EX-10.19.10






Exhibit 10.19.10




AVERY DENNISON CORPORATION

RESTRICTED STOCK UNIT AGREEMENT




THIS AGREEMENT, dated * , is made by and between Avery Dennison Corporation, a Delaware
corporation, hereinafter referred to as the “Company,” and *, an employee of
Company or a Subsidiary of Company, hereinafter referred to as “Employee.”



WHEREAS, Company wishes to grant to Employee an Award of restricted stock units (“RSUs”) with
Dividend Equivalents (“DEs”) under the terms of the Employee Stock Option and Incentive Plan, as
amended and restated (“Plan); and



WHEREAS, the Compensation and Executive Personnel Committee of the Company’s Board of Directors
(hereinafter referred to as the “Committee”), appointed to administer the Plan, has determined that
it would be to the advantage and best interest of Company and its shareholders to grant the RSUs
with DEs (the “RSU Award”) provided for herein to Employee as an inducement to remain in the
service of Company or its Subsidiaries and as an incentive for increased efforts during such
service;



WHEREAS, the Committee has advised the Company of its determination and instructed the undersigned
officers to issue said RSU Award, as authorized 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 Employee do hereby
agree as follows:



ARTICLE I — DEFINITIONS


Terms not defined herein shall have the meaning given in the Plan. Whenever the following terms
are used in this Agreement they shall have the meaning specified below unless the context clearly
indicates to the contrary.



	 	 	 
	1.1

	 	Pronouns
	
 
	 	 
	
 
	 	The masculine pronoun shall include the feminine and neuter, and the

singular and plural, where the context so indicates.
	1.2

	 	Dividend Equivalents
	
 
	 	 







Whenever dividends are paid or distributions made with respect to the Common Stock, Employee
shall be entitled to dividend equivalents (“Dividend Equivalents”) (in an amount equal in
value to the amount of the dividend paid or property distributed on a single share of Common
Stock multiplied by the number of Restricted Stock Units in Employee’s RSU account), which
Dividend Equivalents shall be credited as additional Restricted Stock Units (calculated by
dividing the Dividend Equivalent by the price of a single share of Company Stock and,
including any fractional share) to the Employee’s RSU account as of the last business day of
each calendar quarter.



.ARTICLE II — TERMS OF AWARD



	 	 	 
	2.1

	 	RSU Award
	
 
	 	 
	
 
	 	In consideration of Employee’s agreement to remain in the employment of

Company or its Subsidiaries during the Restriction Period (defined below)

and for other good and valuable consideration, on the date hereof the

Company grants to Employee a RSU Award representing *

shares of the Company’s Common Stock, subject to the terms and conditions

set forth in this Agreement and the Plan. Each RSU shall represent one

hypothetical share of Common Stock of the Company. The RSU Award granted

hereunder shall be held in [book-entry form in the books and records] of

the Company (or its designee) for the Employee’s RSU account. The RSU

Award shall be subject to the restrictions described herein and shall

vest as set forth in the Award Notice or as set forth in this Agreement.
	2.2

	 	Restriction Period
	
 
	 	 







	 	(a)	 	No portion of the RSU Award granted hereunder may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of by the Employee until the RSU
Award becomes vested. The period of time between the date hereof and the date the RSU
Award becomes vested is referred to herein as the “Restriction Period.” At the time
the RSU Award vests, the RSUs and the DEs vest.






	 	(b)	 	Subject to the provisions of this Agreement, if the Employee’s employment with
the Company is terminated for Cause or voluntary termination, the balance of the RSU
Award, which has not vested by the time of the Employee’s Termination of Employment,
shall be forfeited by the Employee, and ownership transferred back to the Company.






	2.3	 	Lapse of Restriction Period






The Restriction Period shall lapse when the RSU Award is vested as set forth in the Award
Notice ( * years from the date of this Agreement) or as otherwise set forth in this
Agreement.



	 	 	 
	2.4

	 	Change of Control; Good Reason
	
 
	 	 
	
 
	 	In the event of a Change of Control or a termination of Employee’s

employment for Good Reason (as defined in any employment agreement or

related agreement with the Company), the restrictions in this Agreement

will lapse and be removed, and the RSU Award granted to Employee pursuant

to this Agreement will vest as of the date of such Change in Control or

termination for Good Reason.
	2.5

	 	Death; Disability
	
 
	 	 
	
 
	 	If Employee’s employment with the Company or its Subsidiaries terminates

by reason of Employee’s death or Disability (as defined in any employment

agreement or related agreement with the Company, or in the absence of

such agreement in the Plan) the restrictions imposed upon the RSU Award

granted to Employee pursuant to this Agreement will lapse and be removed,

and the RSU Award will vest as of the last date of Employee’s employment.
	2.6

	 	Retirement
	
 
	 	 







RSU Awards, granted to employees participating in the Senior Executive or the Executive
Leadership Compensation Plans (annual bonus plans), who (i) retire under the Company’s
retirement plan, (ii) have worked for the Company for ten (10) or more years, and (iii) have
a combination of age and service with the Company of seventy five (75) or more, will vest as
of the date of Termination of Employment.



	 	 	 
	2.7

	 	Adjustments in RSU Award
	
 
	 	 
	
 
	 	In the event that the outstanding shares of the Common Stock 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 Committee or the Company shall make an

appropriate and equitable adjustment in the number and kind of the RSU

Award granted hereunder. Such adjustment shall be made with the intent

that after the change or exchange of shares, the Employee’s proportionate

interest shall be maintained as before the occurrence of such event.






ARTICLE III – RSU CERTIFICATES; SHAREHOLDER RIGHTS



	 	 	 
	3.1

	 	Conditions to and Issuance of Common Stock
	
 
	 	 
	
 
	 	The shares of Common Stock deliverable for the RSU Award, or any part

thereof, may be either previously authorized but unissued shares or

issued shares that have then been reacquired by the Company. Such shares

shall be fully paid and nonassessable. The Company’s obligation to issue

or deliver any certificate or certificates for shares of stock shall be

subject to satisfaction 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 Committee or
the Company 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 Committee or the Company shall, in its absolute
discretion, determine to be necessary or advisable;






	 	(d)	 	The receipt by the Company of full payment for all related taxes. The Employee
shall be liable for any and all taxes, including withholding taxes, arising out of this
RSU Award or the vesting of the RSU Award hereunder. The Employee may elect to satisfy
such withholding tax obligation by having the Company retain RSUs having a fair market
value equal to the Company’s minimum withholding obligations.






