INVESTOR RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of June
20, 2005, by and between Clinical Data, Inc., a Delaware corporation (the
"Company"), and RAM Trading, Ltd., a Cayman Islands exempted company (the
"Preferred Stockholder").
WHEREAS, the Preferred Stockholder will be acquiring that number of shares
of Series A Preferred Stock, $0.01 par value per share (the "Series A Preferred
Stock"), of the Company provided for in Exhibit C to the Agreement and Plan of
Merger dated as of June 20, 2005, by and among the Company, Safari Acquisition
Corp., and Genaissance Pharmaceuticals, Inc., a Delaware corporation (the
"Merger Agreement");
WHEREAS, the Company has agreed to enter into this Agreement to provide the
Preferred Stockholder with certain registration rights, as well as certain other
rights and remedies set forth in this Agreement with respect to the shares of
Series A Preferred Stock to be acquired by the Preferred Stockholder in the
Merger Agreement; and
WHEREAS, the closing and consummation of the transactions contemplated by
the Merger Agreement is conditioned upon this Agreement being executed by the
parties hereto simultaneously with the execution of the Merger Agreement, to
become effective upon the closing and consummation of the transactions
contemplated by the Merger Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS.
1.1 Unless otherwise stated herein, capitalized terms used but not
defined herein shall have the meanings set forth in the Merger Agreement.
1.2 Unless otherwise provided in this Agreement, capitalized terms
used herein shall have the following meanings:
"Advice" has the meaning specified in Section 3.
"Agreement" has the meaning set forth in the first paragraph hereof.
"Closing Date" shall mean the closing and consummation of the transactions
contemplated by the Merger Agreement.
"Common Stock" means the Common Stock, par value $0.01 per share, of the
Company.
"Company" has the meaning set forth in the first paragraph hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor federal statute, and the rules and regulations of the SEC thereunder,
as the same may be amended from time to time.
"Holder" means the Preferred Stockholder and any transferee of the
Preferred Stockholder's Registrable Securities with respect to the rights that
such transferee shall have acquired in accordance with Section 8, at such times
as such Persons shall own Registrable Securities.
"Losses" has the meaning specified in Section 7.1.
"Merger Agreement" has the meaning set forth in the first recital above.
"Participating Holders" means the Holders participating in a registration
hereunder.
"Preferred Stockholder" has the meaning set forth in the first paragraph
hereof.
"Registrable Securities" means (a) any Common Stock issued upon the
conversion of any Series A Preferred Shares and (b) any Common Stock issued or
issuable with respect to the securities referred to in clause (a) by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when they have been (i) distributed to the public pursuant to an
offering registered under the Securities Act, (ii) distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act, (iii) become eligible for
sale (with respect to any Holder thereof) pursuant to Rule 144 promulgated under
the Securities Act within a six-month period in accordance with the limitations
set forth in Rule 144(e) promulgated under the Securities Act, (iv) eligible for
sale (with respect to any Holder thereof) under Rule 144(k) of the Securities
Act (or any similar or successor rule become eligible for resale pursuant to the
provisions of Rule 144 of the Securities Act), or (v) otherwise transferred and
new certificates for them not bearing a restrictive legend as provided by the
Securities Act, and the rules and regulations promulgated thereunder, have been
delivered by the Company. For purposes of this Agreement, a Person shall be
deemed to be the holder of Registrable Securities, and the Registrable
Securities shall be deemed to be outstanding and in existence, whenever such
Person has the right to acquire Registrable Securities, and such Person shall be
entitled to exercise the rights of a Holder of such Registrable Securities
hereunder.
"SEC" means the Securities and Exchange Commission, including any
governmental authority or agency succeeding to the functions thereof.
"Securities Act" means the Securities Act of 1933, or any successor federal
statute, and the rules and regulations of the SEC thereunder, as the same may be
amended from time to time.
"Series A Preferred Stock" has the meaning set forth in the first recital
above.
"Shelf Registration Statement" means a registration statement on Form S-3
(except if the Company is not then eligible to register the Registrable
Securities on Form S-3, any other appropriate form) filed under the Securities
Act providing for the registration of, and the sale on a continuous or delayed
2
basis by the Holders of, all Registrable Securities, among other capital stock
issued or issuable by the Company, pursuant to Rule 415 under the Securities Act
and/or any similar rule that may be adopted by the SEC, filed by the Company
pursuant to the provisions of Section 2, including any amendments (including
post-effective amendments) and supplements to such registration statement.
