Contract

EXHIBIT 10.31 [GENAISSANCE PHARMACEUTICALS LOGO] May 25, 2006Kevin Rakin14 Side Hill RoadWestport, CT 06880Dear Kevin: Since the termination of your employment with Genaissance Pharmaceuticals,Inc. (the “Company”) in October 2005, you, the Company and the Company’s parent,Clinical Data, Inc. (the “Parent”), have disputed amounts owed to you under youremployment agreement dated January 1, 2004 (the “Employment Agreement”). This letter follows up on the negotiations we have had concerning theseparation of your employment with the Company and, among other things, isintended as a resolution of the above-mentioned disputes. The Company isoffering to you certain severance and other terms and benefits in exchange forthe general release of claims and other terms set forth below. The specificterms of our agreement (the “Agreement”) are as follows: 1. TERMINATION OF EMPLOYMENT. Your employment with the Companyterminated effective October 31, 2005 (your “Termination Date”). The Company haspaid you all wages earned and any accrued and unused vacation time in accordancewith the Company’s policies through your Termination Date. 2. SEVERANCE PAY AND BENEFITS. (a) Severance Pay. The Company (a) has paid you a one-time lumpsum payment in the total gross amount of one hundred thousand dollars ($100,000)on or about the date hereof and (b) will pay you a one-time lump sum payment inthe total gross amount of four hundred twenty-three thousand five hundreddollars ($423,500), in the case of both (a) and (b) less appropriate income andemployment tax withholdings as determined by the Company in good faith and anyauthorized deductions (the “Severance Payment”); provided, however that nopayment shall be made under clause (b) above until the later of either theCompany’s next regular payroll period following May 31, 2006 or the expirationof the Revocation Period defined in paragraph 8 below. In addition, the Companyagrees that it shall not offset from the Severance Payment the value of the2,500 shares of the Parent’s common stock, par value $0.01 (the “Common Stock”)and the 1,250 warrants to purchase Common Stock issued to you on or aboutNovember 17, 2005 (valued at the time of investment at forty-eight thousand ninehundred six dollars and twenty-five cents ($48,906.25)) which may be subject totaxation in accordance with applicable law.Kevin RakinPage 2 (b) Taxes and Filing. Except as provided by Section 13(b)subparagraphs (iii) through (vi) of your Employment Agreement, you acknowledgethat you shall be solely responsible for the satisfaction of any income,employment or other taxes, interest or penalties that may be assessed againstyou. Neither the Company nor its affiliates, nor any of their directors, agents,or employees shall have any obligation to indemnify or hold you harmless fromany or all of such taxes. You agree to indemnify and hold the Company harmlessfrom any claims and expenses the Company may incur as a result of any failure byyou to pay taxes which might be due as a result of receiving compensation fromthe Company under this Agreement or otherwise. You shall be responsible formaking all filings under Section 16 of the Securities and Exchange Act of 1934,as amended. (c) Legal fees. The Company agrees to reimburse you for legal feesand expenses actually incurred in connection with the negotiation of thisAgreement up to a maximum amount of fifteen thousand dollars ($15,000). Toreceive reimbursement for legal fees and expenses contemplated by this paragraph2(c), you must submit invoices for such fees and expenses (with any privilegedinformation redacted) to Caesar Belbel, the Company’s Executive Vice Presidentand Chief Legal Counsel, at the Company’s headquarters. Payment for legal feeswill be made on the Company’s next regularly scheduled payroll period followingsubmission and review of the fee invoices. (d) Health and Dental Insurance. Upon the termination of youremployment, you and your dependents may be eligible to continue your healthand/or dental insurance coverage under Company-sponsored plans, if any, pursuantto the federal law known as COBRA. You have elected COBRA continuation coverage.The Company has paid the full monthly premium cost and any monthlyadministrative fee for such continuation coverage (the “COBRA Premium”) sincethe Termination Date and will continue pay the COBRA Premium for a total periodof 18 months following your Termination Date. Your rights and obligations undersuch insurance plans shall be governed by the specific terms of the plans andCOBRA. Information concerning COBRA rights, coverage and election has been sentto you under separate cover. In the event you obtain health and/or dentalinsurance coverage through other employment prior to the expiration of the18-month period of COBRA Premium payments described herein, the Company’sobligation to continue to provide such COBRA Premium payments shall cease as ofthe effective date of such coverage. Should you obtain such coverage, you agreeto promptly notify Mr. Belbel in writing at the Company’s headquarters. (e) Accelerated Vesting of Stock Options and Extension