: /s/ Xxxxxx X. Moufflet
---------------------------------
Name: Xxxxxx X. Moufflet
Title: Senior Vice President
18
22
XXXX X. XXXXXXX
By: /s/ Xxxxxx X. Moufflet
---------------------------------
Xxxxxx X. Moufflet as attorney-
in-fact for XXXX X. XXXXXXX
XXXXXXX XXX
By: /s/ Xxxxxx X. Moufflet
---------------------------------
Xxxxxx X. Moufflet as attorney-
in-fact for XXXXXXX XXX
XXXXXX HEALTHCARE CORPORATION
By: /s/ Xxxx Xxxxxxx
---------------------------------
Name: Xxxx Xxxxxxx
Title:
THE VENTURE CAPITAL FUND OF NEW
ENGLAND III, L.P.
By: FH & Co. III, L.P.
General Partner
By: /s/ Xxxxxxx X. Xxxxx III
---------------------------------
Name: Xxxxxxx X. Xxxxx III
Title: General Partner
SPROUT CAPITAL VI, L.P.
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------
Name: Xx. Xxxxxxxx Xxxxxxx
Title: Attorney-in-fact
19
23
DLJ CAPITAL CORPORATION
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------
Name: Xx. Xxxxxxxx Xxxxxxx
Title: Attorney-in-fact
/s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx, M.D.
/s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, M.D.
/s/ Xxxxx X. Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx
20
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Exhibit A
---------
List of Purchasers
------------------
Number of Shares Aggregate
of Non- Dollar Value Aggregate
Name Convertible of Warrant Purchase
---- Preferred Stock Shares Price
--------------- ------------ ---------
Advent International Investors II 1,242 $ 414.00 $ 1,242.00
Limited Partnership
c/o Advent International
Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Advent Performance Materials 119,453 $39,814.00 $119,453.00
Limited Partnership
x/x Xxxxxx Xxxxxxxxxxxxx
Xxxxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Global Private Equity II Limited 223,023 $74,334.00 $223,023.00
Partnership
c/o Advent International
Corporation
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Rovent II Limited Partnership 89,979 $29,990.00 $ 89,979.00
x/x Xxxxxx Xxxxxxxxxxxxx
Xxxxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxxxx 309 $ 103.00 $ 309.00
x/x Xxxxxx Xxxxxxxxxxxxx
Xxxxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
A-1
25
Number of Shares Aggregate
of Non- Dollar Value Aggregate
Name Convertible of Warrant Purchase
---- Preferred Stock Shares Price
--------------- ------------ ---------
Xxxxxxx Xxx 372 $ 124.00 $ 372.00
x/x Xxxxxx Xxxxxxxxxxxxx
Xxxxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxx Healthcare Corporation 319,068 $106,345.00 $ 319,068.00
Xxx Xxxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
The Venture Capital Fund 100,554 $ 33,515.00 $ 100,554.00
of New England III, L.P.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Sprout Capital VI, L.P. 73,380 $ 24,458.00 $ 73,380.00
000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
DLJ Capital Corporation 11,620 $ 3,873.00 $ 11,620.00
000 Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Xxxxxx X. Xxxxx, M.D 38,000 $ 12,665.00 $ 38,000.00
c/o Transcend Therapeutics, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Xxxx X. Xxxxxx, M.D 12,000 $ 4,000.00 $ 12,000.00
c/o Transcend Therapeutics, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 0000
Xxxxx X. Xxxxxxx 50,000 $ 16,665.00 $ 50,000.00
0000 Xxxx Xxxxx Xxxxxxx Xxxx
Xxxxxx, XX 00000 --------- ----------- -------------
Total: 1,039,000 $346,300.00 $1,039,000.00
========= =========== =============
A-2