"Suspension Period has the meaning specified in Section 3.
"Transfer" means and includes the act of selling, giving, transferring,
creating a trust (voting or otherwise), assigning or otherwise disposing of
(other than pledging, hypothecating or otherwise transferring as security) (and
correlative words shall have correlative meanings); provided, however, that any
transfer or other disposition upon foreclosure or other exercise of remedies of
a secured creditor after an event of default under or with respect to a pledge,
hypothecation or other transfer as security shall constitute a "Transfer".
"Violation" has the meaning specified in Section 7.1.
2. SHELF REGISTRATION.
2.1 The Company shall use its commercially reasonable efforts to
prepare and file with the SEC, no later than 45 days following the Closing Date,
a Shelf Registration Statement relating to the offer and sale on a continuous
basis of the Registrable Securities, among other capital stock issued by the
Company, and, thereafter, shall use its commercially reasonable efforts to cause
such Shelf Registration Statement to be declared effective under the Securities
Act no later than 120 days following the Closing Date. The Shelf Registration
Statement shall contain a "Plan of Distribution" section as is reasonably
requested by the Holders. If the Company fails to meet the filing and/or
effectiveness deadlines set forth in this Section 2.1, the Company shall
nonetheless be obligated to file the Shelf Registration Statement with the SEC
and to use its commercially reasonable efforts to cause such Shelf Registration
Statement to be declared effective by the SEC as soon as practicable following
the applicable deadline provided in this Section 2.1 for so long as the
Preferred Stockholder named in the first paragraph of this Agreement or an
Affiliate of such Preferred Stockholder holds any Series A Preferred Shares.
2.2 This Section shall not apply to a registration of shares of Common
Stock on Form S-4 or Form S-8 or their then equivalent forms relating to an
offering of shares of Common Stock to be issued solely in connection with any
acquisition of any entity or business or otherwise issuable in connection with
any stock option, stock purchase or other employee benefit plan
2.3 The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective under the Securities Act (subject
to Section 3) until the earlier of (i) the date that all Registrable Securities
covered by the Shelf Registration Statement have been publicly sold, or (ii) the
date on which all Registrable Securities not otherwise sold pursuant to clause
(i) and covered by the Shelf Registration Statement may be sold pursuant to Rule
144(k).
2.4 If the Holders requesting such registration intend to distribute
the Registrable Securities covered by their request by means of an underwriting,
3
they shall so advise the Company as a part of their request made pursuant to
this Section and the Company shall include such information in the written
notice to other holders referred to above. The right of any Holder to
registration pursuant to this Section shall be conditioned upon such Holder's
agreeing to participate in such underwriting and to permit inclusion of such
holder's Registrable Securities in the underwriting. If such method of
disposition is an underwritten public offering, the Company may designate the
managing underwriter of such offering. A Holder may elect to include in such
underwriting all or a part of the Registrable Securities it holds.
