Document:

EX-10.31.2

Exhibit 10.31.2

AVERY DENNISON CORPORATION

2005 EXECUTIVE VARIABLE DEFERRED RETIREMENT PLAN

ARTICLE 1

PURPOSE

The 2005 Executive Variable Deferred Retirement Plan (“Plan”) adopted by Avery Dennison
Corporation, a Delaware corporation (the “Company”) on behalf of itself and its participating
Subsidiaries, originally effective as of December 1, 2004, is hereby amended and restated effective
as of January 1, 2008, to comply with Internal Revenue Code Section 409A and applicable authorities
promulgated thereunder. The Plan is a deferred compensation plan for Eligible Executives employed
by the Company and its Participating Subsidiaries. All vested deferred compensation account
balances as of November 30, 2004, grandfathered under the Code Section 409A transition rules, shall
be governed by prior deferred compensation plan documents and no subsequent amendment shall apply
to such grandfathered amounts. All amounts deferred, contributed or which became vested on or after
December 1, 2004 shall be subject to the provisions of this amended and restated Plan. The Plan is
intended, and shall be interpreted in all respects, to comply with the provisions of Code Section
409A and those provisions of the Employee Retirement Income Security Act of 1974, as amended,
applicable to an unfunded plan maintained primarily to provide deferred compensation benefits for a
select group of “management or highly compensated employees.”

ARTICLE 2

DEFINITIONS AND CERTAIN PROVISIONS

2.1 Account(s). “Account” or “Accounts” means the bookkeeping account(s) established
for record keeping purposes for a Participant pursuant to Section 6.1, which shall include one or
more Deferral Accounts, a Company Contributions Account, any Special Unit Accounts and/or Stock
Unit Account which may be established for the Participant by the Company.

2.2 Administrator. “Administrator” means the administrator appointed by the Committee
to handle the day-to-day administration of the Plan pursuant to Article 9.

2.3 Allocation Election. “Allocation Election” means the form or electronic
communication by which a Participant elects the Declared Rate(s) to be credited as notional
earnings or losses to such Participant’s Account.

2.4 Annual Base Salary. “Annual Base Salary” means an Eligible Employee’s annual
salary at the time of deferral, or any other subsequent date as determined by the Administrator in
its discretion, before reductions for contributions to or deferrals under any pension, deferred
compensation or benefit plans sponsored by the Company. For Eligible Employees who are sales
representatives for the Company, Annual Base Salary (solely for the purpose of computing the
maximum deferral amount under Section 4.3) shall include any commissions earned by such Eligible
Employee.

2.5 Annual Deferral. “Annual Deferral” means the amount of Annual Base Salary and/or
Bonus that the Participant elects to defer under the Plan for a Plan Year.

2.6 Beneficiary. “Beneficiary” means the person or persons or entity designated as
such by a Participant pursuant to Article 8.

2.7 Benefit. “Benefit” means any benefit provided under the terms of the Plan.

2.8 Bonus. “Bonus” means the bonus to which the Participant is entitled from the
Company under any bonus plan or incentive program specified by the Administrator, including any
annual bonus plan or long-term incentive plan, before reductions for contributions to or deferrals
under any pension, deferred compensation or benefit plans sponsored by the Company.

2.9 Change of Control. “Change of Control” means “a change in the ownership or
effective control,” or in “the ownership of a substantial portion of the assets of” the Company
(but not a Participating Subsidiary, except as provided under Article 10), within the meaning of
Code Section 409A and shall include any of the following events as such concepts are interpreted
under Code Section 409A:

(a) the date on which a majority of members of the Company’s Board of Directors is replaced
during any twelve-month period by directors whose appointment or election is not endorsed by a
majority of the members of the Company’s Board of Directors before the date of the appointment or
election; or

(b) the acquisition, by any one person, or by persons acting as a group, or by a corporation
owned by a group of persons that has entered into a merger, acquisition, consolidation, purchase,
stock acquisition, asset acquisition, or similar business transaction with the Company, of:

(i) ownership of stock of the Company, that, together with any stock previously held by such
person or group, constitutes more than fifty percent (50%) of either (i) the total fair market
value, or (ii) the total voting power of the stock of the Company;

(ii) ownership of stock of the Company possessing thirty percent (30%) or more of the total
voting power of the Company, during the twelve-month period ending on the date of such
acquisition; or

(iii) assets from the Company that have a total gross fair market value equal to or more than
forty percent (40%) of the total gross fair market value of all of the assets of the Company
immediately before such acquisition, during the twelve-month period ending on the date of such
acquisition; provided, however, that any transfer of assets to a related person as defined under
Code Section 409A shall not constitute a Change of Control.

2.10 Code. “Code” means the Internal Revenue Code of 1986, as amended, as interpreted
by Treasury regulations and applicable authorities.

2.11 Committee. “Committee” means the deferred compensation plans administrative
committee appointed to administer the Plan pursuant to Article 9.

2.12 Company. “Company” means Avery Dennison Corporation, a Delaware corporation,
acting on behalf of itself and its Participating Subsidiaries, as the context may require.

2.13 Company Contributions. “Company Contributions” means discretionary Matching
Contributions or Special Unit Contributions made by the Employer on behalf of the Participant
pursuant to Article 5.

2.14 Company Contributions Account. “Company Contributions Account” means an Account
established to hold discretionary Matching Contributions pursuant to Sections 5.1 and 6.1.

2.15 Declared Rate. “Declared Rate” means the notional rates of return (which may be
positive or negative) of the individual investment options selected by a Participant for such
Participant’s Account, as referred to in Article 6.

2.16 Deferral Account. “Deferral Account” means an Account established to hold Annual
Deferrals pursuant to Sections 4.1 and 6.1.

2.17 Disability Benefit. “Disability Benefit” means the Benefit payable to a
Participant in accordance with Section 7.4 after the Participant has become Disabled.

2.18 Disability or Disabled. “Disability or Disabled” shall be interpreted in accord
with the requirements of Code Section 409A and shall mean, in the case of a Participant, that the
Participant (i) is unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment, which can be expected to result in death or can be
expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason
of any medically determinable physical or mental impairment, which can be expected to result in
death or can be expected to last for a continuous period of not less than twelve (12) months,
receiving income replacement benefits for a period of not less than three (3) months under an
accident and health plan covering Employees.

2.19 Distribution. “Distribution” means any payment to a Participant or Beneficiary
according to the terms of this Plan.

2.20 Early Termination Benefit. “Early Termination Benefit” means the lump-sum amount
payable to a Participant who ceases to be an Employee pursuant to the provisions of Section 7.2 or
7.3.

2.21 Eligible Employee. “Eligible Employee” means an Employee who is (i) a member of
a select group of management, or a highly compensated employee, and (ii) who meets the annually
indexed salary requirement and/or such other eligibility requirements as may be established by the
Committee.

2.22 Employee. “Employee” means any person employed by the Company or a Participating
Subsidiary.

2.23 Employer. “Employer” means the Company or the Participating Subsidiary that is
the legal employer of the relevant Participant.

2.24 Enrollment Period. “Enrollment Period” means the period(s) designated for a
particular Plan Year by the Administrator for enrollments.

2.25 ERISA. “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, as interpreted by applicable authorities.

2.26 Matching Contributions. “Matching Contributions” means contributions made by the
Employer on behalf of a Participant pursuant to Section 5.1.

2.27 Participant. “Participant” means an Eligible Employee who has filed a completed
and executed Participation Election Form with the Administrator, and who is participating in the
Plan in accordance with the provisions of Articles 3 and 4.

2.28 Participating Subsidiary. “Participating Subsidiary” means a subsidiary
corporation the majority of the outstanding stock of which is owned, directly or indirectly by the
Company.

2.29 Participation Election. “Participation Election” means the commitment to make a
deferral under the Plan, submitted by the Participant to the Administrator pursuant to Articles 3
and 4 of the Plan. The Participant Election may take the form of an electronic communication
followed by appropriate confirmation according to procedures established by the Administrator.

2.30 Plan. “Plan” means this 2005 Executive Variable Deferred Retirement Plan, a
non-qualified elective deferred compensation plan, as the same may be amended from time to time.

2.31 Plan Year. “Plan Year” means the calendar year.

2.32 Settlement Date. “Settlement Date” means the date by which a lump-sum payment
shall be made or the date by which installment payments shall commence under the Plan. Unless
otherwise specified, the Settlement Date shall be as soon as practicable after, but in all events
no later than ninety (90) days following, the Valuation Date. In the case of a Participant’s
death, the Administrator shall be provided with the documentation reasonably necessary to establish
the fact of the Participant’s death. Notwithstanding the foregoing or any other provision of the
Plan, in the event that a Participant is a “key employee” (as defined in Code Section 416(i)
without regard to paragraph (5) thereof) of a corporation, any stock of which is publicly traded on
an established securities market, the Settlement Date with respect to payments triggered by
Termination of Employment (other than be reason of death or Disability) or Change in Control shall
be paid only after the earlier of (i) the last day of the sixth (6th) complete calendar month
following the Participant’s Termination of Employment, or (ii) the Participant’s death, consistent
with the provisions of Code Section 409A. Any payments delayed by reason of the preceding sentence
shall be caught up and paid in a single lump-sum on the first day such payments are permissible
consistent with the application of Code Section 409A.

2.33 Special Unit Contribution. “Special Unit Contribution” means a contribution made
by the Employer on behalf of a Participant pursuant to Section 5.2.

2.34 Special Unit Account. “Special Unit Account” means an Account created to hold a
Special Unit Contribution pursuant to Sections 5.2 and 6.1.

2.35 Special Unit Award Agreement. “Special Unit Award Agreement” means the agreement
between the Participant and the Company specifying the terms of a Special Unit Contribution
including the vesting schedule and payout elections applicable to such Special Unit Contribution.
The Special Unit Award Agreement may take the form of an electronic communication followed by
appropriate confirmation according to procedures established by the Administrator.

2.36 Stock Unit Contribution. “Stock Unit Contribution” means a contribution made by
the Company on behalf of a Participant pursuant to Section 5.3.

2.37 Stock Unit Account. “Stock Unit Account” means an Account created to hold all
Stock Unit Contribution on behalf of a single Participant pursuant to Sections 5.3 and 6.1.

2.38 Stock Unit Award Agreement. “Stock Unit Award Agreement” means a Performance
Unit Agreement or such other agreement between a Participant and the Company specifying the terms
of a Stock Unit Contribution. The Stock Unit Award Agreement may take the form of an electronic
communication followed by appropriate confirmation according to procedures established by the
Administrator.

2.39 Survivor Benefit. “Survivor Benefit” means those Plan Benefits that become
payable upon the death of a Participant pursuant to Section 7.5.

