EXHIBIT 10.17
COMPLETE RESTATEMENT AND AMENDMENT OF
AVERY DENNISON CORPORATION
DIRECTORS DEFERRED COMPENSATION PLAN
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December 23, 1994
TABLE OF CONTENTS
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PAGE
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ARTICLE 1: PURPOSE 1
ARTICLE 2: DEFINITIONS AND CERTAIN PROVISIONS 1
ARTICLE 3: ADMINISTRATION OF THE PLAN 4
ARTICLE 4: PARTICIPATION 5
4.1 ELECTION TO PARTICIPATE
4.2 DEFERRED COMPENSATION ACCOUNTS
4.3 VALUATION OF ACCOUNTS
4.4 STATEMENT OF ACCOUNTS
ARTICLE 5: BENEFITS 9
5.1 NORMAL RETIREMENT BENEFIT
5.2 PRE-RETIREMENT BENEFIT
5.3 DISABILITY BENEFIT
5.4 TERMINATION BENEFIT
5.5 SURVIVOR BENEFITS
5.6 SPOUSAL SURVIVOR BENEFIT
5.7 WITHHOLDING; UNEMPLOYMENT TAXES
5.8 DISCOUNTED CASH OUT ELECTION
5.9 EMERGENCY BENEFIT
ARTICLE 6: BENEFICIARY DESIGNATION 17
ARTICLE 7: AMENDMENT OR TERMINATION OF PLAN 17
ARTICLE 8: MISCELLANEOUS 18
8.1 UNSECURED GENERAL CREDITOR
8.2 OBLIGATIONS TO COMPANY
8.3 NONASSIGNABILITY
8.4 BOARD MEMBERSHIP NOT GUARANTEED
8.5 PROTECTIVE PROVISIONS
8.6 GENDER, SINGULAR & PLURAL
8.7 CAPTIONS
8.8 VALIDITY
8.9 NOTICE
8.10 APPLICABLE LAW
COMPLETE RESTATEMENT AND AMENDMENT OF
AVERY DENNISON CORPORATION
DIRECTORS DEFERRED COMPENSATION PLAN
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ARTICLE I
PURPOSE
The purpose of this Directors Deferred Compensation Plan (the "Plan")
is to provide a means whereby Avery Dennison Corporation, a Delaware corporation
(the "Company"), may afford financial security to a select group of Directors of
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the Company who have rendered and continue to render valuable services to the
Company and its subsidiaries which constitute an important contribution towards
the Company's continued growth and success, by providing for additional future
compensation so that these Directors may be retained and their productive
efforts encouraged.
ARTICLE 2
DEFINITIONS AND CERTAIN PROVISIONS
Beneficiary. "Beneficiary" means the person or persons designated as
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such in accordance with Article 6.
Benefit Unit. "Benefit Unit" means a unit enrolled in by a Participant
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pursuant to Article 4 providing the benefits described in Article 5.
Committee. "Committee" means the deferred compensation plan committee
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appointed to administer the Plan pursuant to Article 3.
Declared Rate. "Declared Rate" means with respect to any Plan Year
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Moody's Corporate Bond Yield Average - Monthly Average Corporates as published
by Moody's Investor's Service, Inc. (or any successor thereto) for any
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calendar month in the Plan Year next preceding such Plan Year as selected by the
Committee in its sole discretion, or, if such yield is no longer published, a
substantially similar average selected by the Committee.
Deferral Commitment. "Deferral Commitment" means with respect to each
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Benefit Unit the total cumulative amount by which a Participant's Director's
Fees will be reduced over the Deferral Period.
Deferral Period. "Deferral Period" means that period of eight (8) Plan
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Years as determined pursuant to Article 4 over which a Participant defers all or
a portion of such Participant's Director's Fees with respect to a Benefit Unit.
Deferred Compensation Account. "Deferred Compensation Account" means
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the account maintained on the books of account of the Company for each Benefit
Unit pursuant to Section 4.2.
Director. "Director" means a member of the Board of Directors of the
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Company who is not also an employee of the Company.
Director's Fees. "Director's Fees" means the retainer and regular
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Board of Directors meeting fees paid to a Director for service as a director of
the Company, but before reduction pursuant to this Plan.
