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                                                                 EXHIBIT 10.21.2

                           AVERY DENNISON CORPORATION
                            1996 STOCK INCENTIVE PLAN
                              amended and restated

SECTION 1.  PURPOSE; DEFINITIONS

The purpose of the Plan is to give the Company a competitive advantage in
attracting, retaining and motivating officers and employees and to provide the
Company and its subsidiaries with a stock plan providing incentives more
directly linked to the profitability of the Company businesses and increases in
shareholder value.

For purposes of the Plan, the following terms are defined as set forth below:

(a) "Affiliate" means a subsidiary of the Company.

(b) "Award" means a Stock Appreciation Right, Stock Option, Restricted Stock,
Performance Unit, Stock Payment or Dividend Equivalent.

(c) "Awardee" means a person granted an Award.

(d) "Award Cycle" shall mean a period of consecutive fiscal years or portions
thereof designated by the Committee over which Performance Units are to be
earned.

(e) "Board" means the Board of Directors of the Company.

(f) "Cause" means (1) conviction of a participant for committing a felony under
federal law or the law of the state in which such action occurred, (2)
dishonesty in the course of fulfilling a participant's employment duties or (3)
willful and deliberate failure on the part of a participant to perform his
employment duties in any material respect, or such other events as shall be
determined by the Committee. The Committee shall have the sole discretion to
determine whether "Cause" exists, and its determination shall be final.

(g) "Change in Control" and "Change in Control Price" have the meanings set
forth in Sections 10(b) and (c), respectively.

(h) "CEO" means the Chief Executive Officer of the Company.

(i) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto. References to Sections of the Code shall be
deemed to include any successors to such Sections.

(j) "Commission" means the Securities and Exchange Commission or any successor
agency.

(k) "Committee" means the Committee referred to in Section 2.

(l) "Common Stock" means common stock, par value $1.00 per share, of the
Company, as presently constituted and any equity security of the Company issued
or authorized to be issued in the future.

(m) "Company" means Avery Dennison Corporation, a Delaware corporation.

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(n) "COO" means the Chief Operating Officer of the Company.

(o) "Covered Employee" means a participant designated prior to the grant of
shares of Restricted Stock or Performance Units by the Committee who is or may
be a "covered employee" within the meaning of Section 162(m)(3) of the Code in
the year in which Restricted Stock or Performance Units are expected to be
taxable to such participant.

(p) "Disability" means permanent and total disability as determined under
procedures established by the Committee for purposes of the Plan.

(q) "Dividend Equivalent" means an Award made pursuant to Section 9.

(r) "Early Retirement" means retirement from active employment with the Company,
or an Affiliate pursuant to the early retirement provisions of the applicable
pension plan of such employer or as otherwise determined by the Committee.

(s) "Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time, and any successor thereto.

(t) "Fair Market Value" means, as of any given date, the mean between the
highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange Composite Tape or, if not listed on such exchange, on any other
national securities exchange on which the Common Stock is listed or on NASDAQ.
If there is no regular public trading market for such Common Stock, the Fair
Market Value of the Common Stock shall be determined by the Committee in good
faith.

(u) "Non-Employee Director" means a member of the Board who qualifies as a
Non-Employee Director as defined in Rule 16b-3(b)(3), as promulgated by the
Commission under the Exchange Act, or any successor definition adopted by the
Commission.

(v) "Non-qualified Stock Option" means a Stock Option, which is not an incentive
stock option under Section 422 of the Code.

(w) "Normal Retirement" means retirement from active employment with the
Company, or an Affiliate at or after age 65.

(x) "Optionee" means an individual granted a Stock Option under this Plan.

(y) "Qualified Performance-Based Award" means an Award of Stock Options, Stock
Appreciation Rights, Restricted Stock or Performance Units designated as such by
the Committee at the time of grant, based upon a determination that (i) the
recipient is or may be a "covered employee" within the meaning of Section
162(m)(3) of the Code in the year in which the Company would expect to be able
to claim a tax deduction with respect to such Stock Options, Stock Appreciation
Rights, Restricted Stock or Performance Units and (ii) the Committee wishes such
Award to qualify for the Section 162(m) Exemption. Notwithstanding any other
provision of the Plan, no Award shall be considered a Qualified
Performance-Based Award unless it is granted subject to or after obtaining

shareholder approval satisfying the requirements of Section 162(m)(4)(C)(ii) of
the Code and the Treasury Regulations thereunder.

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(z) "Performance Goals" means the performance goals established by the Committee
in connection with the grant of Restricted Stock or Performance Units. In the
case of Qualified Performance-Based Awards, (i) such goals shall be based on the
attainment of specified levels of one or more of the following measures:
earnings per share, sales, net income, net income after tax, gross income,
operating income, cash generation, economic value added, unit volume, return on
equity, change in working capital, return on capital or shareholder return, and
(ii) such Performance Goals shall be set by the Committee within the time period
prescribed by Section 162(m) of the Code and related regulations.

(aa) "Performance Units" means an award made pursuant to Section 8.

(bb) "Plan" means the Avery Dennison Corp. 1996 Stock Incentive Plan, as set
forth herein and as hereinafter amended from time to time.

(cc) "Restricted Stock" means an award granted under Section 7.

(dd) "Retirement" means Normal or Early Retirement.

(ee) "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission under
Section 16(b) of the Exchange Act, as amended from time to time.

(ff) "Secretary" means the Secretary of the Company.

(gg) "Section 162(m) Exemption" means the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in Section
162(m)(4)(C) of the Code.

(hh) "Stock Appreciation Right" means a right granted under Section 6.

(ii) "Stock Option" means an option granted under Section 5.

(jj) "Stock Payments" means (a) a payment in the form of shares of Common Stock,
or (b) an option or other right to purchase shares of Common Stock, as part of a
deferred compensation arrangement, made in lieu of all or any portion of the
compensation, including without limitation, salary, bonuses and commissions,
that would otherwise become payable to an employee in cash.

(kk) "Termination of Employment" means the termination of the participant's
employment with the Company or an Affiliate. A participant employed by an
Affiliate shall also be deemed to incur a Termination of Employment if the
Affiliate ceases to be a subsidiary, as the case may be, and the participant
does not immediately thereafter become an employee of the Company or an
Affiliate. Temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Company and Affiliates shall not be
considered Terminations of Employment. The Committee, in its absolute
discretion, shall determine the effect of all other matters and questions
relating to Termination of Employment.

In addition, certain other terms used herein have definitions given to them in
the first place in which they are used.

SECTION 2.  ADMINISTRATION

The Plan shall be administered by the Compensation and Executive Personnel
Committee or such other committee of the Board as the Board may from time to
time designate (the "Committee"), which shall be

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composed of not less than two Non-Employee Directors, each of whom shall be an
"outside director" for purposes of Section 162(m)(4) of the Code, and shall be
appointed by and serve at the pleasure of the Board.

The Committee shall have plenary authority to grant Awards pursuant to the terms
of the Plan to officers and employees of the Company and its Affiliates;
provided that no further Awards will be made after December 6, 2002.

Among other things, the Committee shall have the authority, subject to the terms
of the Plan:

(a) To select the officers and employees to whom Awards may from time to time be
granted;

(b) To determine whether and to what extent Stock Options, Stock Appreciation
Rights, Restricted Stock, Performance Units, Stock Payments or Dividend
Equivalents or any combination thereof are to be granted hereunder;

(c) To determine the number of shares of Common Stock to be covered by each
Award granted hereunder;

(d) To determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the option price (subject to Section 5(a)), any
vesting condition, restriction or limitation (which may be related to the
performance of the participant, the Company or any Affiliate) and any vesting
acceleration or forfeiture waiver regarding any Award and the shares of Common
Stock relating thereto, based on such factors as the Committee shall determine;

(e) To modify, amend or adjust the terms and conditions of any Award, at any
time or from time to time, including but not limited to Performance Goals;
provided, however, that the Committee may not adjust upwards the amount payable
with respect to a Qualified Performance-Based Award or waive or alter the
Performance Goals associated therewith;

(f) To determine to what extent and under what circumstances Common Stock and
other amounts payable with respect to an Award shall be deferred; and

(g) To determine under what circumstances an Award may be settled in cash or
Common Stock under Sections 5(j), 6(b)(ii), 8(b)(v) and 9.

The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any agreement relating thereto)
and to otherwise supervise the administration of the Plan.

