Document:

exv10w4

 

Exhibit 10.4

CLINICAL DATA, INC.

1991 STOCK OPTION PLAN

1. Purpose.

The purpose of this plan (the "Plan") is to secure for Clinical Data, Inc.
(the "Company") and its shareholders the benefits arising from capital stock
ownership by employees and officers of, and consultants or advisors to, the Company and
its parent and subsidiary corporations (excluding directors of the Company) who are
expected to contribute to the Company’s future growth and success. Except where the
context otherwise requires, the term "Company" shall include the parent and all
present and future subsidiaries of the Company as defined in Sections 425(e) and 425(f) of
the Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code").

2. Type of Options and Administration.

(a) Types of Options. Options granted pursuant to the Plan shall be authorized
by action of the Board of Directors of the Company (or a Committee designated by the Board
of Directors) and may be either incentive stock options ("Incentive Stock
Options") meeting the requirements of Section 422A of the Code or non-statutory
options which are not intended to meet the requirements of Section 422A of the Code.

(b) Administration. The Plan will be administered by the Board of Directors of
the Company, whose construction and interpretation of the terms and provisions of the Plan
shall be final and conclusive. The Board of Directors may in its sole discretion grant
options to purchase shares of the Company’s common stock, $.01 par value
("Common Stock"), and issue shares upon exercise of such options as provided in
the Plan. The Board shall have authority, subject to the express provisions of the Plan,
to construe the respective option agreements and the Plan, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and provisions of the
respective option agreements, which need not be identical, and to make all other
determinations in the judgment of the Board of Directors necessary or desirable for the
administration of the Plan. The Board of Directors may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any option agreement in the
manner and to the extent it shall deem expedient to carry the Plan into effect and it
shall be the sole and final judge of such expediency. No director shall be liable for any
action or determination made in good faith. The Board of Directors may, to the full extent
permitted by or consistent with applicable laws or regulations (including, without
limitation, applicable state law and Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act"), or any successor rule ("Rule
16b-3")), delegate any or all of its powers under the Plan to a committee (the
"Committee") appointed by the Board of Directors, and if the Committee is so
appointed all references to the Board of Directors in the Plan shall mean and relate to
such Committee.

(c) Applicability of Rule 16b-3. Those provisions of the Plan which make express
reference to Rule 16b-3 shall apply only to such persons as are required to file reports
under Section 16(a) of the Exchange Act (a "Reporting Person").

3. Eligibility.

(a) General. Options shall be granted to persons who are, at the time of grant,
employees or officers of, or consultants or advisors to, the Company; provided,
that Incentive Stock Options may be granted only to persons who are eligible to receive
such options under Section 422A of the Code. Options shall not be granted to directors of
the Company. A person who has been granted an option may, if he or she is otherwise
eligible, be granted an additional option or options if the Board of Directors shall so
determine.

(b) Grant of Options to Officers. The selection of an officer (as the term
"officer" is defined for purposes of Rule 16b-3) as a participant, the timing of
the option grant, the exercise price of the option and the number of shares for which an
option may be granted to such officer shall be determined either (i) by the Board of
Directors, of which all members shall be "disinterested persons" (as hereinafter
defined), or (ii) by a committee of two or more directors having full authority to act in
the matter, of which all members shall be "disinterested persons." For the
purposes of the Plan, a director shall be deemed to be "disinterested" only if
such person qualifies as a "disinterested person" within the meaning of Rule
16b-3, as such term is interpreted from time to time.

4. Stock Subject to Plan.

Subject to adjustment as provided in Section 14 below, the maximum number of shares of
Common Stock of the Company which may be issued and sold under the Plan is 80,000 shares.
If an option granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject to such option shall again
be available for subsequent option grants under the Plan. If shares issued upon exercise
of an option under the Plan are tendered to the Company in payment of the exercise price
of an option granted under the Plan, such tendered shares shall again be available for
subsequent option grants under the Plan; provided, that in no event shall (i) the total
number of shares issued pursuant to the exercise of Incentive Stock Options under the
Plan, on a cumulative basis, exceed the maximum number of shares authorized for issuance
under the Plan, exclusive of shares made available for issuance pursuant to this sentence
or (ii) the total number of shares issued pursuant to the exercise of options by Reporting
Persons, on a cumulative basis, exceed the maximum number of shares authorized for
issuance under the Plan exclusive of shares made available for issuance pursuant to this
sentence.

5. Forms of Option Agreements.

As a condition to the grant of an option under the Plan, each recipient of an option
shall execute an option agreement in such form not inconsistent with the Plan as may be
approved by the Board of Directors. Such option agreements may differ among recipients.

6. Purchase Price.

(a) General. The purchase price per share of stock deliverable upon the exercise
of an option shall be determined by the Board of Directors, provided, however,
that in the case of an Incentive Stock Option, the exercise price shall not be less than
100% of the fair market value of such stock, as determined by the Board of Directors, at
the time of grant of such option, or less than 110% of such fair market value in the case
of options described in Section 11(b).

(b) Payment of Purchase Price. Options granted under the Plan may provide for
the payment of the exercise price by delivery of cash or a check to the order of the
Company in an amount equal to the exercise price of such options, or, to the extent
provided in the applicable option agreement, (i) by delivery to the Company of shares of
Common Stock of the Company already owned by the optionee and having a fair market value
equal in amount to the exercise price of the options being exercised, (ii) by any other
means which the Board of Directors determines are consistent with the purpose of the Plan
and with applicable laws and regulations (including, without limitation, the provisions of
Rule 16b-3 and Regulation T promulgated by the Federal Reserve Board) or (iii) by any
combination of such methods of payment. The fair market value of any shares of the
Company’s Common Stock or other non-cash consideration which may be delivered upon
exercise of an option shall be determined in such manner as may be prescribed by the Board
of Directors.

7. Option Period.

Each option and all rights thereunder shall expire on such date as shall be set forth
in the applicable option agreement, except that such date, in the case of an Incentive
Stock Option, shall in no case be later than ten years after the date on which the option
is granted.

8. Exercise of Options.

Each option granted under the Plan shall be exercisable either in full or in
installments at such time or times and during such period as shall be set forth in the
agreement evidencing such option, subject to the provisions of the Plan.

9. Nontransferability of Options.

Incentive Stock Options and options granted to Reporting Persons shall not be
assignable or transferable by the person to whom they are granted, either voluntarily or
by operation of law, except by will or the laws of descent and distribution or, in the
case of a non-statutory option granted to a Reporting Person, pursuant to a qualified
domestic relations order (as defined in Section 414(p) of the Code), and, during the life
of the optionee, shall be exercisable only by the optionee.

10. Effect of Termination of Employment or Other Relationship.

The Board of Directors shall determine the period of time, if any, during which an
optionee may exercise an option following (i) the termination of the optionee’s
employment or other relationship with the Company or (ii) the death or disability of the
optionee. Such periods shall be set forth in the agreement evidencing such option.

11. Incentive Stock Options.

Options granted under the Plan which are intended to be Incentive Stock Options shall
be subject to the following additional terms and conditions:

(a) Express Designation. All Incentive Stock Options granted under the Plan
shall, at the time of grant, be specifically designated as such in the option agreement
covering such Incentive Stock Options.

(b) 10% Shareholder. If any employee to whom an Incentive Stock Option is to be
granted under the Plan is, at the time of the grant of such option, the owner of stock
possessing more than 10% of the total combined voting power of all classes of stock of the
Company (after taking into account the attribution of stock ownership rules of Section
425(d) of the Code), then the following special provisions shall be applicable to the
Incentive Stock Option granted to such individual:

  
    (i) The purchase price per share of the Common Stock subject to such Incentive Stock
    Option shall not be less than 110% of the fair market value of one share of Common Stock
    at the time of grant; and

    (ii) The option exercise period shall not exceed five years from the date of grant.

  

(c) Dollar Limitation. For so long as the Code shall so provide, options granted
to any employee under the Plan (and any other incentive stock option plans of the Company)
which are intended to constitute Incentive Stock Options shall not constitute Incentive
Stock Options to the extent that such options, in the aggregate, become exercisable for
the first time in any one calendar year for shares of Common Stock with an aggregate fair
market value (determined as of the respective date or dates of grant) of more than
$100,000.

