EX-10.8.3.1






Exhibit 10.8.3.1




EMPLOYMENT AGREEMENT




This EMPLOYMENT AGREEMENT is entered into by and between Avery Dennison Corporation, a Delaware
corporation (the “Company”) and      (the “Executive”), effective as of      .



The Board of Directors of the Company (the “Board”) has determined that it is in the best interests
of the Company and its shareholders to enter into an Employment Agreement with Executive to assure
that the Company will have the continued dedication of the Executive. The Board further believes
it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control (as defined below) and
to encourage the Executive’s full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and has therefore determined to extend the
term of the employment period upon a Change of Control to provide the Executive with compensation
and benefits arrangements upon a Change of Control which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company
to enter into this Employment Agreement.



This Agreement contains the entire agreement between the parties with respect to the matters
specified herein and supersedes all prior oral and written employment agreements, understandings
and commitments between the Company and Executive.



NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:



1. Certain Definitions



(a) The “Effective Date” shall mean the date hereof, which is set forth in the first paragraph of
this Agreement.



(b) The “Employment Period” shall mean the period commencing on the Effective Date and ending on
the first anniversary of the Effective Date; provided, however, that commencing on the first day of
the month next following the Effective Date and on the first day of each month thereafter prior to
a Change of Control (the most recent of such dates is hereinafter referred to as the “Renewal
Date”), the Employment Period shall be automatically extended so as to terminate on the earlier of
the first anniversary of such Renewal Date or (ii) the Executive’s “Normal Retirement Age” as such
concept is defined under the Company sponsored qualified retirement plan, unless the Company or
Executive shall give notice to the other that the Employment Period shall not be further extended
prior to any such Renewal Date. Notwithstanding the foregoing or any of the provisions of this
Agreement to the contrary, if a Change of Control (as defined in Section 2) occurs, the Employment
Period shall be automatically extended so as to terminate on the earlier of three years from the
date on which the Change of Control occurs or the Executive’s Normal Retirement Age.



If the Executive’s employment with the Company is terminated prior to the date on which a Change of
Control occurs, and if it is reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change
of Control, then for all purposes of this Agreement the “Employment Period” for such Executive
shall be the earlier of three years from the date of such termination of employment or the
Executive’s Normal Retirement Age.



2. Change of Control



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, within the
meaning of Code Section 409A, and shall include any of the following events as such concepts are
interpreted under Code Section 409A:



(i) 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



(ii) 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:



A. 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;



B. ownership of stock of the Company possessing 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



C. 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 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 Section 409A shall not constitute a Change
of Control.



3. Employment Period



The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees
to remain in the employ of the Company subject to the terms and conditions of this Agreement, for
the period commencing on the “Effective Date” and continuing during the “Employment Period,” as
defined in Sections 1(a) and (b) above.



4. Terms of Employment



(a) Position and Duties



(i) During the Employment Period, the Executive’s position (including titles), authority,
duties and responsibilities shall be at least commensurate with the most significant of those held,
exercised and assigned to the Executive at any time during the 120-day period immediately preceding
the Effective Date.



(ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage personal investments, so
long as such activities do not interfere with the performance of the Executive’s responsibilities
as an employee of the Company in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s responsibilities to the Company.



(b) Compensation




(i) Base Salary



During the Employment Period, the Executive shall receive an annual base salary (“Annual Base
Salary”) which shall be paid at a monthly rate at least equal to twelve times the highest monthly
base salary paid or payable, including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs. During the Employment Period,
the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter at least annually. Any
increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase,
and the term “Annual Base Salary” as utilized in this Agreement shall refer to Annual Base Salary
as so increased; provided, however, that Executive’s Annual Base Salary may be reduced prior to a
Change of Control as part of any general, across the board salary reduction which applies in a
comparable manner to other officers or senior executives of the Company, but not by more than ten
percent (10%) (unless Executive agrees to accept a larger reduction) during any calendar year. As
used in this Agreement, the term “affiliated companies” shall include any company controlled by,
controlling or under common control with the Company.




(ii) Annual Bonus



In addition to Annual Base Salary, the Executive shall be eligible to receive, for each fiscal year
ending during the Employment Period, an annual bonus (the “Annual Bonus”) under the Company’s
Executive Leadership Compensation Plan or Senior Executive Incentive (Leadership) Compensation
Plan, or any comparable bonus under any successor plan (such plans, collectively, the “Annual Bonus
Plans”), including any Annual Bonus which has been earned but deferred. After a Change of Control,
the Executive shall be awarded for each fiscal year ending during the Employment Period an Annual
Bonus in cash at least equal to the Executive’s average Annual Bonus for the last three full fiscal
years prior to the Change of Control (annualized in the event that the Executive was not employed
by the Company for the whole of such fiscal year) (the “Recent Annual Bonus”). Each such Annual
Bonus shall be paid no later than twp and one-half (21/2) months after the end of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall
make a timely election to defer the receipt of such Annual Bonus pursuant to a Company sponsored
deferred compensation plan.




(iii) Incentive, Savings and Retirement Plans



During the Employment Period, the Executive shall be entitled to participate in all incentive,
savings, retirement, deferral (including the plans described in Section 6(a)(v) below), and
nonqualified supplemental pension (including the Benefit Restoration Plan) plans, practices,
policies and programs applicable generally to other peer executives of the Company and its
affiliated companies. In no event shall such plans, practices, policies and programs provide the
Executive after a Change of Control with incentive opportunities (measured with respect to both
regular and special incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each case, which are
less favorable, in the aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices, policies and programs as in
effect at any time during the 120-day period immediately preceding the Change of Control or, if
more favorable to the Executive, those provided generally at any time after the Change of Control
to other peer executives of the Company and its affiliated companies.




(iv) Welfare Benefit Plans



During the Employment Period, the Executive and/or the Executive’s family, as the case may be,
shall be eligible for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated companies (including,
without limitation, medical, prescription, dental, disability, salary continuance, employee life,
group life, accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its affiliated companies. In no
event shall such plans, practices, policies and programs provide the Executive after a Change of
Control with benefits which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time during the 120-day
period immediately preceding the Change of Control or, if more favorable to the Executive, those
provided generally at any time after the Change of Control to other peer executives of the Company
and its affiliated companies.




(v) Expenses



During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance with the policies, practices and
procedures of the Company and its affiliated companies in effect for the Executive from time to
time. After a Change of Control, such reimbursement shall be made in accordance with the most
favorable policies, practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately preceding the Change of Control
or, if more favorable to the Executive, as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies.




(vi) Fringe Benefits



During the Employment Period, the Executive shall be entitled to fringe benefits, including,
without limitation, if applicable, tax and financial planning services, payment of club dues, and
automobile lease and payment of related expenses, in accordance with the plans, practices, programs
and policies of the Company and its affiliated companies in effect for the Executive from time to
time. After a Change of Control, such fringe benefits shall be provided in accordance with the
most favorable plans, practices, programs and policies of the Company and its affiliated companies
in effect for the Executive at any time during the 120-day period immediately preceding the Change
of Control or, if more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated companies.




(vii) Office and Support Staff



During the Employment Period, the Executive shall be entitled to an office and support staff in
accordance with the practices and policies of the Company and its affiliated companies in effect
for the Executive from time to time. After a Change of Control, the Executive shall be entitled to
an office or offices of a size and with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any time during the
120-day period immediately preceding the Change of Control or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer executives of the Company
and its affiliated companies.




(viii) Vacation



During the Employment Period, the Executive shall be entitled to paid vacation in accordance with
the plans, policies, programs and practices of the Company and its affiliated companies in effect
for the Executive from time to time. After a Change of Control, the Executive shall be entitled to
vacation in accordance with the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive at any time during the 120-day
period immediately preceding the Change or Control or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies.



5. Termination of Employment



(a) Death or Disability



The Executive’s employment shall terminate automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the Disability of the Executive
has occurred during the Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with Section 12(b) of this
Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th day after receipt of such notice
by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time performance of the Executive’s duties
with or without reasonable accommodation. For purposes of this Agreement, “Disability” shall mean
the absence of the Executive from the Executive’s duties with the Company on a full-time basis for
a period of (i) ninety (90) consecutive calendar days or (ii) an aggregate of one hundred fifty
(150) calendar days in any fiscal year of the Company as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the Executive’s legal representative
(subject to compliance with all applicable laws).



