Exhibit 10.5
ALLIANCE ONE INTERNATIONAL,
INC.
PENSION EQUITY PLAN
Amended and Restated Effective January
1, 2009
Originally Effective January 1,
1986
TABLE OF CONTENTS
ARTICLE 1
Definitions
4
1.01
Accounting Firm
4
1.02
Administrator
4
1.03
Affiliate
4
1.04
Board
4
1.05
Cash Balance Plan
4
1.06
Capped Parachute Payments
4
1.07
Cause
4
1.08
Change in Control
4
1.09
Code
5
1.10
Compensation
5
1.11
Compensation Committee
5
1.12
Control Change Date
5
1.13
Corporation
5
1.14
Credited Compensation
5
1.15
Credited Service
6
1.16
Employee
6
1.17
Excess Parachute Payment
Amount
6
1.18
Fiscal Year
6
1.19
Frozen Average Compensation
6
1.20
Grandfathered Participant
6
1.21
Joint and Survivor Annuity
7
1.22
Net After-Tax Amount
7
1.23
Normal Form
7
1.24
Normal Retirement Allowance
7
1.25
Normal Retirement Date
7
1.26
Offset Amount
7
1.27
Parachute Payment
8
1.28
Participant
8
1.29
Plan
8
1.30
Pro Ration Percentage
8
1.31
Retirement, Retire, Retired or
Retires
9
1.32
Separation from Service
9
1.33
Spouse or Surviving Spouse
9
1.34
Year of Service
9
ARTICLE 2
Participation
10
ARTICLE 3
Retirement Allowance
10
3.01
Normal Retirement Allowance
10
3.02
Time and Form of Payment of Normal
Retirement Allowance
10
3.03
Pre-Retirement Death Benefit
11
3.04
Delay of Payments
12
3.05
Certain Retired Participants as of
December 31, 2008
12
ARTICLE 4
Vesting
12
4.01
Normal Vesting
12
4.02
Change in Control
12
4.03
Transition Rules
13
4.04
Forfeiture Upon Termination for
Cause
13
ARTICLE 5
Administration of the Plan
13
5.01
Powers of Administrator
13
5.02
Delegation
14
5.03
Costs
14
5.04
Reliance
14
5.05
Indemnification
14
5.06
Cooperation
14
ARTICLE 6
Claim and Appeal Procedures
14
6.01
Filing of a Claim for Benefits
14
6.02
Notification to Claimant of
Decision
15
6.03
Procedure for Appeal and
Review
15
6.04
Decision on Review
15
6.05
Action by Authorized Representative of
Claimant
16
6.06
Exhaustion of Administrative Remedies and
Deadline for Filing Suit
16
ARTICLE 7
Termination, Amendment or Modification of
Plan
16
7.01
Reservation of Rights
16
7.02
Limitation on Actions
16
ARTICLE 8
Miscellaneous
16
8.01
Limitation on Benefits
16
8.02
Unfunded Plan
16
8.03
Other Benefits and Agreements
16
8.04
Facility of Payments
16
8.05
Restrictions on Transfer of
Benefits
16
8.06
No Guarantee of Employment
16
8.07
“Top Hat” Pension Benefit
Plan
16
8.08
Receipt and Release
16
8.09
Reliance on Data
16
8.10
Withholding and Reporting
16
8.11
Number and Gender
16
8.12
Headings
16
8.13
Deferred Compensation
16
8.14
No Tax Representations
16
8.15
Binding Effect
16
8.16
Severability
16
8.17
Applicable Law
16
ARTICLE 9
Adoption and Execution.
16
ALLIANCE ONE INTERNATIONAL,
INC.
