EXHIBIT 10.18
COMPLETE RESTATEMENT AND AMENDMENT
OF
AVERY DENNISON CORPORATION
DIRECTORS VARIABLE 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 5
ARTICLE 4: PARTICIPATION 6
4.1 ELECTION TO PARTICIPATE
4.2 DEFERRAL ACCOUNTS
4.3 VALUATION OF ACCOUNTS
4.4 STATEMENT OF ACCOUNTS
ARTICLE 5: BENEFITS 10
5.1 NORMAL RETIREMENT BENEFIT
5.2 DISABILITY BENEFIT
5.3 TERMINATION BENEFIT
5.4 SURVIVOR BENEFITS
5.5 EMERGENCY BENEFIT
5.6 SMALL BENEFIT
5.7 DISCOUNTED CASH OUT ELECTION
5.8 WITHHOLDING; UNEMPLOYMENT TAXES
ARTICLE 6: BENEFICIARY DESIGNATION 19
ARTICLE 7: AMENDMENT OR TERMINATION OF PLAN 19
ARTICLE 8: MISCELLANEOUS 20
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 VARIABLE DEFERRED COMPENSATION PLAN
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ARTICLE I
PURPOSE
The purpose of this Directors Variable 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 the Company and its subsidiaries 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
Authorization Form. "Authorization Form" means the authorization form
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which a Director files with the Company to participate in a Benefit Unit under
the Plan.
Beneficiary. "Beneficiary" means the person or persons designated as
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such in accordance with Article 6.
Benefit Deferral Period. "Benefit Deferral Period" means that period
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of one (1) to five (5) Plan 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.
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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. Each
Benefit Unit will be covered by a separate Authorization Form.
Committee. "Committee" means the deferred compensation plan committee
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appointed to administer the Plan pursuant to Article 3.
Cumulative Deferral Amount. "Cumulative Deferral Amount" means with
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respect to each Benefit Unit the total cumulative amount by which a
Participant's Director's Fees will be reduced over the Benefit Deferral Period.
Declared Rate. "Declared Rate" means the following rates of interest
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for Deferral Options A and B, respectively:
Option A. "Declared Rate" means with respect to any Plan Year the
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one hundred twenty (120) month rolling average rate of ten-year United
States Treasury Notes. The one hundred twenty (120) month rolling average
rate will be determined by an outside source selected by the Committee once
for each Plan Year. This rate will be determined for each Plan Year as of
the end of the month of September of the preceding Plan Year and will be
the average of the rates in effect at the end of each month (as so
indicated in "Yield & Yield Spreads-U.S. Government Securities by Maturity"
published by Salomon Brothers) for the one hundred twenty (120) months
ending with that September.
Option B. "Declared Rate" means with respect to any quarter of a
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Plan Year a rate of return (positive or negative) that is based on the
actual performance of a specific Pruco Variable Life Insurance Contract
investment fund. At the end of each quarter of a Plan Year, Prudential Life
Insurance Company will report to the Company the actual gross performance
of each investment fund. The rate of return determined based on such gross
performance for an investment fund, less an administrative charge of .3%,
will be the Declared Rate for the
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investment fund for the quarter. At the discretion of the Committee, the
Declared Rate may be determined on a monthly basis.
The Declared Rate choices for Option B are:
Declared Rate 1. This rate is based on the performance of the
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Money Market Fund.
Declared Rate 2. This rate is based on the performance of the
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Common Stock Fund.
Declared Rate 3. This rate is based on the performance of the
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Conservatively Managed Fund.
Declared Rate 4. This rate is based on the performance of the
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Aggressively Managed Fund.
Deferrals will not necessarily be invested by the Company in the foregoing
investment funds, even though the actual performance of the investment fund will
be used to measure the Declared Rate.
Deferral Account. "Deferral Account" means the account maintained on
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the books of account of the Company for each Benefit Unit pursuant to Section
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4.3.
Deferral Option. "Deferral Option" means the two deferral options
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which are available under the Plan, Option A and Option B, as described in
Articles 4 and 5.
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.
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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 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 5.2
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 Deferral Account pursuant
to the terms and conditions of Section 5.7.
Emergency Benefit. "Emergency Benefit" means the benefit that is
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payable pursuant to Section 5.5 of the Plan.
Normal Retirement. "Normal Retirement" means with respect to any
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Benefit Unit termination of a Participant's status as a Director with the
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Company for reasons other than death on or after the date the Participant
attains age 60.
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 Authorization Form 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.
Rabbi Trust. "Rabbi Trust" means the trust described in Section 8.1.
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Survivor Benefit. "Survivor Benefit" means those Plan benefits that
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become payable upon the death of a Participant pursuant to the provisions of
Section 5.4.
