LETTER OF
GRANT
as of
January 1, 2009
Mr. Dean
A. Scarborough
President and Chief Executive Officer
Avery Dennison Corporation
150 North Orange Grove Boulevard
Pasadena, California 91103
Avery
Dennison Corporation (“Company”) is adopting an amended
and restated Avery Dennison Corporation Supplemental Executive
Retirement Plan (“Plan”) effective as of
January 1, 2009. The amended and restated Plan contains the
necessary provisions to bring the Plan into compliance with
Internal Revenue Code Section 409A
(“Section 409A”). By complying with the
requirements of Section 409A, the benefits provided under such
nonqualified deferred compensation plan may continue to be tax
deferred. This letter is written to advise you of the changes that
the Compensation and Executive Personnel Committee of the Board of
Directors of the Company has made to the Plan in order to comply
with Section 409A.
Calculation
of SERP Benefit . As an
inducement for you to remain in the service of the Company, and to
provide you with additional incentive to further the growth,
development and financial success of the Company, the Company will
continue to provide you with a SERP Benefit that is determined in
accordance with the provisions below and subject to the terms of
the Plan.
Your
“SERP Benefit” is equal to the annual payment of a
straight life annuity commencing the first day of the month
following the month in which you attain age 65 (or the month in
which a Payment Event occurs, if later) with each annual payment
equal to sixty-two and one-half percent (62.5%) of your Average
Compensation. The amount determined in the preceding sentence will
be reduced for early commencement:
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(1)
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In
the same manner as provided in the Qualified Plan to the extent
your Benefit Commencement Date is on or after the date you attain
age 55; and
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(2)
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To
the extent your Benefit Commencement Date is before the date you
attain age 55 and your SERP Benefit is payable to you in a Lump
Sum, then the Lump Sum SERP Benefit will be Actuarially Equivalent
to the
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SERP Benefit
payable to you on the first day of the month following the date you
attain age 55, taking into account the applicable early
commencement factors that would be applied under the Qualified Plan
as of such date.
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Finally,
your SERP Benefit will be further reduced by the Specified Formula
Reductions. For the avoidance of doubt, the rate at which your SERP
Benefit accrues will not be adversely affected if the benefit under
the Amended and Restated Benefit Restoration Plan of Avery Dennison
Corporation (“BRP”) is paid prior to the payment of
your SERP Benefit by reason of a Change in Control.
Time and
Form of Payment . Your SERP
Benefit will be paid on the Benefit Commencement Date determined
under the BRP and in accordance with the form of payment specified
or, if applicable, elected under the BRP.
Key
Employee Delay . If you
are a Key Employee, as determined under the Avery Dennison
Corporation Key Employee Policy or by the Committee for all
nonqualified plans in accordance with the requirements of Code
Section 409A, and your SERP Benefit is payable due to your
Separation from Service, as described under the BRP, your Benefit
Commencement Date will be no earlier than the first day of the
month that is coincident with or next following the date that is
six months after your Separation from Service, unless an earlier
payment complies with a permissible Section 409A exception (
e.g. , the payment of employment taxes). To the extent your
status as a Key Employee results in a delayed payment, then,
following the end of such six-month period, the Plan will provide
you with a one-time payment equal to the amount you would have been
entitled to receive if your Benefit Commencement Date had not been
delayed due to your status as a Key Employee, together with
Interest.
Vesting
. You will
become vested in your SERP Benefit upon the earliest of the
following dates provided, in the event of (1), (2), or (3), you are
an Employee on that date:
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(1)
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The
date you attain age 60;
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(2)
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The
date you suffer a Disability;
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(3)
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The
date of your death;
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(4)
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The
date you have an involuntary Separation from Service from the
Company without Cause, including an involuntary Separation from
Service on account of a Change in Control; and
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(5)
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The
date of your Separation from Service for Good Reason.
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Forfeiture
. In the
event you are terminated by the Company for Cause before you attain
age 65, you will forfeit your entire SERP Benefit under the
Plan.
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Death
Benefit . Upon your
death, a Death Benefit will be paid only to the spouse to whom you
were married on the date of your death; payment will be made in a
Lump Sum (which is the form in which the “death
benefit” under the BRP is paid) at the same time as the
“death benefit” under the BRP, provided such spouse is
then living.
The amount
of the Lump Sum Death Benefit payable to your spouse will be
Actuarially Equivalent to the amount that would have been payable
to your spouse as a survivor benefit hereunder if before your date
of death you attained age 60 (or your actual age, if you are
older), commenced benefits in the form of a 50% Joint and Survivor
Annuity, and then died.
No Death
Benefit will be payable hereunder or under the Plan if you die
while unmarried before any scheduled Benefit Commencement
Date.
Definitions
. For
purposes of determining your rights hereunder and under the Plan,
the terms:
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(1)
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Cause, Disability, Good Reason, Lump
Sum and SERP Benefit will have the meanings set forth in the
Plan;
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