Document:

Employment Agreement of J. Daniel Fisher

 Exhibit 10 (viii) 
 STATE OF NORTH CAROLINA 
 COUNTY OF HARNETT 
 EMPLOYMENT AGREEMENT 
 THIS AGREEMENT entered into as of January 14,
2008 by and between NEW CENTURY BANK (hereinafter referred to as the “Bank”), NEW CENTURY BANCORP, INC. (hereinafter referred to as the “Company”) and J. DANIEL FISHER (hereinafter referred to as
“Employee”). 
 W I T N E S S E T H: 
 WHEREAS, the expertise and experience of Employee in the financial institutions industry are extremely valuable to the Company and the Bank; and 
 WHEREAS, it is in the best interests of the Bank, the Company and the Company’s shareholders to maintain an experienced and sound executive
management team to manage the Bank and to further the Company’s overall strategies to protect and enhance the value of the shareholders’ investments; and 
 WHEREAS, the Bank, the Company and Employee desire to enter into this Agreement to establish the scope, terms and conditions of Employee’s employment by the Bank; and 
 WHEREAS, the Bank, the Company and Employee desire to enter into this Agreement also to provide Employee with security in the event of a change of
control of the Bank and to ensure the continued loyalty of Employee during any such change of control in order to maximize shareholder value as well as the continued safe and sound operation of the Bank. 
 NOW, THEREFORE, for and in consideration of the premises and mutual promises, covenants and conditions hereinafter set forth, and other good and
valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the Bank, the Company and Employee hereby agree as follows: 
 1. Employment. The Bank hereby agrees to employ Employee, and Employee hereby agrees to serve as an officer of both the Bank and the Company, all upon the terms and conditions stated herein. As an officer of the Bank and the
Company, Employee will (i) serve as Executive Vice President and Chief Credit Officer, and (ii) have such other duties and responsibilities, and render to the Bank and the Company such other management services, as are customary for
persons in Employee’s position or as shall otherwise be reasonably assigned to him from time to time by the Bank and/or the Company. Employee shall faithfully and 

 
diligently discharge his duties and responsibilities under this Agreement and shall use his best efforts to implement the policies established by the Bank
and the Company. Employee hereby agrees to devote such number of hours of his working time and endeavors to the employment granted hereunder the parties hereto shall deem to be necessary to discharge his duties hereunder, and, for so long as
employment hereunder shall exist, Employee shall not engage in any other occupation which requires a significant amount of Employee’s personal attention during the Bank’s regular business hours or which otherwise interferes with
Employee’s attention to or performance of his duties and responsibilities as an officer of the Bank and the Company hereunder except with the prior written consent of the Bank or the Company. However, nothing herein contained shall restrict or
prevent Employee from personally, and for Employee’s own account, trading in stocks, bonds, securities, real estate or other forms of investment for Employee’s own benefit so long as said activities do not interfere with Employee’s
attention to or performance of his duties and responsibilities as an officer of the Bank and the Company hereunder, and provided further, that such activities do not amount, in the Bank’s sole discretion, to direct competition with the Bank.

 2. Compensation. For all services rendered by Employee to the Bank and the Company under this Agreement, the Bank shall pay
Employee a base salary at a rate of One Hundred Eighty-Five Thousand and 00/100 Dollars ($185,000.00) per annum. The rate of such salary shall be reviewed by the Board of Directors of the Bank not less often than annually during the term of this
Agreement and may be increased, but not decreased, during the term hereof, provided however, that the Board of Directors may decrease the rate of salary payable hereunder in the event that Employee is demoted for Cause (as such term is defined in
Paragraph 6(d) hereof) or in the event that Employee voluntarily accepts a position with the Bank that involves a material reduction in duties or responsibilities. Salary paid under this Agreement shall be payable in cash not less frequently than
monthly. All compensation hereunder shall be subject to customary withholding taxes and such other employment taxes as are required by law. Should a Change in Control (as defined in Paragraph 8) of the Bank occur while Employee is subject to the
provisions of this Agreement, Employee’s base salary shall be increased not less than six percent (6%) annually during the term of this Agreement. 
  

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 In addition to the foregoing, Employee shall be entitled to receive a one-time bonus payment of
Twenty-Five Thousand and 00/100 Dollars ($25,000.00) payable on or before January 31, 2008. 
 3. Participation in Retirement and
Employee Benefit Plans; Fringe Benefits. Subject to the terms and conditions of this Agreement, Employee shall be entitled to participate in any and all employee benefit programs and compensation plans from time to time maintained by the
Bank and available to all employees of the Bank, all in accordance with the terms and conditions (including eligibility requirements) of such programs and plans of the Bank, resolutions of the Bank’s Board of Directors establishing such
programs and plans, and the Bank’s normal practices and established policies regarding such programs and plans. 
 In addition to the
other compensation and benefits described in this Agreement, the Bank shall: 
 (i) Provide Employee with five (5) weeks of paid vacation
leave per year and ten (10) days of paid sick leave per year, notwithstanding the policy of the Bank for all other employees. Such vacation leave and sick leave shall be in addition to federal banking holidays, which shall be paid holidays;

 (ii) Reimburse Employee for the following relocation expenses incurred by him and documented to the reasonable satisfaction of the Bank:
(1) moving expenses; (2) realtor’s commissions for the sale of his current primary residence; (3) closing costs associated with his purchase of a new primary residence; and (4) rental payments associated with his
transitional residence; 
 (iii) Reimburse Employee for all reasonable expenses incurred by him in the performance of his duties under this
Agreement and documented to the reasonable satisfaction of the Bank pursuant to established policies; 
 (iv) Pay expenses associated with
Employee’s membership in one (1) country club, including initiation fees and monthly dues not to exceed $7,500 per year, provided that Employee shall be responsible for all personal expenses for use of such club; 
 (v) Provide Employee major medical insurance coverage under a policy at least equivalent to the major medical insurance coverage generally provided to
active full-time employees of the Bank from time to time and which shall include, at a minimum, payment of 

  

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100% of Employee’s portion of the Bank’s PPO 80/20 Plan and 50% of Employee’s portion of dental insurance coverage (if elected); 

(vi) Provide Employee with life insurance coverage, which coverage shall be in an amount equal to at least twice Employee’s annual base salary;

 (vii) Within thirty (30) days of commencement of Employee’s employment hereunder, grant incentive stock options to Employee
under the Company’s 2000 Incentive Stock Option Plan to purchase 3,000 shares of common stock as authorized under said Plan, which options shall be subject to a three-year vesting schedule and grant incentive stock options to Employee under the
Company’s 2004 Incentive Stock Option Plan to purchase 7,000 shares of common stock as authorized under said Plan, which options shall be subject to a five-year vesting schedule. All such options shall have an exercise price equal to the fair
market value of the Company’s common stock on the date of grant; 
 (viii) Permit Employee to participate in incentive or bonus
compensation plans existing on the date of this Agreement or adopted by the Bank during the term of this Agreement; 
 (ix) Permit Employee
to participate (to the extent permissible under applicable laws and regulations) in all savings, pension and retirement plans, policies and programs applicable generally to all employees of the Bank. Without limiting the foregoing, such plans shall
include the Bank’s 401(k) Savings Plan; 
 (x) Provide Employee with a car allowance in the amount of One Thousand and 00/100 Dollars
($1,000.00) per month. Employee shall be responsible for taxes, insurance and maintenance and fuel expenses incurred with regard to the automobile; and 
 (xi) Permit Employee to participate in any other fringe benefits which are now, or may hereafter become, applicable to the Bank’s other executive officers. 
 4. Term. Unless sooner terminated as provided in this Agreement and subject to the right of either Employee or the Bank to terminate
Employee’s employment at any time as provided herein, the initial term of this Agreement and Employee’s employment with the Bank hereunder shall be for a period commencing on the date hereof and continuing for a period of three
(3) years. Upon each anniversary of the execution hereof, the term of this Agreement shall automatically be extended for an additional one (1) year period, unless written notice from 

  

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the Bank or Employee is received 90 days prior to anniversary of the execution hereof notifying the other party that this Agreement shall not be further
extended. 
 5. Confidentiality; Non-Solicitation. Employee hereby acknowledges and agrees that (i) in the course of his
service as an officer of the Bank, he will gain substantial knowledge of and familiarity with the Bank’s customers and its dealings with them, and other information concerning the Bank’s business, all of which constitutes valuable assets
and privileged information that is particularly sensitive due to the fiduciary responsibilities inherent in the banking business; and, (ii) in order to protect the Bank’s interest in and to assure it the benefit of its business, it is
reasonable and necessary to place certain restrictions on Employee’s disclosure of information about the Bank’s business and customers. For that purpose, and in consideration of the agreements of the Bank and the Company contained herein,
Employee covenants and agrees as provided below. 
 (a) Non-Solicitation Covenant. During a period of two (2) years
following the effective date of termination of this Agreement or Employee’s employment with the Bank for any reason, Employee will not (i) solicit, or assist any other Financial Institution or other Person in soliciting, directly or
indirectly, in one or a series of transactions, any Customer, supplier, vendor or other service provider of the Bank or any affiliate of the Bank for the purpose of providing a service that the Bank, or any affiliate of the Bank, provides; or
(ii) induce, or assist any other Financial Institution or other Person in inducing, directly or indirectly, in one or a series of transactions, any then or former employees or service providers to terminate their employment with, or service to,
the Bank or the Company or otherwise interfere with employment relationships between the Bank and its employees. The Bank (or its designee) shall have sole and absolute discretion to determine if any of the activities described in this Paragraph
5(a) have occurred. 
 For the purposes of this Paragraph 5, the following terms shall have the meanings set forth below: 
 Customer. The term “Customer” means any Person with whom, at any time during the one-year period preceding and including the
effective date of termination of this Agreement or Employee’s employment with the Bank for any reason, the Bank has had a depository, loan and/or other banking relationship. 
  

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 Financial Institution. The term “Financial Institution” means any federal or
state chartered bank, savings bank, savings and loan association or credit union, or any holding company for or corporation that owns or controls any such entity, or any other Person engaged in the business of making loans of any type or receiving
deposits, other than the Bank. 
 Person. The term “Person” means any natural person or any corporation,
partnership, proprietorship, joint venture, limited liability company, trust, estate, governmental agency or instrumentality, fiduciary, unincorporated association or other entity. 
 (b) Confidentiality Covenant. Employee covenants and agrees that any and all data, figures, projections, estimates, lists, files, records,
documents, manuals or other such materials or information (financial or otherwise) relating to the Bank and its banking business, regulatory examinations, financial results and condition, lending and deposit operations, customers (including lists of
the Bank’s customers and information regarding their accounts and business dealings with the Bank), policies and procedures, computer systems and software, shareholders, employees, officers and directors (herein referred to as
“Confidential Information”) are proprietary to the Bank and are valuable, special and unique assets of the Bank’s business to which Employee will have access during his employment with the Bank. Employee agrees that (i) all such
Confidential Information shall be considered and kept as the confidential, private and privileged records and information of the Bank, and (ii) at all times during the term of his employment with the Bank and following the termination of this
Agreement or his employment for any reason, and except as shall be required in the course of the performance by Employee of his duties on behalf of the Bank or otherwise pursuant to the direct, written authorization of the Bank, Employee will not:
divulge any such Confidential Information to any other Person or Financial Institution; remove any such Confidential Information in written or other recorded form from the Bank’s premises; or make any use of any Confidential Information for his
own purposes or for the benefit of any Person or Financial Institution other than the Bank. However, following the termination of Employee’s employment with the Bank, this subparagraph (b) shall not apply to any Confidential Information
which then is in the public domain (provided that Employee was not responsible, directly or indirectly, for permitting such Confidential Information to enter the public domain without the Bank’s consent), or which is obtained by Employee from a
third party which or who is not obligated under an agreement of confidentiality with respect to such information. 
  