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 5.3.
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
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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 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 Authorization Form 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
Authorization Form 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 Authorization
Form, the Director shall irrevocably elect a Cumulative Deferral Amount by which
the aggregate Director's Fees of such Participant will be reduced over the
Benefit Deferral Period.
(a) Option A. Under Option A, a Director must elect a specific
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dollar amount of Director's Fees to be deferred each Plan Year for four
years. A Director may specify in his Authorization Form the dollar amount
of his Director's Fees to be deferred toward satisfaction of his annual
deferral commitment. The minimum annual deferral under Option A is $2,000,
and the maximum annual deferral under Option A is $20,000.
(b) Option B. In order to participate in Option B, a Director
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must participate in Option A at the minimum deferral level ($2,000 per year
for each of four years). Under Option B, a Director may
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elect to defer a specific dollar amount from his Director's Fees to be
deferred each Plan Year for one to five years. The minimum annual deferral
under Option B is $5,000 and Option B is not subject to a maximum annual
deferral.
(c) Accelerated Reduction. Prior to the beginning of any Plan
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Year in any Benefit Deferral Period as to which there are two 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 any of the Plan Years remaining in such Benefit
Deferral Period; provided, however, that any such increase in the reduction
of Director's Fees for any remaining Plan Years in the Benefit Deferral
Period shall not increase the Cumulative Deferral Amount for the Benefit
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 Benefit Deferral Period pursuant
to Section 4.1. In the event a Participant elects to increase the
previously elected reduction of Director's Fees pursuant to this Section
4.1(c), 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.
(d) Maximum Reduction in Director's Fees. A Participant may not
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elect a Cumulative Deferral Amount or an increase in reduction of
Director's Fees pursuant to Section 4.1(c), 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 amounts required by federal, state or
local law to be withheld by the Company from such Director's Fees. In the
event that a Participant elects a Cumulative Deferral Amount or increase in
reduction of Director's Fees in an amount in excess of the
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amount allowable pursuant to the previous sentence, the election shall be
valid except that the Cumulative Deferral Amount 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.
(e) Enrollment in Benefit Unit. For purposes of the Plan, a
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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 Benefit Deferral Period
with respect to such Benefit Unit.
4.2 Deferral Accounts. The Committee shall establish and maintain a
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separate Deferral 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 each Benefit Unit shall be credited by the Company to the
Participant's Deferral Account for such Benefit Unit no later than the first day
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of the month following the month in which such Director's Fees would otherwise
have been paid. The Deferral 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) Interest on Deferral Accounts. Various types of returns will
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be credited on Deferral Accounts prior to commencement of payment of
benefits depending on the Deferral Option which a Participant chooses, as
described below.
(i) Option A. Under Option A, the Declared Rate for Option
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established by Article 2 shall be credited monthly to Deferral
Accounts at one-twelfth (1/12) of the Declared Rate, and all such
interest shall be compounded annually.
(ii) Option B. Under Option B, a Participant may elect one
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of four Declared Rates (as defined in Article 2) to be
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credited on 100% of his Deferral Account balance or two of the four
Declared Rates with each to be credited on 50% of his Deferral Account
balance. The Participant's Deferral Accounts will be credited with a
rate of return (positive or negative) based on the Declared Rate(s)
which he elects. The rate of return (positive or negative) will be
credited monthly to Deferral Accounts at one-third of the quarterly
Declared Rate(s). Notwithstanding the foregoing provision or any other
provision of this Plan, the Committee, in its sole discretion, may
credit a Participant's Deferral Accounts based on monthly Declared
Rate(s) or may use monthly Declared Rate(s) for the months subsequent
to the end of the preceding quarter whenever a lump sum payment will
be made to the Participant or the Beneficiary.
A Participant may change his Declared Rate(s) election under Option B
twice a year effective as of the following June 1 or December 1 of each year by
filing a written notice with the Company at least 30 days in advance. Under
Option B, Deferral Accounts are subject to greater investment risk because the
actual performance of the investment fund that is chosen to measure the Declared
Rate may be either positive or negative and either more or less than the Option
A Declared Rate. Deferral Account balances will not necessarily be invested in
these investment funds by the Company, even though the actual performance of the
investment fund that is chosen to measure the Declared Rate will determine the
rate of return (positive or negative) on the Participant's Deferral Account.
4.3 Valuation of Accounts. The value of a Deferral Account as of any
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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 the amounts theretofore debited to
such account.
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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 format the Committee deems desirable setting forth the
balance standing to the credit of each Participant in each of his Deferral
Accounts. Each statement of account shall show the Participant's deferrals and
the interest credited to the Participant's Deferral Account.