(d) Termination of Employment, Death or Disability. No Incentive Stock Option
may be exercised unless, at the time of such exercise, the optionee is, and has been
continuously since the date of grant of his or her option, employed by the Company, except
that:

  
    (i) an Incentive Stock Option may be exercised within the period of three months after
    the date the optionee ceases to be an employee of the Company (or within such lesser
    period as may be specified in the applicable option agreement), provided, that the
    agreement with respect to such option may designate a longer exercise period and that the
    exercise after such three-month period shall be treated as the exercise of a non-statutory
    option under the Plan;

    (ii) if the optionee dies while in the employ of the Company, or within three months
    after the optionee ceases to be such an employee, the Incentive Stock Option may be
    exercised by the person to whom it is transferred by will or the laws of descent and
    distribution within the period of one year after the date of death (or within such lesser
    period as may be specified in the applicable option agreement); and

    (iii) if the optionee becomes disabled (within the meaning of Section 22(e)(3) of the
    Code or any successor provision thereto) while in the employ of the Company, the Incentive
    Stock Option may be exercised within the period of one year after the date the optionee
    ceases to be such an employee because of such disability (or within such lesser period as
    may be specified in the applicable option agreement).

  

For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the Income Tax
Regulations (or any successor regulations). Notwithstanding the foregoing provisions, no
Incentive Stock Option may be exercised after its expiration date.

12. Additional Provisions.

(a) Additional Option Provisions. The Board of Directors may, in its sole
discretion, include additional provisions in any option granted under the Plan, including
without limitation restrictions on transfer, repurchase rights, commitments to pay cash
bonuses, to make, arrange for or guaranty loans or to transfer other property to optionees
upon exercise of options, or such other provisions as shall be determined by the Board of
Directors; provided that such additional provisions shall not be
inconsistent with any other term or condition of the Plan.

(b) Repurchase of Option Shares. In addition to such other terms, conditions and
restrictions upon options granted under the Plan as shall be imposed by the Board of
Directors, each option granted under the Plan shall provide that:

  
    (i) If an optionee’s employment or other relationship with the Company is
    terminated for any reason (including without limitation the death or disability of the
    optionee), the Company and any person(s) designated by the Company (hereinafter a
    "Designee") shall have the right to purchase from the optionee or his heirs,
    executors, administrators, legal representatives or assigns, as the case may be, at the
    purchase price equal to the fair market value of said shares as of the effective date of
    such termination determined by taking the average of the "bid" and
    "ask" price of the shares quoted in the Wall Street Journal for the
    thirty trading days immediately preceding the effective date of termination (hereinafter
    the "Fair Value"), the aggregate of (i) all shares purchased by said optionee
    under the Plan at any time or times within three (3) years prior to the effective date of
    such termination, (ii) two thirds (2/3) of all shares purchased by said optionee under the
    Plan at any time or times within four (4) years (but more than three (3) years) prior to
    the effective date of such termination, and (iii) one third (1/3) of all shares purchased
    by said optionee under the Plan at any time or times within five (5) years (but more than
    four (4) years) prior to the effective date of such termination (the respective portions
    of such shares set forth in (i)-(iii) above so acquired within said three-year, four-year
    and five-year periods being hereinafter referred to as "Qualified Shares"). Upon
    any termination of his employment, the optionee shall immediately offer (and in the event
    that said optionee fails or is unable to do so, said optionee or his heirs, executors,
    administrators, legal representatives or assignees shall be deemed to have so offered) all
    Qualified Shares to the Company’s Board of Directors for purchase at their Fair
    Value, and the Board of Directors shall have forty-five (45) days after its receipt of any
    such offer to accept or reject said offer, in whole or in part, in the name and on behalf
    of the Company or any Designee. All shares acquired by the optionee more than five (5)
    years prior to the effective date of any such termination of his employment (or otherwise
    not included in the portion of such shares required to be offered to the Company under the
    second preceding sentence), and all Qualified Shares offered to the Board of Directors as
    aforesaid which are not purchased pursuant to an election made within the aforesaid 45-day
    period shall be free of the provisions of this Section 12(b) and the optionee and his
    heirs, executors, administrators, personal representatives or assignees, as the case may
    be, shall be entitled to own, hold and dispose of all such shares free of the provisions
    described in this Section 12(b) and upon such terms and conditions as they may approve.

    (ii) If any ownership or transfer of Qualified Shares is asserted, made or attempted
    contrary to the terms described in this paragraph (b), the Company’s Board of
    Directors shall have the right to purchase for the account of the Company or its Designee
    such shares from the owner thereof or his transferee at any time. In addition to any other
    legal or equitable remedies which it may have, the Company may enforce its rights by
    specific performance to the extent permitted by law. The Company may also refuse for any
    purpose to recognize as a shareholder of the Company any transferee who receives or holds
    any Qualified Shares contrary to the provisions described in this Section 12(b), and the
    Company may retain and/or recover all dividends on such shares which were paid or payable
    subsequent to the date on which the prohibited transfer was made or attempted.

    (iii) Each option shall provide that all certificates representing shares of Common
    Stock acquired by the optionee upon the exercise of the option shall have the following
    legend:

    
      
        "Contractual Restriction on Transfer. The shares of stock represented by
        this certificate are subject to the rights of Clinical Data, Inc. or its designee to
        repurchase such shares pursuant to the provisions of a Stock Option Agreement dated
        between the Company and the optionee."

      

    

  

(c) Acceleration, Extension, Etc. The Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular option or
options granted under the Plan may be exercised or (ii) extend the dates during which all,
or any particular option or options granted under the Plan may be exercised; provided,
however, that no such extension shall be permitted if it would cause the Plan to fail to
comply with Section 422A of the Code or with Rule 16b-3.

(d) Change in Control. Notwithstanding any other provision of the Plan and
except as otherwise provided in the relevant option agreement, in the event of a
"Change in Control of the Company" (as defined below), the exercise dates of all
options then outstanding shall be accelerated in full and any restrictions on exercising
outstanding options issued pursuant to the Plan prior to any given date shall terminate.
For purposes of the Plan, a "Change in Control of the Company" shall occur or be
deemed to have occurred only if (i) any "person", as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other than the Company, any trustee or other
fiduciary holding securities under an employee benefit plan of the Company, or any
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportion as their ownership of stock of the Company), is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing 50% or more of the
combined voting power of the Company’s then outstanding securities; (ii) during any
period of two consecutive years ending during the term of the Plan (not including any
period prior to the adoption of the Plan), individuals who at the beginning of such period
constitute the Board of Directors of the Company, and any new director (other than a
director designated by a person who has entered into an agreement with the Company to
effect any transaction described in clause (i), (iii) or (iv) of this Section 12(d)) whose
election by the Board of Directors or nomination for election by the
Company’s-stockholders was approved by a vote of at least two-thirds of the directors
then still in office who were either directors at the beginning of the period or whose
election or whose nomination for election was previously so approved (collectively, the
"Disinterested Directors"), cease for any reason to constitute a majority of the
Board of Directors; (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 50% of the
combined voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or similar
transaction) in which no "person" (as hereinabove defined) acquires more than
50% of the combined voting power of the Company’s then outstanding securities or (C)
a merger or consolidation which has been approved by a majority of the Disinterested
Directors; or (iv) the stockholders of the Company approve a plan of complete liquidation
of the Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets which, in either case, has not previously
been approved by a majority of the Disinterested Directors. Notwithstanding the foregoing,
the Board of Directors of the Company may, in its sole discretion, by a resolution adopted
by two-thirds of the Disinterested Directors prior to the occurrence of any of the events
otherwise constituting a Change in Control of the Company, declare that such event will
not constitute a Change in Control of the Company for the purposes of the Plan. If such
resolution is adopted, such event shall not constitute a Change in Control of the Company
for any purpose of the Plan.

(e) Parachute Payments. Notwithstanding any other provision of the Plan, the
provisions of Section 12(d) shall not be applicable to any option the acceleration of
which would, taking into account any other consideration to be received by the
optionholder from the Company, constitute an excess parachute payment as defined in
Section 280G of the Code.

13. Rights as a Shareholder.

The holder of an option shall have no rights as a shareholder with respect to any
shares covered by the option (including, without limitation, any rights to receive
dividends or non-cash distributions with respect to such shares) until the date of issue
of a stock certificate to him or her for such shares. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such stock
certificate is issued.

