PROLIANCE INTERNATIONAL, INC.

EXECUTIVE SEVERANCE PLAN

effective January 1, 2008

 

 

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TABLE OF CONTENTS

 

 

 

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Section 1. Name, Effective Date and Purpose

 

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Section 2. Definitions

 

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Section 3. Administration

 

4

Section 4. Benefits

 

5

Section 5. Claims Procedures

 

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Section 6. General Provisions

 

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Section 7. Participant Obligations

 

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Section 8. Taxes and Income Tax Withholding

 

9

Section 9. Amendment, Suspension or Termination

 

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PROLIANCE INTERNATIONAL, INC.

EXECUTIVE SEVERANCE PLAN

Section 1. Name, Effective Date and Purpose

1.1 Proliance International, Inc. (the “Company”) established an Executive
Severance Plan (the “Plan”) as of January 1, 2005. This amended and restated
plan document is effective as of January 1, 2008.

1.2 The purpose of the Plan is to provide supplemental compensation for key
employees and managers of the Company or its affiliates, as selected by the
Board of Directors, in its sole discretion, whose employment is terminated under
certain circumstances.

1.3 To the extent the Plan provides for benefits which constitute deferred
compensation, the Plan is intended to be an unfunded, non-qualified plan for a
select group of management and highly compensated employees, as described in
§201(2) and §301(a)(3) of the Employee Retirement Income Security Act (“ERISA”)
and §409A(a)(2), (3) and (4) of the Internal Revenue Code, and the provisions of
the Plan shall be interpreted accordingly.

Section 2. Definitions

2.1 “Administrative Committee” shall mean the Compensation Committee of the
Board of Directors (or if such Committee is not then constituted, the Board of
Directors), which shall administer the Plan as provided in Section 3, below. Any
notices, elections or other writings should be sent to the Administrative
Committee, Proliance International, Inc. Executive Severance Plan, 100 Gando
Drive, New Haven, CT 06513.

2.2 “Board of Directors” shall mean the Board of Directors of Proliance
International, Inc. or its delegate.

2.3 “Cause” shall mean (i) the willful and continued failure of the Participant
to substantially perform the Participant’s duties with the Company (or any
affiliate); (ii) the willful engaging by the Participant in an act or acts of
dishonesty constituting a felony and resulting or intending to result in gain or
personal enrichment at the expense of the Company (or any affiliate), or the
Participant’s conviction of a felony; or (iii) the willful engaging by the
Participant in conduct which is demonstrably and materially injurious to the
Company (or any affiliate), monetarily or otherwise.

2.4 “Change of Control,” with respect to a Participating Employer that is
organized as a corporation, any of the following events: (i) a change in the
ownership of the Participating Employer; (ii) a change in the effective control
of the Participating Employer;

 

 

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(iii) a change in the ownership of a substantial portion of the assets of the
Participating Employer.

(i) A change in the ownership of the Participating Employer occurs on the date
on which any one person, or more than one person acting as a group, acquires
ownership of stock of the Participating Employer that, together with stock held
by such person or group constitutes more than 50% of the total fair market value
or total voting power of the stock of the Participating Employer.

(ii) A change in the effective control of the Participating Employer occurs on
the date on which either (a) a person, or more than one person acting as a
group, acquires ownership of stock of the Participating Employer possessing 30%
or more of the total voting power of the stock of the Participating Employer,
taking into account all such stock acquired during the 12-month period ending on
the date of the most recent acquisition, or (b) a majority of the members of the
Participating Employer’s Board of Directors is replaced during any 12-month
period by directors whose appointment or election is not endorsed by a majority
of the members of such Board of Directors prior to the date of the appointment
or election, but only if no other corporation is a majority shareholder of the
Participating Employer.

(iii) A change in the ownership of a substantial portion of assets occurs on the
date on which any one person, or more than one person acting as a group, other
than a person or group of persons that is related to the Participating Employer,
acquires assets from the Participating Employer that have a total gross fair
market value equal to or more than 40% of the total gross fair market value of
all of the assets of the Participating Employer immediately prior to such
acquisition or acquisitions, taking into account all such assets acquired during
the 12-month period ending on the date of the most recent acquisition.