(b) Cause



The Company may terminate the Executive’s employment during the Employment Period for Cause. For
purposes of this Agreement, “Cause” shall mean:



(i) the willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive’s duties, or



(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.



For purposes of this provision, no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of
the Company or based upon the advice of counsel for the Company shall be conclusively presumed to
be done, or omitted to be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless
and until there shall have been delivered to the Executive a notice that the Executive is guilty of
the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.



(c) Good Reason



The Executive’s employment may be terminated by the Executive during the Employment Period for Good
Reason. For purposes of this Agreement, “Good Reason” shall mean a “separation from service for
good reason” as set forth in Code Section 409A, which shall mean that, without the express written
consent of the Executive, one or more of the following shall have occurred without being timely
remedied in the manner set forth below:



(i) A material diminution in the Executive’s base compensation (except as provided for
herein).



(ii) A material diminution in the Executive’s authority, duties, or responsibilities.



(iii) A material diminution in the authority, duties, or responsibilities of the supervisor to
whom the Executive is required to report.



(iv) A material change in the geographic location at which the Executive must perform the
services.



(v) Any other action or inaction that constitutes a material breach by the Company of the
agreement under which the Executive provides services.



The Executive shall have “Good Reason” in connection with any or all of the above solely if (A) the
Executive provides notice to the Company of the existence of the particular condition, action or
inaction which the Executive considers to give the Executive “Good Reason” within ninety (90) days
of the initial existence of the condition, or the action or inaction, and (B) the Company shall not
have remedied the condition, action or inaction within thirty (30) days of its receipt of the
Executive’s notice. The effective date of any termination for “Good Reason” shall be no later than
twelve (12) months after the initial existence of such condition, action or inaction constituting
“Good Reason.”



(d) Notice of Termination



Any termination during the Employment Period by the Company for Cause, or by the Executive for Good
Reason, shall be communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s employment under the
provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder
or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.



(e) Date of Termination



“Date of Termination” means “termination of service” as such term is defined under Code Section
409A and shall be (i) if the Executive’s employment is terminated by the Company for Cause, or by
the Executive for Good Reason, the effective date of termination specified in the Notice of
Termination, (ii) if the Executive’s employment is terminated by the Company other than for Cause
or Disability, the date on which the Company notifies the Executive of such termination, and (iii)
if the Executive’s employment is terminated by reason of death or Disability, the date of death of
the Executive or the Disability Effective Date, as the case may be.



6. Obligations of the Company upon Termination



(a) Good Reason; Other Than for Cause, Death or Disability



If, during the Employment Period, the Company shall terminate the Executive’s employment other than
for Cause or Disability or the Executive shall terminate employment for Good Reason:



(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date
of Termination an amount equal to the present value, determined in accordance with Section
280G(d)(4) of the Internal Revenue Code of 1986, as amended (the “Code”), of the aggregate of the
following amounts under A, B and C below ; provided however that some or all of such payment shall
be delayed if necessary to comply with Code Section 409A as provided in Section 12..



A. the Executive’s Annual Base Salary through the Date of Termination to the extent not
theretofore paid (“Accrued Obligation”); and



B. (a) if the Date of Termination occurs prior to a Change of Control, the amount equal to the
product of (1) one and (2) the Executive’s highest combined Annual Base Salary and Annual Bonus
during any of the last three full fiscal years prior to the Date of Termination, or (b) if the Date
of Termination occurs after a Change of Control (or the Executive’s Employment Period is extended
to three years under the last paragraph of Section 1(b)), the amount equal to the product of (1)
three (or the number of years, including partial years, until the end of the Employment Period, if
less) and (2) the Executive’s highest combined Annual Base Salary and Annual Bonus during any of
the last three full fiscal years prior to the Date of Termination, plus the product of (x) (i) if a
Change of Control does not occur during the fiscal year which includes the Date of Termination, the
highest Annual Bonus paid to the Executive during the three (3) year period ending on the Date of
Termination or (ii) if a Change of Control does occur during the fiscal year which includes the
Date of Termination, the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has been earned but deferred (and annualized
for any fiscal year consisting of less than twelve full months or during which the Executive was
employed for less than twelve full months), for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred to as the “Highest Annual Bonus”) and
(y) a fraction, the numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365; and



C. an amount equal to the difference between (a) the aggregate benefit under the Company’s
qualified defined benefit retirement plans (collectively, the “Retirement Plan”) and any excess or
supplemental defined benefit retirement plans (including the Benefit Restoration Plan) in which the
Executive participates (collectively, the “SRP”) which the Executive would have accrued (whether or
not vested) if the Executive’s employment had continued for one year (or three years if the Date of
Termination occurs after a Change of Control or the Executive’s Employment Period is extended to
three years under the last paragraph of Section 1(b)) after the Date of Termination, but not after
the date on which the Executive attains age 65, and (b) the actual vested benefit, if any, of the
Executive under the Retirement Plan and the SRP, determined as of the Date of Termination (with the
foregoing amounts to be computed on an actuarial present value basis, based on the assumption that
the Executive’s compensation in the year (or, if applicable, each of the three years) following
such termination would have been that required by Section 4(b)(i) and Section 4(b)(ii), and using
the actuarial assumptions in effect for purposes of computing benefit entitlements under the
Retirement Plan and the SRP at the Date of Termination or, following a Change of Control, using
actuarial assumptions no less favorable to the Executive than the most favorable assumptions which
were in effect for such purposes at any time from the day before the Change of Control through the
Date of Termination;



(ii) for one year (or three years if the Date of Termination occurs after a Change of Control
or the Executive’s Employment Period is extended to three years under the last paragraph of Section
1(b)) after the Executive’s Date of Termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy, subject to compliance with Code Section
409A as provided in Section 12, the Company shall continue benefits to the Executive and/or the
Executive’s family at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if
the Executive’s employment had not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies and their families; provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable period of eligibility, and
for purposes of determining eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, programs, practices and policies, the
Executive shall be considered to have remained employed until one year (or three years if the Date
of Termination occurs after a Change of Control or the Executive’s Employment Period is extended to
three years under the last paragraph of Section 1(b)) after the Date of Termination and to have
retired on the last day of such period;



(iii) if the Date of Termination occurs after a Change of Control or the Executive’s
Employment Period is extended to three years under the last paragraph of Section 1(b), the Company
shall, at its sole expense as incurred (but in no event to exceed $50,000), provide the Executive
with outplacement services the scope and provider of which shall be selected by the Executive in
the Executive’s sole discretion and any payments shall be subject to compliance with Section 12;



(iv) within two and one-half (21/2) months after the Date of Termination, the Executive shall be
entitled to purchase at depreciated book value the automobile (if any) which the Company was
providing for the use of such Executive, and to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or benefits required to be
paid or provided or which the Executive is eligible to receive under any plan, program, practice or
policy or contract or agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”); and



(v) the Executive shall be treated, for purposes of the Company’s Executive Deferred
Compensation Plan, Executive Variable Deferred Compensation Plan, Executive Deferred Retirement
Plan, Executive Variable Deferred Retirement Plan, and any successor or similar plans, as if he had
one more year of service, and attained an age one year older, than his actual years of service and
age as of the Date of Termination; provided, however, that Executive shall be credited with the
number of years of service and attained age (in addition to his actual years of service and
attained age on the Date of Termination) which are required in order to satisfy the eligibility
requirements for “early retirement” benefits and to receive the retirement interest rate under such
plans, if the Date of Termination occurs after a Change of Control or the Executive’s Employment
Period is extended to three years under the last paragraph of Section 1(b).



If the Executive should die while receiving payments pursuant to this Section 6(a), the remaining
payments which would have been made to the Executive if he had lived shall be paid to the
beneficiary designated in writing by the Executive; or if there is no effective written
designation, then to his spouse; or if there is neither an effective written designation nor a
surviving spouse, then to his estate. Designation of a beneficiary or beneficiaries to receive the
balance of any such payments shall be made by written notice to the Company, and the Executive may
revoke or change any such designation of beneficiary at any time by a later written notice to the
Company.