14. Adjustment Provisions for Recapitalizations and Related Transactions.

(a) General. If, through or as a result of any merger, consolidation, sale of
all or substantially all of the assets of the Company, reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other similar
transaction, (i) the outstanding shares of Common Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the Company, or
(ii) additional shares or new or different shares or other securities of the Company or
other non-cash assets are distributed with respect to such shares of Common Stock or other
securities, an appropriate and proportionate adjustment may be made in (x) the maximum
number and kind of shares reserved for issuance under the Plan, (y) the number and kind of
shares or other securities subject to then outstanding options under the Plan, and (z) the
price for each share subject to any then outstanding options under the Plan, without
changing the aggregate purchase price as to which such options remain exercisable,
provided that no adjustment shall be made pursuant to this Section 14 if such adjustment
would cause the Plan to fail to comply with Section 422A of the Code or with Rule 16b-3.

(b) Board Authority to Make Adjustments. Any adjustments under this Section 14
will be made by the Board of Directors, whose determination as to what adjustments, if
any, will be made and the extent thereof will be final, binding and conclusive. No
fractional shares will be issued under the Plan on account of any such adjustments.

15. Merger, Consolidation, Asset Sale, Liquidation, etc.

(a) General. In the event of a consolidation or merger or sale of all or
substantially all of the assets of the Company in which outstanding shares of Common Stock
are exchanged for securities, cash or other property of any other corporation or business
entity or in the event of a liquidation of the Company, the Board of Directors of the
Company, or the board of directors of any corporation assuming the obligations of the
Company, may, in its discretion, take any one or more of the following actions, as to
outstanding options: (i) provide that such options shall be assumed, or equivalent options
shall be substituted, by the acquiring or succeeding corporation (or an affiliate
thereof), provided that any such options substituted for Incentive Stock Options
shall meet the requirements of Section 425(a) of the Code, (ii) upon written notice to the
optionees, provide that all unexercised options will terminate immediately prior to the
consummation of such transaction unless exercised by the optionee within a specified
period following the date of such notice, (iii) in the event of a merger under the terms
of which holders of the Common Stock of the Company will receive upon consummation thereof
a cash payment for each share surrendered in the merger (the "Merger Price"),
make or provide for a cash payment to the optionees equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to such outstanding
options (to the extent then exercisable at prices not in excess of the Merger Price) and
(B) the aggregate exercise price of all such outstanding options in exchange for the
termination of such options, and (iv) provide that all or any outstanding options shall
become exercisable in full immediately prior to such event.

(b) Substitute Options. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become employees of
the Company, or a subsidiary of the Company, as the result of a merger or consolidation of
the employing corporation with the Company or a subsidiary of the Company, or as a result
of the acquisition by the Company, or one of its subsidiaries, of property or stock of the
employing corporation. The Company may direct that substitute options be granted on such
terms and conditions as the Board of Directors considers appropriate in the circumstances.

16. No Special Employment Rights.

Nothing contained in the Plan or in any option shall confer upon any optionee any right
with respect to the continuation of his or her employment by the Company or interfere in
any way with the right of the Company at any time to terminate such employment or to
increase or decrease the compensation of the optionee.

17. Other Employee Benefits.

The amount of any compensation deemed to be received by an employee as a result of the
exercise of an option or the sale of shares received upon such exercise will not
constitute compensation with respect to which any other employee benefits of such employee
are determined, including, without limitation, benefits under any bonus, pension,
profit-sharing, life insurance or salary continuation plan, except as otherwise
specifically determined by the Board of Directors.

18. Amendment of the Plan.

(a) The Board of Directors may at any time, and from time to time, modify or amend the
Plan in any respect, except that if at any time the approval of the shareholders of the
Company is required as to such modification or amendment under Section 422A of the Code or
any successor provision with respect to Incentive Stock Options or under Rule 16b-3 or any
successor provision with respect to options held by Reporting Persons, the Board of
Directors may not effect such modification or amendment without such approval.
Notwithstanding the foregoing, the provisions of Section 3(b) of the Plan may not be
amended more than once every six months, other than to comport with changes in the
Internal Revenue Code, the Employee Retirement Income Security Act, or the rules
thereunder.

(b) The termination or any modification or amendment of the Plan shall not, without the
consent of an optionee, affect his or her rights under an option previously granted to him
or her. With the consent of the optionee affected, the Board of Directors may amend
outstanding option agreements in a manner not inconsistent with the Plan. The Board of
Directors shall have the right to amend or modify (i) the terms and provisions of the Plan
and of any outstanding Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422A of the Code and (ii) the terms and provisions of the Plan
and of any outstanding option to the extent necessary to ensure the qualification of the
Plan under Rule 16b-3 or any successor rule.

19. Withholding.

(a) The Company shall have the right to deduct from payments of any kind otherwise due
to the optionee any federal, state or local taxes of any kind required by law to be
withheld with respect to any shares issued upon exercise of options under the Plan.
Subject to the prior approval of the Company, which may be withheld by the Company in its
sole discretion, the optionee may elect to satisfy such obligations, in whole or in part,
(i) by causing the Company to withhold shares of Common Stock otherwise issuable pursuant
to the exercise of an option or (ii) by delivering to the Company shares of Common Stock
already owned by the optionee. The shares so delivered or withheld shall have a fair
market value equal to such withholding obligation. The fair market value of the shares
used to satisfy such withholding obligation shall be determined by the Company as of the
date that the amount of tax to be withheld is to be determined. An optionee who has made
an election pursuant to this Section 19(a) may only satisfy his or her withholding
obligation with shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.

(b) Notwithstanding the foregoing, in the case of a Reporting Person, no election to
use shares for the payment of withholding taxes shall be effective unless made in
compliance with any applicable requirements of Rule 16b-3(e) or any successor rule under
such Act.

20. Cancellation and New Grant of Options, Etc.

The Board of Directors shall have the authority to effect, at any time and from time to
time, with the consent of the affected optionees, (i) the cancellation of any or all
outstanding options under the Plan and the grant in substitution therefor of new options
under the Plan covering the same or different numbers of shares of Common Stock and having
an option exercise price per share which may be lower or higher than the exercise price
per share of the cancelled options or (ii) the amendment of the terms of any and all
outstanding options under the Plan to provide an option exercise price per share which is
higher or lower than the then-current exercise price per share of such outstanding
options.

21. Effective Date and Duration of the Plan.

(a) Effective Date. The Plan shall become effective when adopted by the Board of
Directors, but no Incentive Stock Option granted under the Plan shall become exercisable
unless and until the Plan shall have been approved by the Company’s shareholders. If
such shareholder approval is not obtained within twelve months after the date of the
Board’s adoption of the Plan, no options previously granted under the Plan shall be
deemed to be Incentive Stock Options and no Incentive Stock Options shall be granted
thereafter. Amendments to the Plan not requiring shareholder approval shall become
effective when adopted by the Board of Directors; amendments requiring shareholder
approval (as provided in Section 18) shall become effective when adopted by the Board of
Directors, but no Incentive Stock Option issued after the date of such amendment shall
become exercisable (to the extent that such amendment to the Plan was required to enable
the Company to grant such Incentive Stock Option to a particular optionee) unless and
until such amendment shall have been approved by the Company’s shareholders. If such
shareholder approval is not obtained within twelve months of the Board’s adoption of
such amendment, any Incentive Stock Options granted on or after the date of such amendment
shall terminate to the extent that such amendment to the Plan was required to enable the
Company to grant such option to a particular optionee. Subject to this limitation, options
may be granted under the Plan at any time after the effective date and before the date
fixed for termination of the Plan.

(b) Termination. Unless sooner terminated in accordance with Section 15, the
Plan shall terminate, with respect to Incentive Stock Options, upon the earlier of (i) the
close of business on the day next preceding the tenth anniversary of the date of its
adoption by the Board of Directors, or (ii) the date on which all shares available for
issuance under the Plan shall have been issued pursuant to the exercise or cancellation of
options granted under the Plan. Unless sooner terminated in accordance with Section 15,
the Plan shall terminate with respect to options which are not Incentive Stock Options on
the date specified in (ii) above. If the date of termination is determined under (i)
above, then options outstanding on such date shall continue to have force and effect in
accordance with the provisions of the instruments evidencing such options.

22. Provision for Foreign Participants.

The Board of Directors may, without amending the Plan, modify awards or options granted
to participants who are foreign nationals or employed outside the United States to
recognize differences in laws, rules, regulations or customs of such foreign jurisdictions
with respect to tax, securities, currency, employee benefit or other matters.

23. Rule 16b-3.

Notwithstanding anything in the Plan to the contrary, no action may be taken with
respect to the Plan which would cause the Plan to cease to be qualified under Rule 16b-3
or any successor rule, without the express acknowledgment of the Board of Directors that
such disqualification may occur.

