Document:

EXHIBIT 10.31.2

                               AMENDMENT No. 1 to

                   EXECUTIVE VARIABLE DEFERRED RETIREMENT PLAN

The Executive Variable Deferred Retirement Plan (the "Plan"), amended and
restated as of December 1, 1997, is hereby amended effective December 1. 1999,
as follows:

1.   Article 2 Definitions and Certain Provisions

     a.   The definition of "Normal Retirement" is amended to read:

          Normal Retirement. "Normal Retirement" means the termination of a
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          Participant's employment with Employer for reasons other than death on
          or after the Participant attains age 62.

     b.   The definition of "Second Beneficiary" is deleted in its entirety.

2.   Section 7.7(c) "Second Beneficiary" is deleted in its entirety.

3.   All other terms and conditions of the Plan remain in full force and effect.EXHIBIT 10.34

                              AMENDED AND RESTATED
                            CAPITAL ACCUMULATION PLAN

ARTICLE 1:  Purpose

The purpose of the Avery Dennison Corporation Capital Accumulation Plan is to
provide a means whereby Avery Dennison Corporation, a Delaware corporation, may
provide a tax-favored capital accumulation and diversification opportunity to
non-employee Directors and to a select group of key management employees of the
Company and its subsidiaries who have rendered valuable services to the Company
or its subsidiaries which constitute an important contribution towards the
Company's continued growth and success.

ARTICLE 2:  Definitions

2.1. "Administrator" shall mean the administrator appointed by the Committee to
handle the day-to-day administration of the Plan pursuant to Article 8.

2.2. "Account" or "Accounts" shall mean a Participant's Deferral Accounts, or
either of them, as appropriate.

2.3. "Allocation Election Form" shall mean the form on which a Participant
elects the Declared Rate(s) to be credited as earnings or losses to such
Participant's Diversified Account.

2.4. "Base Salary" shall mean an Eligible Employee's rate of salary in effect on
May 1, 1997 or any other subsequent date as determined by the Administrator in
his discretion.

2.5. "Beneficiary" shall mean the person or entity designated as such by a
Participant pursuant to Article 7.

2.6. "Benefit" shall mean a Retirement Benefit, Survivor Benefit or a
Termination Benefit, as appropriate.

2.7. "Bonus" shall mean an Eligible Employee's bonus opportunity target in
effect on May 1, 1997 or any subsequent year as determined by the Administrator
in his discretion.

2.8. "Code" shall mean the Internal Revenue Code of 1986, as amended.

2.9. "Committee" shall mean the Capital Accumulation Plan Committee appointed to
administer the Plan pursuant to Article 8.

2.10. "Company" shall mean Avery Dennison Corporation, a Delaware Corporation,
and any of its subsidiary companies, its successors and assigns.

2.11. "Declared Rate" shall mean the notional rates of return (which may be
positive or negative) of the individual investment options selected by a
Participant or a Participant's Beneficiary for such Participant's Diversified
Account as set forth in Article 5.4.

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2.12. "Deferral" or "Deferrals" shall mean, as appropriate, the amount of
individual or aggregate Stock Option Gains that a Participant defers under the
Plan.

2.13. "Deferral Accounts" shall mean the accounts established for a Participant
pursuant to Article 3, consisting of a Diversified Account and/or a Stock
Account for Eligible Employees and for Directors. Deferral Accounts shall be
maintained solely as bookkeeping entries by the Company to evidence unfunded
obligations of the Company.

2.14. "Deferral Election Form" shall mean the form on which a Participant
designates (i) the specified Options which, when exercised, shall result in the
ensuing Stock Option Gains thereon deferred under the Plan, and (ii) initial
elections with respect to the forms of distribution elections for Retirement
Benefits under the Plan.

2.15. "Deferral Period" shall mean the period during which Deferrals must be
completed. The initial Deferral Period shall be May 1, 1997, through December
31, 2005. The Committee, in its sole discretion, may determine future Deferral
Periods, if any.

2.16. "Director" shall mean a member of the Board of Directors of the Company
who is not an Employee.

2.17. "Disability" shall mean any inability on the part of an Eligible Employee,
commencing before such Eligible Employee attaining the age of 64 1/2, to perform
the substantial and material duties of the Employee's position due to injury or
sickness of a duration greater than one hundred eighty (180) consecutive days,
as such Disability is determined by the Administrator in his discretion.
Disability for purposes of this Plan shall be deemed to commence as of the first
day following the end of such one hundred eighty (180) day period. If an
Eligible Employee makes application for disability benefits under the Social
Security Act, as in effect as of the date of this Plan or as such Act may
hereafter be amended, and qualifies for such Benefits, the Eligible Employee
shall be presumed to suffer from a Disability. The Administrator may require the
Eligible Employee to submit to an examination by a physician or medical clinic
selected by the Administrator. On the basis of such medical evidence as provided
by such examination and in the absence of qualification for disability benefits
under the Social Security Act, the determination of the Administrator as to
whether or not a condition of Disability exists shall be conclusive.

2.18. "Discounted Cash Out" shall mean a distribution made pursuant to Article
6.8.

2.19. "Discounted Cash Out Election" shall mean the written election by a
Participant or Beneficiary to receive all or part of the Participant's Deferral
Accounts pursuant to Article 6.8.

2.20. "Diversified Account" shall mean the Deferral Account credited with that
portion of a Participant's Deferrals and earnings thereon allocated to the
Diversified Account based on the performance of the Declared Rate(s) selected by
a Participant or a Participant's Beneficiary as set forth in Article 5.4.

2.21. "Early Retirement" shall mean the termination of a Participant's position
as a Director or employment with the Company for reasons other than death or
Disability on or after the Eligible Employee's attaining age 55 with fifteen
(15) years of service with the Company and before Normal Retirement, or a
non-employee Director's retirement before Normal Retirement.

2.22. "Eligible Employee" shall mean an Employee who is a member of a select
group of management or highly compensated employees and who is determined to be
eligible to

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participate in the Plan and so designated in writing by the Chairman and Chief
Executive Officer, Chief Operating Officer and/or Compensation Committee of the
Board of Directors.

2.23. "Employee" shall mean any person employed by the Company or its
subsidiaries on a regular full-time salaried basis, including officers of the
Company.

2.24. "Enrollment Period" shall mean a period designated by the Administrator
for enrollment of Participants for participation in the Plan. The Plan's initial
Enrollment Period shall be from May 1, 1997, to June 1, 1997. The Administrator
may establish additional Enrollment Periods in his discretion. The Participant
must submit a Participation Election Form during the Enrollment Period as
designated by the Administrator.

2.25. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.