An event constitutes a Change in Control with respect to a Participant only if
the Participant performs services for the Participating Employer that has
experienced the Change in Control, or the Participant’s relationship to the
affected Participating Employer otherwise satisfies the requirements of Treasury
Regulation Section 1.409A-3(2)(i)(5)(ii).

The determination as to the occurrence of a Change in Control shall be based on
objective facts and in accordance with the requirements of Code Section 409A.

2.5 “Code” means the Internal Revenue Code of 1986, as amended from time to
time.

2.6 “Company” shall mean Proliance International, Inc. and its successors.

2.7 “Involuntary Separation from Service” means, generally, a Separation from
Service due to the independent exercise of the unilateral authority of the
Company (or the Participant’s Participating Employer) to terminate the
Participant’s employment, other than due to the Participant’s implicit or
explicit request, where the Participant was willing and

 

 

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able to continue providing services. Whether an Involuntary Separation from
Service has occurred shall be determined in accordance with Treasury Regulation
§1.409A-1(n).

2.8 “Participant” shall mean an individual employed by the Company who is a high
level management employee and who (a) has been selected for participation in
this Plan by the Administrative Committee, or (b) had a written Severance
Agreement with the Company which, by written agreement, has been superseded and
replaced by this Plan.

2.9 “Participating Employer” shall mean the Company and any other, affiliated
company as shall be designated by the Board of Directors as eligible to have one
or more of its senior executives participate in the Plan.

2.10 “Plan” shall mean Proliance International, Inc. Executive Severance Plan.

2.11 “Plan Administrator” shall mean the Administrative Committee.

2.12 “Plan Year” shall mean each calendar year.

2.13 “Separation from Service” means a termination of employment with the
Company, as defined for purposes of Code §409A. Except as noted below with
respect to asset sales, the Plan Administrator will determine, in accordance
with Code Section 409A, whether a Separation from Service has occurred. Except
in the case of a Participant on a bona fide leave of absence as provided below,
a Participant is deemed to have incurred a Separation from Service if the
Company and the Participant reasonably anticipate that the level of services to
be performed by the Participant after a date certain will be reduced to 20% or
less of the average services rendered by the Participant during the immediately
preceding 36-month period (or the total period of employment, if less than 36
months), disregarding periods during which the Participant was on a bona fide
leave of absence.

A Participant who is absent from work due to military leave, sick leave, or
other bona fide leave of absence shall incur a Separation from Service on the
first date immediately following the later of (i) the six-month anniversary of
the commencement of the leave or (ii) the expiration of the Participant’s right,
if any, to reemployment under statute or contract.

For purposes of determining whether a Separation from Service has occurred, the
Company means the Company and any affiliate, except that for purposes of
determining whether another organization is an affiliate of the Company, common
ownership of at least 50% shall be determinative. Affiliate means a corporation,
trade or business that, together with the Company, is treated as a single
employer under Code §414(b) or (c).

The Company specifically reserves the right to determine whether a sale or other
disposition of substantial assets to an unrelated party constitutes a Separation
from Service with respect to a Participant providing services to the seller
immediately prior to the transaction and providing services to the buyer after
the transaction. Such determination shall be made in accordance with the
requirements of Code §409A.

 

 

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2.14 “Specified Employee” means an employee who, as of the date of his or her
Separation from Service, is a “key employee” of the Company or any affiliate,
any stock of which is actively traded on an established securities market or
otherwise. An employee is a key employee if he or she meets the requirements of
Code §416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with applicable
regulations thereunder and without regard to Code §416(i)(5)) at any time during
the 12-month period ending on the Specified Employee Identification Date. Such
Employee shall be treated as a key employee for the entire 12-month period
beginning on the Specified Employee Effective Date. Notwithstanding anything in
this paragraph to the contrary, (i) if a different definition of compensation
has been designated by the Company with respect to another nonqualified deferred
compensation plan in which a key employee participates, the definition of
compensation shall be the definition provided in Treasury Regulation
§1.409A-1(i)(2), and (ii) the Company may through action that is legally binding
with respect to all nonqualified deferred compensation plans maintained by the
Company and any Participating Employer, elect to use a different definition of
compensation. In the event of corporate transactions described in Treasury
Regulation Section 1.409A-1(i)(6), the identification of Specified Employees
shall be determined in accordance with the default rules described therein,
unless the Company elects to utilize the available alternative methodology
through designations made within the timeframes specified therein. Specified
Employee Effective Date means the first day of the fourth month following the
Specified Employee Identification Date, or such earlier date as is selected by
the Plan Administrator. Specified Employee Identification Date means December
31, unless the Company has elected a different date through action that is
legally binding with respect to all nonqualified deferred compensation plans
maintained by the Company or any Participating Employer.

