INVESTOR RIGHTS AGREEMENT

 

                            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.

 

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     "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

 

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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,

 

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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

 

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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.

 

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          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.