Disability. "Disability" means any inability on the part of a
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Director, commencing before age 64 1/2, as determined by the Committee, in its
complete and sole discretion, to perform the substantial and material duties of
a Director due to injury or sickness lasting for more than one hundred eighty
(180) consecutive days. Disability for purposes of this Plan shall be deemed to
commence as of the first day following the end of such one hundred eighty (180)
day period. If a Director makes application for disability benefits under the
Social Security Act, as now in effect or as hereafter amended, and qualifies for
such benefits, the Director shall be presumed to suffer from a Disability under
this Plan. The Committee may require the Director to submit to an examination by
a
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physician or medical clinic selected by the Committee. On the basis of such
medical evidence and in the absence of qualification for disability benefits
under the Social Security Act, the determination of the Committee as to whether
or not a condition of Disability exists shall be conclusive. To constitute
Disability, the same must commence after the Director has become a Participant
in the Plan.
Disability Benefit. "Disability Benefit" means benefits payable to a
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Participant who suffers a Disability pursuant to the provisions of Section 5.3.
Discounted Cash Out Election. "Discounted Cash Out Election" means the
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written election by a Participant or Beneficiary in a form acceptable to the
Committee to receive all or part of the Participant's Deferred Compensation
Account pursuant to the terms and conditions of Section 5.8.
Emergency Benefit. "Emergency Benefit" means the benefit that is
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payable pursuant to Section 5.9 of the Plan.
Enrollment Agreement. "Enrollment Agreement" means the written
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agreement substantially in the form attached hereto that shall be entered into
by the Company and a Director pursuant to which the Director becomes a
Participant in the Plan. In the sole discretion of the Company, authorization
forms filed by any Participant for the first Plan Year as to which the Plan is
effective and by which the Participant makes the elections provided for by this
Plan may be treated as a completed and fully executed Enrollment Agreement for
all purposes under the Plan.
Normal Retirement. "Normal Retirement" means with respect to any
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Benefit Unit the termination of a Participant's status as a Director with the
Company for reasons other than death on or after the date the Participant
attains age 60.
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Normal Retirement Benefit. "Normal Retirement Benefit" means benefits
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payable to a Participant for a Benefit Unit pursuant to the provisions of
Section 5.1.
Participant. "Participant" means a Director who has filed a completed
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and executed Enrollment Agreement with the Committee and is participating in the
Plan in accordance with the provisions of Article 4.
Plan Year. "Plan Year" means the fiscal year beginning December 1 and
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ending November 30.
Pre-Retirement Benefit. "Pre-Retirement Benefit" means benefits
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payable to a Participant pursuant to the provisions of Section 5.2.
Rabbi Trust. "Rabbi Trust" means the trust described in Section 8.1.
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Termination Benefit. "Termination Benefit" means the lump sum amount
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payable to a Participant who ceases to be a Director pursuant to the provisions
of Section 5.4.
ARTICLE 3
ADMINISTRATION OF THE PLAN
A deferred compensation plan committee consisting of three or more
members shall be appointed by the Company's Chairman and Chief Executive Officer
to administer the Plan and establish, adopt, or revise such rules and
regulations as it may deem necessary or advisable for the administration of the
Plan and to interpret the provisions of the Plan, with any such interpretations
to be conclusive. All decisions of the Committee shall be by vote of at least a
majority of its members and shall be final and binding. Members of the Committee
shall be eligible to participate in the Plan while serving as members of the
Committee, but a member of the Committee shall not vote or act
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upon any matter which relates solely to such member's interest in the Plan as a
Participant.
ARTICLE 4
PARTICIPATION
4.1 Election to Participate. Any Director may enroll in a Benefit
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Unit under the Plan effective as of the first day of a Plan Year by filing a
completed and fully executed Enrollment Agreement with the Committee prior to
the beginning of such Plan Year. Any person who first becomes a Director on or
after the first day of a Plan Year may enroll in a Benefit Unit under the Plan,
effective as of the date of filing of a completed and fully executed Enrollment
Agreement, by filing such Enrollment Agreement with the Committee. Any
enrollment in a Benefit Unit beginning in any Plan Year other than the first
Plan Year under this Plan may be made only with the consent of the Committee.
Pursuant to said Enrollment Agreement, the Director shall irrevocably elect
a Deferral Commitment by which the aggregate Director's Fees of such Participant
will be reduced over the eight (8) Plan Years beginning with the Plan Year next
following the execution of the Enrollment Agreement (the "Deferral Period"),
provided, however, that:
(a) Minimum Deferral. The dollar amount by which the aggregate
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Director's Fees may be reduced for any Benefit Unit for any Plan Year shall
not be less than the equivalent as of the first day of such Plan Year of
Two Thousand U.S. Dollars (U.S. $2,000.00).