ARTICLE 5
BENEFITS
5.1 Normal Retirement Benefit. A Participant is eligible for a
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Retirement Benefit under this Plan with respect to a Benefit Unit when he has
satisfied all of the requirements for Normal Retirement (as defined in Article
2) with respect to the Benefit Unit. The Normal Retirement Benefit for a Benefit
Unit will be based on the total value of the Deferral Account for the Benefit
Unit. In addition to the interest credited under Section 4.2(a)(i), Deferral
Accounts under Option A will be credited with additional interest equal to 25%
of the Declared Rate for each Plan Year prior to commencement of payment of the
Normal Retirement Benefit.
The Normal Retirement Benefit will be paid beginning on the date
and in the manner which the Participant elects when he enrolls in a Benefit
Unit. This election may not be changed at any time by the Participant. A
Participant may elect to receive his Normal Retirement Benefit at retirement or
on a specified date in either a lump sum or installments over a specified number
of years (not to exceed 20 years) or a combination of a lump sum payment and
installment payments. All installment payments will be calculated on an annual
basis but paid in such intervals as may be determined by the Committee, provided
that such intervals shall not be less frequent than quarterly.
Under Option A, if a Participant elects to receive his Normal
Retirement Benefit in installment payments, interest will continue to be
credited on the unpaid Deferral Account balance at a rate equal to 125% of the
average
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of the Declared Rates for the five Plan Years prior to payment of the
initial installment of the Normal Retirement Benefit.
Under Option B, if a Participant elects to receive his Normal
Retirement Benefit in installment payments, the payments will be made in such
intervals as may be determined by the Committee, provided that such intervals
shall not be less frequent than quarterly, based on the Deferral Account balance
at the beginning of the payment period. The payments will be redetermined
annually by dividing the Participant's current number of remaining years in the
payment period based on the Participant's retirement payment election. The rate
of return (positive or negative) during any payment year will be credited during
the year on the unpaid Deferral Account balance at the applicable Declared
Rate(s). A Participant may continue to change his Declared Rate(s) election
twice a year, effective as of the following June 1 or December 1 by filing a
written notice with the Company at least 30 days in advance, as long as he has a
remaining Deferral Account balance.
5.2 Disability Benefit. In the event that a Participant who has
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completed the Cumulative Deferral Amount with respect to a Benefit Unit
experiences a Disability prior to the commencement of payment of either the
Normal Retirement Benefit or the Survivor 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 Cumulative Deferral Amount with respect to a Benefit Unit
experiences a Disability, amounts that otherwise would have been credited to the
Deferral Account for such Benefit Unit in accordance with Section 4.1 if the
Participant had not suffered such a Disability will continue to be credited to
such Deferral Account for all purposes of this Plan. Upon completion of the
Cumulative Deferral Amount 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
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a Benefit Unit shall not otherwise receive either a Normal Retirement Benefit or
a Survivor Benefit with respect to such Benefit Unit.
5.3 Termination Benefit.
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(a) Certain Terminations. With respect to any Benefit Unit, if a
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Participant (i) ceases to be a Director for any reason other than death,
Disability or Normal Retirement, or (ii) fails to return to the status of a
Director within one hundred eighty (180) days following recovery from a
Disability prior to Normal Retirement, the Company shall pay to the
Participant in one lump sum an amount (the "Termination Benefit" ) equal to
the value of the Deferral Account for such Benefit Unit. In computing the
Termination Benefit, the value of the Deferral Account will be based on
interest at the applicable Declared Rate, not including the value of the
additional interest referred to in Section 5.1. The Participant shall be
entitled to no further benefits under this Plan for such Benefit Units.
(b) Termination of a Benefit Unit. With the written consent of the
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Committee, a Participant may terminate enrollment in a Benefit Unit by filing
with the Committee a written request to so terminate the Benefit Unit. Upon
termination of enrollment in a Benefit Unit, no further reductions shall be made
in the Participant's Director's Fees pursuant to the Authorization Form with
respect to such Benefit Unit, and the Participant shall immediately cease to be
eligible for any benefits with respect to such Benefit Unit, other than the
Termination Benefit. No other benefit shall be payable to either the Participant
or any Beneficiary of such Participant with respect to the terminated Benefit
Unit. In its sole discretion, the Committee may pay the Termination Benefit with
respect to a terminated Benefit Unit on a date earlier than a Participant's
termination of employment with the Company, with such Termination Benefit to be
calculated as if the Participant had terminated employment with the Company on
the date of such payment.
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5.4 Survivor Benefits.
