Exhibit 10.11.6

 

LETTER OF GRANT

as of

May 1, 2005

 

Mr. Dean A. Scarborough

President and Chief Executive Officer

Avery Dennison Corporation

150 North Orange Grove Boulevard

Pasadena, California 91103

 

Dear Mr. Scarborough:

 

Avery Dennison Corporation (“Company”) adopted the amended and restated Avery
Dennison Corporation Supplemental Executive Retirement Plan (“Plan”) effective
as of April 22, 2004, a copy of which is enclosed. This letter is written to
advise you that the Compensation and Executive Personnel Committee of the Board
of Directors of the Company has designated you as a Participant under the Plan.

 

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 hereby agrees to provide you with a Benefit
which, subject to the terms of the Plan and those set forth below, shall be the
Actuarial Equivalent of an annual payment of a straight life annuity with
payments commencing as described below and each payment equal to the excess of
sixty-two and one-half percent (62.5%) of your Average Compensation over the
total of the offsets numbered (1), (2), (3) and (4) below.

 

The amount of the offsets described below will be calculated as of the date of
your Retirement or other termination of employment with the Company; provided,
however, that the amount of offset (4) shall not be calculated or take effect
before October 14, 2020, or such earlier date, if any, upon which you commence
receiving benefit payments under the Social Security Act. The offsets are as
follows:

 

(1) The annual payment under a straight life annuity which is the Actuarial
Equivalent of the benefit payable to or with respect to you under The Retirement
Plan for Employees of Avery Dennison Corporation, as amended (“Retirement
Plan”), the Associate Retirement Plan, the Benefit Restoration Plan (“BRP”) and
any other defined benefit plan or arrangement created by the Company which
provides benefits in lieu thereof or in addition thereto, including any payments
under the Retirement Plan which are due to transfers from the Stock Holding and
Retirement Enhancement Plan of Avery Dennison Corporation (“SHARE Plan”);

 

(2) The annual payment under a straight life annuity which is the Actuarial
Equivalent of the total of your “Company Contributions Account” and your “Prior
Account” under the Avery Dennison Employee Savings Plan (“Saving Plan”) and the
portion of your Accounts which represent Company contributions plus interest
under the Avery Dennison Corporation Executive Variable Deferred Compensation
Plan (“EVDCP”), the Avery Dennison Corporation Executive Variable Deferred
Retirement Plan (“EVDRP”), and any other deferred compensation, defined
contribution plan or arrangement under which Company contributions are made on
your behalf;

 

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(3) The annual payment under a straight life annuity which is the Actuarial
Equivalent of the total value distributed to you in cash from your “Cash
Account” or in shares of “Company Stock” from your “Stock Account” under the
SHARE Plan, other than amounts transferred to the Retirement Plan which are
offset under (1) above; and

 

(4) Twelve (12) times your monthly Primary Social Security Benefit.

 

You may elect to receive your Benefit in any form allowed by the Plan and the
provisions set forth below at any time more than twelve (12) months before
October 14, 2020, when you will attain age 65. The time when Benefit payments
hereunder shall commence and the conditions of your entitlement to the Benefit
are described below:

 

Retirement. In the event of your Retirement at or after age 65, payment of your
Benefit will commence on your Retirement Date.

 

Cause. In the event your employment with the Company is terminated for Cause
before you attain age 65, no Benefit shall be payable hereunder or under the
Plan.

 

Voluntary Resignation. In the event your employment with the Company is
terminated by voluntary resignation (other than for Good Reason) before you
attain age 65, no Benefit shall be payable hereunder or under the Plan. If you
terminate employment for Good Reason pursuant to your Employment Agreement with
the Company dated May 1, 2000 as amended from time to time (the “Employment
Agreement”), payment of your Benefit shall commence upon the first to occur of
(i) October 14, 2020 or (ii) three years after your termination of employment.
If payment of your Benefit commences before you attain age 65, your benefit will
be actuarially reduced for early commencement in the same manner as provided in
the Retirement Plan.

 

Disability. In the event your employment with the Company is terminated because
of your Disability, payment of your Benefit will commence on October 14, 2020,
provided that you are then living.