2.40 Termination of Employment. “Termination of Employment” means the cessation of a
Participant’s employment with the Employer for any reason, whether voluntary or involuntary,
including by reason of retirement, Disability or death. For purpose of the preceding sentence,
Termination of Employment shall be interpreted consistent with the requirements of Code Section
409A for “separation from service”.

2.41 Valuation Date. “Valuation Date” means the date on which the Account is valued
for Distribution purposes. This date shall be the last day of the month in which an event occurs
that triggers a Benefit payment.

2.42 Years of Participation. “Years of Participation” means the cumulative
consecutive years of participation in this Plan or in any other nonqualified deferred compensation
plan sponsored by the Company, as determined in the complete and sole discretion of the
Administrator.

ARTICLE 3

PARTICIPATION

3.1 Participation. The Administrator shall notify Eligible Employees generally not
less than thirty (30) days (or such lesser period as may be practicable under the circumstances)
prior to any deadline for filing a Participation Election Form. An Eligible Employee must submit a
Participant Election during the Enrollment Period established by the Administrator to become a
Participant.

3.2 Participation Election. An Eligible Employee shall become a Participant in the
Plan no later than the first day of the Plan Year coincident with or beginning after the date the
Employee is designated as an Eligible Employee, provided such Employee has filed a Participant
Election with the Administrator. To be effective, the Eligible Employee must submit the
Participant Election during an Enrollment Period or any other such time as determined by the
Administrator. The Administrator may establish a special Enrollment Period during a Plan Year
within thirty (30) days after an Eligible Executive first becomes eligible to participate in the
Plan (if the Eligible Employee is not already a participant in any plan that is aggregated with
this Plan for purposes of Code Section 409A), to allow deferrals by such newly Eligible Employee of
amounts earned during the balance of such Plan Year.

3.3 Continuation of Participation. A Participant who has elected to participate in
the Plan by submitting a Participant Election shall continue as a Participant until all Benefits
payable to or on behalf of the Participant under the Plan have been distributed. In the event a
Participant becomes ineligible to continue participation in the Plan, but has not experienced a
Termination of Employment, no further Annual Deferrals or Company Contributions shall be made by or
on behalf of the Participant but the Participant’s Accounts shall be held and administered in
accordance with the Plan until such time as the Participant’s Accounts have been completely
distributed.

ARTICLE 4

PARTICIPANT DEFERRALS

4.1 Annual Deferral. On the Participation Election Form, and subject to the
restrictions set forth herein, an Eligible Employee shall designate the amount of Annual Base
Salary and Bonus to be deferred for the following Plan Year or Bonus performance period, or such
other period as the Committee may determine, provided that any deferral election shall be made no
later than the last day of the calendar year preceding the calendar year (or, in the case of a new
Participant, the thirtieth (30th) day following initial eligibility for the remaining
portion of the Plan Year) in which the services are performed for which such Annual Base Salary or
Bonus are earned; except and provided further that, to the extent allowed by Code Section 409A, the
Committee may allow deferral elections to be made or revised no later than six (6) months before
the end of the performance period solely with respect to any “performance-based compensation” as
defined in Code Section 409A that is based on services performed over a period of at least twelve
(12) months. For this purpose, the Committee shall determine, in its complete and sole discretion,
whether any Bonus qualifies as “performance-based compensation” as defined under Code Section 409A.

4.2 Minimum Deferral. The minimum amount of Annual Deferral that may be deferred
shall be two percent (2%) of a Participant’s Annual Base Salary.

4.3 Maximum Deferral. The standard maximum amount of Annual Deferral that may be
deferred shall be seventy-five percent (75%) of a Participant’s Annual Base Salary and one hundred
percent (100%) of a Participant’s Bonus; provided that, with the approval of the Administrator,
Participants may defer up to one hundred percent (100%) of their Annual Base Salary, less
applicable withholdings. Notwithstanding the foregoing, the Committee may further limit the
maximum or the minimum amount of deferrals by any Participant or group of Participants in its sole
discretion.

ARTICLE 5

DISCRETIONARY COMPANY CONTRIBUTIONS

5.1 Discretionary Matching Contributions. The Employer, in its sole discretion, may
credit to selected Participants’ Accounts a discretionary amount or match of an Annual Deferral in
any amount determined by the Company. Matching Contributions shall be made in the complete and sole
discretion of the Company and no Participant or Eligible Employee shall have the right to receive
any Matching Contribution regardless of whether Matching Contributions are made on behalf of other
Participants. Matching Contributions shall vest at the time specified by the Company.

5.2 Special Unit Contributions. The Employer, in its complete and sole discretion,
may credit an amount to the Plan on behalf of an existing Participant or a newly Eligible Employee
as a special bonus award or a deferred signing bonus (a “Special Unit Contribution”). Such amounts
shall be granted pursuant to a Special Unit Award Agreement which shall specify the period over
which such Special Unit Contribution shall vest. The Participant may be granted an election with
respect to the time and form of payment of a Special Unit Contribution during the thirty (30) day
period following the grant of a Special Unit Contribution if such Contribution is subject to a
substantial risk of forfeiture for a minimum of twelve (12) months after the end of such election
period (i.e., 13 months after the grant date), or as otherwise permitted under Code Section 409A.

5.3 Stock Unit Contributions. A Participant may be credited an amount under the Plan
as a hypothetical stock contribution (a “Stock Unit Contribution”), for example, pursuant to a
Performance Unit Award under the Company-sponsored Employee Stock Option and Incentive Plan or any
successor plan or similar plan, as determined by the Company in its complete and sole discretion,
and as evidenced by a Stock Unit Award Agreement. The Stock Unit Award Agreement may specify that
such award is to be contributed to this Plan or the Participant may be granted an election with
respect to such an award to defer such phantom stock unit award into this Plan within the thirty
(30) day period following grant of the award but only if such stock unit award is subject to a
substantial risk of forfeiture for a minimum of twelve (12) months after the end of such election
period (i.e., 13 months after the grant date), or as otherwise permitted under Code Section 409A.

ARTICLE 6

ACCOUNTS AND INVESTMENT OPTIONS

6.1 Accounts. Solely for record keeping purposes, the Company shall maintain up to
five (5) Deferral Accounts under the Plan for each Participant. Annual Deferrals shall be credited
by the Employer to the Participant’s Deferral Account at the time such amounts would otherwise have
been paid to the Participant. The Company shall also maintain a Company Contributions Account for
each Participant which shall be credited with any Matching Contributions made on behalf of such
Participant pursuant to Section 5.1, as directed by the Company. In addition to Deferral Accounts
and Company Contribution Accounts, separate Special Unit Accounts shall be maintained for each
Special Unit Contribution and a separate Stock Unit Account shall be maintained for all Stock Unit
Contributions made to the Plan on behalf of a Participant, if any, as directed by the Company. All
of a Participant’s Accounts, except the Stock Unit Account, shall be credited (and compounded
daily) with a notional rate of return (positive or negative) based on the Declared Rate(s) elected
by the Participant under Section 6.2. Stock Unit Accounts shall be credited as provided in Section
6.4.

6.2 Participant Election of Declared Rates. The crediting rate on amounts in a
Participant’s Account shall be based on the Participant’s choice among the investment alternatives
made available from time to time by the Committee. The Administrator shall establish a procedure by
which a Participant may make an Allocation Election among any combination of Declared Rates in one
percent (1%) increments up to one hundred percent (100%) and may change the Declared Rate(s) at
least once per week with such change(s) effective as of the first day of the next following week.
Such investment elections may apply to future deferrals and/or to the existing Account balances, as
indicated by the Participant. Notwithstanding the foregoing, the Company shall have no obligation
to set aside or invest funds as directed by the Participant and, if the Company elects to invest
funds as directed by the Participant, the Participant shall have no more right to such investments
than any other unsecured general creditor of the Company.

6.3 Declared Rates. A Participant may select from Declared Rates 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 nine (9) core investment fund
choices comparable in focus, type and quality to those listed on Exhibit A. The Declared Rates
provide a rate of return (positive or negative) that are based on the actual net performance of the
Declared Rate(s) selected by the Participant. The Declared Rates credited to Participant Accounts
shall be the actual net performance of the Declared Rates, to which will be added a basis point
credit, which credit (when added to the actual net performance of the Declared Rates) will together
be approximately equivalent on average to crediting the actual gross performance of the Declared
Rates less twenty (20) basis points.

6.4 Stock Unit Accounts. A Participant’s Stock Unit Account shall be credited with
the number of phantom shares of common stock of the Company specified in the Stock Unit Award
Agreement. Amounts credited to a Stock Unit Account shall be distributed in kind, subject to
compliance with all legal requirements. The Committee shall administer any Stock Unit Account
consistent with the intent of the Plan to reflect a hypothetical investment in common stock of the
Company and shall have the complete and sole discretion to establish a minimum or maximum share
level and/or require the adjustment in number or conversion of notional shares held in a Stock Unit
Account to an alternative form of security as appropriate to accomplish the intent of the Plan to
treat such notional stock units similarly to actual shares of Company common stock. Prior to
distribution, Participants shall have no rights as shareholders with respect to amounts credited to
a Stock Unit Account except that Participants shall be entitled to be credited with dividend
equivalents on vested awards or otherwise as provided under the terms of the Stock Unit Award
Agreement. Such dividend equivalents shall be considered current earnings on the Stock Unit Account
and shall be credited in the form of additional share units to the Stock Account based on the value
of Company stock as of the date dividends are paid to shareholders of the Company.

6.5 Valuation of Accounts. The value of an Account as of any date shall equal the
amounts theretofore credited or debited to such Account, plus the deemed earnings or losses of such
Account in accordance with this Article 6 through the day immediately preceding such date.

6.6 Vesting. A Participant shall be one hundred percent (100%) vested at all times in
amounts credited to the Participant’s Deferral Accounts. Amounts credited to a Participant’s
Company Contributions Account or Special Unit Account shall vest as specified by the Company or in
the Special Award Agreement. Amounts credited to a Participant’s Stock Unit Account shall vest as
provided under the applicable Stock Unit Award Agreement for such Stock Unit Contribution.

6.7 Statement of Accounts. The Administrator (or an agent thereof) shall provide to
each Participant periodic statements or on-line access to information setting forth the
Participant’s deferrals, Declared Rate(s) (credits or debits), Distributions and Account balance.