		Adopted by the Board of Directors on , 1991.exv10w6

 

Exhibit 10.6

Clinical Data, Inc.

2005 Equity Incentive Plan

 

Article 1. 

Background and Purpose of the Plan

1.1. Background. This 2005 Equity Incentive Plan (the "Plan")
permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock
Appreciation Rights, Restricted Stock, Restricted Stock Units, and other equity-based
awards.

1.2. Purpose. The purposes of the Plan are (a) to attract and
retain highly competent persons as Employees, Directors, and Consultants of the Company;
(b) to provide additional incentives to such Employees, Directors, and Consultants; and
(c) to promote the success of the business of the Company.

1.3. 2002 Plan. The Clinical Data, Inc. 2002 Incentive and Stock
Plan (the "Prior Plan") shall remain in effect in accordance with its
terms, and further option grants may be made under the Prior Plan after the Effective
Date. The adoption of this Plan as of the Effective Date shall not affect the Prior Plan
or the terms of any option granted under the Prior Plan either before or after the
Effective Date.

1.4. Eligibility. Service Providers who are Employees,
Consultants determined by the Committee to be significantly responsible for the success
and future growth and profitability of the Company, or Directors are eligible to be
granted Awards under the Plan. However, Incentive Stock Options may be granted only to
Employees.

1.5. Definitions. Capitalized terms used in the Plan and not
otherwise defined herein shall have the meanings assigned to such terms in the attached
Appendix.

Article 2. 

Share Limits

2.1. Shares
Subject to the Plan.

(a) Share Reserve. Subject to adjustment under Section 2.3 of
the Plan, one million (1,000,000) Shares shall be initially reserved for issuance pursuant
to Awards made under the Plan. All of the available Shares may, but need not, be
issued pursuant to the exercise of Incentive Stock Options. At all times the Company will
reserve and keep available a sufficient number of Shares to satisfy the requirements of
all outstanding Awards made under the Plan and all other outstanding but unvested Awards
made under the Plan that are to be settled in Shares.

(b) Shares Counted Against Limitation. If an Award is exercised,
in whole or in part, by delivery or attestation of Shares under Section 5.4(b), or if the
tax withholding obligation is satisfied by withholding Shares under Section 10.7(b), the
number of Shares deemed to have been issued under the Plan (for purposes of the limitation
set forth in this Section 2.1) shall be the number of Shares that were subject to the
Award or portion thereof so exercised and not the net number of Shares actually issued
upon such exercise.

(c) Lapsed Awards. If an Award: (i) expires; (ii) is
terminated, surrendered, or canceled without having been exercised in full; or (iii) is
otherwise forfeited in whole or in part, then the unissued Shares that were subject to
such Award and/or such surrendered, canceled, or forfeited Shares (as the case may be)
shall become available for future grant or sale under the Plan (unless the Plan has
terminated), subject however, in the case of Incentive Stock Options, to any limitations
under the Code.

(d) Limitation on Full-Value Awards. Not more than five hundred
thousand (500,000) of the total number of Shares reserved for issuance under the Plan (as
adjusted under Section 2.3) may be granted or sold as Awards of Restricted Stock,
Restricted Stock Units, unrestricted grants of Shares, and other Awards ("full-value
Awards") whose intrinsic value is not solely dependent on appreciation in the price
of Shares after the date of grant. Options and Stock Appreciation Rights shall not be
subject to, and shall not count against, the limit described in the preceding sentence. If
a full-value Award expires, is forfeited, or otherwise lapses as described in Section
2.1(c), the Shares that were subject to the Award shall be restored to the total number of
Shares available for grant or sale as full-value Awards.

(e) Substitute Awards. The Committee may grant Awards under the
Plan in substitution for stock and stock based awards held by employees, directors,
consultants or advisors of another company (an "Acquired Company")
in connection with a merger, consolidation or advisors of such Acquired Company with the
Company or an Affiliate or the acquisition by the Company or an Affiliate of property or
stock of the Acquired Company. The Committee may direct that the substitute Awards be
granted on such terms and conditions as the Committee considers appropriate in the
circumstances. Any substitute Awards granted under the Plan shall not count against the
share limitations set forth in Section 2.1(a) and 2.2.

2.2. Individual Share Limit. In any Tax
Year, no Service Provider shall be granted Awards with respect to more than one hundred
fifty thousand (150,000) Shares. The limit described in this Section 2.2 shall be
construed and applied consistently with Section 162(m) of the Code, except that the limit
shall apply to all Service Providers.

(a) Awards not Settled in Shares. If an Award is to be settled
in cash or any medium other than Shares, the number of Shares on which the Award is based
shall count toward the individual share limit set forth in this Section 2.2.

(b) Canceled Awards. Any Awards granted to a Participant that
are canceled shall continue to count toward the individual share limit applicable to that
Participant set forth in this Section 2.2.

2.3. Adjustments.

(a) In the event that there is any dividend or distribution payable in
Shares, or any stock split, reverse stock split, combination or reclassification of
Shares, or any other similar change in the number of outstanding Shares, then the maximum
aggregate number of Shares available for Awards under Section 2.1 of the Plan, the maximum
number of Shares issuable to a Service Provider under Section 2.2 of the Plan, and any
other limitation under this Plan on the maximum number of Shares issuable to an individual
or in the aggregate shall be proportionately adjusted (and rounded down to a whole number)
by the Committee as it deems equitable in its discretion to prevent dilution or
enlargement of the rights of the Participants. The Committee’s determination with
respect to any such adjustments shall be conclusive.

(b) In the event that there is any
extraordinary dividend or other distribution in respect of the Shares, recapitalization,
reclassification, merger, reorganization, consolidation, combination, sale of assets,
split-up, exchange, spin-off or other extraordinary event, then the Committee shall make
provision for a cash payment, for the substitution or exchange of any or all outstanding
Awards or a combination of the foregoing, based upon the distribution or consideration
payable to holders of the Shares in respect of such event or on such other terms as the
Committee otherwise deems appropriate.

Article 3. 

Administration of the Plan

3.1. Administrator. The Plan shall be administered by the
Committee.

3.2. Powers of the Committee. Subject to the provisions of the
Plan, Applicable Law, and the specific duties delegated by the Board to the Committee, the
Committee shall have the authority in its discretion: (a) to determine the Fair Market
Value; (b) to select the Service Providers to whom Awards may be granted hereunder and the
types of Awards to be granted to each; (c) to determine the number of Shares to be covered
by each Award granted hereunder; (d) to determine whether, to what extent, and under
what circumstances an Award may be settled in cash, Shares, other securities, other
Awards, or other property; (e) to approve forms of Award Agreements; (f) to determine, in
a manner consistent with the terms of the Plan, the terms and conditions of any Award
granted hereunder, based on such factors as the Committee, in its sole discretion, shall
determine; (g) to construe and interpret the terms of the Plan and Award Agreements; (h)
to correct any defect, supply any omission, or reconcile any inconsistency in the Plan or
any Award Agreement in the manner and to the extent it shall deem desirable to carry out
the purposes of the Plan; (i) to prescribe, amend, and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans established
pursuant to Section 12.1 of the Plan; (j) to authorize withholding arrangements pursuant
to Section 10.7(b) of the Plan; (k) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Award previously granted by the
Committee; and (l) to make all other determinations and take all other action described in
the Plan or as the Committee otherwise deems necessary or advisable for administering the
Plan and effectuating its purposes.

3.3. Compliance with Applicable Law. The Committee shall
administer, construe, interpret, and exercise discretion under the Plan and each Award
Agreement in a manner that is consistent and in compliance with a reasonable, good faith
interpretation of all Applicable Laws, and that avoids (to the extent practicable) the
classification of any Award as "deferred compensation" for purposes of Section
409A of the Code, as determined by the Committee. 

3.4. Effect of Committee’s Decision and Committee’s
Liability. The Committee's decisions, determinations and interpretations shall be
final and binding on all Participants and any other holders of Awards. Neither the
Committee nor any of its members shall be liable for any act, omission, interpretation,
construction, or determination made in good faith in connection with the Plan or any Award
Agreement.

3.5. Delegation to Executive Officers. To the extent permitted
by Applicable Law, the Board may delegate to one or more Executive Officers the powers:
(a) to designate Service Providers who are not Executive Officers as eligible to
participate in the Plan; and (b) to determine the amount and type of Awards that may be
granted to Service Providers who are not Executive Officers.