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 (c) Remedies for Breach. Employee understands and agrees that a breach or violation by him
of the covenants contained in Paragraph 5(a) and 5(b) of this Agreement will be deemed a material breach of this Agreement and will cause irreparable injury to the Bank, and that it would be difficult to ascertain the amount of monetary damages that
would result from any such violation. In the event of Employee’s actual or threatened breach or violation of the covenants contained in Paragraph 5 (a) or 5(b), the Bank shall be entitled to bring a civil action seeking an injunction
restraining Employee from violating or continuing to violate those covenants or from any threatened violation thereof, or for any other legal or equitable relief relating to the breach or violation of such covenant. Employee agrees that, if the Bank
institutes any action or proceeding against Employee seeking to enforce any of such covenants or to recover other relief relating to an actual or threatened breach or violation of any of such covenants, Employee shall be deemed to have waived the
claim or defense that the Bank has an adequate remedy at law and shall not urge in any such action or proceeding the claim or defense that such a remedy at law exists. However, the exercise by the Bank of any such right, remedy, power or privilege
shall not preclude the Bank or its successors or assigns from pursuing any other remedy or exercising any other right, power or privilege available to it for any such breach or violation, whether at law or in equity, including the recovery of
damages, all of which shall be cumulative and in addition to all other rights, remedies, powers or privileges of the Bank. 
 Notwithstanding anything contained herein to the contrary, Employee agrees that the provisions of Paragraph 5(a) and 5(b) above and the remedies provided in this Paragraph 5(c) for a breach by Employee shall be in addition to, and shall not
be deemed to supersede or to otherwise restrict, limit or impair the rights of the Bank under the Trade Secrets Protection Act contained in Article 24, Chapter 66 of the North Carolina General Statutes, or any other state or federal law or
regulation dealing with or providing a remedy for the wrongful disclosure, misuse or misappropriation of trade secrets or other proprietary or confidential information. 
 (d) Survival of Covenants. Employee’s covenants and agreements and the Bank’s rights and remedies provided for in this Paragraph 5 shall survive any termination of this Agreement or
Employee’s employment with the Bank. 
  

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 6. Termination and Termination Pay. 
 (a) Employee’s employment under this Agreement may be terminated at any time by Employee upon sixty (60) days written notice to the
Bank. Upon such termination, Employee shall be entitled to receive compensation through the effective date of such termination; provided, however, that the Bank, in its sole discretion, may elect for Employee not to serve out part or all of said
notice period. 
 (b) Employee’s employment under this Agreement shall be terminated upon the death of Employee during the term
of this Agreement. Upon any such termination, Employee’s estate shall be entitled to receive any compensation due to Employee computed through the last day of the calendar month in which his death shall have occurred but which remains unpaid.

 (c) In the event Employee becomes disabled under the term of his employment hereunder and it is determined by the Bank, through
consultation with an independent third party, that Employee is permanently unable to perform his duties under this Agreement, the Bank shall continue to compensate Employee at the level of compensation described in Paragraph 2 above, and shall
continue to provide Employee each of the other benefits set forth or described in this Agreement, for the remaining term of this Agreement, less any other payments provided under any disability income plan of the Bank which is applicable to
Employee. In the event of any disagreement between Employee and the Bank as to whether Employee is physically or mentally incapacitated such as will result in the termination of Employee’s employment pursuant to this Paragraph 6(c), the
question of such incapacity shall be submitted to an impartial and reputable physician for determination, selected by mutual agreement of Employee and the Bank or, failing such agreement, by two (2) physicians (one (1) of whom shall be
selected by the Bank and the other by Employee), and such determination of the question of such incapacity by such physician or physicians shall be final and binding on Employee and the Bank. The Bank shall pay the reasonable fees and expenses of
such physician or physicians in making any determination required under this Paragraph 6(c). 
 (d) The Bank may terminate
Employee’s employment at any time for any reason with or without “Cause” (as defined below). Any termination of Employee’s employment which is not for “Cause” (as defined below) shall entitle Employee to the
compensation specified in Paragraph 2 above as to salary for the remaining term of the contract 

  

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and Paragraph 3(v) above as to medical benefits for the remaining term of this agreement. Any termination of Employee’s employment which is for
“Cause” (as defined below) shall mean that Employee has no further rights to receive payments for compensation or benefits under this Agreement, with the exception of any vested benefits of Employee under any employee benefits plan of the
Bank or the Company. 
 For purposes of this Paragraph 6(d), the Bank shall have “Cause” to terminate Employee’s employment
upon: 
 (i) A determination by the Bank, in good faith, that Employee (A) has breached in any material respect any of the
terms or conditions of this Agreement, or (B) is engaging or has engaged in willful conduct which is materially detrimental to the business prospects of the Bank or which has had or likely will have a material adverse effect on the
Bank’s business or reputation. Prior to any termination by the Bank of Employee’s employment for a breach, failure to perform or conduct described in this subparagraph (i), the Bank shall give Employee written notice which describes such
breach, failure to perform or conduct and if during a period of thirty (30) business days following such notice Employee cures or corrects the same to the reasonable satisfaction of the Bank, then this Agreement shall remain in full force and
effect. However, notwithstanding the above, if the Bank has given written notice to Employee on a previous occasion of the same or a substantially similar breach, failure to perform or conduct, or of a breach, failure to perform or conduct which the
Bank determines in good faith to be of substantially similar import, or if the Bank determines in good faith that the then current breach, failure to perform or conduct is not reasonably curable, then termination under this subparagraph
(i) shall be effective immediately and Employee shall have no right to cure such breach, failure to perform or conduct. 
 (ii)
The violation by Employee of any applicable federal or state law, or any applicable rule, regulation, order or statement of policy promulgated by any governmental agency or authority having jurisdiction over the Bank or any of its affiliates or
subsidiaries (a “Regulatory Authority”, including without limitation the Board of Governors of the Federal Reserve System, the Federal Reserve Bank of Richmond, Federal Deposit Insurance Corporation, the North Carolina Commissioner of
Banks or any other banking regulator having legal jurisdiction over the Bank or the Company), which results from Employee’s gross negligence, willful misconduct or intentional disregard of such law, rule, regulation, order or 

  

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policy statement and results in any substantial damage, monetary or otherwise, to the Bank or any of its affiliates or subsidiaries or to the Bank’s
reputation; 
 (iii) The commission in the course of Employee’s employment with the Bank of an act of fraud, embezzlement, theft
or proven personal dishonesty (whether or not resulting in criminal prosecution or conviction); 
 (iv) The conviction of Employee of
any felony or any criminal offense involving dishonesty or breach of trust, or the occurrence of any event described in Section 19 of the Federal Deposit Insurance Act or any other event or circumstance which disqualifies Employee from serving
as an employee or executive officer of, or a party affiliated with, the Bank or its bank holding company; 
 (v) Employee is removed,
suspended or prohibited from participating in the conduct of the Bank’s affairs by any Regulatory Authority; and, 
 (vi) The
occurrence of any event that results in Employee being excluded from coverage, or having coverage limited as to Employee as compared to other covered officers or employees, under the Bank’s then current “blanket bond” or other
fidelity bond or insurance policy covering its directors, officers or employees. 
 7. Additional Regulatory Requirements.
Notwithstanding anything contained in this Agreement to the contrary, it is understood and agreed that the Bank (or its successors in interest) shall not be required to make any payment or take any action under this Agreement if (a) the
Bank is declared by any Regulatory Authority to be insolvent, in default or operating in an unsafe or unsound manner, or if (b) in the opinion of counsel to the Bank such payment or action (i) would be prohibited by or would
violate any provision of state or federal law applicable to the Bank, including without limitation the Federal Deposit Insurance Act and Chapter 53 of the North Carolina General Statutes as now in effect or hereafter amended, (ii) would
be prohibited by or would violate any applicable rules, regulations, orders or statements of policy, whether now existing or hereafter promulgated, of any Regulatory Authority, or (iii) otherwise would be prohibited by any Regulatory
Authority. 
 8. Change in Control Payments and Benefits 
 (a) In the event that: 
  

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 (i) During the term of this Agreement, (x) the Bank terminates Employee’s
employment other than for Cause or Disability; or (y) Employee terminates such employment following a Termination Event; and 
 (ii) Such termination pursuant to clause (x) or (y) of Paragraph 8(a)(i) above occurs within twelve (12) months after a Change in Control (any such termination meeting the explicit requirements of both Paragraphs
8(a)(i) and 8(a)(ii) referred to hereinafter as a “Change in Control Termination”), then Employee shall be entitled to receive the payments and benefits specified in this Paragraph 8. The date on which the Employee or Bank receives notice
in accordance with Paragraph 6 of the termination of Employee’s employment or Subparagraph 8(f) of a Change in Control Termination, respectively, shall be deemed the Change in Control Termination Date. 
 (b) For the purposes of this Agreement, the term “Change in Control” shall mean any of the following events: 
 (i) After the effective date of this Agreement, any “person” (as such term is defined in Section 7 (j) (8) (A) of
the Change in Bank Control Act of 1978), directly or indirectly, acquires beneficial ownership of voting stock, or acquires irrevocable proxies or any combination of voting stock and irrevocable proxies, representing fifty percent (50%) or more
of any class of voting securities of the Bank, or acquires control of in any manner the election of a majority of the directors of the Bank; 
 (ii) The Bank consolidates or merges with or into another corporation, association, or entity, or is otherwise reorganized, where the Bank is not the surviving corporation in such transaction; or 
 (iii) All or substantially all of the assets of the Bank are sold or otherwise transferred to or are acquired by any other corporation,
association, or other person, entity, or group. 
 Notwithstanding the other provisions of this Paragraph 8, a transaction or event shall
not be considered a Change in Control if (i) prior to the consummation or occurrence of such transaction or event, Employee and the Bank agree in writing that the same shall not be treated as a Change in Control for purposes of this Agreement;
or (ii) the transaction is one in which the Bank is reorganizing itself into the bank holding company form of organization 

  

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whereby the shareholders of the Bank immediately prior to such reorganization are substantially the same as those immediately after consummation of such
reorganization. 
 (c) For purposes of this Agreement, the term “Termination Event” shall mean the occurrence of any of the
following events: 
 (i) Employee is assigned any duties and/or responsibilities that are inconsistent with his position, duties,
responsibilities, or status at the time of the Change in Control or with his reporting responsibilities or titles with the Bank in effect at such time; 
 (ii) Employee’s annual base salary is reduced below the amount in effect as of the effective date of a Change in Control or as the same shall have been increased from time to time following such effective
date; 
 (iii) Employee’s life insurance, medical or hospitalization insurance, dental insurance, stock option plans, stock
purchase plans, deferred compensation plans, management retention plans, retirement plans, or similar plans or benefits being provided by the Bank to Employee as of the effective date of the Change in Control are reduced in their level, scope, or
coverage, or any such insurance, plans, or benefits are eliminated, unless such reduction or elimination applies proportionately to all salaried employees of the Bank who participated in such benefits prior to such Change in Control; or 

