Exhibit 10.18.2
AVERY DENNISON
CORPORATION
2005 DIRECTORS
VARIABLE DEFERRED COMPENSATION PLAN
ARTICLE 1
PURPOSE
The 2005 Directors Variable Deferred
Compensation Plan (“Plan”) adopted by Avery Dennison
Corporation, a Delaware corporation (the “Company”),
originally effective as of December 1, 2004, is hereby amended
and restated effective as of January 1, 2008, to comply with
Internal Revenue Code Section 409A and applicable authorities
promulgated thereunder. The Plan is a deferred compensation plan
for non-employee directors of the Company. All vested deferred
compensation balances as of November 30, 2004, grandfathered
under the Code Section 409A transition rules, shall be
governed by prior deferred compensation Plan documents and no
subsequent amendment shall apply to such grandfathered amounts. All
amounts deferred, contributed or which became vested on or after
December 1, 2004 shall be subject to the provisions of this
amended and restated Plan. The Plan is intended, and shall be
interpreted in all respects, to comply with the provisions of Code
Section 409A.
ARTICLE 2
DEFINITIONS AND
CERTAIN PROVISIONS
2.1 Administrator .
“Administrator” means the administrator appointed by
the Committee to handle the day-to-day administration of the Plan
pursuant to Article 9.
2.2 Allocation Election .
“Allocation Election” means the form or electronic
communication by which a Participant elects the Declared Rate(s) to
be credited as earnings or losses to such Participant’s
Deferral Account.
2.3 Annual Deferral .
“Annual Deferral” means the amount of Director’s
Fees that the Participant elects to defer for a Calendar Year.
2.4 Beneficiary .
“Beneficiary” means the person or persons or entity
designated as such by a Participant pursuant to Article 8.
2.5 Benefit .
“Benefit” means any benefit provided under the terms of
the Plan.
2.6 Change of Control .
“Change of Control” means “a change in the
ownership or effective control,” or in “the ownership
of a substantial portion of the assets of” the Company (but
not a Participating Subsidiary, except as provided under
Article 10), within the meaning of Code Section 409A and
shall include any of the following events as such concepts are
interpreted under Code Section 409A:
(a) the date on which a
majority of members of the Company’s Board of Directors is
replaced during any twelve-month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Company’s Board of Directors before the date
of the appointment or election; or
(b) the acquisition, by any one
person, or by a corporation owned by a group of persons that has
entered into a merger, acquisition, consolidation, purchase, stock
acquisition, asset acquisition, or similar business transaction
with the Company, of:
(i) ownership of stock of the
Company, that, together with any stock previously held by such
person or group, constitutes more than fifty percent (50%) of
either (i) the total fair market value, or (ii) the total
voting power of the stock of the Company;
(ii) ownership of stock of the
Company possessing thirty percent (30%) or more of the total voting
power of the Company, during the twelve-month period ending on the
date of such acquisition; or
(iii) assets from the Company
that have a total gross fair market value equal to or more than
forty percent (40%) of the total gross fair market value of all of
the assets of the Company immediately before such acquisition,
during the twelve-month period ending on the date of such
acquisition; provided, however, that any transfer of assets to a
related person as defined under Code Section 409A shall not
constitute a Change of Control.
2.7 Code . “Code”
means the Internal Revenue Code of 1986, as amended, as interpreted
by Treasury regulations and applicable authorities.
2.8 Committee .
“Committee” means the deferred compensation plans
administrative committee appointed to administer the Plan pursuant
to Article 9.
2.9 Declared Rate .
“Declared Rate” means the notional rates of return
(which may be positive or negative) of the individual investment
options selected by a Participant for such Participant’s
Deferral Account, as referred to in Article 6.
2.10 Deferral Account .
“Deferral Account” means the notional account
established for record keeping purposes for a Participant pursuant
to Section 4.4.
2.11 Director .
“Director” means a member of the Board of Directors of
the Company who is not employed by the Company or any of its
subsidiaries.
2.12 Director’s Fees .
“Director’s Fees” means the retainers and meeting
fees payable to a Director for service as a Director, which may be
deferred hereunder.
2.13 Disability Benefit .
“Disability Benefit” means the Benefit payable to a
Participant in accordance with Section 7.4 after the
Participant has become Disabled.