(b) Reduction in Director's Fees.
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(i) In General. Except as otherwise provided in this
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Section 4.1, the Director's Fees of the Participant for each of the
Plan Years in the Deferral Period shall be reduced by an amount
equal to the result of dividing the Deferral Commitment by the
number of Plan Years in the Deferral Period. The Committee
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shall make such exceptions to this requirement as may be necessary
to accommodate persons who first become Directors on or after the
first day of a Plan Year and elect to become Participants in the
Plan.
(ii) Accelerated Reduction. Prior to the beginning of
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any Plan Year in any Deferral Period as to which there are two (2)
or more Plan Years remaining, a Participant may elect in a written
notice filed with the Committee to increase the amount of the
reduction of Director's Fees otherwise provided for by Section
4.1(b)(i) for any of the Plan Years remaining in such Deferral
Period; provided, however, that any such increase in the reduction
of Director's Fees for any remaining Plan Years in the Deferral
Period shall not increase the Deferral Commitment for the Deferral
Period, but shall act to shorten the length of the Deferral Period,
unless the Participant elects in such written notice to apply the
increased reduction in Director's Fees for any Plan Year as a credit
against the reductions in Director's Fees that otherwise would have
resulted in subsequent Plan Years in the Deferral Period pursuant to
Section 4.1(b)(i). In the event a Participant elects to increase the
previously elected reduction of Director's Fees pursuant to this
Section 4.1(b), the Participant in his sole discretion shall
determine the allocation as between said Participant's retainer and
regular Board of Directors meeting fees paid during the year of such
increase.
(c) Maximum Reduction in Director's Fees. A Participant may not
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elect a Deferral Commitment or an increase in reduction of Director's Fees
pursuant to Section 4.1(b)(ii), or any combination of the two, that would
cause the aggregate total reduction in Director's Fees in any Plan Year
with respect to all Benefit Units to exceed one hundred percent (100%) of
the excess of (i) the Director's Fees otherwise payable during such Plan
Year, over (ii) the sum of the amounts required by
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federal, state or local law to be withheld by the Company from such
Director's Fees. In the event that a Participant elects a Deferral
Commitment or increase in reduction of Director's Fees in an amount in
excess of the amount allowable pursuant to the previous sentence, the
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election shall be valid except that the Deferral Commitment or increase in
reduction of Director's Fees so elected shall automatically be reduced to
comply with such limitation, whichever is most appropriate in the sole
discretion of the Committee.
For purposes of the Plan, a Benefit Unit shall be deemed to be a Benefit Unit in
which a Participant is enrolled only as of and after the first day of the
Deferral Period with respect to such Benefit Unit.
4.2 Deferred Compensation Accounts. The Committee shall establish
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and maintain a separate Deferred Compensation Account for each of a
Participant's Benefit Units. The amount by which a Participant's Director's Fees
are reduced pursuant to Section 4.1 with respect to any Benefit Unit shall be
credited by the Company to the Participant's Deferred Compensation Account for
such Benefit Unit no later than the first day of the month following the month
in which such Director's Fees would otherwise have been paid. The Deferred
Compensation Account for a Benefit Unit shall be debited by the amount of any
payments made by the Company to the Participant or the Beneficiary with respect
to such Benefit Unit pursuant to this Plan.
(a) Normal Retirement, Death, Disability and Pre-Retirement
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Benefit Interest. Each Deferred Compensation Account of a Participant who
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terminates service as a Director by reason of death, Disability or Normal
Retirement or who elects and receives a Pre-Retirement Benefit shall be
deemed to bear interest on the balance in such Deferred Compensation
Account from the date such Deferred Compensation Account was established
through the date of such death, Disability, Normal Retirement or
commencement of payment of such Pre-Retirement Benefit at a rate equal to
the sum of (i) the Declared Rate,
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plus (ii) six percent (6%) per annum, compounded annually. Following the
date of Normal Retirement, Disability or commencement of payment of such
Pre-Retirement Benefit, each of a Participant's Deferred Compensation
Accounts shall be deemed to bear interest on the balance in such Deferred
Compensation Account at a rate equal to the sum of (i) the average of the
Declared Rate for the five (5) Plan Years ending prior to such Normal
Retirement, Disability or commencement of payment of such Pre-Retirement
Benefit, plus (ii) six percent (6%) per annum, compounded annually.
