Form of Non-Employee Director Stock Option Agreement



 EXHIBIT 10.15.1 
  
 AVERY DENNISON CORPORATION 
  
 DIRECTOR EQUITY PLAN AGREEMENT 
  
 THIS AGREEMENT, dated December 4, 2003 is made by and between Avery Dennison Corporation, a Delaware corporation, hereinafter referred to as the “Company,” and
*, a non-employee director of Company, hereinafter referred to as “Optionee.” 
  
 WHEREAS, Company wishes to afford Optionee the opportunity to purchase shares of its $1.00 par value common stock under the terms of the Avery Dennison Corporation Director Equity Plan (hereinafter referred to as the “Plan”), as
amended and restated, and 
  
 WHEREAS, The Company’s Board of Directors
(hereinafter referred to as the “Board”), appointed to administer said Plan, has determined that it would be to the advantage and best interest of Company and its stockholders to grant the Option provided for herein to Optionee as an
inducement to provide services as a Director of the Company and as an incentive for increased efforts during such service. The Board has advised Company of its determination and instructed the undersigned officers to issue said Option, which is a
Non-Qualified Stock Option, as required under the Plan; 
  
 NOW, THEREFORE, in
consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt of which is hereby acknowledged, Company and Optionee do hereby agree as follows: 
  
 ARTICLE I DEFINITIONS 
  
 Whenever the following terms are used in this Agreement they shall have the meaning set forth below or as set forth in the Plan unless the
context clearly indicates to the contrary. 
  

	1.1	Agreement 

  
 “Agreement” shall mean this Director Equity Plan Agreement. 
  

	1.2	Beneficiary 

  
 “Beneficiary” shall mean a person properly designated by the Optionee, including his/her spouse or heirs at law, to exercise such
Optionee’s rights under the Plan. Designation, revocation and redesignation of Beneficiaries must be made in writing in accordance with rules established by the Committee and shall be effective upon delivery to the Committee. 
  

	1.3	Change of Control 

  
 “Change of Control” shall have the same meaning given in Article 9 of the Plan. 
  

	1.4	Option 

  
 “Option” shall mean this option to purchase common stock of the Company granted under the Agreement. 


	*	Refer to attached Notice. 

  

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	1.5	Optionee 

  
 “Optionee” shall mean a non-employee Director eligible under the terms of the Plan. 
  

	1.6	Plan 

  
 The “Plan” shall mean the Avery Dennison Corporation Director Equity Plan, as amended and restated. 
  

	1.7	Pronouns 

  
 The masculine pronoun shall include the feminine and neuter, and the singular, and the plural, where the context so indicates. 
  

	1.8	Secretary 

  
 “Secretary” shall mean the Secretary of the Company. 
  

	1.9	Termination 

  
 “Termination” shall mean the time when the Optionee ceases to be a Director of the Company for any reason, including, but not limited to, a
termination by resignation, removal, death, retirement, or failure to be elected. 
  

	1.10	Transferee 

  
 “Transferee” shall mean “family members” as defined in the Securities and Exchange Commission Release No. 33-7646 and 34-41109, who
have acquired the Option through a gift or a domestic relations order, and includes any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the employee’s household (other than a tenant or employee), a trust in which these persons have more than fifty percent of the beneficial interest, a
foundation in which these persons (or the employee) control the management of assets, and any other entity in which these person (or the employee) own more than fifty percent of the voting interests. 
  
 ARTICLE II GRANT OF OPTION 
  

	2.1	Grant of Option 

  
 In consideration of Optionee’s agreement to provide services as a director of the Company and for other good and valuable consideration, on the date
hereof the Company irrevocably grants to Optionee the option to purchase any part or all of an aggregate of 2,000 shares of its $1.00 par value common stock upon the terms and conditions set forth in this Agreement. Such Option is granted pursuant
to the Plan and shall also be subject to the terms and conditions set forth in the Plan which is incorporated herein by reference. 
  

	2.2	Purchase Price 

  
 The purchase price of the shares of stock covered by the Option shall be fifty five and 5500/10000 dollars ($55.55) per share without commission or other
charge. 
  