(iv) Employee is transferred to a location outside of Cumberland County, North Carolina and Harnett County, North Carolina, without
Employee’s express written consent. 
 A Termination Event shall be deemed to have occurred on the date such action or event is
implemented or takes effect. 
 (d) Upon a Change in Control Termination, the Bank shall pay to Employee in a lump sum in cash on the
earlier of (x) the first day of the seventh month after the date of the Change in Control Termination Date or (y) the date of Employee’s death an amount equal to two hundred ninety-nine percent (299%) of Employee’s base
amount as defined in Section 280G(b)(3)(A) of the Internal Revenue Code of 1986, as amended (the “Code”). 
 (e)
Following a Termination Event which gives rise to Employee’s rights hereunder, Employee shall have twelve (12) months from the date of occurrence of the Termination Event to terminate his employment pursuant to this Paragraph 8. Any
such termination shall be deemed to have occurred only upon delivery to the Bank or any successor 

  

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thereto, of written notice of termination which describes the Change in Control and Termination Event. If Employee does not so terminate his employment
within such twelve (12) month period, Employee shall thereafter have no further rights hereunder with respect to that Termination Event, but shall retain rights, if any, hereunder with respect to any other Termination Event as to which such
period has not expired. 
 (f) Survival. Employee’s rights and benefits under this Paragraph 8 shall survive any
termination of this Agreement or Employee’s employment. 
 9. Additional Agreements. 
 (a) The parties acknowledge that Employee may be subject to certain non-competition covenants (the “Prior Non-Compete”) contained in an
employment agreement with Employee’s former employer, Gateway Bank & Trust Company, Elizabeth City, North Carolina (“Gateway”). Employee believes that his acceptance of employment with the Bank pursuant to this Agreement will
not violate any covenant contained in the Prior Non-Compete. Notwithstanding any other provision contained in this Agreement, in the event that Gateway notifies Employee in writing that (i) Employee is in violation of the Prior
Non-Compete and (ii) that Gateway intends to cease making payments to Employee pursuant to the Prior Non-Compete and/or take legal action as a result of such alleged violation of the Prior Non-Compete, then the parties hereto agree that
Bank may terminate Employee or that Employee may resign, and that in either such circumstance, the Bank shall continue to provide Employee the insurance benefits called for by Paragraph 3(v) hereof for a period of one (1) year and shall pay to
Employee in a lump sum in cash on the earlier of (x) the first day of the seventh month after the date of the such termination or resignation or (y) the date of Employee’s death, an amount equal to 100% percent (100%) of
Employee’s then current base salary. 
 (b) Survival. Employee’s rights and benefits under this Paragraph 9 shall
survive any termination of this Agreement or Employee’s employment. 
 10. Successors and Assigns. 
 (a) This Agreement shall inure to the benefit of and be binding upon any corporate or other successor of the Bank which shall acquire, directly or
indirectly, by conversion, merger, consolidation, purchase or otherwise, all or substantially all of the assets of the Bank. 
  

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 (b) The Bank is contracting for the unique and personal skills of Employee. Therefore, Employee
shall be precluded from assigning or delegating his rights or duties hereunder without first obtaining the written consent of the Bank. 
 11. Modification; Waiver; Amendments. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the parties hereto. No waiver by
either party hereto, at any time, of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No amendments or additions to this Agreement shall be binding unless in writing and signed by both parties, except as herein otherwise provided. 
 12. Applicable Law. This Agreement shall be governed in all respects whether as to validity, construction, capacity, performance or
otherwise, by the laws of North Carolina, except to the extent that federal law shall be deemed to apply. 
 13. Severability.
The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. 
 14. Section 409A Compliance. Employee and the Bank intend that their exercise of authority or discretion under this Agreement shall
comply with Section 409A of the Code. In that regard, if any provision of this Agreement is ambiguous as to its satisfaction of the requirements of Section 409A, such provision shall nevertheless be applied in a manner consistent with
those requirements. The Bank shall maintain to the maximum extent practicable the original intent of the applicable provision without subjecting Employee to additional tax or interest, and the Bank shall not be required to incur additional
compensation expense as a result of the reformed provision. References in this Agreement to Section 409A of the Code include rules, regulations and guidance of general application issued by the Department of Treasury under Section 409A of
the Code. 
 [Signature page follows] 
  

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 IN WITNESS WHEREOF, the parties have executed this Agreement under seal and in such form as to be
binding as of the day and year first hereinabove written. 
  

			
	NEW CENTURY BANCORP, INC.
		
	By:	 	 /s/ William L. Hedgepeth, II

		 	William L. Hedgepeth, II, President & CEO

  

	
	ATTEST:
	
	 /s/ Brenda Bonner

	Corporate Secretary

  

			
	NEW CENTURY BANK
		
	By:	 	 /s/ William L. Hedgepeth, II

		 	William L. Hedgepeth, II, President & CEO

  

	
	ATTEST:
	
	 /s/ Brenda Bonner

	Corporate Secretary

  

	
	 /s/ J. Daniel Fisher

	J. Daniel Fisher

  

 15Philip Morris International Benefit Equalization Plan

 Exhibit 10.5 
 PHILIP MORRIS INTERNATIONAL BENEFIT EQUALIZATION PLAN 
 Effective as of January 1, 2008 
 (As amended and in effect as of March 28, 2008) 

 TABLE OF CONTENTS 
  

					
	 	  	 	  	Page No
	ARTICLE I	  	DEFINITIONS	  	  2
			
	ARTICLE II	  	BENEFIT EQUALIZATION RETIREMENT ALLOWANCES AND BENEFIT EQUALIZATION PROFIT-SHARING ALLOWANCES	  	14
			
	ARTICLE III	  	FUNDS FROM WHICH ALLOWANCES ARE PAYABLE	  	23
			
	ARTICLE IV	  	THE ADMINISTRATOR	  	24
			
	ARTICLE V	  	AMENDMENT AND DISCONTINUANCE OF THE PLAN	  	25
			
	ARTICLE VI	  	FORMS; COMMUNICATIONS	  	26
			
	ARTICLE VII	  	INTERPRETATION OF PROVISIONS	  	27
			
	ARTICLE VIII	  	CHANGE IN CONTROL PROVISIONS	  	28

  

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 PHILIP MORRIS INTERNATIONAL BENEFIT EQUALIZATION PLAN 
 The Philip Morris International Benefit Equalization Plan governs the rights of an Employee whose benefit under the Retirement Plan or the Profit-Sharing
Plan, or both Qualified Plans, is subject to one or more of the Statutory Limitations. The liabilities allocable to Employees, former employees and retired employees of the international tobacco operations conducted by the Company and the other
Participating Companies have been transferred from the Benefit Equalization Plan maintained by Altria Corporate Services, Inc. to the Plan. 
 It is intended that Grandfathered Benefit Equalization Retirement Allowances and Grandfathered Benefit Equalization Profit-Sharing Allowances with respect to Grandfathered Employees and Grandfathered Retired Employees not be subject to the
requirements of Section 409A of the Code and that the Plan be interpreted and administered in accordance with this intention. The Plan as hereinafter set forth shall be effective with respect to Employees who incur a Separation from Service on
or after March 28, 2008, except as otherwise provided herein. The Plan will also be the source of benefits to former employees of Philip Morris International Inc. and its subsidiaries who terminated employment prior to January 1, 2008.

 The Plan is three separate plans, programs or arrangements. Each portion shall be treated as a separate plan, program or arrangement from
the other portions. One portion of the Plan provides benefits to a Retired Employee (or his Spouse or other Beneficiary) solely in excess of the Section 415 Limitations; the second portion of the Plan provides benefits to a Retired Employee (or
his Spouse or other Beneficiary) attributable solely to the Compensation Limitation; the third portion of the Plan provides benefits to a Retired Employee (or his Spouse or other Beneficiary) because payment of the benefit from one or both of the
Qualified Plans could result in a failure to meet the nondiscrimination requirements of Section 401(a)(4) of the Code or the coverage requirements of Section 410(b) of the Code. 
  

 1 

 ARTICLE I 
 DEFINITIONS 
 The following terms as used herein and in the Preamble shall have the meanings set
forth below. Any capitalized term used herein or in the Preamble and not defined below shall have the meaning set forth in the Retirement Plan or the Profit-Sharing Plan, as the context may require. 
 (a) “Actuarial Equivalent” shall mean a benefit which is at least equivalent in value to the benefit otherwise payable pursuant to the
terms of the Plan, based on the actuarial principles and assumptions set forth in Exhibit I to the Retirement Plan; provided, however, that a Single Sum Payment of all or any portion of a benefit payable pursuant to the terms of the Plan shall be
the Actuarial Equivalent of such benefit (or portion of such benefit) payable in equal monthly payments during a twelve (12) month period for the life of the recipient commencing at the applicable BEP Benefit Commencement Date, using the
actuarial principles and assumptions set forth in Exhibit A to the Plan. 
 (b) “Allowance” or “Allowances”
shall mean a Benefit Equalization Retirement Allowance, determined under ARTICLE II A of the Plan and a Benefit Equalization Profit-Sharing Allowance, determined under ARTICLE II B of the Plan. 
 (c) “Beneficiary” shall mean: 
 (1) in the case of a Retired Employee who is to receive all or a portion of his Benefit Equalization Retirement Allowance after his Separation from Service in a Single Sum Payment pursuant to ARTICLE II C(1)(a) of the Plan, but who dies
after his Separation from Service and before such Single Sum Payment is made: 
 (i) if the Retired Employee is married on the date of his
death, the Beneficiary of such Single Sum Payment shall be the Spouse to whom he was married on the date of death; and 
 (ii) if the Retired
Employee is not married on the date of his death, the Beneficiary of such Single Sum Payment shall be the Retired Employee’s estate. 
 An Employee or Retired Employee may designate any other person or persons as the Beneficiary who is to receive a Single Sum Payment of his Benefit Equalization Retirement Allowance in the event that he dies after his Separation from Service
and before such Single Sum Payment is paid to him by timely filing a beneficiary designation form with the Administrator (or his delegate), provided, however, that if the Employee or Retired Employee is married on the date of the filing of such
beneficiary designation form, his Spouse must consent, in writing before a notary public or a duly authorized representative of his Participating Company, to such designation. 
 (2) In the case of a Grandfathered Employee who has elected to receive after his Separation from Service that portion of his Benefit Equalization
Retirement 

  

 2 

 
Allowance equal to the Grandfathered Benefit Equalization Retirement Allowance in the form of an Optional Payment described in ARTICLE I (z)(i)(2) or I
(z)(i)(3) pursuant to ARTICLE II C(2) of the Plan, the person or persons designated by the Grandfathered Employee to receive (or who, pursuant to the terms of such Optional Payment, will receive) after his death a benefit according to the option
elected by the Grandfathered Employee. 
 (3) In the case of an Employee or Retired Employee who has been credited with a Benefit Equalization
Profit-Sharing Allowance and who dies prior to the payment of such Benefit Equalization Profit-Sharing Allowance (or prior to the payment of the then remaining balance of such Benefit Equalization Profit-Sharing Allowance in the case of a
Grandfathered Employee who has elected to receive that portion of his Benefit Equalization Profit-Sharing Allowance equal to the Grandfathered Benefit Equalization Profit-Sharing Allowance in the form of an Optional Payment pursuant to ARTICLE II
D(3) of the Plan): 
 (i) if the Employee or Retired Employee is married on the date of his death, the Beneficiary of such Benefit
Equalization Profit-Sharing Allowance shall be the Spouse to whom he was married on the date of death; and 
 (ii) if the Employee or Retired
Employee is not married on the date of his death, the Beneficiary of such Benefit Equalization Profit-Sharing Allowance shall be the Employee’s or Retired Employee’s estate. 
 An Employee or Retired Employee may designate any other person or persons (including a trust created by the Employee or Retired Employee during his
lifetime or by will) as Beneficiary of his Benefit Equalization Profit-Sharing Allowance in the event of his death by timely filing a beneficiary designation form with the Administrator (or his delegate), provided that if the Employee or Retired
Employee is married on the date of the filing of such beneficiary designation form, his Spouse must consent, in writing before a notary public or a duly authorized representative of his Participating Company, to such designation. 
  