PENSION EQUITY PLAN
INTRODUCTION
Alliance One International, Inc. (the
“Corporation”) maintains the Alliance One
International, Inc. Pension Equity Plan (the “Plan”) to
provide unfunded supplemental retirement benefits to a select group
of management and highly compensated employees as such terms are
used in sections 201, 301, and 501 of the Employee Retirement
Income Security Act of 1974. The Plan was originally
effective January 1, 1986. The Corporation previously amended
the Plan on or about August 25, 2004, March 11, 2005, May 24, 2006,
and March 30, 2007. During the period from January 1, 2005
through December 31, 2008, the Plan has been administered in good
faith compliance with Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and guidance issued
thereunder, including but not limited to Internal Revenue Service
Notices 2005-1, 2006-79, 2007-78 and 2007-86 and proposed and final
regulations published under Section 409A of the Code.
Except as otherwise specifically
provided, the provisions of the Plan as amended and restated herein
are generally effective as of January 1, 2009, and are intended to
satisfy the requirements of Section 409A(a)(2), (3) and (4) of the
Code.
The provisions of the Plan as amended and
restated herein shall not apply to a Grandfathered Participant who
Retires on or after March 11, 2005 and prior to April 1, 2007.
The rights and benefits of any such Grandfathered Participant
shall be determined in accordance with the terms and provisions of
the amendment to the Plan executed on May 24, 2006 (if the
Participant Retires on or after May 24, 2006 and prior to April 1,
2007) or the amendment to the Plan dated March 11, 2005 (if the
Participant Retires on or after March 11, 2005 and prior to May 24,
2006).
Participation in the Plan is frozen
effective December 31, 2004. In addition, no Participant
shall accrue additional benefits under this Plan on account of
Compensation paid after March 31, 2007.
ARTICLE
1
DEFINITIONS
1.01
Accounting
Firm
Accounting Firm means the accounting
firm, consulting firm or other qualified service provider
designated by the Corporation.
1.02
Administrator
Administrator means an administrative
committee composed of the Corporation’s Senior Vice President
– Human Resources and Vice President – Compensation and
Benefits, provided that no member of such committee shall take part
in any discretionary administrative decision with respect to such
member’s benefits (if any) under the Plan.
Notwithstanding the foregoing, the Compensation Committee in
its discretion may remove or replace any member of the
administrative committee, or name a different committee or an
individual to serve as Administrator hereunder.
1.03
Affiliate
Affiliate means any related person or
entity that along with the Corporation would be considered a single
employer under Code Section 414(b) or (c), provided that in
applying such rules the existence of a controlled group of
corporations or of a group of trades or businesses under common
control shall be based on a threshold of 50% instead of 80%.
A person or entity shall be considered an Affiliate only
during the time it would be considered a single employer with the
Corporation under such provisions.
1.04
Board
Board means the Board of Directors of the
Corporation.
1.05
Cash
Balance Plan
Cash Balance Plan means the Alliance One
International, Inc. Pension Plan (formerly known as the DIMON
Incorporated Cash Balance Plan), and any successor
thereto.
1.06
Capped
Parachute Payments
Capped Parachute Payments means the
largest amount of Parachute Payments that may be paid to the
Participant without liability under Code Section 4999.
1.07
Cause
A Participant’s termination of
employment will be deemed to have been “for Cause”
hereunder if the Administrator determines that the
Participant’s employment was terminated in whole or in part
by reason of (i) one or more violations of the Corporation’s
Code of Conduct (as in effect from time to time) or (ii) one or
more violations of law (other than misdemeanor traffic violations)
that injure or damage the business reputation or prospects of the
Corporation or an Affiliate.