3.6. Awards may be Granted Separately or Together. In the
Committee’s discretion, Awards may be granted alone, in addition to, or in tandem
with any other Award or any award granted under another plan of the Company or an
Affiliate. Awards granted in addition to or in tandem with other awards may be granted
either at the same time or at different times.

Article 4. 

Vesting and Performance Objectives

4.1. General. The vesting schedule or Period of Restriction for
any Award shall be specified in the Award Agreement. The criteria for vesting and for
removing restrictions on any Award may include (i) performance of substantial services for
the Company for a specified period; (ii) achievement of one or more Performance
Objectives; or (iii) a combination of (i) and (ii), as determined by the Committee.

4.2. Period of Absence from Providing Substantial Services. To
the extent that vesting or removal of restrictions is contingent on performance of
substantial services for a specified period, a leave of absence (whether paid or unpaid)
shall not count toward the required period of service unless the Award Agreement provides
otherwise.

4.3. Performance Objectives.

(a) Possible Performance Objectives. Any
Performance Objective shall relate to the Service Provider’s performance for the
Company (or an Affiliate) or the Company’s (or Affiliate’s) business activities
or organizational goals, and shall be sufficiently specific that a third party having
knowledge of the relevant facts could determine whether the Performance Objective is
achieved. The Performance Objectives with respect to any Award may be one or more of the
following General Financial and/or Operational Objectives, as established by the Committee
in its sole discretion:

(i) General Financial Objectives:

  
    Increasing the Company’s net sales

    Achieving a target level of earnings (including gross earnings; earnings before certain
    deductions, such as interest, taxes, depreciation, or amortization; or earnings per Share)

    Achieving a target level of income (including net income or income before consideration
    of certain factors, such as overhead) or a target level of gross profits for the Company,
    an Affiliate, or a business unit

    Achieving a target return on the Company’s (or an Affiliate’s) capital,
    assets, or stockholders’ equity

    Maintaining or achieving a target level of appreciation in the price of the Shares

    Increasing the Company’s (or an Affiliate’s) market share to a specified
    target level

    Achieving or maintaining a Share price that meets or exceeds the performance of
    specified stock market indices or other benchmarks over a specified period

    Achieving a level of Share price, earnings, or income performance that meets or exceeds
    performance in comparable areas of peer companies over a specified period

    Achieving specified reductions in costs

    Achieving specified improvements in collection of outstanding accounts or specified
    reductions in non-performing debts

  

(ii) Operational Objectives:

  
    Expanding one or more products into one or more new markets

    Acquiring a prescribed number of new customers in a line of business

    Achieving a prescribed level of productivity within a business unit

    Completing specified projects within or below the applicable budget

  

(b) Stockholder Approval of Performance Objectives. The list of
possible Performance Objectives set forth in Section 4.3(a), above, and the other material
terms of Awards of Restricted Stock or Restricted Stock Units that are intended to qualify
as "performance-based compensation" under Section 162(m) of the Code, shall be
subject to reapproval by the Company’s stockholders at the first stockholder meeting
that occurs in 2010. No Award of Restricted Stock or Restricted Stock Units that is
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code shall be made after that meeting unless stockholders have reapproved the list of
Performance Objectives and other material terms of such Awards, or unless the vesting of
the Award is made contingent on stockholder approval of the Performance Objectives and
other material terms of such Awards.

(c) Documentation of Performance Objectives. With respect to any
Award, the Performance Objectives shall be set forth in writing no later than 90 days
after commencement of the period to which the Performance Objective(s) relate(s) (or, if
sooner, before 25% of such period has elapsed) and at a time when achievement of the
Performance Objectives is substantially uncertain. Such writing shall also include the
period for measuring achievement of the Performance Objectives, which shall be no greater
than five consecutive years, as established by the Committee. Once established by the
Committee, the Performance Objective(s) may not be changed to accelerate the settlement of
an Award or to accelerate the lapse or removal of restrictions on Restricted Stock that
otherwise would be due upon the attainment of the Performance Objective(s).

(d) Committee Certification. Prior to
settlement of any Award that is contingent on achievement of one or more Performance
Objectives, the Committee shall certify in writing that the applicable Performance
Objective(s) and any other material terms of the Award were in fact satisfied. For
purposes of this Section 4.3(d), approved minutes of the Committee shall be adequate
written certification.

(e) Negative Discretion. The Committee may reduce, but may not
increase, the number of Shares deliverable or the amount payable under any Award after the
applicable Performance Objectives are satisfied.

Article 5. 

Stock Options

5.1. Terms of Option. Subject to the
provisions of the Plan, the type of Option, term, exercise price, vesting schedule, and
other conditions and limitations applicable to each Option shall be as determined by the
Committee and shall be stated in the Award Agreement.

5.2. Type of Option.

(a) Each Option shall be designated in the Award Agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option.

(b) Neither the Company nor the Committee shall have liability to a
Participant or any other party if an Option (or any part thereof) which is intended to be
an Incentive Stock Option does not qualify as an Incentive Stock Option. In addition, the
Committee may make an adjustment or substitution described in Section
2.3 of the Plan that causes the Option to cease to qualify as an Incentive Stock
Option without the consent of the affected Participant or any other party.

5.3. Limitations.

(a) Maximum Term. No Option shall have a term in excess of 10
years measured from the date the Option is granted. In the case of any Incentive Stock
Option granted to a 10% Stockholder (as defined in Section 5.3(e), below), the term of
such Incentive Stock Option shall not exceed five years measured from the date the Option
is granted.

(b) Minimum Exercise Price. Subject to Section 2.3(b) of the
Plan, the exercise price per share of an Option shall not be less than 100% of the Fair
Market Value per Share on the date the Option is granted. In the case of any Incentive
Stock Option granted to a 10% Stockholder (as defined in Section 5.3(e), below), subject
to Section 2.3(b) of the Plan, the exercise price per share of such Incentive Stock Option
shall not be less than 110% of the Fair Market Value per Share on the date the Option is
granted. 

(c) Repricing Prohibited. Except as provided in Section 2.3, the
Committee shall not amend any outstanding Option to reduce its exercise price, and shall
not grant an Option with a lower exercise price within six months before or after an
Option with a higher exercise price is canceled.

(d) $100,000 Limit for Incentive Stock
Options. Notwithstanding an Option’s designation, to the extent that Incentive
Stock Options are exercisable for the first time by the Participant during any calendar
year with respect to Shares whose aggregate Fair Market Value exceeds $100,000 (regardless
of whether such Incentive Stock Options were granted under this Plan, the 2002 Plan, or
any other plan of the Company or any Affiliate), such Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 5.3(d), Fair Market Value shall
be measured as of the date the Option was granted and Incentive Stock Options shall be
taken into account in the order in which they were granted.

(e) 10% Stockholder. For purposes of
this Section 5.3, a "10% Stockholder" is an individual who, immediately before
the date an Award is granted, owns (or is treated as owning) stock possessing more than
10% of the total combined voting power of all classes of stock of the Company (or an
Affiliate), determined under Section 424(d) of the Code.

5.4. Form of Consideration. The
Committee shall determine the acceptable form of consideration for exercising an Option,
including the method of payment. In the case of an Incentive Stock Option, the Committee
shall determine the acceptable form of consideration at the time of grant. To the extent
approved by the Committee, the consideration for exercise of an Option may be paid in
any one, or any combination, of the forms of consideration set forth in subsections (a),
(b), and (c), below.

(a) Cash Equivalent. Consideration may
be paid by cash, check, or other cash equivalent approved by the Committee.

(b) Tender or Attestation of Shares. Consideration
may be paid by the tendering of other Shares to the Company or the attestation to the
ownership of the Shares that otherwise would be tendered to the Company in exchange for
the Company’s reducing the number of Shares issuable upon the exercise of the Option.
Shares tendered or attested to in exchange for Shares issued under the plan must be held
by the Service Provider for at least six months prior to their tender or their attestation
to the Company and may not be shares of Restricted Stock at the time they are tendered or
attested to. The Committee shall determine acceptable methods for tendering or attesting
to Shares to exercise an Option under the Plan and may impose such limitations and
prohibitions on the use of Shares to exercise Options as it deems appropriate. For
purposes of determining the amount of the Option price satisfied by tendering or attesting
to Shares, such Shares shall be valued at their Fair Market Value on the date of tender or
attestation, as applicable.

(c) Other Methods. Consideration may be
paid using such other methods of payment as the Committee, at its discretion, deems
appropriate from time to time. 