The Committee may act only by a majority of its members then in office, except
that the members thereof may delegate to (i) the CEO the authority to make
decisions pursuant to, and interpretations of, the Plan (provided that no such
delegation may be made that would cause Awards or other transactions under the
Plan to cease to be exempt from Section 16(b) of the Exchange Act or cease to be
Qualified Performance-Based Awards), including, but not limited to, the
authority to make grants of Stock Options and other Awards with respect to any
employee who is not an "officer" of the Company (within the meaning of Rule
16a-1(f) promulgated under the Exchange Act, as amended), subject to any
limitations the Committee may impose, and (ii) the CEO or Secretary, or both, or
any or all of the administrative

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duties and authority of the Committee under the Plan, other than the authority
to make grants or awards under the Plan except as set forth above.

Any determination made by the Committee or pursuant to delegated authority
pursuant to the provisions of the Plan with respect to any Award shall be made
in the sole discretion of the Committee or such delegate at the time of the
grant of the Award or, unless in contravention of any express term of the Plan,
at any time thereafter. All decisions made by the Committee or any appropriately
delegated officer pursuant to the provisions of the Plan shall be final and
binding on all persons, including the Company and Plan participants.

Any authority granted to the Committee may also be exercised by the full Board,
except to the extent that the grant or exercise of such authority would cause
any Award or transaction to become subject to (or lose an exemption under) the
short-swing profit recovery provisions of Section 16 of the Exchange Act or
cause an award designated as a Qualified Performance-Based Award not to qualify
for, or to cease to qualify for, the Section 162(m) Exemption. To the extent
that any permitted action taken by the Board conflicts with action taken by the
Committee, the Board action shall control.

SECTION 3.  COMMON STOCK SUBJECT TO PLAN

The total number of shares of Common Stock reserved and available for grant
under the Plan during each calendar year shall be 1.75 percent of the number of
outstanding shares on the first day of each calendar year. Shares subject to an
Award under the Plan may be treasury shares held by the Company or treasury
shares that have been transferred to and that are held in a grantor trust of the
Company (including, without limitation, the Employee Stock Benefit Trust).

If any shares of Restricted Stock are forfeited, or if any Stock Option (and
related Stock Appreciation Right, if any) terminates, expires or is canceled
without being exercised, or if any Stock Appreciation Right is exercised for
cash, shares subject to such Awards shall again be available for distribution in
connection with Awards under the Plan.

In the event of any change in corporate capitalization, such as a stock split
(whether or not effected in the form of a dividend), or a corporate transaction,
such as any merger, consolidation, separation, including a spin-off, or other
distribution of stock or property of the Company, any reorganization (whether or
not such reorganization comes within the definition of such term in Section 368
of the Code) or any partial or complete liquidation of the Company, the
Committee or Board shall make such substitution or adjustments in the aggregate
number and kind of shares reserved for issuance under the Plan, in the number,

kind and option price of shares subject to outstanding Stock Options and Stock
Appreciation Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other equitable
substitution or adjustments as it may determine to be appropriate in its
discretion with the intent that, after such substitution or adjustments, the
value of each Optionee's and each Awardee's interest shall be maintained as
before the occurrence of such event; provided, however, that the number of
shares subject to any Award shall always be a whole number. Such adjusted option
price shall also be used to determine the amount payable by the Company upon the
exercise of any Stock Appreciation Right associated with any Stock Option.

SECTION 4.  ELIGIBILITY

Directors, officers and employees of the Company, its subsidiaries and
Affiliates who are responsible for or contribute to the management, growth and
profitability of the business of the Company, and its Affiliates are eligible to
be granted Awards under the Plan.

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SECTION 5.  STOCK OPTIONS

The Committee shall have the authority to grant Stock Options to any eligible
individual, either alone or in addition to other Awards granted under the Plan,
in such form and subject to such conditions as the Committee may determine (and
which may differ for separate Stock Options). Such terms and conditions may
include, without limitation, restrictions on the transferability of the shares
of Common Stock received upon exercise of Stock Options. All Stock Options
granted hereunder shall be Non-qualified Stock Options.

The grant of a Stock Option shall be considered to occur on the date the
Committee by resolution selects an individual participant to receive such grant,
determines the number of shares of Common Stock to be subject to such Stock
Option, and specifies the terms and provisions of the Stock Option. Upon grant
of a Stock Option, the Committee shall instruct the Secretary to issue an option
agreement evidencing such option, and to deliver such option agreement to the
Optionee. Such agreement shall become effective upon execution by the Company
and the Optionee.

Stock Options granted under the Plan shall be subject to the following terms and
conditions and shall contain such additional terms and conditions as the
Committee shall deem desirable:

(a) Option Price. The option price per share of Common Stock purchasable under a
Stock Option shall be determined by the Committee and set forth in the option
agreement. Stock Options may not be repriced.

(b) Option Term. The term of each Stock Option shall be fixed by the Committee.

(c) Exercisability. Except as otherwise provided herein, Stock Options shall be
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee. If the Committee provides that any Stock
Option is exercisable only in installments, the Committee may at any time waive
or modify such installment exercise provisions, in whole or in part, based on
such factors as the Committee may determine. In addition, the

Committee may at any time accelerate the exercisability of any Stock Option or
extend the period during which it may be exercised (but not beyond the
expiration of the term thereof).

(d) Method of Exercise. Subject to the provisions of this Section 5, Stock
Options may be exercised, in whole or in part, at any time during the option
term by giving written notice of exercise to the Company specifying the number
of shares of Common Stock subject to the Stock Option to be purchased.

Except as specified below, such notice shall be accompanied by payment in full
of the option price by certified or bank check or such other instrument as the
Company may accept. Payment, in full or in part, may also be made in the form of
unrestricted Common Stock already owned by the Optionee of the same class as the
Common Stock subject to the Stock Option (based on the Fair Market Value of the
Common Stock on the date the Stock Option is exercised); provided, however, that
such already owned shares have been held by the Optionee for at least six months
at the time of exercise. The Committee may also permit a delay in payment of all
or a portion of the option price for up to 30 days, on such terms and conditions
as it may specify.

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Payment of the option price for any shares subject to a Stock Option may also be
made by delivering a properly executed exercise notice to the Company, together
with a copy of irrevocable instructions to a broker acceptable to the Company to
deliver promptly to the Company the amount of sale or loan proceeds necessary to
pay the option price, and, if requested, by the amount of any federal, state,
local or foreign withholding taxes. To facilitate the foregoing, the Company may
enter into agreements for coordinated procedures with one or more brokerage
firms.

In addition, payment of the option price for any shares subject to a Stock
Option may also be made by instructing the Company to withhold a number of such
shares having a Fair Market Value on the date of exercise equal to the aggregate
exercise price of such Stock Option plus any amounts required to be withheld
pursuant to Section 13(d).

On exercise of a Stock Option, delivery of Common Stock may be made by delivery
of Common Stock certificates or through a book-entry system (such as a direct
registration system). Except as otherwise provided in Section 5(l) below and in
the terms and conditions of the relevant Stock Option as determined by the
Committee, an Optionee shall have all of the rights of a shareholder of the
Company holding the class or series of Common Stock that is subject to such
Stock Option (including, if applicable, the right to vote the shares and the
right to receive dividends), when the Optionee has given written notice of
exercise, has paid in full for such shares and, if requested, has given the
representation described in Section 13(a).

(e) Nontransferability of Stock Options. No Stock Option shall be transferable
by the Optionee other than (i) by will or by the laws of descent and
distribution or (ii) as otherwise expressly permitted under the applicable
option agreement including, if so permitted, pursuant to a gift to such
Optionee's family, whether directly or indirectly or by means of a trust or
partnership or otherwise. All Stock Options shall be exercisable, subject to the
terms of this Plan, only by the Optionee, the guardian or legal representative
of the Optionee, or any person to whom such option is transferred pursuant to
the preceding sentence, it being understood that the term "holder" and
"Optionee" include such guardian, legal representative and other transferee.

(f) Termination by Death. Unless otherwise determined by the Committee, if an
Optionee's employment terminates by reason of death, any Stock Option held by
such Optionee may thereafter be exercised, to the extent then exercisable, or on
such accelerated basis as the Committee may determine, for a period of 12 months
(or such other period as the Committee may specify in the option agreement) from
the date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter.