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(a) Pre-Retirement. If a Participant dies and has not yet
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commenced to receive Normal Retirement Benefit payments with respect to a
Benefit Unit, a Survivor Benefit will be paid to his Beneficiary in annual
installments over five years. The aggregate Survivor Benefit will be equal
to the Deferral Account balance for the Benefit Unit. The annual Survivor
Benefit payments shall be redetermined each year based upon the value of
the Deferral Account at that time, plus the expected interest based on the
interest rate that is established by the Company each year for the
remaining period of installment payments. Interest will be credited on the
unpaid balance in the Deferral Account under Option A and Option B as
follows:
(i) Option A. A Deferral Account under Option A will be
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credited with interest for each Plan Year before and after the
Participant's death equal to 125% of the Declared Rate for balances
for which the Participant had elected to receive a Normal Retirement
Benefit.
(ii) Option B. A Deferral Account under Option B will be
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credited with interest equal to the Declared Rate for each Plan Year
before the Participant's death. After the Participant's death,
interest will be credited at a rate to be determined each year by the
Company, but in no event less than 7% per annum.
(b) Post-Retirement. If a Participant dies after he has commenced
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to receive a Normal Retirement Benefit with respect to a Benefit Unit, his
Beneficiary will be entitled to receive a Survivor Benefit with respect to
the Benefit Unit under Option A and Option B as follows:
(i) Option A. The Beneficiary will be entitled to receive
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the remaining installments of the Normal Retirement Benefit which would
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have been paid to the Participant with respect to the Benefit Unit if the
Participant had survived based upon interest that would have been credited
on unpaid amounts if the Participant had survived.
(ii) Option B. The Beneficiary will be entitled to receive a
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Survivor Benefit equal to the Deferral Account balance for the Benefit
Unit, which will be paid in annual installments over five years. After
the Participant's death, interest will be credited on the unpaid
balance in the Deferral Account at a rate to be determined each year
by the Company, but in no event less than 7% per annum.
(c) Large Survivor Benefit. If the aggregate Deferral Account
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balances which are payable to a Beneficiary as a Survivor Benefit for all
of the Participant's Benefit Units exceed $500,000, the Survivor Benefit
for each Benefit Unit shall be payable to the Beneficiary over the number
of years (if more than five years) which the Participant elected for
payment of his Normal Retirement Benefit for each such Benefit Unit.
5.5 Emergency Benefit. In the event that the Committee, upon written
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petition of the Participant or Beneficiary determines, in its sole discretion,
that the Participant or Beneficiary 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 5.3 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
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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.
5.6 Small Benefit Payment. In the event the Committee determines that
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the balance of the Participant's Deferral Accounts is less than $50,000 at the
time of commencement of payment of his Normal Retirement Benefit or Termination
Benefit, or the portion of the balance of the Participant's Deferral Account
payable to any Beneficiary is less than $50,000 at the time of commencement of
payment of a Survivor Benefit to such Beneficiary, the Company may pay the
benefit in the form of a lump sum payment, notwithstanding any provision of this
Article 5 to the contrary. Such lump sum payment shall be equal to the balance
of the Participant's Deferral Accounts, or portions thereof payable to a
Beneficiary.
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5.7 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 Deferral 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 5.7(a).
Interest on the amount elected to be withdrawn from such Deferral 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 or Beneficiary has
a Deferral 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 Deferral
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 Deferral 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 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
Deferral Account for a Benefit Unit via a Discounted Cash Out
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Election, the Participant's Deferral 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 Deferral 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 Deferral 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 Deferral
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 5.7(b). Interest on the amount elected to
be withdrawn from such Deferral 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:
(i) The Discounted Cash Out Election must be for an amount
of $200,000 or greater, unless a Participant or Beneficiary has a
Deferral 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 Deferral
Account for the Benefit Unit in question.
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(ii) If a Participant or Beneficiary elects to receive his
entire Deferral Account for a Benefit Unit via a Discounted Cash Out
Election, the Participant's or Beneficiary's Deferral 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 Deferral 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 Deferral 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 Deferral Account for a Benefit Unit remains unpaid,
future monthly benefit payments shall be reduced to reflect the
withdrawal of part of the Deferral Account and there shall be no
reduction in the previously scheduled number of monthly benefit
payments.
5.8 Withholding; Unemployment Taxes. To the extent required by the
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.
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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 Deferral Accounts) prior to the Plan Year commencing after the date of such
amendment; (ii) Section 5.1 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, the Company may offset such amount owed to 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
----------------
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
21
reduction 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 first day on which he participates in the Plan or (b) the first
day of the Participant's Benefit Deferral Period for any new Benefit Unit under
the Plan, or if the Participant makes any material misstatement of information
or nondisclosure of medical history, then no benefits with respect to any
affected Benefit Unit 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 any such action, misstatement
--
or nondisclosure.
8.6 Gender, Singular & 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 Vice President, General Counsel
and Secretary 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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