Following the date of Participant's death prior to commencement of payment
of any Normal Retirement Benefit or Pre-Retirement Benefit with respect to
a Benefit Unit, the Deferred Compensation Account for such Benefit Unit
shall be deemed to bear interest on the balance in such Deferred
Compensation Account at a rate determined by the Committee prior to the
beginning of each Plan Year.
(B) Termination Interest. In the case of any termination of a
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Participant's service as a Director other than by reason of death,
Disability or Normal Retirement or prior to the commencement of any Pre-
Retirement Benefit elected by the Participant, each of such Participant's
Deferred Compensation Accounts, shall be deemed to bear interest,
compounded annually, from the date such Deferred Compensation Account was
established through the date of such termination of service on the balance
in such Deferred Compensation Account at a rate equal to the Declared Rate;
provided, however, that if a Participant shall so terminate service as a
Director prior to the completion of the first Plan Year in the Deferral
Period for any Benefit Unit, the Deferred Compensation Account for such
Benefit Unit shall not be credited with interest in any amount.
Deemed interest will be credited (at one-twelfth [1/12] of the annual
rate) to each Deferred Compensation Account on a monthly basis on the last day
of each month and will be compounded annually.
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4.3 Valuation of Accounts. The value of a Deferred Compensation
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Account as of any date shall equal the amounts theretofore credited to such
account plus the interest deemed to be earned on such account in accordance with
Section 4.2 through the day preceding such date less amounts theretofore debited
to such account.
4.4 Statement of Accounts. The Committee shall submit to each
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Participant, within one hundred twenty (120) days after the close of each Plan
Year, a statement in such form as the Committee deems desirable setting forth
the balance standing to the credit of each Participant in each of his Deferred
Compensation Accounts. Each statement of account shall show the Participant's
deferrals and the interest credited to the Participant's Deferred Compensation
Account.
ARTICLE 5
BENEFITS
5.1 Normal Retirement Benefit. Upon Normal Retirement, the Company
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shall pay to the Participant with respect to each Benefit Unit in which the
Participant is enrolled an equal amount each month for one hundred eighty (180)
months beginning on the first day of the month next following the date of Normal
Retirement the sum of which payments shall equal (a) the value as of the date of
Normal Retirement of the Deferred Compensation Account for such Benefit Unit,
plus (b) the interest that will accrue on the unpaid balance in such Deferred
Compensation Account during such one hundred eighty (180) month period pursuant
to Section 4.2 (the "Normal Retirement Benefit"). A Participant may instead
elect in the Enrollment Agreement for any Benefit Unit to have the Normal
Retirement Benefit for such Benefit Unit paid to him in either sixty (60) or one
hundred twenty (120) equal monthly payments or to have payments made on an
annual rather than a monthly basis, the amount of any such payments to be
calculated in accordance with the principle stated in the preceding sentence, or
may elect in such Enrollment Agreement to defer the making of such election
until any time prior to sixty (60) days preceding the date of Normal Retirement.
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5.2 Pre-Retirement Benefit. A Participant may elect in the
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Enrollment Agreement for any Benefit Unit to receive with respect to such
Benefit Unit an equal amount each month for one hundred eighty (180) months,
beginning on a date set forth in the Enrollment Agreement which may be no
earlier than the latest of (a) the date on which the Participant attains age
sixty (60), (b) the ninth anniversary of the first day of the Deferral Period
for such Benefit Unit and (c) the date on which the Deferral Commitment with
respect to such Benefit Unit is completed, the sum of which amounts shall equal
(x) the value as of the date of commencement of the payments of the Deferred
Compensation Account for such Benefit Unit, plus (y) the interest that will
accrue on the unpaid balance in such Deferred Compensation Account during such
one hundred eighty (180) months period pursuant to Section 4.2 (the "Pre-
Retirement Benefit"). A Participant may instead elect in the Enrollment
Agreement for a Benefit Unit to have the Pre-Retirement Benefit for such Benefit
Unit paid to him in either sixty (60) or one hundred twenty (120) equal monthly
payments or to have the payments made on an annual rather than a monthly basis,
the amount of any such payments to be calculated in accordance with the
principle stated in the preceding sentence. A Participant who elects a Pre-
Retirement Benefit with respect to a Benefit Unit shall not receive a Normal
Retirement Benefit with respect to such Benefit Unit and a Participant who
receives either a Termination Benefit or a Disability Benefit with respect to a
Benefit Unit shall not receive a Pre-Retirement Benefit with respect to such
Benefit Unit.