1.08
Change in
Control
Effective on and after April 1, 2007,
Change in Control means that (i) any “person” (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended) becomes the beneficial owner,
directly or indirectly, of securities of the Corporation
representing more
than 30% of the aggregate voting power of
all classes of the Corporation’s voting securities on a fully
diluted basis, after giving effect to the conversion of all
outstanding warrants, options and other securities of the
Corporation convertible into or exercisable for voting securities
of the Corporation (whether or not such securities are then
exercisable); (ii) the shareholders of the Corporation approve (A)
a plan of merger, consolidation or share exchange between the
Corporation and an entity other than a direct or indirect
wholly-owned subsidiary of the Corporation or (B) a proposal with
respect to the sale, lease, exchange or other disposal of all, or
substantially all, of the Corporation’s property; or (iii)
during any period of two consecutive years (which period may be
deemed to begin prior to the date of this agreement), individuals
who at the beginning of such period constituted the Board, together
with any new members of the Board whose election by the Board or
whose nomination for election by the shareholders of the
Corporation was approved by a majority of the members of the Board
then still in office who either were directors at the beginning of
such period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority of the Board.
1.09
Code
Code means the Internal Revenue Code of
1986, as amended, or any successor thereto, as in effect at the
relevant time.
1.10
Compensation
Compensation means the taxable earnings
for services rendered as an Employee and paid in cash by the
Corporation and its Affiliates to the Participant, plus amounts
deferred or contributed under Code Sections 401(k), 125, 129 or
132(f)(4) pursuant to the Participant’s salary reduction
agreement, but excluding commissions, extra pay for temporary
foreign service, amounts paid as special incentive bonuses under
incentive programs established in connection with the merger of
Standard Commercial Corporation and DIMON Incorporated, and
severance or similar benefits paid by the Corporation or any
Affiliate on account of termination of employment.
Compensation shall not include any amount paid or payable
after March 31, 2007.
1.11
Compensation
Committee
Compensation Committee means the
Executive Compensation Committee of the Board (or such other
committee of the Board appointed by the Board to administer the
Plan).
1.12
Control
Change Date
Control Change
Date means the date on or after April 1, 2007, on which all of the
events necessary for a Change in Control have occurred.
1.13
Corporation
Corporation means Alliance One
International, Inc. and any successor corporation.
1.14
Credited
Compensation
(a)
If the Participant dies or Retires prior
to April 1, 2007, Credited Compensation means 1.1% multiplied by
years of Credited Service multiplied by the average of the
Compensation paid to the Participant with respect to periods of
employment with the Corporation or an Affiliate during the five
consecutive Fiscal Years during the last ten
Fiscal Years that the Participant was
employed by the Corporation or an Affiliate that yields the highest
number.
(b)
If the Participant dies or Retires on or
after April 1, 2007, Credited Compensation means 1.1% multiplied by
years of Credited Service multiplied by the Participant’s
Frozen Average Compensation.
1.15
Credited
Service
Credited Service means a
Participant’s total period of service as an Employee who is
compensated on a salaried basis, determined as of December 31,
2004, plus the additional years of Credited Service, if any, that
the Participant would earn on account of continued employment as a
salaried employee of the Corporation after such date until the date
the Participant would attain age 65. All periods of such
service (whether or not consecutive or continuous) shall be
aggregated and twelve months of such service shall constitute a
year of Credited Service.
1.16
Employee
Employee means a person who is an
employee of the Corporation or an Affiliate.
1.17
Excess
Parachute Payment Amount
Excess Parachute
Payment Amount means the excess of the total amount of Parachute
Payments over the amount of Capped Parachute Payments.
1.18
Fiscal
Year
Fiscal Year means the Corporation’s
taxable year for Federal income tax purposes.
1.19
Frozen
Average Compensation
Frozen Average Compensation means the
average of the Compensation paid to the Participant during the five
consecutive Fiscal Years in the ten Fiscal Years immediately
preceding April 1, 2007, that yields the highest such
average.
1.20
Grandfathered
Participant
A Participant is a Grandfathered
Participant only if and so long as all of the following
requirements are satisfied:
(a)
The entire benefit payable with respect
to the Participant under this Plan was earned and vested and no
longer subject to a substantial risk of forfeiture as of December
31, 2004, as determined in accordance with Code Section 409A and
applicable guidance thereunder;
(b)
No portion of the benefit payable with
respect to the Participant under the Plan has been materially
modified after October 3, 2004, as determined in accordance with
Code Section 409A and applicable guidance thereunder;
and
(c)
Code Section 409A does not otherwise
apply to any portion of the Participant’s benefit when the
benefit becomes payable or benefit payments commence.
