EXHIBIT
10.2
AMENDED AND
RESTATED EMPLOYMENT AGREEMENT
THIS AMENDED AND
RESTATED EMPLOYMENT AGREEMENT (this
“Agreement”), made effective as of December 31, 2008,
by and between ALLIANCE ONE INTERNATIONAL, INC. , a Virginia
Corporation (the “Company”), and ROBERT E.
HARRISON (the “Executive”).
R E
C I T A L S:
The
Company the Executive are parties to that certain Employment
Agreement dated November 7, 2004 (the “Original
Agreement”). The Company and the Executive have
concluded that the Original Agreement should be amended in
accordance with the requirements of Section 409A of the Internal
Revenue Code of 1986, as amended (the “Code”).
Accordingly, the Company and the Executive desire to amend
and restate the Original Agreement as set forth herein.
NOW,
THEREFORE , in
consideration of the mutual covenants and obligations herein and
the compensation the Company agrees herein to pay the Executive,
and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the
Executive agree as follows:
ARTICLE
1
EMPLOYMENT OF
EXECUTIVE
Subject to the
terms and conditions set forth in this Agreement, the Company
hereby employs the Executive and the Executive hereby accepts such
employment for the period stated in ARTICLE 3 of this
Agreement.
ARTICLE
2
POSITION,
RESPONSIBILITIES AND DUTIES
2.1.
Position and
Responsibilities . During the Term
(as defined in Section 3.1), the Executive shall serve as the
President and Chief Executive Officer of the Company on the
conditions herein provided. The Executive shall provide such
executive services in the management of the Company’s
business not inconsistent with his position and the provisions of
Section 2.2 as shall be assigned to him from time to time by the
Board and shall report to the Board.
2.2.
Duties
. In
addition to having the responsibilities described in Section 2.1,
during the Term the Executive shall also serve, if elected, as a
director of the Company or as an officer or director of any
subsidiary or affiliate of the Company. During the Term and except
for illness, reasonable vacation periods, and reasonable leaves of
absence, the Executive shall devote his full business time,
attention, skill, energies and efforts to the faithful performance
of his duties hereunder and to the business and affairs of the
Company and any subsidiary or affiliate of the Company and shall
not during the Term be employed in any other business activity,
whether or not such activity is pursued for gain, profit or other
pecuniary advantage; provided, however, that (i) with the approval
of the Board, the Executive may serve, or continue to serve, on the
boards of directors of, and hold any other offices or positions in,
companies or organizations, which, in the Board’s judgment,
will not present any conflict of interest with the Company or any
of its subsidiaries or affiliates or divisions, or materially
affect the performance of the Executive’s duties pursuant to
this Agreement and (ii) the Executive shall not be prevented from
investing his personal assets in any business which does not
compete with the Company or with any subsidiary or affiliate of the
Company, where the form or manner of such investment will not
require substantial services on the part of the Executive in the
operation of the business in which such investment is made.
Notwithstanding the foregoing, the duties of the Executive shall
not be expanded without the Executive’s prior
approval.
ARTICLE
3
TERM
3.1.
Term of
Employment . The term of the
Executive’s employment (the “Initial Term”) under
this Agreement shall commence effective as of December 31, 2008
(the “Effective Date”), and shall continue until the
earliest to occur of the following dates (the “Termination
Date”): (i) May 13, 2010; (ii) the date of death of the
Executive; (iii) the date coinciding with the end of one hundred
eighty (180) days of continuous “Total Disability” (as
defined in Section 7.4) of the Executive (the “Disability
Period”); (iv) the specified date of Executive’s
separation from service under the Notice Exception (as defined in
Section 3.2); (v) the date of Executive’s separation from
service under the Cause Exception (as defined in Section 3.3); or
(vi) the date the Executive separates from service for Good Reason
(as defined in Section 3.4). In the event that the Initial Term
shall expire on account of the terminating event described in
subparagraph (i) of this Section 3.1, then, notwithstanding the
provisions of subparagraph (i) of this Section 3.1, the Initial
Term shall be extended automatically, without any further action by
the Company or the Executive for successive one-year periods (each,
an “Extension Period”) following the expiration of the
Initial Term (by reason of the terminating event described in
subparagraph (i) of this Section 3.1) or any succeeding one-year
Extension Period (except as otherwise provided in this Section
3.1). If either party hereto desires for the Term to expire at the
end of the Initial Term or at the end of any succeeding one-year
Extension Period, such party shall give written notice of such
desire to the other party at least one year before the expiration
of the Initial Term or the Extension Period, as applicable. All
references herein to the term of the Executive’s employment
(the “Term”) shall refer to the Initial Term and shall
include any Extension Period.