5.3 Disability Benefit. In the event that a Participant who has
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completed the Deferral Commitment with respect to a Benefit Unit experiences a
Disability prior to the commencement of payment of either the Normal Retirement
Benefit or the Pre-Retirement Benefit with respect to such Benefit Unit, the
Company shall pay to such Participant the Normal Retirement Benefit with respect
to such Benefit Unit (the "Disability Benefit"), beginning on the commencement
of the Disability. In the event that a Participant who has not completed the
Deferral Commitment with respect to a Benefit Unit experiences a Disability,
amounts that otherwise would have been credited to the Deferred Compensation
Account for such Benefit Unit in accordance with Section 4.1 if
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the Participant had not suffered such a Disability will continue to be credited
to such Deferred Compensation Account for all purposes of this Plan. Upon
completion of the Deferral Commitment with respect to a Benefit Unit, the
Company shall commence payment to the Participant of the Disability Benefit with
respect to such Benefit Unit. A Participant who receives a Disability Benefit
with respect to a Benefit Unit shall not otherwise receive either a Normal
Retirement Benefit or a Pre-Retirement Benefit with respect to such Benefit
Unit.
5.4 Termination Benefit. If a Participant shall cease to be a
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Director for purposes of a Benefit Unit for any reason other than death,
Disability or Normal Retirement, and prior to the commencement of payment of
either the Normal Retirement Benefit or the Pre-Retirement Benefit with respect
to such Benefit Unit, the Company shall pay to the Participant in one lump sum
an amount (the "Termination Benefit") equal to the value of the Deferred
Compensation Account for such Benefit Unit in which the Participant is enrolled
less any payments theretofore made by the Company to such Participant pursuant
to this Plan and such Participant shall be entitled to no further benefits under
this Plan for such Benefit Unit.
5.5 Survivor Benefits.
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(a) If a Participant dies prior to commencement of any Normal
Retirement Benefit or Pre-Retirement Benefit under the Plan with respect to
a Benefit Unit in which the Participant is enrolled, the Company will pay
to the Beneficiary with respect to such Benefit Unit an annual benefit for
ten (10) years, beginning on the first day of the month next following the
date of such Participant's death, equal to the sum of the following:
(i) An annual payment each year for ten (10) years the
sum of which payments shall equal the sum of (A) the value as of the
date of death of the Deferred Compensation Account for such Benefit
Unit, plus (B) the interest that will accrue
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on the unpaid balance in such Deferred Compensation Account during
such ten (10) year period pursuant to Section 4.2; provided, however,
that if the value of the Deferred Compensation Account for such
Benefit Unit as of the date of the Participant's death is less than
Twenty Five Thousand Dollars ($25,000), the then value of the Deferred
Compensation Account will be paid out to such Beneficiary in one lump
sum rather than in ten (10) annual payments; plus
(ii) An annual payment each year for ten (10) years
equal to one hundred percent (100%) of the initial annual amount by
which Director's Fees were reduced with respect to such Benefit Unit
as determined pursuant to Section 4.1(b) (i).
(b) If a Participant dies after the commencement of the
payment of any Normal Retirement Benefit or Pre-Retirement Benefit with
respect to a Benefit Unit under the Plan, the Company will pay to the
Beneficiary the remaining installments of any such benefit that would have
been paid to the Participant had the Participant survived.
5.6 Spousal Survivor Benefit. If a Participant dies after the
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commencement of the payment of any Normal Retirement Benefit or Pre-Retirement
Benefit with respect to a Benefit Unit under the Plan and such Participant has
been married for at least one (1) year at the time of such Participant's death,
the Company shall pay to such Participant's surviving spouse an annual benefit
for a period of five (5) years equal to fifty percent (50%) of the annual Normal
Retirement Benefit or Pre-Retirement Benefit otherwise payable to the
Participant assuming an election to receive such payments over one hundred
eighty (180) months, beginning on the first day of the month next following the
later of (a) the date of such Participant's death or (b) the month in which the
last payment of Normal Retirement Benefit or Pre-Retirement Benefit is paid
pursuant to Section 5.5(b).
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5.7 Withholding; Unemployment Taxes. To the extent required by the
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law in effect at the time payments are made, the Company shall withhold from
payments made hereunder the minimum taxes required to be withheld by the federal
or any state or local government.