1.21
Joint and
Survivor Annuity
Joint and Survivor Annuity means an
annuity benefit under which equal monthly installments are payable
to the Participant during his lifetime and under which, upon the
earlier death of the Participant, monthly installments are payable
to the Surviving Spouse during her lifetime in an amount equal to
50% of the Participant’s monthly payment. The Joint and
Survivor Annuity shall be actuarially equivalent (using the
actuarial assumptions and methods applicable to the Cash Balance
Plan) in value to the Participant’s Normal Retirement
Allowance.
1.22
Net
After-Tax Amount
Net After-Tax Amount means the amount of
any Parachute Payments or Capped Parachute Payments, as applicable,
net of taxes imposed under Code Sections 1, 3101(b) and 4999 and
any State or local income taxes applicable to the Participant as in
effect on the date of the first payment under this Plan after a
Control Change Date. The determination of the Net After-Tax Amount
shall be made using the highest combined effective rate imposed by
the foregoing taxes on income of the same character as the
Parachute Payments or Capped Parachute Payments, as applicable, in
effect for the year in which the determination is made.
1.23
Normal
Form
Normal Form means payment of a benefit in
the form of a single life annuity payable monthly and commencing as
of the Participant’s Normal Retirement Date.
1.24
Normal
Retirement Allowance
Normal Retirement Allowance means the
benefit described in Section 3.01.
1.25
Normal
Retirement Date
Provided that the Participant has met the
vesting requirements of Section 4.01, 4.02 or 4.03, Normal
Retirement Date means the first day of the month next following the
later of:
(a)
The Participant’s Separation from
Service; or
(b)
The date the Participant has both
attained age 60 (55 if the Participant had the title of Senior Vice
President or above with DIMON Incorporated (or one of its
predecessors) prior to July 1, 1995), and satisfied the rule of 85,
or the date the Participant would have satisfied such requirements
but for his Separation from Service. The Participant will
satisfy the rule of 85 when the sum of his age (in years) and his
Years of Service equals 85.
1.26
Offset
Amount
Offset Amount means the sum of the
benefits, if any, accrued for or on behalf of a Participant under
the Cash Balance Plan, the Alliance One International, Inc. Global
Pension Plan (or its successor) and the Alliance One Brasil
Exportadora de Tobacos Ltda Pension Plan (or its successor).
The Offset Amount shall be expressed as a monthly amount that
would be paid in the Normal Form. To calculate the Offset
Amount, the Administrator shall convert each benefit that is
includible in the Offset Amount into an actuarially equivalent
monthly benefit expressed in the Normal Form, and then add such
monthly amounts together. The following special rules shall
apply:
(a)
The Offset Amount shall be determined as
of the date of the Participant’s Separation from Service or,
for purposes of determining any benefit payable under Section 3.03,
the Participant’s death.
(b)
Actuarial equivalence shall be determined
using the actuarial assumptions and methods applicable to the Cash
Balance Plan as of the Participant’s Separation from Service
or, for purposes of determining any benefit payable under Section
3.03, the Participant’s death.
(c)
The Administrator may adopt such
procedures and conventions as it deems necessary or appropriate to
calculate the Offset Amount hereunder, including but not limited to
procedures and conventions for converting amounts expressed in
different currencies into the corresponding amounts expressed in
the currency in which Plan benefits will be paid.
1.27
Parachute
Payment
Parachute Payment means a payment that is
described in Code Section 280G(b)(2) (without regard to whether the
aggregate present value of such payments exceeds the limit
prescribed by Code Section 280G(b)(2)(A)(ii)). The amount of any
Parachute Payment shall be determined in accordance with Code
Section 280G and the regulations promulgated thereunder.