2.26. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

2.27. "Exercise Declaration Form" shall mean the form filed with the
Administrator indicating the date(s) on which Options previously designated on a
Deferral Election Form are to be exercised.

2.28. "First Beneficiary" shall mean the Beneficiary (whether the primary or
contingent Beneficiary) who first becomes entitled to Survivor Benefits under
this Plan.

2.29. "Normal Retirement" shall mean the termination of a Participant's position
as a Director or employment with the Company for any reason other than death or
Disability on or after the Participant attains age 65.

2.30. "Option" shall mean an option to purchase Stock that is not an incentive
stock option under Section 422 of the Internal Revenue Code of 1986, as amended.

2.31. "Participation Election Form" shall mean the form on which a Participant
elects the total dollar amount of Deferrals to be made during a Deferral Period
under the Plan.

2.32. "Participant" shall mean a non-employee Director or an Eligible Employee
who has met the requirements for participation in the Plan as prescribed by
Article 3.

2.33. "Plan" shall mean this Amended and Restated Avery Dennison Corporation
Capital Accumulation Plan, a non-qualified elective deferred compensation plan,
as the same may be amended from time to time.

2.34. "Retirement" shall mean a termination of service as a Director or
termination of employment by an Eligible Employee upon Normal Retirement or
Early Retirement.

2.35. "Retirement Benefits" shall mean the Benefits payable to a Participant
upon the Participant's satisfaction of the requirements for Normal or Early
Retirement pursuant to Article 6.1.

2.36. "Second Beneficiary" shall mean the First Beneficiary's named Beneficiary
(whether primary or contingent) who becomes the Second Beneficiary entitled to
Survivor Benefits under the Plan.

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2.37. "Settlement Date" shall mean the date upon which a Benefit payment is due
and payable to a Participant or Beneficiary pursuant to Article 6.15.

2.38. "Stock" shall mean shares of Avery Dennison Corporation common stock.

2.39. "Stock Account" shall mean the Deferral Account credited with (i) that
portion of a Participant's Deferrals allocated to Stock, (ii) additional shares
of Stock distributed as dividends with respect to Stock credited to the
Participant's Stock Account, and (iii) additional shares of Stock purchased with
the proceeds of non-Stock dividends distributed with respect to Stock credited
to the Participant's Stock Account.

2.40. "Stock Option Gains" shall mean the amount of a Participant's net gain
resulting from the Participant's exercise of Options.

2.41. "Survivor Benefit" shall mean those Plan Benefits that become payable upon
the death of a Participant pursuant to Article 6.6.

2.42. "Termination Benefit" shall mean the lump sum amount payable to an
Eligible Employee who ceases to be an Employee pursuant to Article 6.5.

2.43. "Termination of Employment" shall mean the cessation of an Eligible
Employee's employment with the Company for any reason, whether voluntary or
involuntary, other than Retirement, Disability or death.

2.44. "Total Compensation" shall mean the sum of an Eligible Employee's Base
Salary and Bonus.

2.45. "Unforeseeable Emergency" shall mean a severe financial hardship to a
Participant, as determined by the Administrator, resulting from a sudden and
unexpected illness or accident of a Participant or a dependent of a Participant,
loss of a Participant's property due to a casualty, or other similar
extraordinary and unforeseeable circumstances arising as a result of an event
beyond the control of a Participant. The circumstances that will constitute an
Unforeseeable Emergency will depend on the facts of each case, but, in any case,
payment may not be made in the event that such financial hardship is or may be
relieved:

     (a)  through reimbursement or compensation by insurance or otherwise,
     (b)  by liquidation of a Participant's assets, to the extent that
          liquidation of such assets would not itself cause severe financial
          hardship, or
     (c)  by cessation of Deferrals under the plan.

2.46. "Valuation Date" shall mean the date on which the Diversified Account is
valued pursuant to Article 6.14 and the date on which the number of shares of
Stock credited to the Stock Account is determined.

2.47. "Vested," when used with reference to a Participant's Accounts, shall mean
non-forfeitable.

ARTICLE 3:  Participation

3.1. Participation. The Committee, through the Administrator, shall notify
Participants generally not later than 30 days (or such lesser period as may be
practicable in the circumstances) prior to any deadline for filing a
Participation Election Form.

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3.2. Participation Election. A non-employee Director or an Eligible Employee
shall become a Participant in the Plan after completing a Participation Election
Form and submitting it to the Administrator. Participants must submit the
Participation Election Form to the Administrator during an Enrollment Period. In
the Participation Election Form, the Participant shall designate (i) for
Eligible Employees, the total dollar amount of Deferrals to be made under the
Plan during the Deferral Period (as a whole multiple of Total Compensation to a
maximum established by the Committee, which currently is five times Total
Compensation, or, for non-employee Directors, the Stock Option Gains from
Options to be deferred under the Plan during the Deferral Period (as a total
number of Options to purchase up to a maximum of 12,000 shares of Stock), (ii)
the form of Retirement Benefit distributions, and (iii) any other information or
elections required by the Administrator. Notwithstanding the foregoing, the
Administrator, in his discretion, may permit a Participant who was a
non-employee Director or an Eligible Employee during the initial Enrollment
Period to submit a Participation Election Form in a subsequent Enrollment
Period. A Participant who otherwise satisfies the requirements of this Article
3.2, but who makes no Deferrals under the Plan shall not be considered a
Participant for purposes of the Plan.

3.3. Continuation of Participation. A Participant who has elected to participate
in the Plan by making a Deferral election shall continue as a Participant in the
Plan until the entire balance of the Participant's Deferral Accounts has been
distributed to the Participant. In the event a Participant becomes ineligible to
continue participation in the Plan, but remains an Employee of the Company, the
Participant's Deferral Accounts shall be held and administered in accordance
with the Plan until such time as Benefits are completely distributed.

ARTICLE 4:  Participant Deferrals

4.1. Deferrals Under Plan. Subject to the conditions herein, a Participant shall
designate specific Stock Option Gains from the exercise of specified Stock
Options to be deferred into the Plan by completing and filing with the
Administrator a Deferral Election Form(s). The election(s) shall be irrevocable,
except as provided or limited under Articles 4.3, 4.4, 5.3, and 6.4. Not later
than five (5) days prior to exercise of an Option designated on a Deferral
Election Form for deferral under the Plan, a Participant shall file with the
Administrator an Exercise Declaration Form with respect to such Option.
Satisfaction of Deferral can come only from Stock Option Gains. To the extent
there is no such Stock Option Gain at the time of exercise, then the Deferral
election is deemed to be withdrawn.

4.2. Minimum Deferral. An Eligible Employee's minimum cumulative Deferrals over
the term of the Plan should equal or exceed such Participant's Total
Compensation as of May 1, 1997.