Subject to Section 4.5 below, the Company shall issue to the Employee the number of shares
of Common Stock represented by the number of vested RSUs within sixty (60) days after the
date on which the RSUs vest, except that in the cases of Termination of Employment by
reason of Disability under Section 2.5 or of Retirement under Section 2.6, the RSUs shall
be paid on the first day of the seventh (7th) calendar month beginning after the Employee’s
Termination of Employment. Such issuance of shares of Common Stock constitutes payment of
the vested RSU and shall satisfy the Company’s obligations under this Agreement.



	 	 	 
	3.2

	 	Shareholder Rights
	
 
	 	 
	
 
	 	During the Restriction Period, the Employee shall not have the rights of

a shareholder with respect to the RSU Award granted hereunder except for

the right to Dividend Equivalents on the RSU, provided, however, that

dividends paid, if any, with respect to RSUs that have not vested at the

time of the dividend payment, shall be reflected in the books and records

of the Company (or its designee), and shall be subject to the same

restrictions that apply to the corresponding RSUs.






ARTICLE IV – MISCELLANEOUS




	4.1	 	Agreement Subject to Plan






The Agreement is subject to the terms of the Plan, and in the event of any conflict between
this Agreement and the Plan, the Plan shall control.



	 	 	 
	4.2

	 	Administration
	
 
	 	 
	
 
	 	The Committee or the Company shall have the power to interpret the Plan

and this Agreement and to adopt such procedures for the administration,

interpretation and application of the Plan as are consistent therewith

and to interpret or revoke any such procedures. Nothing in this

Agreement or the Plan shall be construed to create or imply any contract

or right of continued employment between the Employee and the Company (or

any of its Subsidiaries).
	4.3

	 	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 Employee 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 that is required to be given to

Employee shall, if Employee is then deceased, be given to Employee’s

Beneficiary or personal representative if such individual has previously

informed the Company of his status and address by written notice under

this Section.
	4.4

	 	Titles
	
 
	 	 
	
 
	 	Titles are provided herein for convenience only and are not to serve as a

basis for interpretation or construction of this Agreement.
	4.5

	 	Code Section 409A
	
 
	 	 
	4.6

	 	The RSUs are intended to comply in all respects with Section 409A of

the Internal Revenue Code of 1986, as amended (“Section 409A”) and this

Agreement shall be interpreted accordingly. However, if at any time the

Committee determines that the RSUs may not comply with all requirements

of Section 409A, the Committee shall have the right, in its sole

discretion, to amend this Agreement as it may determine is necessary or

desirable for the RSUs to satisfy the requirements of Section 409A.

Construction
	
 
	 	 
	
 
	 	This Agreement and the Plan and all actions taken thereunder shall be

governed by and construed in accordance with the laws of the State of

Delaware, without reference to principles of conflict of laws.






IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.



Employee Avery Dennison Corporation



	 	 	 
	
 
	 	By: *
	
 
	 	 
	*

	 	President and Chief Executive Officer

By: *
	 

	 	 
	Address*:

	 	Secretary







	 	•	 	Refer to attached Award Notice.





AVERY DENNISON CORPORATION

RESTRICTED STOCK UNIT AGREEMENT




THIS AGREEMENT, dated * , is made by and between Avery Dennison Corporation, a Delaware
corporation, hereinafter referred to as the “Company,” and * , an employee of
Company or a Subsidiary of Company, hereinafter referred to as “Employee.”



WHEREAS, Company wishes to grant to Employee an Award of restricted stock units (“RSUs”) with
Dividend Equivalents (“DEs”) under the terms of the Employee Stock Option and Incentive Plan, as
amended and restated (“Plan); and



WHEREAS, the Compensation and Executive Personnel Committee of the Company’s Board of Directors
(hereinafter referred to as the “Committee”), appointed to administer the Plan, has determined that
it would be to the advantage and best interest of Company and its shareholders to grant the RSUs
with DEs (the “RSU Award”) provided for herein to Employee as an inducement to remain in the
service of Company or its Subsidiaries and as an incentive for increased efforts during such
service;



WHEREAS, the Committee has advised the Company of its determination and instructed the undersigned
officers to issue said RSU Award, as authorized 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 Employee do hereby
agree as follows:



ARTICLE I — DEFINITIONS


Terms not defined herein shall have the meaning given in the Plan. Whenever the following terms
are used in this Agreement they shall have the meaning specified below unless the context clearly
indicates to the contrary.



	 	 	 
	1.1

	 	Pronouns
	
 
	 	 
	
 
	 	The masculine pronoun shall include the feminine and neuter, and the

singular and plural, where the context so indicates.
	1.3

	 	Dividend Equivalents
	
 
	 	 







Whenever dividends are paid or distributions made with respect to the Common Stock, Employee
shall be entitled to dividend equivalents (“Dividend Equivalents”) (in an amount equal in
value to the amount of the dividend paid or property distributed on a single share of Common
Stock multiplied by the number of Restricted Stock Units in Employee’s RSU account), which
Dividend Equivalents shall be credited as additional Restricted Stock Units (calculated by
dividing the Dividend Equivalent by the price of a single share of Company Stock and
including any fractional share) to the Employee’s RSU account as of the record date for such
dividend or distribution.



.ARTICLE II — TERMS OF AWARD



	 	 	 
	2.1

	 	RSU Award
	
 
	 	 
	
 
	 	In consideration of Employee’s agreement to remain in the employment of

Company or its Subsidiaries during the Restriction Period (defined below)

and for other good and valuable consideration, on the date hereof the

Company grants to Employee a RSU Award representing *

shares of the Company’s Common Stock, subject to the terms and conditions

set forth in this Agreement and the Plan. Each RSU shall represent one

hypothetical share of Common Stock of the Company. The RSU Award granted

hereunder shall be held in the books and records of the Company (or its

designee) for the Employee’s RSU account. The RSU Award shall be subject

to the restrictions described herein and shall vest as set forth in this

Agreement.
	2.2

	 	Restriction Period
	
 
	 	 







	 	(b)	 	No portion of the RSU Award granted hereunder may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of by the Employee until the RSU
Award becomes vested. The period of time between the date hereof and the date the RSU
Award becomes vested is referred to herein as the “Restriction Period.” At the time
the RSU Award vests, the RSUs and the DEs vest.






