1
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement (the "Agreement") executed on the
18th day of December, 2000, sets forth the terms of the agreement between
TransPro, Inc. ("TransPro") and Henry P. McHale ("McHale") relating to the
termination of McHale's employment with TransPro. This Agreement shall take
effect on the eighth day following the date upon which McHale executes this
Agreement (the "Effective Date").
WHEREAS, McHale has been employed as the President, Chief Executive
Officer and Director of TransPro pursuant to an Employment Agreement, dated as
of September 29, 1995, as amended on October 1, 1998 and July 1, 2000 (the
"Employment Agreement"); and
WHEREAS, TransPro and McHale have agreed that McHale will resign as
President and Chief Executive Officer and Director, and will terminate his
employment as of December 31, 2000 (the "Termination Date") and pursuant to the
terms of this Agreement as set forth below.
NOW THEREFORE, in consideration of the mutual promises of the parties
and other valuable and sufficient consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. Tender of Resignation
On September 25, 2000, McHale announced that he would be resigning his
positions as President and Chief Executive Officer of TransPro and would resign
from the Board of Directors of TransPro, in each case effective December 31,
2000. Simultaneously with the execution of this Agreement, McHale will
irrevocably tender, and TransPro will accept, McHale's written resignations from
such offices and directorships and all officer and director positions with
TransPro's subsidiaries effective at the close of business on December 31, 2000.
2. Severance Payments/Compensation
(a) TransPro shall continue to pay McHale all amounts due under the
Employment Agreement through the Termination Date. In addition, TransPro shall
pay to McHale the sum of One Thousand Dollars ($1,000) on the date of this
Agreement, as provided in Section 5(c) below.
(b) In lieu of any further salary or other payments to McHale pursuant
to the Employment Agreement or otherwise for periods subsequent to the
Termination Date, TransPro shall:
(i) pay to McHale as severance pay or as liquidated damages,
or both, in twelve (12) substantially equal monthly installments
commencing on the fifth day after the Termination Date, an aggregate
amount equal to Three Hundred Eighty-Six Thousand
2
Two Hundred Fifty Dollars ($386,250), less any applicable Federal,
State or local withholding taxes.
(ii) for a period of twelve (12) months following the
Termination Date, arrange to provide McHale with (A) life, disability,
accident and health insurance (including dental insurance) benefits
substantially equivalent to those which he was receiving as of the date
of this Agreement (McHale being entitled to benefits under COBRA
commencing on the first anniversary of the Termination Date) and (B)
the use of the automobile furnished to McHale by TransPro as of the
date of this Agreement; provided, however, that as of the Termination
Date, McHale will no longer be deemed to be an "employee" for purposes
of any qualified pension plan, any other qualified or non-qualified
retirement plan, any stock option or other equity incentive
compensation arrangement or any successor plans thereto; and
(iii) pay to McHale all reasonable legal fees and expenses
incurred by McHale in connection with the negotiation of this Agreement
and the reasonable and valid enforcement thereof (together with any
such legal fees and expenses in connection with any tax audit or
proceeding to the extent attributable to application of section 4999 of
the Internal Revenue Code to maintain benefits provided hereunder); and
(iv) pay to McHale the sum of $14,800.00, representing accrued
vacation pay and all other unpaid amounts (if any) to which McHale is
entitled as of the Termination Date under any compensation or bonus
plan of TransPro, such amount to be payable not later than five days
after the Termination Date;
(such amounts, collectively, the "Severance Payments").
(c) On the Termination Date, TransPro shall reimburse McHale for any
unreimbursed business expenses incurred by McHale on behalf of TransPro in
accordance with TransPro's normal reimbursement practices.
(d) No amounts payable to McHale pursuant to this Section 2 shall be
subject to offset due to McHale obtaining employment with a third party after
the Termination Date. McHale shall not be obligated to mitigate the amounts
payable hereunder by seeking employment with a third party after the Termination
Date.
3. Termination of Employment Agreement/Survival of Confidentiality Covenant
The Employment Agreement is terminated as of the Termination Date and
shall be of no further force or effect. Notwithstanding the foregoing, the
covenant set forth in paragraph 8(b) of the Employment Agreement which relates
to McHale's duty to keep certain proprietary information of TransPro
confidential shall remain in effect indefinitely, or until such time as any
proprietary information becomes public knowledge through no fault of McHale.