Section 3. Administration

3.1 The Plan shall be administered by the Administrative Committee. The
Administrative Committee shall have full discretionary authority and power to
construe and interpret the terms of the Plan, establish and amend administrative
procedures to further the purposes of the Plan, and take any other actions
necessary to administer the Plan. The Administrative Committee’s decisions,
actions, and interpretations regarding the Plan shall be final and binding upon
all Participants.

3.2 The Administrative Committee shall act by vote or written consent of a
majority of its members. Members of the Administrative Committee who are
Participants may vote on or participate in any matter affecting the
administration of the Plan, provided, however, that no member of the
Administrative Committee may vote on or participate in any matter directly
relating to his or her own benefits.

3.3 The Administrative Committee (or its delegate) shall (a) calculate and
maintain records of benefit payments; (b) prepare communications to
Participants; (c) prepare reports and data required by the Company concerning
the Plan; and (d) take any other actions as are otherwise necessary or
appropriate for effective implementation and administration of the Plan. The
Administrative Committee shall be the Plan Administrator for purposes of ERISA.

 

 

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Section 4. Benefits

4.1 A Participant shall be entitled to benefits upon an Involuntary Separation
from Service with the Company under the following circumstances:

(a) Involuntary Termination of Employment Without Cause. If the Company
terminates the Participant’s employment other than for Cause and under
circumstances constituting an Involuntary Separation from Service, the
Participant shall be entitled to benefits as provided in Section 4.2, below.

(b) Termination of Employment With Good Reason Upon a Change of Control. The
Participant shall be entitled to benefits as provided in Section 4.2, below, if
within the period commencing on the date that a Change of Control is formally
proposed to the Company’s Board of Directors and ending on the first anniversary
of the date on which such Change of Control occurs, the Participant experiences
one or more of the following conditions arising without the consent of the
Participant:

(i) a material reduction in the Participant’s base compensation occurs;

(ii) a material reduction of the Participant’s duties and significant
responsibilities occurs (not including reasonable changes in title or in
corporate structure); or

(iii) the Company fails to have any successor to all or substantially all of the
business and properties of the Company assume the liabilities and obligations of
the Company under this Plan;

and, in connection with any of the foregoing conditions, the Participant incurs
a Separation from Service; provided that

(1) the Participant has given written notice to the Company, specifying that one
of the foregoing conditions has occurred, within 90 days after the initial
existence of such condition;

(2) the Company fails to cure such condition within 31 days after its receipt of
such notice; and

(3) the Separation from Service occurs within 6 months after the initial
existence of such condition.

4.2 In the event of a Participant’s Separation from Service as described in
Section 4.1(a) or (b), above, the maximum benefit shall consist of payment of
the Participant’s

 

 

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bi-weekly salary (determined as of the Separation from Service date) for a
period of one year after the effective date of the Participant’s Separation from
Service.

(a) If the Participant secures other full-time employment during the applicable
period, benefits shall cease as of the date such other employment commences.

(b) Payment shall be made in fixed bi-weekly installments in accordance with the
Company’s standard payroll practices in effect at the time of the Separation
from Service and shall commence as of the Participant’s Separation from Service
date. In no event may a Participant designate the timing or year of payment.

(c) In the event the value of the separation pay benefit (assuming the maximum
benefit will be paid) exceeds two times the lesser of the Participant’s
annualized compensation or the maximum amount that may be taken into account for
qualified plan purposes (in each determined in accordance with Treasury
Regulations §1.409A-1(b)(9)(iii)(A)), the excess shall not be paid as provided
above, but shall be withheld until the first business day of the month following
the date that is six months after the Participant’s Separation from Service
date, at which time the excess amount only will be paid in a single lump sum.

(d) In the event of a Participant’s death while separation pay benefits are
being paid, such benefits will be paid to the Participant’s surviving spouse, if
any, or if not, to the Participant’s estate.

4.3 Notwithstanding anything to the contrary set forth herein, any and all
amounts payable hereunder shall remain general assets of the Company until
actually paid distributed to a Participant.