(b) Death



If the Executive’s employment is terminated by reason of the Executive’s death during the
Employment Period, this Agreement shall terminate without further obligations to the Executive’s
legal representatives under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date
of Termination. With respect to the provision of Other Benefits, after a Change of Control the
term “Other Benefits” as utilized in this Section 6(b) shall include, without limitation, and the
Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to
the most favorable benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as were in effect with respect
to other peer executives and their beneficiaries at any time during the 120-day period immediately
preceding the Change of Control or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other
peer executives of the Company and its affiliated companies and their beneficiaries.



(c) Disability



If the Executive’s employment is terminated by reason of the Executive’s Disability during the
Employment Period in accordance with Section 5(a), this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision of Other
Benefits, after a Change of Control the term “Other Benefits” as utilized in this Section 6(c)
shall include, and the Executive shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if any, as were in effect
generally with respect to other peer executives and their families at any time during the 120-day
period immediately preceding the Change of Control or, if more favorable to the Executive and/or
the Executive’s family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.



(d) Cause; Other than for Good Reason



If the Executive’s employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other than the obligation to
pay to the Executive (x) the Annual Base Salary through the Date of Termination, (y) the amount of
any compensation previously deferred by the Executive, and (z) Other Benefits, in each case to the
extent theretofore unpaid. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, or retires at age 65 or thereafter,
this Agreement shall terminate without further obligations to the Executive, other than for Accrued
Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued
obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination.



7. Non-exclusivity of Rights



Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation
in any plan, program, policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any contract or agreement
(other than this Agreement) with the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy, practice or program
or contract or agreement except as explicitly modified by this Agreement.



8. Full Settlement; Offsets



Except as provided in this Section 8, the Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
have against the Executive or others.



Executive shall not be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions of this Agreement.
However, the amount of any payments and benefits provided for in this Agreement shall be reduced by
one hundred percent (100%) of any benefits and earned income (within the meaning of Section
911(d)(2)(A) of the Code) which is earned by the Executive for services rendered to persons or
entities other than the Company or its affiliates during or with respect to the Employment Period
or, after a Change of Control, during the 36-month period after the Date of Termination. Medical
and welfare benefits shall be offset as provided in Section 6(a)(ii).



Not less frequently than annually (by December 31 of each year), the Executive shall account to the
Company with respect to all benefits and earned income earned by the Executive which are required
hereunder to be offset against payments or benefits received by the Executive from the Company. If
the Company has paid amounts in excess of those to which the Executive is entitled (after giving
effect to the offsets provided above), the Executive shall reimburse the Company for such excess by
December 31 of such year. The requirements imposed under this paragraph shall terminate on
December 31 of the calendar year in which the Employment Period ends or, after a Change of Control,
December 31 of the calendar year which includes the third anniversary of the Date of Termination.



9. Certain Additional Payments by the Company



(a) Anything in this Agreement to the contrary notwithstanding, in the event it shall be determined
that any payment or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional payments required under this Section 9)
(a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any
interest or penalties are incurred by the Executive with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Executive shall be entitled to receive an additional payment (a “Gross-Up
Payment”) in an amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without limitation, any
income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.



(b) Subject to the provisions of Section 9(c), all determinations required to be made under this
Section 9, including whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be
made by the certified public accounting firm which serves as the Company’s auditor immediately
prior to the Change of Control (the “Accounting Firm”), which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of the receipt of notice
from the Executive that there has been a Payment, or such earlier time as is requested by the
Company or the Executive. In the event that such Accounting Firm declines to act, the Company
shall appoint another nationally recognized accounting firm (which is acceptable to the Executive)
to make the determinations required hereunder (which accounting firm shall then be referred to as
the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely
by the Company. Any Gross-Up Payment, as determined pursuant to this Section 9, shall be paid by
the Company to the Executive within five days of the receipt of the Accounting Firm’s determination
and, in all events, by the end of the calendar year next following the calendar year in which the
Executive pays the Excise Tax. Any determination by the Accounting Firm shall be binding upon the
Company and the Executive. As a result of the uncertainty in the application of Section 4999 of
the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible
that Gross-Up Payments which will not have been made by the Company should have been made
(“Underpayment”), consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 9(c) and the Executive thereafter is
required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to
or for the benefit of the Executive and in all events, by the end of the calendar year next
following the year in which the Executive pays the Excise Tax..



(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of the Gross-Up Payment. Such
notification shall be given as soon as practicable but no later than fifteen days after the
Executive is informed in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the date on which it gives such notice
to the Company (or such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive shall:



(i) give the Company any information reasonably requested by the Company relating to such
claim,



(ii) take such action in connection with contesting such claim as the Company shall reasonably
request in writing from time to time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the Company,



(iii) cooperate with the Company in good faith in order effectively to contest such claim, and



(iv) permit the Company to participate in any proceedings relating to such claim;



provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall defend,
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result of such representation
and payment of costs and expenses. Without limitation on the foregoing provisions of this Section
9(c), the Company shall control all proceedings taken in connection with such contest and, at its
sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis (subject to compliance with all applicable
laws) and shall defend, indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto) imposed with
respect to such advance or with respect to any imputed income with respect to such advance; and
further provided that any extension of the statute of limitations relating to payment of taxes for
the taxable year of the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company’s control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder, and
the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.



(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to Section
9(c), the Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of Section 9(c)) promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 9(c), a determination is made that the Executive shall not be
entitled to any refund with respect to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior to the expiration of 30 days after
such determination, then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment
required to be paid.



10. Confidential Information



The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or
confidential business information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been obtained by the
Executive during the Executive’s employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After termination of the
Executive’s employment with the Company, the Executive shall not, without the prior written consent
of the Company or as may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those designated by it.
In no event shall an asserted or alleged violation of the provisions of this Section 10 constitute
a basis for deferring or withholding any amounts otherwise payable to the Executive under this
Agreement.



11. Successors



(a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.



(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors
and assigns.



(c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law or otherwise.



12. Compliance with Code Section 409A



(a) All payments of “nonqualified deferred compensation” (within the meaning of Code Section 409A)
are intended to comply with the requirements of Code Section 409A, and shall be interpreted in
accordance therewith. Neither party individually or in combination may accelerate any such
deferred payment, except in compliance with Code Section 409A, and no amount shall be paid prior to
the earliest date on which it is permitted to be paid under Code Section 409A. In the event that
the Executive is determined to be a “key employee” (as defined and determined under Code Section
409A) of Company at a time when its stock is deemed to be publicly traded on an established
securities market, payments determined to be “nonqualified deferred compensation” payable following
termination of employment or Change in Control, to the extent required under Code Section 409A,
shall be made no earlier than the earlier of (i) the last day of the sixth (6th) complete calendar
month following such termination of employment, or (ii) the Executive’s death. Any payment delayed
by reason of the prior sentence shall be paid out in a single lump sum on the first day of
the month following the end of such required delay period in order to catch up to the original
payment schedule. Notwithstanding anything herein to the contrary, no amendment may be made to
this Agreement if it would cause the Agreement or any payment hereunder not to be in compliance
with Code Section 409A.



(b) Unless otherwise expressly provided, any payment of compensation by Company to the
Executive, whether pursuant to this Agreement or otherwise, shall be made within two and one-half
months (21/2 months) after the end of the later of the calendar year or the Company’s fiscal year in
which the Executive’s right to such payment vests (i.e., is not subject to a substantial risk of
forfeiture for purposes of Code Section 409A). Such amounts shall not be subject to the
requirements of subsection (a) above applicable to “nonqualified deferred compensation.”



(c) Section (a) above shall not apply to that portion of any amounts payable upon
termination of employment which shall qualify as “involuntary severance” under Section 409A because
such amount does not exceed the lesser of (1) two hundred percent (200%) of the Executive’s
annualized compensation from the Company for the calendar year immediately preceding the calendar
year during which the Date of Termination occurs, or (2) two hundred percent (200%) of the annual
limitation amount under Section 401(a)(17) of the Code (the maximum amount of compensation that may
be taken into account for purposes of a tax-qualified retirement plan) for the calendar year during
which the Date of Termination occurs.