 

Death. In the event your employment with the Company is terminated by your
death, payment of your Benefit will be made only to the spouse to whom you were
married on the date of your death, and will commence on the first of the month
after your death, provided that such spouse is then living. The payments to her
shall be the Actuarial Equivalent of the payments which would have been made to
her hereunder had you selected the 50% joint and survivor form of annuity and
retired on the date of your death. No Benefit shall be payable hereunder or
under the Plan if you die before age 65 while unmarried.

 

Other. In the event your employment with the Company is terminated for any
reason other than death, Disability, Cause, voluntary resignation by you (other
than for Good Reason) before age 65, or Retirement at or after age 65, payment
of your Benefit will commence upon the first to occur of (i) October 14, 2020 or
(ii) three years after your termination of employment. If payment of your
Benefit commences before you attain age 65, your benefit will be actuarially
reduced for early commencement in the same manner as provided in the Retirement
Plan.

 

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For purposes of determining your rights hereunder and under the Plan, the terms
Cause, Good Reason and Disability shall have the meanings set forth in the
Employment Agreement, and the terms Actuarial Equivalent, Average Compensation,
Actuarial Reduction, Primary Social Security Benefit, Retirement and Retirement
Date shall have the meanings set forth in Appendix A hereto.

 

Neither future amendments nor termination of the Plan will adversely affect the
Benefit to be provided hereunder or under the Plan without your prior written
consent. The rights provided hereunder and under the Plan may not be sold,
pledged, assigned or transferred in any manner other than by will or by the laws
of descent and distribution.

 

Please acknowledge your receipt and acceptance of this Letter of Grant, and your
agreement to be bound by all of the terms hereof and of the Plan, by
countersigning and dating the enclosed copy of this letter in the space provided
below and returning the same to me.

 

Very truly yours,

 

AVERY DENNISON CORPORATION

 

By:  

/s/ Philip M. Neal

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    Philip M. Neal     Chairman of the Board

 

I hereby acknowledge having received, read and understood this Letter of Grant
and the Plan, and agree to be bound by the terms hereof and of the Plan.

 

/s/ Dean A. Scarborough

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Dean A. Scarborough

 

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APPENDIX A

 

As used in the Letter of Grant to which this Appendix is attached, and herein,
the following terms shall have the meanings specified:

 

1. “Actuarial Equivalent” shall mean the equivalent of a given amount (or series
of amounts) payable in another manner or by another means in accordance with
actuarial principles, methods and assumptions as approved for this purpose by
the Compensation and Executive Personnel Committee of the Board of Directors of
the Company and which shall include the following:

 

  (a) Mortality - 1994 Mortality Table as described in Revenue Ruling 2001-62

 

  (b) Interest - Eight percent (8%).

 

2. “Average Compensation” shall mean the annual average of (a) and (b) below:

 

  (a) Your salary for the three highest twelve month periods out of your last
sixty months of employment with the Company as CEO; plus

 

  (b) Your three highest earned annual bonuses during your last sixty months of
employment with the Company as CEO.

 

For this purpose your salary and bonus shall include any such compensation that
is deferred by you under any Company deferred compensation plan or arrangement.

 

3. “Actuarial Reduction” – If you (or your spouse) commence receipt of a benefit
from the Plan prior to your reaching age 65 there will be a reduction to the
benefit for early commencement in the same manner as provided in the Retirement
Plan.

 

4. “Primary Social Security Benefit” shall mean the monthly payments you are
entitled to receive commencing on your Retirement Date (or such earlier date, if
any upon which you commence receiving benefits under the Social Security Act),
determined under the federal Social Security Act as in effect on the January 1
coincident with or next preceding the termination of your employment with the
Company (irrespective of subsequent amendments of the Act, including retroactive
amendments, and irrespective of whether or not you actually apply for and
receive all or any part of such amount for any month) by assuming in the case of
termination of your employment with the Company prior to your Retirement Date
that you will have no further employment and no further earnings.

 

5. “Retirement” shall mean the termination of your employment with the Company
on your Retirement Date.

 

6. “Retirement Date” shall mean the first day of any month coincident with the
date you shall elect for Retirement.

 

7. “Retirement Plan” shall mean the Retirement Plan for Employees of Avery
Dennison Corporation or the Associate Retirement Plan for Employees of Avery
Dennison Corporation.

 

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