3. TEMPORARY SUSPENSIONS OF SHELF REGISTRATION STATEMENT. Notwithstanding
anything to the contrary contained herein, the Company shall not be obligated to
prepare and file a registration statement pursuant to the provisions of this
Agreement if the Company delivers to the Holders of Registrable Securities who
have requested registration a certificate signed by the President or the Chief
Executive Officer stating that a Material Transaction exists at the time of such
request; provided, however, that (i) the Company may not utilize such right more
than twice during any twelve-month period, and (ii) such right, when exercised,
shall extend for a period not to exceed 90 days from the delivery date of such
certificate (a "Suspension Period"). For purposes of this Section, "Material
Transaction" means any material transaction in which the Company or any of its
subsidiaries proposes to engage or is engaged in, including, without limitation,
a purchase or sale of assets or securities, financing, merger, consolidation or
any other transaction that may require disclosure pursuant to the Exchange Act
and with respect to which the Company's Board of Directors has reasonably
determined in good faith that compliance with this Agreement will either
materially interfere with Company's ability to consummate such transaction or
require the Company to disclose material, non-public information prior to such
time it would otherwise be required to be disclosed. The Company shall provide
written notice to the Holders to require the Holders to suspend the use of the
prospectus forming a part of the Shelf Registration Statement for sales of
Registrable Securities. Immediately upon receipt of such notice, the Holders of
Registrable Securities covered by the Shelf Registration Statement shall suspend
the use of the prospectus forming a part of the Shelf Registration Statement
until requisite changes to such prospectus have been made as required herein or
until the Holders are advised in writing (the "Advice") by the Company that the
use of the prospectus may be resumed. After the expiration of any Suspension
Period and without any further request from a Holder, the Company shall as
promptly as reasonably practicable prepare a post-effective amendment or
supplement to the Shelf Registration Statement or the prospectus forming a part
thereof, or any document incorporated therein by reference, or file any other
required document so that, as thereafter delivered to purchasers of Registrable
Securities included therein, such prospectus will not include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
4. REGISTRATION PROCEDURES; ADDITIONAL AGREEMENTS. With respect to the
Company's obligations under Section 2, the Company shall:
4.1 Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its commercially reasonable
efforts to cause such registration statement to become effective; provided,
however, that before filing a registration statement or prospectus or any
4
amendments or supplements thereto, the Company shall furnish to one firm of
counsel selected by the Participating Holders holding a majority of the
Registrable Securities covered by such registration statement copies of all such
documents in the form substantially as proposed to be filed with the SEC at
least three (3) Business Days (or with respect to any prospectus or any
amendment or supplement, at least two (2) Business Days) prior to filing for
review and comment by such counsel, which opportunity to comment shall include
an absolute right to control or contest disclosure if any Participating Holder
reasonably believes that it may be subject to controlling person liability under
applicable securities laws with respect thereto, and if such review lasts longer
than 48 hours, the filing and effectiveness requirements set forth in Section 2
shall be suspended during the pendency of such review.
4.2 Notify each Participating Holder of the effectiveness of any
registration statement with respect to the Registrable Securities and prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities Act and
rules thereunder with respect to the disposition of all securities covered by
such registration statement. The Company shall amend the registration statement
or supplement the prospectus included therein so that it will remain current and
in compliance with the requirements of the Securities Act for the period
specified in Section 2.2, and if during such period any event or development
occurs as a result of which the registration statement or prospectus contains a
misstatement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, the
Company shall promptly notify each Participating Holder, amend the registration
statement or supplement the prospectus so that each will thereafter comply with
the Securities Act and furnish to each Participating Holder such amended or
supplemented prospectus, which each such Holder shall thereafter use in the
Transfer of Registrable Securities covered by such registration statement.
4.3 Furnish to each of the Participating Holders, without charge, such
numbers of copies of such registration statement, any pre-effective or
post-effective amendment thereto, the prospectus included therein, including
each preliminary prospectus, and any amendments or supplements thereto, in each
case in conformity with the requirements of the Securities Act, and such other
related documents as any such Participating Holders may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such
Participating Holders.
4.4 Use its commercially reasonable efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such states or jurisdictions as shall be
reasonably requested by the Participating Holders owning a majority of the
Registrable Securities to be included in such registration statement; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business as a foreign corporation, to consent
to general service of process or to subject itself to taxation in any state or
jurisdiction.
4.5 Promptly notify each Participating Holder of any stop order issued
by the SEC in connection therewith and take all reasonable actions required to
prevent the entry of such stop order or to remove it if entered.
5
4.6 Make available for inspection by any Participating Holder and the
representatives of such Holders all financial and other information as shall be
reasonably requested by them, and provide such Holders the reasonable
opportunity to discuss the business affairs of the Company with its principal
executives and with the independent public accountants who have certified the
audited financial statements included in such registration statement, in each
case all as necessary to enable them to exercise their due diligence
responsibility under the Securities Act, and in each case subject to the
execution of a confidentiality agreement in a form acceptable to the Company.
4.7 Use all reasonable efforts to cause all Registrable Securities to
be listed on the NASDAQ National Market or the NASDAQ Small Cap Market.
4.8 Take such other actions as are reasonably required in order to
expedite or facilitate the disposition of Registrable Securities included in
each such registration.
