ex4_1.htm


    
      

    

    Exhibit
4.1

     

     

    CONVERTIBLE
NOTE

     

    NEITHER
THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS.  THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.  NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING
ARRANGEMENT SECURED BY THE SECURITIES.  ANY TRANSFEREE OF THIS NOTE
SHOULD CAREFULLY REVIEW THE TERMS OF THIS NOTE, INCLUDING SECTION 4(c)(iii)
AND SECTION 15(a)
HEREOF.  THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND,
ACCORDINGLY, THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE
AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION 4(c)(iii)
OF THIS NOTE.

     

    CLINICAL
DATA, INC.

     

    Convertible
Note

     

    
      
        	
                Issuance
      Date:  February 25, 2009

              	
                Original
      Principal Amount: U.S.
$25,000,000

              


      

    

    


    FOR VALUE RECEIVED, Clinical
Data, Inc., a Delaware corporation (the “Company”), hereby promises to
pay to ______________________ or registered assigns (“Holder”) the amount set out
above as the Original Principal Amount (as reduced pursuant to the terms hereof
pursuant to redemption, conversion or otherwise, the “Principal”) when due, whether
upon the Maturity Date (as defined below), acceleration, redemption or otherwise
(in each case in accordance with the terms hereof) and to pay interest (“Interest”) on any outstanding
Principal at the applicable Interest Rate from the date set out above as the
Issuance Date (the “Issuance Date”) until the same becomes
due and payable, whether upon an Interest Date (as defined below) or the
Maturity Date, acceleration, conversion, redemption or otherwise (in each case
in accordance with the terms hereof).  This Convertible Note
(including all Convertible Notes issued in exchange, transfer or replacement
hereof, this “Note”) is
one of an issue of Convertible Notes issued pursuant to the Securities Purchase
Agreement on the Closing Date (collectively, the “Notes” and such other
Convertible Notes, the “Other Notes”).  Certain
capitalized terms used herein are defined in Section 24.

     

    
      
        
           


        

        
          
          

          
            

          

        

        
           


        

      

    

     

    1.             
PAYMENTS OF
PRINCIPAL.  On the Maturity Date, the Company shall pay to the
Holder an amount in cash representing all outstanding Principal and accrued and
unpaid Interest on such Principal.  The “Maturity Date” shall be February 25,
2017.  Other than as specifically permitted by this Note, the Company
may not prepay any portion of the outstanding Principal or accrued and unpaid
Interest.

     

    2.             
PREPAYMENT OF
PRINCIPAL.  At any time (a) on or before the second anniversary
of the Issuance Date upon receipt of the written consent of the Required Holders
(which consent may be withheld, conditioned or delayed at the sole discretion of
the Required Holders), or (b) after the second anniversary of the Issuance Date
upon not less than 90 days’ prior written notice to the Holder (which notice may
by given by the Company not more than 89 days prior to the second anniversary)
and all of the other holders of the Notes, in either such case, the Company
shall have the right to prepay, without penalty or premium, all or any portion
(in multiples of not less than $100,000 or the amount outstanding under this
Note) of this Note and the Other Notes; provided, however, the Holder
shall retain conversion rights in respect of this Note during such notice
period; provided further
that any such prepayment of the Notes shall be pro rata with respect to the
then-outstanding principal balances of the Notes.  If, after providing
the 90-day notice to the Holder, the Holder notifies the Company during such
90-day period that the Holder intends to convert all or a portion of this Note
to Conversion Shares, the Company shall not thereafter be permitted to prepay
the portion of the Note to be so converted, regardless of whether there is a
delay in the conversion of such portion of this Note as a result of any filing
required under the HSR Act (as defined herein).

     

    3.            
 INTEREST;
INTEREST RATE.

     

    (a)           Payment of
Interest.  Interest on this Note shall commence accruing on the
Issuance Date and shall be computed on the basis of a 365-day year and the
actual number of days elapsed and shall be payable in arrears on each yearly
anniversary of the Issuance Date, including the Maturity Date (each, an “Interest Date”) with the first Interest
Date being February 25, 2010.  Interest shall be payable on each
Interest Date, to the record holder of this Note on such Interest Date, in cash
(“Cash
Interest”).  Cash Interest shall be paid to the Holder pursuant
to Section
20(b).

     

    (b)           Default
Interest.  From and after the occurrence and during the
continuance of an Event of Default, the Interest Rate shall be increased to
17.72% per annum.  In the event that such Event of Default is
subsequently cured, the adjustment referred to in the preceding sentence shall
cease to be effective as of the date of such cure; provided, however, that the
Interest as calculated and unpaid at such increased rate during the continuance
of such Event of Default shall continue to apply to the extent relating to the
days after the occurrence of such Event of Default through and including the
date of cure of such Event of Default.  

     

    4.             
CONVERSION OF
NOTES.  This Note shall be convertible into shares of the
Company’s common stock, par value $0.01 per share (the “Common Stock”), on the terms
and conditions set forth in this Section 4.

     

    (a)           Conversion
Right.  Subject to the provisions of Section 4(c)(ii), at any time
or times on or after the Issuance Date, the Holder shall be entitled to convert
any portion of the outstanding and unpaid Conversion Amount (as defined below)
into fully paid and nonassessable shares of Common Stock in accordance with
Section 4(c), at the
Conversion Rate (as defined below).  The Company shall not issue any
fraction of a share of Common Stock upon any conversion.  If the
issuance would result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock down to the
nearest whole share and shall pay the Holder cash in lieu of such fractional
share.  The Company shall pay any and all transfer, stamp and similar
taxes that may be payable with respect to the issuance and delivery of Common
Stock upon conversion of any Conversion Amount; provided, however, that the
Company shall not be required to pay any tax that may be payable in respect of
the issuance and delivery of Common Stock to any Person other than the Holder or
with respect to any income tax due by the Holder with respect to such Common
Stock.

     

    
      
        
           


        

        
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    (b)           Conversion
Rate.  The number of shares of Common Stock issuable upon
conversion of any Conversion Amount pursuant to Section 4(a) shall be
determined by dividing (x) such Conversion Amount by (y) the Conversion Price
(the “Conversion
Rate”).