 3 

 (d) “Benefit Equalization Joint and Survivor Allowance” shall mean the total amount that
would be payable during a twelve (12) month period as a reduced Benefit Equalization Retirement Allowance to a Retired Employee for life and after his death the amount payable to his Spouse for life equal to one-half of the reduced Benefit
Equalization Retirement Allowance payable to the Retired Employee (regardless of whether such form of benefit was available to such Retired Employee and his Spouse), which together shall be the Actuarial Equivalent of the Benefit Equalization
Retirement Allowance of the Retired Employee. 
 (e) “Benefit Equalization Profit-Sharing Allowance” or
“Profit-Sharing Allowance” shall mean the benefit determined under ARTICLE II B of the Plan and payable at the times and in the forms set forth in ARTICLE II D of the Plan. The Benefit Equalization Profit-Sharing Allowance shall be
comprised of the Grandfathered Benefit Equalization Profit-Sharing Allowance, if any, and the remaining portion of such Allowance. 
 (f)
“Benefit Equalization Retirement Allowance” shall mean the benefit determined under ARTICLE II A of the Plan and payable at the times and in the forms set forth in ARTICLE II C of the Plan. The Benefit Equalization Retirement
Allowance shall be comprised of the Grandfathered Benefit Equalization Retirement Allowance, if any, and the remaining portion of such Allowance. 
 (g) “Benefit Equalization Survivor Allowance” shall mean the benefit payable to: 
 (i) the Spouse of a Deceased
Employee; and 
 (ii) the Spouse of a deceased Retired Employee; 
 in an amount equal one-half of the reduced Benefit Equalization Retirement Allowance which would have been payable in the form of a Benefit Equalization Joint and Survivor Allowance to the Deceased Employee or
deceased Retired Employee (regardless of whether such form of benefit was available to such Deceased Employee or deceased Retired Employee). 
 (h) “Benefits Committee” shall mean the Philip Morris International Benefits Committee. 
 (i) “BEP Benefit
Commencement Date” shall mean the date on which the benefit to which the recipient is entitled to is paid or commences to be paid pursuant to the application filed in accordance with ARTICLE II E of the Plan, or if no such application is
filed, in accordance with the terms of the Plan as determined in the sole discretion of the Administrator. All such Allowances (regardless of to whom paid) not paid in a Single Sum Payment are paid in arrears so that the actual date of payment shall
be the first day of the calendar month next succeeding the BEP Benefit Commencement Date. 
 (i) Except as provided in clauses
(ii), (iii), (iv) and (v) hereof, the BEP Benefit Commencement Date of the Benefit Equalization Retirement Allowance shall be the Payment Date, but not later than the Latest Payment Date. 
 (ii) (A) Except as provided in clause (ii)(B), the BEP Benefit Commencement Date of that portion of a Benefit Equalization Retirement
Allowance that 

  

 4 

 
is the Grandfathered Benefit Equalization Retirement Allowance payable in the form of an Optional Payment pursuant to an election under ARTICLE II C(2) to a
Grandfathered Retired Employee shall be the Benefit Commencement Date of the Grandfathered Retired Employee’s Full, Deferred or Early Retirement Allowance under the Retirement Plan. 
 (B) The BEP Benefit Commencement Date of that portion of a Benefit Equalization Retirement Allowance that is the Grandfathered Benefit
Equalization Retirement Allowance payable in the form of an Optional Payment with respect to a Grandfathered Retired Employee who voluntarily retires within the one (1) year period following the date of the filing of his application for an
Optional Payment with the Administrator pursuant to ARTICLE II C(2) or whose employment is terminated for misconduct (as determined by the Benefits Committee) within such one (1) year period, shall be the first day of the month following the
expiration of the one (1) year period following the date of the filing of his application for an Optional Payment. 
 (iii) The BEP Benefit Commencement Date of that portion of a Benefit Equalization Retirement Allowance that is the Grandfathered Benefit Equalization Retirement Allowance payable to a Grandfathered Retired Employee who is only eligible for
a Vested Retirement Allowance shall be the Benefit Commencement Date of the Retired Employee’s Vested Retirement Allowance under the Retirement Plan. 
 (iv) The BEP Benefit Commencement Date of any Benefit Equalization Retirement
Allowance described in ARTICLE II A(1)(f) shall be the BEP Benefit Commencement Date set forth in the General Release Agreement; provided, however, that if no time of payment is specified, the BEP Benefit Commencement Date shall be the first day of
the third calendar month following the month in which the Employee Separates from Service, but no later than the 15th day of the third month
following the end of the Employee’s first taxable year in which the right is no longer subject to a substantial risk of forfeiture or the 15th
day of the third month following the end of the Employee’s Participating Company first taxable year in which the right is no longer subject to a substantial risk of forfeiture; provided, however that no such Benefit Equalization Allowance shall
change either the time or form of payment of the Grandfathered Benefit Equalization Retirement Allowance of a Grandfathered Employee otherwise payable pursuant to the terms of the Plan. 
 (v) (A) Except as provided in clause (B), the BEP Benefit Commencement Date of the Benefit Equalization Profit-Sharing Allowance shall be
the Payment Date, but not later than the Latest Payment Date. 
   (B) The BEP Benefit Commencement Date of that
portion of a Benefit Equalization Profit-Sharing Allowance that is the Grandfathered Benefit Equalization Profit-Sharing Allowance payable in the form of an Optional Payment pursuant to an election under ARTICLE II D(3) to a Grandfathered Retired
Employee shall be the date specified in the application. 
  

 5 

 (vi) (A) Except as provided in clause (B), the BEP Benefit Commencement Date of the Benefit Equalization
Survivor Allowance payable to the Spouse of a Deceased Employee or deceased Retired Employee shall be the Survivor Allowance Payment Date, but not later than the Survivor Allowance Latest Payment Date. 
 (B) The BEP Benefit Commencement Date of that portion of the Benefit Equalization Survivor Allowance that is derived from the
Grandfathered Benefit Equalization Retirement Allowance that is payable to: 
  

	 	(1)	the Spouse of a Grandfathered Deceased Employee; or 

  

	 	(2)	the Spouse of a deceased Grandfathered Retired Employee, 

 shall, in each case, be the Benefit Commencement Date of the Survivor Allowance payable to such Spouse under the Retirement Plan, provided that the Spouse may elect in accordance with the provisions of ARTICLE II, A5(c) or (f) of the
Retirement Plan, as applicable to the Spouse, that the BEP Benefit Commencement Date be the first day of any month thereafter, but not later than the later of (i) the first day of the second calendar month following the month in which the
Grandfathered Deceased Employee or deceased Grandfathered Retired Employee died (or if his date of birth was on the first day of a calendar month, the first day of the calendar month next following the calendar month in which the Grandfathered
Deceased Employee or deceased Grandfathered Retired Employee died), or (ii) the date that would have been the Grandfathered Deceased Employee’s or deceased Grandfathered Retired Employee’s Unreduced Early Retirement Benefit
Commencement Date. 
 (j) “Change in Circumstance” shall mean: 
 (i) the marriage of the Grandfathered Employee or Grandfathered Retired Employee; 
 (ii) the divorce of the Grandfathered Employee or Grandfathered Retired Employee from his spouse (determined in accordance with applicable
state law), provided 
 (A) such spouse was the Beneficiary who is to receive an Optional Payment, or 
 (B) the Grandfathered Employee or Grandfathered Retired Employee elected to receive an Optional Payment pursuant to ARTICLE I(z)(i)(1) of
the Plan; 
 (iii) the death of the Beneficiary designated by the Grandfathered Employee or Grandfathered Retired Employee to
receive an Optional Payment after the death of the Grandfathered Retired Employee; or 
 (iv) a medical condition of the
Beneficiary, based on medical evidence satisfactory to the Administrator, which is expected to result in the death of the 

  

 6 

 
Beneficiary within five (5) years of the filing of an application for change in Optional Payment method pursuant to ARTICLE II C(2) or ARTICLE II D(2)
hereof. 
 (k) “Company” shall mean PMI Global Services Inc. PMI Global Services Inc. is the sponsor of the Plan. 

(l) “Compensation” shall have the same meaning as in the Retirement Plan, except that in computing the Retirement Allowance and
Benefit Equalization Retirement Allowance of an Employee in salary bands A and B who was not age fifty-five (55) or older at December 31, 2006, Compensation shall mean the lesser of his (i) base salary, plus annual incentive award,
and (ii) base salary, plus annual incentive award at a business rating of 100 and individual performance rating of “Exceeds”. 
 (m) “Compensation Limitation” shall mean the limitation of Section 401(a)(17) of the Code on the annual compensation of an Employee which may be taken into account under the Qualified Plans. 
 (n) “Date of Retirement” shall have the same meaning as in the Retirement Plan. 
 (o) “Earned and Vested” shall mean, when referring to an Allowance or any portion of an Allowance, an amount that, as of January 1,
2005, is not subject to a substantial risk of forfeiture (as defined in Treasury Regulation §1.83-3(c)) or a requirement to perform future services. 
 (p) “Employee” shall mean any person employed by a Participating Company who has accrued a benefit under the Retirement Plan or the Profit-Sharing Plan but whose entire accrued benefit, if computed
without regard to the Statutory Limitations, cannot be paid under the Retirement Plan or Profit-Sharing Plan, or both Qualified Plans, as a result of the Statutory Limitations, provided that an Employee shall not include: 
 (i) an EPF Employee; or 
 (ii) an employee of
a Participating Company who has elected to participate in the target payment arrangement, but only with respect to those calendar years in which he was a participant in such arrangement; provided, however, that nothing shall deprive such employee of
any Grandfathered Benefit Equalization Retirement Allowance and Grandfathered Benefit Equalization Profit-Sharing Allowance earned for any Plan year in which he is not a participant in the target payment arrangement. 
  