(g) Termination by Reason of Disability. Unless otherwise determined by the
Committee, if an Optionee's employment terminates by reason of Disability, any
Stock Option held by such Optionee may thereafter be exercised by the Optionee,
to the extent it was exercisable at the time of termination, or on such
accelerated basis as the Committee may determine, for a period of three years
(or such shorter period as the Committee may specify in the option agreement)
from the date of such termination of employment or until the expiration of the
stated term of such Stock Option, whichever period is the shorter; provided,
however, that if the Optionee dies within such period, any unexercised Stock
Option held by such Optionee shall, notwithstanding the expiration of such
period, continue to be exercisable to the extent to which it was exercisable at
the time of death for a period of 12 months from the date of such death or until
the expiration of the stated term of such Stock Option, whichever period is the
shorter.

(h) Termination by Reason of Retirement. Unless otherwise determined by the
Committee in an option agreement, if an Optionee's employment terminates by
reason of Retirement, any Stock Option held by

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such Optionee may thereafter be exercised by the Optionee, to the extent it was
exercisable at the time of such Retirement, or on such accelerated basis as the
Committee may determine, as follows: (i) if the Optionee has been before such
Retirement, the CEO or the COO, for the period ending upon the expiration of the
stated term of such Stock Option; (ii) if the Optionee has been before such
Retirement, a participant in the Company's Long Term Incentive Program or any
successor thereto, other than the CEO or the COO, for the period ending on the
earlier of the fifth anniversary of such Retirement or the expiration of the
stated term of such Stock Option; and (iii) in all other cases, for a period
ending on the earlier of the third anniversary of such Retirement or the
expiration of the stated term of such Stock Option; provided, however, that if
the Optionee dies within such period any unexercised Stock Option held by such
Optionee shall, notwithstanding the expiration of such period, continue to be
exercisable to the extent to which it was exercisable at the time of death for a
period of 12 months from the date of such death or until the expiration of the
stated term of such Stock Option, whichever period is the shorter.

(i) Other Termination. Unless otherwise determined by the Committee: (A) if an
Optionee incurs a Termination of Employment for Cause, all Stock Options held by
such Optionee shall thereupon terminate; and (B) if an Optionee incurs a
Termination of Employment for any reason other than death, Disability or
Retirement or for Cause, any Stock Option held by such Optionee, to the extent
then exercisable, or on such accelerated basis as the Committee may determine,
may be exercised for the lesser of 6 months from the date of such Termination of
Employment or the balance of such Stock Option's term; provided, however, that
if the Optionee dies within such six-month period, any unexercised Stock Option
held by such Optionee shall, notwithstanding the expiration of such three-month
period, continue to be exercisable to the extent to which it was exercisable at
the time of death for a period of 12 months from the date of such death or until
the expiration of the stated term of such Stock Option, whichever period is the
shorter.

(j) Cashing Out of Stock Option. On receipt of written notice of exercise, the
Committee may elect to cash out all or part of the portion of the shares of
Common Stock for which a Stock Option is being exercised by paying the Optionee
an amount, in cash or Common Stock, equal to the excess of the Fair Market Value
of the Common Stock over the option price times the number of shares of Common
Stock for which the Option is being exercised on the effective date of such
cash-out.

(k) Change in Control Cash-Out. Notwithstanding any other provision of the Plan,
during the 60-day period from and after a Change in Control (the "Exercise
Period"), unless the Committee shall determine otherwise at the time of grant,
an Optionee shall have the right, whether or not the Stock Option is fully
exercisable and in lieu of the payment of the exercise price for the shares of
Common Stock being purchased under the Stock Option and by giving notice to the
Company, to elect (within the Exercise Period) to surrender all or part of the
Stock Option to the Company and to receive cash, within 30 days of such notice,
in an amount equal to the amount by which the Change in Control Price per share
of Common Stock on the date of such election shall exceed the exercise price per
share of Common Stock under the Stock Option (the "Spread") multiplied by the
number of shares of Common Stock granted under the Stock Option as to which the
right granted under this Section 5(k) shall have been exercised. Notwithstanding
the foregoing, if any right granted pursuant to this Section 5(k) would make a
Change in Control transaction ineligible for pooling-of-interests accounting
under APB No. 16 that but for the nature of such grant would otherwise be
eligible for such accounting treatment, the Committee shall have the ability to
substitute for the cash payable pursuant to such right Common Stock with a Fair
Market Value equal to the cash that would otherwise be payable hereunder.

(l) Deferral of Option Shares. The Committee may from time to time establish
procedures pursuant to which an Optionee may elect to defer, until a time or
times later than the exercise of an Option, receipt of all or a portion of the
Shares subject to such Option and/or to receive cash at such later time or times
in

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lieu of such deferred Shares, all on such terms and conditions as the Committee
shall determine. If any such deferrals are permitted, then notwithstanding
Section 5(d) above, an Optionee who elects such deferral shall not have any
rights as a stockholder with respect to such deferred Shares unless and until
Shares are actually delivered to the Optionee with respect thereto, except to
the extent otherwise determined by the Committee.

SECTION 6.  STOCK APPRECIATION RIGHTS

(a) Grant and Exercise. Stock Appreciation Rights may be granted in conjunction
with all or part of any Stock Option granted under the Plan, either at or after
the time of grant of such Stock Option. A Stock Appreciation Right shall
terminate and no longer be exercisable upon the termination or exercise of the
related Stock Option.

A Stock Appreciation Right may be exercised by an Optionee in accordance with
Section 6(b) by surrendering the applicable portion of the related Stock Option
in accordance with procedures established by the Committee. Upon such exercise
and surrender, the Optionee shall be entitled to receive an amount determined in
the manner prescribed in Section 6(b). Stock Options which have been so
surrendered shall no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised.

(b) Terms and Conditions. Stock Appreciation Rights shall be subject to such
terms and conditions as shall be determined by the Committee, including the
following:

         (i) Stock Appreciation Rights shall be exercisable only at such time or
         times and to the extent that the Stock Options to which they relate are
         exercisable in accordance with the provisions of Section 5 and this
         Section 6.

         (ii) Upon the exercise of a Stock Appreciation Right, an Optionee shall
         be entitled to receive an amount in cash, shares of Common Stock or
         both, in value equal to the excess of the Fair Market Value of one
         share of Common Stock over the option price per share specified in the
         related Stock Option multiplied by the number of shares in respect of
         which the Stock Appreciation Right shall have been exercised, with the
         Committee having the right to determine the form of payment.

         (iii) Stock Appreciation Rights shall be transferable only to permitted
         transferees of the underlying Stock Option in accordance with Section
         5(e).

         (iv) Upon the exercise of a Stock Appreciation Right, the Stock Option
         or part thereof to which such Stock Appreciation Right is related shall
         be deemed to have been exercised for the purpose of the limitation set
         forth in Section 3 on the number of shares of Common Stock to be issued
         under the Plan, but only to the extent of the number of shares covered
         by the Stock Appreciation Right at the time of exercise based on the
         value of the Stock Appreciation Right at such time.

SECTION 7.  RESTRICTED STOCK

(a) Administration. Shares of Restricted Stock may be awarded either alone or in
addition to other Awards granted under the Plan. The Committee shall determine
the officers and employees to whom and the time or times at which grants of
Restricted Stock will be awarded, the number of shares to be awarded to any
participant (subject to the aggregate limit on grants to individual participants
set forth in Section 3), the conditions for vesting, the time or times within
which such Awards may be subject to forfeiture and any other terms and
conditions of the Awards, in addition to those contained in Section 7(c).

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(b) Awards and Certificates. Shares of Restricted Stock shall be evidenced in
such manner as the Committee may deem appropriate, including book-entry
registration or issuance of one or more stock certificates. Any certificate
issued in respect of shares of Restricted Stock shall be registered in the name
of such participant and shall bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:

         "The transferability of this certificate and the shares of stock
         represented hereby are subject to the terms and conditions (including
         forfeiture) of the Avery Dennison Corporation 1996 Stock Incentive Plan
         and a Restricted Stock Agreement. Copies of such Plan and Agreement are
         on file at the offices of Avery Dennison Corporation, 150 North Orange
         Grove Boulevard, Pasadena, CA 91103."

The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon shall have lapsed and
that, as a condition of any Award of Restricted Stock, the participant shall
have delivered a stock power, endorsed in blank, relating to the Common Stock
covered by such Award.