5.5. Exercise of Option.

(a) Procedure for Exercise. Any Option
granted hereunder shall be exercisable according to the terms of the Plan and at such
times and under such conditions as set forth in the Award Agreement. An Option shall be
deemed exercised when the Committee receives: (i) written or electronic notice of exercise
(in accordance with the Award Agreement) from the person entitled to exercise the Option
and (ii) full payment for the Shares (in a form permitted under Section 5.4 of the Plan)
with respect to which the Option is exercised.

(b) Termination of Relationship as a
Service Provider. Following a Participant’s Termination of Service, the
Participant (or the Participant’s Beneficiary, in the case of Termination of Service
due to death) may exercise his or her Option within such period of time as is specified in
the Award Agreement, subject to the following conditions:

(i) An Option may be exercised after the Participant’s Termination
of Service only to the extent that the Option was vested as of the Termination of Service;

(ii) An Option may not be exercised after the expiration of the term of
such Option as set forth in the Award Agreement;

(iii) Unless a Participant’s Termination of Service is the result
of the Participant’s Disability, the Participant may not exercise an Incentive Stock
Option more than three months after such Termination of Service;

(iv) If a Participant’s Termination of
Service is the result of the Participant’s Disability, the Participant may exercise
an Incentive Stock Option up to 12 months after Termination of Service; and 

(v) After the Participant’s death, his
Beneficiary may exercise an Incentive Stock Option only to the extent that that the
deceased Participant was entitled to exercise such Incentive Stock Option as of the date
of his death.

In the absence of a specified time in the Award Agreement, the Option
shall remain exercisable for three months after the Participant’s Termination of
Service for any reason other than Disability or death, and for 12 months after the
Participant’s Termination of Service on account of Disability or death.

(c) Rights as a Stockholder. Shares subject to an Option shall
be deemed issued, and the Participant shall be deemed the record holder of such Shares, on
the Option exercise date. Until such Option exercise date, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the Shares
subject to the Option. In the event that the Company effects a split of the Shares by
means of a stock dividend and the exercise price of, and number of shares subject to, an
Option are adjusted as of the date of distribution of the dividend (rather than as of the
record date for such dividend), then a Participant who exercises such Option between the
record date and the distribution date for such stock dividend shall be entitled to
receive, on the distribution date, the stock dividend with respect to the Shares subject
to the Option. No other adjustment shall be made for a dividend or other right for which
the record date is prior to the date the Shares are issued.

5.6. Repurchase Rights. The Committee shall have the discretion
to grant Options which are exercisable for unvested Shares. If the Participant ceases to
be a Service Provider while holding such unvested Shares, the Company shall have the right
to repurchase any or all of those unvested Shares at a price per share equal to the lower
of (i) the exercise price paid per Share, or (ii) the Fair Market Value per Share at the
time of repurchase. The terms upon which such repurchase right shall be exercisable by the
Committee (including the period and procedure for exercise and the appropriate vesting
schedule for the purchased Shares) shall be established by the Committee and set forth in
the document evidencing such repurchase right.

Article 6. 

Stock Appreciation Rights

6.1. Terms of Stock Appreciation Right.
The term, base amount, vesting schedule, and other conditions and limitations applicable
to each Stock Appreciation Right, except the medium of settlement, shall be as determined
by the Committee and shall be stated in the Award Agreement. All Awards of Stock
Appreciation Rights shall be settled in Shares issuable upon the exercise of the Stock
Appreciation Right.

6.2. Exercise of Stock Appreciation Right.

(a) Procedure for Exercise. Any Stock Appreciation Right granted
hereunder shall be exercisable according to the terms of the Plan and at such times and
under such conditions as set forth in the Award Agreement. A Stock Appreciation Right
shall be deemed exercised when the Committee receives written or electronic notice of
exercise (in accordance with the Award Agreement) from the person entitled to exercise the
Stock Appreciation Right.

(b) Termination of Relationship as a Service Provider.
Following a Participant’s Termination of Service, the Participant (or the
Participant’s Beneficiary, in the case of Termination of Service due to death) may
exercise his or her Stock Appreciation Right within such period of time as is specified in
the Award Agreement to the extent that the Stock Appreciation right is vested as of the
Termination of Service. In the absence of a specified time in the Award Agreement, the
Stock Appreciation Right shall remain exercisable for three months following the
Participant’s Termination of Service for any reason other than Disability or death,
and for 12 months after the Participant’s Termination of Service on account of
Disability or death.

(c) Rights as a Stockholder. Shares subject to a Stock
Appreciation Right shall be deemed issued, and the Participant shall be deemed the record
holder of such Shares, on the date the Stock Appreciation Right is exercised. Until such
date, no right to vote or receive dividends or any other rights as a stockholder shall
exist with respect to the Shares subject to the Stock Appreciation Right. If the Company
effects a split of the Shares by means of a stock dividend and the exercise price of, and
number of shares subject to, a Stock Appreciation Right are adjusted as of the date of
distribution of the dividend (rather than as of the record date for such dividend), then a
Participant who exercises such Stock Appreciation Right between the record date and the
distribution date for such stock dividend shall be entitled to receive, on the
distribution date, the stock dividend with respect to the Shares subject to the Stock
Appreciation Right. No other adjustment shall be made for a dividend or other right for
which the record date is prior to the date the Shares are issued.

Article 7. 

Restricted Stock

7.1. Terms of Restricted Stock. Subject to the provisions of the
Plan, the Period of Restriction, the number of Shares granted, and other conditions and
limitations applicable to each Award of Restricted Stock shall be as determined by the
Committee and shall be stated in the Award Agreement. Unless the Committee determines
otherwise, Shares of Restricted Stock shall be held by the Company as escrow agent until
the restrictions on such Shares have lapsed.

7.2. Transferability. Except as provided in this Article 7,
Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction.

7.3. Other Restrictions. The Committee, in its sole discretion,
may impose such other restrictions on Shares of Restricted Stock as it may deem advisable
or appropriate.

7.4. Removal of Restrictions. Except as otherwise provided in
this Article 7, and subject to Section 10.5 of the Plan, Shares of Restricted Stock
covered by an Award of Restricted Stock made under the Plan shall be released from escrow,
and shall become fully transferable, as soon as practicable after the Period of
Restriction ends, and in any event no later than 2.5  months after the end of the Tax
Year in which the Period of Restriction ends.

7.5. Voting Rights. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless otherwise provided in the Award Agreement.

7.6. Dividends and Other Distributions. During the Period of
Restriction, Service Providers holding Shares of Restricted Stock shall be entitled to
receive all dividends and other distributions paid with respect to such Shares unless
otherwise provided in the Award Agreement.

(a) If any such dividends or distributions are paid in Shares, the
Shares shall be subject to the same restrictions (and shall therefore be forfeitable to
the same extent) as the Shares of Restricted Stock with respect to which they were paid.

(b) If any such dividends or distributions are paid in cash, the Award
Agreement may specify that the cash payments shall be subject to the same restrictions as
the related Restricted Stock, in which case they shall be accumulated during the Period of
Restriction and paid or forfeited when the related Shares of Restricted Stock vest or are
forfeited. Alternatively, the Award Agreement may specify that the dividend equivalents or
other payments shall be unrestricted, in which case they shall be paid as soon as
practicable after the dividend or distribution date. In no event shall any cash dividend
or distribution be paid later than 2.5 months after the Tax Year in which the dividend or
distribution becomes nonforfeitable.

7.7. Right of Repurchase of Restricted Stock. If, with respect
to any Award, (a) a Participant’s Termination of Service occurs before the end
of the Period of Restriction or (b) any Performance Objectives are not achieved by
the end of the period for measuring such Performance Objectives, then the Company shall
have the right to repurchase forfeitable Shares of Restricted Stock from the Participant
at their original issuance price or other stated or formula price (or to require
forfeiture of such Shares if issued at no cost).

Article 8. 

Restricted Stock Units

8.1. Terms of Restricted Stock Units. Subject to the provisions
of the Plan, the Period of Restriction, number of underlying Shares, and other conditions
and limitations applicable to each Award of Restricted Stock Units shall be as determined
by the Committee and shall be stated in the Award Agreement.

8.2. Settlement of Restricted Stock Units. Subject to Section
10.5 of the Plan, the number of Shares specified in the Award Agreement, or cash equal to
the Fair Market Value of the underlying Shares specified in the Award Agreement, shall be
delivered to the Participant as soon as practicable after the end of the applicable Period
of Restriction, and in any event no later than 2.5 months after the end of the Tax Year in
which the Period of Restriction ends.