	 	(b)	 	After three fiscal years following the date the RSU Award was granted, the RSU
Award will vest on the date of the Committee’s certification (as described below),
provided that the Company’s return on total capital (“ROTC”) (as reported in the annual
report to shareholders or other report) for the most recently completed fiscal year
equals or exceeds the sixty-seventh (67%) percentile of the return on total capital for
the peer group companies (as listed in the Company’s proxy statement) for such third
fiscal year (the “performance test”). (For example, the initial performance test for
vesting for the RSU Award granted in December 2005 will be based on the return on total
capital for 2008.)






To facilitate the peer group performance comparison needed to determine whether the
RSU Award vests, the figures for peer group companies return on total capital will be
based upon the twelve-month performance for each company in the peer group closest to
the Company’s fiscal year end, using the most recent publicly available financial
information for such companies.




If the Company meets the performance test described above, all prior non-vested RSU
Awards eligible for vesting will vest on the date of the Committee’s certification
that the Company has met the performance test.




If the Company fails to meet the initial performance test described above, all prior
non-vested RSU Awards eligible for vesting will be subject to the same performance
test following the end of the next two fiscal years. If the Company fails to meet
the performance test by the end of the fifth fiscal year following the date of the
grant, then the RSU Award will be forfeited.




	 	(c)	 	Subject to the provisions of this Agreement, if the Employee’s employment with
the Company is terminated for Cause or voluntary termination, the balance of the RSU
Award, which has not vested by the time of the Employee’s Termination of Employment,
shall be forfeited by the Employee, and ownership transferred back to the Company.





	 	 	 
	2.4

	 	Lapse of Restriction Period
	
 
	 	 
	
 
	 	The Restriction Period shall lapse when the RSU Award is vested as set forth in this Agreement.
	2.4

	 	Change of Control; Good Reason
	
 
	 	 
	
 
	 	In the event of a Change of Control or a termination of Employee’s employment for Good Reason (as defined in any employment

agreement or related agreement with the Company), the restrictions in this Agreement will lapse and be removed, and the RSU

Award granted to Employee pursuant to this Agreement will vest as of the date of such Change in Control or termination for

Good Reason.
	2.5

	 	Death; Disability
	
 
	 	 
	
 
	 	If Employee’s employment with the Company or its Subsidiaries terminates by reason of Employee’s death or Disability (as

defined in any employment agreement or related agreement with the Company, or in the absence of such agreement in the Plan)

the restrictions imposed upon the RSU Award granted to Employee pursuant to this Agreement will lapse and be removed, and the

RSU Award will vest as of the last date of Employee’s employment.
	2.6

	 	Retirement
	
 
	 	 







RSU Awards, granted to employees participating in the Senior Executive or the Executive
Leadership Compensation Plans (annual bonus plans), who (i) retire under the Company’s
retirement plan, (ii) have worked for the Company for ten (10) or more years, and (iii) have
a combination of age and service with the Company of seventy five (75) or more, will vest as
of the date of Termination of Employment, provided that the Company has achieved the ROTC
performance test (described in Section 2.2 (b)) herein in at least 3 of the last 5 years
before the year of retirement.



	 	 	 
	2.7

	 	Adjustments in RSU Award
	
 
	 	 
	
 
	 	In the event that the outstanding shares of the Common Stock 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 Committee or the Company shall make an

appropriate and equitable adjustment in the number and kind of the RSU

Award granted hereunder. Such adjustment shall be made with the intent

that after the change or exchange of shares, the Employee’s proportionate

interest shall be maintained as before the occurrence of such event.






ARTICLE III – ISSUANCE OF COMMON STOCK; SHAREHOLDER RIGHTS



	 	 	 
	3.1

	 	Conditions to and Issuance of Common Stock
	
 
	 	 
	
 
	 	The shares of Common Stock deliverable for the RSU Award, or any part

thereof, may be either previously authorized but unissued shares or

issued shares that have then been reacquired by the Company. Such shares

shall be fully paid and nonassessable. The Company’s obligation to issue

or deliver any certificate or certificates for shares of stock shall be

subject to satisfaction of all of the following conditions:







	 	(b)	 	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 Committee or
the Company 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 Committee or the Company shall, in its absolute
discretion, determine to be necessary or advisable;






	 	(d)	 	The receipt by the Company of full payment for all related taxes. The Employee
shall be liable for any and all taxes, including withholding taxes, arising out of this
RSU Award or the vesting of the RSU Award hereunder. The Employee may elect to satisfy
such withholding tax obligation by having the Company retain RSUs having a fair market
value equal to the Company’s minimum withholding obligations.






Subject to Section 4.5 below, the Company shall issue to the Employee the number of shares
of Common Stock represented by the number of vested RSUs within sixty (60) days after the
date on which the RSUs vest, except that in the cases of Termination of Employment by
reason of Disability under Section 2.5 or of Retirement under Section 2.6, the RSUs shall
be paid on the first day of the seventh (7th) calendar month beginning after the Employee’s
Termination of Employment. Such issuance of shares of Common Stock constitutes payment of
the vested RSU and shall satisfy the Company’s obligations under this Agreement.



	 	 	 
	3.2

	 	Shareholder Rights
	
 
	 	 
	
 
	 	During the Restriction Period, the Employee shall not have the rights of

a shareholder with respect to the RSU Award granted hereunder except for

the right to Dividend Equivalents on the RSUs, provided, however, that

dividends paid, if any, with respect to RSUs that have not vested at the

time of the dividend payment, shall be reflected in the books and records

of the Company (or its designee), and shall be subject to the same

restrictions that apply to the corresponding RSUs.






ARTICLE IV – MISCELLANEOUS




	4.1	 	Agreement Subject to Plan






The Agreement is subject to the terms of the Plan, and in the event of any conflict between
this Agreement and the Plan, the Plan shall control.