(c) Terms and Conditions. Shares of Restricted Stock shall be subject to the
following terms and conditions:

         (i) The Committee may, prior to or at the time of grant, designate an
         Award of Restricted Stock as a Qualified Performance-Based Award, in
         which event it shall condition the grant or vesting, as applicable, of
         such Restricted Stock upon the attainment of Performance Goals. If the
         Committee does not designate an Award of Restricted Stock as a
         Qualified Performance-Based Award, it may also condition the grant or
         vesting thereof upon the attainment of Performance Goals. Regardless of
         whether an Award of Restricted Stock is a Qualified Performance-Based
         Award, the Committee may also condition the grant or vesting thereof
         upon the continued service of the participant. The conditions for grant
         or vesting and the other provisions of Restricted Stock Awards
         (including without limitation any applicable Performance Goals) need
         not be the same with respect to each recipient. The Committee may at
         any time, in its sole discretion, accelerate or waive, in whole or in
         part, any of the foregoing restrictions; provided, however, that in the
         case of Restricted Stock that is a Qualified Performance-Based Award,
         the applicable Performance Goals have been satisfied.

         (ii) Subject to the provisions of the Plan and the Restricted Stock
         Agreement referred to in Section 7(c)(vi), during the period, if any,
         set by the Committee, commencing with the date of such Award for which
         such participant's continued service is required (the "Restriction
         Period"), and until the later of (i) the expiration of the Restriction
         Period and (ii) the date the applicable Performance Goals (if any) are
         satisfied, the participant shall not be permitted to sell, assign,
         transfer, pledge or otherwise encumber shares of Restricted Stock;
         provided that the foregoing shall not prevent a participant from
         pledging Restricted Stock as security for a loan, the sole purpose of
         which is to provide funds to pay the option price for Stock Options.

         (iii) Except as provided in this paragraph (iii) and Sections 7(c)(i)
         and 7(c)(ii) and the Restricted Stock Agreement, the participant shall
         have, with respect to the shares of Restricted Stock, all of the rights

         of a stockholder of the Company holding the class or series of Common
         Stock that is the subject of the Restricted Stock, including, if
         applicable, the right to vote the shares and the right to receive any
         cash dividends. If so determined by the Committee in the applicable
         Restricted Stock Agreement and subject to Section 13(e) of the Plan,
         (A) cash

                                       10

<PAGE>

         dividends on the class or series of Common Stock that is the subject of
         the Restricted Stock Award shall be automatically deferred and
         reinvested in additional Restricted Stock, held subject to the vesting
         of the underlying Restricted Stock, or held subject to meeting
         Performance Goals applicable only to dividends, and (B) dividends
         payable in Common Stock shall be paid in the form of Restricted Stock
         of the same class as the Common Stock with which such dividend was
         paid, held subject to the vesting of the underlying Restricted Stock,
         or held subject to meeting Performance Goals applicable only to
         dividends.

         (iv) Except to the extent otherwise provided in the applicable
         Restricted Stock Agreement and Sections 7(c)(i), 7(c)(ii), 7(c)(v) and
         10(a)(ii), upon a participant's Termination of Employment for any
         reason during the Restriction Period or before the applicable
         Performance Goals are satisfied, all shares still subject to
         restriction shall be forfeited by the participant.

         (v) Except to the extent otherwise provided in Section 10(a)(ii), in
         the event that a participant retires or such participant's employment
         is involuntarily terminated (other than for Cause), the Committee shall
         have the discretion to waive, in whole or in part, any or all remaining
         restrictions (other than, in the case of Restricted Stock with respect
         to which a participant is a Covered Employee, satisfaction of the
         applicable Performance Goals unless the participant's employment is
         terminated by reason of death or Disability) with respect to any or all
         of such participant's shares of Restricted Stock.

         (vi) If and when any applicable Performance Goals are satisfied and the
         Restriction Period expires without a prior forfeiture of the Restricted
         Stock, unlegended certificates for such shares shall be delivered to
         the participant upon surrender of the legended certificates.

         (vii) Each Award shall be confirmed by, and be subject to, the terms of
         a Restricted Stock Agreement.

SECTION 8.  PERFORMANCE UNITS

(a) Administration. Performance Units may be awarded either alone or in addition
to other Awards granted under the Plan. The Committee shall determine the
officers and employees to whom and the time or times at which Performance Units
shall be awarded, the number of Performance Units to be awarded to any
participant (subject to the aggregate limit on grants to individual participants
set forth in Section 3), the duration of the Award Cycle and any other terms and
conditions of the Award, in addition to those contained in Section 8(b).

(b) Terms and Conditions. Performance Units Awards shall be subject to the
following terms and conditions:

         (i) The Committee may, prior to or at the time of the grant, designate
         Performance Units as Qualified Performance-Based Awards, in which event
         it shall condition the settlement thereof upon the attainment of
         Performance Goals. If the Committee does not designate Performance
         Units as Performance-Based Awards, it may also condition the settlement
         thereof upon the attainment of Performance Goals. Regardless of whether
         Performance Units are Qualified Performance-Based Awards, the Committee
         may also condition the settlement thereof upon the continued service of
         the participant. The provisions of such Awards (including without
         limitation any applicable Performance Goals) need not be the same with
         respect to each recipient. Subject to the provisions of the Plan and
         the Performance Units Agreement referred to

                                       11

<PAGE>

         in Section 8(b)(vi), Performance Units may not be sold, assigned,
         transferred, pledged or otherwise encumbered during the Award Cycle.

         (ii) Except to the extent otherwise provided in the applicable
         Performance Unit Agreement and Sections 8(b)(iii) and 10(a)(iii), upon
         a participant's Termination of Employment for any reason during the
         Award Cycle or before any applicable Performance Goals are satisfied,
         all rights to receive cash or stock in settlement of the Performance
         Units shall be forfeited by the participant.

         (iii) Except to the extent otherwise provided in Section 10(a)(iii), in
         the event that a participant's employment is terminated (other than for
         Cause), or in the event a participant retires, the Committee shall have
         the discretion to waive, in whole or in part, any or all remaining
         payment limitations (other than, in the case of Performance Units that
         are Qualified Performance-Based Awards, satisfaction of the applicable
         Performance Goals unless the participant's employment is terminated by
         reason of death or Disability) with respect to any or all of such
         participant's Performance Units.

         (iv) A participant may elect to further defer receipt of cash or shares
         in settlement of Performance Units for a specified period or until a
         specified event, subject in each case to the Committee's approval and
         to such terms as are determined by the Committee (the "Elective
         Deferral Period"). Subject to any exceptions adopted by the Committee,
         such election must generally be made prior to commencement of the Award
         Cycle for the Performance Units in question.

         (v) At the expiration of the Award Cycle, the Committee shall evaluate
         the Company's performance in light of any Performance Goals for such
         Award, and shall determine the number of Performance Units granted to
         the participant which have been earned, and the Committee shall then
         cause to be delivered (A) a number of shares of Common Stock equal to
         the number of Performance Units determined by the Committee to have
         been earned, or (B) cash equal to the Fair Market Value of such number
         of shares of Common Stock to the participant, as the Committee shall
         elect (subject to any deferral pursuant to Section 8(b)(iv)).

         (vi) Each Award shall be confirmed by, and be subject to, the terms
         of a Performance Unit Agreement.

SECTION 9.  STOCK PAYMENTS; DIVIDEND EQUIVALENTS

(a) Stock Payments may be granted under this Plan either alone or in conjunction
with any other Award. The number of shares shall be determined by the Committee
and may be based upon the Fair Market Value, book value or other measure of the
value of Common Stock on the date such Stock Payment is made or on any date
thereafter, and subject to such other terms and conditions as the Committee may
determine.

Dividend Equivalents may be granted under this Plan either alone or in
conjunction with any other Award. Dividend Equivalents shall represent the right
to receive cash payments, shares of Common Stock, or a combination thereof,
having a value equal to the dividends declared on Common Stock during a
specified period, and subject to such other terms and conditions as the
Committee shall determine.

                                       12

<PAGE>

SECTION 10. CHANGE IN CONTROL PROVISIONS

(a) Impact of Event. Notwithstanding any other provision of the Plan to the
contrary, in the event of a Change in Control:

         (i) Any Stock Options and Stock Appreciation Rights outstanding as of
         the date such Change in Control is determined to have occurred, and
         which are not then exercisable and vested, shall become fully
         exercisable and vested to the full extent of the original grant.