3.2.
Termination by
Giving Notice . If the Company
desires to terminate the Executive’s employment without Cause
prior to the expiration of the Term or if the Executive desires to
separate from service without Good Reason prior to the expiration
of the Term, such party shall give not less than sixty (60)
days’ written notice of such desire to the other party
specifying the date on which the separation from service will occur
(the “Notice Exception”). Notwithstanding the
foregoing, the Notice Exception shall not be effected by the
Company while the Executive is Totally Disabled as provided in
ARTICLE 7.
3.3.
Termination for
Cause; Automatic Termination . Subject to the
requirements of Section 3.5 of this Agreement, the Company shall at
all times have the right to discharge the Executive for Cause. For
purposes of this Agreement, the term “Cause” shall be
limited to one or more of the following: (i) the Executive’s
failure or refusal to perform his material duties, responsibilities
and obligations; (ii) any act of fraud, misappropriation of funds,
material dishonesty, theft or embezzlement by the Executive
affecting the Company; (iii) the Executive’s conviction of a
felony or a plea of nolo contendere to a felony; (iv) the
Executive’s willful gross neglect or misconduct resulting in
material harm to the Company’s financial condition or
reputation or (v) the Executive’s breach of his covenants in
ARTICLE 13 (the “Cause Exception”).
Notwithstanding
the foregoing, if the Company desires to discharge the Executive
for the reason described in subparagraph (i) of this Section 3.3 (a
“Policy Infraction”), it shall give notice to the
Executive as provided in Section 3.5 and the Executive shall have
thirty (30) days after notice has been given to him in which to
cure the Policy Infraction. If the Policy Infraction is timely
cured by the Executive, the Company’s notice shall become
null and void. For purposes of this Agreement, Cause shall not
include the Executive’s Total Disability (as defined in
Section 7.4).
3.4.
Good
Reason . Subject to the
requirements of Section 3.5 of this Agreement, the Executive may
separate from service at any time for Good Reason (as defined in
this Section 3.4). If the Executive desires to separate from
service for Good Reason, he shall give notice to the Company as
provided in Section 3.5. For purposes of this Section 3.4,
separation from service for “Good Reason” shall mean
any of the following:
(a)
The
Executive’s voluntary separation from service with the
Company on account of and within six (6) months following a
material diminution or material adverse change by the Board of the
duties, functions, responsibilities and authority of the Executive
in the position or positions identified in section 2.1 without his
consent, if such diminution or change is not cured within thirty
(30) days after notice has been given to the Company by the
Executive; or
(b)
The
Executive’s voluntary separation from service with the
Company on account of and within six (6) months following any
material breach of a provision of this Agreement by the Company, if
such breach is not cured within thirty (30) days after notice has
been given to the Company by the Executive. Without limiting the
generality of the foregoing sentence, the Company shall be in
material breach of its obligations hereunder if, for example, the
Company shall not permit the Executive to exercise such
responsibilities as are consistent with the Executive’s
position as President and Chief Executive Officer, or assign the
Executive duties that are inconsistent with such positions and are
of such a nature as are usually associated with the positions of
president and chief executive officer of a corporation engaged in
substantially the same business as the Company, or the Executive
shall at any time be required to report to anyone other than
directly to the Company’s Board as provided in Section 2.1,
or the Company shall fail to make a payment when due to the
Executive; or
(c)
The
Executive’s voluntary separation from service with the
Company on account of and within six (6) months following a
material reduction in the Executive’s Base Salary, annual
incentive opportunity or aggregate benefit levels without his
consent, if such reduction is not cured within thirty (30) days
after notice has been given to the Company by the
Executive;
(d)
The
Executive’s voluntary separation from service with the
Company on account of and within six (6) months following the
Company’s failure to obtain the written assumption of this
Agreement in accordance with ARTICLE 26 on or before the
consummation of a transaction described in ARTICLE 26, if such
failure is not cured within thirty (30) days after notice has been
given to the Company or the Successor Corporation, as appropriate;
or
(e)
The
Executive’s voluntary separation from service with the
Company on account of and within six (6) months following the
failure of the Company’s shareholders to reelect the
Executive as a member of the Board, if such failure is not cured
within thirty (30) days after notice has been given to the Company
by the Executive.
If
the reason for the Executive’s desire to separate from
service for Good Reason as defined in this Section 3.4 is timely
cured by the Company (or the Successor Corporation, if
appropriate), the Executive’s notice shall become null and
void.
3.5.