5. HOLDERS' OBLIGATIONS. It shall be a condition precedent to the
obligations of the Company to undertake any action pursuant to this Agreement
with respect to the Registrable Securities of any Participating Holder of
Registrable Securities that such Participating Holder shall promptly furnish to
the Company such information regarding such Participating Holder (including name
and address), the number of the Registrable Securities beneficially owned by it
(as required by Section 13 of the Exchange Act), the number of Registrable
Securities being registered and the intended method of disposition of such
securities as shall be required to effect the registration of such Holder's
Registrable Securities, and to cooperate with the Company in preparing such
registration.
6. REGISTRATION EXPENSES.
6.1 Company Expenses. All expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration and filing fees, fees of any transfer agent and registrar, fees
and expenses of compliance with securities or blue sky laws, printing expenses,
messenger and delivery expenses, fees and disbursements of custodians, fees and
disbursements of counsel for the Company and its independent certified public
accountants, the Company's internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any liability insurance and the expenses and
fees for listing the securities to be registered on each securities exchange or
quotation system on which similar securities issued by the Company are then
listed or quoted shall be borne by the Company.
6.2 Holder Expenses. In connection with a registration hereunder, the
Company shall reimburse the Holders with Registrable Securities included in such
registration for the reasonable fees and disbursements of one counsel chosen by
the holders of a majority of the Registrable Securities included in such
registration, and the fees and expenses of any advisers, consultants, and other
agents retained by the Participating Holder (including, without limitation, all
salaries and expenses of a participating Holder's officers, directors and
employees performing legal, financial analysis or accounting duties), such fees
and expenses not to exceed $25,000 in the aggregate, as well as the fees and
expenses (including discounts and commissions) of any underwriter retained by
6
the Company and/or the Participating Holder in connection with the offer, sale
and distribution of the Registrable Securities under the Securities Act.
7. INDEMNIFICATION; CONTRIBUTION.
7.1 With respect to a Shelf Registration Statement, to the extent
permitted by applicable law, the Company shall indemnify and hold harmless each
Participating Holder, each Person, if any, who controls such Participating
Holder within the meaning of the Securities Act, and each officer, director,
partner, and employee of such Participating Holder and such controlling Person,
against any and all losses, claims, damages, liabilities and expenses (joint or
several), including reasonable attorneys' fees and disbursements and expenses of
investigation (collectively, "Losses"), incurred by such party pursuant to any
actual or threatened action, suit, proceeding or investigation, or to which any
of the foregoing Persons may become subject under the Securities Act, the
Exchange Act or other federal or state laws, insofar as such Losses arise out of
or are based upon any of the following statements, omissions or violations
(collectively a "Violation"):
(a) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein, or any amendments or
supplements thereto;
(b) the omission or alleged omission to state therein a material fact
required to be stated therein, or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading; or
(c) any violation or alleged violation by the Company of any federal
or state securities law applicable to the Company relating to any action or
inaction by the Company in connection with the registration effected by the
registration statement;
provided, however, that the indemnification required by this Section 7.1 shall
not apply to amounts paid in settlement of any such Loss if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for any
such Loss to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished to
the Company by or on behalf of the indemnified party expressly for use in
connection with such registration; provided, further, that any indemnification
required by this Section 7.1 shall not apply to any Participating Holder to the
extent that any such Loss is based on or arises out of (i) sales of Registrable
Securities during any Suspension Period or (ii) an untrue statement or alleged
untrue statement of a material fact, or an omission or alleged omission to state
a material fact, contained in or omitted from any preliminary prospectus if the
final prospectus shall correct such untrue statement or alleged untrue
statement, or such omission or alleged omission, and a copy of the final
prospectus has been delivered to any such Participating Holder but has not been
sent or given by any such Participating Holder to such Person alleging damage.
7.2 To the extent permitted by applicable law, each Participating
Holder shall, severally and not jointly, indemnify and hold harmless the
Company, each of its directors, each of its officers who shall have signed the
7
registration statement, each Person, if any, who controls the Company within the
meaning of the Securities Act against any and all Losses incurred by the Company
or such Person pursuant to any actual or threatened action, suit, proceeding or
investigation, or to which the Company or any of the foregoing Persons may
otherwise become subject under the Securities Act, the Exchange Act or other
federal or state laws, insofar as such Losses arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation arises out of or is based upon and in conformity with written
information furnished by or on behalf of a Participating Holder expressly for
use in connection with such registration; provided, however, that (x) the
indemnification required by this Section 7.2 shall not apply to amounts paid in
settlement of any such Loss if such settlement is effected without the consent
of the relevant Participating Holder, which consent shall not be unreasonably
withheld, and (y) in no event shall the amount of any indemnity obligation under
this Section 7.2 exceed the net proceeds from the applicable offering received
by such Participating Holder.