         (ii) The restrictions and deferral limitations applicable to any
         Restricted Stock shall lapse, and such Restricted Stock shall become
         free of all restrictions and become fully vested and transferable to
         the full extent of the original grant.

         (iii) All Performance Units shall be considered to be earned and
         payable in full, and any deferral or other restriction shall lapse and
         such Performance Units shall be settled in cash as promptly as is
         practicable.

         (iv) Any restrictions or deferral or forfeiture limitations applicable
         to any Dividend Equivalents shall lapse.

(b) Definition of Change in Control. For purposes of the Plan, a "Change in
Control" shall mean the happening of any of the following events:

         (i) An acquisition by any individual, entity or group (within the
         meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
         "Person") of beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of 20% or more of either (1) the
         then outstanding shares of common stock of the Company (the
         "Outstanding Company Common Stock") or (2) the combined voting power of
         the then outstanding voting securities of the Company entitled to vote
         generally in the election of directors (the "Outstanding Company Voting
         Securities"); excluding, however, the following: (1) any acquisition
         directly from the Company, other than an acquisition by virtue of the
         exercise of a conversion privilege unless the security being so
         converted was itself acquired directly from the Company, (2) any
         acquisition by the Company, (3) any acquisition by any employee benefit
         plan (or related trust) sponsored or maintained by the Company or any
         corporation controlled by the Company, or (4) any acquisition by any
         corporation pursuant to a transaction which complies with clauses (1),
         (2) and (3) of subsection (iii) of this Section 9(b); or

         (ii) A change in the composition of the Board such that the individuals
         who, as of the effective date of the Plan, constitute the Board (such
         Board shall be hereinafter referred to as the "Incumbent Board") cease
         for any reason to constitute at least a majority of the Board;
         provided, however, for purposes of this Section 9(b), that any
         individual who becomes a member of the Board subsequent to the
         effective date of the Plan, whose election, or nomination for election
         by the Company's shareholders, was approved by a vote of at least a
         majority of those individuals who are members of the Board and who were
         also members of the Incumbent Board (or deemed to be such pursuant to
         this proviso) shall be considered as though such individual were a
         member of the Incumbent Board; but, provided further, that any such
         individual whose initial assumption of office occurs as a result of
         either an actual or threatened election contest (as such terms are used
         in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
         other actual or threatened solicitation of proxies or consents by or on
         behalf of a Person other than the Board shall not be so considered as a
         member of the Incumbent Board; or

                                       13

<PAGE>

         (iii) The approval by the shareholders of the Company of a
         reorganization, merger or consolidation or sale or other disposition of
         all or substantially all of the assets of the Company ("Corporate
         Transaction") or, if consummation of such Corporate Transaction is
         subject, at the time of such approval by shareholders, to the consent
         of any government or governmental agency, obtaining of such consent
         (either explicitly or implicitly by consummation); excluding however,
         such a Corporate Transaction pursuant to which (1) all or substantially
         all of the individuals and entities who are the beneficial owners,
         respectively, of the Outstanding Company Common Stock and Outstanding
         Company Voting Securities immediately prior to such Corporate
         Transaction will beneficially own, directly or indirectly, more than
         60% of, respectively, the outstanding shares of common stock, and the
         combined voting power of the then outstanding voting securities
         entitled to vote generally in the election of directors, as the case
         may be, of the corporation resulting from such Corporate Transaction
         (including, without limitation, a corporation which as a result of such
         transaction owns the Company or all or substantially all of the
         Company's assets either directly or through one or more subsidiaries)
         in substantially the same proportions as their ownership, immediately
         prior to such Corporate Transaction, of the Outstanding Company Common
         Stock and Outstanding Company Voting Securities, as the case may be,
         (2) no Person (other than the Company, any employee benefit plan (or
         related trust) of the Company or such corporation resulting from such
         Corporate Transaction) will beneficially own, directly or indirectly,
         20% or more of, respectively, the outstanding shares of common stock of
         the corporation resulting from such Corporate Transaction or the
         combined voting power of the outstanding voting securities of such
         corporation entitled to vote generally in the election of directors
         except to the extent that such ownership existed prior to the Corporate
         Transaction, and (3) individuals who were members of the Incumbent
         Board will constitute at least a majority of the members of the board
         of directors of the corporation resulting from such Corporate
         Transaction; or

         (iv) The approval by the stockholders of the Company of a complete
         liquidation or dissolution of the Company.

(c) Change in Control Price. For purposes of the Plan, "Change in Control Price"
means the higher of

         (i) the highest reported sales price, regular way, of a share of Common
Stock in any transaction reported on the New York Stock Exchange Composite Tape
or other national exchange on which such shares are listed or on NASDAQ during
the 60-day period prior to and including the date of a Change in Control, or

         (ii) if the Change in Control is the result of a tender or exchange
offer or a Corporate Transaction, the highest price per share of Common Stock
paid in such tender or exchange offer or Corporate Transaction. To the extent
that the consideration paid in any such transaction described above consists all
or in part of securities or other noncash consideration, the value of such
securities or other noncash consideration shall be determined in the sole
discretion of the Board.

SECTION 11.  TERM, AMENDMENT AND TERMINATION

The Plan will continue in existence until it is terminated by the Board. Under
the Plan, Awards outstanding as of such date shall not be affected or impaired
by the termination of the Plan.

                                       14

<PAGE>

The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the rights of an
Optionee under a Stock Option or a recipient of a Stock Appreciation Right,
Restricted Stock Award or Performance Unit Award theretofore granted without the
Optionee's or recipient's consent, except such an amendment made to cause the
Plan to qualify for any exemption provided by Rule 16b-3. In addition, no such
amendment shall be made without the approval of the Company's shareholders to
the extent such approval is required by law, rule or agreement.

The Committee may amend the terms of any Stock Option or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall cause a
Qualified Performance-Based Award to cease to qualify for the Section 162(m)
Exemption or impair the rights of any holder without the holder's consent except
such an amendment made to cause the Plan or Award to qualify for any exemption
provided by Rule 16b-3.

Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting rules as well as
other developments, and to grant Awards which qualify for beneficial treatment
under such rules without stockholder approval.

SECTION 12.  UNFUNDED STATUS OF PLAN

It is presently intended that the Plan constitutes an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver Common Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.

SECTION 13.  GENERAL PROVISIONS

(a) The Committee may require each person purchasing or receiving shares
pursuant to an Award to represent to and agree with the Company in writing that
such person is acquiring the shares without a view to the distribution thereof.
The certificates for such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer.

Notwithstanding any other provision of the Plan or agreements made pursuant
thereto, the Company shall not be required to issue or deliver any certificate
or certificates for shares of Common Stock under the Plan prior to fulfillment
of all of the following conditions:

         (1) Listing or approval for listing upon notice of issuance, of such
         shares on the New York Stock Exchange, Inc., or such other securities
         exchange as may at the time be the principal market for the Common
         Stock;

         (2) Any registration or other qualification of such shares of the
         Company under any state or federal law or regulation, or the
         maintaining in effect of any such registration or other qualification
         which the Committee shall, in its absolute discretion upon the advice
         of counsel, deem necessary or advisable; and

         (3) Obtaining any other consent, approval, or permit from any state or
         federal governmental agency which the Committee shall, in its absolute
         discretion after receiving the advice of counsel, determine to be
         necessary or advisable.

                                       15

<PAGE>

(b) Nothing contained in the Plan shall prevent the Company or any subsidiary or
Affiliate from adopting other or additional compensation arrangements for its
employees.

(c) Adoption of the Plan shall not confer upon any employee any right to
continued employment, nor shall it interfere in any way with the right of the
Company or any Affiliate to terminate the employment of any employee at any
time.

(d) No later than the date as of which an amount first becomes includible in the
gross income of the participant for federal income tax purposes with respect to
any Award under the Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Company regarding the payment of, any federal,
state, local or foreign taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Company, withholding
obligations may be settled with Common Stock, including Common Stock that is
part of the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements, and the Company and its Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment
otherwise due to the participant. The Committee may establish such procedures as
it deems appropriate, including making irrevocable elections, for the settlement
of withholding obligations with Common Stock.

(e) Reinvestment of dividends in additional Restricted Stock at the time of any
dividend payment shall only be permissible if sufficient shares of Common Stock
are available under Section 3 for such reinvestment (taking into account then
outstanding Stock Options and other Awards).