(d) All benefit plans, programs and policies sponsored by the Company shall comply with all
requirements of Code Section 409A or be structured so as to be exempt from the application of Code
Section 409A. In particular, all taxable expense reimbursement payments and in kind benefits
provided to the Executive shall be structured in compliance with Code Section 409A and
reimbursements shall be paid by the Company to the Executive by no later than the end of the
calendar year following the calendar year in which the Executive incurs such expenses, and the
Executive shall take all actions necessary to claim all such reimbursements on a timely basis to
permit the Company to make all such reimbursement payments prior to the end of said period.



(e) Notwithstanding anything in this Agreement to the contrary, to the extent that any
payment or benefit constitutes non-exempt “nonqualified deferred compensation” for purposes of
Section 409A, and such payment or benefit would otherwise be payable or distributable hereunder by
reason of Employee’s termination of employment, all references to Employee’s termination of
employment shall be construed to mean a “separation from service,” as defined in Treasury
Regulation Section 1.409A-1(h), and Employee shall not be considered to have a termination of
employment unless such termination constitutes a “separation from service” with respect to
Employee.



13. Miscellaneous



(a) This Agreement shall be governed by and construed in accordance with the laws of the State of
California, without reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives subject to compliance with Section 12.



(b) All notices and other communications hereunder shall be in writing and shall be given by hand
delivery to the other party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:



	 	 	 
	
 
	 	If to the Company:
	
 
	 	 
	If to the Executive:




[to the last address provided

by the Executive]

	 	Avery Dennison Corporation

150 North Orange Grove Boulevard

Pasadena, California 91103

Attention: General Counsel






or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.



(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.



(d) The Company may withhold from any amounts payable under this Agreement such Federal, state,
local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.



(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision
hereof or any other provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 5(c)(i)-(iv) of this Agreement, shall not
be deemed to be a waiver of such provision or right or any other provision or right of this
Agreement.



14. Arbitration; Attorneys Fees



(a) The parties agree that any disputes, controversies or claims which arise out of or are related
to this Agreement, Executive’s employment or the termination of his employment, including, but not
limited to, any claim relating to the purported validity, interpretation, enforceability or breach
of this Agreement, and/or any other claim or controversy arising out of the relationship between
the Executive and Company (or the nature of the relationship) or the continuation or termination of
that relationship, including, but not limited to, claims that a termination was for Cause or for
Good Reason, claims for breach of covenant, breach of an implied covenant of good faith and fair
dealing, wrongful termination, breach of contract, or intentional infliction of emotional distress,
defamation, breach of right of privacy, interference with advantageous or contractual relations,
fraud, conspiracy or other tort or property claims of any kind, which are not settled by agreement
between the parties, shall be settled by arbitration in accordance with the then-current Rules of
Practice and Procedure for Employment Arbitration (“Rules”) of the Judicial Arbitration and
Mediation Services, Inc. (“JAMS”).



The arbitration shall be before a single arbitrator selected in accordance with the JAMS Rules or
otherwise by mutual agreement of the parties. The arbitration shall take place in Los Angeles
County, California, unless the parties agree to hold the arbitration at another location.
Depositions and other discovery shall be allowed in accordance with the JAMS Rules. The arbitrator
shall apply the substantive law (and the law of remedies, if applicable) of the State of California
or federal law, or both, as applicable to the claim(s) asserted.



(b) In consideration of the parties’ agreement to submit to arbitration all disputes with regard to
this Agreement and/or with regard to any alleged contract, or any other claim arising out of their
conduct, the relationship existing hereunder or the continuation or termination of that
relationship, and in further consideration of the anticipated expedition and the minimizing of
expense of this arbitration remedy, the arbitration provisions of this Agreement shall provide the
exclusive remedy, and each party expressly waives any right he or it may have to seek redress in
any other forum. The arbitrator, and not any federal, state, or local court or agency, shall have
exclusive authority to resolve any dispute relating to the interpretation, applicability,
enforceability or formation of this Agreement, including but not limited to any claim that all or
any part of this Agreement is void or voidable. The arbitration shall be final and binding upon
the parties.



Either party may bring an action in any court of competent jurisdiction to compel arbitration under
this Agreement and to enforce an arbitration award. Except as otherwise provided in this
Agreement, both the Company and the Executive agree that neither of them shall initiate or
prosecute any lawsuit or administrative action in any way related to any claim covered by this
Agreement.



(c) Any claim which either party has against the other party that could be submitted for resolution
pursuant to this Section must be presented in writing by the claiming party to the other party
within one year of the date the claiming party knew or should have known of the facts giving rise
to the claim, except that claims arising out of or related to the termination of the Executive’s
employment must be presented by him within one year of the Date of Termination. Unless the party
against whom any claim is asserted waives the time limits set forth above, any claim not brought
within the time periods specified shall be waived and forever barred, even if there is a federal or
state statute of limitations which would have given more time to pursue the claim.



(d) The Company shall advance the costs and expenses of the arbitrator. In any arbitration to
enforce any of the provisions or rights under this Agreement, the unsuccessful party in such
arbitration, as determined by the arbitrator, shall pay to the successful party or parties all
costs, expenses and reasonable attorneys’ fees incurred therein by such party or parties (including
without limitation such costs, expenses and fees on any appeals), and if such successful party or
parties shall recover an award in any such arbitration proceeding, such costs, expenses and
attorneys’ fees shall be included as part of such award. Notwithstanding the foregoing provision,
in no event shall the successful party or parties be entitled to recover an amount from the
unsuccessful party for costs, expenses and attorneys’ fees that exceeds the unsuccessful party’s
costs, expenses and attorneys’ fees in connection with the action or proceeding.



(e) Any decision and award or order of the arbitrator shall be final and binding upon the parties
hereto and judgment thereon may be entered in the Superior Court of the State of California or any
other court having jurisdiction.



(f) Each of the above terms and conditions shall have separate validity, and the invalidity of any
part thereof shall not affect the remaining parts.



(g) Any decision and award or order of the arbitrator shall be final and binding between the
parties as to all claims which were or could have been raised in connection with the dispute to the
full extent permitted by law. In all other cases the parties agree that the decision of the
arbitrator shall be a condition precedent to the institution or maintenance of any legal,
equitable, administrative, or other formal proceeding by the employee in connection with the
dispute, and that the decision and opinion of the arbitrator may be presented in any other forum on
the merits of the dispute.



IN WITNESS WHEREOF, the Executive has executed this Agreement and, pursuant to the authorization
from the Compensation and Executive Personnel Committee of the Board of Directors, the Company has
caused this Agreement to be executed, all as of the day and year first above written.



	 	 	 
	AVERY DENNISON CORPORATION

By:      

	 	EXECUTIVE

     






EMPLOYMENT AGREEMENT




This EMPLOYMENT AGREEMENT is entered into by and between Avery Dennison Corporation, a Delaware
corporation (the “Company”) and      (the “Executive”), effective as of      .



The Board of Directors of the Company (the “Board”) has determined that it is in the best interests
of the Company and its shareholders to enter into an Employment Agreement with Executive to assure
that the Company will have the continued dedication of the Executive. The Board further believes
it is imperative to diminish the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control (as defined below) and
to encourage the Executive’s full attention and dedication to the Company currently and in the
event of any threatened or pending Change of Control, and has therefore determined to extend the
term of the employment period upon a Change of Control to provide the Executive with compensation
and benefits arrangements upon a Change of Control which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has caused the Company
to enter into this Employment Agreement.



This Agreement contains the entire agreement between the parties with respect to the matters
specified herein and supersedes all prior oral and written employment agreements, understandings
and commitments between the Company and Executive.



NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:



1. Certain Definitions



(a) The “Effective Date” shall mean the date hereof, which is set forth in the first paragraph of
this Agreement.



(b) The “Employment Period” shall mean the period commencing on the Effective Date and ending on
the first anniversary of the Effective Date; provided, however, that commencing on the first day of
the month next following the Effective Date and on the first day of each month thereafter prior to
a Change of Control (the most recent of such dates is hereinafter referred to as the “Renewal
Date”), the Employment Period shall be automatically extended so as to terminate on the earlier of
the first anniversary of such Renewal Date or (ii) the Executive’s “Normal Retirement Age” as such
concept is defined under the Company sponsored qualified retirement plan, unless the Company or
Executive shall give notice to the other that the Employment Period shall not be further extended
prior to any such Renewal Date. Notwithstanding the foregoing or any of the provisions of this
Agreement to the contrary, if a Change of Control (as defined in Section 2) occurs, the Employment
Period shall be automatically extended so as to terminate on the earlier of three years from the
date on which the Change of Control occurs or the Executive’s Normal Retirement Age.