2.14 Disability or Disabled .
“Disability or Disabled” shall be interpreted in accord
with the requirements of Code Section 409A and shall mean, in
the case of a Participant, that the Participant (i) is unable
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment, which can be
expected to result in death or can be expected to last for a
continuous period of not less than twelve (12) months, or
(ii) is, by reason of any medically determinable physical or
mental impairment, which can be expected to result in death or can
be expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and
health plan covering employees of the Participant’s
employer.
2.15 Distribution .
“Distribution” means any payment to a Participant or
Beneficiary according to the terms of this Plan.
2.16 Early Termination Benefit
. “Early Termination Benefit” means the lump sum amount
payable to a Participant pursuant to Section 7.3.
2.17 Enrollment Period .
“Enrollment Period” means the period(s) designated from
year to year by the Administrator for enrollments.
2.18 Normal Retirement .
“Normal Retirement” means the Termination of Service
for reasons other than death on or after the Participant attains
age sixty (60).
2.19 Participant .
Participant” means a Director who has filed a completed and
executed Participation Election Form with the Administrator, and
who is participating in the Plan in accordance with the provisions
of Articles 3 and 4.
2.20 Participation Election .
“Participation Election” means the commitment to make a
deferral under the Plan submitted by the Participant to the
Administrator pursuant to Article 4 of the Plan. The
Participant Election may take the form of an electronic
communication followed by appropriate confirmation according to
procedures established by the Administrator.
2.21 Plan . “Plan”
means this 2005 Directors Variable Deferred Compensation Plan, a
non-qualified elective deferred compensation plan, as the same may
be amended from time to time.
2.22 Plan Year . “Plan
Year” means the calendar year.
2.23 Rabbi Trust .
“Rabbi Trust” means the trust described in
Section 12.7.
2.24 Settlement Date .
“Settlement Date” means the date by which a lump-sum
payment shall be made or the date by which installment payments
shall commence under the Plan. Unless otherwise specified, the
Settlement Date shall be as soon as practicable after, but in all
events no later than ninety (90) days following, the Valuation
Date. In the case of a Participant’s death, the Administrator
shall be provided with the documentation reasonably necessary to
establish the fact of the Participant’s death.
Notwithstanding the forgoing or any other provision of the Plan, no
distribution shall be made prior to the date such distribution is
permissible under Coder Section 409A and any distribution
delayed by reason of the application of this prohibition shall be
paid as soon as such distribution is permissible under Code
Section 409A.
2.25 Survivor Benefit .
“Survivor Benefit” means those Plan Benefits that
become payable upon the death of a Participant pursuant to
Section 7.5.
2.26 Termination of Service .
“Termination of Service” means the cessation of service
as a Director for any reason, whether voluntary or involuntary,
including by reason of retirement, Disability or death. For purpose
of the preceding sentence, Termination of Service shall be
interpreted consistent with the requirements of Code
Section 409A for “separation from service”.
2.27 Valuation Date .
“Valuation Date” means the date on which the Deferral
Account is valued for Distribution purposes. This date shall be the
last day of the month in which an event occurs that triggers a
Benefit payment.
ARTICLE 3
PARTICIPATION
3.1 Participation . The
Administrator shall notify Participants generally not less than
thirty (30) days (or such lesser period as may be practicable
under the circumstances) prior to any deadline for filing a
Participation Election Form. A Director must submit a Participation
Election Form during the Enrollment Period established by the
Administrator to become a Participant.
3.2 Participation Election . A
Director shall become a Participant in the Plan no later than the
first day of the Plan Year coincident with or next following the
date the Director has filed a Participant Election with the
Administrator. To be effective, the Director must submit the
Participant Election during an Enrollment Period or any other such
time as determined by the Administrator. A Director who joins the
Company after the first day of the Plan Year may become a
Participant provided such Director files a Participant Election
with the Administrator within thirty (30) days of commencement
of service as a Director, to allow deferrals by such new Director
of Director’s Fees earned during the balance of such Plan
Year.
3.3 Continuation of
Participation . A Participant who has elected to participate in
the Plan by submitting a Participant Election shall continue as a
Participant in the Plan until the entire balance of the
Participant’s Deferral Account has been distributed.