All Severance Payments and other benefits payable under this Agreement
(but not any vested pension or supplemental pension benefits) shall be
forfeitable and shall be discontinued in
2
3
the event that the TransPro Board of Directors reasonably determines that, after
the date of this Agreement, McHale breached or failed to perform his obligations
under this Section 3 or willfully engaged in conduct which was materially
injurious to TransPro, monetarily or otherwise; provided, however, that being
employed by a competitor without violating Section 8(b) of the Employment
Agreement shall in no way be deemed a violation of this Section 3 or be deemed
to constitute actions materially injurious to TransPro.
4. Options/Restricted Stock
(a) The stock options granted by TransPro to McHale are set forth below
in the chart in subparagraph 4(b) of this Agreement (the "Options"). The Options
shall cease vesting on the Termination Date. McHale shall have ninety (90) days
after the Termination Date within which to exercise the Options, after which
time the Options shall terminate.
(b) The parties acknowledge that as of December 31, 2000, McHale shall
hold the following Options which are vested as set forth below:
Title of Date of No. of Exercise Vesting
Security Grant Shares Price Status
- -------- ----- ------ ----- ------
Option 10/12/95 2,500 $11.75 (1)
Option 10/13/95 2,500 $11.625 (1)
Option 10/16/95 2,500 $10.75 (1)
Option 10/17/95 2,500 $10.625 (1)
Option 10/18/95 2,500 $10.375 (1)
Option 10/19/95 2,500 $10.375 (1)
Option 10/20/95 2,500 $11.25 (1)
Option 10/23/95 2,500 $11.25 (1)
Option 10/24/95 2,500 $11.125 (1)
Option 10/25/95 2,500 $11.375 (1)
Option 10/26/95 2,500 $11.125 (1)
Option 10/27/95 2,500 $10.625 (1)
Option 10/30/95 2,500 $11.00 (1)
Option 10/31/95 2,500 $10.875 (1)
Option 11/1/95 2,500 $11.00 (1)
Option 11/2/95 2,500 $10.625 (1)
3
4
Option 11/3/95 2,500 $10.375 (1)
Option 11/6/95 2,500 $9.875 (1)
Option 11/7/95 2,500 $9.75 (1)
Option 11/8/95 2,500 $9.875 (1)
Option 4/8/96 75,000 $7.50 (1)
Option 4/25/97 50,700 $7.75 (2)
Option 4/28/99 25,000 $5.50 (3)
(1) Fully vested.
(2) 75% vested.
(3) 0% vested.
(c) McHale also holds 9,700 shares of restricted TransPro common stock
pursuant to a grant made on April 25, 1997 (the "Restricted Stock"). The
restrictions on such Restricted Stock shall not have been removed prior to the
Termination Date and the certificate for such Restricted Stock shall be returned
to TransPro for cancellation on or prior to the Termination Date.
5. McHale' Release of TransPro
(a) McHale, on his own behalf and on behalf of his heirs, successors
and assigns (hereafter collectively referred to as the "McHale Group"), hereby
releases and forever discharges TransPro, its predecessors, successors,
corporate affiliates, and their current and former agents, representatives,
shareholders, directors, officers, and employees (TransPro and such other
persons and entities are individually and collectively referred to hereafter as
the "TransPro Group"), from any and all claims, counterclaims, demands, debts,
actions, causes of action, suits or liabilities of any nature whatsoever,
whether known or unknown, which the McHale Group ever had, now has or hereafter
can, shall or may have against the TransPro Group, for, upon, or by reason of
any matter, cause or thing whatsoever arising from the beginning of the world to
the day of this Agreement, including, but not limited to, (1) any statutory or
common law claims relating to McHale' employment and the termination of McHale'
employment; and (2) any claims relating to the Employment Agreement. In addition
to all other statutory and common law claims being released herein, the McHale
Group is also releasing claims arising out of the Federal Age Discrimination in
Employment Act, The Civil Rights Act of 1964, the Civil Rights Act of 1991, the
Civil Rights Act of 1866, the Connecticut Human Rights and Opportunities Law,
the Employee Retirement Income Security Act of 1974, the Americans With
Disabilities Act of 1992 and claims relating to the Connecticut wage laws.
Notwithstanding the releases set forth in the foregoing Section 5(a), the McHale
Group shall in no way be deemed to have released any claim with respect to: (I)
breaches of this Agreement by TransPro, (II) vested benefits under any employee
welfare plan, including without limitation, pension, supplemental pension,
health and welfare plans, (III) any rights to indemnification under applicable
statutes, bylaws or contracts which existed prior to the date of this
4
5
Agreement or as the same may in the future be expanded, and (IV) rights under
workmen's compensation plans and HIPPA (Health Insurance Protection Portability
Act).