	 	 	 
	4.2

	 	Administration
	
 
	 	 
	
 
	 	The Committee or the Company shall have the power to interpret the Plan

and this Agreement and to adopt such procedures for the administration,

interpretation and application of the Plan as are consistent therewith

and to interpret or revoke any such procedures. Nothing in this

Agreement or the Plan shall be construed to create or imply any contract

or right of continued employment between the Employee and the Company (or

any of its Subsidiaries).
	4.3

	 	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 Employee 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 that is required to be given to

Employee shall, if Employee is then deceased, be given to Employee’s

Beneficiary or personal representative if such individual has previously

informed the Company of his status and address by written notice under

this Section.
	4.4

	 	Titles
	
 
	 	 
	
 
	 	Titles are provided herein for convenience only and are not to serve as a

basis for interpretation or construction of this Agreement.
	4.5

	 	Code Section 409A
	
 
	 	 
	
 
	 	The RSUs and DEs are not intended to constitute “nonqualified deferred

compensation” within the meaning of Section 409A and this Agreement shall

be interpreted accordingly. However, if at any time the Committee

determines that the RSUs or DEs may be subject to Section 409A, the

Committee or the Company shall have the right, in its sole

discretion, to amend this Agreement as it may determine is

necessary or desirable either for the RSUs and/or and DEs to be exempt

from the application of Section 409A or to satisfy the requirements of

Section 409A. In order to comply with the requirements of Section 409A,

the Committee or the Company may in its sole discretion delay the

issuance and delivery of Common Stock to the Employee (as described in

Section 3.1 (e) herein), if the Employee is a “key employee” (as defined

in Section 409A or in associated regulations), for a period of six (6)

months from the date of separation from service (for example, in the

event of a termination of employment for Good Reason or Retirement (as

defined in the Plan and referred to in Section 2.6 herein)).
	4.6

	 	Construction
	
 
	 	 
	
 
	 	This Agreement and the Plan and all actions taken thereunder shall be

governed by and construed in accordance with the laws of the State of

Delaware, without reference to principles of conflict of laws.






IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.



Employee Avery Dennison Corporation



	 	 	 
	
 
	 	By: *
	
 
	 	 
	*

	 	President and Chief Executive Officer

By: *
	 

	 	 
	Address*:

	 	Secretary






• Refer to attached Award Notice.



AVERY DENNISON CORPORATION

RESTRICTED STOCK UNIT AGREEMENT




THIS AGREEMENT, dated * , is made by and between Avery Dennison Corporation, a Delaware
corporation, hereinafter referred to as the “Company,” and *, an employee of
Company or a Subsidiary of Company, hereinafter referred to as “Employee.”



WHEREAS, Company wishes to grant to Employee an Award of restricted stock units (“RSUs”) with
Dividend Equivalents (“DEs”) under the terms of the Employee Stock Option and Incentive Plan, as
amended and restated (“Plan); and



WHEREAS, the Compensation and Executive Personnel Committee of the Company’s Board of Directors
(hereinafter referred to as the “Committee”), appointed to administer the Plan, has determined that
it would be to the advantage and best interest of Company and its shareholders to grant the RSUs
with DEs (the “RSU Award”) provided for herein to Employee as an inducement to remain in the
service of Company or its Subsidiaries and as an incentive for increased efforts during such
service;



WHEREAS, the Committee has advised the Company of its determination and instructed the undersigned
officers to issue said RSU Award, as authorized 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 Employee do hereby
agree as follows:



ARTICLE I – DEFINITIONS



Terms not defined herein shall have the meaning given in the Plan. Whenever the following terms
are used in this Agreement they shall have the meaning specified below unless the context clearly
indicates to the contrary.



	 	 	 
	1.1

	 	Pronouns
	
 
	 	 
	
 
	 	The masculine pronoun shall include the feminine and neuter, and the

singular and plural, where the context so indicates.
	1.4

	 	Dividend Equivalents
	
 
	 	 







Whenever dividends are paid or distributions made with respect to the Common Stock, Employee
shall be entitled to dividend equivalents (“Dividend Equivalents”) (in an amount equal in
value to the amount of the dividend paid or property distributed on a single share of Common
Stock multiplied by the number of Restricted Stock Units in Employee’s RSU account), which
Dividend Equivalents shall be credited as additional Restricted Stock Units (calculated by
dividing the Dividend Equivalent by the price of a single share of Company Stock and
including any fractional share) to the Employee’s RSU account as of the last business day of
each calendar quarter.



ARTICLE II — TERMS OF AWARD



	 	 	 
	2.1

	 	RSU Award
	
 
	 	 
	
 
	 	In consideration of Employee’s agreement to remain in the employment of

Company or its Subsidiaries during the Restriction Period (defined below)

and for other good and valuable consideration, on the date hereof the

Company grants to Employee a RSU Award representing *

shares of the Company’s Common Stock, subject to the terms and conditions

set forth in this Agreement and the Plan. Each RSU shall represent one

hypothetical share of Common Stock of the Company. The RSU Award granted

hereunder shall be held in [book-entry form in the books and records] of

the Company (or its designee) for the Employee’s RSU account. The RSU

Award shall be subject to the restrictions described herein and shall

vest as set forth in the Award Notice or as set forth in this Agreement.
	2.2

	 	Restriction Period
	
 
	 	 







	 	(c)	 	No portion of the RSU Award granted hereunder may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of by the Employee until the RSU
Award becomes vested. The period of time between the date hereof and the date the RSU
Award becomes vested (at which time Employee must be employed by the Company, except as
provided in Section 2.4) is referred to herein as the “Restriction Period.” At the
time the RSU Award vests, the RSUs and the DEs vest. Notwithstanding any other
provision, the RSUs and DEs must be vested before the Company is obligated to issue the
            shares of Common Stock as described in Section 3.1.






	 	(b)	 	Subject to the provisions of this Agreement, if the Employee’s employment with
the Company is terminated for Cause or voluntary termination, the balance of the RSU
Award, which has not vested by the time of the Employee’s Termination of Employment,
shall be forfeited by the Employee, and ownership transferred back to the Company.






	2.5	 	Lapse of Restriction Period






The Restriction Period shall lapse when the RSU Award is vested as set forth in the Award
Notice ( * years from the date of this Agreement) or as otherwise set forth in this
Agreement.