4.3. Maximum Deferral. The maximum cumulative or annual Deferrals under the Plan
shall be determined by the Administrator in his discretion. Prior to the
beginning of any Plan year (or, for periods shorter than a full calendar year
during a Deferral Period,) during the Deferral Period, the Administrator may
declare the amount of Stock Option Gains, that may be deferred by Participants
during such period.

4.4. Disability. If an Eligible Employee suffers a Disability during the
Deferral Period, the Deferrals previously designated on any Deferral Election
Forms submitted to the Administrator

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prior to the date of such Disability shall be completed within two (2) years of
the commencement of the Disability and before any termination of employment from
the Company. Subsequent to commencement of such Disability, no new Options may
be designated for Deferrals by the Eligible Employee. In the event of
Disability, Benefits shall be distributed in accordance with the Plan provisions
for termination, Retirement or death.

4.5. Deferral Accounts. Solely for recordkeeping purposes, the Company shall
maintain two (2) Deferral Accounts for each Participant, a Diversified Account
and a Stock Account. A Participant's Diversified Account shall be credited with
a Participant's Deferrals pursuant to Article 5.2, and credited with the
Declared Rate(s) (which may be negative or positive) elected by the Participant
or Beneficiary pursuant to Article 5.3. A Participant's Stock Account shall be
credited with (i) the shares of Stock allocated to the Participant's Stock
Account pursuant to Article 5.2, (ii) any additional shares of Stock distributed
as a dividend with respect to Stock credited to the Participant's Stock Account,
and (iii) shares of Stock purchased with cash dividends or other distributions
with respect to Stock credited to the Participant's Stock Account (provided,
however, that after September 16, 1998, no additional Stock Option Gains will be
placed in a Stock Account).

The Company shall credit the amount of a Participant's Deferrals that is
allocated to the Participant's Diversified Account under Article 5.2 on the
settlement date (generally four business days following the exercise date of the
Option to which such Deferral relates). The Company shall credit shares of Stock
to a Participant's Stock Account in the amount allocated by the Participant
under Article 5.2 on the settlement date (generally four business days following
the exercise date of the Option to which such Deferral relates). Stock purchased
with cash dividends or other distributions with respect to Stock credited to a
Participant's Stock Account, or acquired as a dividend with respect to Stock so
credited, shall be credited to the Participant's Stock Account on the date of
such purchase, or, in the case of a dividend made in shares of Stock, on the
date such dividend distribution is effected. The Diversified and Stock Accounts
shall be debited by (i) the amount of any distributions made to a Participant or
the Participant's Beneficiary pursuant to the Plan, and (ii) any charges or
penalties with respect to such distributions.

4.6. Deferral Adjustment. Prior to any crediting of Deferrals to a Participant's
Accounts, the Company shall deduct from the portion of each Deferral allocated
to a Participant's Diversified Account an up-front load equal to three percent
(3%) (or such lesser percentage as determined by the Administrator) of the
amount so allocated.

4.7. Statement of Account. The Administrator shall provide to each Participant a
periodic statement (at least semi-annually) setting forth the deferrals,
dividends, declared rate(s) (credits or debits) and balance of the Accounts
maintained for such Participant.

4.8. Vesting. The Participant shall be 100% Vested at all times in the
Participant's Deferral Accounts.

4.9. Method of Exercise. A participant exercising Options, the Stock Options
Gains of which are being deferred under the Plan, shall effect such exercise by
constructively delivering the Stock with a fair market value on the date of
exercise of the Option equal to the aggregate exercise price of the Option.
Stock used for this purpose shall be Stock which the Participant has held for a
period of greater than six (6) months prior to the date of exercise of the
Option; provided, however, that if the Participant delivers to the Company Stock
acquired through the exercise of an "incentive stock option" as defined in
Section 422(b) of the Code, such Stock

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shall have been held by the Participant for a period of greater than twelve (12)
months from the date of exercise of the Option and twenty-four (24) months from
the date of grant of the Option.

ARTICLE 5:  Investment Options

5.1. Valuation of Accounts. A Participant's Diversified Account as of each
Valuation Date shall consist of the balance of the Participant's Diversified
Account as of the immediately preceding Valuation Date less any payments made to
the Participant or the Participant's Beneficiary pursuant to Article 6, plus the
amount of the Participant's Deferrals and the Declared Rate(s) thereon, in each
case made (debited or credited) since the immediately preceding Valuation Date.

A Participant's Stock Account as of each Valuation Date shall be measured based
upon the number of shares of Stock allocated to the Participant's Stock Account
as of the immediately preceding Valuation Date less any shares of Stock
distributed to the Participant or the Participant's Beneficiary plus any shares
of Stock (i) credited as a dividend with respect to Stock credited to the
Participant's Stock Account, and (ii) credited with non-Stock dividends
distributed with respect to Stock allocated to the Participant's Stock Account,
in each case made (credited or debited) since the immediately preceding
Valuation Date.

5.2. Allocation of Accounts. After September 16, 1998, the Company shall
allocate each Participant's Stock Options Gains as follows: 100 % to such
Participant's Diversified Account.

5.3. Participant Election of Declared Rates. Participant may elect to have the
Diversified Account allocated among the Declared Rate(s) in 25% increments.
Notwithstanding the foregoing provision or any other provision of this Plan, if
the Participant does not submit an Allocation Election Form to the
Administrator, Amounts so allocated to Diversified Accounts shall be allocated
100% to the Money Market Declared Rate.

Subject to the second sentence of this paragraph, a Participant may change that
Participant's Declared Rate(s) election by filing a new Allocation Election Form
with the Administrator at least 30 days prior to such change becoming effective.
A Participant may change the Participant's Diversified Account allocation
elections under this Article 5.3 a minimum of twice a year effective as of the
earlier of the March 1, June 1, September 1 or December 1 which immediately
follows the date of filing the Allocation Election Form with the Administrator,
and as otherwise permitted by the Administrator.

5.4. Declared Rates. The Declared Rate(s) are equal to the gross performance of
each of the below-listed investment funds (which list may be expanded by the
Committee) reduced by (i) investment advisory fees, (ii) daily operating
expenses and (iii) forty (40) basis points. The Administrator may adjust the
fees in his reasonable discretion annually to reflect decreased costs or to
cover increased costs. A Participant may elect from Declared Rates initially
representing five (5) core investment funds, which may from time to time be
established under the Plan and the number of which may be expanded by the
Committee; it being the intention that at all times Participants will have at
least five (5), core investment fund choices comparable in focus, type and
quality to those listed below Declared Rate(s) are subject to normal investment
risk. The Declared Rates available under the Plan are set forth in Exhibit A.