6.8 Errors in Benefit Statements, Deferrals, Distributions or Administration. In the
event an error is made in a benefit statement, such error shall be corrected on the next benefit
statement following the date such error is discovered. In the event of an error in the amount of a
Participant’s deferral, immediately upon the discovery of such error, if possible, the next
deferral of such Participant shall be adjusted upward or downward to correct such prior error
subject to compliance with permissible corrections procedures established under Code Section 409A.
In the event of an error in a Distribution, the applicable Participant’s Account shall, immediately
upon the discovery of such error, be adjusted to reflect such under or over payment and, if
possible, the next Distribution to such Participant shall be adjusted upward or downward to correct
such prior error subject to compliance with permissible corrections procedures established under
Code Section 409A. If the remaining balance of a Participant’s Account is insufficient to cover an
erroneous overpayment to such Participant, the Company may, at its discretion, offset other amounts
payable to the Participant from the Company to the extent permitted under all applicable laws, to
recoup the amount of such overpayment(s). It is the intent of the Company that the Plan be
interpreted and administered to comply in all respects with Code Section 409A. However,
Participants and/or their Beneficiaries shall be responsible for any and all taxes resulting from
participation in the Plan, and the Company shall have no liability to the Participant or any
Beneficiary in the event any taxes or excise taxes may ultimately be determined to be applicable to
any deferral, contribution, vesting event or Distribution under the Plan.

ARTICLE 7

BENEFITS

7.1 Normal Benefit Distribution Election.

(a) Initial Election. At the time of entering the Plan or, if later, on or before
December 31, 2008, Participants shall designate the time and form of distributions of amounts
credited to their Accounts, from among the distribution alternatives specified herein. A
Participant may establish up to five (5) Deferral Accounts with different payout elections.
Thereafter, at the time of making an Annual Deferral election under the Plan, the Participant shall
designate the time and form of Distribution of deferrals made pursuant to such election by
directing such deferrals to one or more existing Accounts or by establishing one or more new
Accounts with new payout elections. A Participant shall have no more than five (5) Deferral
Accounts in existence at any one time under the Plan. A Participant may elect to make additional
deferrals into an existing Account in a subsequent Plan Year but may only make a new distribution
election for such Account in accordance with the change in elections provisions specified in
Section 7.1(b). If deferrals are directed to an Account which is in payout status, such deferrals
shall be paid out over the remaining installment period commencing with the calendar year following
the year in which the deferral is credited to the Account. At the time of entering the Plan or, if
later, on or before December 31, 2008, Participants shall designate the time and form of
distributions of amounts credited to their Company Contributions Accounts. The time and form of
payment of a Special Unit Account shall be specified in the Special Unit Award Agreement or elected
within the first thirty (30) days following the award of such Special Unit Contribution as provided
in Section 5.2. All of a Participant’s Stock Unit Accounts shall be paid in a single lump-sum on
the Settlement Date next following the Participant’s Termination of Employment for any reason
unless preceded by a Change in Control as specified in Section 7.6, subject to compliance with all
applicable laws.

(b) Modification of Election. A distribution election with respect to an existing
Account under the Plan may only be changed under the terms and conditions specified by the
Committee in compliance with Code Section 409A. After December 31, 2008, except as expressly
provided in this Article 7, no acceleration of a distribution is permitted and a subsequent
election that delays payment or changes the form of payment shall be permitted if and only if all
of the following requirements are met:

(i) the new election does not take effect until at least twelve (12) months after the date on
which the new election is made;

(ii) in the case of payments made on account of Termination of Employment (other than by
reason of death or Disability), Change in Control, or a scheduled date, the new election delays
payment for at least five (5) years from the date that payment would otherwise have been made,
absent the new election; and

(iii) in the case of payments made according to a scheduled date, the new election is made not
less than twelve (12) months before the date on which payment would have been made (or, in the case
of installment payments, the first installment payment would have been made) absent the new
election.

For purposes of application of the above change limitations, distribution elections shall be
made on an Account by Account basis and installment payments from a single Account shall be treated
as a single payment. Changes complying with the requirements of this Section 7.1(b) may be made
any number of times with respect to the same Account but in no event may any change delay the
distribution of benefits payable from any Account beyond the date the Participant attains (or a
deceased Participant would have attained) age eighty-five (85). No changes shall be made to the
timing or form of distribution of a Stock Unit Account unless specifically approved by the
Committee. Election changes made pursuant to this Section 7.1(b) shall be made in accordance with
rules established by the Committee, and shall comply with all applicable requirements of Code
Section 409A and applicable authorities.

7.2 Benefit Distribution Alternatives. The Participant shall be entitled to select
the time and form of payment of Distributions from a particular Account from among the following
alternatives set forth below. Benefits shall be paid according to the Participant’s distribution
elections unless such distribution election is superseded by an alternative distribution event such
as death, Disability, Unforeseeable Emergency, early Termination of Employment, or Change in
Control, as specified in this Article 7. No distribution alternatives shall apply to a Stock Unit
Account, which shall be payable only in the form of a single lump-sum on the Settlement Date next
following Termination of Employment for any reason unless preceded by Change in Control as
specified in Section 7.6.

(a) Form of Distribution. The available forms of payment from each of the
Participant’s Accounts (other than a Stock Unit Account) shall be as follows:

(i) Lump-Sum. One lump-sum payment.

(ii) Installment Payments. Monthly installments of principal and interest
payable over a period of any number of years up to twenty (20), but in no event ending later
than the date on which the Participant shall attain age eighty-five (85). Installment
payments shall be calculated on an annual basis but paid during the Plan Year at
approximately monthly intervals as may be determined by the Committee, provided that such
intervals shall not be less frequent than quarterly, except in the final year of payments
when only one installment shall be made in January of such final Plan Year. Installment
payments shall be based on the Participant’s vested Account balance at the beginning of the
payment period and shall be recalculated annually by dividing the Participant’s vested
Account balance as of the last day of the Plan Year by the number of remaining years in the
payment period based on the Participant’s retirement payment election. Accounts shall
continue to be credited during the payment period based on the Participant’s choice among
Declared Rates as provided in Article 6. In the event that any amounts credited to a
Participant’s Account vest after the end of the installment period, such amounts shall be
paid in a single lump-sum on the Settlement Date next following the Participant’s
Termination of Employment. Notwithstanding the foregoing, an installment payout election
shall not be available prior to the date that the Participant shall have completed five (5)
Years of Participation.

(iii) Small Benefit Exception. Notwithstanding the foregoing, in the event
that the total balance payable from all of a Participant’s Accounts under this Plan (and any
other plans aggregated with this Plan for purposes of Code Section 409A) as of the date of
the Participant’s Termination of Employment is less than the applicable dollar amount under
Code Section 402(g)(1)(B) for the calendar year of payment, the Company shall have the
discretion to pay all of the Participant’s benefits under the Plan in the form of a single
lump-sum, subject to compliance with Code Section 409A.

If no election is made regarding the form of benefits from a particular Account, benefits from that
Account shall be paid in a single lump-sum.

(b) Commencement of Payment of Benefits. The available commencement dates for payment
from a Participant’s Accounts (other than a Stock Unit Account) are as follows:

(i) Upon the Settlement Date next following Termination of Employment;

(ii) In January of any specified Plan Year (without regard to Termination of
Employment, except as provided in Section 7.3); or

(iii) Upon the earlier of January of a specified Plan Year or the Settlement Date next
following Termination of Employment.

If a Participant does not elect a commencement date for benefits from a particular Account,
benefits from such Account shall commence on the Settlement Date next following the Participant’s
Termination of Employment.

7.3 Early Termination Benefit. In the event of a Participant’s Termination of
Employment for any reason other than death, Disability, or prior to completion of five (5) Years of
Participation, the Participant shall receive an Early Termination Benefit equal to the outstanding
vested balance of each of the Participant’s Accounts, credited with notional earnings as provided
in Article 6, payable in the form of a single lump-sum distribution on the Settlement Date next
following such early Termination of Employment. The Participant shall be entitled to no further
Benefits under this Plan.

7.4 Disability Benefit. In the event of a Participant’s Disability prior to complete
distribution of all of the Participant’s Accounts, the Participant shall receive a Disability
Benefit equal to the outstanding vested balance of each of the Participant’s Accounts, credited
with notional earnings as provided in Article 6, payable in the form of a single lump-sum
Distribution on the last day of the fifteenth (15th) month commencing after the month in
which such Disability occurs, unless the Participant makes a timely election under Section 7.1(b),
during the first three (3) months following Disability, to delay commencement of a particular
Account by a minimum of five (5) years and to receive the benefits in January of a later Plan Year,
in the form of a single lump-sum or over a period of up to twenty (20) years. Notwithstanding the
foregoing, no delay in distribution shall be available for a Stock Account which shall be paid on
the Settlement Date next following Termination of Employment by reason of Disability.

7.5 Survivor Benefits. In the event of a Participant’s death prior to complete
distribution of all of the Participant’s Accounts, the Participant’s Beneficiary shall receive a
Survivor Benefit equal to the outstanding vested balance of each of the Participant’s Accounts,
credited with notional earnings as provided in Article 6, payable in the form of a single lump-sum
Distribution on the last day of the fifteenth (15th) month commencing after the month in
which the Participant’s death occurs, unless the Beneficiary makes a timely election during the
first three (3) months following the Participant’s death, which is in compliance with Code Section
409A, to delay commencement of a particular Account by a minimum of five (5) years and to receive
the benefits in January of a later Plan Year, in the form of a single lump-sum or over a period of
up to twenty (20) years. Notwithstanding the foregoing, no delay in distribution shall be
available for a Stock Account which shall be paid on the Settlement Date following death.

7.6 Change of Control or other Benefit. In the event a Change in Control occurs
before a Participant’s Account has been fully distributed, the Participant shall receive an amount
equal to the balance of the Account, credited with notional earnings as provided in Article 6,
payable in the form of a single lump-sum distribution on the last day of the fifteenth
(15th) month commencing after the month in which such Change in Control occurs, unless
the Participant makes a timely election under Section 7.1(b), during the first three (3) months
following such Change in Control, to delay commencement of a particular Account by a minimum of
five (5) years and to receive the benefits in January of a later Plan Year, in the form of a single
lump-sum or over a period of up to twenty (20) years, except that with respect to a Stock Account,
any delayed distribution must be paid in the form of a single lump-sum.

7.7 Unforeseeable Emergency. Upon a finding by the Committee that the Participant has
suffered a Unforeseeable Emergency, subject to compliance with Code Section 409A, the Administrator
may at the request of the Participant, approve cessation of current deferrals or accelerate
distribution of benefits under the Plan in the amount reasonably necessary to alleviate such
financial hardship. The amount distributed pursuant to this Section 7.7 with respect to an
Unforeseeable Emergency shall not exceed the amount necessary to satisfy such emergency plus
amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking
into account the extent to which such hardship is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant’s assets (to the extent
the liquidation of such assets would not itself cause severe financial hardship).

ARTICLE 8

BENEFICIARY DESIGNATION

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

The filing of a new Beneficiary designation form by a Participant will cancel and revoke all
Beneficiary designations previously filed by such Participant.

If a Participant or Beneficiary, as the case may be, fails to designate a Beneficiary as
provided above, or if all designated Beneficiaries predecease the Participant or Beneficiary, as
the case may be, or die prior to complete distribution of the Participant’s Benefits, then the
Administrator shall direct the distribution of such Benefits to the estate of the Participant or
Beneficiary, as the case may be.