	 	 	 
	2.4

	 	Change of Control; Good Reason
	
 
	 	 
	
 
	 	In the event of a Change of Control or a termination of Employee’s

employment for Good Reason (as defined in any employment agreement or

related agreement with the Company), the restrictions in this Agreement

will lapse and be removed, and the RSU Award granted to Employee pursuant

to this Agreement will vest as of the date of such Change in Control or

termination for Good Reason.
	2.5

	 	Death; Disability
	
 
	 	 
	
 
	 	If Employee’s employment with the Company or its Subsidiaries terminates

by reason of Employee’s death or Disability (as defined in any employment

agreement or related agreement with the Company, or in the absence of

such agreement in the Plan) the restrictions imposed upon the RSU Award

granted to Employee pursuant to this Agreement will lapse and be removed,

and the RSU Award will vest as of the last date of Employee’s employment.
	2.6

	 	Retirement
	
 
	 	 







RSU Awards, granted to employees participating in the Senior Executive or the Executive
Leadership Compensation Plans (annual bonus plans), who (i) retire under the Company’s
retirement plan, (ii) have worked for the Company for ten (10) or more years, and (iii) have
a combination of age and service with the Company of seventy five (75) or more, will vest as
of the date of Termination of Employment.



	 	 	 
	2.7

	 	Adjustments in RSU Award
	
 
	 	 
	
 
	 	In the event that the outstanding shares of the Common Stock 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 Committee or the Company shall make an

appropriate and equitable adjustment in the number and kind of the RSU

Award granted hereunder. Such adjustment shall be made with the intent

that after the change or exchange of shares, the Employee’s proportionate

interest shall be maintained as before the occurrence of such event.






ARTICLE III – RSU CERTIFICATES; SHAREHOLDER RIGHTS



	 	 	 
	3.1

	 	Conditions to and Issuance of Common Stock
	
 
	 	 
	
 
	 	The shares of Common Stock deliverable for the RSU Award, or any part

thereof, may be either previously authorized but unissued shares or

issued shares that have then been reacquired by the Company. Such shares

shall be fully paid and nonassessable. The Company’s obligation to issue

or deliver any certificate or certificates for shares of stock shall be

subject to satisfaction of all of the following conditions:







	 	(c)	 	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 Committee or
the Company 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 Committee or the Company shall, in its absolute
discretion, determine to be necessary or advisable;






	 	(e)	 	The receipt by the Company of full payment for all related taxes. The Employee
shall be liable for any and all taxes, including withholding taxes, arising out of this
RSU Award or the vesting of the RSU Award hereunder. The Employee may elect to satisfy
such withholding tax obligation by having the Company retain RSUs having a fair market
value equal to the Company’s minimum withholding obligations.






Subject to Section 4.5 below, the Company shall issue to the Employee the number of shares
of Common Stock represented by the number of vested RSUs within sixty (60) days after the
date on which the RSUs vest except that in the cases of Termination of Employment by reason
of Disability under Section 2.5 or of Retirement under Section 2.6, the RSUs shall be paid
on the first day of the seventh (7th) calendar month beginning after the Employee’s
Termination of Employment. Such issuance of shares of Common Stock constitutes payment of
the vested RSUs and shall satisfy the Company’s obligations under this Agreement.



	 	 	 
	3.2

	 	Shareholder Rights
	
 
	 	 
	
 
	 	During the Restriction Period, the Employee shall not have the rights of

a shareholder with respect to the RSU Award granted hereunder except for

the right to Dividend Equivalents on the RSU, provided, however, that

dividends paid, if any, with respect to RSUs that have not vested at the

time of the dividend payment, shall be reflected in the books and records

of the Company (or its designee), and shall be subject to the same

restrictions that apply to the corresponding RSUs.






ARTICLE IV – MISCELLANEOUS




	4.1	 	Agreement Subject to Plan






The Agreement is subject to the terms of the Plan, and in the event of any conflict between
this Agreement and the Plan, the Plan shall control.



	 	 	 
	4.2

	 	Administration
	
 
	 	 
	
 
	 	The Committee or the Company shall have the power to interpret the Plan

and this Agreement and to adopt such procedures for the administration,

interpretation and application of the Plan as are consistent therewith

and to interpret or revoke any such procedures. Nothing in this

Agreement or the Plan shall be construed to create or imply any contract

or right of continued employment between the Employee and the Company (or

any of its Subsidiaries).
	4.3

	 	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 Employee 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 that is required to be given to

Employee shall, if Employee is then deceased, be given to Employee’s

Beneficiary or personal representative if such individual has previously

informed the Company of his status and address by written notice under

this Section.
	4.4

	 	Titles
	
 
	 	 
	
 
	 	Titles are provided herein for convenience only and are not to serve as a

basis for interpretation or construction of this Agreement.
	4.5

	 	Code Section 409A
	
 
	 	 
	
 
	 	The RSUs are intended to comply in all respects with Section 409A of

the Internal Revenue Code of 1986, as amended (“Section 409A”) and this

Agreement shall be interpreted accordingly. However, if at any time the

Committee determines that the RSUs may not comply with Section 409A, the

Committee shall have the right, in its sole discretion, to amend this

Agreement as it may determine is necessary or desirable for the RSUs to

satisfy the requirements of Section 409A.
	4.6

	 	Construction
	
 
	 	 
	
 
	 	This Agreement and the Plan and all actions taken thereunder shall be

governed by and construed in accordance with the laws of the State of

Delaware, without reference to principles of conflict of laws.






IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.



Employee Avery Dennison Corporation



	 	 	 
	
 
	 	By: *
	
 
	 	 
	*




Address*:      




	 	President and Chief Executive Officer

By: *

—

Secretary






• Refer to attached Award Notice.



AVERY DENNISON CORPORATION

RESTRICTED STOCK UNIT AGREEMENT




THIS AGREEMENT, dated * , is made by and between Avery Dennison Corporation, a Delaware
corporation, hereinafter referred to as the “Company,” and * , an employee of
Company or a Subsidiary of Company, hereinafter referred to as “Employee.”



WHEREAS, Company wishes to grant to Employee an Award of restricted stock units (“RSUs”) with
Dividend Equivalents (“DEs”) under the terms of the Employee Stock Option and Incentive Plan, as
amended and restated (“Plan); and



WHEREAS, the Compensation and Executive Personnel Committee of the Company’s Board of Directors
(hereinafter referred to as the “Committee”), appointed to administer the Plan, has determined that
it would be to the advantage and best interest of Company and its shareholders to grant the RSUs
with DEs (the “RSU Award”) provided for herein to Employee as an inducement to remain in the
service of Company or its Subsidiaries and as an incentive for increased efforts during such
service;



WHEREAS, the Committee has advised the Company of its determination and instructed the undersigned
officers to issue said RSU Award, as authorized 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 Employee do hereby
agree as follows:



ARTICLE I – DEFINITIONS



Terms not defined herein shall have the meaning given in the Plan. Whenever the following terms
are used in this Agreement they shall have the meaning specified below unless the context clearly
indicates to the contrary.



