Exhibit 10.31

 

SEPARATION OF EMPLOYMENT AGREEMENT AND GENERAL RELEASE

 

WHEREAS, Debra L. Pawl (“Employee”) has been employed by Closure Medical
Corporation (“the Company”);

 

WHEREAS, the Company and Employee mutually desire to terminate Employee’s
employment with the Company effective October 28, 2004 (“the Separation Date”);

 

IT IS HEREBY AGREED between Employee and the Company as follows:

 

1. Employee, for and in consideration of the Company’s agreement to enter into
this Agreement, and intending to be legally bound does hereby REMISE, RELEASE
AND FOREVER DISCHARGE the Company and its parents, subsidiaries, affiliates,
divisions, units, joint ventures, and members, and its and their respective
officers, directors, shareholders, employees, agents, and attorneys, its and
their respective predecessors, successors, assigns, heirs, executors,
administrators, and any individual or organization related to the Company and
those benefit plans it sponsors (hereinafter referred to collectively as “the
RELEASEES”) of and from any and all actions and causes of actions, suits, debts,
claims, and demands whatsoever in law or in equity, which she ever had, now has,
or which she or her heirs, executors or administrators may have, by reason of
any matter, cause or thing whatsoever, up to and including the date of this
Separation of Employment Agreement and General Release (“the Agreement”), and
particularly, but without limitation, any claims arising from or relating in any
way to her employment relationship or the termination of her employment
relationship with the Company, including, but not limited to, any claims which
have been asserted, could have been asserted or could be asserted, now or in the
future, including any claims under any federal, state or local laws, including,
without limitation: the Age Discrimination in Employment Act, 29 U.S.C. § 621 et
seq., Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the
American with Disabilities Act, 29 U.S.C. § 12101 et seq., the Employee
Retirement Income Security Act, 29 U.S.C. § 1001 et seq., the Family and Medical
Leave Act, 29 U.S.C. § 2601, et seq., the Immigration and Nationality Act, 8
U.S.C. § 1101 et seq., the whistleblower provisions of the Sarbanes-Oxley Act,
18 U.S.C. § 1514A, the Omnibus Crime Control and Safe Streets Act, 18 U.S.C. §§
2510-2711, the North Carolina Equal Employment Practices Act, G.S. § 143-422.2,
all as amended; any common law, contract, or tort claims now or hereafter
recognized, including, but not limited to: claims for wrongful discharge, public
policy claims, claims for breach of an express or implied contract, claims for
breach of an implied covenant of good faith and fair dealing,

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intentional infliction of emotional distress, invasion of privacy, intrusion
into seclusion, defamation, and tortious interference with contract or
prospective economic advantage; any claims for any compensation, including, but
not limited to: back wages, front pay, fringe benefits, reinstatement, or any
other form of economic loss; all claims for personal injury, including, but not
limited to: mental anguish, emotional distress, pain and suffering, humiliation,
and damage to name or reputation; and all claims for liquidated damages and
punitive damages and all claims for counsel fees and costs.

 

2. The parties agree that in connection with the Company’s decision to outsource
its legal department functions, including the duties and responsibilities
previously performed by Employee, Employee’s position with the Company has been
eliminated and her employment with the Company has been terminated effective
immediately.

 

3. In further consideration of the Company’s agreement to enter into this
Agreement, Employee agrees and covenants that during the three-month period
following the execution of this Agreement, she shall make herself available at
reasonable times to cooperate with the Company and answer any questions
regarding her former duties.

 

4. Provided that Employee does not revoke her signature within the period
provided by paragraph 12(e), in consideration of Employee’s execution of this
Agreement, the Company agrees:

 

  (a) to pay Employee’s base salary at its current rate, two hundred and three
thousand dollars ($203,000.00) annually, through October 28, 2005, minus all
payroll deductions and withholdings required by law, utilizing its standard
payroll practices;

 

  (b) to pay Employee an incentive bonus payment for the 2004 calendar year in
the amount of one hundred and four thousand eight hundred ninety dollars and ten
cents ($104,890.10), minus all payroll deductions and withholdings required by
law, on the date 2004 incentive bonus payments are paid for similarly-situated
executives following the completion, auditing, and approval by the Board of
Directors of the Company’s financial results;

 

  (c)

to pay Employee a pro-rata incentive bonus payment in the amount of eighty-seven
thousand three hundred seventy-three dollars and forty-six cents

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($87,373.46) for the first ten months of the 2005 calendar year, payable in
twenty-six equal installments of three thousand three hundred sixty dollars and
fifty-one cents ($3,360.51) each over the twelve-month period beginning on
October 29, 2004 and ending on October 28, 2005, minus all payroll deductions
and withholding required by law; and