ARTICLE 9

ADMINISTRATION OF THE PLAN

9.1 Committee. A Committee consisting of three (3) or more members shall be appointed
by the Company’s Chief Executive Officer to administer the Plan, which shall have the exclusive
right and full discretion (i) to appoint agents and service providers to act on its behalf, (ii) to
interpret the Plan, (iii) to decide any and all matters arising hereunder (including the right to
remedy possible ambiguities, inconsistencies, or admissions), (iv) to make, amend and rescind such
rules and procedures as it deems necessary for the proper administration of the Plan and (v) to
make all other determinations and resolve all questions of fact necessary or advisable for the
administration of the Plan, including determinations regarding eligibility for benefits payable
under the Plan. All interpretations of the Committee with respect to any matter hereunder shall be
final, conclusive and binding on all persons affected thereby, subject to the provisions of this
Article 9. All decisions of the Committee shall be by vote of at least a majority of its members.
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 that relates
solely to such member’s interest in the Plan as a Participant. The current members of the
Committee are the Chief Executive Officer; the Chief Financial Officer; the Senior Vice President,
Human Resources; the Senior Vice President and General Counsel; the Vice President and Treasurer;
the Vice President, Compensation and HRIS; the Vice President, Associate General Counsel and
Assistant Secretary; the Vice President, Global Finance; the Manager, Corporate Finance and
Investments, and the Director, Financial Reporting at the Company’s Miller Corporate Center. The
Committee has designated the Vice President, Compensation and HRIS as the Administrator to carry
out the day-to-day administration of the Plan. No member of the Committee or any other agent
thereof including the Administrator shall be liable for any determination, decision, or action made
in good faith with respect to the Plan. The Company shall indemnify and hold harmless the members
of the Committee and the Administrator from and against any and all liabilities, costs, and
expenses incurred by such persons as a result of any act, or omission, in connection with the
performance of such persons’ duties, responsibilities, and obligations under the Plan, other than
such liabilities, costs, and expenses as may result from the bad faith, willful misconduct, or
criminal acts of such persons.

9.2 Claims Procedure. Any Participant, former Participant or Beneficiary may file a
written claim with the Administrator setting forth the nature of the Benefit claimed, the amount
thereof, and the basis for claiming entitlement to such Benefit. The Administrator shall determine
the validity of the claim and communicate a decision to the claimant promptly and, in any event,
not later than ninety (90) days after the date of the claim. The claim may be deemed by the
claimant to have been denied for purposes of further review described below in the event a decision
is not furnished to the claimant within such ninety (90) day period. If additional information is
necessary to make a determination on a claim, the claimant shall be advised of the need for such
additional information within forty-five (45) days after the date of the claim. The claimant shall
have up to one hundred and eighty (180) days to supplement the claim information, and the claimant
shall be advised of the decision on the claim within forty-five (45) days after the earlier of the
date the supplemental information is supplied or the end of the one hundred and eighty (180) day
period. Every claim for Benefits that is denied shall be denied by written notice setting forth in
a manner calculated to be understood by the claimant (i) the specific reason or reasons for the
denial, (ii) specific reference to any provisions of the Plan (including any internal rules,
guidelines, protocols, criteria, etc.) on which the denial is based, (iii) description of any
additional material or information that is necessary to process the claim, and (iv) an explanation
of the procedure for further reviewing the denial of the claim and shall include an explanation of
the claimant’s right to pursue legal action upon an adverse determination on review.

9.3 Review Procedures. Within sixty (60) days after the receipt of a denial on a
claim, a claimant or his/her authorized representative may file a written request for review of
such denial. Such review shall be undertaken by the Committee and shall be a full and fair review.
The claimant shall have the right to review all pertinent documents, information and data. The
Committee shall issue a decision not later than sixty (60) days after receipt of a request for
review from a claimant unless special circumstances, such as the need to hold a hearing, require a
longer period of time, in which case a decision shall be rendered as soon as possible but not later
than one hundred and twenty (120) days after receipt of the claimant’s request for review. The
decision on review shall be in writing and shall include specific reasons for the decision written
in a manner calculated to be understood by the claimant with specific reference to any provisions
of the Plan on which the decision is based and shall include an explanation of the claimant’s right
to pursue legal action upon an adverse determination on review.

ARTICLE 10

AMENDMENT OR TERMINATION OF PLAN

The Committee at the direction of the Chief Executive Officer or the Board of Directors of the
Company, may amend the Plan; provided, however, that (i) no such amendment shall be effective to
decrease the Benefits accrued by any Participant or Beneficiary of a deceased Participant
(including, but not limited to, the rate of earnings credited on Accounts); (ii) no such amendment
shall revise the substantive provisions of the Plan related to the calculation of Benefits
(including, without limitation, the provisions of Article 6), the minimum number of Declared Rates
or the manner or timing of payments to be made under the Plan so as to prejudice the rights of any
Participant or Beneficiary, except to the extent required by law, and (iii) no amendment shall
change the timing or form of Distributions or otherwise violate the provisions of Code Section 409A
so as to result in the imposition of excise taxes. Notwithstanding the foregoing, the Company shall
not terminate the Plan but may, in its complete and sole discretion, freeze the Plan and allow no
further deferrals into this Plan on a prospective basis. Notwithstanding the foregoing, the Company
or any Participating Subsidiary may accelerate distribution upon termination of the Plan in the
event of a Change in Control subject to compliance with all requirements of Code Section 409A.

ARTICLE 11

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 for the administration of this Plan, and to reflect properly the
affairs thereof, and to determine the nature and amount of the interests of the respective
Participants in each Account. Separate Accounts or records for the respective Participants’
Accounts 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.

ARTICLE 12

MISCELLANEOUS

12.1 Applicable Law. Except to the extent preempted by ERISA and applicable
substantive provisions of federal law, 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.

12.2 Exempt ERISA Plan. The 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 401 of ERISA, and therefore to be exempt from
Parts 2, 3, and 4 of Title I of ERISA.

12.3 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.

12.4 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.

12.5 Limitation. A Participant and the Participant’s Beneficiary shall assume all
risks in connection with the performance of any Declared Rate and any decrease in value of the
Accounts, and none of the Company, any of its officers, employees, or directors, the Committee or
the Administrator shall be liable or responsible therefor.

12.6 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 Employer, directed to the attention of
the Administrator with a copy to the Senior Vice President and General Counsel 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.

12.7 Limits on Transfer. Other than by will, the laws of descent and distribution, or
legal or judicial process related to dissolution of marriage, 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.

12.8 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
the Participant’s and/or Beneficiary’s claims against the Company for the compensation or other
amounts deferred and relating to the Account and/or Benefits to which the payments relate.

12.9 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 an
Account any sums that federal, state, local or foreign tax law requires to be withheld with respect
to such credit or payment.

12.10 Participant Cooperation. Each Participant shall cooperate with the Employer by
furnishing any and all information requested by the Administrator in order to facilitate the
payment of Benefits hereunder, taking such physical examinations as the Administrator may deem
necessary and taking such other relevant action as may be requested by the Employer. If a
Participant refuses to so cooperate, the Employer 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. If a Participant commits suicide during the two (2) year
period beginning on the first day on which he participates in the Plan or if the Participant makes
any material misstatement of information or nondisclosure of medical history, then no Benefits will
be payable hereunder to such Participant of the deferrals theretofore made pursuant to this Plan,
provided, that in the Committee’s sole discretion, Benefits may be payable in an amount reduced to
compensate the Employer for any loss, cost, damage or expense suffered or incurred by the Employer
as a result in any way of any such action, misstatement or nondisclosure.

12.11 Unfunded Status of Plan; Creation of Rabbi Trust. The Plan is intended to
constitute an “unfunded” plan of 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. The Company has
established the Avery Dennison Corporation Executive Compensation Trust (“Rabbi Trust”). The assets
of the Rabbi Trust shall be subject to the claims of the Company’s creditors. To the extent any
Benefits provided under the Plan are actually paid to a Participant or Beneficiary from the Rabbi
Trust, the Employer 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 Employer.
Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, interest, or claims in or to any specific property or assets of the Employer, nor
shall they be beneficiaries of, or have any rights, claims, or interests in any life insurance
policies, annuity contracts, or the proceeds therefrom owned or which may be acquired by the
Employer (“Policies”). Apart from the Rabbi Trust, such Policies or other assets of the Employer
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 the Employer under this Plan. Any and all of the Employer’s assets and Policies
shall be, and shall remain, the general, un-pledged, unrestricted assets of the Employer. The
Employer’s obligations under the Plan shall be merely an unfunded and unsecured promise of The
Employer to pay money in the future.

12.12 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. The provisions of this Section 12.12 are not intended, however, to
prevent compliance of the Plan with the provisions of Code Section 409A.

12.13 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.

12.14 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.

12.15 Gender, Singular and 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.EX-10.32.1

Exhibit 10.32.1

AMENDED AND RESTATED

BENEFIT RESTORATION PLAN OF

AVERY DENNISON CORPORATION

Avery Dennison Corporation, a Delaware corporation, adopted the Benefit Restoration Plan of Avery
Dennison Corporation (the “Plan”), as of December 1, 1994 for the benefit of its eligible
Employees. Between January 1, 2005 and December 31, 2008, the Plan was operated in accordance with
transition relief established by the Treasury Department and Internal Revenue Service pursuant to
Code Section 409A. The Plan is amended and restated effective as of January 1, 2009 to bring the
Plan into compliance with Code Section 409A and the Treasury Regulations issued by the Treasury
Department on April 10, 2007, and effective January 1, 2009.

The Plan constitutes an unfunded “excess benefit plan” within the meaning of Section 3(36) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan is maintained
primarily for the purpose of providing deferred Compensation for a select group of management or
highly compensated employees, within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1).

The Plan is intended to comply with Code Section 409A and the Treasury Regulations thereunder. Any
provision of this document that is contrary to the requirements of Code Section 409A or the
Treasury Regulations thereunder shall be null void and of no effect and the Plan shall be
interpreted and administered consistent with the requirements of Code Section 409A, which shall
govern the administration of the Plan in the event of a conflict between the Plan terms and the
requirements of Code Section 409A and the Treasury Regulations thereunder.

ARTICLE I – DEFINITIONS

Whenever the following terms are used in the Plan with the first letter capitalized, they shall
have the meaning specified below unless the context clearly indicates to the contrary.

“Actuarial Equivalent” or “Actuarially Equivalent” shall mean the equivalent of a given Benefit or
a given amount payable in another manner or by other means, determined by or under the direction of
the Administrator in accordance with actuarial principles, methods and assumptions which are found
to be appropriate by the Enrolled Actuary, acting independently of the Administrator or the Company
and in the exercise of his sole professional judgment. Such principles, methods and assumptions,
however, shall be reasonable in the aggregate and shall constitute the Enrolled Actuary’s best
estimate of anticipated experience under the Plan.