     

    (i)           “Conversion Amount” means the
portion of the Principal to be converted, redeemed or otherwise with respect to
which this determination is being made.

     

    (ii)           “Conversion Price” means, as of
any Conversion Date (as defined below) or other date of determination, $8.1825,
subject to adjustment as provided herein.

     

    (c)           Mechanics of
Conversion.

     

    (i)           Optional
Conversion.  To convert any Conversion Amount into shares of
Common Stock on any date (a “Conversion Date”), the Holder
shall (A) transmit by facsimile (or otherwise deliver), for receipt on or prior
to 11:59 p.m., New York City time, on such date, a copy of an executed notice of
conversion in the form attached hereto as Exhibit I (the “Conversion Notice”) to the
Company and (B) if required by Section 4(c)(iii),
surrender this Note to a common carrier for delivery to the Company as soon as
practicable on or following such date (or an indemnification undertaking with
respect to this Note in the case of its loss, theft or
destruction).  Accrued and unpaid Interest on any Conversion Amount
being converted up to and including the Conversion Date shall be payable to the
record holder of this Note on the Share Delivery Date (as defined below) as Cash
Interest.  On or before the first Business Day following the date of
receipt of a Conversion Notice, the Company shall transmit by facsimile or
electronic mail a confirmation (the “Conversion Confirmation”) of
receipt of such Conversion Notice to the Holder and the Company’s Transfer
Agent.  Any Conversion Confirmation delivered by the Company shall
confirm that any accrued and unpaid Interest on such Conversion Amount up to and
including the Conversion Date shall be paid on the Share Delivery Date as Cash
Interest.  On or before the third Business Day following the date of
receipt of a Conversion Notice (the “Share Delivery Date”), the Company shall pay
to the Holder in cash an amount equal to the accrued and unpaid Interest on the
Conversion Amount up to and including the Conversion Date.  If this
Note is physically surrendered for conversion as required by Section 4(c)(iii) and the
outstanding Principal of this Note is greater than the Principal portion of the
Conversion Amount being converted, then the Company shall as soon as practicable
and in no event later than three Business Days after receipt of this Note and at
its own expense, issue and deliver to the holder a new Note (in accordance with
Section 15(d))
representing the outstanding Principal not converted.  The Person or
Persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on the Conversion Date.

     

    
      
        
           


        

        
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    (ii)           Company’s Failure to Timely
Convert.  If the Company fails to deliver the required number
of shares of Common Stock in certificated form to which the Holder is entitled
upon conversion of any Conversion Amount on or prior to the date which is three
Trading Days after the Conversion Date other than pursuant to limitations in
Section 4(c)
hereof (a “Conversion
Failure”), and if after the Conversion Date and prior to the receipt of
such shares of Common Stock in certificated form, the Holder purchases in a
bona fide arm’s length
transaction for fair market value (in an open market transaction or otherwise)
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the
shares of Common Stock issuable upon such conversion that the Holder anticipated
receiving upon such conversion (a “Buy-In”), then the Company
shall pay in cash to the Holder the amount by which (x) the Holder’s total
purchase price (including brokerage commissions, if any) for the shares of
Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the
number of shares of Common Stock that the Company was required to deliver to the
Holder in connection with the Conversion Amount at issue by (B) the Conversion
Price.  The Holder shall provide the Company written notice indicating
the amounts payable to the Holder in respect of the Buy-In.

     

    (iii)           Registration;
Book-Entry.  The Company shall maintain a register (the “Register”) for the recordation
of the names and addresses of the holders of each Note and the principal amount
of the Notes held by such holders (the “Registered
Notes”).  The entries in the Register shall be conclusive and
binding for all purposes absent manifest error.  The Company and the
holders of the Notes shall treat each Person whose name is recorded in the
Register as the owner of a Note for all purposes, including, without limitation,
the right to receive payments of principal and interest hereunder,
notwithstanding notice to the contrary.  A Registered Note may be
assigned or sold in whole or in part only by registration of such assignment or
sale on the Register.  Upon its receipt of a request to assign or sell
all or part of any Registered Note by a Holder, the Company shall record the
information contained therein in the Register and issue one or more new
Registered Notes in the same aggregate principal amount as the principal amount
of the surrendered Registered Note to the designated assignee or transferee
pursuant to Section 15.  Notwithstanding
anything to the contrary set forth herein, upon conversion of any portion of
this Note in accordance with the terms hereof, the Holder shall not be required
to physically surrender this Note to the Company unless (A) the full Principal
amount represented by this Note is being converted or (B) the Holder has
provided the Company with prior written notice (which notice may be included in
a Conversion Notice) requesting reissuance of this Note upon physical surrender
of this Note.  The Holder and the Company shall maintain records
showing the Principal and Interest converted and the dates of such conversions
or shall use such other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this Note upon
conversion.

     

    5.            
RIGHTS UPON EVENT OF
DEFAULT.

     

    (a)           Event of
Default.  Each of the following events shall constitute an
“Event of
Default”:

     

    
      
        
           


        

        
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    (i)           the
failure of the Company to file the Registration Statement (as defined in the
Registration Rights Agreement) on or prior to the Filing Date;

     

    (ii)         the
suspension from trading or failure of the Common Stock to be listed on an the
Trading Market for a period of five consecutive Trading Days or for more than an
aggregate of ten Trading Days in any 365-day period;

     

    (iii)         the
Company’s (A) failure to cure a Conversion Failure by delivery of the required
number of shares of Common Stock within ten Business Days after the applicable
Conversion Date or (B) notice, written or oral, to any holder of the Notes,
including by way of public announcement or through any of its agents, at any
time, of its intention not to comply with a request for conversion of any Notes
into shares of Common Stock that is tendered in accordance with the provisions
of the Notes, other than pursuant to Section 4(c)(ii);

     

    (iv)        the
Company’s failure to pay to the Holder any amount of Principal, Redemption
Price, Interest or other amounts when and as due under this Note or any other
Transaction Document (as defined in the Securities Purchase Agreement) or any
other agreement, document, certificate or other instrument delivered in
connection with the transactions contemplated hereby and thereby to which the
Holder is a party, except, in the case of a failure to pay Interest and other
amounts when and as due, in which case only if such failure continues for a
period of at least five Business Days;