(f) The Committee shall establish such procedures as it deems appropriate for a
participant to designate a beneficiary to whom any amounts payable in the event
of the participant's death are to be paid or by whom any rights of the
participant, after the participant's death, may be exercised.

(g) In the case of a grant of an Award to any employee of a an Affiliate of the
Company, the Company may, if the Committee so directs, issue or transfer the
shares of Common Stock, if any, covered by the Award to the Affiliate, for such
lawful consideration as the Committee may specify, upon the condition or
understanding that the Affiliate will transfer the shares of Common Stock to the
employee in accordance with the terms of the Award specified by the Committee
pursuant to the provisions of the Plan.

(h) The Plan and all Awards made and actions taken thereunder shall be governed
by and construed in accordance with the laws of the State of Delaware, without
reference to principles of conflict of laws.

(i) At the time an Award is made hereunder or at any time thereafter, the
Committee may grant to the participant receiving such Award the right to receive
a cash payment in an amount specified by the Committee, to be paid at such time
or times (if ever) as the Award results in compensation income to the
participant, for the purpose of assisting the participant to pay the resulting
taxes, all as determined by the Committee and on such other terms and conditions
as the Committee shall determine.

(j) The Committee may, in its discretion, extend one or more loans to
participants in connection with the exercise or vesting of, or receipt of
payments or other property pursuant to, Awards under this Plan, on such terms
and conditions as the Committee shall determine.

                                       16

<PAGE>

SECTION 14.  DIRECTOR STOCK OPTIONS

(a) After all of the available shares in the Company's 1988 Stock Option Plan
for Non-Employee Directors have been exhausted, each director of the Company who
is not otherwise an employee of the Company or an Affiliate, shall, on the first
Tuesday following his or her first election as a director of the Company, be
granted a Stock Option for 5,000 shares, and thereafter on the day of the
regular meeting of the Board when employee directors and other Company employees
receive annual stock option grants, each non-employee director shall
automatically receive a Stock Option for 2,000 shares. Each such Stock Option
shall have an exercise price equal to Fair Market Value of the Common Stock at
the date of grant of such Stock Option.

(b) An automatic director Stock Option shall be granted hereunder only if as of
each date of grant the director (i) is not otherwise an employee of the Company
or an Affiliate, and (ii) has served on the Board continuously since the
commencement of his term.

(c) Each holder of a Stock Option granted pursuant to this Section 14 shall also
have the rights specified in Section 5(k).

(d) In the event that the number of shares of Common Stock available for future
grant under the Plan is insufficient to make all automatic grants required to be
made on such date, then all non-employee directors entitled to a grant on such
date shall share ratably in the number of options on shares available for grant
under the Plan.

(e) Except as expressly provided in this Section 14, any Stock Option granted
hereunder shall be subject to the terms and conditions of the Plan as if the
grant were made pursuant to Section 5 hereof.

SECTION 15.  EFFECTIVE DATE OF PLAN

The Plan shall be effective as of December 5, 1996. The Plan is amended and
restated as of December 5, 2002.

                                       17<PAGE>

                                                                 EXHIBIT 10.21.3

                           AVERY DENNISON CORPORATION
                            1996 STOCK INCENTIVE PLAN
                      NON-QUALIFIED STOCK OPTION AGREEMENT

THIS AGREEMENT, dated ____________ ____, 2002, is made by and between Avery
Dennison Corporation, a Delaware corporation, hereinafter referred to as the
"Company," and *, an employee of Company or a Subsidiary of Company, hereinafter
referred to as "Employee" or "Optionee."

WHEREAS, Company wishes to afford Employee the opportunity to purchase shares of
its $1.00 par value common stock under the terms of the Avery Dennison
Corporation 1996 Stock Incentive Plan.

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

WHEREAS, the Committee has advised the Company of its determination and
instructed the undersigned officers to issue said Option, which is a
Non-Qualified Stock Option, as authorized under the Plan;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, Company and Employee do hereby agree as follows:

ARTICLE I - DEFINITIONS

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

1.1      Beneficiary

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

1.2      Change of Control

         "Change of Control" shall have the meaning as set forth in the Plan.

1.3      Option

         "Option" shall mean the option to purchase common stock of the Company
granted under this Agreement pursuant to the Plan.

1.4      Plan

         The "Plan" shall mean the Avery Dennison Corporation 1996 Stock
Incentive Plan.

----------
* Refer to the attached Notice.

                                        1

<PAGE>

1.5      Pronouns

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

1.6      Secretary

         "Secretary" shall mean the Secretary of the Company.

1.7      Subsidiary

         "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

1.8      Termination of Employment

         "Termination of Employment" means the termination of the participant's
employment with the Company or an Affiliate. A participant employed by an
Affiliate shall also be deemed to incur a Termination of Employment if the
Affiliate ceases to be a subsidiary, as the case may be, and the participant
does not immediately thereafter become an employee of the Company or an
Affiliate. Temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Company and Affiliates shall not be
considered Terminations of Employment. The Committee, in its absolute
discretion, shall determine the effect of all other matters and questions
relating to Termination of Employment.

ARTICLE II - GRANT OF OPTION

2.1      Grant of Option

         In consideration of Employee's agreement to remain in the employ of
Company or its Subsidiaries and for other good and valuable consideration, on
the date hereof the Company irrevocably grants to Employee the Option to
purchase any part or all of an aggregate of * shares of its $1.00 par value
common stock upon the terms and conditions set forth in this Agreement. Such
Option is granted pursuant to the Plan and shall also be subject to the terms
and conditions set forth in the Plan.

2.2      Purchase Price

         The purchase price of the shares of stock covered by the Option shall
be _________________ dollars ($_______) per share without commission or other
charge.

2.3      Consideration to Company

         In consideration of the granting of this Option by the Company, the
Employee agrees to render faithful and efficient service to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe, for a period of at least one (1) year from the date this
Option is granted (unless the Employee retires before the end of such period and
the Employee satisfies the requirements of the last paragraph of Section 3.1(a)
below). Nothing in this Agreement or in the Plan shall confer upon the Employee
any right to continue in the employ of the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries, which are hereby expressly reserved, to discharge the Employee at
any time for any reason whatsoever, with or without good cause. Nor shall it
interfere with or restrict in any way, other than the forfeiture of all rights
under this

----------
* Refer to the attached Notice.

                                        2

<PAGE>

Agreement, the right of the Employee voluntarily to terminate his employment
with the Company or a Subsidiary.

ARTICLE III - PERIOD OF EXERCISABILITY

3.1      Commencement of Exercisability

         (a) The Option will vest (become available for exercise) nine years and
         nine months from the date the Option was granted. However, if certain
         conditions are met, the Option will become eligible for accelerated or
         early vesting three years from the date the Option was granted or on
         subsequent anniversary dates thereafter.

                  Such early or accelerated vesting will occur provided that the
         Company's return on total capital as reported in the annual report to
         shareholders (or other report) for the most recently completed fiscal
         year equals or exceeds the sixty-seventh (67%) percentile of the return
         on total capital for the peer group companies (as listed in the
         Company's proxy statement) for such third year (the performance test).
         (For example, the performance test for accelerated vesting for options
         granted in December 2002 will be based on the return on total capital
         for 2005).

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

                  If the Company meets the performance test described above, all
         prior non-vested Options eligible for accelerated vesting will become
         available for exercise as soon as possible following the Committee's
         certifications of the Company's performance as compared to the
         performance of the peer group companies.

                  If the Company fails to meet the performance test described
         above, all prior non-vested Options eligible for accelerated vesting
         will be subject to a similar performance test following the end of the
         next fiscal year. The test for accelerated vesting of Options will
         continue to "roll" in the manner described above until the Company
         passes the performance test, until nine years and nine months have
         elapsed from the date of grant, or until such Options otherwise vest as
         described herein.

                  Alternatively, Options, granted to employees as participants
         in the Long Term Incentive Plan, who (i) retire under the Company's
         retirement plan within sixty (60) days of the date of Termination of
         Employment, (ii) have worked for the Company for ten (10) or more
         years, and (iii) have a combination of age and service with the Company
         of seventy five (75) or more, will vest as of the date of Termination
         of Employment, provided that the Company has met the performance test
         (as described above) for the fiscal year ending prior to the employee's
         retirement.