	 	 	 
	1.1

	 	Pronouns
	
 
	 	 
	
 
	 	The masculine pronoun shall include the feminine and neuter, and the

singular and plural, where the context so indicates.
	1.5

	 	Dividend Equivalents
	
 
	 	 







Whenever dividends are paid or distributions made with respect to the Common Stock, Employee
shall be entitled to dividend equivalents (“Dividend Equivalents”) (in an amount equal in
value to the amount of the dividend paid or property distributed on a single share of Common
Stock multiplied by the number of Restricted Stock Units in Employee’s RSU account), which
Dividend Equivalents shall be credited as additional Restricted Stock Units (calculated by
dividing the Dividend Equivalent by the price of a single share of Company Stock and
including any fractional share) to the Employee’s RSU account as of the record date for such
dividend or distribution.



ARTICLE II — TERMS OF AWARD



	 	 	 
	2.1

	 	RSU Award
	
 
	 	 
	
 
	 	In consideration of Employee’s agreement to remain in the employment of

Company or its Subsidiaries during the Restriction Period (defined below)

and for other good and valuable consideration, on the date hereof the

Company grants to Employee a RSU Award representing *

shares of the Company’s Common Stock, subject to the terms and conditions

set forth in this Agreement and the Plan. Each RSU shall represent one

hypothetical share of Common Stock of the Company. The RSU Award granted

hereunder shall be held in the books and records of the Company (or its

designee) for the Employee’s RSU account. The RSU Award shall be subject

to the restrictions described herein and shall vest as set forth in this

Agreement.
	2.2

	 	Restriction Period
	
 
	 	 







	 	(d)	 	No portion of the RSU Award granted hereunder may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of by the Employee until the RSU
Award becomes vested. The period of time between the date hereof and the date the RSU
Award becomes vested (at which time Employee must be employed by the Company, except as
provided in Section 2.4) is referred to herein as the “Restriction Period.” At the
time the RSU Award vests, the RSUs and the DEs vest. Notwithstanding any other
provision, the RSUs and DEs must be vested before the Company is obligated to issue the
            shares of Common Stock as described in Section 3.1.






	 	(b)	 	After three fiscal years following the date the RSU Award was granted, the RSU
Award will vest on the date of the Committee’s certification (as described below),
provided that the Company’s return on total capital (“ROTC”) as reported in the annual
report to shareholders (or other report) for the most recently completed fiscal year
equals or exceeds the sixty-seventh (67%) percentile of the return on total capital for
the peer group companies (as listed in the Company’s proxy statement) for such third
fiscal year (the “performance test”). (For example, the initial performance test for
vesting for the RSU Award granted in December 2006 will be based on the return on total
capital for 2009.)






To facilitate the peer group performance comparison needed to determine whether the
RSU Award vests, the figures for peer group companies return on total capital will be
based upon the twelve-month performance for each company in the peer group closest to
the Company’s fiscal year end, using the most recent publicly available financial
information for such companies.




If the Company meets the performance test described above, all prior non-vested RSU
Awards eligible for vesting will vest on the date of the Committee’s certification
that the Company has met the performance test.




If the Company fails to meet the initial performance test described above, all prior
non-vested RSU Awards eligible for vesting will be subject to the same performance
test following the end of the next two fiscal years. If the Company fails to meet
the performance test by the end of the fifth fiscal year following the date of the
grant, then the RSU Award will be forfeited.




	 	(c)	 	Subject to the provisions of this Agreement, if the Employee’s employment with
the Company is terminated for Cause or voluntary termination, the balance of the RSU
Award, which has not vested by the time of the Employee’s Termination of Employment,
shall be forfeited by the Employee, and ownership transferred back to the Company.





	 	 	 
	2.6

	 	Lapse of Restriction Period
	
 
	 	 
	
 
	 	The Restriction Period shall lapse when the RSU Award is vested as set forth in this Agreement.
	2.4

	 	Change of Control; Good Reason
	
 
	 	 
	
 
	 	In the event of a Change of Control or a termination of Employee’s employment for Good Reason (as defined in any employment

agreement or related agreement with the Company), the restrictions in this Agreement will lapse and be removed, and the RSU

Award granted to Employee pursuant to this Agreement will vest as of the date of such Change in Control or termination for

Good Reason.
	2.5

	 	Death; Disability
	
 
	 	 
	
 
	 	If Employee’s employment with the Company or its Subsidiaries terminates by reason of Employee’s death or Disability (as

defined in any employment agreement or related agreement with the Company, or in the absence of such agreement in the Plan)

the restrictions imposed upon the RSU Award granted to Employee pursuant to this Agreement will lapse and be removed, and the

RSU Award will vest as of the last date of Employee’s employment.
	2.6

	 	Retirement
	
 
	 	 







RSU Awards, granted to employees participating in the Senior Executive or the Executive
Leadership Compensation Plans (annual bonus plans), who (i) retire under the Company’s
retirement plan, (ii) have worked for the Company for ten (10) or more years, and (iii) have
a combination of age and service with the Company of seventy five (75) or more, will vest as
of the date of Termination of Employment, provided that the Company has achieved the ROTC
performance test (described in Section 2.2 (b)) herein in at least 3 of the last 5 years
before the year of retirement.



	 	 	 
	2.7

	 	Adjustments in RSU Award
	
 
	 	 
	
 
	 	In the event that the outstanding shares of the Common Stock 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 Committee or the Company shall make an

appropriate and equitable adjustment in the number and kind of the RSU

Award granted hereunder. Such adjustment shall be made with the intent

that after the change or exchange of shares, the Employee’s proportionate

interest shall be maintained as before the occurrence of such event.