4.4 In no event will benefits hereunder be paid to a Participant prior to the
Participant’s Separation from Service, nor may the commencement of benefits be
deferred to a date later than the Participant’s Separation from Service, except
as provided in Section 4.5, below. The Plan may not be amended to permit the
acceleration of the time or schedule of any payment under the Plan, except as
may be provided by regulation or other guidance issued pursuant to Code
§409A(a)(3). This paragraph is intended to be (and shall be interpreted to be)
consistent with Code §409A(a)(3), Code §409A(a)(4)(C) and related guidance.

4.5 At any time that the Company is publicly traded on an established securities
market (as defined for purposes of Code §409A), if a distribution of amounts
constituting a deferral of compensation is to be made to a Specified Employee
(as defined for purposes of Code §409A(a)(2)(B)(i)) on account of a Separation
from Service, such deferred compensation shall not be paid to the Specified
Employee until the first business day of the month following the date which is
six (6) months after the date of the Specified Employee’s Separation from
Service.

 

 

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Section 5. Claims Procedures

5.1 Any person or entity (hereinafter referred to as “Claimant”) claiming a
benefit, requesting an interpretation or ruling under the Plan, or requesting
information under the Plan shall present the request in writing to the
Administrative Committee, which shall respond in writing as soon as practical,
but in no event later than ninety (90) days after receiving the initial claim.

5.2 If the claim or request is denied, the written notice of denial shall state:

(i) the reasons for denial, with specific reference to the Plan provisions on
which the denial is based;

(ii) a description of any additional material or information required and an
explanation of why it is necessary, in which event the time period indicated in
section 5.1, above, shall be one hundred and eighty (180) days from the date of
the initial claim; and

(iii) an explanation of the Plan’s claim review procedure.

5.3 Any Claimant whose claim or request is denied or who has not received a
response within sixty (60) days may request a review by notice given in writing
to the Administrative Committee. Such request must be made within sixty (60)
days after receipt by the Claimant of the written notice of denial, or in the
event Claimant has not received a response sixty (60) days after receipt by the
Administrative Committee of Claimant’s claim or request. The claim or request
shall be reviewed by the Administrative Committee which may, but shall not be
required to, grant the Claimant a hearing. On review, the Claimant may have
representation, examine pertinent documents, and submit issues and comments in
writing.

5.4 The decision on review shall normally be made within sixty (60) days after
the Administrative Committee’s receipt of a Claimant’s claim or request. If an
extension of time is required for a hearing or other special circumstances, the
Claimant shall be notified and the time limit shall be one hundred twenty (120)
days. The decision shall be in writing and shall state reasons supporting the
decision and the relevant Plan provisions. All decisions on review shall be
final and bind all parties concerned.

Section 6. General Provisions

6.1 The rights of a Participant to the payment of deferred compensation as
provided in the Plan shall not be assigned, pledged, or encumbered or be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, whether
voluntary or involuntary, including, but not limited to, any liability which is
for alimony or other payments for the support of a

 

 

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spouse or former spouse, or for any other relative of any Participant. Any such
attempted assignment or transfer shall be void.

6.2 The Plan is intended to constitute an unfunded deferred compensation
arrangement for a select group of management and highly compensated employees.
Nothing contained in the Plan, and no action taken pursuant to the Plan, shall
create or be construed to create a trust of any kind. The Company’s obligations
hereunder shall be an unfunded and unsecured promise to pay money in the future
for tax purposes and for purposes of Title I of ERISA. A Participant’s right to
receive benefits hereunder shall be no greater than the right of an unsecured
general creditor of the Company. Benefits shall be paid from the general funds
of the Company, and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such benefits.
Notwithstanding the foregoing, the Company may, in its discretion and in
conjunction with maintaining this Plan, establish a so-called “rabbi trust.” Any
such trust created by the Company, and any assets held thereunder to assist the
Company in meeting its obligations under this Plan, may be based on the Revenue
Procedure 92-64 model trust (or subsequent guidance issued by the IRS).

6.3 Nothing contained in the Plan shall give any Participant the right to
continue in the employment of the Company or affect the right of the Company to
discharge a Participant.

6.4 The Plan shall be construed and governed in accordance with the laws of the
State of Connecticut, to the extent not preempted by Federal law.