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The Administrator shall have the right to invest all, part, or none of the
aggregate Deferrals or any of the investment funds upon which the Declared Rates
are based.

5.5. Valuation of Stock. The value of a share of Stock on a Valuation Date shall
be the closing price of a single share of such Stock on the New York Stock
Exchange on the last trading day immediately preceding such Valuation Date, as
such valuation information is published in a nationally recognized daily
business publication.

5.6. Crediting of Dividends With Respect to Stock. Stock and non-stock dividend
distributions with respect to Stock allocated to a Participant's Stock Account
shall be credited by the Administrator to the Participant's Stock Account in the
form of additional shares or fractional shares of Stock as of the date upon
which the Company makes such a distribution.

5.7. Beneficiary Powers. Following a Participant's death, the allocation of
unpaid balances in the Participant's Diversified Account among any Declared
Rate(s) may be made as elected by the Participant's Beneficiary.

ARTICLE 6:  Benefits

6.1. Retirement Benefit. A Participant shall be eligible for a Retirement
Benefit under this Plan upon satisfaction of all of the requirements for Normal
Retirement or Early Retirement.

6.2. Benefit Election Alternatives. A Participant may elect to receive the
Participant's Retirement Benefit in (i) a lump sum; (ii) annual installments
(calculated pursuant to Article 6.3) over five (5), ten (10), fifteen (15), or
twenty (20) years; or (iii) a combination of an initial lump sum distribution
with the remainder paid in annual installments (calculated pursuant to section
6.3) over five (5), ten (10), fifteen (15), or twenty (20) years. A Participant
has the right to make separate elections for each of his Deferral Accounts. The
Retirement Benefit shall be paid over the period elected by the Participant,
which election shall be made no later than thirteen months prior to Retirement.
After a Participant has made an initial election, he may subsequently change his
election at any time provided that such election is made at least thirteen (13)
months prior to Retirement. If a Participant does not file an election with the
Administrator, the Participant's Deferral Accounts shall be paid in annual
installments (calculated pursuant to Article (6.3)) over ten (10) years.

6.3. Installment Payments. If a Participant elects to receive the Participant's
Retirement Benefit in installment payments, the first payment shall be (i) an
annualized amount pro-rated over the period commencing with the last day of the
month of the Participant's date of Retirement through the following December 31,
(ii) calculated pursuant to the method prescribed in this Article, and (iii)
made within the periods established pursuant to Article 6.2. Subsequently,
annual payments shall be made each January, over the period elected by or for
such Participant.

The amount of any installment payment distributed from a Participant's
Diversified Account shall be determined annually by dividing the Participant's
Diversified Account balance, less any initial lump-sum distribution, on the
Valuation Date as prescribed by Article 6.14 by (i) the number of years
remaining in the Participant's payment period, or (ii) some other formula
approved by the Committee which is designed to provide ratable payments using a
reasonable interest rate assumption. The number of shares of Stock distributed
from a Participant's Stock

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Account, as part of any installment payment, shall be determined annually by
dividing the number of shares of Stock credited to a Participant's Stock Account
on the Valuation Date, as prescribed by Article 6.14, by the number of years
remaining in the Participant's payment period. Solely for purposes of
calculating the first installment payment provided for in the first sentence of
this Article, (i) the year of a Participant's Retirement shall be counted as a
pro-rated year in a Participant's payment period, and (ii) the Valuation Date
shall be the last day of the month of the date of the Participant's Retirement.
During any payment year, the unpaid Deferral Account balance shall be credited
as provided in Article 4.5. A retired Participant may continue to change the
allocation of the Participant's Diversified Account, as provided in Article 5.3,
as long as such retired Participant has an undistributed Diversified Account
balance.

6.4. Disability. If an Eligible Employee suffers a Disability, any Deferral
Election Forms executed and delivered to the Administrator prior to the date of
such Disability shall remain in effect in all respects. An Eligible Employee
suffering a Disability may defer Stock Option Gains with respect to Options
previously designated on such forms during the twenty-four (24) month period
following the date of occurrence of the Disability; provided, however, that this
shall not operate so as to extend the period during which the Option may be
exercised under the appropriate stock option plan. Except as otherwise provided
in the last sentence of this Article 6.4, (i) after the expiration of such
24-month period, all uncompleted Deferral elections shall be null and void, and
(ii) no new Deferral Election Forms shall be accepted by the Administrator from
such Eligible Employee after the date of the Disability. During the period of
the Disability, the Eligible Employee's Diversified Account shall continue to be
credited with the applicable Declared Rate(s) elected by the Eligible Employee.
The Eligible Employee's Diversified Account shall be distributed at Retirement,
Termination of Employment, or upon death, whichever is applicable, in accordance
with the terms of the Plan or the Eligible Employee's distribution election in
effect on the date Benefits commence under the Plan, whichever is applicable. If
an Eligible Employee recovers from a Disability and returns to employment with
the Company during the Deferral Period, the Eligible Employee shall resume
making Deferrals in accordance with the Eligible Employee's elections in effect
of the date of the Eligible Employee's Disability and may file additional
Deferral Election Forms with the Administrator.

6.5. Termination Benefit. If an Eligible Employee (i) incurs a Termination of
Employment, or (ii) fails to return to the status of an Employee within sixty
(60) days following recovery from a Disability prior to Retirement, the Company
shall pay to such Eligible Employee a Termination Benefit equal to the Eligible
Employee's Deferral Account balances, determined as of the last day of the month
of the Eligible Employee's Termination of Employment. Such Termination Benefit
shall be in the form of a lump sum distribution, with the Stock Account balance
distributed in Stock and the Diversified Account Balance distributed in cash.
Upon distribution of the Termination Benefit, the Eligible Employee shall be
entitled to no further benefits under the Plan. 6.6. Survivor Benefits.

(a)  Pre-Retirement. If a Participant dies and has not yet commenced receiving
     Retirement Benefits under the Plan, a Survivor Benefit shall be paid to the
     Participant's First Beneficiary in annual installments over ten (10) years,
     except as provided below. The balance in the Participant's Diversified
     Account shall continue to be credited with the applicable Declared Rate(s)
     elected by the First Beneficiary. The balance in the Participant's Stock
     Account shall continue to be credited as provided in Article 4.5. The first
     distribution to the First Beneficiary shall be an annualized amount
     pro-rated over the period commencing with the last day of the month in
     which the Participant's death occurs through the following December 31, and
     calculated pursuant to the manner prescribed in Article 6.3.

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     Subsequently, ten (10) annual payments shall be paid to the First
     Beneficiary in January of each year in an amount determined pursuant to the
     manner prescribed in Article 6.3. The First Beneficiary may continue to
     change the Declared Rate(s) election as provided in Article 5.3 as long as
     he has a remaining Diversified Account balance under the Plan.