of ExercisePeriod. The parties agree that, pursuant to Section 13(c) of your EmploymentAgreement, your unvested stock options and restricted stock of the Parent vestedcompletely effective as of your Termination Date. You may exercise any of thevested options of the Parent as set forth on the attached Exhibit A until andincluding October 31, 2006. Except for the accelerated vesting and exerciseperiod described in this paragraph 2(e), your rights and obligations concerningall options shall be governed by the terms and procedures of the applicableoption grants and agreements.Kevin RakinPage 3 (f) Other Benefits. Except as specifically set forth in thisAgreement, your right to, and participation in, all employee benefit plans ofthe Company and the Parent terminated as of your Termination Date in accordancewith the specific terms of each plan. (g) Consulting Arrangements. (i) You, the Company and the Parenthave been operating under a consulting arrangement in which you devote up toforty percent (40%) of your full business time and effort to matters concerningthe Company and/or the Parent, as directed by the Parent’s Chief ExecutiveOfficer, in exchange for a payment of twenty thousand dollars ($20,000) per eachfull month of service, payable monthly in arrears. This consulting arrangementterminated effective April 15, 2006 and the parties agree that the paymentin-full for your services for one-half of the month of April was ten thousanddollars ($10,000). (ii) Effective April 16, 2006, the parties will operate under a newconsulting arrangement that will continue through March 31, 2007, during whichtime you shall provide consulting services to the Company by mutual agreementbetween you and the Parent’s Chief Executive Officer on an as-needed basis, butin no event in excess of forty percent (40%) of your full business time andeffort per month. As compensation for your past services as a consultant and forfuture services as a consultant described in this subparagraph (ii), the Companyagrees to grant to you seventy thousand (70,000) fully vested non-qualifiedstock options to purchase Common Stock with an exercise price equal to theclosing price of the Common Stock on the Nasdaq National Market as of the dateof the grant. These options shall be issued pursuant to the Parent’s 2005 EquityIncentive Plan and will be subject to the standard non-qualified stock optiongrant agreement promulgated thereunder. The term of these options shall be 10years. These options shall be exercisable at any time during your service as adirector of the Parent and for five (5) years following the termination of yourservice as a director of the Parent, subject in all cases to the 10-year term ofthe options. Your rights and obligations concerning such stock options shall begoverned in all respects by the terms and procedures of the 2005 EquityIncentive Plan and the applicable option grant agreement. The date of the grantunder this paragraph 2(g)(ii) shall be May 12, 2006. (j) Compensation for Service as Director. Upon the conclusion ofthe initial consulting arrangement described in paragraph 2(g)(i) above, andprovided that you are not employed by the Parent or the Company, you shall beeligible to receive director’s fees for your service on the Board on the sameterms, conditions and basis as other non-employee directors of the Board on apro-rated basis (pro-rated monthly) through the date of the Company’s nextannual meeting of stockholders, currently scheduled for September 21, 2006. 3. RETURN OF COMPANY PROPERTY. You agree to return to the Company: (a)all originals and copies of all proprietary or confidential information andtrade secrets of the Company and the Parent, whether in print, electronic orother form;Kevin RakinPage 4(b) all originals and copies of Company and Parent files and customer files,whether in print or electronic form; (c) all identification cards, keys, orother means of access to the Company or Parent; and (d) any other property ofthe Company and Parent in your possession, custody or control (collectively”Company Property”). The parties expressly agree that the term “CompanyProperty” shall not include information, materials and things that you mustretain in your possession in order to reasonably discharge your duties underyour consulting arrangement with the Company or in your role on the ClinicalData Board of Directors. You represent that as of the date of this letter youhave returned all such Company Property. 4. NONDISPARAGEMENT. You agree that you will not make, and that youwill not allow or instruct any other party to make, whether in oral, print,electronic or other form, any false, disparaging or derogatory remarks about, orrefer negatively to your association with, the Parent, the Company, theiraffiliates, their products and services, their past or present officers,directors, trustees, employees or any other Released Party defined in paragraph7. 