Notice of
Termination . Any termination
by the Company under the Cause Exception or by the Executive for
Good Reason shall be communicated by Notice of Termination to the
other party hereto. For purposes of Sections 3.3 and 3.4, a
“Notice of Termination” means a written notice which
(i) indicates the specific termination provision in this Agreement
relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and
(iii) sets forth the date the separation from service will occur
(subject to the other party’s right to cure such facts and
circumstances, if applicable).
(a)
If
the Executive’s employment is terminated by reason of neglect
or misconduct pursuant to clause (iv) of Section 3.3, the
Executive’s separation from service shall be not less than
thirty (30) days nor more than forty-five (45) days after the
receipt of the Notice of Termination by the Executive.
(b)
If
the Executive desires to separate from service for Good Reason
pursuant to Section 3.4, the Executive must provide the Notice of
Termination to the Company or Successor Corporation, as
appropriate, within ninety (90) days after the initial existence of
the condition claimed to provide a basis for separation from
service for Good Reason. The Executive’s separation
from service date shall be not less than thirty (30) days after the
receipt of the Notice of Termination by the Company or Successor
Corporation, as the case may be. The Executive’s
separation from service date must be within six (6) months of the
initial existence of the condition providing the basis for
separation from service for Good Reason.
(c)
If
the Executive’s employment is terminated by reason of one of
the events described in clauses (i), (ii), (iii) or (v) of Section
3.3, the Executive’s separation from service shall be not
more than fifteen (15) days after the receipt of the Notice of
Termination by the Executive.
3.6.
Rights of
Executive Upon Termination of Employment .
(a)
Following the
date the Term expires on account of the Executive’s
employment through the Initial Term or any Extension Period, or the
Executive’s separation from service with Good Reason or the
Executive’s separation from service pursuant to the
Company’s exercise of the Notice Exception, the rights of the
Executive shall be as provided in ARTICLES 4, 5, 6, 9, 10, 12, 13,
14, 15, 16, 18, 24 and 26.
(b)
Following the
date the Term expires on account of the Executive’s death,
the rights of the Executive’s personal representative and
designated beneficiary (as determined pursuant to ARTICLE 16) shall
be as provided in ARTICLES 4, 5, 6, 8, 10, 14, 15, 16, 18, 24 and
26.
(c)
Following the
date the Term expires on account of the Executive’s Total
Disability, the rights of the Executive shall be as provided in
ARTICLES 4, 5, 6, 7, 9, 10, 13, 14, 15, 16, 18, 24 and
26.
(d)
Following the
date the Term expires on account of the Executive’s
separation from service pursuant to Executive’s exercise of
the Notice Exception, the rights of the Executive shall be as
provided in ARTICLES 4, 5, 6, 9, 10, 13, 14, 15, 16, 18, 24 and
26.
(e)
Following the
date the Term expires on account of the termination of the
Executive for Cause, the Executive shall be entitled to receive his
Base Salary through the Termination Date plus any amounts that the
Executive was entitled to receive through the Termination Date as
provided in ARTICLES 5, 6, 10, 14, 15, 16, 18, 24 and 26. If the
Term expires on account of the termination of the Executive for
Cause, the Executive shall continue to be subject to the provisions
of ARTICLE 13 and the Executive shall forfeit any rights under
annual incentive, long-term incentive, equity compensation and
similar plans or awards that were not vested on the Termination
Date.
3.7.
Separation from
Service Defined . All
references herein to Executive’s “separation from
service” shall mean Executive’s separation from service
with the Company and its subsidiaries and affiliates within the
meaning of Section 409A(a)(2)(A)(i) of the Internal Revenue Code of
1986, as amended (the “Code”) and applicable
regulations and other guidance thereunder, including but not
limited to Executive’s termination on account of death or
Total Disability.
ARTICLE
4
COMPENSATION
4.1.
Base
Salary . For all
services rendered by the Executive during the Term, including
without limitation services as an executive, officer, director
(except fees and reimbursements to which all members of the Board,
or a subsidiary or affiliate of the Company, are generally
entitled) or member of any committee of the Company or of any
subsidiary, affiliate, or division thereof, the Company shall pay
the Executive as compensation a base annual salary (the “Base
Salary”), payable in appropriate installments to conform with
regular payroll dates for salaried personnel of the Company. The
annual rate of the Executive’s Base Salary shall be at least
$650,000. The Board’s Committee on Executive Compensation
(the “Committee”) shall review the Executive’s
performance on an annual basis and may, in its discretion, increase
the Executive’s Base Salary on account of his
performance.
4.2.