ARTICLE III – ISSUANCE OF COMMON STOCK; SHAREHOLDER RIGHTS



	 	 	 
	3.1

	 	Conditions to and Issuance of Common Stock
	
 
	 	 
	
 
	 	The shares of Common Stock deliverable for the RSU Award, or any part

thereof, may be either previously authorized but unissued shares or

issued shares that have then been reacquired by the Company. Such shares

shall be fully paid and nonassessable. The Company’s obligation to issue

or deliver any certificate or certificates for shares of stock shall be

subject to satisfaction of all of the following conditions:







	 	(d)	 	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 Committee or
the Company 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 Committee or the Company shall, in its absolute
discretion, determine to be necessary or advisable;






	 	(e)	 	The receipt by the Company of full payment for all related taxes. The Employee
shall be liable for any and all taxes, including withholding taxes, arising out of this
RSU Award or the vesting of the RSU Award hereunder. The Employee may elect to satisfy
such withholding tax obligation by having the Company retain RSUs having a fair market
value equal to the Company’s minimum withholding obligations.






Subject to Section 4.5 below, the Company shall issue to the Employee the number of shares
of Common Stock represented by the number of vested RSUs within sixty (60) days after the
date on which the RSUs vest, except that in the cases of Termination of Employment by
reason of Disability under Section 2.5 or of Retirement under Section 2.6, the RSUs shall
be paid on the first day of the seventh (7th) calendar month beginning after the Employee’s
Termination of Employment. Such issuance of shares of Common Stock constitutes payment of
the vested RSU and shall satisfy the Company’s obligations under this Agreement.



	 	 	 
	3.2

	 	Shareholder Rights
	
 
	 	 
	
 
	 	During the Restriction Period, the Employee shall not have the rights of

a shareholder with respect to the RSU Award granted hereunder except for

the right to Dividend Equivalents on the RSUs, provided, however, that

dividends paid, if any, with respect to RSUs that have not vested at the

time of the dividend payment, shall be reflected in the books and records

of the Company (or its designee), and shall be subject to the same

restrictions that apply to the corresponding RSUs.






ARTICLE IV – MISCELLANEOUS




	4.1	 	Agreement Subject to Plan






The Agreement is subject to the terms of the Plan, and in the event of any conflict between
this Agreement and the Plan, the Plan shall control.



	 	 	 
	4.2

	 	Administration
	
 
	 	 
	
 
	 	The Committee or the Company shall have the power to interpret the Plan

and this Agreement and to adopt such procedures for the administration,

interpretation and application of the Plan as are consistent therewith

and to interpret or revoke any such procedures. Nothing in this

Agreement or the Plan shall be construed to create or imply any contract

or right of continued employment between the Employee and the Company (or

any of its Subsidiaries).
	4.3

	 	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 Employee 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 that is required to be given to

Employee shall, if Employee is then deceased, be given to Employee’s

Beneficiary or personal representative if such individual has previously

informed the Company of his status and address by written notice under

this Section.
	4.4

	 	Titles
	
 
	 	 
	
 
	 	Titles are provided herein for convenience only and are not to serve as a

basis for interpretation or construction of this Agreement.
	4.5

	 	Code Section 409A
	
 
	 	 
	
 
	 	The RSUs and DEs are not intended to constitute “nonqualified deferred

compensation” within the meaning of Section 409A and this Agreement shall

be interpreted accordingly. However, if at any time the Committee

determines that the RSUs or DEs may be subject to Section 409A, the

Committee or the Company shall have the right, in its sole

discretion, to amend this Agreement as it may determine is

necessary or desirable either for the RSUs and/or and DEs to be exempt

from the application of Section 409A or to satisfy the requirements of

Section 409A. In order to comply with the requirements of Section 409A,

the Committee or the Company may in its sole discretion delay the

issuance and delivery of Common Stock to the Employee (as described in

Section 3.1 (e) herein), if the Employee is a “key employee” (as defined

in Section 409A or in associated regulations), for a period of six (6)

months from the date of separation from service (for example, in the

event of a termination of employment for Good Reason or Retirement (as

defined in the Plan and referred to in Section 2.6 herein)).
	4.6

	 	Construction
	
 
	 	 
	
 
	 	This Agreement and the Plan and all actions taken thereunder shall be

governed by and construed in accordance with the laws of the State of

Delaware, without reference to principles of conflict of laws.






IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto.



Employee Avery Dennison Corporation



	 	 	 
	
 
	 	By: *
	
 
	 	 
	*

	 	President and Chief Executive Officer

By: *
	 

	 	 
	Address*:

	 	Secretary






• Refer to attached Award Notice.



AVERY DENNISON CORPORATION

PERFORMANCE UNIT AGREEMENT




THIS AGREEMENT, dated * , is made by and between Avery Dennison Corporation, a Delaware
corporation, hereinafter referred to as the “Company,” and * , an employee of Company or a
Subsidiary of Company, hereinafter referred to as “Employee.”



WHEREAS, Company wishes to grant to Employee an Award of Performance Units (“PUs”) under the terms
of the Employee Stock Option and Incentive Plan, as amended and restated (“Plan); and



WHEREAS, the Compensation and Executive Personnel Committee of the Company’s Board of Directors
(hereinafter referred to as the “Committee”), appointed to administer the Plan, or the Company’s
Chief Executive Officer (“CEO”), has determined that it would be to the advantage and best interest
of Company and its shareholders to grant the PUs (the “PU Award”) to Employee as an inducement to
remain in the service of Company or its Subsidiaries and as an incentive for increased efforts
during such service;



WHEREAS, the Committee or the CEO has advised the Company of the PU Award and instructed that this
PU Award be issued;



NOW, THEREFORE, Company and Employee agree as follows:



ARTICLE I – DEFINITIONS



Terms not defined in this Agreement shall have the meaning given in the Plan.



ARTICLE II – TERMS OF AWARD



2.1 PU Award



As of the date of this Agreement, the Company grants to Employee a PU Award representing * a
right to receive shares of the Company’s Common Stock in the future, assuming that the Company’s
results at the end of the performance period produce 100% of the target performance, subject to the
terms and conditions set forth in this Agreement, the Award Notice and the Plan. Each PU Award
represents one hypothetical share of Common Stock of the Company at 100% target performance. The PU
Award shall be held on the books and records of the Company (or its designee) for the Employee’s PU
account but shall not represent an equity interest in the Company until such time as actual shares
shall be issued to the Employee. The PU Award shall be earned, vested and paid as set forth in
this Agreement.