7.3 (a) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit, proceeding,
investigation or threat thereof for which such indemnified party may make a
claim under this Section 7, such indemnified party shall deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to assume the defense thereof. The
failure to deliver written notice to the indemnifying party as soon as
practicable following the commencement of any such action, if prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 7 to the extent of such
prejudice but shall not relieve the indemnifying party of any liability that it
may have to any indemnified party otherwise than pursuant to this Section 7. Any
fees and expenses incurred by the indemnified party (including any fees and
expenses incurred in connection with investigating or preparing to defend such
action or proceeding) shall be paid to the indemnified party, as incurred,
within forty five (45) days of written notice thereof to the indemnifying party
(regardless of whether it is ultimately determined that an indemnified party is
not entitled to indemnification hereunder).
(b) Any such indemnified party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be the expenses
of such indemnified party unless (i) the indemnifying party shall have failed to
promptly assume the defense of such action, claim or proceeding or (ii) the
named parties to any such action, claim or proceeding (including any impleaded
parties) include both such indemnified party and the indemnifying party, and
such indemnified party shall have been advised by counsel that there may be one
or more legal defenses available to it which are different from or in addition
to those available to the indemnifying party and that the assertion of such
defenses would create a conflict of interest such that counsel employed by the
indemnifying party could not faithfully represent the indemnified party (in
which case, if such indemnified party notifies the indemnifying party in writing
that it elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such action, claim or proceeding on behalf of such indemnified party, it being
understood, however, that the indemnifying party shall not, in connection with
any one such action, claim or proceeding or separate but substantially similar
or related actions, claims or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the reasonable
8
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all such indemnified parties.
7.4 If the indemnification required by this Section 7 from the
indemnifying party is unavailable to an indemnified party hereunder in respect
of any Losses referred to in this Section 7:
(a) The indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such Losses in such proportion as is appropriate to reflect the
relative fault of the indemnifying party and indemnified parties in connection
with the actions which resulted in such Losses, as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified parties shall be determined by reference to, among other things,
whether any Violation has been committed by, or relates to information supplied
by, such indemnifying party or indemnified parties, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such Violation. The amount paid or payable by a party as a result of the Losses
referred to above shall be deemed to include, subject to the limitations set
forth in Section 7.1 and Section 7.2, any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(b) The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 7.4 were determined by pro rata
allocation or by any other method of allocation which does not take into account
the equitable considerations referred to in Section 7.4(a). No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.
7.5 If indemnification is available under this Section 7, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in this Section 7 without regard to the relative fault of such
indemnifying party or indemnified party or any other equitable consideration
referred to in Section 7.4.
7.6 The obligations of the Company and the Participating Holders under
this Section 7 shall survive the completion of any offering of Registrable
Securities pursuant to a registration statement under this Agreement, and
otherwise.
8. TRANSFER OF REGISTRATION RIGHTS. The rights of a Holder with respect to
Registrable Securities pursuant to this Agreement may be Transferred by such
Holder to any Affiliate of such Holder in connection with the Transfer of
Registrable Securities to such Affiliate, in all cases, if (a) the transferor
shall have delivered to the Company written notification of such proposed
Transfer, setting forth the name of the transferor, name and address of the
transferee, and the number of Registrable Securities which shall be so
Transferred, (b) such transferee agrees in writing to be bound by and subject to
the terms and conditions of this Agreement and the Company is provided a copy of
such agreement and (c) the transferor is Transferring at least twenty-five
percent (25%) shares of Series A Preferred Stock (as adjusted for any stock
split, stock dividend, recapitalization or otherwise) acquired by the Preferred
Stockholder under the Merger Agreement.
