9. Additional Section 162(m) Provisions: The Compensation Committee may (but is not required to) grant an award under the plan that is intended to qualify as "performance-based compensation" under Section 162(m) of the Internal Revenue Code. The right to receive a performance-based award, other than options and stock appreciation rights granted at not less than fair market value, will be conditioned on the achievement of written performance goals during a specified time period, established by the Compensation Committee at the time the performance-based award is granted. These performance goals and time periods, which may vary from grantee to grantee and award to award, will be based upon the attainment by Proliance or any of its subsidiaries, divisions or departments of specific amounts of, or increases in, one or more of the following, any of which may be measured either in absolute terms or as compared to other companies: earnings per share, net income, operating margin, return on equity, total stockholder return, revenue, cash flow, net worth, book value, stockholders' equity, market performance, the completion of certain business or capital transactions or other applicable measures.
10. Term: Awards may be granted under this plan until the tenth anniversary of the Company's 2005 annual meeting of stockholders.
11. Termination of the Plan. Termination of this plan will not affect outstanding awards which have been granted prior to such termination, and all unexpired awards will continue in full force and operation after termination of this plan, except as they lapse or terminate by their own terms and conditions, and the terms of this plan will continue to apply to such awards.
12. Amendments. The Compensation Committee may at any time and from time to time amend this plan; provided, however, that any amendment that must be approved by Proliance's stockholders in order to comply with applicable law or the rules of the principal national securities exchange on which Proliance's common shares are traded or quoted will not be effective unless and until such approval has been obtained. Subject to Section 5(f), the Compensation Committee may amend the terms of any award previously granted under the plan prospectively or retroactively, but no amendment will impair the rights of any grantee without his or her consent. The Compensation Committee may, in its discretion, terminate the plan at any time. Termination of the plan will not affect the rights of grantees or their successors under any awards outstanding hereunder and not exercised in full on the date of termination.
13. Withholding of Taxes. To the extent that Proliance is required to withhold federal, state, local or foreign taxes in connection with any payment made or benefit realized by a grantee or other person under this plan, and the amounts available to Proliance for such withholding are insufficient, it will be a condition to the receipt of such payment or the realization of such benefit that the grantee or such other person make arrangements satisfactory to Proliance for payment of the balance of such taxes required to be withheld, which arrangements (in the discretion of the Compensation Committee) may include relinquishment of a portion of such benefit.
14. Fractional Shares. No fractional shares will be issued pursuant to awards and any fractional shares resulting from an adjustment pursuant to Section 6 of this plan will be eliminated.
15. Government Regulations. This plan, the grant and exercise of awards hereunder and Proliance's obligation to sell or deliver shares of stock pursuant to any such award or exercise will be subject to all applicable federal and state laws, rules and regulations and to such approvals by any regulatory or governmental agency as may be required. Proliance will not be required to issue or deliver any shares of its common stock pursuant to this plan prior to (a) the admission of such shares to listing on any stock exchange on which the stock is then listed and (b) the completion of any registration or other qualification of such shares under any state or federal law or rulings or regulations of any governmental body, which Proliance, in its sole discretion, determines to be necessary or advisable.
16. No Rights. Neither this plan, nor the granting of an award nor any other action taken pursuant to this plan, will confer upon any grantee of an award any right with respect to continuance of employment or service with Proliance, nor will it interfere in any way with any right Proliance would otherwise have to terminate such grantee's employment or other service at any time.
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17. Compliance with Section 409A of the Code. To the extent applicable, it is intended that this plan and any grants made under this plan comply with the provisions of Section 409A of the Internal Revenue Code of 1986, as amended (the "Code"). The plan and any grants made under the plan will be administrated in a manner consistent with this intent, and any provision that would cause the plan or any grant to fail to satisfy Section 409A of the Code will have no force and effect until amended to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by Proliance without the consent of any participant). Any reference in this plan to Section 409A of the Code will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.
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Annex A
REPLACEMENT OPTIONS
1. Exercise Price. The purchase price per share of Proliance common stock for which each Replacement Option is exercisable will be equal to the exercise price of the option under the 1995 Nonemployee Directors Stock Option Plan that such Replacement Option is replacing.
2. Exercisability. Pursuant to the terms of the outstanding options being replaced by the Replacement Options, each Replacement Option will be immediately exercisable in full.
3. Term of Replacement Options. Subject to Section 4 of this Annex A, each Replacement Option will expire on the later to occur of the third anniversary of the Merger and the date that the option under the 1995 Nonemployee Directors Stock Option Plan that such Replacement Option is replacing would expire. If a non-employee director subsequently becomes an employee of Proliance while remaining a member of Proliance's board of directors, any Replacement Options held by such individual at the time of such commencement of employment will not be affected thereby.
4. Cessation of Service. (a) All Replacement Options may be exercised by the optionee until the earlier of (i) the third anniversary of the cessation of service as a director and (ii) the end of the remaining term of such Replacement Options, as determined pursuant to Section 3 of this Annex A (the "Post-Cessation Exercise Period"). If an optionee dies within the Post-Cessation Exercise Period, or if cessation of service is due to such optionee's death, such Replacement Options may be exercised at any time within the Post-Cessation Exercise Period by the optionee's executor or administrator or by his or her distributee to whom such options may have been transferred by will or by the laws of descent and distribution.
(b) In no event will the period during which an option may be exercised be extended beyond the end of the remaining term of such Replacement Options (as determined pursuant to Section 3 of this Annex A).
5. Other Terms of the Replacement Options. Except as set forth in the plan and in this Annex A, all other terms of the Replacement Options will be governed by the terms of the 1995 Nonemployee Directors Stock Option Plan.
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