Section 7. Participant Obligations

7.1 Covenant Not to Compete. Each Participant hereby covenants and agrees that
at no time during his or her employment nor for a period of one (1) year
immediately following the termination of such Participant’s employment will he
or she for themselves or on behalf of any other person, partnership, company or
corporation, directly or indirectly, acquire any financial or beneficial
interest in (except as provided in the next sentence), provide consulting or
other services to, be employed by, or own, manage, operate or control any entity
engaged in the vehicle parts business similar to the business engaged in by the
Company or its subsidiaries at the time of such termination of employment.
Notwithstanding the preceding sentence, the Participant will not be prohibited
from owning less than one percent (1%) of any publicly traded corporation,
whether or not such corporation is in competition with the Company.

7.2 Non-Solicitation. Each Participant hereby covenants and agrees that, at all
times during his or her employment and for a period of one (1) year immediately
following the termination thereof, such Participant will not directly or
indirectly employ or seek to employ any person or entity employed at that time
by the Company or any of its subsidiaries, or otherwise encourage or entice such
person or entity to leave such employment.

 

 

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7.3 Confidentiality. Each Participant agrees to keep secret and retain in the
strictest confidence all confidential matters which relate to the Company or any
affiliate of the Company, including, without limitation, customer lists, client
lists, trade secrets, pricing policies and other business affairs of the Company
and any affiliate of the Company learned by him or her from the Company or any
such affiliate or otherwise before or after the effective date of this Plan, and
not to disclose any such confidential matter to anyone outside the Company, or
any of its affiliates, whether during or after his or her period of service with
the Company, except as may be required in the course of a legal or governmental
proceeding. Upon request by the Company, the Participant agrees to deliver
promptly to the Company upon termination of his or her employment with the
Company, or at any time thereafter as the Company may request, all Company or
affiliate memoranda, notes, records, reports, manuals, drawings, designs,
computer files in any media and other documents (and all copies thereof)
relating to the Company’s or any affiliate’s business and all property of the
Company or any affiliate associated therewith, which he or she may then possess
or have under his or her control.

7.4 Non-Disparagement. Each Participant will refrain from making disparaging
remarks about the Company, and its executives during and after the period in
which such Participant receives severance payments and related benefits
hereunder.

7.5 Remedy for Breach. Notwithstanding any other provision of this Plan, should
a Participant engage in or perform, either directly or indirectly, any of the
acts prohibited by Sections 7.1, 7.2, 7.3 or 7.4 hereof, it is agreed that any
and all benefits under this Plan shall immediately terminate and the Company
will also be entitled to full injunctive relief, to be issued by any competent
court of equity, enjoining and restraining the Participant and each and every
other person, firm, organization, association, or corporation concerned therein,
from the continuance of such violative acts. The foregoing remedies available to
the Company will not be deemed to limit or prevent the exercise by the Company
of any or all further rights and remedies which may be available to the Company
hereunder or at law or in equity.

Section 8. Taxes and Income Tax Withholding

8.1 The Company shall deduct from all amounts paid under this Plan any taxes
required to be withheld by the Company under any federal, state, or local
government tax statutes. The Participants will be responsible for all federal,
foreign, state and local income taxes and any other taxes imposed on amounts
paid under this Plan.

 

 

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Section 9. Amendment, Suspension or Termination

9.1 The Company reserves the right to amend, suspend or terminate the Plan at
any time, provided, however, that the Company may not amend, suspend, or
terminate the Plan with respect to any Participant without the consent of such
Participant.

[signature page follows]

 

 

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IN WITNESS WHEREOF, the undersigned, on behalf of the Company, has set his or
her hand this 6th day of December, 2007.

 

 

 

PROLIANCE INTERNATIONAL, INC.

 

By:

/s/ Barry R. Banducci

 

 

 

Its Chairman of the Board

 

 

 

Duly Authorized

 

 

 

 

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PROLIANCE INTERNATIONAL, INC.

EXECUTIVE SEVERANCE PLAN

The undersigned, a Participant in the Proliance International, Inc. Executive
Severance Plan, hereby acknowledges receipt of the amended and restated Plan
document effective as of January 1, 2008 and consents and agrees to the terms
thereof.

 

 

 

 

 

Date: ______________________________________

 

Signed:

 

 

 

Print Name:

 

 

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