 7 

 (q) “Grandfathered Benefit Equalization Joint and Survivor Allowance” shall mean the
total amount that would be payable during a twelve (12) month period as a reduced Grandfathered Benefit Equalization Retirement Allowance to a Grandfathered Retired Employee for life and after his death the amount payable to his Spouse for life
equal to one-half of the reduced Grandfathered Benefit Equalization Retirement Allowance payable to the Grandfathered Retired Employee, which together shall be the Actuarial Equivalent of the Grandfathered Benefit Equalization Retirement Allowance
of the Grandfathered Retired Employee. 
 (r) “Grandfathered Benefit Equalization Optional Payment Allowance” shall mean,
with respect to that portion of a Grandfathered Retired Employee’s Benefit Equalization Retirement Allowance that is the Grandfathered Benefit Equalization Retirement Allowance, the total amount payable during a twelve (12) month period in
accordance with one of the payment methods described in ARTICLE II, A4(d) of the Retirement Plan and designated by the Grandfathered Retired Employee in his application for an Optional Payment under ARTICLE II C(2) of the Plan, pursuant to which the
Grandfathered Retired Employee receives for life after his Date of Retirement a reduced Grandfathered Benefit Equalization Retirement Allowance in equal monthly payments for life and after his death after his Date of Retirement his Beneficiary
receives for life a benefit in equal monthly payments according to the option elected by the Grandfathered Retired Employee, which together shall be the Actuarial Equivalent of the Grandfathered Benefit Equalization Retirement Allowance payable in
equal monthly payments for the life of the Grandfathered Retired Employee after his Date of Retirement. 
 (s) “Grandfathered Benefit
Equalization Profit-Sharing Allowance” shall mean that portion of a Grandfathered Retired Employee’s Benefit Equalization Profit-Sharing Allowance as of December 31, 2004, the right to which is Earned and Vested as of
December 31, 2004, plus any future contributions to the account, the right to which was Earned and Vested as of December 31, 2004, but only to the extent such contributions are actually made, plus earnings (whether actual or notional)
attributable to such Grandfathered Benefit Equalization Profit-Sharing Allowance as of December 31, 2004, or to such income. 
 (t)
“Grandfathered Benefit Equalization Retirement Allowance” shall mean the present value of that portion (or all) of the Benefit Equalization Retirement Allowance earned to December 31, 2004 to which the Grandfathered Employee or
Retired Grandfathered Employee would have been entitled under the Plan if he had voluntarily terminated services without cause on or before December 31, 2004 and received a payment on the earliest possible date allowed under the Plan to receive
payment of a Benefit Equalization Retirement Allowance following the termination of services and received the benefits in the form with the maximum value; provided, however, that for any subsequent year such Grandfathered Benefit Equalization
Retirement Allowance may increase to equal the present value of the benefit the Grandfathered Employee or Grandfathered Retired Employee actually becomes entitled to, in the form and at the time actually paid, determined in accordance with the terms
of the Plan (including applicable Statutory Limitations) as in effect on October 3, 2004, without regard to any further services rendered by the Grandfathered Employee or Grandfathered Retired Employee after December 31, 2004, or any other
events affecting the amount of or the entitlement to benefits (other than an election with respect to the time and form of an available benefit). 
  

 8 

 (u) “Grandfathered Deceased Employee” shall mean a Grandfathered Employee who died while
he was an Employee at a time when he had a nonforfeitable right to any portion of his Retirement Allowance. 
 (v) “Grandfathered
Employee” shall mean: 
 (i) an Employee who is entitled to a Grandfathered Benefit Equalization Retirement Allowance that was Earned
and Vested; or 
 (ii) an Employee who is entitled to a Grandfathered Benefit Equalization Profit-Sharing Allowance, 
 and who, in either instance, is a participant in the executive trust and/or secular trust arrangements. 
 (w) “Grandfathered Retired Employee” shall mean: 
 (i) in the case of a Benefit Equalization Retirement Allowance, a Retired Employee who is eligible for a Grandfathered Benefit Equalization Retirement Allowance that was Earned and Vested; and 
 (ii) in the case of a Benefit Equalization Profit-Sharing Allowance, a Retired Employee who is eligible for a Grandfathered Benefit Equalization
Profit-Sharing Allowance, 
 and who, in either instance, is or was a participant in the executive trust and/or secular trust arrangements.

 (x) “Grandfathered Retirement Allowance” shall mean the present value of that portion (or all) of the Retirement Allowance
earned to December 31, 2004 under the Retirement Plan to which the Grandfathered Employee or Grandfathered Retired Employee had a nonforfeitable right as of December 31, 2004. In calculating the amount of such Grandfathered Retirement
Allowance, it shall be assumed that (i) the Grandfathered Employee or Grandfathered Retired Employee voluntarily terminated services without cause on December 31, 2004, and (ii) received a payment of his Grandfathered Retirement
Allowance with the maximum value available from the Retirement Plan on the earliest possible date allowed under the Retirement Plan to receive payment of a Retirement Allowance following the termination of services, provided, however, that for any
subsequent year such Grandfathered Retirement Allowance may increase to equal the present value of the benefit the Grandfathered Employee or Grandfathered Retired Employee actually becomes entitled to, determined in accordance with the terms of the
Retirement Plan as in effect on October 3, 2004, without regard to any further services rendered by the Grandfathered Employee or Grandfathered Retired Employee after December 31, 2004, or any other events affecting the amount of or the
entitlement to benefits. 
 (y) “Latest Payment Date” shall mean the later of: 
 (i) December 31st of the year in which the Payment Date occurs, and 
  

 9 

 (ii) the fifteenth day of the third month following the Payment Date. 
 (z) “Optional Payment” shall mean: 
 (i) the following optional forms in which that portion of a Benefit Equalization Retirement Allowance that is the Grandfathered Benefit Equalization Retirement Allowance of a Grandfathered Retired Employee may be paid: 
 (1) in equal monthly payments for the life of the Grandfathered Retired Employee, 
 (2) in the form of a Grandfathered Benefit Equalization Joint and Survivor Allowance, or 
 (3) in the form of a Grandfathered Benefit Equalization Optional Payment Allowance, and 
 (ii) in the case of that portion of a Benefit Equalization Profit-Sharing Allowance that is the Grandfathered Benefit Equalization Profit-Sharing
Allowance of a Grandfathered Employee or Grandfathered Retired Employee, any of the methods of distribution permitted under ARTICLE VII of the Profit-Sharing Plan (other than a Single Sum Payment payable at the time specified in ARTICLE II D(1) of
the Plan) and in the event the Grandfathered Employee or Grandfathered Retired Employee dies before distribution of that portion of his Benefit Equalization Profit-Sharing Allowance that is the Grandfathered Benefit Equalization Profit-Sharing
Allowance is made, commences to be made or is fully distributed, to his Beneficiary in accordance with the method of distribution designated by such Grandfathered Employee or Grandfathered Retired Employee; provided, however, that payment to a
Beneficiary who is not the Spouse of the Grandfathered Employee or Grandfathered Retired Employee shall be made no later than one (1) year following the death of the Grandfathered Employee or Grandfathered Retired Employee. 
 Any election to receive an Optional Payment with respect to any Allowance or Allowances under the Plan shall be independent of any election with respect
to benefits payable under the Retirement Plan, the Profit-Sharing Plan, or any other plan of a member of the Controlled Group. 
  

 10 

 (aa) “Payment Date” shall mean the first day of the third calendar month following the
month in which the Employee Separates from Service; provided, however, that in all cases of a Separation from Service other than on account of death, the Payment Date in the case of a Specified Employee shall be the first day of the calendar month
following the date that is six (6) months following the date that such Specified Employee Separates from Service. 
 (bb)
“Plan” shall mean the Philip Morris International Benefit Equalization Plan described herein and in any amendments hereto. 
 (cc) “Profit-Sharing Plan” shall mean the Philip Morris International Deferred Profit-Sharing Plan, effective January 1, 2008 and as amended from time to time. 
 (dd) “Qualified Plans” shall mean the Retirement Plan and the Profit-Sharing Plan. 
 (ee) “Retired Employee” shall mean a former Employee who is eligible for or in receipt of, an Allowance. A Retired Employee shall cease
to be such when he has received all of the Allowances payable to him under the Plan. 
 (ff) “Retirement Plan” shall mean
the Philip Morris International Retirement Plan, effective as of January 1, 2008, and as amended from time to time. 
 (gg)
“Section 415 Limitations” shall mean: 
 (i) in the case of the Retirement Plan, the limitations on benefits applicable to
defined benefit plans set forth in Section 415 of the Code and the Treasury Regulations promulgated thereunder, and 
 (ii) in the case
of the Profit-Sharing Plan, the limitations on contributions applicable to defined contribution plans set forth in Section 415 of the Code and the Treasury Regulations promulgated thereunder. 
 (hh) “Separation from Service”, “Separates from Service” or “Separated from Service” shall each have
the same meaning as the term “separation from service” in Treasury Regulation §1.409A-1(h)(1). 
 (ii) “Single Sum
Payment” shall mean payment of a benefit or portion of a benefit in a single payment to a Retired Employee, or to the Spouse or other Beneficiary of an Employee, Deceased Employee or deceased Retired Employee. A Single Sum Payment shall be
(i) the Actuarial Equivalent of the (or portion of the) Benefit Equalization Retirement Allowance payable in equal monthly payments during a twelve (12) month period for the life of the Retired Employee, and (ii) the Actuarial
Equivalent of the (or portion of the) Benefit Equalization Survivor Allowance payable in equal monthly payments during a twelve (12) month period for the life of the Spouse of the Deceased Employee or deceased Retired Employee. 
 (i) A Single Sum Payment shall be the exclusive form of distribution of the Benefit Equalization Retirement Allowance, except with respect to: 

 

 11 

 (A) that portion of the Benefit Equalization Retirement Allowance derived solely from
the Grandfathered Benefit Equalization Retirement Allowance and that is payable to a Grandfathered Retired Employee who is only eligible for a Vested Retirement Allowance at his Separation from Service; and 
 (B) that portion of the Benefit Equalization Retirement Allowance derived solely from the Grandfathered Benefit Equalization Retirement
Allowance and that is payable to a Grandfathered Retired Employee who has timely elected to receive after his Date of Retirement that portion of his Benefit Equalization Retirement Allowance equal to the Grandfathered Benefit Equalization Retirement
Allowance in the form of an Optional Payment pursuant to ARTICLE II C(2) of the Plan and which election does not cease to be of any force and effect pursuant to ARTICLE II C(2) hereof. 
 (ii) A Single Sum Payment shall be the exclusive form of distribution of the Benefit Equalization Survivor Allowance, except with respect to that portion
of the Benefit Equalization Survivor Allowance derived solely from the Grandfathered Benefit Equalization Retirement Allowance payable to the Spouse of a Grandfathered Deceased Employee or the Spouse of a deceased Grandfathered Retired Employee.

 (iii) A Single Sum Payment shall be the exclusive form of distribution of the Benefit Equalization Profit-Sharing Allowance, except with
respect to that portion of the Benefit Equalization Profit-Sharing Allowance derived solely from the Grandfathered Benefit Equalization Profit-Sharing Allowance payable to a Grandfathered Retired Employee who has timely elected to receive after his
Date of Retirement that portion of his Benefit Equalization Profit-Sharing Allowance equal to the Grandfathered Benefit Equalization Profit-Sharing Allowance in the form of an Optional Payment pursuant to ARTICLE II D(3) of the Plan.