Bonus
.
(a)
In
addition to the Base Salary provided for in Section 4.1, the
Executive shall be entitled to such annual bonus or bonuses, if any
(the “Awarded Bonuses”), as may be awarded to the
Executive from time to time under the Company’s Management
Incentive Plan or any successor or replacement bonus plan or
arrangement (the “MIP”). The Awarded Bonuses for a
fiscal year shall be payable in the manner specified in the MIP,
but in no event later than the end of the calendar year in which
the relevant fiscal year ends. Each fiscal year, the
“target” annual bonus under the MIP shall be at least
seventy-five percent (75%) of the Executive’s then-current
Base Salary and the maximum annual bonus under the MIP shall be at
least two hundred percent (200%) of the Executive’s
“target” annual bonus for the fiscal year.
(b)
If
the Term expires on account of the Executive’s separation
from service with Good Reason or the Company’s exercise of
the Notice Exception, then the Executive shall receive a pro rata
amount of the annual bonus for the fiscal year that includes the
Termination Date as determined by the Committee. The pro rata bonus
will be paid to the Executive on or before the later of (i) the
15th day of the third month immediately following the end of the
fiscal year that includes the Executive’s separation from
service date, or (ii) March 15 immediately following the end of the
calendar year that includes the Executive’s separation from
service date.
4.3.
Long-Term
Incentive Plans . The Executive
shall be eligible to receive awards under the Company’s
long-term incentive plans as determined by the Committee in its
discretion. If the Term expires on account of the Executive’s
separation from service with Good Reason or the Company’s
exercise of the Notice Exception, then (i) all restrictions on any
restricted or deferred stock awards outstanding on the Termination
Date shall be eliminated, (ii) all stock options outstanding on the
Termination Date with an exercise price equal to or less than the
fair market value of the shares as of the close of business on the
Termination Date shall be immediately vested and shall remain
exercisable for twenty-four (24) months thereafter or until the
expiration date of the option, if sooner; provided, that without
the Executive’s consent this clause (ii) shall not apply to
options that are intended to be incentive stock options under
Section 422 of the Internal Revenue Code of 1986; and (iii) all
stock options outstanding on the Termination Date with an exercise
price greater than the fair market value of the shares as of the
close of business on the Termination Date shall be cancelled as of
the close of business on the Termination Date.
ARTICLE
5
REIMBURSEMENT OF
EXPENSES, OFFICE AND SECRETARIAL ASSISTANCE
The
Company recognizes that the Executive will incur, from time to
time, expenses for the benefit of the Company and in furtherance of
the Company’s business, including, but not limited to,
expenses for entertainment, travel and other business expenses
consistent with the Company’s past practices. During the Term
the Executive will be reimbursed for his reasonable expenses
incurred for the benefit of the Company in accordance with the
general policy of the Company as adopted from time to time by the
Board. To receive such reimbursement, the Executive must present to
the Company an itemized accounting, in such detail as the Company
may reasonably request, of such expenditures. The Company further
agrees to furnish the Executive during the Term with an office and
such secretarial assistance as shall be suitable to the character
of the Executive’s position with the Company and adequate for
the performance of his duties hereunder. In the event of the
termination of the Executive’s employment for any reason, the
Company shall reimburse the Executive (or in the event of death,
his personal representative) for expenses incurred by the Executive
on behalf of the Company prior to the Termination Date to the
extent such expenses have not been previously reimbursed by the
Company. The expenses eligible for reimbursement under this ARTICLE
5 in any year shall not affect any expenses eligible for
reimbursement or in-kind benefits to be provided in any other year.
Executive’s rights under this ARTICLE 5 are not subject
to liquidation or exchange for any other benefit.
ARTICLE
6
SUPPLEMENTAL
RETIREMENT BENEFIT
The
Executive shall participate in the Company’s Supplemental
Executive Retirement Plan (the “SERP”). The Executive
shall be entitled to receive benefits in accordance with, and
subject to, the terms of the SERP, as in effect from time to time.
The Executive’s Surviving Spouse (as defined in the SERP)
also shall be entitled to receive benefits in accordance with, and
subject to, the terms of the SERP, as in effect from time to
time.
ARTICLE
7
DISABILITY
BENEFITS
7.1.
Commencement of
Total Disability . If the Executive
suffers a “Total Disability” (as defined in Section
7.4) during the Term, he shall be deemed totally disabled
(“Totally Disabled”) for purposes of this Agreement as
of the date such Total Disability commenced.
7.2.