     

    (v)         any
default under, redemption of or acceleration prior to maturity of any
Indebtedness of the Company or any of its Subsidiaries which Indebtedness,
individually or in the aggregate, exceeds $250,000, other than with respect to
any Other Notes;

     

    (vi)        any
failure to timely pay, when due, trade payables of the Company or any of its
Subsidiaries which trade payables, individually or in the aggregate, exceeds
$250,000;

     

    (vii)       the
Company or any of its Subsidiaries, pursuant to or within the meaning of Title
11, U.S. Code, or any similar Federal, foreign or state law for the relief of
debtors (collectively, “Bankruptcy Law”), (A)
commences a voluntary case, (B) consents to the entry of an order for relief
against it in an involuntary case, (C) consents to the appointment of a
receiver, trustee, assignee, liquidator or similar official (a “Custodian”), (D) makes a
general assignment for the benefit of its creditors or (E) admits in writing
that it is generally unable to pay its debts as they become due;

     

    (viii)      a
court of competent jurisdiction enters an order or decree under any Bankruptcy
Law that (A) is for relief against the Company or any of its Subsidiaries in an
involuntary case, (B) appoints a Custodian of the Company or any of its
Subsidiaries for all or substantially all of its property or (C) orders the
liquidation of the Company or any of its Subsidiaries and, in each case, such
order or decree is not dismissed or stayed within 30 days of such
entry;

     

    (ix)        
a final judgment or judgments for the payment of money aggregating in excess of
$250,000 are rendered against the Company or any of its Subsidiaries and which
judgments are not, within 60 days after the entry thereof, bonded, discharged or
stayed pending appeal, or are not discharged within 60 days after the expiration
of such stay; provided,
however, that any judgment which is covered by insurance or an indemnity
from a credit worthy party shall not be included in calculating the $250,000
amount set forth above so long as the Company provides the Holder a written
statement from such insurer or indemnity provider (which written statement shall
be reasonably satisfactory to the Holder) to the effect that such judgment is
covered by insurance or an indemnity and the Company will receive the proceeds
of such insurance or indemnity within 30 days of the issuance of such
judgment;

     

    
      
        
           


        

        
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    (x)          there
is a material breach of a representation, warranty, covenant or other term or
condition of the Company under any Transaction Document, except, in the case of
a breach of a covenant or other term or condition which is curable, only if such
breach continues for a period of at least ten consecutive Business Days;
or

     

    (xi)         the
SEC commences a formal investigation or enforcement action of the Company and/or
its Subsidiaries, or a formal investigation or enforcement action of any of the
then current officers or directors of the Company that is related to the
Company, its Subsidiaries and/or the Common Stock or enters a consent or other
order against the Company and/or its Subsidiaries or any of the then current
officers or directors of the Company that is related to the Company, its
Subsidiaries and/or the Common Stock.

     

    (b)           Redemption
Right.  Upon the occurrence of an Event of Default, the Company
shall within one Business Day deliver written notice thereof via facsimile and
overnight courier (an “Event of
Default Notice”) to the Holder.  At any time after the earlier
of the Holder’s receipt of an Event of Default Notice and the Holder becoming
aware of an Event of Default, the Holder may require the Company to redeem all
or any portion of this Note by delivering written notice thereof (the “Event of Default Redemption
Notice”) to the Company, which Event of Default Redemption Notice shall
indicate the portion of this Note the Holder is electing to redeem and, in the
case the Holder has not received an Event of Default Notice, the Event of
Default of which the Holder has become aware.  Each portion of this
Note subject to redemption by the Company pursuant to this Section 5(b)
shall be redeemed by the Company at a price equal to the greater of (i) the sum
of the Conversion Amount to be redeemed together with accrued and unpaid
Interest with respect to such Conversion Amount and (ii) the product of (A) the
Conversion Rate with respect to such sum of the Conversion Amount together with
accrued and unpaid Interest with respect to such Conversion Amount in effect at
such time as the Holder delivers an Event of Default Redemption Notice and (B)
the greatest of (x) the Closing Bid Price of the Common Stock on the date
immediately preceding such Event of Default, (y) the Closing Bid Price of the
Common Stock on the date immediately after such Event of Default and (z) the
Closing Bid Price of the Common Stock on the date the Holder delivers the Event
of Default Redemption Notice (the “Event of Default Redemption
Price”).  Redemptions required by this Section 5(b)
shall be made in accordance with the provisions of Section 10.  To
the extent redemptions required by this Section 5(b) are
deemed or determined by a court of competent jurisdiction to be prepayments of
the Note by the Company, such redemptions shall be deemed to be voluntary
prepayments.

     

    6.            
RIGHTS UPON
FUNDAMENTAL TRANSACTION AND CHANGE OF CONTROL.

     

    
      
        
           


        

        
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    (a)           Assumption.  The
Company shall not enter into or be party to a Fundamental Transaction unless
(i)  the Successor Entity assumes in writing all of the obligations of the
Company under this Note and the other Transaction Documents in accordance with
the provisions of this Section 6(a) pursuant to
written agreements in form and substance reasonably satisfactory to the Required
Holders and approved by the Required Holders prior to such Fundamental
Transaction, including agreements to deliver to each holder of Notes in exchange
for such Notes a security of the Successor Entity evidenced by a written
instrument substantially similar in form and substance to the Notes, including,
without limitation, having a principal amount and interest rate equal to the
principal amounts and the interest rates of the Notes then outstanding held by
such holder, having similar conversion rights and having similar ranking to the
Notes, and satisfactory to the Required Holders and (ii) the Successor
Entity (including its Parent Entity) is a publicly traded corporation whose
common stock is quoted on or listed for trading on an Eligible Market (a “Public Successor
Entity”).  Upon the occurrence of any Fundamental Transaction,
the Successor Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of this Note
referring to the “Company” shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Note with the same effect as if such
Successor Entity had been named as the Company herein.  Upon
consummation of the Fundamental Transaction, the Successor Entity shall deliver
to the Holder confirmation that there shall be issued upon conversion or
redemption of this Note at any time after the consummation of the Fundamental
Transaction, in lieu of the shares of the Company’s Common Stock (or other
securities, cash, assets or other property) issuable upon the conversion or
redemption of the Notes prior to such Fundamental Transaction, such shares of
the publicly traded common stock (or their equivalent) of the Successor Entity
(including its Parent Entity), as adjusted in accordance with the provisions of
this Note.  The provisions of this Section shall apply similarly and
equally to successive Fundamental Transactions and shall be applied without
regard to any limitations on the conversion or redemption of this
Note.