(b)  Post-Retirement. If a Participant dies after payment of Benefits to such
     Participant has commenced, the First Beneficiary shall be entitled to
     receive the remainder of the annual payments not yet paid to the
     Participant in accordance with the election of the Participant then in
     effect. After the Participant's death, (i) the Participant's Diversified
     Account shall continue to be credited with the applicable Declared Rate(s)
     elected by the Beneficiary, and (ii) the Participant's Stock Account shall
     continue to be credited as provided in Article 4.5.

(c)  Second Beneficiary. If the First Beneficiary dies before all Survivor
     Benefits under the Plan have been distributed to the First Beneficiary, any
     remaining Account balances shall be paid in a lump sum to the Second
     Beneficiary or to the First Beneficiary's estate if no Second Beneficiary
     designation is on file with the Administrator.

6.7. Scheduled Withdrawal. At the time a Participant first enrolls in the Plan,
the Participant may make a one-time irrevocable election to receive a Scheduled
Withdrawal of a specified dollar amount in January of any Plan year, provided
that the amount of any Scheduled Withdrawal actually distributed shall not
exceed a Participant's aggregate Account balances as of the date that is
twenty-four (24) months prior to the date of such Scheduled Withdrawal. If the
Participant terminates employment with the Company by reason of Retirement, the
Scheduled Withdrawal shall be null and void, and the Benefit shall be paid in
accordance with Article 6.2. If the Participant terminates employment with the
Company for any other reason prior to the receipt of the Participant's Scheduled
Withdrawal, the Participant's Scheduled Withdrawal election shall be null and
void, and the Participant shall receive a Termination Benefit as provided in
Article 6.5.

6.8. Discounted Cash Out Election. At any time a Participant or a Beneficiary
has a remaining Account balance in the Plan, the Participant or a Beneficiary
may elect to receive all or part of the Participant's Accounts in a lump sum by
filing a written election to receive a Discounted Cash Out pursuant to this
Article 6.8. Crediting of Declared Rates to the amount elected to be withdrawn
shall cease to accrue as of the date the Discounted Cash Out Election is made.
The requirements for a Discounted Cash Out Election and the manner of
determining the amount to be paid to a Participant who makes a pre-retirement
Discounted Cash Out Election are set forth in Articles 6.9 through 6.12.

6.9. Minimum Amount. Unless otherwise determined by the Committee, the
Discounted Cash Out must be in an amount of at least $200,000, unless the
Participant's Accounts have an aggregate balance of less than $200,000 as of the
date of the Discounted Cash Out Election, in which case the amount of the
Discounted Cash Out shall be equal to 100% of the aggregate balance of the
Participant's Accounts.

6.10. Account Value. The amount available for the Discounted Cash Out shall be
determined no later than the last day of the month during which the Participant
delivers to the Administrator a written Discounted Cash Out Election, provided,
however, that the Administrator shall have at lease fifteen (15) business days
to make such determination.

6.11. Adjustment of Accounts; Penalty. If a Participant or Beneficiary elects to
receive a Discounted Cash Out, the total amount of such Discounted Cash Out
shall be deducted ratably

                                       10
<PAGE>

from the Diversified Account and Stock Account in the proportion which the
balance of each such Account bears to the aggregate balance of such
Participant's Accounts. The amount of the Discounted Cash Out actually
distributed to the Participant shall be the amount of the requested Discounted
Cash Out Election less a penalty as established by the Committee which is six
percent (6%) (unless otherwise required by law or regulation) of the amount of
the requested Discounted Cash-Out Election. The forfeited amount shall be
deducted from the portion of the Discounted Cash Out withdrawn from the
Participant's Diversified Account and shall be returned to the Trust. To the
extent that the Participant's Diversified Account balance is insufficient to
satisfy the penalty, the remainder of the penalty amount shall be deducted from
the Participant's Stock Account.

6.12. Number of Distributions. During the course of any calendar year and prior
to retirement, a Participant may make one Discounted Cash Out Election per year;
following retirement, a Participant or a Beneficiary in a payout status, may
make two Discounted Cash Out Elections per year.

6.13. De Minimis Benefit. Notwithstanding anything in the Plan to the contrary,
after a Participant ceases to be an employee then in the event the aggregate
balance of such Participant's Accounts is $50,000 or less, the Administrator may
distribute any such amount in a single lump sum. The Administrator shall provide
the Participant at least 30 days advance notice of its intention to make such
distribution.

6.14. Valuation Date. Unless otherwise provided by the Administrator, the
Valuation Date for determining Deferral Account balances shall be the last day
of the month. Except as otherwise provided in the Plan, the Valuation Date for
purposes of determining Annual Retirement or Survivor Benefit distributions
shall be the November 30 preceding the date of such distribution.

6.15. Settlement Date. Unless otherwise provided in the Plan, the Settlement
Date for Benefit payments shall be as soon as administratively feasible
following the Valuation Date.

6.16. Distribution Due to Unforeseeable Emergency. A Participant may request a
Distribution Due to Unforeseeable Emergency by submitting a written request to
the Administrator accompanied by evidence to demonstrate that the circumstances
being experienced qualify as an Unforeseeable Emergency. The Administrator shall
have the authority to require such evidence as the Administrator deems, in his
discretion, necessary to determine if such a distribution is warranted. If the
Administrator approves the Participant's application for a Distribution Due to
an Unforeseeable Emergency, the distribution is limited to an amount sufficient
to meet the Unforeseeable Emergency. The allowed distribution shall be payable
in a manner determined by the Administrator, as soon as possible after approval
of such distribution.

The need to send a Participant's child to college or the desire to purchase a
home shall not be an Unforeseeable Emergency.

ARTICLE 7:  Beneficiary Designation

Each Participant and First Beneficiary shall have the right, at any time, to
designate any person or persons as Beneficiary or Beneficiaries to whom payment
under this Plan shall be made in the event of death of the Participant or First
Beneficiary, as the case may be, prior to complete

                                       11
<PAGE>

distribution of Benefits due under the Plan. Each Beneficiary designation shall
become effective only when filed in writing with the Administrator during the
Participant's or First Beneficiary's lifetime, as the case may be, on a form
prescribed by the Administrator.

The filing of a new Beneficiary designation with the Administrator shall cancel
and revoke all Beneficiary designations previously filed. Any finalized divorce
or marriage (other than a common law marriage) of a Participant or First
Beneficiary, as the case may be, subsequent to the date of filing of a
Beneficiary designation form shall revoke such designation unless (i) in the
case of divorce, the previous spouse or a trust for said previous spouse was not
designated as Beneficiary, or (ii) In the case of marriage, the Participant's
new spouse or a trust for said new spouse had previously been designated as
Beneficiary.