8.3. Dividend and Other Distribution Equivalents. The Committee
is authorized to grant to holders of Restricted Stock Units the right to receive payments
equivalent to dividends or other distributions with respect to Shares underlying Awards of
Restricted Stock Units. The Award Agreement may specify that the dividend equivalents or
other distributions shall be subject to the same restrictions as the related Restricted
Stock Units, in which case they shall be accumulated during the Period of Restriction and
paid or forfeited when the related Restricted Stock Units are paid or forfeited.
Alternatively, the Award Agreement may specify that the dividend equivalents or other
distributions shall be unrestricted, in which case they shall be paid on the dividend or
distribution payment date for the underlying Shares, or as soon as practicable thereafter.
In no event shall any unrestricted dividend equivalent or other distribution be paid later
than 2.5  months after the Tax Year in which the record date for the dividend or
distribution occurs.

8.4. Forfeiture. If, with respect to any Award, (a) a
Participant’s Termination of Service occurs before the end of the Period of
Restriction, or (b) any Performance Objectives are not achieved by the end of the period
for measuring such Performance Objectives, then the Restricted Stock Units granted
pursuant to such Award shall be forfeited and the Company (and any Affiliate) shall have
no further obligation thereunder.

Article 9. 

Other Equity-Based Awards

9.1. Other Equity-Based Awards. The Committee shall have the
right to grant other Awards based upon or payable in Shares having such terms and
conditions as the Committee may determine, including the grant of Shares upon the
achievement of a Performance Objective and the grant of securities convertible into
Shares.

Article 10. 

Additional Terms of Awards

10.1. No Rights to Awards. No Service Provider shall have any
claim to be granted any Award under the Plan, and the Company is not obligated to extend
uniform treatment to Participants or Beneficiaries under the Plan. The terms and
conditions of Awards need not be the same with respect to each Participant.

10.2. No Effect on Employment or Service. Neither the Plan nor
any Award shall confer upon a Participant any right with respect to continuing the
Participant’s relationship as a Service Provider with the Company; nor shall they
interfere in any way with the Participant’s right or the Company’s right to
terminate such relationship at any time, with or without cause, to the extent permitted by
Applicable Laws and any enforceable agreement between the Service Provider and the
Company.

10.3. No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan or any Award, and the Committee shall determine whether
cash, other securities, or other property shall be paid or transferred in lieu of any
fractional Shares, or whether such fractional Shares or any rights thereto shall be
canceled, terminated, or otherwise eliminated. 

10.4. Transferability of Awards. Unless otherwise determined by
the Committee, an Award may not be sold, pledged, assigned, hypothecated, transferred, or
disposed of in any manner other than by will or by the laws of descent or distribution and
may be exercised, during the lifetime of the Participant, only by the Participant. Subject
to the approval of the Committee in its sole discretion, Nonstatutory Stock Options may be
transferable to members of the immediate family of the Participant and to one or more
trusts for the benefit of such family members, partnerships in which such family members
are the only partners, or corporations in which such family members are the only
stockholders. "Members of the immediate family" means the Participant’s
spouse, children, stepchildren, grandchildren, parents, grandparents, siblings (including
half brothers and sisters), and individuals who are family members by adoption. To the
extent that any Award is transferable, such Award shall contain such additional terms and
conditions as the Committee deems appropriate. 

10.5. Conditions On Delivery of Shares and
Lapsing of Restrictions. The Company shall not be obligated to deliver any Shares
pursuant to the Plan or to remove restrictions from Shares previously delivered under the
Plan until (a) all conditions of the Award have been met or removed to the satisfaction of
the Committee, (b) subject to approval of the Company’s counsel, all other legal
matters (including any Applicable Laws) in connection with the issuance and delivery of
such Shares have been satisfied, and (c) the Participant has executed and delivered to the
Company such representations or agreements as the Committee may consider appropriate to
satisfy the requirements of Applicable Laws.

10.6. Inability to Obtain Authority. The inability of the
Company to obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of
any Shares hereunder, shall relieve the Company of any liability in respect of the failure
to issue or sell such Shares as to which such requisite authority shall not have been
obtained.

10.7. Withholding.

(a) Withholding Requirements. Prior to the delivery of any
Shares or cash pursuant to the grant, exercise, vesting, or settlement of an Award, the
Company shall have the power and the right to deduct or withhold, or to require a
Participant or Beneficiary to remit to the Company, an amount sufficient to satisfy any
federal, state, and local taxes (including the Participant’s FICA obligation) that
the Company determines is required to be withheld to comply with Applicable Laws. The
Participant or Beneficiary shall remain responsible at all times for paying any federal,
state, and local income or employment tax due with respect to any Award, and the Company
shall not be liable for any interest or penalty that a Participant or Beneficiary incurs
by failing to make timely payments of tax.

(b) Withholding Arrangements. The
Committee, in its sole discretion and pursuant to such procedures as it may specify from
time to time, may permit a Participant or Beneficiary to satisfy such tax withholding
obligation, in whole or in part, by (i) electing to have the Company withhold otherwise
deliverable Shares, or (ii) delivering to the Company already-owned Shares having a Fair
Market Value equal to the amount required by Applicable Law to be withheld. The Fair
Market Value of the Shares to be withheld or delivered, or with respect to which
restrictions are removed, shall be determined as of the date that the taxes are required
to be withheld.

10.8. Other Provisions in Award Agreements. In addition to the
provisions described in the Plan, any Award Agreement may include such other provisions
(whether or not applicable to the Award of any other Participant) as the Committee
determines appropriate, including restrictions on resale or other disposition, provisions
for the acceleration of exercisability of Options and Stock Appreciation Rights in the
event of a change in control of the Company, provisions for the cancellation of Awards in
the event of a change in control of the Company, and provisions to comply with Applicable
Laws.

10.9. Section 16 of the Exchange Act. It is the intent of the
Company that Awards and transactions permitted by Awards be interpreted in a manner that,
in the case of Participants who are or may be subject to Section 16 of the Exchange Act,
qualify, to the maximum extent compatible with the express terms of the Awards, for
exemption from matching liability under Rule 16b-3 promulgated under the Exchange Act. The
Company shall have no liability to any Participant or other person for Section 16
consequences of Awards or events in connection with Awards if an Award or related event
does not so qualify.

10.10. Not Benefit Plan Compensation. Payments and other
benefits received by a Participant under an Award made pursuant to the Plan shall not be
deemed a part of a Participant’s compensation for purposes of determining the
Participant’s benefits under any other employee benefit plans or arrangements
provided by the Company or an Affiliate, except where the Committee expressly provides
otherwise in writing.

Article 11. 

Term, Amendment, and Termination of Plan

11.1. Term of Plan. The Plan shall become effective on the
Effective Date.

11.2. Termination of the Plan. The Plan shall terminate upon the
earliest to occur of (i) July [27], 2015; (ii) the date that is 10 years after the Plan is
approved by the Company’s stockholders; (iii) the date on which all Shares available
for issuance under the Plan have been issued as fully vested Shares; or (iv) the date
determined by the Board pursuant to its authority under Section 11.3 of the Plan.

11.3. Amendment of the Plan. The Board
or the Committee may at any time amend, alter, suspend, or terminate the Plan, without the
consent of the Participants or Beneficiaries. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary to comply with Applicable Laws.

11.4. Effect of Amendment or Termination. Except as provided in
Section 11.5 of the Plan, no amendment, alteration, suspension, or termination of the Plan
shall impair the rights of any Participant or Beneficiary under an outstanding Award,
unless required to comply with an Applicable Law or mutually agreed otherwise between the
Participant and the Committee; any such agreement must be in writing and signed by the
Participant and the Company. Termination of the Plan shall not affect the Committee’s
ability to exercise the powers granted to it hereunder with respect to Awards granted
under the Plan prior to the date of such termination.

11.5. Adjustments of Awards Upon the
Occurrence of Unusual or Nonrecurring Events. The Committee may, in its sole
discretion (but subject to the limitations and conditions expressly stated in the Plan,
such as the limitations on adjustment of Performance Objectives), adjust the terms and
conditions of Awards during the pendency or in recognition of (a) unusual or nonrecurring
events affecting the Company or an Affiliate (such as a capital adjustment,
reorganization, or merger) or the financial statements of the Company or an Affiliate, or
(b) any changes in Applicable Laws or accounting principles. By way of example, the power
to adjust Awards shall include the power to suspend the exercise of any Option or Stock
Appreciation Right.

Article 12. 