9
9. NEGATIVE COVENANTS.
9.1 For so long as the Preferred Stockholder or its Affiliates own in
the aggregate at least 125,000 shares of Series A Preferred Stock (as adjusted
for any stock split, stock dividend, recapitalization or otherwise affecting the
Series A Preferred Stock), the Company shall not, without the vote or written
consent of the holders of 66-2/3% of the shares of Series A Preferred Stock then
outstanding (the "Supermajority Preferred Holders"):
(1) authorize, issue or enter into any agreement providing for the issuance
(contingent or otherwise) of any capital stock or other equity securities
of the Company (or any securities convertible into or exchangeable for any
capital stock or other equity securities of the Company) having rights,
preference, privileges or priorities pari passu with or senior to the
Series A Preferred Stock;
(2) directly or indirectly redeem, purchase or otherwise acquire any of the
Company's capital stock or other equity securities (including warrants,
options and other rights to acquire such capital stock or other equity
securities) other than (A) the Series A Preferred Stock pursuant to the
terms of the Series A Preferred Stock and (B) shares of its capital stock
or other equity securities repurchased or otherwise acquired (i) upon the
termination of employment of an officer, employee, director or consultant
of the Company, or (ii) in connection with the surrender of shares of
capital stock or other equity securities, in each case pursuant to an
option agreement or restricted stock purchase agreement or comparable
agreement approved by the Board of Directors of the Company;
(3) (A) liquidate, dissolve or wind up the Company, (B) commence a
voluntary case under any applicable bankruptcy law, (C) consent to the
appointment of, or taking possession by, a receiver of the Company or for
all or substantially all of the property and assets of the Company, or (D)
effect any general assignment for the benefit of creditors of the Company;
(4) create, incur, assume or suffer to exist any Indebtedness; provided,
however, the Company may incur Indebtedness if the amount of Indebtedness
outstanding at such time (including the Indebtedness so incurred) does not
exceed 100% of the amount of the Company's Stockholders Equity (as
determined in accordance with generally accepted accounting principles
consistently applied by the Company, and measured as of the end of the last
completed quarterly period prior to the incurrence of any such
Indebtedness);
(5) fail to continue to have the Common Stock to be quoted on the Nasdaq
National Market or the Small Cap Market of The Nasdaq Stock Market, or
listed on the New York Stock Exchange agree to do any of the foregoing; or
(6) materially breach any covenant contained in this Agreement or in the
terms of the Series A Preferred Stock.
As used in Section 9.1(4) above, "Indebtedness" means (i) all obligations
of the Company for borrowed money or in respect of loans or advances; (ii) all
obligations of the Company evidenced by bonds, debentures, notes or other
similar instruments; (iii) all obligations of the Company in respect of letters
10
of credit, whether or not drawn; (iv) any Indebtedness of a third Person that is
guaranteed by the Company; or (v) any obligations under capitalized leases with
respect to which the Company is liable.
9.2 Enforcement Remedies.
(a) In the event of any breach by the Company of any of the foregoing
covenants which is not remedied or cured by the Company within thirty (30) days
following written notice of such breach by the Preferred Stockholder to the
Company (an "Event of Default"), the Preferred Stockholder shall be entitled to
enforce such rights specifically to recover damages to the Preferred Stockholder
caused by reason of any Event of Default and to exercise all other rights
granted by law. The Company agrees and acknowledges that money damages may not
be an adequate remedy for any Event of Default, and that the Preferred
Stockholder may apply for specific performance and for other injunctive relief
in order to enforce or prevent violation of the provisions of Section 9 of this
Agreement.
(b) At the election of the Supermajority Preferred Holders, following the
occurrence of an Event of Default which is unremedied or uncured after the
thirty-day period set forth above, the Preferred Stockholder shall have the
option to require the Company to redeem, retire and repurchase for cash the
outstanding shares of Series A Preferred Stock then held by the Preferred
Stockholder at the then outstanding Accreted Value of the Series A Preferred
Stock (as defined in the terms of the Series A Preferred Stock). Such redemption
shall be made with 90 days following delivery of written notice to the Company
by the Preferred Stockholder of an election to redeem.
10. MISCELLANEOUS.
10.1 Remedies. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages are not an adequate remedy for any breach of the
provisions of this Agreement and that any party may apply for specific
performance and for other injunctive relief in order to enforce or prevent
violation of the provisions of this Agreement.
10.2 Amendments and Waivers.
(a) This Agreement may not be amended, modified or supplement except by a
written instrument signed by each of the Company and the Holders of a majority
of the then outstanding Registrable Securities.