 (jj) “Specified Employee” shall have the meaning given in Treasury Regulation §1.409A-1(i). 
 (kk) “Statutory Limitations” shall mean: 
 (i) the Section 415 Limitations, 
 (ii) the Compensation Limitation, 
 (iii) the nondiscrimination requirements of Section 401(a)(4) of the Code, and 
 (iv) the coverage requirements of Section 410(b) of the Code. 
 (ll) “Survivor Allowance Latest Payment Date” shall mean the later of 
 (i) December 31st of the year in which the Survivor Allowance Payment Date occurs, and 
  

 12 

 (ii) the fifteenth day of the third month following the Survivor Allowance Payment Date. 
 (mm) “Survivor Allowance Payment Date” shall mean the first day of the third calendar month following the month in which the Deceased
Employee or deceased Retired Employee died. 
 The masculine pronoun shall include the feminine pronoun unless the context clearly requires
otherwise. 
  

 13 

 ARTICLE II 
 BENEFIT EQUALIZATION RETIREMENT ALLOWANCES AND 
 BENEFIT EQUALIZATION PROFIT-SHARING ALLOWANCES

  

	A.	Benefit Equalization Retirement Allowances and other benefits payable under this Plan shall be as follows: 

 (1) (a) Subject to the provisions of subparagraphs (d), (e) and (f) hereof, the Benefit Equalization Retirement Allowance with respect to a
Retired Employee (other than a Grandfathered Retired Employee) shall equal the sum of (i) and (ii) below: 
 (i) the amount by
which the Retirement Allowance under the Retirement Plan accrued to the Date of Retirement, if computed without regard to the Statutory Limitations, exceeds the amount of the Retirement Allowance actually payable under the Retirement Plan, plus

 (ii) in the case of a Retired Employee who is eligible to receive an enhanced benefit under the Qualified Plan (such as a benefit payable
pursuant to a voluntary early retirement program or a shutdown benefit), but whose additional accrued benefit resulting solely from participation in such program or benefit may not be paid from the Qualified Plan because of the nondiscrimination
requirements of Section 401(a)(4) of the Code, or the coverage requirements of Section 410(b) of the Code, the amount of such additional accrued benefit payable to such Retired Employee solely as a result of his participation in such
program or benefit. 
 (b) Subject to the provisions of subparagraphs (d) and (e) and ARTICLE II F, the Benefit
Equalization Retirement Allowance with respect to a Grandfathered Retired Employee who is a participant in the target payment arrangement shall equal the amount by which the Grandfathered Benefit Equalization Retirement Allowance exceeds the amount
of the Grandfathered Retirement Allowance. 
 (c) Subject to the provisions of subparagraphs (d), (e) and (f) and
ARTICLE II F, the Benefit Equalization Retirement Allowance with respect to a Grandfathered Retired Employee who is not a participant in the target payment arrangement shall equal the sum of (i) and (ii) below: 
 (i) the amount by which the Retirement Allowance under the Retirement Plan accrued to the Date of Retirement, if computed without regard to the Statutory
Limitations, exceeds the amount of the Retirement Allowance actually payable under the Retirement Plan, plus 
 (ii) in the case of a
Grandfathered Retired Employee who is eligible to receive an enhanced benefit under the Qualified Plan (such as a benefit payable pursuant to a voluntary early retirement program or a shutdown benefit), but whose additional accrued benefit resulting
solely from participation in such program or benefit may not be paid from the 

  

 14 

 
Qualified Plan because of the nondiscrimination requirements of Section 401(a)(4) of the Code, or the coverage requirements of Section 410(b) of
the Code, the amount of such additional accrued benefit payable to such Grandfathered Retired Employee solely as a result of his participation in such program or benefit. 
 In no event shall any increase in a Grandfathered Employee’s Benefit Equalization Retirement Allowance resulting from an amendment to the Salaried Plan to add or remove a subsidized benefit change the time and
form of payment of the Benefit Equalization Retirement Allowance earned prior to the date of such amendment. 
 (d) In the
event that all or any portion of the Benefit Equalization Retirement Allowance with respect to the Retired Employee described in ARTICLE II A(1)(a), ARTICLE II A(1)(b) or ARTICLE II A(1)(c) is paid in a Single Sum Payment prior to the Retired
Employee’s Benefit Commencement Date in accordance with the provisions of ARTICLE II C, the amount of such Benefit Equalization Retirement Allowance shall equal the amount by which the Retirement Allowance under the Retirement Plan accrued to
the Date of Retirement, if computed without regard to the Statutory Limitations, is reasonably estimated by the Administrator to exceed the amount of the Retirement Allowance which is projected by the Administrator to be actually payable under the
Retirement Plan. 
 (e) In the event that all or any portion of the Benefit Equalization Retirement Allowance with respect to
a Retired Employee described in ARTICLE II A(1)(a), ARTICLE II A(1)(b) or ARTICLE II A(1)(c) is paid in a Single Sum Payment in accordance with the provisions of ARTICLE II C prior to the date the Retired Employee shall have specified on his
application for retirement as the Benefit Commencement Date of his Retirement Allowance under the Retirement Plan, the Single Sum Payment shall be calculated based on the assumption that the Retired Employee elected to receive a Retirement Allowance
at his Unreduced Early Retirement Benefit Commencement Date or Unreduced Vested Retirement Benefit Commencement Date, as applicable to the Retired Employee. 
 (f) If, as a result of the execution of a General Release Agreement (and not revoking it), (A) an Employee first obtains a legally
binding right to payment of an increase in his Benefit Equalization Retirement Allowance, (B) as of the first date the Employee obtains a legally binding right to such increase it is subject to a substantial risk of forfeiture (within the
meaning of Treasury Regulation §1.409A-1(d)), then the amount of such increase in the Benefit Equalization Allowance with respect to such Employee shall be the amount as set forth in the General Release Agreement and shall be payable at the BEP
Benefit Commencement Date specified in ARTICLE I(i)(iv), provided, however that no such increase in an Employee’s Benefit Equalization Allowance shall change either the time or form of payment of the Grandfathered Benefit Equalization
Retirement Allowance of a Grandfathered Employee otherwise payable pursuant to the terms of the Plan. The provisions of this paragraph are in lieu of and not in addition to the benefits provided pursuant to the provisions of ARTICLE II A(1)(a)(ii)
or ARTICLE II A(1)(c)(ii). 
  

 15 

 (2) (a) The Spouse of 
 (i) a Deceased Employee, or 
 (ii) a deceased Retired Employee (other than a deceased Grandfathered Retired
Employee) who has died after his Date of Retirement and before his BEP Benefit Commencement Date 
 shall, in each case, be eligible to
receive a Benefit Equalization Survivor Allowance. 
 (b) The Spouse of a deceased Grandfathered Retired Employee who has died
after his Date of Retirement and before his BEP Benefit Commencement Date shall be eligible to receive a Benefit Equalization Survivor Allowance, provided that the deceased Grandfathered Retired Employee did not make an election for a Grandfathered
Benefit Equalization Optional Payment Allowance and designated a Beneficiary other than his Spouse. 
 (c) The Spouse of a
Grandfathered Retired Employee described in ARTICLE II A(1)(b) or ARTICLE II A(1)(c) of the Plan whose request for an Optional Payment pursuant to ARTICLE I(z)(i)(1) or ARTICLE I(z)(i)(2) of the Plan with respect to that portion of his Benefit
Equalization Retirement Allowance that is the Grandfathered Benefit Equalization Allowance has been granted by the Administrator, but who dies after his Date of Retirement and prior to his BEP Benefit Commencement Date, shall be eligible to receive
a Benefit Equalization Survivor Allowance. 
 (3) The Beneficiary of a Grandfathered Retired Employee whose request for an Optional Payment
in the form of a Grandfathered Benefit Equalization Optional Payment Allowance has been granted by the Administrator, but who dies after his Date of Retirement and prior to his BEP Benefit Commencement Date shall be eligible to receive that portion
of the Grandfathered Benefit Equalization Optional Payment Allowance elected by the Grandfathered Retired Employee which is payable after the death of the Grandfathered Retired Employee. 
  

	B.	Benefit Equalization Profit-Sharing Allowances payable under this Plan shall be as follows: 

 (1) (a) The Benefit Equalization Profit-Sharing Allowance with respect to an Employee who is not a Grandfathered Retired Employee shall equal the amounts
which would have been credited, but were not credited to his Company Account as a result of the Statutory Limitations. 
 (b) The Benefit
Equalization Profit-Sharing Allowance with respect to a Grandfathered Employee who is a participant in the target payment arrangement shall equal the Grandfathered Benefit Equalization Profit-Sharing Allowance. 
 (c) The Benefit Equalization Profit-Sharing Allowance with respect to a Grandfathered Employee who is not a participant in the target payment arrangement
shall equal the sum of the Grandfathered Benefit Equalization Profit-Sharing Allowance, plus the amounts 

  

 16 

 
which would have been credited, but were not credited to his Company Account (as defined in the Profit-Sharing Plan) on and after January 1, 2005 as a
result of the Statutory Limitations. 
 (2) All such amounts shall be deemed to have been invested in Part A of the Fund (as defined in
the Profit-Sharing Plan) and valued in accordance with the provisions of the Profit-Sharing Plan. 
  

	C.	BEP Benefit Commencement Date and termination of Benefit Equalization Retirement Allowances payable in the form of an Optional Payment: 

 (1) (a)(i) The Benefit Equalization Retirement Allowance payable pursuant to ARTICLE II A(1)(a) of the Plan shall be distributed to a Retired Employee in
a Single Sum Payment on the Benefit Commencement Date specified in ARTICLE I(i)(i). If a Retired Employee described in ARTICLE II A(1)(a) dies after his Date of Retirement and before payment of his Benefit Equalization Retirement Allowance is paid
in a Single Sum Payment, his Beneficiary shall receive a Single Sum Payment on the Benefit Commencement Date specified in ARTICLE I (i)(i). 
 (ii) The Benefit Equalization Retirement Allowance payable pursuant to paragraph A(1)(b) and (c) of the Plan shall be distributed to a Grandfathered Retired Employee who is eligible for an Early, Full or Deferred Retirement Allowance
at his Separation from Service in a Single Sum Payment on the BEP Benefit Commencement Date specified in ARTICLE I(j)(i), unless the Administrator has approved the election of the Grandfathered Retired Employee to have distribution of that portion
of his Benefit Equalization Retirement Allowance that is the Grandfathered Benefit Equalization Retirement Allowance made in the form of an Optional Payment pursuant to subparagraph (2) of this ARTICLE II C, in which case the BEP Benefit
Commencement Date of his Grandfathered Benefit Equalization Retirement Allowance made in the form of an Optional Payment shall be as specified in ARTICLE I(i)(ii)(A) or (B), as applicable to the Grandfathered Retired Employee. If a Grandfathered
Retired Employee described in ARTICLE II, A(1) (b) or (c) who is eligible for an Early, Full or Deferred Retirement Allowance at his Separation from Service dies after his Date of Retirement and before payment of his Benefit Equalization
Retirement Allowance in a Single Sum Payment, his Beneficiary shall receive a Single Sum Payment on the BEP Benefit Commencement Date specified in ARTICLE I(i)(i), provided, that the Administrator has not granted the Grandfathered Retired
Employee’s application to receive an Optional Payment. 
 (iii) the Benefit Equalization Retirement Allowance payable pursuant to
paragraph A(1)(b) or (c) of the Plan shall be distributed to a Grandfathered Retired Employee who is only eligible for a Vested Retirement Allowance at his Separation from Service, as follows: 
 (y) that portion of the Benefit Equalization Retirement Allowance that is the Grandfathered Benefit Equalization Allowance shall be
distributed in accordance with the Grandfathered Retired Employee’s BEP Benefit Commencement Date described in ARTICLE I(i)(iii) of the Plan and shall be paid in the same form of Optional Payment which the Grandfathered Retired Employee’s
Vested Retirement Allowance is paid from the Retirement Plan; and 
  