5.8 Discounted Cash Out Election
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(a) During the course of any Plan Year prior to the date on
which a Participant ceases to serve as a Director, the Participant may make
one election to receive all or part of the Participant's Deferred
Compensation Account(s) in a single lump-sum payment that shall be paid
within fifteen (15) days after the end of the month in which the Participant
files a written election to receive a discounted lump sum payment pursuant to
this Section 5.8(a). Interest on the amount elected to be withdrawn from such
Deferred Compensation Accounts shall cease to accrue at this end of the month
in which the Discounted Cash Out Election is made. The requirements for a
valid Discounted Cash Out Election and the manner of determining the amount
to be paid to a Participant who makes a pre-retirement Discounted Cash Out
Election are as follows:
(i) The Discounted Cash Out Election must be for an
amount of $200,000 or greater, unless a Participant has a Deferred
Compensation Account for a Benefit Unit worth less than $200,000 at
the time of the Discounted Cash Out Election in which case the amount
of the Discounted Cash Out Election may be equal to 100% of the
Deferred Compensation Account for the Benefit Unit in question.
(ii) The amount available for the Discounted Cash Out
Election shall be determined by establishing the value of the
Participant's Deferred Compensation Account for the Benefit Unit
(including the rate of interest to be credited pursuant to Section
4.2) as if the Participant ceased to serve as a Director on
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the last day of the month during which the Participant executes a
written Discounted Cash Out Election.
(iii) If a Participant elects to receive his entire
Deferred Compensation Account for a Benefit Unit via a Discounted Cash
Out Election, the Participant's Deferred Compensation Account for the
Benefit Unit shall be deemed fully distributed to the Participant. The
amount, however, actually distributed to the Participant shall be the
amount of the Deferred Compensation Account for the Benefit Unit less
a penalty equal to six percent (6%) of the amount otherwise
distributable.
(iv) If a Participant elects to receive $200,000, or some
higher dollar amount of his Deferred Compensation Account for a
Benefit Unit, the amount elected shall be deemed distributed to the
Participant. The amount, however, actually distributed to the
Participant shall be the elected amount less a penalty equal to six
percent (6%) of the elected amount.
(b) During the course of any Plan Year following a
Participant's Normal Retirement date, the Participant or the Beneficiary
may make up to two elections to receive all or part of the Participant's
Deferred Compensation Account(s) in single lump sum payments that shall be
paid within fifteen (15) days after the end of the month in which the
Participant or Beneficiary files a written election to receive a discounted
lump sum payment pursuant to this Section 5.8(b). Interest on the amount
elected to be withdrawn from such Deferred Compensation Account(s) shall
cease to accrue at the end of the month in which the Discounted Cash Out
Election is made. The requirements for a valid Discounted Cash Out Election
and the manner of determining the amount to be paid to a Participant or
Beneficiary who makes a post-retirement Discounted Cash Out Election are as
follows:
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(i) The Discounted Cash Out Election must be for an
amount of $200,000 or greater, unless a Participant or Beneficiary has
a Deferred Compensation Account for a Benefit Unit worth less than
$200,000 at the time of the Discounted Cash Out Election in which case
the amount of the Discounted Cash Out Election may be equal to 100% of
the Deferred Compensation Account for the Benefit Unit in question.
(ii) If a Participant or Beneficiary elects to receive his
entire Deferred Compensation Account for a Benefit Unit via a
Discounted Cash Out Election, the Participant's or Beneficiary's
Deferred Compensation Account for the Benefit Unit shall be deemed
fully distributed to the Participant or Beneficiary. The amount,
however, actually distributed to the electing Participant or
Beneficiary shall be the amount of the Deferred Compensation Account
for the Benefit Unit less a penalty equal to six percent (6%) of the
amount otherwise distributable.
(iii) If a Participant or Beneficiary elects to receive
$200,000 or some higher dollar amount of his Deferred Compensation
Account, the amount elected shall be deemed fully distributed to the
Participant or Beneficiary. The amount, however, actually distributed
to the Participant or Beneficiary shall be the elected amount less a
penalty equal to six percent (6%) of the elected amount.
(iv) If a Participant or Beneficiary makes a Discounted
Cash Out Election(s) or receives payment(s) of an Emergency Benefit
and a portion of a Deferred Compensation Account for a Benefit Unit
remains unpaid, future monthly benefit payments shall be reduced to
reflect the withdrawal of part of the Deferred Compensation Account
and there shall be no reduction in the previously scheduled number of
monthly benefit payments.