2.2 Performance Period



(a) No portion of the PU Award may be sold, transferred, assigned, pledged or otherwise
encumbered by the Employee until the PU Award is earned and the shares are issued. Employee must
be employed by the Company from the date of this Agreement until the date that the PU Award is
earned and vested. The “Performance Period” shall be January 1, 2008 through December 31, 2010.
At the end of the Performance Period, , the specific number shares of Common Stock to be issued to
the Employee under the PU Award shall be determined based on the Company’s results during the
Performance Period, compared against the performance metrics (“Metrics”), approved by the Committee
(as modified by any adjustment items approved by the Committee), except as provided in Sections 2.3
through 2.5.



(b) Except as provided in Sections 2.3 through 2.5, the PU Award will be earned and vested on
the date of the Committee’s certification of results in 2011.



The three Metrics are: sales, cumulative economic value added, and relative total shareholder
return. For the peer group performance comparison needed to determine whether the portion of the
PU Award Metric related to total shareholder return (“TSR”) is earned, the TSR for the S&P 500
Industrials and Materials subsets will be used.



(c) Subject to the other provisions of this Agreement, if the Employee’s employment with the
Company is terminated, the PU Award, which has not been earned by the time of the Employee’s
Termination of Employment, shall be forfeited by the Employee.



2.3 Change of Control



In the event of a Change of Control, the PU Award granted to Employee pursuant to this
Agreement will be earned and vested at 100% target performance as of the date of such Change in
Control regardless of the Company’s actual performance.



2.4 Death; Disability



If Employee’s employment with the Company or its Subsidiaries terminates by reason of
Employee’s death or Disability (as defined in the Employee’s employment agreement or related
agreement with the Company, or in the absence of such agreement in the Plan) the PU Award will be
earned and vested based on a prorated time-based formula starting with the actual month of
service completed by the Employee during the Performance Period divided by the total months in the
original Performance Period (in this case 36) multiplied by the number of shares in the PU Award
assuming 100% target performance.



2.5 Retirement



PU Awards, granted to employees who retire under the Company’s pension plan, will be earned
and vested as of the date of termination based on a prorated time-based formula starting with the
actual month of service completed by the Employee during the Performance Period divided by the
total months in the original Performance Period (in this case 36) multiplied by the number of
shares in the PU Award assuming 100% target performance.



2.6 Adjustments in PU Award



In the event that the outstanding shares of the Common Stock 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,
combination of shares, or other similar restructuring, the Committee or the Company shall make an
appropriate and equitable adjustment in the number and kind of shares represented by the PU Award
granted hereunder. Such adjustment shall be made with the intent that after the change or exchange
of shares, the Employee’s proportionate equity interest in the Company shall be maintained as it
was before the occurrence of such event.



ARTICLE III – ISSUANCE OF COMMON STOCK; SHAREHOLDER RIGHTS



3.1 Conditions to and Issuance of Common Stock



The shares of Common Stock deliverable for the PU Award, or any part thereof, may be either
previously authorized but unissued shares or issued shares that have then been reacquired by the
Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to
issue or deliver any shares of stock for any PU Award 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 Committee or the Company 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 Committee or the Company shall, in its absolute discretion, determine to be
necessary or advisable;



(d) The receipt by the Company of full payment or withholding for all related taxes. The
Employee shall be liable for any and all taxes, including withholding taxes, arising out of this PU
Award or the vesting of the PU Award hereunder. The Company or the Employee may elect to satisfy
such withholding tax obligation by having the Company retain PUs having a fair market value equal
to the Company’s minimum withholding obligations.



(e) Subject to Section 4.4 below, the Company shall issue via electronic transfer to the
Employee’s brokerage account the number of shares of Common Stock that are earned as determined
under Article II within sixty (60) days after the date on which the PUs are earned and vested under
the terms of this Agreement, except that in the cases of Termination of Employment by reason of
Disability under Section 2.4 or of Retirement under Section 2.5, the PUs shall be paid on the first
day of the seventh (7th) calendar month beginning after the Employee’s Termination of
Employment. Delivery of these shares of Common Stock shall satisfy the Company’s obligations under
this Agreement.



(f) The Employee shall establish an equity account with a broker designated by the Company
(currently Charles Schwab) so that the net shares from vested PUs (after withholding for applicable
taxes) may be electronically transferred to the Employee’s account.



3.2 Shareholder Rights



The Employee shall have no rights as a shareholder of the Company with respect to this PU
Award until shares are issued to the Employee and the Employee shall be no more than an unsecured
general creditor of the Company with no special or prior right to any assets of the Company for
payment of any obligations hereunder.



ARTICLE IV – MISCELLANEOUS



4.1 Agreement Subject to Plan



The Agreement is subject to the terms of the Plan, and in the event of any conflict between
this Agreement and the Plan, the Plan shall control.



4.2 Administration



The Committee or the Company shall have the power to interpret the Plan and this Agreement and
to adopt such procedures for the administration, interpretation and application of the Plan as are
consistent therewith and to interpret, modify or revoke any such procedures. Nothing in this
Agreement or the Plan shall be construed to create or imply any contract or right of continued
employment between the Employee and the Company (or any of its Subsidiaries).



4.3 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 Employee 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. Any
notice that is required to be given to Employee shall, if Employee is then deceased, be given to
Employee’s Beneficiary or personal representative if such individual has previously informed the
Company of his status and address by written notice under this Section.



4.4 Code Section 409A



The PU Awards granted hereunder are intended to comply in all respects with Section 409A of
the Internal Revenue Code of 1986, as amended, (“Section 409A”) and this Agreement shall be
interpreted accordingly. However, if at any time the Committee or the Company determines that the
PUs may be subject to Section 409A, the Committee or the Company shall have the right, in its sole
discretion, to amend this Agreement as it may determine is necessary or desirable for the PUs to
satisfy the requirements of Section 409A.



4.5 Construction



This Agreement, the Award Notice and the Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware, without reference
to principles of conflict of laws. Titles are provided in this Agreement for convenience only and
shall not serve as a basis for interpretation or construction of this Agreement.



IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties.



Employee Avery Dennison Corporation



	 	 	 
	*     

Address*:

     

	 	By: *

President and Chief Executive Officer

By: *

Secretary






* Refer to attached Award Notice



* Refer to attached Award Notice







* Refer to attached Award Notice