         (b) No portion of the Option which is an unexercisable installment
         under Subsection (a) above at Termination of Employment shall
         thereafter become exercisable, unless otherwise determined by the
         Committee in accordance with the terms of the Plan.

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

                                        3

<PAGE>

3.2      Term of Option

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

3.3      Exercise of Option after Termination of Employment

         This Option is exercisable by the Employee only while he is employed by
the Company or a Subsidiary, subject to the following exceptions (or as
authorized by the Committee):

         (a) If the Employee dies while the Option, or any portion thereof, is
         exercisable under the terms of this Agreement, the Employee's
         Beneficiary may exercise such rights, subject to the limitation in
         Subsection 3.1(b). The Option must be exercised within twelve (12)
         months after the Employee's death, and the Committee may in its
         discretion extend the Expiration Date of the Option to accommodate such
         exercise.

         (b) If the Employee's employment is terminated due to his permanent and
         total disability, as defined in Section 22(c)(3) of the Code, the
         Employee may exercise the Option, subject to the limitation in
         Subsection 3.1(b), within thirty-six (36) months after Termination
         of Employment, but not later than the Option's Expiration Date.

         (c) If the Employee's employment is terminated due to his retirement,
         the Employee may exercise the Option, subject to the limitation of
         Subsection 3.1(b), within sixty (60) months after Termination of
         Employment, but not later than the Option's Expiration Date.

         (d) If the Employee's employment is terminated other than for good
         cause or the reasons set forth in Subsections (a) through (c) above,
         the Employee may exercise the Option, subject to the limitations of
         Subsection 3.1(b), within six (6) months after Termination of
         Employment, but not later than the Option's Expiration Date.

ARTICLE IV - EXERCISE OF OPTIONS

4.1      Partial Exercise

         Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2. Each partial exercise shall be for not less than twenty-five (25) shares
(or a smaller number, if it is the maximum number which may be exercised under
Section 3.1), and shall be for whole shares only.

4.2      Manner of Exercise

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

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

         (b) Full payment for the shares with respect to which the Option or
         portion thereof is exercised.

                                        4

<PAGE>

         Payment may be made by any one of the following methods:

                  (i) in cash (or by certified or bank cashier's check), or

                  (ii) by actual or constructive delivery to the Company, in
                  accordance with the procedures established by the Company, of
                  Company Common Stock then owned by the Employee with a fair
                  market value on the date the Option is exercised equal to the
                  aggregate exercise purchase price of the shares with respect
                  to which the Option or portion thereof is exercised; or

                  (iii) by a combination of cash and surrender of stock in the
                  manner herein specified; or

                  (iv) irrevocable instructions to a broker, acceptable to the
                  Company, to delivery promptly to the Company the amount of
                  the sale or the loan proceeds necessary to pay the option
                  price; or

                  (v) by instructing the Company to withhold a number of such
                  shares having a Fair Market Value on the date of the exercise
                  equal to the aggregate exercise price of such Option; and

         (c) Full payment to the Company of any federal, state, local or foreign
         taxes required to be withheld in connection with the exercise, which
         payment may be made in cash (or by certified or bank cashier's check)
         or by actual or constructive delivery and surrender to the Company in
         accordance with procedures established by the Company, of Company
         Common Stock then owned by the Employee with a Fair Market Value on the
         date the Option is exercised equal to the total of such taxes due in
         connection with the exercise, or by a combination of cash and surrender
         of stock in the manner herein specified (provided that in any event
         Employee is responsible for the payment of any and all applicable taxes
         related to this stock option grant and any exercise of stock options
         hereunder); and

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

4.3      Conditions to Issuance of Stock Certificates

         The shares of stock deliverable, either in the form of Common Stock
certificates or as evidenced in a book-entry system (such as in a direct
registration system), upon the exercise of the Option, or any part thereof, may
be previously authorized but unissued shares, issued shares which have then been
reacquired by the Company, or shares held by a grantor trust (such as the
Employee Stock Benefit Trust). Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates, or to provide instructions for book entries, for
shares of stock purchased upon the exercise of the Option or part thereof prior
to fulfillment of all of the following conditions:

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

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

                                        5

<PAGE>

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

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

         (e) Subject to the terms of the Plan, the receipt by the Company of
         full payment for such shares.

4.4      Rights as Shareholders

         The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates, or
book entries, representing such shares shall have been issued or made by the
Company, or the Company's transfer agent, to such holder.

ARTICLE V - MISCELLANEOUS

5.1      Option Subject to Plan

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

5.2      Administration

         The Committee shall have the power to interpret the terms and
provisions of the Plan and this Agreement and to adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, alter or repeal any such rules.

5.3      Transferability

         Neither the Option nor any interest or right therein or part thereof
may be sold, pledged, assigned or transferred in any manner other than by will
or by the applicable laws of descent and distribution, except as authorized by
the Committee. The Option shall be exercised during the Employee's lifetime only
by the Employee, or his guardian or legal representative, except as authorized
by the Committee.

5.4      Notices

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

                                        6

<PAGE>

by the United States Postal Service.

5.5      Titles

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

5.6      Construction

         This Agreement and the Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws.

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

                                        AVERY DENNISON CORPORATION

                                        by:  Chairman & Chief Executive Officer*

                                        by:  Secretary*

by:  Optionee*

----------
* Refer to the attached Notice.

                                        7

<PAGE>

                           AVERY DENNISON CORPORATION
                           --------------------------
                           1996 STOCK INCENTIVE PLAN
                           -------------------------
                      NON-QUALIFIED STOCK OPTION AGREEMENT
                      ------------------------------------

THIS AGREEMENT, dated ____________ ____, 2002, is made by and between Avery
Dennison Corporation, a Delaware corporation, hereinafter referred to as the
"Company," and *, an employee of Company or a Subsidiary of Company, hereinafter
referred to as "Employee" or "Optionee."

WHEREAS, Company wishes to afford Employee the opportunity to purchase shares of
its $1.00 par value common stock under the terms of the Avery Dennison
Corporation 1996 Stock Incentive Plan.

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

WHEREAS, the Committee has advised the Company of its determination and
instructed the undersigned officers to issue said Option, which is a
Non-Qualified Stock Option, as authorized under the Plan;

NOW, THEREFORE, in consideration of the mutual covenants herein contained and
other good and valuable consideration, the receipt of which is hereby
acknowledged, Company and Employee do hereby agree as follows:

ARTICLE I - DEFINITIONS
-----------------------

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

1.1  Beneficiary
     -----------

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

1.2  Change of Control
     -----------------

     "Change of Control" shall have the meaning as set forth in the Plan.

1.3  Option
     ------

     "Option" shall mean the option to purchase common stock of the Company
granted under this Agreement pursuant to the Plan.

1.4  Plan
     ----

     The "Plan" shall mean the Avery Dennison Corporation 1996 Stock Incentive
Plan.

1.5  Pronouns
     --------

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

--------------------
* Refer to the attached Notice

                                       1

<PAGE>

1.6  Secretary
     ---------

     "Secretary" shall mean the Secretary of the Company.

1.7  Subsidiary
     ----------

     "Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

1.8  Termination of Employment
     -------------------------

     "Termination of Employment" means the termination of the participant's
employment with the Company or an Affiliate. A participant employed by an
Affiliate shall also be deemed to incur a Termination of Employment if the
Affiliate ceases to be a subsidiary, as the case may be, and the participant
does not immediately thereafter become an employee of the Company or an
Affiliate. Temporary absences from employment because of illness, vacation or
leave of absence and transfers among the Company and Affiliates shall not be
considered Terminations of Employment. The Committee, in its absolute
discretion, shall determine the effect of all other matters and questions
relating to Termination of Employment.

ARTICLE II - GRANT OF OPTION
----------------------------

2.1  Grant of Option
     ---------------

     In consideration of Employee's agreement to remain in the employ of Company
or its Subsidiaries and for other good and valuable consideration, on the date
hereof the Company irrevocably grants to Employee the Option to purchase any
part or all of an aggregate of * shares of its $1.00 par value common stock upon
the terms and conditions set forth in this Agreement. Such Option is granted
pursuant to the Plan and shall also be subject to the terms and conditions set
forth in the Plan.

2.2  Purchase Price
     --------------

     The purchase price of the shares of stock covered by the Option shall be
_________________ dollars ($_______) per share without commission or other
charge.