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5.9 Emergency Benefit. "Emergency Benefit". In the event that the
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Committee, upon written petition of the Participant or Beneficiary, determines,
in its sole discretion, that the Participant or Benficiary has suffered an
unforeseeable financial emergency, the Company shall pay to the Participant or
Beneficiary, as soon as practicable following such determination, an amount
necessary to meet the emergency not in excess of the Termination Benefit to
which the Participant would have been entitled pursuant to Section 5.4 if said
Participant had a termination of service on the date of such determination (the
"Emergency Benefit"). For purposes of this Plan, an unforeseeable financial
emergency is an unexpected need for cash arising from an illness, casualty loss,
sudden financial reversal, or other such unforeseeable occurrence. An
unforeseeable financial emergency for purposes of this Plan shall exist for any
Participant or Beneficiary who is deemed to be in constructive receipt of income
on account of deferred benefits payable under the terms of the Plan, and in such
event all deferred benefits giving rise to said constructive receipt of income
shall be paid to the Participant or Beneficiary in question. Notwithstanding the
foregoing, the final determination by the Internal Revenue Service ("IRS") or
court of competent jurisdiction, all time for appeal having lapsed, that the
Company is not the owner of the assets of the Rabbi Trust, with the result that
the income of the Rabbi Trust is not treated as income of the Company pursuant
to Sections 671 through 679 of the Internal Revenue Code of 1986, as amended
("Code"), or the final determination by (i) the IRS, (ii) a court of competent
jurisdiction, all time for appeal having lapsed, or (iii) counsel to the Company
that a federal tax is payable by the Participant or Beneficiary with respect to
assets of the Rabbi Trust or the Participant's or Beneficiary's Deferral
Accounts prior to the distribution of those assets or Deferral Accounts to the
Participant or Beneficiary shall in any event constitute an unforeseeable
financial emergency entitling such Participant or Beneficiary to an Emergency
Benefit provided for in this Section. Cash needs arising from foreseeable events
such as the purchase of a home or education expenses for children shall not be
considered to be the result of an unforeseeable financial emergency. The amount
of benefits otherwise payable under the Plan shall thereafter be adjusted to
reflect the reduction of a Deferral Account due to the early payment of the
Emergency Benefit.
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ARTICLE 6
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any
person or persons as Beneficiary or Beneficiaries to whom payment under this
Plan shall be made in the event of Participant's death prior to complete
distribution to Participant of the benefits due under the Plan. Each Beneficiary
designation shall become effective only when filed in writing with the Committee
during the Participant's lifetime on a form prescribed by the Committee.
The filing of a new Beneficiary designation form will cancel all
Beneficiary designations previously filed. Any finalized divorce or marriage
(other than a common law marriage) of a Participant subsequent to the date of
filing of a Beneficiary designation form shall revoke such designation unless in
the case of divorce the previous spouse or a trust for said previous spouse was
not designated as Beneficiary and unless in the case of marriage the
Participant's new spouse or a trust for said new spouse had previously been
designated as Beneficiary.
If a Participant fails to designate a Beneficiary as provided above,
or if his Beneficiary designation is revoked by marriage, divorce, or otherwise
without execution of a new designation, or if all designated Beneficiaries
predecease the Participant or die prior to complete distribution of the
Participant's benefits, then the Committee shall direct the distribution of such
benefits to the Participant's estate.
ARTICLE 7
AMENDMENT OR TERMINATION OF PLAN
The Chairman and Chief Executive Officer of the Company may amend the
Plan; provided, however, that (i) no such amendment shall be effective to
decrease the benefits accrued by any Participant or Beneficiary of a deceased
Participant (including, but not limited to, the rate of interest credited to
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the Deferred Compensation Accounts) prior to the Plan Year commencing after the
date of such amendment; (ii) Section 4.2(a) may not be amended; (iii) the
definition of Declared Rate may not be amended; and (iv) the other substantive
provisions of the Plan related to the calculation of benefits or the manner or
timing of payments to be made under the Plan shall not be amended so as to
prejudice the rights of any Participant or Beneficiary of a deceased
Participant.
Notwithstanding any terms herein to the contrary, the Company may
not terminate the Plan. The Company shall not have any obligation to, but may,
in its discretion, allow additional deferrals into this Plan.