If a Participant or First Beneficiary, as the case may be, fails to designate a
Beneficiary as provided above, or if the Participant's Beneficiary designation
is revoked by marriage, divorce, or otherwise without execution of a new
Beneficiary designation, or if all designated Beneficiaries predecease the
Participant or First Beneficiary, as the case may be, then such Benefits shall
be distributed to the estate of the Participant or First Beneficiary, as the
case may be.

ARTICLE 8:  Administration of Plan

The Committee shall consist of at least three members who shall be appointed by
the Company's Chief Executive Officer.

The Committee shall have the sole authority and discretion to administer the
Plan and to make determinations, interpret, construe and apply its provisions in
accordance with its terms. The Committee shall further establish, adopt or
revise such determinations, rules, regulations, and procedures as it may deem
necessary or advisable for the administration of the Plan. All decisions of the
Committee shall be by vote of at least a majority of its members and shall be
final and binding. Members of the Committee shall be eligible to participate in
the Plan while serving as members of the Committee, but a member of the
Committee shall not vote or act upon any matter which relates solely to such
member's interest in the Plan as a Participant. The members of the Committee
shall be the Chairman, the Chief Executive Officer, the Chief Financial Officer,
the Senior Vice President, General Counsel and Secretary, the Vice President,
Human Resources, the Vice President, Treasurer, the Vice President, Compensation
& Benefits, the Vice President, Associate General Counsel and Assistant
Secretary, the Controller, Corporate Center and the Director, Corporate Finance
and Investment, and other members that may be designated by the Chief Executive
Officer or elected by the Committee. The Committee designated the Vice
President, Compensation & Benefits as the Administrator to carry out the
day-to-day administration of the Plan. He shall exercise his discretion on a
consistent and objective basis.

The Committee, and each member thereof, shall be entitled to, in good faith,
rely or act upon any report or other information furnished to him or her by any
officer or other employee of the Company or any subsidiary, the Company's
independent certified public accountants, or any executive compensation
consultant, legal counsel, or other professional retained by the Company to
assist in the administration of the Plan. To the maximum extent permitted by
law,

                                       12
<PAGE>

no member of the Committee or the Administrator, nor any person to whom
ministerial duties have been delegated, shall be liable to any person for any
action taken or omitted in connection with the interpretation and administration
of the Plan. To the maximum extent permitted by law, the Company shall defend
and indemnify the members of the Committee against any and all claims, losses,
damages, expenses, including any counsel fees and costs, incurred by them, and
any liability, including any amounts paid in settlement with their approval,
arising from their action or failure to act, unless and to the extent such
liability arises from a member's own fraud, gross negligence or willful
misconduct.

ARTICLE 9:  Amendment and Termination of Plan

9.1. The Chief Executive Officer of the Company may amend or terminate the Plan
provided, however, that (i) no such amendment or termination shall be effective
to decrease the Benefits accrued to any Participant or Beneficiary of a deceased
Participant (including, but not limited to, the rate of return credited to the
Deferral Account(s) prior to the effective date of such amendment or
termination); (ii) Article 6.1 may not be amended; (iii) the definition of
Declared Rate may not be amended; and (iv) the other substantive provisions of
the Plan related to the calculation of Benefits or other elections, manner or
timing of payments to be made under the Plan shall not be amended so as to
prejudice the rights of any Participant or Beneficiary of a deceased
Participant. The Committee may, in its discretion, adjust future Deferrals (as
set forth in Article 4.3) and may allow Eligible Employees to make Deferrals
into the Plan. In the event of termination of the Plan, Participants' account
balances shall be distributed to the Participants within 60 (sixty) days
following termination of the Plan.

9.2. Distribution Upon Constructive Receipt. Notwithstanding anything to the
contrary in the Plan, the Administrator may authorize payments before they would
otherwise be due if, based on a change in the federal tax or revenue laws, a
published ruling or similar announcement issued by the Internal Revenue Service,
a regulation issued by the Secretary of the Treasury, a decision by a court of
competent jurisdiction involving a Participant or a Beneficiary, or a closing
agreement made under Section 7121 of the Internal Revenue Service Code that is
approved by the Internal Revenue Service and involves a Participant, he
determines that a Participant has or will recognize income for federal income
tax purposes with respect to amounts that are or will be payable under the Plan
before they otherwise would be paid.

ARTICLE 10:  Maintenance of Accounts

The Company shall keep, or cause to be kept, all such books of account, records
and other data as may be necessary or advisable in its judgment for the
administration of this Plan, and properly to reflect the affairs thereof, and to
determine the nature and amount of the interests of the respective Participants
in each Account.

The Company is not required to segregate physically any assets with respect to
the Accounts under this Plan from any other assets of the Company and may
commingle any such assets with any other moneys, securities and properties of
any kind of the Company. Separate Accounts or records for the respective
Participants' interest shall be maintained for operational and accounting
purposes, but no such Account or record shall be considered as creating a lien
of any nature whatsoever on or as segregating any of the assets with respect to
the Accounts under this Plan from any other funds or property of the Company.

                                       13
<PAGE>

ARTICLE 11:  Claims and Review Procedures

11.1. Claims Procedure. The Administrator or his designee shall notify a
Participant or Beneficiary (each, for purposes of this Article, a "Claimant") of
the denial of a claim made by or on behalf of such Claimant for the payment,
commencement or continuation of benefits under the Plan, in writing, within
ninety (90) days after submission of such claim. The notice of such denial shall
be delivered to the last known address of the Claimant, and shall set forth (1)
the specific reasons for such denial, (2) a specific reference to the provisions
of the Plan on which the denial is based, (3) a description of any additional
information or material necessary for the Claimant to perfect the Claimant's
claim, and a description of why such information is needed, and (4) an
explanation of the Plan's claims review procedure and other appropriate
information as to the steps to be taken if the Claimant wishes to have the claim
reviewed. If the Administrator or his designee determines that there are special
circumstances requiring additional time to make a decision, the Administrator or
its designee shall notify the Claimant of the special circumstances and the date
by which a decision is expected to be made, and may extend the time within which
to make such decision for up to an additional ninety-day (90) period.

