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EXHIBIT 10.31
[GENAISSANCE PHARMACEUTICALS LOGO]
May 25, 2006
Kevin Rakin
14 Side Hill Road
Westport, CT 06880
Dear 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 your
employment agreement dated January 1, 2004 (the "Employment
Agreement").
This
letter follows up on the negotiations we have had concerning
the
separation of your employment with the Company and, among other
things, is
intended as a resolution of the above-mentioned disputes. The
Company is
offering to you certain severance and other terms and benefits in
exchange for
the general release of claims and other terms set forth below. The
specific
terms of our agreement (the "Agreement") are as follows:
1.
TERMINATION OF EMPLOYMENT. Your employment with the Company
terminated effective October 31, 2005 (your "Termination Date").
The Company has
paid you all wages earned and any accrued and unused vacation time
in accordance
with 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 lump
sum 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 in
the total gross amount of four hundred twenty-three thousand five
hundred
dollars ($423,500), in the case of both (a) and (b) less
appropriate income and
employment tax withholdings as determined by the Company in good
faith and any
authorized deductions (the "Severance Payment"); provided, however
that no
payment shall be made under clause (b) above until the later of
either the
Company's next regular payroll period following May 31, 2006 or the
expiration
of the Revocation Period defined in paragraph 8 below. In addition,
the Company
agrees that it shall not offset from the Severance Payment the
value of the
2,500 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
about
November 17, 2005 (valued at the time of investment at forty-eight
thousand nine
hundred six dollars and twenty-five cents ($48,906.25)) which may
be subject to
taxation in accordance with applicable law.
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Kevin Rakin
Page 2
(b) Taxes and
Filing. Except as provided by Section 13(b)
subparagraphs (iii) through (vi) of your Employment Agreement, you
acknowledge
that you shall be solely responsible for the satisfaction of any
income,
employment or other taxes, interest or penalties that may be
assessed against
you. Neither the Company nor its affiliates, nor any of their
directors, agents,
or employees shall have any obligation to indemnify or hold you
harmless from
any or all of such taxes. You agree to indemnify and hold the
Company harmless
from any claims and expenses the Company may incur as a result of
any failure by
you to pay taxes which might be due as a result of receiving
compensation from
the Company under this Agreement or otherwise. You shall be
responsible for
making 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 fees
and expenses actually incurred in connection with the negotiation
of this
Agreement up to a maximum amount of fifteen thousand dollars
($15,000). To
receive reimbursement for legal fees and expenses contemplated by
this paragraph
2(c), you must submit invoices for such fees and expenses (with any
privileged
information redacted) to Caesar Belbel, the Company's Executive
Vice President
and Chief Legal Counsel, at the Company's headquarters. Payment for
legal fees
will be made on the Company's next regularly scheduled payroll
period following
submission and review of the fee invoices.
(d) Health and
Dental Insurance. Upon the termination of your
employment, you and your dependents may be eligible to continue
your health
and/or dental insurance coverage under Company-sponsored plans, if
any, pursuant
to the federal law known as COBRA. You have elected COBRA
continuation coverage.
The Company has paid the full monthly premium cost and any
monthly
administrative fee for such continuation coverage (the "COBRA
Premium") since
the Termination Date and will continue pay the COBRA Premium for a
total period
of 18 months following your Termination Date. Your rights and
obligations under
such insurance plans shall be governed by the specific terms of the
plans and
COBRA. Information concerning COBRA rights, coverage and election
has been sent
to you under separate cover. In the event you obtain health and/or
dental
insurance coverage through other employment prior to the expiration
of the
18-month period of COBRA Premium payments described herein, the
Company's
obligation to continue to provide such COBRA Premium payments shall
cease as of
the effective date of such coverage. Should you obtain such
coverage, you agree
to promptly notify Mr. Belbel in writing at the Company's
headquarters.
(e) Accelerated
Vesting of Stock Options and Extension of Exercise
Period. The parties agree that, pursuant to Section 13(c) of your
Employment
Agreement, your unvested stock options and restricted stock of the
Parent vested
completely effective as of your Termination Date. You may exercise
any of the
vested options of the Parent as set forth on the attached Exhibit A
until and
including October 31, 2006. Except for the accelerated vesting and
exercise
period described in this paragraph 2(e), your rights and
obligations concerning
all options shall be governed by the terms and procedures of the
applicable
option grants and agreements.
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Kevin Rakin
Page 3
(f) Other
Benefits. Except as specifically set forth in this
Agreement, your right to, and participation in, all employee
benefit plans of
the Company and the Parent terminated as of your Termination Date
in accordance
with the specific terms of each plan.
(g) Consulting
Arrangements. (i) You, the Company and the Parent
have been operating under a consulting arrangement in which you
devote up to
forty percent (40%) of your full business time and effort to
matters concerning
the Company and/or the Parent, as directed by the Parent's Chief
Executive
Officer, in exchange for a payment of twenty thousand dollars
($20,000) per each
full month of service, payable monthly in arrears. This consulting
arrangement
terminated effective April 15, 2006 and the parties agree that the
payment
in-full for your services for one-half of the month of April was
ten thousand
dollars ($10,000).
(ii) Effective April 16, 2006, the parties will operate under a
new
consulting arrangement that will continue through March 31, 2007,
during which
time you shall provide consulting services to the Company by mutual
agreement
between you and the Parent's Chief Executive Officer on an
as-needed basis, but
in no event in excess of forty percent (40%) of your full business
time and
effort per month. As compensation for your past services as a
consultant and for
future services as a consultant described in this subparagraph
(ii), the Company
agrees to grant to you seventy thousand (70,000) fully vested
non-qualified
stock options to purchase Common Stock with an exercise price equal
to the
closing price of the Common Stock on the Nasdaq National Market as
of the date
of the grant. These options shall be issued pursuant to the
Parent's 2005 Equity
Incentive Plan and will be subject to the standard non-qualified
stock option
grant agreement promulgated thereunder. The term of these options
shall be 10
years. These options shall be exercisable at any time during your
service as a
director of the Parent and for five (5) years following the
termination of your
service as a director of the Parent, subject in all cases to the
10-year term of
the options. Your rights and obligations concerning such stock
options shall be
governed in all respects by the terms and procedures of the 2005
Equity
Incentive Plan and the applicable option grant agreement. The date
of the grant
under this paragraph 2(g)(ii) shall be May 12, 2006.
(j) Compensation
for Service as Director. Upon the conclusion of
the initial consulting arrangement described in paragraph 2(g)(i)
above, and
provid