(a) Any term or provision of this Agreement may be waived, or the time for
performance extended, as authorized in writing by the party or parties entitled
to the benefit thereof. No waiver of any term or condition of this Agreement
shall operate as a waiver of any other breach of such term and condition or any
other term or condition, nor shall any failure to enforce any provision hereof
operate as a waiver of such provision or of any other provision hereof. No
11
written waiver hereunder, unless it by its own terms explicitly provides to the
contrary, shall be construed to effect a continuing waiver of the provisions
being waived and no such waiver in any instance shall constitute a waiver in any
other instance or for any other purpose or impair the right of the party against
whom such waiver is claimed in all other instances or for all other purposes to
require full compliance with such provision.
10.3 Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto.
10.4 Entire Agreement. This Agreement, together with the Merger
Agreement, constitutes the entire agreement of the parties hereto with respect
to the subject matter contained herein, and supersedes all prior agreements,
negotiations, discussions and understandings between the parties hereto with
respect to such subject matter.
10.5 Severability. Wherever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law and in such a way as to, as closely as possible, achieve the intended
economic effect of such provision and this Agreement as a whole, but if any
provision contained herein is, for any reason, held to be invalid, illegal or
unenforceable in any respect, such provision shall be ineffective to the extent,
but only to the extent, of such invalidity, illegality or unenforceability
without invalidating the remainder of such provision or any other provisions
hereof, unless such a construction would be unreasonable.
10.6 Notices. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or delivered
(a) when delivered personally, (b) if transmitted by facsimile when confirmation
of transmission is received, (c) if sent by registered or certified mail,
postage prepaid, return receipt requested, three Business Days after mailing or
(d) if sent by reputable overnight courier service, one Business Day after
delivery to such service; and shall be addressed as follows:
If to the Company, to: with a copy to:
--------------------- --------------
Clinical Data, Inc. ▇▇▇▇▇▇▇▇▇ Will & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Preferred Stockholder, to: with a copy to:
----------------------------------- --------------
RAM Trading, Ltd. Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP
c/▇ ▇▇▇▇▇▇▇ Capital Management, LLC Bank One Plaza
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
12
10.7 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, without giving effect to
any choice of law or conflict of law rules or provisions (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware. In furtherance of the
foregoing, the internal law of the State of Delaware shall control the
interpretation and construction of this Agreement, even though under that
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
10.8 Execution in Counterparts. This Agreement may be executed in any
number of counterparts (including via facsimile), each of which will be
considered an original instrument, but all of which together will be considered
one and the same agreement, and will become binding when one or more
counterparts have been signed by and delivered to each of the parties.
10.9 Termination. This Agreement may be terminated at any time by a
written instrument signed by all parties hereto.
10.10 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement, or where any provision hereof is validly
asserted as a defense, the successful party shall be entitled to recover
reasonable attorneys' fees (including any fees incurred in any appeal) in
addition to its costs and expenses and any other available remedy.
10.11 No Third Party Beneficiaries. Nothing herein expressed or
implied is intended to confer upon any person, other than the parties hereto or
their respective permitted assigns, successors, heirs and legal representatives,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
10.12 Further Assurances. Each of the parties hereto shall execute all
such further instruments and documents and take all such further action as any
other party hereto may reasonably require in order to effectuate the terms and
purposes of this Agreement.
10.13 Effectiveness; Termination. This Agreement is being executed and
delivered by each of the parties in connection with the execution and delivery
of the Merger Agreement. Notwithstanding anything contained herein to the
contrary, this Agreement shall expressly take effect only upon, and
simultaneously with, the closing and consummation of the transactions
contemplated by the Merger Agreement. This Agreement shall automatically
terminate, and neither the Company nor the Preferred Stockholder shall have any
rights or obligations hereunder and this Agreement shall become null and void
and have no further effect, upon the earliest to occur of (a) the mutual consent
of all of the parties hereto, and (b) provided that the merger transaction
contemplated by the Merger Agreement has not occurred, the date of termination
of the Merger Agreement in accordance with its terms.
[SIGNATURE PAGE FOLLOWS]
13
IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights
Agreement to be executed the day and year first above written.
CLINICAL DATA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, M.D.
Title: President and CEO
RAM TRADING, LTD.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Chief Financial Officer