If the Executive’s employment with the Company is terminated prior to the date on which a Change of
Control occurs, and if it is reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or anticipation of a Change
of Control, then for all purposes of this Agreement the “Employment Period” for such Executive
shall be the earlier of three years from the date of such termination of employment or the
Executive’s Normal Retirement Age.



2 Change of Control



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, within the
meaning of Code Section 409A, and shall include any of the following events as such concepts are
interpreted under Code Section 409A:



(i) 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



(ii) 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:



A. 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;



B. ownership of stock of the Company possessing 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



C. 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 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 Section 409A shall not constitute a Change
of Control.



3. Employment Period



The Company hereby agrees to continue the Executive in its employ, and the Executive hereby agrees
to remain in the employ of the Company subject to the terms and conditions of this Agreement, for
the period commencing on the “Effective Date” and continuing during the “Employment Period,” as
defined in Sections 1(a) and (b) above.



4. Terms of Employment



(a) Position and Duties



(i) During the Employment Period, the Executive’s position (including titles), authority,
duties and responsibilities shall be at least commensurate with the most significant of those held,
exercised and assigned to the Executive at any time during the 120-day period immediately preceding
the Effective Date.



(ii) During the Employment Period, and excluding any periods of vacation and sick leave to
which the Executive is entitled, the Executive agrees to devote reasonable attention and time
during normal business hours to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the Executive hereunder, to use the
Executive’s reasonable best efforts to perform faithfully and efficiently such responsibilities.
During the Employment Period it shall not be a violation of this Agreement for the Executive to (A)
serve on corporate, civic or charitable boards or committees, (B) deliver lectures, fulfill
speaking engagements or teach at educational institutions and (C) manage personal investments, so
long as such activities do not interfere with the performance of the Executive’s responsibilities
as an employee of the Company in accordance with this Agreement. It is expressly understood and
agreed that to the extent that any such activities have been conducted by the Executive prior to
the Effective Date, the continued conduct of such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive’s responsibilities to the Company.



(b) Compensation




(i) Base Salary



During the Employment Period, the Executive shall receive an annual base salary (“Annual Base
Salary”) which shall be paid at a monthly rate at least equal to twelve times the highest monthly
base salary paid or payable, including any base salary which has been earned but deferred, to the
Executive by the Company and its affiliated companies in respect of the twelve-month period
immediately preceding the month in which the Effective Date occurs. During the Employment Period,
the Annual Base Salary shall be reviewed no more than 12 months after the last salary increase
awarded to the Executive prior to the Effective Date and thereafter at least annually. Any
increase in Annual Base Salary shall not serve to limit or reduce any other obligation to the
Executive under this Agreement. Annual Base Salary shall not be reduced after any such increase,
and the term “Annual Base Salary” as utilized in this Agreement shall refer to Annual Base Salary
as so increased; provided, however, that Executive’s Annual Base Salary may be reduced prior to a
Change of Control as part of any general, across the board salary reduction which applies in a
comparable manner to other officers or senior executives of the Company, but not by more than ten
percent (10%) (unless Executive agrees to accept a larger reduction) during any calendar year. As
used in this Agreement, the term “affiliated companies” shall include any company controlled by,
controlling or under common control with the Company.




(ii) Annual Bonus



In addition to Annual Base Salary, the Executive shall be eligible to receive, for each fiscal year
ending during the Employment Period, an annual bonus (the “Annual Bonus”) under the Company’s
Executive Leadership Compensation Plan or Senior Executive Incentive (Leadership) Compensation
Plan, or any comparable bonus under any successor plan (such plans, collectively, the “Annual Bonus
Plans”), including any Annual Bonus which has been earned but deferred. After a Change of Control,
the Executive shall be awarded for each fiscal year ending during the Employment Period an Annual
Bonus in cash at least equal to the Executive’s average Annual Bonus for the last three full fiscal
years prior to the Change of Control (annualized in the event that the Executive was not employed
by the Company for the whole of such fiscal year) (the “Recent Annual Bonus”). Each such Annual
Bonus shall be paid no later than twp and one-half (21/2) months after the end of the fiscal year
next following the fiscal year for which the Annual Bonus is awarded, unless the Executive shall
make a timely election to defer the receipt of such Annual Bonus pursuant to a Company sponsored
deferred compensation plan.




(iii) Incentive, Savings and Retirement Plans



During the Employment Period, the Executive shall be entitled to participate in all incentive,
savings, retirement, deferral (including the plans described in Section 6(a)(v) below), and
nonqualified supplemental pension (including the Benefit Restoration Plan) plans, practices,
policies and programs applicable generally to other peer executives of the Company and its
affiliated companies. In no event shall such plans, practices, policies and programs provide the
Executive after a Change of Control with incentive opportunities (measured with respect to both
regular and special incentive opportunities, to the extent, if any, that such distinction is
applicable), savings opportunities and retirement benefit opportunities, in each case, which are
less favorable, in the aggregate, than the most favorable of those provided by the Company and its
affiliated companies for the Executive under such plans, practices, policies and programs as in
effect at any time during the 120-day period immediately preceding the Change of Control or, if
more favorable to the Executive, those provided generally at any time after the Change of Control
to other peer executives of the Company and its affiliated companies.




(iv) Welfare Benefit Plans



During the Employment Period, the Executive and/or the Executive’s family, as the case may be,
shall be eligible for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated companies (including,
without limitation, medical, prescription, dental, disability, salary continuance, employee life,
group life, accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its affiliated companies. In no
event shall such plans, practices, policies and programs provide the Executive after a Change of
Control with benefits which are less favorable, in the aggregate, than the most favorable of such
plans, practices, policies and programs in effect for the Executive at any time during the 120-day
period immediately preceding the Change of Control or, if more favorable to the Executive, those
provided generally at any time after the Change of Control to other peer executives of the Company
and its affiliated companies.




(v) Expenses



During the Employment Period, the Executive shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Executive in accordance with the policies, practices and
procedures of the Company and its affiliated companies in effect for the Executive from time to
time. After a Change of Control, such reimbursement shall be made in accordance with the most
favorable policies, practices and procedures of the Company and its affiliated companies in effect
for the Executive at any time during the 120-day period immediately preceding the Change of Control
or, if more favorable to the Executive, as in effect generally at any time thereafter with respect
to other peer executives of the Company and its affiliated companies.




(vi) Fringe Benefits



During the Employment Period, the Executive shall be entitled to fringe benefits, including,
without limitation, if applicable, tax and financial planning services, payment of club dues, and
automobile lease and payment of related expenses, in accordance with the plans, practices, programs
and policies of the Company and its affiliated companies in effect for the Executive from time to
time. After a Change of Control, such fringe benefits shall be provided in accordance with the
most favorable plans, practices, programs and policies of the Company and its affiliated companies
in effect for the Executive at any time during the 120-day period immediately preceding the Change
of Control or, if more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated companies.




(vii) Office and Support Staff



During the Employment Period, the Executive shall be entitled to an office and support staff in
accordance with the practices and policies of the Company and its affiliated companies in effect
for the Executive from time to time. After a Change of Control, the Executive shall be entitled to
an office or offices of a size and with furnishings and other appointments, and to exclusive
personal secretarial and other assistance, at least equal to the most favorable of the foregoing
provided to the Executive by the Company and its affiliated companies at any time during the
120-day period immediately preceding the Change of Control or, if more favorable to the Executive,
as provided generally at any time thereafter with respect to other peer executives of the Company
and its affiliated companies.




(viii) Vacation



During the Employment Period, the Executive shall be entitled to paid vacation in accordance with
the plans, policies, programs and practices of the Company and its affiliated companies in effect
for the Executive from time to time. After a Change of Control, the Executive shall be entitled to
vacation in accordance with the most favorable plans, policies, programs and practices of the
Company and its affiliated companies as in effect for the Executive at any time during the 120-day
period immediately preceding the Change or Control or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies.