ARTICLE 8
MISCELLANEOUS
8.1 Unsecured General Creditor. The Company intends to establish and
fund the Avery Dennison Corporation Directors Deferred Compensation Trust
("Rabbi Trust"). The assets of the Rabbi Trust shall be subject to the claims of
the Company's creditors. To the extent any benefits provided under the Plan are
actually paid from the Rabbi Trust, the Company shall have no further obligation
with respect thereto, but to the extent not so paid, such benefits shall remain
the obligation of, and shall be paid by, the Company. Participants and their
Beneficiaries, heirs, successors, and assigns shall have no legal or equitable
rights, interest, or claims in an specific property or assets of the Company,
nor shall they be beneficiaries of, or have any rights, claims, or interests in
any life insurance policies, annuity contracts, or the proceeds therefrom owned
or which may be acquired by the Company ("Policies"). Apart from the Rabbi
Trust, such Policies or other assets of the Company shall not be held under any
trust for the benefit of Participants, their Beneficiaries, heirs, successors,
or assigns, or held in any way as collateral security for the fulfilling of the
obligations of the Company under this Plan. Any and all of the Company's assets
and Policies shall be, and remain, the general, unpledged, unrestricted assets
of the Company. The Company's obligation under the Plan shall be
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merely that of an unfunded and unsecured promise of the Company to pay money in
the future.
8.2 Obligations To The Company. If a Participant becomes entitled to
--------------------------
a distribution of benefits under the Plan, and if at such time the Participant
has outstanding any debt, obligation, or other liability representing an amount
owing to the Company, then the Company may offset such amount owing it against
the amount of benefits otherwise distributable. Such determination shall be made
by the Committee.
8.3 Nonassignability. Neither a Participant nor any other person
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shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage or otherwise encumber, hypothecate or convey in advance of actual
receipt the amounts, if any, payable, hereunder, or any part thereof, or
interest therein which are, and all rights to which are, expressly declared to
be unassignable and non-transferable. No part of the amounts payable shall,
prior to actual payment, be subject to seizure or sequestration for the payment
of any debts, judgments, alimony or separate maintenance owed by a Participant
or any other person, nor be transferable by operation of law in the event of a
Participant's or any other person's bankruptcy or insolvency.
8.4 Board Membership Not Guaranteed. Nothing contained in this Plan
-------------------------------
nor any action taken hereunder shall be construed as a contract for services of
any Director as a director of the Company or as giving a Director any right to
be retained as a director of the Company.
8.5 Protective Provisions. Each Participant shall cooperate with the
---------------------
Company by furnishing any and all information requested by the Company in order
to facilitate the payment of benefits hereunder, taking such physical
examinations as the Company may deem necessary and taking such other relevant
action as may be requested by the Company. If a Participant refuses so to
cooperate, the Company shall have no further obligation to the Participant under
the Plan, other than payment to such Participant of the cumulative
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reductions in Director's Fees theretofore made pursuant to this Plan. If a
Participant commits suicide during the two (2) year period beginning on the
later of (a) the date of adoption of this Plan or (b) the first day of the first
Plan Year of such Participant's participation in the Plan, or if the Participant
makes any material misstatement of information or nondisclosure of medical
history, then no benefits will be payable hereunder to such Participant or his
Beneficiary other than payment to such Participant of the cumulative reductions
in Director's Fees theretofore made pursuant to this Plan, provided, that in the
Company's sole discretion, benefits may be payable in an amount reduced to
compensate the Company for any loss, cost, damage or expense suffered or
incurred by the Company as a result in any way of misstatement or nondisclosure.
8.6 Gender, Singular and Plural. All pronouns and any variations
---------------------------
thereof shall be deemed to refer to the masculine, feminine, or neuter, as the
identity of the person or persons may require. As the context may require, the
singular may be read as the plural and the plural as the singular .
8.7 Captions. The captions of the articles, sections, and paragraphs
--------
of this Plan are for convenience only and shall not control or affect the
meaning or construction of any of its provisions.
8.8 Validity. In the event any provision of this Plan is held
--------
invalid, void, or unenforceable, the same shall not affect, in any respect
whatsoever, the validity of any other provision of this Plan.
8.9 Notice. Any notice or filing required or permitted to be given
------
to the Committee under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company, directed to the attention of the President of the Company. Such
notice shall be deemed given as of the date of delivery or, if delivery is made
by mail, as of the date shown on the postmark on the receipt for registration or
certification.
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8.10 Applicable Law. This Plan shall be governed and construed in
--------------
accordance with the laws of the State of California.
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