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	2.3	Consideration to Company 

  
 In consideration of the granting of this Option by the Company, the Optionee agrees to render services as a Director to the Company, for a period of at
least one (1) year from the date this Option is granted. Nothing in this Agreement or in the Plan shall confer upon the Optionee any right to continue as a Director of the Company, nor shall it interfere with or restrict in any way, other than the
loss of rights as provided in Article III of this Agreement, the right of the Optionee voluntarily to resign as a Director of the Company. 
  

	2.4	Adjustments in Option 

  
 In the event that the outstanding shares of the stock subject to the Option are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the Company by reason of merger, consolidation, recapitalization, reclassification, stock split-up, stock dividend, or combination of shares, the Board shall make an appropriate and equitable adjustment in the number
and kind of shares as to which the Option, or portions thereof then unexercised, shall be exercisable. Such adjustment shall be made with the intent that after the change or exchange of shares, the Optionee’s proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in the Option may include a necessary corresponding adjustment in the option price per share, but shall be made without change in the total price applicable to the unexercised
portion of the Option (except for any change in the aggregate price resulting from rounding-off of share quantities or prices). 
  
 ARTICLE III PERIOD OF EXERCISABILITY 
  

	3.1	Commencement of Exercisability 

  

	 	(a)	The Option shall become exercisable in two cumulative installments as follows: 

  

	 	(i)	The first installment shall consist of fifty percent (50%) of the shares covered by the Option and shall become exercisable on the first anniversary of the date the Option was
granted. 

  

	 	(ii)	The second installment shall consist of an additional fifty percent (50%) of the shares covered by the Option and shall become exercisable on the second anniversary of the date the
Option was granted. 

  
 The installments provided
for in this Subsection (a) are cumulative. Each installment which becomes exercisable shall remain exercisable during the term of the Option, subject to Section 3.3. 
  

	 	(b)	No portion of the Option which is an unexercisable installment under Subsection (a) above at Termination shall thereafter become exercisable. 

  

	 	(c)	Notwithstanding Subsection 3.1(a) above, upon a Change of Control, all Option installments not yet exercisable shall become immediately exercisable. 

  

	 	(d)	Notwithstanding Subsection 3.1(a) above, when the Optionee retires from the Board at or after age seventy-two, all Option installments not yet exercisable shall become immediately
exercisable. 

  

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	3.2	Term of Option 

  
 The Option will expire and will not, under any condition, be exercisable after the tenth (10th) anniversary of the date the Option was granted. Such date
shall be the Option’s Expiration Date. 
  

	3.3	Exercise of Option after Termination 

  
 This Option is exercisable by the Optionee only while he is a Director of the Company, subject to the following exceptions and Section 5.2 below:

  

	 	(a)	If the Optionee dies while the Option is exercisable under the terms of this Agreement, the Optionee’s Beneficiary or a Transferee, as applicable, may exercise such rights,
subject to the limitation in Subsection 3.1(b). The Option must be exercised within twelve (12) months after the Optionee’s death, but not later than the Option’s Expiration Date. 

  

	 	(b)	If the Optionee ceases to be a Director due to his Retirement, the Optionee or a Transferee, as applicable, may exercise the Option, subject to the limitation in Subsection 3.1(b),
within sixty (60) months after Termination, but not later than the Option’s Expiration Date. 

  

	 	(c)	If the Optionee ceases to be a Director other than for the reasons set forth in Subsections (a) or (b) above, the Optionee or a Transferee, as applicable, may exercise the Option,
subject to the limitations of Subsection 3.1(b), within three (3) months after Termination, but not later than the Option’s Expiration Date. 

  

ARTICLE IV EXERCISE OF OPTIONS 
  

	4.1	Partial Exercise 

  
 Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.2. Each partial exercise shall be for not less than one hundred (100) shares (or a smaller number, if it is the maximum number which may be exercised under Section 3.1), and
shall be for whole shares only. 
  