     

    (b)           Occurrence.  Upon
the occurrence of a Fundamental Transaction, and any subsequent conversion of
this Note, the Holder shall have the right to receive, for the Conversion Amount
that would have been issuable upon such conversion immediately prior to the
occurrence of such Fundamental Transaction, at the option of the Holder, (a)
upon conversion of this Note, the number of shares of Common Stock of the
successor or acquiring corporation or of the Company, if it is the surviving
corporation, and any additional consideration (the “Alternate Consideration”)
receivable upon or as a result of such reorganization, reclassification, merger,
consolidation or disposition of assets by a Holder of the number of shares of
Common Stock for which this Note is convertible immediately prior to such event
or (b) if the Company is acquired in an all cash transaction, cash equal to the
value of this Note as determined in accordance with the Black-Scholes option
pricing formula.  For purposes of any such conversion, the
determination of the Conversion Price shall be appropriately adjusted to apply
to such Alternate Consideration based on the amount of Alternate Consideration
issuable in respect of one share of Common Stock in such Fundamental
Transaction, and the Company shall apportion the Conversion Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received
in a Fundamental Transaction, then the Holder shall be given the same choice as
to the Alternate Consideration it receives upon any conversion of this Note
following such Fundamental Transaction. To the extent necessary to effectuate
the foregoing provisions, any successor to the Company or surviving entity in
such Fundamental Transaction shall issue to the Holder a new note consistent
with the foregoing provisions and evidencing the Holder’s right to convert such
note into Alternate Consideration. The terms of any agreement pursuant to which
a Fundamental Transaction is effected shall include terms requiring any such
successor or surviving entity to comply with the provisions of this Section 6 and
ensuring that this Note (or any such replacement security) will be similarly
adjusted upon any subsequent transaction analogous to a Fundamental
Transaction.

     

    
      
         


      

      
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    (c)           
Redemption
Right.  Not later than 30 days prior to the consummation of a
Change of Control, but not prior to the public announcement of such Change of
Control, the Company shall deliver written notice thereof via facsimile and
overnight courier to the Holder (a “Change of Control Notice”).  At any
time during the period beginning after the Holder’s receipt of a Change of
Control Notice and ending 20 Trading Days after the date of the consummation of
such Change of Control, the Holder may require the Company to redeem all or any
portion of this Note by delivering written notice thereof (“Change of Control Redemption
Notice”) to the Company, which Change of Control Redemption Notice shall
indicate the Conversion Amount the Holder is electing to redeem.  The
portion of this Note subject to redemption pursuant to this Section 6 shall
be redeemed by the Company in cash at a price equal to the greater of (i) the
sum of (A) the Conversion Amount being redeemed and (B) the amount of any
accrued but unpaid Interest on such Conversion Amount being redeemed through the
date of such redemption payment and (ii) the sum of (A) the product of (x) the
Conversion Amount being redeemed multiplied by (y) the quotient determined by
dividing (I) the aggregate cash consideration and the aggregate cash value of
any non-cash consideration per Common Share to be paid to the holders of the
Common Shares upon consummation of the Change of Control (any such non-cash
consideration consisting of marketable securities to be valued at the higher of
the Closing Bid Price of such securities as of the Trading Day immediately prior
to, the Closing Bid Price as of the Trading Day immediately following the public
announcement of such proposed Change of Control and the Closing Bid Price of the
Common Stock immediately prior to the public announcement of such proposed
Change of Control) by (II) the Conversion Price plus (B) the amount of any
accrued but unpaid Interest on such Conversion Amount being redeemed through the
date of such redemption payment (the “Change of Control Redemption
Price”).  Redemptions required by this Section 6 shall
be made in accordance with the provisions of Section 10 and
shall have priority to payments to stockholders in connection with a Change of
Control.  To the extent redemptions required by this Section 5(b) are
deemed or determined by a court of competent jurisdiction to be prepayments of
the Note by the Company, such redemptions shall be deemed to be voluntary
prepayments.  Notwithstanding anything to the contrary in this Section 6, until
the Change of Control Redemption Price (together with any interest thereon) is
paid in full, the Conversion Amount submitted for redemption under this Section 6(c)
(together with any interest thereon) may be converted, in whole or in part, by
the Holder into Common Stock pursuant to Section 4.

     

    7.            
CERTAIN
ADJUSTMENTS.

     

    (a)           Stock Dividends and
Splits.  If the Company, at any time on or after the
Subscription Date: (i) pays a stock dividend or otherwise makes a distribution
or distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company
pursuant to this Note), (ii) subdivides outstanding shares of Common Stock into
a larger number of shares, (iii) combines (including by way of reverse stock
split) outstanding shares of Common Stock into a smaller number of shares, or
(iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Conversion Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event and the number of shares issuable
upon conversion of this Note shall be proportionately adjusted.  Any
adjustment made pursuant to this Section 7(a)
shall become effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution and shall
become effective immediately after the effective date in the case of a
subdivision, combination or re-classification.

     

    
      
        
           


        

        
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    (b)           Other
Events.  If any event occurs of the type contemplated by the
provisions of this Section 8 but
not expressly provided for by such provisions (including, without limitation,
the granting of stock appreciation rights, phantom stock rights or other rights
with equity features), then the Company’s Board of Directors will make an
appropriate adjustment in the Conversion Price so as to protect the rights of
the Holder under this Note; provided, however, that no
such adjustment will increase the Conversion Price as otherwise determined
pursuant to this Section 7.