(b) McHale has been advised to consult independent legal counsel before
signing this Agreement and he acknowledges that he has executed this Agreement
after actually consulting with his counsel. McHale further acknowledges that he
had the opportunity to consider the terms of this Agreement for at least
twenty-one (21) days. McHale further represents and warrants that he has read
this Agreement carefully, that he has discussed this Agreement with his
attorney, that he fully understands the terms of this Agreement, and that he has
had sufficient time within which to consider the terms of this Agreement. He
represents and warrants that he is signing this Agreement voluntarily.
(c) McHale represents and warrants that TransPro has paid McHale the
sum of $1,000 as consideration for this Agreement. McHale represents that no
other inducements have been offered to McHale by TransPro other than the
consideration set forth in this Agreement, and that the consideration set forth
herein represents consideration to which he would not otherwise be entitled but
for his execution of this Agreement.
(d) This Agreement shall not become effective until the eighth day
following the day on which McHale signed it, and McHale may, at any time prior
to the Effective Date, revoke this Agreement by giving notice of revocation to
TransPro. Such revocation of this Agreement shall operate to revoke any
consideration paid by TransPro to McHale pursuant to this Agreement.
(e) On the Termination Date, McHale agrees to provide TransPro with a
release of any and all claims against TransPro arising from the date of this
Agreement to the Termination Date. The delivery of the release referred to in
this paragraph 5(e) is a condition to the delivery to McHale of the Severance
Payments.
6. TransPro's Release of McHale
The TransPro Group hereby releases and forever discharges the McHale
Group from any and all claims, counterclaims, demands, debts, actions, causes of
action, suits or liabilities of any nature whatsoever, whether known or unknown,
which the TransPro Group ever had, now has or hereafter can, shall or may have
against the McHale Group, for, upon, or by reason of any matter, cause or thing
whatsoever arising from the beginning of the world to the day of the date of
this Agreement, including, but not limited to, (1) any statutory or common law
claims relating to McHale's employment and the termination of McHale's
employment; and (2) any claims relating to the Employment Agreement.
Notwithstanding the releases set forth in the foregoing Section 6, the TransPro
Group shall in no way be deemed to have released any claim with respect to
breaches of this Agreement by McHale.
7. Notice
Any notice or other communication under this Agreement shall be in
writing and shall be deemed to have been given when delivered personally against
receipt therefor; one day after being sent by Federal Express or other overnight
delivery service; or three days after being
5
6
mailed registered or certified mail, postage prepaid, return receipt requested,
to either party at the following addresses: to TransPro, 100 Gando Drive, New
Haven, CT 06511, Attention: Chairman of the Board; to McHale, 26 Godfrey Road
West, Weston, CT 06883; or at such other address as such party shall give by
notice hereunder to the other party.
8. Governing Law
This Agreement shall be governed by, and construed in accordance with
and subject to the laws of the State of Connecticut applicable to agreements
made and to be performed entirely within such State without regard to principles
of conflicts of law.
9. Waivers and Amendments
This Agreement may be amended, modified, superseded, cancelled, renewed
or extended, and the terms and conditions hereof may be waived, only by a
written instrument signed by the parties or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any party of any right, power, or privilege hereunder,
nor any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege hereunder.
10. Entire Agreement
This Agreement contains the entire agreement between the parties hereto
with respect to the subject matter hereof and supersedes all prior written or
oral contracts and agreements.
11. Successors and Assigns/Assignment
McHale may not assign this Agreement. TransPro may, without the consent
of McHale, assign this Agreement and its rights and obligations but only in
connection with any sale, transfer or other disposition of all or substantially
all of its assets or business, whether by merger, consolidation or otherwise, in
which case this Agreement shall become binding upon any successor in interest.
TransPro shall make best efforts to cause any successor in interest to agree to
assume the liabilities under this Agreement.
12. Severability
The provisions of this Agreement are severable, and if any part of it
is found to be unenforceable, the other provisions shall remain fully valid and
enforceable.
13. Counterparts
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original but both of which together shall constitute
one and the same instrument.
[signature page follows]
6
7
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first written above.
TRANSPRO, INC.
By:/s/
------------------------------
Name: Barry R. Banducci
Title: Chairman of the Board
/s/
------------------------------
HENRY P. McHALE
4z6p03!.DOC\10701\200\232225.03
7