1.28
Participant
Participant means an Employee who
satisfies the requirements of Article 2.
1.29
Plan
Plan means this Alliance One
International, Inc. Pension Equity Plan.
1.30
Pro
Ration Percentage
Pro Ration Percentage means the
percentage determined by adding the “service fraction”
and the “age fraction” and dividing the sum by
two.
(a)
In the case of a Participant who had the
title Senior Vice President or above with the Corporation or an
Affiliate on July 1, 1995:
(i)
The “service fraction” is a
fraction in which the numerator is the Years of Service (in whole
and fractional years, but not to exceed thirty) credited to the
Participant on the date of termination of employment with the
Corporation and its Affiliates and the denominator of which is
thirty; and
(ii)
The “age fraction” is a
fraction in which the numerator is the Participant’s age (in
whole and fractional years, but not to exceed fifty-five) on the
date of termination of employment with the Corporation and its
Affiliates and the denominator of which is fifty-five.
(b)
In the case of a Participant who is not
described in paragraph (a) above:
(i)
The “service fraction” is a
fraction in which the numerator is the Years of Service (in whole
and fractional years, but not to exceed twenty-five) credited to
the
Participant on the date of termination of
employment with the Corporation and its Affiliates and the
denominator of which is twenty-five; and
(ii)
The “age fraction” is a
fraction in which the numerator is the Participant’s age (in
whole and fractional years, but not to exceed sixty) on the date of
termination of employment with the Corporation and its Affiliates
and the denominator of which is sixty.
By way of illustration, a Participant who
was not a Senior Vice President or above on July 1, 1995, and who
terminates employment at age fifty and after completing eighteen
Years of Service and after satisfying the vesting requirements of
Section 4.02 will have a “service fraction” of 18/25
and an “age fraction” of 50/60 or 5/6. In that example,
the Pro Ration Percentage is 77.7% (18/25 plus 5/6) divided by 2 =
(.72 plus .833) divided by 2.
1.31
Retirement,
Retire, Retired or Retires
Retirement, Retire, Retired or Retires
means the termination of a Participant’s employment with the
Corporation or an Affiliate for any reason other than the
Participant’s death prior to his Normal Retirement
Date.
1.32
Separation
from Service
Separation from Service means the
Participant’s “separation from service” with the
Corporation and its Affiliates within the meaning of Code Section
409A(a)(2)(A)(i) and applicable regulations and other guidance
thereunder. A Separation from Service shall not have
occurred:
(a)
So long as the employment relationship is
treated as continuing intact under Treasury Regulation §
1.409A-1(h)(i); or
(b)
If the Participant continues to provide
more than insignificant services as an employee, consultant or
other service provider to the Corporation or any Affiliate.
The Participant will be deemed to be providing more than
insignificant services after a particular date unless the facts and
circumstances indicate that the Corporation and the Participant
reasonably anticipate that the level of bona fide services the
Participant will perform after such date would permanently decrease
to no more than 20% of the average level of the Participant’s
bona fide services over the preceding 36-month period. The
provisions of this paragraph shall be administered in a manner
consistent with Treasury Regulation §
1.409A-1(h)(ii).
1.33
Spouse or
Surviving Spouse
Spouse means the person to whom the
Participant is legally married on the date the Participant Retires
or dies. Surviving Spouse means the Spouse, provided that the
Spouse survives the Participant.
1.34
Year of
Service
Year of Service means a year of vesting
service as determined under the Cash Balance Plan. If the
Participant is not a participant in the Cash Balance Plan, a Year
of Service shall be twelve (12) months of active service as an
Employee of the Corporation and its
Affiliates, whether or not consecutive. An Employee shall
receive credit for one (1) month of active service for each
calendar
month in which he performs substantial
services for the Corporation or an Affiliate, as determined by the
Administrator.
ARTICLE
2
PARTICIPATION
Participation in
the Plan shall