“Administrator” shall mean Avery Dennison Corporation, acting through its Board or its delegates,
except that if it appoints a Committee under Section 6.4, the term “Administrator” shall mean the
Committee as to those duties, powers and responsibilities specifically conferred upon the
Committee. Avery Dennison Corporation shall have all duties and responsibilities imposed by ERISA,
except as specifically assigned to, delegated to or reserved to the Board, and the Committee under
the Plan.

“Annuity” shall mean any form of payment described in Section 5.2(e)(i)-(vii) (as determined in
accordance with Treas. Reg. Section 1.409A-2(b)(2)(ii)).

“Associate Plan” shall mean The Associate Retirement Plan for Employees of Avery Dennison
Corporation as in effect on or after June 1, 2002 and as set forth in Appendix B to the Dennison
Retirement Plan, as may be amended from time to time, and any successor plan thereto.

“Beneficiary” shall mean:

	(a)	 	in the case of the death benefit described in Section 4.5, the Participant’s surviving
spouse; and

	(b)	 	in the case of a Benefit payable to a Participant, a person or trust properly designated by a
Participant or Former Participant in accordance with the Rules of the Plan, and which may
include a Joint/Contingent Annuitant to the extent determined by the Committee. 

“Benefit” of a Participant shall mean the benefit payable pursuant to Article IV.

“Benefit Commencement Date” shall mean, with respect to a Participant or Beneficiary, the date set
forth in the Plan with respect to a Payment Event, or set forth on a 2008 Transition Election, for
which a benefit under the Plan is required to commence. Solely for purposes of determining
compliance with Code Section 409A and related Treasury Regulations, a payment shall be deemed made
on the Benefit Commencement Date if the benefit actually commences by the end of the calendar year
in which the Benefit Commencement Date occurs or, if later, by the 15th day of the third month
following the Benefit Commencement Date.

“Benefit Service” of a Participant shall mean his “Benefit Service” as defined in the Qualified
Plan, except that

	(a)	 	days of “Service” prior to the December 1, 1994 shall be ignored;

	(b)	 	a Participant’s “Service” shall commence with the first year after December 1, 1994 for which
his “Compensation” exceeded the Code Section 401(a)(17) limit then in effect; except that each
Participant who became a “Participant” under the Qualified Plan after December 1, 1994 shall,
for his first Plan Year of participation under the Qualified Plan, be credited with Service
only for the period beginning with the first day of the month following his one year
anniversary of his hire date and through the end of that Plan Year;

	(c)	 	a Participant shall also be credited with a year of “Service” for any year in which he
participates in the Company’s nonqualified deferred compensation program to the extent that
any part of such period of participation is not treated as “Service” under subsection (b) and

	(d)	 	if the Participant incurs a Disability, Benefit Service shall continue to accrue during the
period of Disability but not beyond the second anniversary of the first day of his absence on
account of the Disability.

“Board” shall mean the Board of Directors of Avery Dennison Corporation. The Board may delegate
any power or duty otherwise allocated to the Administrator to any other person or persons,
including a Committee appointed under Section 6.4.

“CEO” shall mean the Chief Executive Officer of Avery Dennison Corporation.

“Certain and Life Annuity” shall mean a monthly benefit that is the Actuarial Equivalent of a
Participant’s Single Life Annuity and that is payable during the Participant’s lifetime with a
guaranteed payment period during which monthly payments shall be made without regard to the
Participant’s death. If the Participant dies prior to the end of the guaranteed payment period, the
monthly benefit that is payable shall be paid to the Participant’s Joint/Contingent Annuitant for
the remainder of the guaranteed payment period. The last payment shall be made on the first day of
the calendar month in which the Participant’s death occurs or, if later, the end of the guaranteed
payment period. If the Joint/Contingent Annuitant dies after the Participant and before the end of
the guaranteed payment period, then Actuarial Equivalent present value of the remaining guaranteed
payments shall be paid to the estate of the Joint/Contingent Annuitant.

“Change in Control” shall mean “a change in the ownership or effective control,” or in “the
ownership of a substantial portion of the assets of” the Company, within the meaning of Section
409A, and shall include any of the following events as such concepts are interpreted under Section
409A:

	(a)	 	the date on which a majority of members of the Board is replaced during any twelve-month
period by directors whose appointment or election is not endorsed by a majority of the members
of the Board before the date of the appointment or election; or

	(b)	 	the acquisition, by any one Person, or by persons acting as a group, or by a corporation
owned by a group of persons that has entered into a merger, acquisition, consolidation,
purchase, stock acquisition, asset acquisition, or similar business transaction with the
Company, of:

	 	(i)	 	ownership of stock of the Company, that, together with any stock previously
held by such Person or group, constitutes more than fifty percent (50%) of either (i)
the total fair market value or (ii) the total voting power of the stock of the Company;

	 	(ii)	 	ownership of stock of the Company possessing percent (30%) or more of the total
voting power of the Company, during the twelve-month period ending on the date of such
acquisition; or

	 	(iii)	 	assets from the Company that have a total gross fair market value equal to or
more than forty percent (40%) of the total gross fair market value of all of the assets
of the Company during the twelve-month period ending on the date of such acquisition;
provided, however, that any transfer of assets to a related person as defined under
Section 409A shall not constitute a Change of Control.

The foregoing definition of “Change in Control” is intended to comply with the requirements of Code
Section 409A and Treasury Regulations Section 1.409A-3(i)(5), and shall be interpreted and applied
by the Administrator in a manner consistent with this intent. For purposes of such definition,
“Company” means the Company and any other corporation described in Treasury Regulations Section
1.409A-3(i)(5)(ii)(A).

“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

“Committee” shall mean the BRP Committee of Avery Dennison Corporation, as appointed pursuant to
Section 6.4, if any.

“Company” shall mean Avery Dennison Corporation and any successor corporation.

“Company Affiliate” shall mean any company which, at the time of reference, was, with respect to
the Company, a member of a controlled group of corporations or trades or businesses under common
control, or a member of an affiliated service group, as determined under regulations issued by the
Secretary under Code Section 414(b) or (c).

“Compensation Committee” shall mean the Compensation and Executive Personnel Committee of the
Board.

“Compensation – Unrestricted” of a Participant shall mean his “Compensation,” as defined in the
Qualified Plan, but determined without regard to the limitations of Code Section 401(a)(17),
without application of the limitation on benefits under Code Section 415 and including the
Participant’s deferrals under the Company’s nonqualified deferred compensation program earned on or
after the Effective Date or, if later, the date he commenced participation under the Plan.

“Disability” shall mean a medically determinable physical or mental impairment that can be expected
to last for a continuous period of not less than six months, where such impairment causes the
Employee to be unable to perform the duties of his position or any substantially similar position.

“Effective Date” shall mean the effective date of the Plan, which shall be January 1, 2009. The
original effective date of the plan shall mean December 1, 1994.

“Employee” shall mean any person who renders services to the Company in the status of an employee
as the term is defined in Code Section 3121(d), excluding: (i) any person retained to render
services as an independent contractor; (ii) leased Employees treated as Employees of the Company
pursuant to Code Sections 414(n) and 414(o), (iii) employees of an Employer, or (iv) any person
whose services with the Company are performed pursuant to a contract or an arrangement that
purports to treat the individual as an independent contractor even if such individual is later
determined (by judicial action or otherwise) to have been a common law employee of the Company
rather than an independent contractor; provided, however, that “Employee” shall also mean any
Included Affiliate Employee.

For purposes of this Plan, a United States citizen shall be treated as an employee of the Company
if he is employed by a foreign subsidiary of the Company or a Company Affiliate to which there
applies an agreement under Section 3121(l) of the Code and if no contributions to a funded plan of
deferred compensation (whether or not a plan described in Sections 401(a), 403(a) or 405(a) of the
Code) are provided by any other person with respect to the compensation paid to such citizen by the
foreign subsidiary, unless otherwise elected by the Vice President, Compensation and Benefits of
Avery Dennison Corporation.

“Employer” shall mean the Company, any Company Affiliate that adopts the Plan as a whole or as to
any one or more divisions, in accordance with Section 7.3(b), and any successor company which
continues the Plan under Section 7.3(a).

“Enrolled Actuary” shall mean the person enrolled by the Joint Board for the Enrollment of
Actuaries established under subtitle C of title III of ERISA who has been engaged by the
Administrator on behalf of all Participants to make and render all necessary actuarial
determinations, statements, opinions, assumptions, reports and valuations under the Plan as
required by law or requested by the Administrator.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to
time.

“Former Participant” shall mean a Participant who has had a Separation from the Service.

“Included Affiliate Employee” shall mean any person who is employed by a Company Affiliate and
would not be an Employee but for the fact that the Vice President, Compensation and Benefits of
Avery Dennison Corporation has determined that he be so treated.

“Interest” shall mean the interest rate that is the first segment rate defined in Code Section
417(e)(3)(C) and that is used for purposes of determining an Actuarial Equivalent Lump Sum.

“Joint and Survivor Annuity” shall mean a monthly benefit that is the Actuarial Equivalent of a
Participant’s Single Life Annuity and that is payable during the Participant’s lifetime with a
designated percentage of the Participant’s monthly benefit amount continuing after his death to his
Joint/Contingent Annuitant, if such Joint/Contingent Annuitant survives him, for the
Joint/Contingent Annuitant’s remaining lifetime. The last payment shall be made on the first day of
the calendar month in which the Participant’s death occurs or, if later, the Joint/Contingent
Annuitant’s death.

“Joint/Contingent Annuitant” shall mean the person(s) designated as such by the Participant or the
Plan, as applicable, as entitled to receive a portion of the Participant’s Retirement Income
following his death.

“Key Employee” shall mean any person determined to be a “Key Employee” under the Avery Dennison
Corporation Key Employee Policy; provided that the definition of “Key Employee” in said policy
shall be a definition permitted under Code Section 409A and the Treasury Regulations thereunder for
purposes of determining who is a “specified employee” and shall be the same for all nonqualified
deferred compensation arrangements sponsored by the Employer.

“Lump Sum” shall mean the single sum payment that is Actuarially Equivalent to the Benefit payable
as of a specified date. The Lump Sum is a non-Annuity form of payment described under Section
5.2(a).

“Military Leave” shall mean leave subject to reemployment rights under the Uniformed Services
Employment and Reemployment Rights Act of 1994, as amended from time to time. Any Employee who
leaves the Company or a Company Affiliate directly to perform service in the Armed Forces of the
United States or in the United States Public Health Service under conditions entitling him to such
reemployment rights shall, solely for the purposes of the Plan and irrespective of whether he is
compensated by the Company or such Company Affiliate during such period of service, be presumed an
Employee on Military Leave. An Employee’s Military Leave shall expire if such Employee voluntarily
resigns from the Company or such Company Affiliate during such period of service, or if he fails to
make application for reemployment within the period specified by such laws for the preservation of
his reemployment rights. For purposes of computing an Employee’s service, no more than 365 days of
service shall be credited for any Military Leave except as required by Treas. Reg. Section 1.410(a)
- 7(b) (6) (iii).