 

  (d) to pay the full premiums associated with Employee’s continued
participation in the Company’s benefit programs in which Employee participated
on the Separation Date, at the same level of such participation on the
Separation Date, through October 28, 2005. Notwithstanding the foregoing,
following the Separation Date, Employee shall no longer participate in the
Closure Medical Corporation Employee Stock Purchase Plan and the Closure Medical
Corporation 401(k) Retirement Plan & Trust. The parties agree that Employee
shall not experience a “loss of coverage” until October 28, 2005 for those
benefit programs in which she continues to participate in following the
Separation Date and, thus, this period shall not reduce her entitlement to
continuation coverage under the Consolidated Omnibus Budget Reconciliation Act
of 1974.

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5. Provided that Employee does not revoke her signature within the period
provided by paragraph 12(e), Employee and the Company further agree to following
provisions regarding her equity compensation:

 

  (a) Employee shall not be entitled to any additional grants of stock or stock
options after the Separation Date;

 

  (b) all of Employee’s previously granted stock options which: (1) had vested
prior to the Separation Date; and (2) on the Separation Date had an exercise
price below the market price of stock on the Separation Date shall be fully
exercisable in accordance with the terms of the Closure Medical Corporation
Amended and Restated 1996 Equity Compensation Plan, i.e., for a period up to
ninety (90) days from the Separation Date;

 

  (c) all of Employee’s previously granted stock options which: (1) had vested
prior to the Separation Date; and (2) on the Separation Date had an exercise
price above the market price of the stock on the Separation Date shall be fully
exercisable on or before October 27, 2006;

 

  (d) all of Employee’s previously granted stock options which: (1) had not
vested as of the Separation Date; and (2) on the Separation Date had an exercise
price above the market price of the stock on the Separation Date, shall vest on
the Separation Date and shall be exercisable on or before October 27, 2006; and

 

  (e) all of Employee’s previously granted stock options which: (1) had not
vested as of the Separation Date; and (2) on the Separation Date had an exercise
price below the market price of stock on the Separation Date, shall be
forfeited.

 

6. It is expressly agreed and understood that neither the Company nor any of the
RELEASEES has and will not have any obligation to provide Employee at any time
in the future with any payments, benefits or considerations other than those
recited in paragraphs 4 and 5.

 

7. Employee hereby agrees and recognizes that her employment relationship with
the Company is hereby permanently and irrevocably severed, and that neither the
Company nor any of the RELEASEES has any obligation, contractual or otherwise,
to hire, rehire or re-employ her in the future. Employee further agrees that she
will not seek employment or re-employment with the Company or any of the
RELEASEES at any point in the future.

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8. To the extent permissible under controlling law, Employee agrees, covenants,
and promises that she has not communicated or disclosed, and will not hereafter
communicate or disclose, the terms of this Agreement to any persons with the
exception of members of her immediate family, her attorney, and her accountant
or tax advisor, each of whom shall be informed of this confidentiality
obligation and shall be bound by its terms.

 

9. To the extent permissible under controlling law, Employee agrees not to make
disparaging, critical, or otherwise detrimental comments to any person or entity
concerning the Company, its officers, directors or employees; the products,
services or programs provided or to be provided by the Company; the business
affairs or the financial condition of the Company; or circumstances surrounding
her employment with the Company and/or the termination of that employment.

 

10. Employee agrees that all memoranda, notes, records, papers, electronic
files, or other documents, and all copies thereof (maintained in whatever
format), relating to the Company’s operations or business, and all objects
associated therewith in any way obtained by Employee during the course of her
employment with the Company are and shall remain the Company’s sole and
exclusive property. Employee agrees that she will deliver all of the
aforementioned materials that may be in her possession to the Company within two
business days following her execution of this Agreement.

 

11. Employee agrees and acknowledges that the agreement by the Company described
herein is not and shall not be construed to be an admission of any violation of
any federal, state, or local statute or regulation, or of any duty owed by the
Company to Employee.