Benefits Payable
Upon Total Disability . In the event of
the Executive’s disability or Total Disability, he shall be
entitled to receive benefits in accordance with, and subject to,
the terms of any short-term disability, long-term disability or
other plan or program providing benefits for disability maintained
by the Company.
7.3.
Cessation of
Disability . Notwithstanding
the provisions of Section 7.2, if prior to the end of the
Disability Period the Executive’s Total Disability shall have
ceased under the definition of Total Disability set forth in
Section 7.4 and he shall have commenced to perform his regular
duties hereunder, the following special provisions shall apply: (i)
this Agreement shall continue in full force and effect (except as
otherwise provided in ARTICLE 3); and (ii) the Executive shall be
entitled to resume his employment under this Agreement and to
receive thereafter compensation in accordance with ARTICLE 4 as
though he had not been Totally Disabled.
7.4.
Definition of
Total Disability . For purposes of
this Agreement, “Total Disability” shall mean the
permanent and total inability, by reason of physical or mental
infirmity, or both, of the Executive to perform his regular and
customary duties with the Company in a satisfactory manner for one
hundred eighty (180) days in any period of three hundred sixty-five
(365) days. The determination of the existence or nonexistence of
Total Disability shall be made by the Board, pursuant to a medical
examination by a medical doctor licensed to practice medicine in
the State of North Carolina selected or approved by the
Board.
ARTICLE
8
DEATH
BENEFIT
Upon
the expiration of the Term on account of the Executive’s
death, the Company shall pay to the Executive’s designated
beneficiary (as determined pursuant to ARTICLE 16 or the terms of
the applicable benefit plan) any life insurance or death benefits
payable under any plan or program maintained by the
Company.
ARTICLE
9
DEATH FOLLOWING
COMMENCEMENT OF PAYMENTS
If
(i) the Term expires under circumstances entitling the Executive to
receive payments pursuant to ARTICLE 12 and (ii) the Executive dies
prior to receiving any or all of the payments, monthly installments
or benefits to which he is due hereunder (including, for the
avoidance of doubt, amounts payable under Sections 4.2 and 4.3),
then such remaining payments, monthly installments or benefits
shall be payable to his designated beneficiary (as determined
pursuant to ARTICLE 16).
ARTICLE
10
OTHER EMPLOYEE
BENEFITS
The
Executive shall be entitled to participate in any and all
retirement, health, disability, life insurance, long-term
disability insurance, nonqualified deferred compensation and
tax-qualified retirement plans or any other plans or benefits
offered by the Company to its employees or executives generally, if
and to the extent the Executive is eligible to participate in
accordance with the terms and provisions of any such plan or
benefit program. Nothing in this ARTICLE 10 is intended, or shall
be construed, to require the Company to institute any particular
plan, program or benefit. Benefits payable pursuant to this
Agreement shall be in addition to benefits payable to the Executive
under all other employee benefit plans or programs of the
Company.
ARTICLE
11
VACATION AND SICK
LEAVE
During the term
of his employment hereunder, the Executive shall be entitled to and
receive as an additional benefit at least four (4) weeks of
personal time off each fiscal year under the Company’s
Compensated Leave Policy, during which time his compensation shall
be paid in full. Such personal time off shall be taken by the
Executive at such times as may be reasonably mutually agreed upon
by the Executive and the Company.
ARTICLE
12
TERMINATION
COMPENSATION
12.1.
Monthly
Compensation . Upon the
expiration of the Term for any reason, the Executive shall be
entitled to continue to receive his Base Salary through the last
day of the month in which the Termination Date occurs.
12.2.
Severance Payment
and Benefits . In addition to
the compensation provided for in Section 12.1, the Executive shall
be entitled to severance benefits as provided in this Section 12.2
upon his separation from service with Good Reason or upon his
separation from service on account of the Company’s exercise
of the Notice Exception. For purposes of this Section 12.2,
the date of such separation from service is referred to as the
Executive’s “Separation Date”.
(a)
Within sixty (60)
days following the Separation Date, the Executive (or in the event
of his subsequent death, his designated beneficiary) shall be
entitled to receive a single cash payment equal to a multiple of
(i) the Executive’s Base Salary as in effect on the
Separation Date plus (ii) the greater of (A) the Executive’s
target annual bonus under Section 4.2 for the fiscal year that
includes the Separation Date or (B) the average of the actual
annual bonuses paid to the Executive under Section 4.2 for the two
fiscal years ended before the Separation Date. The multiplier shall
be (X) three (3) if the Separation Date is within twenty-four
months after a Change in Control, or (Y) two (2) in all other
cases. If all or any part of the amount payable pursuant