“Normal Retirement Date” shall mean “Normal Retirement Date” as defined in the Qualified Plan.

“Participant” shall mean any person included in the Plan as provided in Article II.

“Payment Event” shall mean the applicable event triggering a payment of vested benefits under the
Plan. The applicable event shall be one of the following:

(a) The Participant’s Separation from Service;

(b) The Participant’s death; or

(c) A Change in Control.

“Plan” shall mean the Amended and Restated Benefit Restoration Plan of Avery Dennison Corporation.

“Plan Year” shall be the twelve month period from December 1 through the last day of the following
November, including all such years prior to the adoption of the Plan.

“Qualified Benefit” of a Participant for a period of time shall mean the benefit accrued pursuant
to Article IV of the Qualified Plan during such period.

“Qualified Benefit – Unrestricted” of a Participant for a Plan Year shall mean his Qualified
Benefit for such Plan Year but based upon his Compensation – Unrestricted as defined hereunder.

“Qualified Plan” shall mean the Retirement Plan and the Associate Plan as may be amended from time
to time, or any successor plans. The Retirement Plan and the Associate Plan are qualified employer
plans as defined under Treasury Regulations Section 1.409A-1(a)(2).

“Retirement Plan” shall mean The Retirement Plan for Employees of Avery Dennison Corporation as in
effect on or after June 1, 2002, as may be amended from time to time, and any successor plan
thereto.

“Rules of the Plan” shall mean rules adopted by the Administrator pursuant to Section 6.1 for the
administration, interpretation or application of the Plan.

“Separation from Service” of an Employee shall mean, except as provided in subsections (a) and (b),
an Employee’s termination from employment (whether by retirement or resignation from or discharge
by the Company or a Company Affiliate), but not his transfer among the Company and Company
Affiliates.

	(a)	 	If an Employee is absent from employment due to a sick leave, any other bona fide leave of
absence authorized by the Company or a Company Affiliate in accordance with established
policies, or a Military Leave, a Separation from Service shall not occur until the later of:

	 	(i)	 	the expiration of six months from the first date that an Employee is absent
from employment, except that if the Participant’s absence was on account of his
Disability, 24 months shall be substituted for six months, and

	 	(ii)	 	to the extent the Employee no longer retains a right to reemployment with the
Company or any Company Affiliates under an applicable statute or by contract, the date
the Employee no longer retains a right to reemployment.

If a Participant fails to return to work upon the expiration of any sick leave, bona fide
leave of absence or Military Leave where such leave is for less than six months, a
Separation from Service shall occur as of the date of the expiration of such leave.

	(b)	 	A Separation from Service shall be deemed to have occurred if an Employee and the Company or
Company Affiliates reasonably anticipate, based on the facts and circumstances, that either:

	 	(i)	 	the Employee will not provide any additional services for the Company and the
Company Affiliates after a certain date, or

	 	(ii)	 	the level of bona fide services performed by the Employee after a certain
date will permanently decrease to no more than 20 percent of the average level of bona
fide services performed by the Employee over the immediate preceding 36-month period.

The definition of “Separation from Service” shall at all times be interpreted in accordance with
the terms of Treasury Regulations Section 1.409A-1(h) and any guidance issued thereunder.

“Single Life Annuity” shall mean a benefit payable monthly during the Participant’s lifetime,
commencing as of his Benefit Commencement Date and ending with the payment due on the first day of
the calendar month in which the Participant’s death occurs.

“Treasury Regulations” shall mean the regulations promulgated by the United States Department of
Treasury pursuant to the Code.

“2004 Average Compensation – Unrestricted” of a Participant shall mean his “2004 Average
Compensation” as defined in the Qualified Plan but based on Compensation – Unrestricted.

“2008 Transition Election” shall mean an election made in 2008 by a Participant who has not
received or commenced to receive Benefits before December 31, 2008.

	(a)	 	In such election the Participant shall elect, or be deemed to have elected (as described in
(b) and (c) below), a time and a form of payment for Benefits payable in 2009 or later.

	(b)	 	If, before January 1, 2009, a Participant to whom was distributed a blank 2008 Transition
Election form, does not return the form, or fails to select a valid time of payment as
determined by the Company in its sole discretion, then such Participant’s Benefits will be
paid or commence pursuant to the following deemed election:

	 	(i)	 	If the Payment Event is a Separation from Service and the Participant is an
Employee on December 31, 2008, his Benefits shall be paid or commence to be paid on the
later of the first day of the month following his Separation from Service or the first
day of the month coincident with or following the date the Participant attains age 55;

	 	(ii)	 	If the Participant is not an Employee on December 31, 2008 because he has
already had a Separation from Service and he has not attained age 55, his Benefits
shall be paid or commence to be paid on the later of July 1, 2009 and the date he
attains age 55; and

	 	(iii)	 	If the Participant is not an Employee on December 31, 2008 because he has
already had a Separation from Service and he has attained age 55, his Benefits shall be
paid or commence to be paid on July 1, 2009.

	(c)	 	If, before January 1, 2009, a Participant to whom was distributed a blank 2008 Transition
Election form, does not return the form, or fails to select a valid form of payment as
determined by the Company in its sole discretion, he shall be deemed to have elected to
receive and shall receive his Benefits in a Lump Sum.

“Vested Benefit” of a Participant on a given date shall mean the Benefit provided hereunder if the
Participant were to have a Separation from the Service on such date with a “Vested Retirement
Benefit” under the Qualified Plan.

ARTICLE II – ELIGIBILITY

Section 2.1 — Requirements for Participation

Only those Employees who satisfy criteria set by the Administrator from time to time, shall be
Participants. Such criteria are set forth in Appendix A, which may be updated from time to time
without formal amendment of the Plan. Each of the Administrator, the Board, the Compensation
Committee, the Committee or the CEO shall have the power to change or revoke such criteria
hereunder in its sole discretion on a prospective basis, and any such change or revocation shall be
binding and final on all Employees, Beneficiaries and other interested persons.

ARTICLE III — FUNDING OF BENEFITS

Section 3.1 — Source of Benefits

The Plan shall be an unfunded promise of the Company and the Employers to make payments in
accordance with its terms. All benefits payable under the Plan shall be paid from the Company’
general assets, and nothing contained in the Plan shall require the Company to set aside or hold in
trust any funds for the benefit of a Participant or his Beneficiary, each of whom shall have the
status of a general unsecured creditor with respect to the Company’s obligation to make payments
under the Plan. Any funds of the Company available to pay benefits under the Plan shall be subject
to the claims of general creditors of the Company and may be used for any purpose by the Company.
Notwithstanding the foregoing, the Company, in its sole discretion, shall have the authority to
allocate the total liability to pay any benefit under the Plan to any applicable Employer as it
deems appropriate.

ARTICLE IV – BENEFITS

Section 4.1 — Determination of Benefits

	 	 	Unless otherwise described in Appendix B, a Participant’s Benefit shall be the sum of

	(a)	 	for each Participant who, as of December 1, 2004, is entitled to accrue a benefit under the
Plan and is a “Participant” under the Qualified Plan, the excess of

	 	(i)	 	the greater of:

	 	 	 	a one hundred and five percent of the sum of

	 	1	 	his Qualified Benefit (using the “Formula Amount” under Supplement
B of the Associate Plan and Supplement E of the Retirement Plan (as
applicable)) and

	 	 	 	 	 	 	 
	2	 	the product of	 	 
	 

	 	

	 	

	 	

	 	 	A	 	one and three-quarters percent,
	
 
	 	 
	 	

	 	

	 	 	B	 	his years of Benefit Service, and
	
 
	 	 
	 	

	 	

	
 
	 	C
	 	the excess of
	 	

	
 
	 	 
	 	

	 	

	
 
	 	 	 	I
	 	his Compensation-Unrestricted, over
	
 
	 	 	 	 
	 	

	 	 	 	II his “Compensation” (as defined under the Qualified
Plan),

	 	 	 	all as of November 30, 2004; or

	 	 	 	 	 	 	 	 	 
	b	 	the sum of	 	 
	 

	 	

	 	

	 	

	 	 	 	1	 	 	the product of
	
 
	 	 	 	 	 	

	 	

	
 
	 	 	 	 	 	A
	 	the sum of
	
 
	 	 	 	 	 	 
	 	

	 	 	 	I one and one-quarter percent of his “2004 Average
Compensation” (as defined under the Qualified Plan), and

	 	 	 	II one-half of one percent of that portion of his
“2004 Average Compensation” (as defined under the
Qualified Plan), as exceeds his “Covered Compensation”
(as defined under the Qualified Plan), and

	 	 	 	B his years of “Benefit Service” (as defined in the Qualified
Plan) as of November 30, 2004, not in excess of 35, and

	 	2	 	the product of

	 	 	 	A one and one-quarter percent of his “2004 Average
Compensation” (as defined under the Qualified Plan), and

	 	 	 	B his years of “Benefit Service” (as defined in the Qualified
Plan”) as of November 30, 2004 in excess of 35, and

	 	 	 	 	 	 	 
	3	 	the product of	 	 
	 

	 	

	 	

	 	

	 	 	A	 	one and three-quarters percent,
	
 
	 	 
	 	

	 	

	 	 	B	 	his years of Benefit Service, and
	
 
	 	 
	 	

	 	

	
 
	 	C
	 	the excess of
	 	

	
 
	 	 
	 	

	 	

	
 
	 	 	 	I
	 	his 2004 Average Compensation-Unrestricted, over
	
 
	 	 	 	 
	 	

	 	 	 	II his “2004 Average Compensation” (as defined under
the Qualified Plan),

	 	•	 	ver

	 	(ii)	 	his Qualified Benefit as of December 1, 2004; and

	(b)	 	for each Plan Year beginning on or after December 1, 2004 and for which the Participant is
entitled to accrue a benefit under the Plan, the excess of

	 	(i)	 	his Qualified Benefit – Unrestricted accrued for such Plan Year,

	 	•	 	ver

	 	(ii)	 	his actual Qualified Benefit accrued for such Plan Year,

	 	 	 	but not less than zero.

If a Participant is not credited with an Hour of Service as a Participant for any period commencing
on or after December 1, 2004, his Benefit under the Plan shall be calculated under Section 4.1 of
the Plan as in effect before December 1, 2004.

Section 4.2 Normal Retirement Benefit

To the extent a Participant’s Benefit Commencement Date is upon his Normal Retirement Date, the
Participant’s Vested Benefit shall be equal to the Benefit set forth in Section 4.1.