 

12. Employee hereby certifies that:

 

  (a) she has read the terms of this Agreement and that she understands its
terms and effects, including the fact that she has agreed to release and forever
discharge the RELEASEES from any legal action arising out of her employment
relationship with the Company, the terms and conditions of that employment
relationship, and the termination of that employment relationship, including but
not limited to claims under the Age Discrimination in Employment Act, 29 U.S.C.
§ 621 et seq.;

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  (b) she has been informed by the Company, through this document, that she may
discuss this Agreement with an attorney of her own choice;

 

  (c) she is signing this Agreement voluntarily and knowingly in exchange for
the consideration herein, which she acknowledges as adequate and satisfactory to
her;

 

  (d) she understands that she has twenty-one (21) days within which to consider
and sign this Agreement, and that she has signed on the date indicated below
after concluding that this Agreement is satisfactory to her;

 

  (e) she understands that she may revoke her release for a period of seven (7)
days following the day on which she signs by submitting written notice thereof
to: Daniel Pelak, Chief Executive Officer, Closure Medical Corporation, 5250
Greens Dairy Road Raleigh, North Carolina 27616; and

 

  (f) neither the Company nor any of its agents, representatives, or attorneys
has made any representations to Employee concerning the terms or effects of this
Agreement other than those contained herein.

 

13. This Agreement shall be deemed to be made in, and in all respects shall be
interpreted, construed, and governed by and in accordance with, the laws of the
State of North Carolina, without regard to any principles governing conflicts of
laws or canons of construction interpreting written agreements against the
draftsman. Any dispute arising out of this Agreement shall be brought in a court
of competent jurisdiction in the State of North Carolina.

 

14. Employee acknowledges and agrees that this Agreement constitutes the entire
agreement and understanding between her and the Company concerning the
termination of her employment, and any obligations, monetary or otherwise, owed
to Employee arising out of her employment with the Company. Employee
acknowledges and agrees that this Agreement supersedes any and all prior written
or oral agreements or understandings between the parties hereto, with the
exception of: (1) the provisions regarding Confidential

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Information, Developments, Non-Competition, No Solicitation, and Equitable
Relief set forth in paragraphs 2, 3, 4, 5, and 6 of that certain Employment
Agreement dated March 30, 1998 between Closure Medical Corporation and Employee;
and (2) that certain Employment, Confidential information and Invention
Assignment Agreement executed by Employee on March 30, 1998, copies of which are
collectively attached hereto as Exhibit A and are incorporated by reference.
Employee’s obligations to the Company, and the Company’s corresponding rights
vis-à-vis Employee, under those provisions shall survive the execution of this
Agreement.

 

15. The parties agree that if any provision of this Agreement, other than the
Release by Employee set forth in Paragraph 1, or the application thereof to any
person, place or circumstance, shall be held by a court of competent
jurisdiction to be invalid, unenforceable, or void, the remainder of this
Agreement and such provision as applied to other persons, places, and
circumstances shall remain in full force and effect.

 

16. This Agreement shall be binding upon and enforceable by, and shall inure to
the benefit of, the Company and its respective successors and assigns. The
obligations and duties of Employee hereunder are personal and not assignable,
and any attempt of assignment or transfer of Employee’s duties or obligations
shall be void.

 

NOTICE TO EMPLOYEE: IF YOU SIGN THIS AGREEMENT, YOU WILL BE GIVING UP YOUR RIGHT
TO SUE (AND TO INSTITUTE OTHER LEGAL PROCEEDINGS) AND TO RECOVER DAMAGES FROM
THE COMPANY AND ANY PERSONS AND ENTITIES AFFILIATED WITH THE COMPANY ON ACCOUNT
OF ANY ACT OR OMISSION PRIOR TO THE DATE OF THIS AGREEMENT IS SIGNED. YOU,
THEREFORE, ARE ADVISED TO REVIEW THIS AGREEMENT CAREFULLY BEFORE SIGNING. YOU
HAVE TWENTY-ONE (21) DAYS AFTER THE DATE YOU RECEIVE THIS AGREEMENT TO DECIDE
WHETHER OR NOT TO SIGN IT. IF YOU DECIDE TO SIGN, YOU CAN CHANGE YOUR MIND AND
REVOKE YOUR SIGNATURE AT ANY TIME WITHIN SEVEN (7) DAYS AFTER THE DATE YOU SIGN.
TO REVOKE YOUR SIGNATURE, YOU MUST GIVE WRITTEN NOTICE OF REVOCATION TO DANIEL
PELAK, CHIEF EXECUTIVE OFFICER, CLOSURE MEDICAL CORPORATION, 5250 GREENS DAIRY
ROAD RALEIGH, NORTH CAROLINA 27616. NOTICE IS NOT DEEMED TO BE GIVEN UNTIL
RECEIVED BY CLOSURE MEDICAL CORPORATION.

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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereby
execute the foregoing Agreement as of the dates respectively set forth below.

 

Closure Medical Corporation

By:  

/s/ DANIEL A. PELAK

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    Daniel Pelak, Chief Executive Officer Date:   11/18/2004 Debra L. Pawl

/s/ DEBRA L. PAWL

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Date:   11/18/2004