2.3  Consideration to Company
     ------------------------

     In consideration of the granting of this Option by the Company, the
Employee agrees to render faithful and efficient service to the Company or a
Subsidiary, with such duties and responsibilities as the Company shall from time
to time prescribe, for a period of at least one (1) year from the date this
Option is granted (unless the Employee retires before the end of such period and
the Employee satisfies the requirements of the last paragraph of Section 3.1(a)
below). Nothing in this Agreement or in the Plan shall confer upon the Employee
any right to continue in the employ of the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries, which are hereby expressly reserved, to discharge the Employee at
any time for any reason whatsoever, with or without good cause. Nor shall it
interfere with or restrict in any way, other than the forfeiture of all rights
under this Agreement, the right of the Employee voluntarily to terminate his
employment with the Company or a Subsidiary.

ARTICLE III - PERIOD OF EXERCISABILITY
--------------------------------------

3.1  Commencement of Exercisability
     ------------------------------

--------------------
* Refer to the attached Notice

                                       2

<PAGE>

     (a) The Option will vest (become available for exercise) nine years and
     nine months from the date the Option was granted. However, if certain
     conditions are met, the Option will become eligible for accelerated or
     early vesting three years from the date the Option was granted or on
     subsequent anniversary dates thereafter.

          Such early or accelerated vesting will occur provided that the
     Company's return on total capital as reported in the annual report to
     shareholders (or other report) for the most recently completed fiscal year
     equals or exceeds the sixty-seventh (67%) percentile of the return on total
     capital for the peer group companies (as listed in the Company's proxy
     statement) for such third year (the performance test). (For example, the
     performance test for accelerated vesting for options granted in December
     2002 will be based on the return on total capital for 2005).

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

          If the Company meets the performance test described above, all prior
     non-vested Options eligible for accelerated vesting will become available
     for exercise as soon as possible following the Committee's certifications
     of the Company's performance as compared to the performance of the peer
     group companies.

          If the Company fails to meet the performance test described above, all
     prior non-vested Options eligible for accelerated vesting will be subject
     to a similar performance test following the end of the next fiscal year.
     The test for accelerated vesting of Options will continue to "roll" in the
     manner described above until the Company passes the performance test, until
     nine years and nine months have elapsed from the date of grant, or until
     such Options otherwise vest as described herein.

          Alternatively, Options, granted to employees as participants in the
     Long Term Incentive Plan, who (i) retire under the Company's retirement
     plan within sixty (60) days of the date of Termination of Employment, (ii)
     have worked for the Company for ten (10) or more years, and (iii) have a
     combination of age and service with the Company of seventy five (75) or
     more, will vest as of the date of Termination of Employment, provided that
     the Company has met the performance test (as described above) for the
     fiscal year ending prior to the employee's retirement.

     (b) No portion of the Option which is an unexercisable installment under
     Subsection (a) above at Termination of Employment shall thereafter become
     exercisable, unless otherwise determined by the Committee in accordance
     with the terms of the Plan.

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

3.2  Term of Option
     --------------

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

3.3  Exercise of Option after Termination of Employment
     --------------------------------------------------

                                       3

<PAGE>

     This Option is exercisable by the Employee only while he is employed by the
Company or a Subsidiary, subject to the following exceptions:

     (a) If the Employee dies while the Option, or any portion thereof, is
     exercisable under the terms of this Agreement, the Employee's Beneficiary
     may exercise such rights, subject to the limitation in Subsection 3.1(b).
     The Option must be exercised within twelve (12) months after the Employee's
     death, and the Committee may in its discretion extend the Expiration Date
     of the Option to accommodate such exercise.

     (b) If the Employee's employment is terminated due to his permanent and
     total disability, as defined in Section 22(c)(3) of the Code, the Employee
     may exercise the Option, subject to the limitation in Subsection 3.1(b),
     within thirty-six (36) months after Termination of Employment, but not
     later than the Option's Expiration Date.

     (c) If the Employee's employment is terminated due to his retirement, the
     Employee may exercise the Option, subject to the limitation of Subsection
     3.1(b), to the full term of the Option, but not later than the Option's
     Expiration Date.

     (d) If the Employee's employment is terminated other than for good cause or
     the reasons set forth in Subsections (a) through (c) above, the Employee
     may exercise the Option, subject to the limitations of Subsection 3.1(b),
     within six (6) months after Termination of Employment, but not later than
     the Option's Expiration Date.

ARTICLE IV - EXERCISE OF OPTIONS
--------------------------------

4.1  Partial Exercise
     ----------------

     Any exercisable portion of the Option or the entire Option, if then wholly
exercisable, may be exercised in whole or in part at any time prior to the time
when the Option or portion thereof becomes unexercisable under Section 3.2. Each
partial exercise shall be for not less than twenty-five (25) shares (or a
smaller number, if it is the maximum number which may be exercised under Section
3.1), and shall be for whole shares only.

4.2  Manner of Exercise
     ------------------

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

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

     (b) Full payment for the shares with respect to which the Option or portion
     thereof is exercised. Payment may be made by any one of the following
     methods:

          (i) in cash (or by certified or bank cashier's check), or

          (ii) by actual or constructive delivery to the Company, in accordance
          with the procedures established by the Company, of Company Common
          Stock then owned by the Employee with a fair market value on the date
          the Option is exercised equal to the aggregate exercise purchase price
          of the shares with respect to which the Option or portion thereof is
          exercised; or

                                        4

<PAGE>

          (iii) by a combination of cash and surrender of stock in the manner
          herein specified; or

          (iv) irrevocable instructions to a broker, acceptable to the Company,
          to delivery promptly to the Company the amount of the sale or the loan
          proceeds necessary to pay the option price; or

          (v) by instructing the Company to withhold a number of such shares
          having a Fair Market Value on the date of the exercise equal to the
          aggregate exercise price of such Option; and

     (c) Full payment to the Company of any federal, state, local or foreign
     taxes required to be withheld in connection with the exercise, which
     payment may be made in cash (or by certified or bank cashier's check) or by
     actual or constructive delivery and surrender to the Company in accordance
     with procedures established by the Company, of Company Common Stock then
     owned by the Employee with a Fair Market Value on the date the Option is
     exercised equal to the total of such taxes due in connection with the
     exercise, or by a combination of cash and surrender of stock in the manner
     herein specified (provided that in any event Employee is responsible for
     the payment of any and all applicable taxes related to this stock option
     grant and any exercise of stock options hereunder); and

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

4.3  Conditions to Issuance of Stock Certificates
     --------------------------------------------

     The shares of stock deliverable, either in the form of Common Stock
certificates or as evidenced in a book-entry system (such as in a direct
registration system), upon the exercise of the Option, or any part thereof, may
be previously authorized but unissued shares, issued shares which have then been
reacquired by the Company, or shares held by a grantor trust (such as the
Employee Stock Benefit Trust). Such shares shall be fully paid and
nonassessable. The Company shall not be required to issue or deliver any
certificate or certificates, or to provide instructions for book entries, for
shares of stock purchased upon the exercise of the Option or part thereof prior
to fulfillment of all of the following conditions:

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

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

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

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

     (e) Subject to the terms of the Plan, the receipt by the Company of full
     payment for such shares.

4.4  Rights as Shareholders
     ----------------------

                                       5

<PAGE>

     The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates, or
book entries, representing such shares shall have been issued or made by the
Company, or the Company's transfer agent, to such holder.

ARTICLE V - MISCELLANEOUS
-------------------------

5.1  Option Subject to Plan
     ----------------------

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

5.2  Administration
     --------------

     The Committee shall have the power to interpret the terms and provisions of
the Plan and this Agreement and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith and to
interpret, alter or repeal any such rules.

5.3  Transferability
     ---------------

     Neither the Option nor any interest or right therein or part thereof may be
sold, pledged, assigned or transferred in any manner other than by will or by
the applicable laws of descent and distribution, except as authorized by the
Committee. The Option shall be exercised during the Employee's lifetime only by
the Employee, or his guardian or legal representative, except as authorized by
the Committee.

5.4  Notices
     -------

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

5.5  Titles
     ------

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

5.6  Construction
     ------------

     This Agreement and the Plan and all actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware,
without reference to principles of conflict of laws.

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

                                        6

<PAGE>

                                   AVERY DENNISON CORPORATION

                                   by:      Chairman & Chief Executive Officer*

                                   by:      Secretary*

by:      Optionee*

-------------
* Refer to the attached Notice

                                       7

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