Section 4.3 Early Commencement of Benefit

To the extent a Participant’s Benefit Commencement Date is before the date the Participant attains
his Normal Retirement Date, the Participant’s Vested Benefit shall equal the Benefit described in
Section 4.1 determined as of the Participant’s Normal Retirement Date reduced for early
commencement in accordance with the early retirement reduction factors that would apply to the
Qualified Benefit if the Qualified Benefit were to commence as of the Benefit Commencement Date,
provided the Participant’s Benefit Commencement Date is no earlier than the date the Participant
attains age 55. If a Participant’s Benefit Commencement Date is before the date the Participant
attains age 55 and the Participant is entitled to be paid in a Lump Sum, then the Participant’s
Lump Sum Benefit shall be Actuarially Equivalent to the Benefit described in Section 4.1 payable
upon the first day of the month coincident with or next following the date the Participant attains
age 62, taking into account the applicable early commencement factors that would be applied to the
Qualified Benefit if the Qualified Benefit were to commence as of such date.

Section 4.4 Late Commencement of Benefit

To the extent a Participant’s Benefit Commencement Date is after the date the Participant attains
his Normal Retirement Date, the Participant’s Vested Benefit shall equal the Benefit described in
Section 4.1 adjusted in the same as manner and to the extent (if any) an adjustment would be
applied to the Qualified Benefit if the Qualified Benefit were to commence at the same time.

Section 4.5 Death Benefit

To the extent a Vested Benefit is first payable due to the death of the Participant, the Benefit
payable under the Plan shall be the Actuarial Equivalent amount of the Benefit that would be
payable if the Participant had attained age 62 (or his actual age if later), commenced his Benefit
in the form of a 50% Joint and Survivor Annuity, and then died.

ARTICLE V — PAYMENT OF BENEFITS

Section 5.1 — Time of Payment

	(a)	 	Except as otherwise provided for under the terms of the Plan, the Participant shall be
entitled to a payment of his Vested Benefit as of the earlier of Separation from Service or
Change in Control.

	 	(i)	 	If a Benefit is payable with respect to Separation from Service, the
Participant’s Benefit Commencement Date shall be the later of:

	 	a.	 	The first day of the month following the date of
Separation from Service, and

	 	b.	 	The first day of the month coincident with or
following the date he attains age 55.

	 	(ii)	 	If a Benefit is payable with respect to Change in Control, the
Participant’s Benefit Commencement Date shall be the first day of the month
following the Change in Control.

	(b)	 	Notwithstanding the requirements of Section 5.1(a) and, if applicable, 5.1(c), to the extent
a Participant is a Key Employee and is entitled to a payment as a result of a Separation from
Service, the Participant’s Benefit Commencement Date shall be the first day of the month
coincident with or next following the date that is six months after the Participant’s
Separation from Service, unless an earlier payment complies with a permissible Code Section
409A exception (e.g., the payment of employment taxes). At the end of such six-month period,
the Plan shall provide the Participant with a one-time payment equal to the amount the
Participant would have been entitled to receive if his Benefit Commencement Date had been the
first day of the month following his Separation from Service, together with Interest.

	(c)	 	Notwithstanding the terms of Section 5.1(a), a Participant who had not received or commenced
to receive Benefits as of December 31, 2008, was permitted to make a 2008 Transition Election
with respect to a time of payment for the Participant’s Benefit payable upon Separation from
Service, and the Participant’s Benefit shall be paid in accordance with the elected, or deemed
elected, time of payment, if he has a Separation from Service except if the Participant is
subject to the time of payment restriction set forth under Section 5.2(c). On and after
January 1, 2009, a Participant shall not be permitted to elect a Benefit Commencement Date,
except as provided with respect to the election permitted under Section 5.2(c).

Section 5.2 – Form of Payment

	(a)	 	Except as provided under the terms of the Plan, a Participant’s Benefit shall be paid in the
form of a Lump Sum, determined with respect to the applicable Benefit Commencement Date.

	(b)	 	Notwithstanding the terms of Section 5.2(a), a Participant who had not received or commenced
to receive Benefits as of December 31, 2008, was permitted to make a 2008 Transition Election
with respect to the form of payment for the Participant’s Benefit payable upon Separation from
Service, and the Participant’s Benefit shall be paid in accordance with the elected, or deemed
elected, form of payment if he has a Separation from Service, except if the Participant elects
a form of payment under Section 5.2(c).

	(c)	 	On and after January 1, 2009, a Participant whose benefit is payable due to a Separation from
Service may elect to have his Vested Benefit paid in an Annuity form of payment set forth in
Section 5.2(e) below, or in a Lump Sum if he elected an Annuity in a 2008 Transition Election,
provided:

	 	(i)	 	the Participant shall be required to make such election in writing at
least 12 months before his Benefit Commencement Date, and

	 	(ii)	 	with respect to any payment based on a Separation from Service, the
Participant reschedules his Benefit Commencement Date to a date that is no earlier
than the fifth anniversary of the Benefit Commencement Date upon which the
Participant’s Benefit would have otherwise been paid or commenced to be paid.

A Participant’s election pursuant to this subsection (c) shall become irrevocable as of the
date that is 12 months before the Participant’s Separation from Service. To the extent a
Participant elects any optional form of payment within 12 months of his Separation from
Service, such optional form of payment election will be deemed invalid.

	(d)	 	Notwithstanding anything in the Plan to the contrary, to the extent a Participant has made
an irrevocable election with respect to an Annuity under Section 5.2(c), the Participant may
at any time before his Benefit Commencement Date elect any other Annuity described under
Section 5.2(e)(i)-(vii) Any election properly made under this subsection (d) shall become
irrevocable as of the Participant’s Benefit Commencement Date.

	(e)	 	By submitting a valid irrevocable election, a Participant’s Benefit may commence in one of
the following optional forms of payment:

Annuity Forms of Payment:

	 	(i)	 	Single Life Annuity

	 	 	 
	(ii)

(iii)

(iv)

	 	50% Joint and Survivor Annuity

75% Joint and Survivor Annuity

100% Joint and Survivor Annuity

	 	(v)	 	5 Year Certain and Life Annuity

	 	 	 
	(vi)

(vii)

(viii)

	 	10 Year Certain and Life Annuity

15 Year Certain and Life Annuity

Social Security Level Income Option

All such optional forms of payment shall have the same meaning as set forth in the Qualified
Plan. Except as provided under the terms of the Plan, all such optional forms of payment
shall be calculated in the same manner and using the same actuarial factors as apply under
the Qualified Plan for the applicable form.

Section 5.3 – Time and Form of Payment for Death Benefits

Notwithstanding anything set forth in Section 5.1 or Section 5.2 to the contrary, if a Benefit is
first payable upon the Participant’s death, the amount of the Benefit described under Section 4.5
shall be paid to the Participant’s Beneficiary in the form of a Lump Sum. The Beneficiary’s Benefit
Commencement Date shall be the first day of the fourth month following the Participant’s date of
death. To the extent a Participant dies after another Payment Event has occurred, but before his
Benefit Commencement Date, the Benefit shall be accelerated and the amount described under Section
4.5 shall be paid to the Beneficiary in a Lump Sum, as permitted under Code Section 409A and the
Treasury Regulations thereunder.

Section 5.4 – Benefit Cashout

	(a)	 	De Minimis Cashout. Notwithstanding the time and form of payment determined pursuant to this
Article V, if the Actuarially Equivalent Lump Sum present value of all nonaccount balance
nonqualified plan benefits is less than the Code Section 402(g) limit as of the Participant’s
Separation from Service, the Company shall pay the Participant the entire Benefit in a Lump
Sum; provided, all of the Participant’s nonaccount balance nonqualified plan benefits are also
paid in a lump sum as of the same date.

	(b)	 	Large Cashout. If the combined Actuarially Equivalent Lump Sum present value of the Benefit
and, if applicable, the Participant’s benefit under the Supplemental Executive Retirement Plan
is less than or equal to $50,000 as of the Participant’s Benefit Commencement Date, the
Company shall pay the Participant (or Beneficiary) the entire Benefit (or death benefit) in a
Lump Sum; provided, the Participant’s Supplemental Executive Retirement Plan benefit is also
to be paid in a Lump Sum as of the same date.

Section 5.5 – Other Permissible Delays or Accelerations

If the Board, Compensation Committee or CEO determines that a delay or an acceleration of a Benefit
is appropriate and complies with the requirements under Code Section 409A (e.g., a delay to comply
with Code Section 162(m) or an acceleration to pay employment taxes), the Board, Compensation
Committee or CEO may either delay or accelerate the payment of a Benefit in accordance with the
terms of Code Section 409A in its sole discretion as it deems advisable. If any payment is delayed
in accordance with this provision, the Company shall pay such delayed payments with Interest.

Section 5.6 — Forfeitures

If a Participant has a Separation from the Service while all or any portion of his Benefit is not a
Vested Benefit, such portion of his Benefit shall immediately be forfeited. In addition, if a
Participant dies while unmarried before any scheduled Benefit Commencement Date, all Benefits
payable in respect of the Participant shall be forfeited.

ARTICLE VI — ADMINISTRATIVE PROVISIONS

Section 6.1 – Administrator’s Duties and Powers

	(a)	 	The Administrator shall conduct the general administration of the Plan in accordance with the
Plan and shall have all the necessary power and authority to carry out that function. Among
its necessary powers and duties are the following:

	 	(i)	 	To delegate all or part of its function as Administrator to others and to
revoke any such delegation.

	 	(ii)	 	To determine questions of vesting of Participants and their entitlement to
benefits, subject to the provisions of Section 6.11.

	 	(iii)	 	To select and engage attorneys, accountants, actuaries, appraisers, brokers,
consultants, administrators, physicians, the Committee under Section 6.4, or other
persons to render service or advice with regard to any responsibility the Administrator
or the Board has under the Plan, or otherwise, to designate such persons to carry out
fiduciary responsibilities under the Plan, and (with the Committee, the Companies, the
Board and its officers, and Employees) to rely upon the advice, opinions or valuations
of any such persons, to the extent permitted by law, being fully protected in acting or
relying thereon in good faith.

	 	(iv)	 	To interpret the Plan for purpose of the administration and application of the
Plan, in a manner not inconsistent with the Plan or applicable law and to amend or
revoke any such interpretation.

	 	(v)	 	To conduct claims procedures as provided in Section 6.11

	 	(vi)	 	To adopt Rules of the Plan that are not inconsistent with the Plan or
applicable law and to amend or revoke any such rules.

	(b)	 	Every finding, decision and determination made by the Administrator shall, to the full extent
permitted by law, be final and binding upon all parties, except to the extent found by a court
of competent jurisdiction to constitute an abuse of discretion.