 17 

 (z) that portion of the Benefit Equalization Retirement Allowance that is not the
Grandfathered Benefit Equalization Allowance shall be distributed to the Retired Employee in a Single Sum Payment on Benefit Commencement Date specified in ARTICLE I(i)(i). 
 (b) (i) The amount of the Benefit Equalization Retirement Allowance to be distributed in a Single Sum Payment pursuant to subparagraph (iii)(z) above,
shall equal the present value of such Allowance that would be payable to the Retired Employee as of the date he will attain the age of sixty-five (65). The present value of such Benefit Equalization Retirement Allowance shall be determined as of the
first day of the month following the month in which the Retired Employee Separated from Service (or died, in the case of a payment to the Spouse of the deceased Retired Employee). 
      (ii) If such Benefit Equalization Retirement Allowance payable in a Single Sum Payment is paid after the Payment Date, interest
(at a rate determined in the sole discretion of the Administrator), from the date the Retired Employee Separated from Service to the last day of the month preceding the month in which payment is made, shall be added to the amount of the Benefit
Equalization Retirement Allowance otherwise payable to the Retired Employee (or Spouse). 
 (2) (a)(1) A Grandfathered Retired Employee who
is eligible to retire on a Full, Deferred or Early Retirement Allowance at his Separation from Service may make application to the Administrator to receive an Optional Payment with respect to his Grandfathered Benefit Equalization Retirement
Allowance in lieu of the Single Sum Payment otherwise payable after his Date of Retirement. The application for an Optional Payment shall specify: 
 (i) the form in which such Optional Payment is to be paid, and 
 (ii) the Beneficiary, if any, who will receive benefits after the
death of the Grandfathered Retired Employee; and 
 (iii) the BEP Benefit Commencement Date. 
 (b) In the case of a Grandfathered Retired Employee who eighteen (18) months prior to attaining the age of sixty-five (65) years could be
compulsorily retired by his Participating Company upon attaining the age of sixty-five (65) years pursuant to Section 12(c) of the Age Discrimination in Employment Act, any application for an Optional Payment must be filed with the
Administrator more than one (1) year preceding the date the Grandfathered Retired Employee attains the age of sixty-five (65) years. 
 (c) The Administrator may grant or deny any such application in its sole and absolute discretion. Except as provided in subparagraphs (d)(i) and (f) of this ARTICLE II C, a Grandfathered Retired Employee shall not receive that portion
of his Benefit Equalization Retirement Allowance that is the Grandfathered Benefit Equalization Retirement Allowance in the form of a Single Sum Payment after the Administrator has granted the Grandfathered Retired Employee application for an
Optional Payment. In the event the Grandfathered Retired Employee incurs a Change in Circumstance on or after the date of the filing of the application for an Optional Payment and prior to his BEP Benefit Commencement Date, the Grandfathered 

  

 18 

 
Retired Employee may file an application with the Administrator within ninety (90) days of the Change in Circumstance, but in no event later than his
BEP Benefit Commencement Date, to change the form of Optional Payment, or to change the Beneficiary who is to receive a benefit after the death of the Grandfathered Retired Employee in accordance with the Optional Payment method originally filed
with the Administrator. 
 (d) An application for an Optional Payment shall be of no force and effect if: 
 (i) the Grandfathered Retired Employee does not retire on a Full, Deferred or Early Retirement Allowance, 
 (ii) the Grandfathered Retired Employee incurs a disability at any time before the date his Optional Payment commences to be made which causes him to be
eligible for benefits under the Philip Morris International Long-Term Disability Plan, or 
 (iii) the Grandfathered Retired Employee is
retired for ill health, or disability under ARTICLE II, A 3(a) of the Retirement Plan. 
 (e) In the event the application for an Optional
Payment is of no force and effect as a result of an event described in clauses (ii) or (iii) of ARTICLE II C(2)(d) of the Plan, payment of that portion of the Grandfathered Retired Employee’s Benefit Equalization Retirement
Allowance that is the Grandfathered Benefit Equalization Retirement Allowance shall be made in a Single Sum Payment pursuant to ARTICLE II C(1)(a) of the Plan on the Payment Date, but not later than the Latest Payment Date, but otherwise such
application for an Optional Payment shall be effective on the Grandfathered Retired Employee’s Date of Retirement on a Full, Deferred or Early Retirement Allowance and the Grandfathered Retired Employee’s benefits shall commence on the BEP
Benefit Commencement Date specified in ARTICLE I(j)(ii)(A) of the Plan; provided, however, that if within the one (1) year period following the date of the filing of the application with the Administrator the Grandfathered Retired Employee
voluntarily retires or his employment is terminated for misconduct (as determined by the Administrator) by any member of the Controlled Group, the Optional Payment shall be reduced by one percent (1%) for each month (or portion of a month) by
which the month in which the Grandfathered Retired Employee’s termination of employment precedes the first anniversary of the filing of the application with the Administrator and his benefits shall commence in the BEP Benefit Commencement Date
specified in ARTICLE I(j)(ii)(B) of the Plan. 
 (f) Notwithstanding the preceding provisions of this paragraph C, 
 (i) the Administrator may cause the distribution of that portion of the Benefit Equalization Retirement Allowance that is the Grandfathered Benefit
Equalization Retirement Allowance to any group of similarly situated Retired Employees (or their Spouses or other Beneficiaries) in a Single Sum Payment or as an Optional Payment; and 
 (ii) the Administrator shall distribute that portion of an Employee’s Benefit Equalization Retirement Allowance that is the Grandfathered Benefit
Equalization Retirement Allowance in a Single Sum Payment if such portion of the Benefit Equalization Retirement Allowance payable in equal monthly payments is not more than $250 per month. 
  

 19 

 (3) The Benefit Equalization Survivor Allowance payable pursuant to ARTICLE II A(2)(a) shall be paid
in a Single Sum Payment on the Survivor Allowance Payment Date, but not later than the Survivor Allowance Latest Payment Date, provided, however, that the portion of the Benefit Equalization Survivor Allowance that is derived from the Grandfathered
Benefit Equalization Retirement Allowance shall be paid on the BEP Benefit Commencement Date described in ARTICLE I(i)(vi)(B). 
 (4) The
Benefit Equalization Retirement Allowance payable pursuant to ARTICLE II A(2)(b) and ARTICLE II A(2)(c) shall be paid on the BEP Benefit Commencement Date described in ARTICLE I(i)(vi)(B). 
 D. Commencement and termination of Benefit Equalization Profit-Sharing Allowances: 
 (1) The Benefit Equalization Profit-Sharing Allowance payable pursuant to ARTICLE II B(1)(a), (b) or (c) shall be distributed to the Retired Employee in a Single Sum Payment on the Payment Date, but not
later than the Latest Payment Date, unless, solely in the case of a Grandfathered Retired Employee, the Administrator has approved his election to have distribution of that portion of his Benefit Equalization Profit-Sharing Allowance that is the
Grandfathered Benefit Equalization Profit-Sharing Allowance made in accordance with ARTICLE II D(3) of the Plan. 
 (2) If an Employee or
Retired Employee dies before his Single Sum Payment has been paid and without having the approval by the Administrator for payment of that portion of his Benefit Equalization Profit-Sharing Allowance that is the Grandfathered Benefit Equalization
Profit-Sharing Allowance in the form of an Optional Payment, the Single Sum Payment otherwise payable to the Employee or Retired Employee shall be paid to his Beneficiary on the Payment Date, but not later than the Latest Payment Date. 

(3) (a) A Grandfathered Employee may make application to the Administrator to receive an Optional Payment with respect to that portion of his Benefit
Equalization Profit-Sharing Allowance that is the Grandfathered Benefit Equalization Profit-Sharing Allowance in lieu of the Single Sum Payment otherwise payable to him on the Benefit Commencement Date specified in ARTICLE I(i)(v)(A) after he
becomes a Grandfathered Retired Employee. The application for an Optional Payment shall specify: 
 (i) the form in which such Optional
Payment is to be paid; 
 (ii) the Beneficiary who will receive the balance of that portion of his Benefit Equalization Profit-Sharing
Allowance that is the Grandfathered Benefit Equalization Profit-Sharing Allowance after the death of the Grandfathered Employee or Grandfathered Retired Employee. 
 (b) In the case of a Grandfathered Employee who eighteen (18) months prior to attaining the age of sixty-five (65) years could
be compulsorily retired by his Participating Company upon attaining the age of sixty-five (65) years pursuant to Section 12(c) of the Age Discrimination in Employment Act, any application for an Optional Payment must be filed with the
Administrator more than one (1) year preceding the date the Grandfathered Employee attains the age of sixty-five (65) years. 
  

 20 

 (c) The Administrator may grant or deny any such application in its sole and absolute
discretion. A Grandfathered Employee shall not receive that portion of his Benefit Equalization Profit-Sharing Allowance that is the Grandfathered Benefit Equalization Profit-Sharing Allowance in the form of a Single Sum Payment after the
Administrator has granted the Grandfathered Employee’s application for an Optional Payment. In the event the Grandfathered Employee or Grandfathered Retired Employee has elected to receive his Optional Payment over the joint life expectancies
of he and his Beneficiary and incurs a Change in Circumstance described in ARTICLE I(j)(ii), (iii) or (iv) hereof on or after the date of the filing of the application and prior to the date his Optional Payment commences to be paid, the
Grandfathered Employee or Grandfathered Retired Employee may file an application with the Administrator within ninety (90) days of the Change in Circumstance, but in no event later than the date his Optional Payment is scheduled to commence to
be paid to designate a new Beneficiary or elect to receive his Optional Payment over the life expectancy of the Grandfathered Employee or Grandfathered Retired Employee. 
 (d) If within the one (1) year period following the date of the filing of the application for an Optional Payment with the
Administrator, the Grandfathered Employee voluntarily retires (other than for ill health, disability or hardship under ARTICLE II, A(3)(a) of the Retirement Plan), voluntarily terminates his employment with his Participating Company (other than
for a disability which causes him to be eligible for benefits under the Long-Term Disability Plan for Salaried Employees), or his employment is terminated for misconduct (as determined by the Administrator) by any member of the Controlled Group, the
Optional Payment shall be reduced in the same manner as specified in ARTICLE II C(2)(e) hereof. 
 (e) If a Grandfathered
Retired Employee dies after he Separates from Service and prior to the date his Grandfathered Benefit Equalization Profit-Sharing Allowance is paid or commences to be paid, payment shall be made to his Beneficiary commencing in the form and on the
date specified in the application. 
 (4) Notwithstanding the preceding provisions of this Paragraph D, (a) the Administrator may cause
the distribution of that portion of the Benefit Equalization Profit-Sharing Allowance that is the Grandfathered Benefit Equalization Profit-Sharing Allowance to any group of similarly situated Beneficiaries in a Single Sum Payment or as an Optional
Payment and (b) the Administrator shall distribute a Grandfathered Employee’s or Grandfathered Retired Employee’s Benefit Equalization Profit-Sharing Allowance in a Single Sum Payment if the value of such Benefit Equalization
Profit-Sharing Allowance is not more than $10,000. 
 E. Application or Notification for Payment of Allowances: 
 An application for retirement pursuant to ARTICLE II, B of the Retirement Plan shall be deemed notification to the Administrator of the BEP Benefit
Commencement Date of a Benefit 