5. Termination of Employment



(a) Death or Disability



The Executive’s employment shall terminate automatically upon the Executive’s death during the
Employment Period. If the Company determines in good faith that the Disability of the Executive
has occurred during the Employment Period (pursuant to the definition of Disability set forth
below), it may give to the Executive written notice in accordance with Section 12(b) of this
Agreement of its intention to terminate the Executive’s employment. In such event, the Executive’s
employment with the Company shall terminate effective on the 30th day after receipt of such notice
by the Executive (the “Disability Effective Date”), provided that, within the 30 days after such
receipt, the Executive shall not have returned to full-time performance of the Executive’s duties
with or without reasonable accommodation. For purposes of this Agreement, “Disability” shall mean
the absence of the Executive from the Executive’s duties with the Company on a full-time basis for
a period of (i) ninety (90) consecutive calendar days or (ii) an aggregate of one hundred fifty
(150) calendar days in any fiscal year of the Company as a result of incapacity due to mental or
physical illness which is determined to be total and permanent by a physician selected by the
Company or its insurers and acceptable to the Executive or the Executive’s legal representative
(subject to compliance with all applicable laws).



(b) Cause



The Company may terminate the Executive’s employment during the Employment Period for Cause. For
purposes of this Agreement, “Cause” shall mean:



(i) the willful and continued failure of the Executive to perform substantially the
Executive’s duties with the Company or one of its affiliates (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for substantial
performance is delivered to the Executive by the Board or the Chief Executive Officer of the
Company which specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive’s duties, or



(ii) the willful engaging by the Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company.



For purposes of this provision, no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or
without reasonable belief that the Executive’s action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of
the Company or based upon the advice of counsel for the Company shall be conclusively presumed to
be done, or omitted to be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless
and until there shall have been delivered to the Executive a notice that the Executive is guilty of
the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in
detail.



(c) Good Reason



The Executive’s employment may be terminated by the Executive during the Employment Period for Good
Reason. For purposes of this Agreement, “Good Reason” shall mean a “separation from service for
good reason” as set forth in Code Section 409A, which shall mean that, without the express written
consent of the Executive, one or more of the following shall have occurred without being timely
remedied in the manner set forth below:



(i) A material diminution in the Executive’s base compensation (except as provided for
herein).



(ii) A material diminution in the Executive’s authority, duties, or responsibilities.



(iii) A material diminution in the authority, duties, or responsibilities of the supervisor to
whom the Executive is required to report.



(iv) A material change in the geographic location at which the Executive must perform the
services.



(v) Any other action or inaction that constitutes a material breach by the Company of the
agreement under which the Executive provides services.



The Executive shall have “Good Reason” in connection with any or all of the above solely if (A) the
Executive provides notice to the Company of the existence of the particular condition, action or
inaction which the Executive considers to give the Executive “Good Reason” within ninety (90) days
of the initial existence of the condition, or the action or inaction, and (B) the Company shall not
have remedied the condition, action or inaction within thirty (30) days of its receipt of the
Executive’s notice. The effective date of any termination for “Good Reason” shall be no later than
twelve (12) months after the initial existence of such condition, action or inaction constituting
“Good Reason.”



(d) Notice of Termination



Any termination during the Employment Period by the Company for Cause, or by the Executive for Good
Reason, shall be communicated by Notice of Termination to the other party hereto given in
accordance with Section 12(b) of this Agreement. For purposes of this Agreement, a “Notice of
Termination” means a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the Executive’s employment under the
provision so indicated, and (iii) if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date (which date shall be not more than
thirty days after the giving of such notice). The failure by the Executive or the Company to set
forth in the Notice of Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company, respectively, hereunder
or preclude the Executive or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive’s or the Company’s rights hereunder.



(e) Date of Termination



“Date of Termination” means “termination of service” as such term is defined under Code Section
409A and shall be (i) if the Executive’s employment is terminated by the Company for Cause, or by
the Executive for Good Reason, the effective date of termination specified in the Notice of
Termination, (ii) if the Executive’s employment is terminated by the Company other than for Cause
or Disability, the date on which the Company notifies the Executive of such termination, and (iii)
if the Executive’s employment is terminated by reason of death or Disability, the date of death of
the Executive or the Disability Effective Date, as the case may be.



6. Obligations of the Company upon Termination



(a) Good Reason; Other Than for Cause, Death or Disability



If, during the Employment Period, the Company shall terminate the Executive’s employment other than
for Cause or Disability or the Executive shall terminate employment for Good Reason:



(i) the Company shall pay to the Executive in a lump sum in cash within 30 days after the Date
of Termination an amount equal to the present value, determined in accordance with Section
280G(d)(4) of the Internal Revenue Code of 1986, as amended (the “Code”), of the aggregate of the
following amounts under A, B and C below ; provided however that some or all of such payment shall
be delayed if necessary to comply with Code Section 409A as provided in Section 12..



A. the Executive’s Annual Base Salary through the Date of Termination to the extent not
theretofore paid (“Accrued Obligation”); and



B. (a) if the Date of Termination occurs prior to a Change of Control, the amount equal to the
product of (1) one and (2) the Executive’s highest combined Annual Base Salary and Annual Bonus
during any of the last three full fiscal years prior to the Date of Termination, or (b) if the Date
of Termination occurs after a Change of Control (or the Executive’s Employment Period is extended
to three years under the last paragraph of Section 1(b)), the amount equal to the product of (1)
three (or the number of years, including partial years, until the end of the Employment Period, if
less) and (2) the Executive’s highest combined Annual Base Salary and Annual Bonus during any of
the last three full fiscal years prior to the Date of Termination, plus the product of (x) (i) if a
Change of Control does not occur during the fiscal year which includes the Date of Termination, the
highest Annual Bonus paid to the Executive during the three (3) year period ending on the Date of
Termination or (ii) if a Change of Control does occur during the fiscal year which includes the
Date of Termination, the higher of (I) the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has been earned but deferred (and annualized
for any fiscal year consisting of less than twelve full months or during which the Executive was
employed for less than twelve full months), for the most recently completed fiscal year during the
Employment Period, if any (such higher amount being referred to as the “Highest Annual Bonus”) and
(y) a fraction, the numerator of which is the number of days in the current fiscal year through the
Date of Termination, and the denominator of which is 365; and



C. an amount equal to the difference between (a) the aggregate benefit under the Company’s
qualified defined benefit retirement plans (collectively, the “Retirement Plan”) and any excess or
supplemental defined benefit retirement plans (including the Benefit Restoration Plan) in which the
Executive participates (collectively, the “SRP”) which the Executive would have accrued (whether or
not vested) if the Executive’s employment had continued for one year (or three years if the Date of
Termination occurs after a Change of Control or the Executive’s Employment Period is extended to
three years under the last paragraph of Section 1(b)) after the Date of Termination, but not after
the date on which the Executive attains age 65, and (b) the actual vested benefit, if any, of the
Executive under the Retirement Plan and the SRP, determined as of the Date of Termination (with the
foregoing amounts to be computed on an actuarial present value basis, based on the assumption that
the Executive’s compensation in the year (or, if applicable, each of the three years) following
such termination would have been that required by Section 4(b)(i) and Section 4(b)(ii), and using
the actuarial assumptions in effect for purposes of computing benefit entitlements under the
Retirement Plan and the SRP at the Date of Termination or, following a Change of Control, using
actuarial assumptions no less favorable to the Executive than the most favorable assumptions which
were in effect for such purposes at any time from the day before the Change of Control through the
Date of Termination;



(ii) for one year (or three years if the Date of Termination occurs after a Change of Control
or the Executive’s Employment Period is extended to three years under the last paragraph of Section
1(b)) after the Executive’s Date of Termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy, subject to compliance with Code Section
409A as provided in Section 12, the Company shall continue benefits to the Executive and/or the
Executive’s family at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 4(b)(iv) of this Agreement if
the Executive’s employment had not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of the Company and
its affiliated companies and their families; provided, however, that if the Executive becomes
reemployed with another employer and is eligible to receive medical or other welfare benefits under
another employer-provided plan, the medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such applicable period of eligibility, and
for purposes of determining eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, programs, practices and policies, the
Executive shall be considered to have remained employed until one year (or three years if the Date
of Termination occurs after a Change of Control or the Executive’s Employment Period is extended to
three years under the last paragraph of Section 1(b)) after the Date of Termination and to have
retired on the last day of such period;