     

    8.             NONCIRCUMVENTION.  The
Company hereby covenants and agrees that the Company will not, by amendment of
its Certificate of Incorporation, Bylaws or through any reorganization, transfer
of assets, consolidation, merger, scheme of arrangement, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Note, and will at all
times in good faith carry out all of the provisions of this Note and take all
action as may be required to protect the rights of the Holder of this
Note.

     

    9.           
 RESERVATION OF
AUTHORIZED SHARES.

     

    (a)           Reservation.  Commencing
on or before the Issuance Date, the Company shall take all action necessary to
at all times have authorized, and reserved for the purpose of issuance under
each of the Notes, no less than, 100% of the number of shares of Common Stock
issuable (i) as Conversion Shares upon conversion of the Notes and (ii) as
Warrant Shares upon exercise of the Warrants then outstanding (without taking
into account any limitations on the conversion of the Notes or exercise of the
Warrants set forth in the Notes and Warrants, respectively).

     

    (b)           Insufficient Authorized
Shares.  If at any time while any of the Notes remains
outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion of the Notes at least a number of shares of Common
Stock equal to the Required Reserve Amount (an “Authorized Share Failure”),
then the Company shall immediately take all action necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for the Notes then
outstanding.  Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an
Authorized Share Failure, but in no event later than 60 days after the
occurrence of such Authorized Share Failure, the Company shall hold a meeting of
its stockholders for the approval of an increase in the number of authorized
shares of Common Stock.  In connection with such meeting, the Company
shall provide each stockholder with a proxy statement and shall use its best
efforts to solicit its stockholders’ approval of such increase in authorized
shares of Common Stock and to cause its board of directors to recommend to the
stockholders that they approve such proposal.

     

    
      
         


      

      
        9

        
          

        

      

      
         


      

    

     

    10.           HOLDER’S
REDEMPTIONS.

     

    (a)           Mechanics.  The
Company shall deliver the applicable Redemption Price to the Holder within five
Business Days after the Company’s receipt of the Holder’s Event of Default
Redemption Notice.  If the Holder has submitted a Change of Control
Redemption Notice in accordance with Section 6(c),
the Company shall deliver the applicable Redemption Price to the Holder
concurrently with the consummation of such Change of Control if such notice is
received at least one Business Day prior to the consummation of such Change of
Control and within five Business Days after the Company’s receipt of such notice
otherwise.  In the event of a redemption of less than all of the
Conversion Amount of this Note, the Company shall promptly cause to be issued
and delivered to the Holder a new Note (in accordance with Section 15(d))
representing the outstanding Principal which has not been
redeemed.  In the event that the Company does not pay the applicable
Redemption Price to the Holder within the time period required, at any time
thereafter and until the Company pays such unpaid Redemption Price in full, the
Holder shall have the option, in lieu of redemption, to require the Company to
promptly return to the Holder all or any portion of this Note representing the
Conversion Amount that was submitted for redemption and for which the applicable
Redemption Price has not been paid.  Upon the Company’s receipt of
such notice, (x) the applicable Redemption Notice shall be null and void with
respect to such Conversion Amount, and (y) the Company shall immediately return
this Note, or issue a new Note (in accordance with Section 15(d))
to the Holder representing the sum of such Conversion Amount to be redeemed
together with accrued and unpaid Interest with respect to such Conversion
Amount.

     

    (b)           Redemption by Other
Holders.  Upon the Company’s receipt of notice from any of the
holders of the Other Notes for redemption or repayment as a result of an event
or occurrence substantially similar to the events or occurrences described in
Section 5(b) or
Section 6(b)
(each, an “Other Redemption
Notice”), the Company shall immediately, but no later than one Business
Day of its receipt thereof, forward to the Holder by facsimile a copy of such
notice.  If the Company receives a Redemption Notice and one or more
Other Redemption Notices, during the seven Business Day period beginning on and
including the date which is three Business Days prior to the Company’s receipt
of the Holder’s Redemption Notice and ending on and including the date which is
three Business Days after the Company’s receipt of the Holder’s Redemption
Notice and the Company is unable to redeem all principal, interest and other
amounts designated in such Redemption Notice and such Other Redemption Notices
received during such seven Business Day period, then the Company shall redeem a
pro rata amount from
each holder of the Notes (including the Holder) based on the principal amount of
the Notes submitted for redemption pursuant to such Redemption Notice and such
Other Redemption Notices received by the Company during such seven Business Day
period.

     

    
      
         


      

      
        10

        
          

        

      

      
         


      

    

     

    11.           VOTING
RIGHTS.  The Holder shall have no voting rights as the holder
of this Note, except as required by law, including, but not limited to, the
Delaware General Corporation Law, and as expressly provided in this
Note.

     

    12.           COVENANTS.  So
long as this Note is outstanding:

     

    (a)           Rank.  All
payments due under this Note shall rank pari passu with all Other
Notes and, without the written consent of the Required Holders, no other
Indebtedness (other than Permitted Indebtedness) of the Company and its
Subsidiaries shall be senior to the Indebtedness of the Company and its
Subsidiaries evidenced by this Note and the Other Notes.

     

    (b)           Use of Proceeds. The Company will use the
proceeds from the sale of the Notes substantially as set forth on Schedule 5(d)
to the Securities Purchase Agreement.

     

    (c)           HSR
Filing.  If, prior to any proposed issuance of Conversion
Shares to the Holder upon conversion of this Note (including any issuance
pursuant to the last sentence of Section 2), it
is determined by the Company or the Holder that such issuance would require the
filing of a Notification and Report Form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the “HSR Act”), with the U.S.
Federal Trade Commission and the Antitrust Division of the U.S. Department of
Justice, then the Company shall (i) cooperate fully with the Holder and its
Affiliates with respect to completing such filing as soon as practicable, (ii)
respond as promptly as practicable to any inquiries received from the U.S.
Federal Trade Commission and the Antitrust Division of the U.S. Department of
Justice for additional information or documentation and to all inquiries and
requests received from any State Attorney General or other governmental
authority in connection with antitrust matters, and (iii) not extend any waiting
period under the HSR Act or enter into any other agreement with the U.S. Federal
Trade Commission or the Antitrust Division of the U.S. Department of Justice
with respect to the transaction contemplated by such filing without the prior
written consent of the Holder.  Each of the Company and the Holder
shall be responsible for, and shall pay the amount of, any filing fee required
to be paid by it under the HSR Act.