ARTICLE 4
PARTICIPANT
DEFERRALS
4.1 Annual Deferral . On the
Participation Election Form, and subject to the restrictions set
forth herein, a Director shall designate the amount of
Director’s Fees to be deferred thereby for the next following
calendar year, provided that any deferral election shall be made
not later than the last day of the calendar year preceding the
calendar year in which such Director’s Fees are earned (or,
in the case of a new Participant, the thirtieth (30 th )
day following initial eligibility for the remaining portion of the
Plan Year).
4.2 Minimum Deferral . The
minimum amount of Annual Deferral that may be deferred shall be ten
percent (10%) of the Participant’s Director’s Fees.
4.3 Maximum Deferral . The
standard maximum amount of Annual Deferral that may be deferred
shall be one hundred percent (100%) of the Participant’s
Director’s Fees. Notwithstanding the foregoing, the Committee
may further limit the maximum or the minimum amount of deferrals by
any Participant or group of Participants in its sole
discretion.
ARTICLE 5
DISCRETIONARY
COMPANY CREDITS
The Company, in its sole discretion,
may credit to selected Participants’ Deferral Accounts a
discretionary amount or match in an amount determined by the
Company. These amounts and subsequent earnings are subject to
vesting schedules established by the Administrator.
ARTICLE 6
ACCOUNTS AND
INVESTMENT OPTIONS
6.1 Accounts . Solely for
record keeping purposes, the Company shall maintain a Deferral
Account under the Plan for each Participant. Annual Deferrals shall
be credited by the Employer to the Participant’s Deferral
Account at the time such amounts would otherwise have been paid to
the Participant. Such Account shall be credited (and compounded
daily) with a notional rate of return (positive or negative) based
on the Declared Rate(s) elected by the Participant under
Section 6.2. All Distributions shall be debited from the
applicable Account on the Valuation Date.
6.2 Participant Election of
Declared Rates . The crediting rate on amounts in a
Participant’s Deferral Account shall be based on the
Participant’s choice among the investment alternatives made
available from time to time by the Committee. The Administrator
shall establish a procedure by which a Participant may make an
Allocation Election among any combination of Declared Rates in one
percent (1%) increments up to one hundred percent (100%) and may
change the Declared Rate(s) at least once per week with such
change(s) effective as of the first day of the next following week.
Such investment elections may apply to future deferrals and/or to
the existing Deferral Account balances, as indicated by the
Participant. Notwithstanding the foregoing, the Company shall have
no obligation to set aside or invest funds as directed by the
Participant and, if the Company elects to invest funds as directed
by the Participant, the Participant shall have no more right to
such investments than any other unsecured general creditor of the
Company.
6.3 Declared Rates . A
Participant may select from Declared Rates which may from time to
time be established under the Plan and the number of which may be
expanded by the Committee; it being the intention that at all times
Participants will have at least nine (9) core investment fund
choices comparable in focus, type and quality to those listed on
Exhibit A. The Declared Rates provide a rate of return
(positive or negative) that are based on the actual net performance
of the Declared Rate(s) selected by the Participant. The Declared
Rates credited to Participant Deferral Accounts shall be the actual
net performance of the Declared Rates, to which will be added a
basis point credit, which credit (when added to the actual net
performance of the Declared Rates) will together be approximately
equivalent on average to crediting the actual gross performance of
the Declared Rates less twenty (20) basis points.
6.4 Valuation of Deferral
Accounts . The value of a Deferral Account as of any date shall
equal the amounts theretofore credited or debited to such Deferral
Account, plus the deemed earnings or losses of such Deferral
Account in accordance with this Article 6 through the day
immediately preceding such date.
6.5 Vesting . A Participant
shall be one hundred percent (100%) vested at all times in amounts
credited to the Participant’s Deferral Accounts.
6.6 Statement of Deferral
Accounts . The Administrator (or an agent thereof) shall
provide to each Participant periodic statements or on-line access
to information setting forth the Participant’s deferrals,
Declared Rate(s) (credits or debits), Distributions and Deferral
Account balance.
6.7 Errors in Benefit Statements,
Deferrals, Distributions or Administration . In the event an
error is made in a benefit statement, such error shall be corrected
on the next benefit statement following the date such error is
discovered. In the event of an error in the amount of a
Participant’s deferral, immediately upon the discovery of
such error, if possible, the next deferral of such Participant
shall be adjusted upward or downward to correct such prior error
subject to compliance