(iii) if the Date of Termination occurs after a Change of Control or the Executive’s
Employment Period is extended to three years under the last paragraph of Section 1(b), the Company
shall, at its sole expense as incurred (but in no event to exceed $50,000), provide the Executive
with outplacement services the scope and provider of which shall be selected by the Executive in
the Executive’s sole discretion and any payments shall be subject to compliance with Section 12;



(iv) within two and one-half (21/2) months after the Date of Termination, the Executive shall be
entitled to purchase at depreciated book value the automobile (if any) which the Company was
providing for the use of such Executive, and to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or benefits required to be
paid or provided or which the Executive is eligible to receive under any plan, program, practice or
policy or contract or agreement of the Company and its affiliated companies (such other amounts and
benefits shall be hereinafter referred to as the “Other Benefits”); and



(v) the Executive shall be treated, for purposes of the Company’s Executive Deferred
Compensation Plan, Executive Variable Deferred Compensation Plan, Executive Deferred Retirement
Plan, Executive Variable Deferred Retirement Plan, and any successor or similar plans, as if he had
one more year of service, and attained an age one year older, than his actual years of service and
age as of the Date of Termination; provided, however, that Executive shall be credited with the
number of years of service and attained age (in addition to his actual years of service and
attained age on the Date of Termination) which are required in order to satisfy the eligibility
requirements for “early retirement” benefits and to receive the retirement interest rate under such
plans, if the Date of Termination occurs after a Change of Control or the Executive’s Employment
Period is extended to three years under the last paragraph of Section 1(b).



If the Executive should die while receiving payments pursuant to this Section 6(a), the remaining
payments which would have been made to the Executive if he had lived shall be paid to the
beneficiary designated in writing by the Executive; or if there is no effective written
designation, then to his spouse; or if there is neither an effective written designation nor a
surviving spouse, then to his estate. Designation of a beneficiary or beneficiaries to receive the
balance of any such payments shall be made by written notice to the Company, and the Executive may
revoke or change any such designation of beneficiary at any time by a later written notice to the
Company.



(b) Death



If the Executive’s employment is terminated by reason of the Executive’s death during the
Employment Period, this Agreement shall terminate without further obligations to the Executive’s
legal representatives under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid to the
Executive’s estate or beneficiary, as applicable, in a lump sum in cash within 30 days of the Date
of Termination. With respect to the provision of Other Benefits, after a Change of Control the
term “Other Benefits” as utilized in this Section 6(b) shall include, without limitation, and the
Executive’s estate and/or beneficiaries shall be entitled to receive, benefits at least equal to
the most favorable benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies under such plans,
programs, practices and policies relating to death benefits, if any, as were in effect with respect
to other peer executives and their beneficiaries at any time during the 120-day period immediately
preceding the Change of Control or, if more favorable to the Executive’s estate and/or the
Executive’s beneficiaries, as in effect on the date of the Executive’s death with respect to other
peer executives of the Company and its affiliated companies and their beneficiaries.



(c) Disability



If the Executive’s employment is terminated by reason of the Executive’s Disability during the
Employment Period in accordance with Section 5(a), this Agreement shall terminate without further
obligations to the Executive, other than for payment of Accrued Obligations and the timely payment
or provision of Other Benefits. Accrued Obligations shall be paid to the Executive in a lump sum
in cash within 30 days of the Date of Termination. With respect to the provision of Other
Benefits, after a Change of Control the term “Other Benefits” as utilized in this Section 6(c)
shall include, and the Executive shall be entitled after the Disability Effective Date to receive,
disability and other benefits at least equal to the most favorable of those generally provided by
the Company and its affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if any, as were in effect
generally with respect to other peer executives and their families at any time during the 120-day
period immediately preceding the Change of Control or, if more favorable to the Executive and/or
the Executive’s family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families.



(d) Cause; Other than for Good Reason



If the Executive’s employment shall be terminated for Cause during the Employment Period, this
Agreement shall terminate without further obligations to the Executive other than the obligation to
pay to the Executive (x) the Annual Base Salary through the Date of Termination, (y) the amount of
any compensation previously deferred by the Executive, and (z) Other Benefits, in each case to the
extent theretofore unpaid. If the Executive voluntarily terminates employment during the
Employment Period, excluding a termination for Good Reason, or retires at age 65 or thereafter,
this Agreement shall terminate without further obligations to the Executive, other than for Accrued
Obligations and the timely payment or provision of Other Benefits. In such case, all Accrued
obligations shall be paid to the Executive in a lump sum in cash within 30 days of the Date of
Termination.



7. Non-exclusivity of Rights



Nothing in this Agreement shall prevent or limit the Executive’s continuing or future participation
in any plan, program, policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor shall anything herein limit or otherwise affect such
rights as the Executive may have under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any contract or agreement
(other than this Agreement) with the Company or any of its affiliated companies at or subsequent to
the Date of Termination shall be payable in accordance with such plan, policy, practice or program
or contract or agreement except as explicitly modified by this Agreement.



8. Full Settlement; Offsets



Except as provided in this Section 8, the Company’s obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which the Company may
have against the Executive or others.



Executive shall not be obligated to seek other employment or take any other action by way of
mitigation of the amounts payable to the Executive under any of the provisions of this Agreement.
However, the amount of any payments and benefits provided for in this Agreement shall be reduced by
one hundred percent (100%) of any benefits and earned income (within the meaning of Section
911(d)(2)(A) of the Code) which is earned by the Executive for services rendered to persons or
entities other than the Company or its affiliates during or with respect to the Employment Period
or, after a Change of Control, during the 36-month period after the Date of Termination. Medical
and welfare benefits shall be offset as provided in Section 6(a)(ii).



Not less frequently than annually (by December 31 of each year), the Executive shall account to the
Company with respect to all benefits and earned income earned by the Executive which are required
hereunder to be offset against payments or benefits received by the Executive from the Company. If
the Company has paid amounts in excess of those to which the Executive is entitled (after giving
effect to the offsets provided above), the Executive shall reimburse the Company for such excess by
December 31 of such year. The requirements imposed under this paragraph shall terminate on
December 31 of the calendar year in which the Employment Period ends or, after a Change of Control,
December 31 of the calendar year which includes the third anniversary of the Date of Termination.



9. Confidential Information



The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or
confidential business information, knowledge or data relating to the Company or any of its
affiliated companies, and their respective businesses, which shall have been obtained by the
Executive during the Executive’s employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the Executive or
representatives of the Executive in violation of this Agreement). After termination of the
Executive’s employment with the Company, the Executive shall not, without the prior written consent
of the Company or as may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those designated by it.
In no event shall an asserted or alleged violation of the provisions of this Section 10 constitute
a basis for deferring or withholding any amounts otherwise payable to the Executive under this
Agreement.



10. Successors



(a) This Agreement is personal to the Executive and without the prior written consent of the
Company shall not be assignable by the Executive otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.



(b) This Agreement shall inure to the benefit of and be binding upon the Company and its successors
and assigns.



(c) The Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession had taken place. As
used in this Agreement, “Company” shall mean the Company as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law or otherwise.



11. Compliance with Code Section 409A



(a) All payments of “nonqualified deferred compensation” (within the meaning of Code Section 409A)
are intended to comply with the requirements of Code Section 409A, and shall be interpreted in
accordance therewith. Neither party individually or in combination may accelerate any such
deferred payment, except in compliance with Code Section 409A, and no amount shall be paid prior to
the earliest date on which it is permitted to be paid under Code Section 409A. In the event that
the Executive is determined to be a “key employee” (as defined and determined under Code Section
409A) of Company at a time when its stock is deemed to be publicly traded on an established
securities market, payments determined to be “nonqualified deferred compensation” payable following
termination of employment or Change in Control, to the extent required under Code Section 409A,
shall be made no earlier than the earlier of (i) the last day of the sixth (6th) complete calendar
month following such termination of employment, or (ii) the Executive’s death. Any payment delayed
by reason of the prior sentence shall be paid out in a single lump sum on the first day of
the month following the end of such required delay period in order to catch up to the original
payment schedule. Notwithstanding anything herein to the contrary, no amendment may be made to
this Agreement if it would cause the Agreement or any payment hereunder not to be in compliance
with Code Section 409A.