     

    (d)           Incurrence of
Indebtedness.  So long as this Note or any Other Note is
outstanding, the Company shall not, and the Company shall not permit any of its
Subsidiaries to, directly or indirectly, incur or guarantee, assume or suffer to
exist any Indebtedness, other than the Indebtedness evidenced by this Note and
the Other Notes or Permitted Indebtedness.

     

    (e)           Restriction on Redemption
and Cash Dividends.  So long as this Note or any Other Note is
outstanding, the Company shall not, directly or indirectly, redeem, or declare
or pay any cash dividend or cash distribution on, the Common Stock of the
Company without the prior express written consent of the Required
Holders.

     

    (f)           Additional Notes; Variable
Securities; Dilutive Issuances.  For long as any Notes or
Warrants remain outstanding, the Company shall not, in any manner, issue or sell
any rights, warrants or options to subscribe for or purchase Common Stock or
directly or indirectly convertible into or exchangeable or exercisable for
Common Stock at a price which is less than the then market price of the Common
Stock, including by way of one or more reset(s) to any fixed price, other than
in connection with an underwritten public offering.  For purposes of
clarification, this section does not prohibit the issuance of securities with
customary “weighted average” or “full ratchet” anti-dilution adjustments that
adjust the fixed conversion or exercise price of securities sold by the Company
in the future.

     

    
      
         


      

      
        11

        
          

        

      

      
         


      

    

     

    13.           VOTE TO ISSUE, OR CHANGE THE
TERMS OF, NOTES.  The affirmative vote at a meeting duly called
for such purpose or the written consent without a meeting of the Required
Holders shall be required for any change or amendment to this Note or the Other
Notes.  In no event shall any amendment, modification or waiver be
made to this Note which would adversely effect the Holder without the written
consent of the Holder.

     

    14.           TRANSFER.  This
Note and any shares of Common Stock issued upon conversion of this Note may be
offered, sold, assigned or transferred by the Holder without the consent of the
Company, subject only to the provisions of Section 7 of the Securities
Purchase Agreement.

     

    15.           REISSUANCE OF THIS
NOTE.

     

    (a)           Transfer.  If
this Note is to be transferred, the Holder shall surrender this Note to the
Company, whereupon the Company will forthwith issue and deliver upon the order
of the Holder a new Note (in accordance with Section 15(d)),
registered as the Holder may request, representing the outstanding Principal
being transferred by the Holder and, if less then the entire outstanding
Principal is being transferred, a new Note (in accordance with Section 15(d))
to the Holder representing the outstanding Principal not being
transferred.  The Holder and any assignee, by acceptance of this Note,
acknowledge and agree that, by reason of the provisions of Section 3(b)(iii) following
conversion or redemption of any portion of this Note, the outstanding Principal
represented by this Note may be less than the Principal stated on the face of
this Note.

     

    (b)           Lost, Stolen or Mutilated
Note.  Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Note, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in accordance with
Section 15(d))
representing the outstanding Principal.

     

    (c)           Note Exchangeable for
Different Denominations.  This Note is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new
Note or Notes (in accordance with Section 15(d)
and in principal amounts of at least $100,000) representing in the aggregate the
outstanding Principal of this Note, and each such new Note will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of such surrender.

     

    
      
         


      

      
        12

        
          

        

      

      
         


      

    

     

    (d)           Issuance of New
Notes.  Whenever the Company is required to issue a new Note
pursuant to the terms of this Note, such new Note (i) shall be of like tenor
with this Note, (ii) shall represent, as indicated on the face of such new Note,
the Principal remaining outstanding (or in the case of a new Note being issued
pursuant to Section 15(a) or
Section 15(c),
the Principal designated by the Holder which, when added to the principal
represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior
to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note, which is the same as the Issuance Date of this
Note, (iv) shall have the same rights and conditions as this Note, and (v) shall
represent accrued and unpaid Interest on the Principal and Interest of this
Note, from the Issuance Date.

     

    16.           REMEDIES, CHARACTERIZATIONS,
OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF.  The
remedies provided in this Note shall be cumulative and in addition to all other
remedies available under this Note and any of the other Transaction Documents at
law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the Holder’s right to pursue
actual and consequential damages for any failure by the Company to comply with
the terms of this Note.  Amounts set forth or provided for herein with
respect to payments, conversion and the like (and the computation thereof) shall
be the amounts to be received by the Holder and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof).  The Company acknowledges that a breach by it of
its obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate.  The Company
therefore agrees that, in the event of any such breach or threatened breach, the
Holder shall be entitled, in addition to all other available remedies, to an
injunction restraining any breach, without the necessity of showing economic
loss and without any bond or other security being required.

     

    17.           PAYMENT OF COLLECTION,
ENFORCEMENT AND OTHER COSTS.  If (a) this Note is placed in the
hands of an attorney for collection or enforcement or is collected or enforced
through any legal proceeding or the Holder otherwise takes action to collect
amounts due under this Note or to enforce the provisions of this Note or (b)
there occurs any bankruptcy, reorganization, receivership of the Company or
other proceedings affecting Company creditors’ rights and involving a claim
under this Note, then the Company shall pay the costs incurred by the Holder for
such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, but not limited to,
attorneys’ fees and disbursements.

     

    18.           CONSTRUCTION;
HEADINGS.  This Note shall be deemed to be jointly drafted by
the Company and all the Holders of Notes and shall not be construed against any
person as the drafter hereof.  The headings of this Note are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Note.

     

    19.           FAILURE OR INDULGENCE NOT
WAIVER.  No failure or delay on the part of the Holder in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.