11.2. Review Procedure. If a Claimant is determined by the Administrator not to
be eligible for benefits, or if the Claimant believes that the Claimant is
entitled to greater or different benefits under the Plan, the Claimant or duly
authorized representative shall have the opportunity to have such claim reviewed
by the Committee by filing a petition for review with the Committee within sixty
(60) days after receipt of the notice issued by the Administrator pursuant to
Article 11.1. Said petition shall state the specific reasons that the Claimant
believes entitle the Claimant to Benefits or to greater or different benefits.
The Claimant or representative may review pertinent documents relating to the
claim and its denial, and may submit issues and comments in writing to the
Committee. The Committee shall notify the Claimant of its decision with respect
to such petition in writing within sixty (60) days of receipt of such petition,
stating specifically the basis of its decision, written in a manner calculated
to be understood by the Claimant, and the specific provisions of the Plan on
which the decision is based. If, because of the need for additional information,
the sixty-day period is not sufficient, the decision may be deferred for up to
another sixty-day period at the election of the Committee, but notice of this
deferral shall be given to the Claimant. In the event of the death of the
Claimant, the same procedures shall apply to the Claimant's beneficiaries.

ARTICLE 12:  Miscellaneous

12.1. Applicable Law. Except to the extent preempted by ERISA, this Plan shall
be governed and construed in accordance with the laws of the State of California
applicable to agreements made and to be performed entirely therein, and
applicable substantive provisions of federal law.

12.2. Captions. The captions of the articles, sections, and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.

12.3. Employment Not Guaranteed. Nothing contained in this Plan nor any action
taken hereunder shall be construed as a contract of employment or as giving any
Employee any right to be retained in the employ of the Company.

                                       14
<PAGE>

12.4. Provisions Relating to Section 16 of the Exchange Act and Section 162(m)
of the Code.

With respect to a Participant who is then subject to the reporting requirements
of Section 16(a) of the Exchange Act:

Any function of the Administrator under the Plan relating to such Participant
shall be performed solely by the Administrator or a subcommittee thereof
consisting solely of 2 or more members who constitute "non-employee directors"
under Rule 16b-3, if and to the extent required to ensure the availability of an
exemption under Rule 16b-3 or exclusion under Rule 16a for such Participant with
respect to the Plan.

To the extent necessary so that transactions by and rights of such a Participant
under the Plan are excluded from reporting under Rule 16a, if any provision of
this Plan or any rule, election form or other form, or instruction does not
comply with the requirements of such Rule as then applicable to such transaction
or right under the Plan, such provision shall be construed or deemed amended to
the extent necessary to conform to such requirements.

It is the intent of the Company that any compensation (including any award)
deferred under the Plan by a person who is, with respect to the year of payment,
deemed by the Administrator to be a "covered employee" within the meaning of
Code Section 162(m) and regulations thereunder, which compensation constitutes
either "qualified performance-based compensation" within the meaning of Code
Section 162(m) and regulations thereunder or compensation not otherwise subject
to the limitation on deductibility under Section 162(m) and regulations
thereunder, shall not, as a result of deferral hereunder, become compensation
with respect to which the Company in fact would not be entitled to a tax
deduction under Code Section 162(m). Accordingly, unless otherwise determined by
the Administrator, if any compensation would become so disqualified under
Section 162(m) as a result of deferral hereunder, the terms of such deferral
shall be automatically modified to the extent necessary to ensure that the
compensation would not, at the time of payout, be so disqualified.

12.5. Sources of Stock. If Stock is deposited under the Plan in a trust pursuant
to Articles 12.13 or 12.18 in connection with a deferral of Stock Option Gains
with respect to an Option award under another plan, program, employment
agreement or other arrangement that provides for the issuance of shares, the
shares of Stock so deposited shall be deemed to have originated, and shall be
counted against the number of shares reserved, under such other plan, program or
arrangement. The number of shares of Stock credited to such Stock Account shall
in no event exceed the number of shares subject to the Stock Option Gains
deferred under the Plan plus any additional shares of Stock dividends or Stock
purchased with cash dividends on shares allocated to such Stock Account. The
number of shares of Stock otherwise credited to Stock Accounts of Participants
who are subject to Section 16(a) of the Exchange Act shall not exceed 10% of the
Stock outstanding at any time. Stock actually delivered in settlement of
Deferral Accounts shall be originally issued shares, treasury shares or shares
from an employee stock trust, in the discretion of the Administrator.

12.6. Exempt ERISA Plan. The Plan consists of two plans under a single plan
document. The first plan is intended to be an unfunded plan maintained primarily
to provide deferred compensation benefits for a select group of management or
highly compensated employees within the meaning of Section 201, 301 and 401 of
ERISA, and therefor to be exempt from parts 2, 3 and 4 of Title 1 of ERISA. The
second plan is a separate plan not subject to ERISA, and is

                                       15
<PAGE>

maintained to provide deferred compensation benefit for non-employee directors

12.7. Gender; Singular & Plural. All pronouns and any variations thereof shall
be deemed to refer to the masculine, feminine, or neuter, as the identity of the
person or persons may require. As the context may require, the singular may be
read as the plural and the plural as the singular.

12.8. Limitation. A Participant and the Participant's Beneficiary shall assume
all risk in connection with the performance of any Declared Rate and any
decrease in value of the Deferral Accounts, including any decrease in the value
of Stock, and the Company, Committee and the Administrator shall not be liable
or responsible therefor.

12.9. Notice. Any notice or filing required or permitted to be given to the
Administrator under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, to the principal office of
the Company, directed to the attention of the Senior Vice President, General
Counsel and Secretary of the Company. Such notice shall be deemed given as of
the date of delivery or, if delivery is made by mail, as of the date shown on
the postmark on the receipt for registration or certification.

12.10. Obligations to Company. If a Participant becomes entitled to a
distribution of Benefits under the Plan, and if at such time the Participant has
outstanding any debt, obligation, or other liability representing an amount
owing to the Company, then the Company may offset such amount owed to it against
the amount of Benefits otherwise distributable. Such determination shall be made
by the Administrator.

12.11. Limits on Transfer. Other than by will or the laws of descent and
distribution, no right, title or interest of any kind in the Plan shall be
transferable or assignable by a Participant or the Participant's Beneficiary or
be subject to alienation, anticipation, encumbrance, garnishment, attachment,
levy, execution or other legal or equitable process, nor subject to the debts,
contracts, alimony, liabilities or engagements, or torts of any Participant or
Participant's Beneficiary. Any attempt to alienate, sell, transfer, assign,
pledge, garnish, attach or take any other action subject to legal or equitable
process or encumber or dispose of any interest in the Plan shall be void.

12.12. Satisfaction of Claims. Payments to any Participant or Beneficiary in
accordance with the provisions of the Plan shall, to the extent thereof, be in
full or partial satisfaction of claims against the Company for the compensation
or other amounts deferred and relating to the Deferral Account to which the
payments relate.