5. CONFIDENTIALITY. You agree to keep the existence, terms andnegotiations of this Agreement strictly confidential and shall not disclosethese matters to anyone, in words or in substance, except: (a) to yourattorneys, financial advisors, and immediate family members, provided that theyfirst agree to keep all such matters confidential; (b) to any taxing authority;and (c) to the extent required by law or to the extent necessary to enforcerights under this Agreement; provided however that if you anticipate or arerequired to make disclosure pursuant to this subsection, you shall inform theParent’s Chief Executive Officer in advance of any disclosure at least ten (10)days prior to such disclosure whenever possible, and where not possible, youshall provide as much advance notice as possible. Nothing in this Agreementshall limit the rights of any government agency or any party’s right of accessto, participation or cooperation with any government agency. 6. NON-FILING OF COMPLAINT OR CHARGES. You represent that you have notfiled or asserted any cause of action, claim, charge or other action orproceeding against the Company or any Released Party, defined in paragraph 7. 7. GENERAL RELEASE. As a material inducement to the Parent and theCompany to enter into this Agreement, and in consideration of the severance payand benefits and other good and valuable consideration, the receipt andsufficiency is hereby acknowledged, you, on behalf of yourself, your heirs,administrators, representatives, executors, successors, and assigns, herebyirrevocably and unconditionally release, acquit, and forever dischargeGenaissance Pharmaceuticals, Inc. and its predecessors, parents, subsidiaries,affiliates, divisions, any related entity, successors and assigns, and all oftheir current and former agents, officers, directors, shareholders, employees,members, trustees, fiduciaries, representatives, attorneys and all personsacting by, through, under or in concert with any of them (the “ReleasedParties”) from any and all charges, complaints, claims, liabilities,Kevin RakinPage 5obligations, promises, agreements, damages, causes of action, suits, demands,losses, debts, and expenses of any nature whatsoever, known or unknown(“Claims”) which you have, had or claim to have against any Released Party up toand including the Effective Date of this Agreement. This General Release ofClaims shall include, without limitation, Claims relating to your employment andseparation from employment with the Company, Claims of discrimination under thecommon law or any federal or state statute (including, without limitation, theCivil Rights Act of 1964, the Americans with Disabilities Act and the AgeDiscrimination in Employment Act, all as amended), Claims for wrongfuldischarge, Claims for the payment of any salary, wages, bonuses, commissions,vacation pay, severance pay or benefits, Claims relating to stock or stockoptions, Claims relating to the payment of taxes, including without limitationany taxes that may be assessed under Sections 409A or 4999 of the InternalRevenue Code, Claims of detrimental reliance, and all other statutory, commonlaw, tort, contract or other Claims of any nature whatsoever, to the fullestextent permitted by law. This General Release of Claims does not apply to anyClaims concerning a breach of this Agreement or any claims arising after theEffective Date of this Agreement. With respect to the Claims you are waivingherein, you acknowledge that you are waiving your right to receive money or anyother relief in any action instituted by you or on your behalf by any otherperson, entity or government agency. To the fullest extent permitted by law, youfurther agree that if any agency or court assumes jurisdiction over anycomplaint or charge on your behalf against any Released Party, you will requestimmediate dismissal of the matter. 8. NOTICE AND RIGHT TO CONSIDER. You are advised to consult with anattorney before executing this Agreement. You represent and acknowledge that youhave been advised to consult with an attorney and that you have been representedby the attorney of your choosing, Louis A. Rodriques, Esquire, during thenegotiation of this Agreement, that you have consulted with your attorney beforeexecuting this Agreement, that you have carefully read and fully understand allof the provisions of this Agreement and that you are voluntarily entering intothis Agreement. You acknowledge that you have been given up to twenty-one (21)days from the date you receive this letter to complete your review and sign it.You acknowledge that if you sign this Agreement prior to the expiration of thetwenty-one (21) day period that you did so voluntarily. You will also have seven(7) days following your execution of this Agreement to revoke it (the”Revocation Period”). If you wish to revoke your acceptance of this Agreement,you must submit your revocation in writing to the Company’s Chief ExecutiveOfficer within the time period set forth above. The terms of this Agreementshall not become effective or enforceable until after the expiration of theRevocation Period. The effective date of this Agreement shall be the dayimmediately following the expiration of the Revocation period (the “EffectiveDate”). 