Miscellaneous

12.1. Authorization of Sub-Plans. The
Committee may from time to time establish one or more sub-plans under the Plan for
purposes of satisfying applicable blue sky, securities, and/or tax laws of various
jurisdictions. The Committee shall establish such sub-plans by adopting supplements to
this Plan containing (i) such limitations as the Committee deems necessary or desirable,
and (ii) such additional terms and conditions not otherwise inconsistent with the Plan as
the Committee shall deem necessary or desirable. All sub-plans adopted by the Committee
shall be deemed to be part of the Plan, but each sub-plan shall apply only to Participants
within the affected jurisdiction and the Company shall not be required to provide copies
of any sub-plans to Participants in any jurisdiction which is not the subject of such
sub-plan.

12.2. Governing Law. The provisions of the Plan and all Awards
made hereunder shall be governed by and interpreted in accordance with the laws of the
State of Delaware, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof.

12.3. Committee Manner of Action. Unless otherwise provided in
the bylaws of the Company or the charter of the Committee: (a) a majority of the members
of a Committee shall constitute a quorum, and (b) the vote of a majority of the
members present who are qualified to act on a question assuming the presence of a quorum
or the unanimous written consent of the members of the Committee shall constitute action
by the Committee. The Committee may delegate the performance of ministerial functions in
connection with the Plan to such person or persons as the Committee may select.

12.4. Expenses. The costs of administering the Plan shall be
paid by the Company.

12.5. Severability. If any provision of the Plan or any Award
Agreement is determined by a court of competent jurisdiction to be invalid, illegal, or
unenforceable in any jurisdiction, or as to any person or Award, such provision shall be
construed or deemed to be amended to resolve the applicable infirmity, unless the
Committee determines that it cannot be so construed or deemed amended without materially
altering the Plan or the Award, in which case such provision shall be stricken as to such
jurisdiction, person, or Award, and the remainder of the Plan and any such Award shall
remain in full force and effect.

12.6. Construction. Unless the contrary
is clearly indicated by the context, (1) the use of the masculine gender shall also
include within its meaning the feminine and vice versa; (2) the use of the singular
shall also include within its meaning the plural and vice versa; and (3) the word
"include" shall mean to include, but not to be limited to.

12.7. No Trust or Fund Created. Neither the Plan nor any Award
Agreement shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company (or an Affiliate) and a Participant or any
other person. To the extent that any person acquires a right to receive payments from the
Company (or an Affiliate) pursuant to an Award, such right shall be no more secure than
the right of any unsecured general creditor of the Company (or the Affiliate, as
applicable).

12.8. Headings. Headings are given to the sections and
subsections of the Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or interpretation
of the Plan or any provision thereof.

12.9. Complete Statement of Plan.
This document is a complete statement of the Plan.

Appendix

As used in the Plan, the following terms shall have the following meanings:

(a) "Affiliate" means an entity in which the Company
has a direct or indirect equity interest, whether now or hereafter existing; provided
however, that with respect to an Incentive Stock Option, an Affiliate means a "parent
corporation" (as defined in Section 424(e) of the Code) or a "subsidiary
corporation" (as defined in Section 424(f) of the Code) with respect to the Company,
whether now or hereafter existing.

(b) "Applicable Laws" means the requirements relating
to, connected with, or otherwise implicated by the administration of long-term incentive
plans under applicable state corporation laws, United States federal and state securities
laws, the Code, any stock exchange or quotation system on which the Shares are listed or
quoted, and the applicable laws of any foreign country or jurisdiction where Awards are,
or will be, granted under the Plan.

(c) "Award" means, individually or collectively, a
grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted
Stock Units, or other equity-based awards.

(d) "Award Agreement" means a written agreement
setting forth the terms and provisions applicable to an Award granted under the Plan. Each
Award Agreement shall be subject to the terms and conditions of the Plan.

(e) "Beneficiary" means the personal representative of
the Participant’s estate or the person(s) to whom an Award is transferred pursuant to
the Participant’s will or in accordance with the laws of descent or distribution.

(f) "Board" means the board of directors of the
Company.

(g) "Code" means the Internal Revenue Code of 1986, as
amended. Any reference to a section of the Code herein shall be a reference to any
regulations or other guidance of general applicability promulgated under such section, and
shall further be a reference to any successor or amended section of such section of the
Code that is so referred to and any regulations thereunder.

(h) "Committee" means the Compensation Committee of
the Board, which has been constituted by the Board to comply with the requirements of Rule
16b-3 promulgated under the Exchange Act, Section 162(m) of the Code, and/or other
Applicable Laws.

(i) "Company" means Clinical Data, Inc., a Delaware
corporation, or any successor thereto.

(j) "Consultant" means any natural person, including
an advisor, engaged by the Company or an Affiliate to render services to such entity.

(k) "Director" means a member of the Board.

(l) "Disability" means total and permanent disability
as defined in Section 22(e)(3) of the Code.

(m) "Effective Date" means July [27], 2005; provided
that the Plan and any Awards granted hereunder shall be null and void if the Plan is not
approved by the Company’s stockholders before any compensation under the Plan is
paid.

(n) "Employee" means any person who is an employee, as
defined in Section 3401(c) of the Code, of the Company or any Affiliate or any other
entity the employees of which are permitted to receive Incentive Stock Options under the
Code. Neither service as a Director nor payment of a director’s fee by the Company
shall be sufficient to constitute "employment" by the Company.

(o) "Exchange Act" means the Securities Exchange Act
of 1934, as amended.

(p) "Executive Officer" means an individual who is an
"executive officer" of the Company (as defined by Rule 3b-7 under the Exchange
Act) or a "covered employee" under Section 162(m) of the Code.

(q) "Fair Market Value" means, with respect to Shares
as of any date the closing sale price per share of such Shares (or the closing bid, if no
sales were reported) as reported in The Wall Street Journal (Northeast edition) or,
if not reported therein, such other source as the Committee deems reliable.

(r) "Incentive Stock Option" means an Option intended
to qualify as an incentive stock option within the meaning of Section 422 of the Code.

(s) "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.

(t) "Option" means an option to purchase Shares that
is granted pursuant to Article 5 of the Plan. An Option may be an Incentive Stock Option
or a Nonstatutory Stock Option.

(u) "Participant" means the holder of an outstanding
Award granted under the Plan.

(v) "Performance Objective" means a performance
objective or goal that must be achieved before an Award, or a feature of an Award, becomes
nonforfeitable, as described in Section 4.3 of the Plan.

(w) "Period of Restriction" means the period during
which Restricted Stock, the remuneration underlying Restricted Stock Units, or any other
feature of an Award is subject to a substantial risk of forfeiture. A Period of
Restriction shall be deemed to end when the applicable Award ceases to be subject to a
substantial risk of forfeiture.

(x) "Restricted Stock" means Shares that, during a
Period of Restriction, are subject to restrictions as described in Article 7 of the Plan.

(y) "Restricted Stock Unit" means an Award that
entitles the recipient to receive Shares or cash after a Period of Restriction, as
described in Article 8 of the Plan.

(z) "Service Provider" means an Employee, Director, or
Consultant.

(aa) "Share" means a share of the Company’s
common stock.

(bb) "Stock Appreciation Right" means an Award that
entitles the recipient to receive, upon exercise, the excess of (i) the Fair Market Value
of a Share on the date the Award is exercised, over (ii) a base amount specified by
the Committee which shall not be less than the Fair Market Value of a Share on the date
the Award is granted, as described in Article 6 of the Plan

(cc) "Tax Year" means the Company’s taxable year.
If an Award is granted by an Affiliate, such Affiliate’s taxable year shall apply
instead of the Company’s taxable year.

(dd) "Termination of Service" means the date an
individual ceases to be a Service Provider. Unless the Committee or a Company policy
provides otherwise, a leave of absence authorized by the Company or the Committee
(including sick leave or military leave) from which return to service is not guaranteed by
statute or contract shall be characterized as a Termination of Service if the individual
does not return to service within three months; such Termination of Service shall be
effective as of the first day that is more than three months after the beginning of the
period of leave. If the ability to return to service upon the expiration of such leave is
guaranteed by statute or contract, but the individual does not return, the leave shall be
characterized as a Termination of Service as of a date established by the Committee or
Company policy. For purposes of the Plan and any Award hereunder, if an entity ceases to
be an Affiliate, Termination of Service shall be deemed to have occurred with respect to
each Participant in respect of such Affiliate who does not continue as a Service Provider
in respect of the Company or another Affiliate after such giving effect to such
Affiliate’s change in status.

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