12.13. Unfunded Status of Plan; Creation of Trusts. The Plan is intended to
constitute an "unfunded" plan for deferred compensation and Participants shall
rely solely on the unsecured promise of the Company for payment hereunder. With
respect to any payment not yet made to a Participant under the Plan, nothing
contained in the Plan shall give a Participant any rights that are greater than
those of a general unsecured creditor of the Company; provided, however, that
the Administrator may authorize the creation of trusts, including but not
limited to the Trust referred to in this Article or Article 12.18, or make other
arrangements to meet the Company's obligations under the Plan, which trusts or
other arrangements shall be consistent with the "unfunded" status of the Plan.

12.14. Compliance. A Participant in the Plan shall have no right to receive
payment with respect to the Participant's Deferral Account until legal and
contractual obligations of the

                                       16
<PAGE>

Company relating to establishment of the Plan and the making of such payments
shall have been complied with in full. In addition, the Company shall impose
such restrictions on Stock delivered to a Participant hereunder and any other
interest constituting a security as it may deem advisable in order to comply
with the Securities Act of 1933, as amended, the requirements of the New York
Stock Exchange or any other stock exchange or automated quotation system upon
which the Stock is then listed or quoted, any state securities laws applicable
to such a transfer, any provision of the Company's Certificate of Incorporation
or Bylaws, or any other applicable law or applicable regulation.

12.15. Other Participant Rights. No Participant shall have any of the rights or
privileges of a stockholder of the Company under the Plan, including as a result
of the crediting of Stock equivalents or other amounts to a Deferral Account, or
the creation of any trust and deposit of such Stock therein, except at such time
as Stock may be actually delivered in settlement of a Deferral Account. Subject
to the limitations set forth in Article 12.11 hereof, the Plan shall inure to
the benefit of, and be binding upon, the parties hereto and their successors and
assigns. Stock allocated in the trust will be voted by the trustee thereof in
the same manner as the Company stock held in the Company's Employee Stock
Benefit Trust.

12.16. Tax Withholding. The Participant or Beneficiary shall make appropriate
arrangements with the Company for satisfaction of any federal, state or local
income tax withholding requirements and Social Security or other employee tax
requirements applicable to the crediting and payment of Benefits under the Plan.
If no other arrangements are made, the Company shall have the right to deduct
from amounts otherwise credited or payable in settlement of a Deferral Account
any sums that federal, state, local or foreign tax law requires to be withheld
with respect to such credit or payment. Shares of Stock may be withheld to
satisfy such obligations in any case where taxation would be imposed upon the
delivery of shares, except that shares issued or delivered under any plan,
program, employment agreement or other arrangement may be withheld only in
accordance with the terms of such plan, program, employment agreement or other
arrangement and any applicable rules, regulations, or resolutions thereunder.

12.17. Protective Provisions. Each Participant shall cooperate with the Company
by furnishing any and all information requested by the Company in order to
facilitate the payment of Benefits hereunder, taking such physical examinations
when and as the Company may deem necessary and taking such other relevant action
as may be requested by the Company. If a Participant refuses so to cooperate,
the Company shall have no further obligation to the Participant under the Plan,
other than payment to such Participant of the cumulative Deferrals theretofore
made pursuant to this Plan.

12.18. Unsecured General Creditor. The Company intends to establish and fund a
trust (the "Trust") under the Avery Dennison Corporation Capital Accumulation
Plan. The assets of the Trust shall be subject to the claims of the Company's
creditors. Benefits shall be paid directly by the Trustee, or its designated
agent, from Trust assets to the Participant or Beneficiary. To the extent any
Benefits provided under the Plan are actually paid from the Trust, the Company
shall have no further obligation with respect thereto, but to the extent not so
paid, such Benefits shall remain the obligation of, and shall be paid by, the
Company. Participants and their Beneficiaries, heirs, successors, and assigns
shall have no legal or equitable rights, interest, or claims in any specific
property or assets of the Company, nor shall they be beneficiaries of, or have
any rights, claims, or interests in any life insurance policies, annuity
contracts, mutual funds, shares of Company stock or the proceeds therefrom owned
or which may be acquired by the Company. Apart from the Trust, such policies or
other assets of

                                       17
<PAGE>

the Company shall not be held under any trust for the benefit of Participants,
their Beneficiaries, heirs, successors, or assigns, or held in any way as
collateral security for the fulfilling of the obligations of Company under this
Plan. Any and all of the Company's assets and policies shall be, and remain, the
general, unpledged, unrestricted assets of the Company. The Company's obligation
under the Plan shall be merely that of an unfunded and unsecured promise of the
Company to pay money or property in the future.

12.19. Waiver of Stay, Extension and Usury Laws. The Company covenants (to the
extent that it may lawfully do so) that it will not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law or any usury law or other law that would prohibit or
forgive the Company from paying all or any portion of the benefits due
hereunder, wherever such laws may be enacted, now or at any time hereafter in
force, or which may affect the administration or performance of this Plan; and
(to the extent that it may lawfully do so) the Company hereby expressly waives
all benefit or advantage of any such law, and covenants that it will not hinder,
delay or impede the realization of any benefits to which the Participants
hereunder are entitled, but will suffer and permit the realization of all such
benefits as though no such law had been enacted.

12.20. Status. The establishment and maintenance of, or allocations and credits
to, the Deferral Accounts of any Participant shall not vest in any Participant
any right, title or interest in and to any Plan assets or Benefits except at the
time or times and upon the terms and conditions and to the extent expressly set
forth in the Plan and in accordance with the terms of the Trust.

12.21. Validity. In the event any provision of this Plan is held invalid, void,
or unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provision of this Plan.

12.22. Waiver of Breach. The waiver by any party of any breach of any provision
of the Plan by any other party shall not operate or be construed as a waiver of
any subsequent breach.

ARTICLE 13:  Effective Date

The effective date of this Plan is May 1, 1997; the Plan is amended and restated
effective as of September 16, 1998.

                                       18
<PAGE>

                                    EXHIBIT A
                                    ---------

Declared Rate 1 - based on the performance of the Money Market Fund managed by
                  Pacific Mutual in the Pacific  Select Fund.

Declared RATE 2 - based on the performance of the Managed Bond Fund managed by
                  PIMCO in the Pacific Select Fund.

DECLARED RATE 3 - based on the performance of the Growth LT Fund managed by
                  James Capital Corporation in the Pacific Select Fund.

Declared Rate 4 - based on the performance of the Equity Index Fund managed by
                  Bankers Trust in the Pacific  Select Fund.

Declared RATE 5 - based on the performance of the International Fund managed by
                  Morgan Stanley in the Pacific Select Fund.

DECLARED RATE 6 - based on the performance of the Growth Fund managed by Capital
                  Guardian Trust Co. in the Pacific Select Fund.

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