Section 6.2 — Limitations Upon Power

The Plan shall be uniformly and consistently administered, interpreted and applied with regard to
all Participants in similar circumstances. The Plan shall be administered, interpreted and applied
fairly and equitably and accordance with the specified purposes of the Plan.

Section 6.3 — Final Effect of Administrator Action

Except as provided in Section 6.11, all actions taken and all determinations made by the
Administrator in good faith shall be final and binding upon all Participants and any person
interested in the Plan.

Section 6.4 — Committee

The Administrator may, but need not, appoint a BRP Committee consisting of three or more members to
hold office during the pleasure of the Administrator. The Committee shall have such powers and
duties as are delegated to it by the Administrator. Committee members shall not receive payment for
their services as such.

Section 6.5 – Resignation

A Committee member may resign at any time by delivering written notice to the Administrator.

Section 6.6 — Vacancies

Vacancies in the Committee shall be filled by the Administrator.

Section 6.7 — Majority Rule

The Committee shall act by a majority of its members in office; provided, however, that the
Committee may appoint one of its members or a delegate to act on behalf of the Committee on matters
arising in the ordinary course of administration of the Plan, or on specific matters.

Section 6.8 — Indemnification by the Company; Liability Insurance

	(a)	 	The Company shall pay or reimburse any of the Company’s officers, directors, Committee
members or Employees who are fiduciaries with respect to the Plan for all expenses incurred by
such persons in, and shall indemnify and hold them harmless from, all claims, liability and
costs (including reasonable attorneys’ fees) arising out of the good faith performance of
their fiduciary functions.

	(b)	 	The Company may obtain and provide for any such person, at the Company’s expense, liability
insurance against liabilities imposed on him by law.

Section 6.9 — Recordkeeping

	(a)	 	The Administrator shall maintain suitable records as follows:

	 	(i)	 	Records of each Participant’s individual Benefit.

	 	(ii)	 	Records which show the operations of the Plan during each Plan Year.

	 	(iii)	 	Records of the Administrator’s deliberations and decisions.

	(b)	 	The Administrator shall appoint a secretary, and at its discretion, an assistant secretary,
to keep the record of proceedings, to transmit its decisions, instructions, consents or
directions to any interested party, to execute and file, on behalf of the Committee, such
documents, reports or other matters as may be necessary or appropriate to perform ministerial
acts.

	(c)	 	The Administrator shall not be required to maintain any records or accounts, which duplicate
any records or accounts maintained by the Company.

Section 6.10 — Inspection of Records

Copies of the Plan and records of a Participant’s Benefit shall be open to inspection by him or his
duly authorized representatives at the office of the Administrator at any reasonable business hour.

Section 6.11 — Claims Procedure

The claims procedures hereunder shall be in accordance with the claims procedures set forth in the
Qualified Plan; provided that for purposes of the claims procedure under this Plan, the review
official described in the Qualified Plan shall be the President of the Company.

Section 6.12 — Conflicting Claims

The procedures for the resolution of conflicting claims by the Committee shall be in accordance
with the procedures set forth in the applicable section of the Qualified Plan.

Section 6.13 — Service of Process

The Secretary of Avery Dennison Corporation is hereby designated as agent of the Plan for the
service of legal process.

ARTICLE VII — MISCELLANEOUS PROVISIONS

Section 7.1 — Amendment, Termination or Suspension of the Plan

	(a)	 	The Plan may be amended or terminated by the Board or the Compensation Committee at any time;
the CEO may amend the Plan at any time. Such amendment or termination may modify or eliminate
any benefit hereunder other than a benefit or a portion of a benefit that is a Vested Benefit.
Notwithstanding the foregoing, neither the Board, the Compensation Committee nor the CEO may
amend or terminate the Plan in a manner that violates the applicable provisions of Code
Section 409A and the Treasury Regulations thereunder, including, but not limited to, the
applicable time and form of payment requirements set forth in Treasury Regulations Section
1.409A-2(b), the applicable prohibitions on accelerations set forth in Treasury Regulations
Section 1.409A-3(j), and the plan termination and liquidation provisions set forth in Treasury
Regulations Section 1.409A-3(j)(4)(ix).

	(b)	 	If the Board determines that payments under the Plan would jeopardize the ability of the
Company to continue as a going concern in accordance with Treasury Regulations Section
1.409A-3(d), the Board may suspend payments under the Plan temporarily for such time as in its
sole discretion it deems advisable; provided, the payments shall resume no later than the
first taxable year in which the Company determines that making such payments would not
jeopardize the ability of the Company to continue as a going concern. The Company shall pay
such suspended payments immediately upon the expiration of the period of suspension together
with Interest.

	(c)	 	The Plan is intended to provide benefits for a “select group of management or highly
compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA, and therefore
to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly, the
Plan shall terminate and, except for benefits or portions of benefits that have vested, no
further benefits shall be paid hereunder in the event it is determined by a court of competent
jurisdiction or by an opinion of the Company’s regular outside employee benefits counsel that
the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of
ERISA which is not so exempt.

Section 7.2 — Limitation on Rights of Employees

The Plan is strictly a voluntary undertaking on the part of the Company and shall not constitute a
contract between the Company and any Employee, or consideration for, or an inducement or condition
of, the employment of an Employee. Nothing contained in the Plan shall give any Employee the right
to be retained in the service of the Company or to interfere with or restrict the right of the
Company, which is hereby expressly reserved, to discharge or retire any Employee, except as
provided by law, at any time without notice and with or without cause. Inclusion under the Plan
will not give any Employee any right or claim to any benefit hereunder except to the extent such
right has specifically become fixed under the terms of the Plan and there are funds available
therefore in the hands of the Company. The doctrine of substantial performance shall have no
application to Employees, Participants or any other persons entitled to payments under the Plan.
Each condition and provision, including numerical items, has been carefully considered and
constitutes the minimum limit on performance, which will give rise to the applicable right.

Section 7.3 — Plan Binding in Event of Consolidation or Merger; Adoption of Plan by Other Companies

	(a)	 	In the event of the consolidation or merger of a Company with or into any other corporation,
this Plan shall be binding on such new corporation.

	(b)	 	Any Company Affiliate may, with the approval of the Board, the Compensation Committee or the
CEO, adopt the Plan as a whole company or as to any one or more divisions by resolution of its
own board of directors or agreement of its partners in order to become an Employer. Such
Company Affiliate shall give written notice of such adoption to the Committee by its duly
authorized officers.

Section 7.4 — Assignments, etc. Prohibited

	(a)	 	Except for the withholding of any tax under the laws of the United States or any state or
locality, no part of a Participant’s Benefit hereunder shall be liable for the debts,
contracts or engagements of any Participant, his Beneficiaries or successors in interest, or
be taken in execution by levy, attachment or garnishment or by any other legal or equitable
proceeding prior to distribution, nor shall any such person have any rights to alienate,
anticipate, commute, pledge, encumber or assign any Benefits or payments hereunder in any
manner whatsoever except to designate a Beneficiary as provided herein.

	(b)	 	Notwithstanding the foregoing, payment may be made from a Participant’s Benefit to an
alternate payee pursuant to an approved domestic relations order as permitted under Treasury
Regulations Sections 1.409A-2(b)(4) and 1.409A-3(j)(4)(ii).

	 	(i)	 	The Company shall establish reasonable procedures for reviewing court orders
made, pursuant to state domestic relations law (including a community property law),
relating to child support, alimony payments, or marital property rights of a spouse,
former spouse, child, or other dependent of a Participant and for notifying
Participants and alternate payees of the receipt of such orders and of the Plan’s
procedures for determining if the orders are approved domestic relations orders and for
administering distributions under approved domestic relations orders.

	 	(ii)	 	Except as may otherwise be required by applicable law, such domestic relations
orders may not require a retroactive transfer of all or part of a Participant’s
Benefit.

Section 7.5 — Errors and Misstatements

Only to the extent permitted under Code Section 409A and any correction program that may be issued
thereunder, in the event of any misstatement or omission of fact by a Participant to the Committee
or any clerical error resulting in payment of benefits in an incorrect amount, the Committee shall
promptly cause the amount of future payments to be corrected upon discovery of the facts and shall
cause the Company to pay the Participant or any other person entitled to payment under the Plan any
underpayment in cash in a lump sum or to recoup any overpayment from future payments to the
Participant or any other person entitled to payment under the Plan in such amounts as the Committee
shall direct or to proceed against the Participant or any other person entitled to payment under
the Plan for recovery of any such overpayment.

Section 7.6 — Payment on Behalf of Minor, Etc.

In the event any amount becomes payable under the Plan to a minor or a person who, in the sole
judgment of the Committee is considered by reason of physical or mental condition to be unable to
give a valid receipt therefore, the Committee may direct that such payment be made to any person
found by the Committee in its sole judgment, to have assumed the care of such minor or other
person. Any payment made pursuant to such determination shall constitute a full release and
discharge of the Company, the Board, the Committee and their officers, directors and employees.

Section 7.7 — Governing Law

This Plan shall be construed, administered and governed in all respects under and by applicable
federal laws and, where, state law is applicable, the laws of the State of California.

Section 7.8 — Pronouns and Plurality

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

Section 7.9 — Titles

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

Section 7.10 — References

Unless the context clearly indicates to the contrary, a reference to a statute, regulation or
document shall be construed as referring to any subsequently enacted, adopted or executed statute,
regulation or document.

Section 7.11 — Effective Date

The Plan was approved by the Compensation Committee and ratified by the Board on December 4, 2008,
and the Plan is effective as of that date.

1

APPENDIX A

PARTICIPATION CRITERIA

Participation in the Plan shall be limited to Employees of the Company or any Employers, selected
by the Administrator, who satisfy the following criteria:

	 	1.	 	Employees whose Compensation, as determined under Section 4.1(a)(i) a
1 and 2 of this Plan, exceeds the limitations of Code Section
401(a)(17) (the $150,000 annual limit adjusted for increases in the cost of living)
($230,000 for the Plan Year beginning December 1, 2008), and as amended thereafter.

	 	2.	 	Effective December 1, 1998, Employees who participate in the Company’s
non-qualified deferred compensation program, regardless of whether they satisfy
criterion 1. above.

	 	3.	 	Present or former employees of the Company (or any present or former direct or
indirect subsidiary) listed on Appendix B.

The criteria in this Appendix may be changed or revoked by the Administrator, the Board, the
Compensation Committee, the Committee or the CEO at any time and without formal amendment, as
provided under Section 2.1 of the Plan.

2

APPENDIX B — SPECIAL BENEFIT SCHEDULE

Notwithstanding any provisions of the Plan to the contrary, the following individuals shall receive
the following indicated benefits under the Plan:

	 	 	 
	Recipient

	 	Benefit
	 

	 	 
	Nelson Gifford

	 	$3,858.57 per month for life, commencing June 1, 2001

3

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