9. COOPERATION. You agree that you will cooperate and assist the Parentand the Company in the future in the event that the Parent or the Company ispresented with legal issues as to which you have relevant information andknowledge. To the extent such cooperation is required, the Parent and theCompany each agreesKevin RakinPage 6to reimburse you for reasonable out-of-pocket expenses actually incurred inconnection with providing such cooperation so long as such expenses are approvedin advance. 10. ENTIRE AGREEMENT. This Agreement constitutes the full understandingand entire Agreement between you, the Parent and the Company and supersedes anyother agreements of any kind, whether oral or written, formal or informal;provided however, that you will adhere to and honor all covenants andobligations to the Company, its parents, its affiliates and its successors andassigns as may be set forth in any agreement between you and the Company whichsurvive termination of your employment, including, without limitation, that youshall remain bound by your continuing obligations to preserve the Company’strade secrets, intellectual property, and confidential information and that youshall remain bound by Sections 7 through 11 of your Employment Agreement, whichcontain non-competition, non-solicitation, confidentiality and inventionscovenants for the period through October 31, 2006. Notwithstanding theforegoing, you acknowledge that, while a member of the Parent’s board ofdirectors, you continue to be subject to your fiduciary obligations to theParent, the Company and their stockholders and that nothing in this agreement orin your Employment Agreement purports to alter such obligations. You acknowledgeand agree that, except for those obligations contained herein, the Parent andthe Company have fulfilled and satisfied all of their obligations under any andall agreements between you and the Company including, without limitation, theEmployment Agreement, and neither the Parent nor the Company has furtherobligations thereunder, or under any other agreements, employment or otherwise.No covenants, agreements, representations or warranties of any kind whatsoeverhave been made by any party, except as specifically set forth in this Agreement.The parties represent and acknowledge that in executing this Agreement they donot rely and have not relied upon any other promise, inducement, representationor statement, whether oral or in writing, made by the other or by the other’sagents, representatives, or attorneys with regard to the subject matter, basisor effect of this Agreement. This Agreement may be modified only by a writingsigned by the parties. 11. MISCELLANEOUS. The parties agree that the failure of a party at anytime to require performance of any provision of this Agreement shall not affect,diminish, obviate or void in any way the party’s full right or ability torequire performance of the same or any other provision of this Agreement at anytime thereafter. This Agreement shall inure to the benefit of and shall be binding uponyou, your heirs, administrators, representatives, executors, successors andassigns and upon the successors and assigns of the Company. This Agreement shall be construed in accordance with and governed by thelaws of the State of Connecticut. Should any portion, term or provision of this Agreement be declared ordetermined by any court to be illegal, invalid or unenforceable, the validity ortheKevin RakinPage 7remaining portions, terms and provisions shall not be affected thereby, and theillegal, invalid or unenforceable portion, term or provision shall be deemed notto be part of this Agreement. The headings of the paragraphs of this Agreement are for convenience onlyand are not binding on any interpretation of this Agreement. * * *Kevin RakinPage 8 If you wish to accept this Agreement, please sign and date the Agreementbelow and return it to me within the time period specified in paragraph 8. We wish you every success for the future. Sincerely, /s/ Caesar J. Belbel —————————————- Caesar J. Belbel Executive Vice President and Chief Legal Officer, Clinical Data, Inc.BY SIGNING THIS AGREEMENT, I STATE THAT I HAVE READ IT, I UNDERSTAND IT, I HAVEREVIEWED IT WITH MY ATTORNEY, I AGREE WITH EVERYTHING IN IT AND I HAVE SIGNED ITKNOWINGLY AND VOLUNTARILY. /s/ Kevin Rakin- ————————————-Kevin RakinDate: May 25, 2006cc: Louis A. Rodriques, Esq. Bingham McCutchen LLP 150 Federal Street Boston, MA 02110 EXHIBIT A

ORIGINAL TERM TO EXERCISE CLDA OPTIONS (PURSUANT GENAISSANCE ORIGINAL CLDA TO SECTION 13(c) OF OPTIONS GRANTED & CONVERTED TO EXERCISE PRICE PER EMPLOYMENTORIGINAL GRANT DATE VESTED CLDA OPTIONS SHARE AGREEMENT)- ——————- —————– ————– —————— ——————- 10-Apr-00 400,000 26,000 $ 184.62 31-Oct-06 22-Oct-01 100,000 6,500 $ 58.47 31-Oct-06 21-Mar-02 50,000 3,250 $ 38.47 31-Oct-06 2-May-02 50,000 3,250 $ 76.93 31-Oct-06 15-Nov-02 75,000 4,875 $ 13.08 31-Oct-06 9-Dec-03 106,043 6,892 $ 39.39 31-Oct-06 9-Dec-03 33,957 2,207 $ 39.39 31-Oct-06 27-Apr-04 10,280 668 $ 57.54 31-Oct-06 27-Apr-04 49,720 3,231 $ 57.54 31-Oct-06 7-Jan-05 41,141 2,674 $ 33.85 31-Oct-06 7-Jan-05 93,859 6,100 $ 33.85 31-Oct-06 ————– Total = 65,647 ==============