     

    
      
         


      

      
        13

        
          

        

      

      
         


      

    

     

    20.           NOTICES;
PAYMENTS.

     

    (a)           Notices.  Whenever
notice is required to be given under this Note, unless otherwise provided
herein, such notice shall be given in accordance with Section 11(c) of the
Securities Purchase Agreement.  The Company shall provide the Holder
with prompt written notice of all actions taken pursuant to this Note, including
in reasonable detail a description of such action and the reason
therefore.

     

    (b)           Payments.  Whenever
any payment of cash is to be made by the Company to any Person pursuant to this
Note, such payment shall be made in lawful money of the United States of America
by a check drawn on the account of the Company and sent via overnight courier
service to such Person at such address as previously provided to the Company in
writing (which address, in the case of each of the Holders of Notes, shall
initially be as set forth on the Schedule of Buyers attached to the Securities
Purchase Agreement); provided,
however, that the Holder may elect to receive a payment of cash via wire
transfer of immediately available funds by providing the Company with prior
written notice setting out such request and the Holder’s wire transfer
instructions.  Whenever any amount expressed to be due by the terms of
this Note is due on any day which is not a Business Day, the same shall instead
be due on the next succeeding day which is a Business Day and, in the case of
any Interest Date which is not the date on which this Note is paid in full, the
extension of the due date thereof shall not be taken into account for purposes
of determining the amount of Interest due on such date.  

     

    21.           CANCELLATION.  After
all Principal, accrued Interest and other amounts at any time owed on this Note
have been paid in full, this Note shall automatically be deemed canceled, shall
be surrendered to the Company for cancellation and shall not be
reissued.

     

    22.           WAIVER OF
NOTICE.  To the extent permitted by law, the Company hereby
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note
and the Securities Purchase Agreement.

     

    23.           GOVERNING
LAW.  All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware, without regard to the principles of conflicts of law thereof, and the
forum, venue, jury waiver and other provisions of Section 11(h) of the
Securities Purchase Agreement are hereby incorporated herein and made a part
hereof.

     

    24.           CERTAIN
DEFINITIONS.  For purposes of this Note, the following terms
shall have the following meanings:

     

    (a)           “Bloomberg” means Bloomberg
Financial Markets.

     

    (b)           “Business Day” means any day
other than Saturday, Sunday or other day on which commercial banks in The City
of New York are authorized or required by law to remain closed.

     

    
      
         


      

      
        14

        
          

        

      

      
         


      

    

     

    (c)           “Change of Control” means any
Fundamental Transaction other than (i) any reorganization, recapitalization or
reclassification of the Common Stock in which holders of the Company’s voting
power immediately prior to such reorganization, recapitalization or
reclassification continue after such reorganization, recapitalization or
reclassification to hold publicly traded securities and, directly or indirectly,
the voting power of the surviving entity or entities necessary to elect a
majority of the members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities, or (ii) pursuant to a migratory
merger effected solely for the purpose of changing the jurisdiction of
incorporation of the Company.

     

    (d)           “Closing Bid Price” means the
closing consolidated bid price of the Common Stock as reported by NASDAQ’s
Market Intelligence Desk as of 4:00 p.m. New York City time on the applicable
payment date, or if the foregoing do not apply, the last closing bid price or
last trade price, respectively, of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg, or,
if no closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the “pink
sheets” by Pink Sheets LLC (formerly the National Quotation Bureau,
Inc.).  If the Closing Bid Price cannot be calculated for a security
on a particular date on any of the foregoing bases, the Closing Bid Price of
such security on such date shall be the fair market value as mutually determined
by the Company and the Holder.  All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during the applicable calculation period.

     

    (e)           “Closing Date” has the meaning
ascribed to such term in the Securities Purchase Agreement which corresponds to
the date this Note and the Other Notes were initially issued pursuant to the
terms of the Securities Purchase Agreement.

     

    (f)           “Effectiveness Date” has the
meaning ascribed to such term in the Registration Rights Agreement.

     

    (g)           “Eligible Market” means the
Trading Market, The New York Stock Exchange, Inc., the American Stock Exchange,
or The Nasdaq Capital Market, or any market that is a successor to any of the
foregoing.

     

    (h)           “Fundamental Transaction” means
(i) any merger or consolidation of the Company with or into another Person, (ii)
any sale of all or substantially all of the Company’s assets in one or a series
of related transactions, (iii) any tender offer or exchange offer (whether by
the Company or another Person) completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities,
cash or property, or (iv) any reclassification of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is effectively
converted into or exchanged for other securities, cash or property.

     

    (i)           “Indebtedness” of any Person
means, without duplication (i) (a) obligations created, issued or incurred
for borrowed money (whether by loan, the issuance and sale of debt securities or
the sale of property to another Person subject to an understanding or agreement,
contingent or otherwise, to repurchase such property from such Person),
(b) indebtedness of others secured by a lien on the property of the Company
or any of its Subsidiaries, whether or not the respective indebtedness so
secured has been assumed by the Company or any of its Subsidiaries,
(c) obligations (contingent or otherwise) in respect of letters of credit
or similar instruments issued or accepted by banks and other financial
institutions, (d) obligations under repurchase agreements, sale/buy-back
agreements or like arrangements, (e) indebtedness of others guaranteed by
the Company or any of its Subsidiaries and (f) any other obligations that may be
considered debt.

     

    
      
         


      

      
        15

        
          

        

      

      
         


      

    

     

    (j)           “Interest Rate” means 9.72% per
annum.  The Interest Rate shall be subject to adjustment as set forth
in Section 3
hereof.

     

    (k)           “Parent Entity” of a Person
means an entity that, directly or indirectly, controls the applicable Person and
whose common stock or equivalent equity security is quoted or listed on an
Eligible Market, or, if there is more than one such Person or Parent Entity, the
Person or Parent Entity with the largest public market capitalization as of the
date of consummation of the Fundamental Transaction.

     

    (l)           “Permitted Indebtedness” means
(i) Indebtedness set forth on Schedule 24(1) attached
hereto, and any amendments, modifications or refinancing of such Indebtedness
and (ii) any other Indebtedness, approved by the Board of Directors, in an
aggregate amount of up to $2 million.

     

    (m)           “Person” means an individual, a
limited liability company, a partnership, a joint venture, a corporation, a
trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

     

    (n)           “Redemption Notices” means,
collectively, the Event of Default Redemption Notice and the Change of Control
Redemption Notice.