  

 21 

 
Equalization Retirement Allowance (or other benefit) in accordance with the terms of this Plan. In the event the Employee shall not have elected an Optional
Payment method with respect to his Grandfathered Benefit Equalization Retirement Allowance, any such notification shall specify the Beneficiary to whom payment of the Single Sum Payment shall be made in the event the Employee dies after his Date of
Retirement and prior to his BEP Benefit Commencement Date. 
 An Employee or Retired Employee (or Beneficiary) shall make application to the
Administrator (or his delegate) for distribution of Benefit Equalization Profit-Sharing Allowance under this Plan. 
 F. Reduction in Benefit Equalization
Retirement Allowances and Benefit Equalization Profit-Sharing Allowances 
 The amount of any Grandfathered Benefit Equalization Retirement
Allowance and Grandfathered Benefit Equalization Profit-Sharing Allowance otherwise payable to a Retired Employee, or his spouse or other Beneficiary pursuant to the provisions of the Plan shall be offset by: 
 (1) any amounts paid from the Employee’s Grantor Trust, said offset to be determined pursuant to the provisions of ARTICLE III of the Employee’s
Employee Grantor Trust Enrollment Agreement; and 
 (2) any “offset amount” (as such term is defined in an Employee’s Cash
Enrollment Agreement), said offset amount to be determined pursuant to the provisions of ARTICLE II of the Employee’s Cash Enrollment Agreement. 
  

 22 

 ARTICLE III  
 FUNDS FROM WHICH ALLOWANCES ARE PAYABLE 
 Individual accounts shall be established for the
benefit of each Employee and Retired Employee (or Beneficiary) under the Plan. Any benefits payable from an individual account shall be payable solely to the Employee, Retired Employee (or Beneficiary) for whom such account was established. The Plan
shall be unfunded. All benefits intended to be provided under the Plan shall be paid from time to time from the general assets of the Employee’s or Retired Employee’s Participating Company and paid in accordance with the provisions of the
Plan; provided, however, that the Participating Companies reserve the right to meet the obligations created under the Plan through one or more trusts or other agreements. In no event shall any such trust or trusts be outside of the United States.
The contributions by each Participating Company on behalf of its Employees and Retired Employees to the individual accounts established pursuant to the provisions of the Plan, whether in trust or otherwise, shall be in an amount which such
Participating Company, with the advice of an actuary, determines to be sufficient to provide for the payment of the benefits under the Plan. 
  

 23 

 ARTICLE IV  
 THE ADMINISTRATOR 
 The general administration of the Plan shall be vested in the
Administrator. 
 All powers, rights, duties and responsibilities assigned to the Administrator under the Retirement Plan applicable to this
Plan shall be the powers, rights, duties and responsibilities of the Administrator under the terms of this Plan, except that the Administrator shall not be a fiduciary (within the meaning of Section 3(21) of ERISA) with respect to any portion
or all of the Plan which is intended to be exempt from the requirements of ERISA pursuant to Section 4(b)(5) of ERISA or which is described in Section 401(a)(1) of ERISA and exempt from the requirements of Part 4 of Title I of ERISA.

  

 24 

 ARTICLE V 
 AMENDMENT AND 
 DISCONTINUANCE OF THE PLAN 
 The Board may, from time to time, and at any time, amend the Plan; provided, however, that authority to amend the Plan is delegated to the following
committees or individuals where approval of the Plan amendment or amendments by the shareholders of Philip Morris International Inc. is not required: (1) to the Benefits Committee, if the amendment (or amendments) will not increase the annual
cost of the Plan by $10,000,000 and (2) to the Administrator, if the amendment (or amendments) will not increase the annual cost of the Plan by $500,000. 
 Any amendment to the Plan may effect a substantial change in the Plan and may include (but shall not be limited to) any change deemed by the Company to be necessary or desirable to obtain tax benefits under any
existing or future laws or rules or regulations thereunder; provided, however, that no such amendment shall deprive any Employee, Retired Employee (or Beneficiary) of any Allowances accrued at the time of such amendment. 
 The Plan may be discontinued at any time by the Board; provided, however, that such discontinuance shall not deprive any Employee, Retired Employee (or
Beneficiary) of any Allowances accrued at the time of such discontinuance. 
  

 25 

 ARTICLE VI 
 FORMS; COMMUNICATIONS 
 The Administrator shall provide such appropriate forms as it may deem
expedient in the administration of the Plan and no action to be taken under the Plan for which a form is so provided shall be valid unless upon such form. Any Plan communication may be made by electronic medium to the extent allowed by applicable
law. The Administrator may adopt reasonable procedures to enable an Employee or Retired Employee to make an election using electronic medium (including an interactive telephone system and a website on the Intranet). 
 All communications concerning the Plan shall be in writing addressed to the Administrator at such address as may from time to time be designated. No
communication shall be effective for any purpose unless received by the Administrator. 
  

 26 

 ARTICLE VII  
 INTERPRETATION OF PROVISIONS 
 The Administrator shall have the full power and authority to
grant or deny requests for payment of a Benefit Equalization Retirement Allowance in accordance with a form of distribution authorized under the Retirement Plan and to grant or deny requests for payment of a Benefit Equalization Profit-Sharing
Allowance in accordance with a form of distribution authorized under the Profit-Sharing Plan to the extent permitted under Code §409A. The Management Committee shall have the full power and authority to grant or deny requests for payment of a
Benefit Equalization Retirement Allowance or Benefit Equalization Profit-Sharing Allowance by the Administrator. 
 The Administrator shall
have full power and authority with respect to all other matters arising in the administration, interpretation and application of the Plan, including discretionary authority to construe plan terms and provisions, to determine all questions that arise
under the Plan such as the eligibility of any employee of a Participating Company to participate under the Plan; to determine the amount of any benefit to which any person is entitled to under the Plan; to make factual determinations and to remedy
any ambiguities, inconsistencies or omissions of any kind. 
 The Plan is intended to comply with the applicable requirements of
Section 409A of the Code. Accordingly, where applicable, this Plan shall at all times be construed and administered in a manner consistent with the requirements of Section 409A of the Code and applicable regulations without any diminution
in the value of benefits. Notwithstanding the preceding sentence, no Participating Company shall be liable to any person if the Internal Revenue Service or any court or other authority having jurisdiction over such matter determines for any reason
that any payment under this Plan is subject to taxes, penalties or interest as a result of failing to comply with Section 409A of the Code. 
  

 27 

 ARTICLE VIII 
 CHANGE IN CONTROL PROVISIONS 
 A. In the event of a Change of Control, each Employee shall be fully vested in
his Allowances and any other benefits accrued through the date of the Change of Control (“Accrued Benefits”). Each Employee (or his Beneficiary) shall, upon the Change of Control, be entitled to a lump sum in cash, payable within 30 days
of the Change of Control, equal to the actuarial equivalent of his Accrued Benefits, determined using actuarial assumptions no less favorable than those used under the Supplemental Management Employees’ Retirement Plan immediately prior to the
Change of Control. 
 B. Definition of Change of Control. 
 “Change of Control” shall mean the happening of any of the following events with respect to a Grandfathered Benefit Equalization Retirement Allowance and Grandfathered Benefit Equalization Profit-Sharing
Allowance: 
 (1) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, and amended (the “Exchange Act”)) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (i) the then outstanding
shares of common stock of Philip Morris International Inc. (the “Outstanding Company Common Stock”) or (ii) the combined voting power of the then outstanding voting securities of Philip Morris International Inc. entitled to vote
generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from Philip Morris
International Inc., (ii) any acquisition by Philip Morris International Inc., (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by Philip Morris International Inc. or any corporation controlled
by Philip Morris International Inc. or (iv) any acquisition by any corporation pursuant to a transaction described in clauses (i), (ii) and (iii) of paragraph (3) of this Section B; or 
 (2) Individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by Philip Morris International Inc.’s shareholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or 
 (3) Approval by the shareholders of Philip Morris International Inc. of a reorganization, merger, share exchange or consolidation (a “Business
Combination”), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination 

  

 28 

 
beneficially own, directly or indirectly, more than 80% of, respectively, the then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such
transaction owns Philip Morris International Inc. through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be, (ii) no Person (excluding any employee benefit plan (or related trust) of Philip Morris International Inc. or such corporation resulting from such Business Combination) beneficially owns, directly
or indirectly, 20% or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or 
 (4)
Approval by the shareholders of Philip Morris International Inc. of (i) a complete liquidation or dissolution of Philip Morris International Inc. or (ii) the sale or other disposition of all or substantially all of the assets of Philip
Morris International Inc., other than to a corporation, with respect to which following such sale or other disposition, (A) more than 80% of, respectively, the then outstanding shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by all or substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such sale or other disposition in substantially the same proportion as their ownership, immediately prior to such
sale or other disposition, of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (B) less than 20% of, respectively, the then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such corporation entitled to vote generally in the election of directors is then beneficially owned, directly or indirectly, by any Person (excluding any employee benefit plan (or
related trust) of Philip Morris International Inc. or such corporation), except to the extent that such Person owned 20% or more of the Outstanding Company Common Stock or Outstanding Company Voting Securities prior to the sale or disposition and
(C) at least a majority of the members of the board of directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such sale or other
disposition of assets of Philip Morris International Inc. or were elected, appointed or nominated by the Board. 
 “Change of Control” shall mean
the happening of any of the events specified in Treasury Regulation §1.409A- 3(i)(5)(v), (vi) (vii) with respect to that portion of a Benefit Equalization Allowance that is not a Grandfathered Benefit Equalization Retirement Allowance
and that portion of a Benefit Equalization Profit-Sharing Allowance that is not a Grandfathered Benefit Equalization Profit-Sharing Allowance. For purposes of determining if a Change in Control has occurred, the Change in Control event must relate
to a corporation identified in Treasury Regulation §1.409A- 3(i)(5)(ii), provided, however, that (i) the spin-off of the shares of Philip Morris International Inc. to the shareholders of Altria Group, Inc. shall not be considered to be a
Change in Control, and (ii) any change in the Incumbent Board coincident with such spin-off shall not be considered to be a Change in Control. 
  

 29 

 EXHIBIT A 
 BENEFIT EQUALIZATION PLAN 
 ACTUARIAL ASSUMPTIONS USED TO CALCULATE A SINGLE SUM PAYMENT

 INTEREST RATE: The average of the monthly rate of interest specified in Section 417(e)(3)(A)(ii)(II) of the Code, but published
for 24 months preceding the Employee’s Date of Retirement, less 1/2 of 1%. 
 MORTALITY ASSUMPTION: The mortality table specified in
Section 417(e)(3)(A)(ii)(I) of the Code and Section 1.417(e)-1(c)(2) of the Treasury Regulations (currently the table prescribed in Revenue Ruling 2001-62). 
  

 30

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