	4.2	Manner of Exercise 

  
 The Option, or any exercisable portion thereof, may be exercised solely by delivering to the Secretary or his office all of the following: 
  

	 	(a)	A written notice, complying with the applicable rules established by the Board, stating that the Option or portion is thereby exercised. The notice shall be signed by the Optionee
or the other person then entitled to exercise the Option; 

  

	 	(b)	Full payment (in cash or by cashier’s check) for the shares with respect to which the Option or portion is exercised. Payment may be made by surrendering Company common stock
owned by the Optionee or a Transferee, as applicable, with a fair market value (as defined in Paragraph 5(c) of the Plan) on the date the Option is exercised equal to the aggregate purchase price of the shares with respect to which the Option, or
portion thereof, is exercised; and 

  

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	 	(c)	In the event the Option or portion thereof shall be exercised by any person or persons other than the Optionee, appropriate proof of the right of such person or persons to exercise
the Option. 

  

	4.3	Conditions to Issuance of Stock Certificates 

  
 The shares of stock deliverable upon the exercise of the Option, or any part thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired by the Company. Such shares shall be fully paid and non-assessable. The Company shall not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of the
Option or part thereof prior to fulfillment of all of the following conditions: 
  

	 	(a)	The admission of such shares to listing on all stock exchanges on which such class of stock is then listed; 

  

	 	(b)	The completion of any registration or other qualification of such shares under any state or federal law, or under rulings or regulations of the Securities and Exchange Commission or
any other governmental regulatory body which the Board shall, in its absolute discretion, deem necessary or advisable; 

  

	 	(c)	The obtaining of any approval or other clearance from any state or federal governmental agency which the Board shall, in its absolute discretion, determine to be necessary or
advisable; 

  

	 	(d)	The lapse of such reasonable period of time following the exercise of the Option as the Board may from time to time establish for reasons of administrative convenience; and


  

	 	(e)	The receipt by the Company of full payment for such shares. 

  

	4.4	Rights as Stockholders 

  
 The holder of the Option shall not be, nor have any of the rights or privileges of, a stockholder of the Company in respect of any shares purchasable upon
the exercise of any part of the Option unless and until certificates representing such shares shall have been issued by the Company to such holder. 
  
 ARTICLE V MISCELLANEOUS 
  

	5.1	Administration 

  
 The Board shall have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of
the Plan as are consistent therewith and to interpret or revoke any such rules. All actions taken and all interpretations and determinations made by the Board in good faith shall be final and binding upon the Optionee, the Company and all other
interested persons. No member of the Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or the Option. 
  

	5.2	Transferability 

  
 Neither the Option nor any interest or right therein or part thereof may be sold, pledged, assigned or transferred in any manner other than by will or by
the applicable laws of descent and distribution, or to a Beneficiary, a Transferee, or except as permitted by the Plan. The Option shall be exercised during the Optionee’s lifetime only by the Optionee, or his guardian or legal representative
or by a Transferee. 
  

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	5.3	Notices 

  
 Any notice to be given under the terms of this Agreement to the Company shall be addressed to the Company in care of its Secretary and any notice to be
given to the Optionee shall be addressed to him at the address given beneath his signature hereto. By a notice given pursuant to this Section, either party may hereafter designate a different address for notices to be given to him. Any notice which
is required to be given to Optionee shall, if Optionee is then deceased, be given to Optionee’s personal representative if such representative has previously informed the Company of his status and address by written notice under this Section.
Any notice shall have been deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United States Postal
Service. 
  

	5.4	Adoption by the Board, Approval by Stockholders and Receipt of Interpretive Letter 

  
 The Plan was approved and adopted by the Board on February 27, 2003 and approved by the Company’s stockholders on April
24, 2003. The Company received an interpretive letter dated April 22, 1988 from the Securities and Exchange Commission to the effect that the Plan meets the requirements of Rule 16b-3 of the Securities Exchange Act of 1934 and that non-employee
directors receiving Options under the Plan are disinterested persons within the meaning of Rule 16b-3 for the purpose of administering certain compensation plans of the Company. 
  

	5.5	Titles 

  
 Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement. 
  

	5.6	Construction 

  
 This Agreement shall be administered and interpreted under the laws of the State of California. 
  
 IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.

  

			
	AVERY DENNISON CORPORATION
		
	By:	 	*
	 	 	

	 	 	Chairman and Chief Executive Officer
	 
		
	By:	 	*
	 	 	

	 	 	Secretary


  

			
		
	By:	 	*
	 	 	

	 	 	Optionee

  

			
	Address*:	 	 
	 	 	

	 	 	 
	 	 	

	 	 	 
	 	 	


  

	*	Refer to attached Notice. 

  

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