(b) Unless otherwise expressly provided, any payment of compensation by Company to the Executive,
whether pursuant to this Agreement or otherwise, shall be made within two and one-half months (21/2
months) after the end of the later of the calendar year or the Company’s fiscal year in which the
Executive’s right to such payment vests (i.e., is not subject to a substantial risk of forfeiture
for purposes of Code Section 409A). Such amounts shall not be subject to the requirements of
subsection (a) above applicable to “nonqualified deferred compensation.”



(c) Section (a) above shall not apply to that portion of any amounts payable upon termination of
employment which shall qualify as “involuntary severance” under Section 409A because such amount
does not exceed the lesser of (1) two hundred percent (200%) of the Executive’s annualized
compensation from the Company for the calendar year immediately preceding the calendar year during
which the Date of Termination occurs, or (2) two hundred percent (200%) of the annual limitation
amount under Section 401(a)(17) of the Code (the maximum amount of compensation that may be taken
into account for purposes of a tax-qualified retirement plan) for the calendar year during which
the Date of Termination occurs.



(d) All benefit plans, programs and policies sponsored by the Company shall comply with all
requirements of Code Section 409A or be structured so as to be exempt from the application of Code
Section 409A. In particular, all taxable expense reimbursement payments and in kind benefits
provided to the Executive shall be structured in compliance with Code Section 409A and
reimbursements shall be paid by the Company to the Executive by no later than the end of the
calendar year following the calendar year in which the Executive incurs such expenses, and the
Executive shall take all actions necessary to claim all such reimbursements on a timely basis to
permit the Company to make all such reimbursement payments prior to the end of said period.



(e) Notwithstanding anything in this Agreement to the contrary, to the extent that any
payment or benefit constitutes non-exempt “nonqualified deferred compensation” for purposes of
Section 409A, and such payment or benefit would otherwise be payable or distributable hereunder by
reason of Employee’s termination of employment, all references to Employee’s termination of
employment shall be construed to mean a “separation from service,” as defined in Treasury
Regulation Section 1.409A-1(h), and Employee shall not be considered to have a termination of
employment unless such termination constitutes a “separation from service” with respect to
Employee.



12. Miscellaneous



(a) This Agreement shall be governed by and construed in accordance with the laws of the State of
California, without reference to principles of conflict of laws. The captions of this Agreement
are not part of the provisions hereof and shall have no force or effect. This Agreement may not be
amended or modified otherwise than by a written agreement executed by the parties hereto or their
respective successors and legal representatives subject to compliance with Section 12.



(b) All notices and other communications hereunder shall be in writing and shall be given by hand
delivery to the other party or by registered or certified mail, return receipt requested, postage
prepaid, addressed as follows:



	 	 	 
	
 
	 	If to the Company:
	
 
	 	 
	If to the Executive:




[to the last address provided

by the Executive]

	 	Avery Dennison Corporation

150 North Orange Grove Boulevard

Pasadena, California 91103

Attention: General Counsel






or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.



(c) The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement.



(d) The Company may withhold from any amounts payable under this Agreement such Federal, state,
local or foreign taxes as shall be required to be withheld pursuant to any applicable law or
regulation.



(e) The Executive’s or the Company’s failure to insist upon strict compliance with any provision
hereof or any other provision of this Agreement or the failure to assert any right the Executive or
the Company may have hereunder, including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section 5(c)(i)-(iv) of this Agreement, shall not
be deemed to be a waiver of such provision or right or any other provision or right of this
Agreement.



13. Arbitration; Attorneys Fees



(a) The parties agree that any disputes, controversies or claims which arise out of or are related
to this Agreement, Executive’s employment or the termination of his employment, including, but not
limited to, any claim relating to the purported validity, interpretation, enforceability or breach
of this Agreement, and/or any other claim or controversy arising out of the relationship between
the Executive and Company (or the nature of the relationship) or the continuation or termination of
that relationship, including, but not limited to, claims that a termination was for Cause or for
Good Reason, claims for breach of covenant, breach of an implied covenant of good faith and fair
dealing, wrongful termination, breach of contract, or intentional infliction of emotional distress,
defamation, breach of right of privacy, interference with advantageous or contractual relations,
fraud, conspiracy or other tort or property claims of any kind, which are not settled by agreement
between the parties, shall be settled by arbitration in accordance with the then-current Rules of
Practice and Procedure for Employment Arbitration (“Rules”) of the Judicial Arbitration and
Mediation Services, Inc. (“JAMS”).



The arbitration shall be before a single arbitrator selected in accordance with the JAMS Rules or
otherwise by mutual agreement of the parties. The arbitration shall take place in Los Angeles
County, California, unless the parties agree to hold the arbitration at another location.
Depositions and other discovery shall be allowed in accordance with the JAMS Rules. The arbitrator
shall apply the substantive law (and the law of remedies, if applicable) of the State of California
or federal law, or both, as applicable to the claim(s) asserted.



(b) In consideration of the parties’ agreement to submit to arbitration all disputes with regard to
this Agreement and/or with regard to any alleged contract, or any other claim arising out of their
conduct, the relationship existing hereunder or the continuation or termination of that
relationship, and in further consideration of the anticipated expedition and the minimizing of
expense of this arbitration remedy, the arbitration provisions of this Agreement shall provide the
exclusive remedy, and each party expressly waives any right he or it may have to seek redress in
any other forum. The arbitrator, and not any federal, state, or local court or agency, shall have
exclusive authority to resolve any dispute relating to the interpretation, applicability,
enforceability or formation of this Agreement, including but not limited to any claim that all or
any part of this Agreement is void or voidable. The arbitration shall be final and binding upon
the parties.



Either party may bring an action in any court of competent jurisdiction to compel arbitration under
this Agreement and to enforce an arbitration award. Except as otherwise provided in this
Agreement, both the Company and the Executive agree that neither of them shall initiate or
prosecute any lawsuit or administrative action in any way related to any claim covered by this
Agreement.



(c) Any claim which either party has against the other party that could be submitted for resolution
pursuant to this Section must be presented in writing by the claiming party to the other party
within one year of the date the claiming party knew or should have known of the facts giving rise
to the claim, except that claims arising out of or related to the termination of the Executive’s
employment must be presented by him within one year of the Date of Termination. Unless the party
against whom any claim is asserted waives the time limits set forth above, any claim not brought
within the time periods specified shall be waived and forever barred, even if there is a federal or
state statute of limitations which would have given more time to pursue the claim.



(d) The Company shall advance the costs and expenses of the arbitrator. In any arbitration to
enforce any of the provisions or rights under this Agreement, the unsuccessful party in such
arbitration, as determined by the arbitrator, shall pay to the successful party or parties all
costs, expenses and reasonable attorneys’ fees incurred therein by such party or parties (including
without limitation such costs, expenses and fees on any appeals), and if such successful party or
parties shall recover an award in any such arbitration proceeding, such costs, expenses and
attorneys’ fees shall be included as part of such award. Notwithstanding the foregoing provision,
in no event shall the successful party or parties be entitled to recover an amount from the
unsuccessful party for costs, expenses and attorneys’ fees that exceeds the unsuccessful party’s
costs, expenses and attorneys’ fees in connection with the action or proceeding.



(e) Any decision and award or order of the arbitrator shall be final and binding upon the parties
hereto and judgment thereon may be entered in the Superior Court of the State of California or any
other court having jurisdiction.



(f) Each of the above terms and conditions shall have separate validity, and the invalidity of any
part thereof shall not affect the remaining parts.



(g) Any decision and award or order of the arbitrator shall be final and binding between the
parties as to all claims which were or could have been raised in connection with the dispute to the
full extent permitted by law. In all other cases the parties agree that the decision of the
arbitrator shall be a condition precedent to the institution or maintenance of any legal,
equitable, administrative, or other formal proceeding by the employee in connection with the
dispute, and that the decision and opinion of the arbitrator may be presented in any other forum on
the merits of the dispute.



IN WITNESS WHEREOF, the Executive has executed this Agreement and, pursuant to the authorization
from the Compensation and Executive Personnel Committee of the Board of Directors, the Company has
caused this Agreement to be executed, all as of the day and year first above written.



	 	 	 
	AVERY DENNISON CORPORATION

By:      

	 	EXECUTIVE