     

    (o)           “Redemption Price” means the
Event of Default Redemption Price or the Change of Control Redemption Price, as
applicable.

     

    (p)           “Registration Rights Agreement”
means that certain Registration Rights Agreement dated as of the Subscription
Date by and among the Company and the initial holders of the Notes.

     

    (q)           “Required Holders” means the
holders of Notes representing at least 50% of the aggregate principal amount of
the Notes then outstanding.

     

    (r)           “SEC” means the United States
Securities and Exchange Commission.

     

    (s)           “Securities Purchase Agreement”
means that certain securities purchase agreement dated as of the Subscription
Date by and among the Company and the initial holders of the Notes pursuant to
which the Company issued the Notes and Warrants.

     

    (t)           “Subscription Date” means
February 25, 2009.

     

    
      
         


      

      
        16

        
          

        

      

      
         


      

    

     

    (u)           “Successor Entity” means the
Person, which may be the Company, formed by, resulting from or surviving any
Fundamental Transaction or the Person with which such Fundamental Transaction
shall have been made, provided that if such Person is not a publicly traded
entity whose common stock or equivalent equity security is quoted or listed for
trading on an Eligible Market, Successor Entity shall mean such Person’s Parent
Entity.

     

    (v)           “Trading Day” means any day on
which the Common Stock is traded on the Trading Market, or, if the Trading
Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is
then traded; provided,
however, that “Trading Day” shall not include any day on which the Common
Stock is scheduled to trade on such exchange or market for less than 4.5 hours
or any day that the Common Stock is suspended from trading during the final hour
of trading on such exchange or market (or if such exchange or market does not
designate in advance the closing time of trading on such exchange or market,
then during the hour ending at 4:00 p.m., New York City time).

     

    (w)           “Trading Market” means the Nasdaq
Global Market.

     

    (x)           “Warrants” has the meaning
ascribed to such term in the Securities Purchase Agreement, and shall include
all warrants issued in exchange therefor or replacement thereof.

     

    25.           DISCLOSURE.  Upon
receipt or delivery by the Company of any notice in accordance with the terms of
this Note, unless the Company has in good faith determined that the matters
relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries, the Company shall within one
Business Day after any such receipt or delivery publicly disclose such material,
nonpublic information on a Current Report on Form 8-K or
otherwise.  In the event that the Company believes that a notice
contains material, nonpublic information relating to the Company or its
Subsidiaries, the Company so shall indicate to such Holder contemporaneously
with delivery of such notice, and in the absence of any such indication, the
Holder shall be allowed to presume that all matters relating to such notice do
not constitute material, nonpublic information relating to the Company or its
Subsidiaries.

     

    [Signature
Page Follows]

     

    
      
         


      

      
        17

        
          

        

      

      
         


      

    


    IN
WITNESS WHEREOF, the Company has caused this Note to be duly executed as of the
Issuance Date set out above.

     

    


    
      
        
          
            	 
      	
                    Clinical
      Data, Inc.

                  
	 	 
	 
      	
                    By:

                  	 
	 
      	 
      	
                    Caesar
      J. Belbel

                  
	 
      	 
      	
                    Executive
      Vice President, Chief Legal Officer and
  Secretary

                  


          

        

      

    

    


     

    Signature
Page to Convertible Note


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    EXHIBIT
I

    


    CLINICAL
DATA, INC.

    CONVERSION NOTICE

    


    Reference
is made to the Clinical Data Convertible Note (the “Note”) issued to the
undersigned by Clinical Data, Inc. (the “Company”).  In
accordance with and pursuant to the Note, the undersigned hereby elects to
convert the Conversion Amount (as defined in the Note) of the Note indicated
below into shares of Common Stock par value $0.01 per share (the “Common Stock”) of the Company,
as of the date specified below.

     

    
      
        
          
            	
                    Date
      of Conversion:

                  	 
      


          

        

      

    

    


    
      
        
          
            
              
                
                  	
                          Aggregate
      Conversion Amount to be converted:

                        	 
      


                

              

            

          

        

      

    

    


    
      
        	
                Please
      confirm the following
information:

              


      

    

    


    
      
        
          
            
              	
                      Conversion
      Price:

                    	 
      


            

          

        

      

    

    


    
      
        
          
            
              
                	
                        Number
      of shares of Common Stock to be issued:

                      	 
      


              

            

          

        

      

    

    


    
      	
              Please
      issue the Common Stock into which the Conversion Amount of the Note is
      being converted in the following name and to the following
      address:

            


    

    


    
      
        
          	
                  Issue
      to:

                	 
      
	 
      	 
      
	 
      	 
      


        

      

    

    


    
      
        
          
            	
                    Facsimile
      Number:

                  	 
      


          

        

      

    

    


    
      
        
          	
                  Authorization:

                	 
      


        

      

    

    


    
      
        	
                By:

              	 
      


      

    

    


    
      
        	
                Title:

              	 
      


      

    

    


    
      
        	
                Dated:

              	 
      


      

    

    


    
      
        	
                Account
      Number:

              	 
      


      

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  (if
      electronic book entry transfer)

                                
	 	 
	
                                  Transaction
      Code Number:

                                	 
      
	
                                  (if
      electronic book entry
transfer)

                                


                        

                      

                    

                  

                

              

            

          

        

      

    

    


    
      
        
          
            
              
                
                  	
                          Installment
      Amount to be reduced and amount

                        	
                           

                        
	
                          of
      reduction for each Installment Date:

                        	 
      


                

              

            

          

        

      

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    ACKNOWLEDGMENT

    


    The
Company hereby acknowledges this Conversion Notice and hereby directs
_________________ to issue the above indicated number of shares of Common Stock
in accordance with the Transfer Agent Instructions dated _________ __, 2009
from the Company and acknowledged and agreed to by
___________________.

     

    


    
      
        
          	 
      	CLINICAL
      DATA, INC.
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	
                  By:

                	 
      
	 
      	 
      	
                  Name:

                
	 
      	 
      	
                  Title: