Document:

Forms of NQSO Agreement under Stock Option Plan

 EXHIBIT 10.19.5 
  
 AVERY DENNISON CORPORATION 
 NON-QUALIFIED STOCK OPTION AGREEMENT 
  
 THIS AGREEMENT, dated December 4, 2003, is made by and between Avery Dennison Corporation, a Delaware corporation, hereinafter referred to as the “Company,” and *, an employee of Company or a Subsidiary of Company, hereinafter
referred to as “Employee.” 
  
 WHEREAS, Company wishes to afford
Employee the opportunity to purchase shares of its $1.00 par value common stock under the terms of the Employee Stock Option and Incentive Plan; and 
  
 WHEREAS, the Compensation and Executive Personnel Committee of the Company’s Board of Directors (hereinafter referred to as the “Committee”), appointed to
administer 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 the Committee has determined should be 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. 
  

	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 procedures established by the Committee or the Company, and shall be effective upon delivery to the Company.

  

	1.2	Change of Control 

  
 “Change of Control” shall have the same meaning given in Article 10.2 of the Plan. 
  

	1.3	Option 

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

	1.4	Plan 

  
 The “Plan” shall mean the Employee Stock Option and Incentive Plan, as amended and restated. 
  

	1.5	Pronouns 

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

	*	Refer to attached Notice 

  

 1 

	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 33 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” shall mean the time when the employee-employer relationship between the Employee and the Company or a Subsidiary is
terminated for any reason, including, but not limited to, a termination by resignation, discharge, death or retirement, but excluding terminations where there is a simultaneous reemployment or continuing employment by the Company or a Subsidiary,
and, at the discretion of the Committee or the Company, terminations which result in the severance of the employee-employer relationship that do not exceed one year. The Committee or the Company 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 fifty-five and 55000/10000 dollars ($55.55) 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 Subsection 3.1(a)). 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. 
  

	2.4	Adjustments in Option 

  
 In the event that the outstanding shares of the stock subject to the Option are changed into or 

	*	Refer to attached Notice 

  

 2 

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

	3.1	Commencement of Exercisability 

  

	 	(a)	The Option 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 2003 will be based on the return on total capital for 2006). 
  
 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 unexercisable under Subsection (a) above at Termination of Employment shall thereafter become exercisable, unless otherwise determined by the
Committee. 

  

 3 

	 	(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, under any condition, be exercisable after the tenth (10th) anniversary of the date the Option was granted. Such date
shall be the Option’s Expiration Date. 
  

	3.3	Exercise of Option after Termination 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: 
  

	 	(a)	If the Employee dies while the Option 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 or the Company 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 limitations 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 by delivery to the Secretary or his office of all of the following: 
  

	 	(a)	A written notice, complying with the applicable procedures established by the Committee or the Company, 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, or alternatively, if the option exercise is executed through the Company’s designated broker (including execution of stock option exercise electronically through
the Web site of the Company’s designated broker), then such notice shall not be required; and 

  

 4 

	 	(b)	Full payment for the shares with respect to which the option or portion thereof is exercised. Payment may be made (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 deliver 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 upon the exercise of the Option, or any part thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired by the Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of the
Option or part thereof prior to fulfillment of all of the following conditions: 
  

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

  

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

  

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

  

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

  

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

  

	4.4	Rights as 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 

  

 5 

 
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 or for 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 conflict between this Agreement and the Plan, the Plan shall control. 

 

	5.2	Administration 

  
 The Committee or the Company shall have the power to interpret the Plan and this Agreement and to adopt such procedures for the administration,
interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such procedures. 
  

	5.3	Option Not Transferable 

  
 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. The Option shall be exercised during the Employee’s lifetime only by the Employee, or his guardian or legal representative. 
  

	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 that
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.

  

	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:	 	*	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 Optionee
	 	 	 	 	 	Chairman and Chief Executive Officer
					
	 Address*:
	 	 	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 	 	 	 	 	 	 	 	Secretary
	
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
	 	 	 	 	 	 

  

	*	Refer to attached Notice. 

  

 6 

 AVERY DENNISON CORPORATION 
  
 NON-QUALIFIED STOCK OPTION AGREEMENT 
  
 THIS AGREEMENT, dated December 4, 2003, is made by and between Avery Dennison Corporation, a Delaware corporation, hereinafter referred to
as the “Company,” and *, an employee of Company or a Subsidiary of Company, hereinafter referred to as “Employee.” 
  
 WHEREAS, Company wishes to afford Employee the opportunity to purchase shares of its $1.00 par value common stock under the terms of the Employee Stock Option and
Incentive Plan; and 
  
 WHEREAS, the Compensation and Executive Personnel
Committee of the Company’s Board of Directors (hereinafter referred to as the “Committee”), appointed to administer 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 the
Committee has determined should be 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. 
  

	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 procedures established by the Committee or the Company, and shall be effective upon delivery to the Company.

  

	1.2	Change of Control 

  
 “Change of Control” shall have the same meaning given in Article 10.2 of the Plan. 
  

	1.3	Option 

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

	1.4	Plan 

  
 The “Plan” shall mean the Employee Stock Option and Incentive Plan, as amended and restated. 
  

	1.5	Pronouns 

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

  

	*	Refer to attached Notice 

  

 7 

	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 33 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” shall mean the time when the employee-employer relationship between the Employee and the Company or a Subsidiary is
terminated for any reason, including, but not limited to, a termination by resignation, discharge, death or retirement, but excluding terminations where there is a simultaneous reemployment or continuing employment by the Company or a Subsidiary,
and, at the discretion of the Committee or the Company, terminations which result in the severance of the employee-employer relationship that do not exceed one year. The Committee or the Company 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 fifty-five and 55000/10000 dollars ($55.55) 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 Subsection 3.1(a)). 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. 
  

	2.4	Adjustments in Option 

  
 In the event that the outstanding shares of the stock subject to the Option are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the 

	*	Refer to attached Notice 

  

 8 

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

	3.1	Commencement of Exercisability 

  

	 	(a)	The Option 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 2003 will be based on the return on total capital for 2006). 
  
 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 unexercisable under Subsection (a) above at Termination of Employment shall thereafter become exercisable, unless otherwise determined by the
Committee. 

  

 9 

	 	(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, under any condition, be exercisable after the tenth (10th) anniversary of the date the Option was granted. Such date
shall be the Option’s Expiration Date. 
  

	3.3	Exercise of Option after Termination 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: 
  

	 	(a)	If the Employee dies while the Option 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 or the Company 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 limitations 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 by delivery to the Secretary or his office of all of the following: 
  

	 	(a)	A written notice, complying with the applicable procedures established by the Committee or the Company, 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, or alternatively, if the option exercise is executed through the Company’s designated broker (including execution of stock option exercise electronically through
the Web site of the Company’s designated broker), then such notice shall not be required; and 

  

	 	(b)	 Full payment for the shares with respect to which the option or portion thereof is exercised. Payment may be made (i) in cash (or by certified or bank
cashier’s check), or 

  

 10 

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

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

  

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

  

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

  

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

  

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

  

	4.4	Rights as 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 or for such holder. 
  

 11 

 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 conflict between this Agreement and the Plan, the Plan shall control. 

 

	5.2	Administration 

  
 The Committee or the Company shall have the power to interpret the Plan and this Agreement and to adopt such procedures for the administration,
interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such procedures. 
  

	5.3	Option Not Transferable 

  
 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. The Option shall be exercised during the Employee’s lifetime only by the Employee, or his guardian or legal representative. 
  

	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 that
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.

  

	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:	 	*	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 Optionee
	 	 	 	 	 	Chairman and Chief Executive Officer
					
	 Address*:
	 	 	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 	 	 	 	 	 	 	 	Secretary
	
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
	 	 	 	 	 	 

  

	*	Refer to attached Notice. 

  

 12 

 AVERY DENNISON CORPORATION 
  
 NON-QUALIFIED STOCK OPTION AGREEMENT 
  
 THIS AGREEMENT, dated December 4, 2003, is made by and between Avery Dennison Corporation, a Delaware corporation, hereinafter referred to
as the “Company,” and *, an employee of Company or a Subsidiary of Company, hereinafter referred to as “Employee.” 
  
 WHEREAS, Company wishes to afford Employee the opportunity to purchase shares of its $1.00 par value common stock under the terms of the Employee Stock Option and
Incentive Plan; and 
  
 WHEREAS, the Compensation and Executive Personnel
Committee of the Company’s Board of Directors (hereinafter referred to as the “Committee”), appointed to administer 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 the
Committee has determined should be 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. 
  

	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 procedures established by the Committee or the Company, and shall be effective upon delivery to the Company.

  

	1.2	Change of Control 

  
 “Change of Control” shall have the same meaning given in Article 10.2 of the Plan. 
  

	1.3	Option 

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

	1.4	Plan 

  
 The “Plan” shall mean the Employee Stock Option and Incentive Plan, as amended and restated. 
  

	1.5	Pronouns 

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

	*	Refer to attached Notice 

  

 13 

	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 33 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” shall mean the time when the employee-employer relationship between the Employee and the Company or a Subsidiary is
terminated for any reason, including, but not limited to, a termination by resignation, discharge, death or retirement, but excluding terminations where there is a simultaneous reemployment or continuing employment by the Company or a Subsidiary,
and, at the discretion of the Committee or the Company, terminations which result in the severance of the employee-employer relationship that do not exceed one year. The Committee or the Company 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 fifty-five and 55000/10000 dollars ($55.55) 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. 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. 
  

	2.4	Adjustments in Option 

  
 In the event that the outstanding shares of the stock subject to the Option are changed into or exchanged for a different number or kind of shares of the
Company or other securities of the 

	*	Refer to attached Notice 

  

 14 

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

	3.1	Commencement of Exercisability 

  

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

  

	 	(i)	The first installment shall consist of twenty-five percent (25%) of the shares covered by the Option and shall become exercisable on the first anniversary of the date the Option was
granted. 

  

	 	(ii)	The second installment shall consist of an additional twenty five percent (25%) of the shares covered by the Option and shall become exercisable on the second anniversary of the
date the Option was granted. 

  

	 	(iii)	The third installment shall consist of an additional twenty five percent (25%) of the shares covered by the Option and shall become exercisable on the third anniversary of the date
the Option was granted. 

  

	 	(iv)	The fourth installment shall consist of twenty five percent (25%) of the shares covered by the Option and shall become exercisable on the fourth anniversary of the date the Option
was granted. 

  
 The installments provided for in
this Subsection (a) are cumulative. Each installment which becomes exercisable shall remain exercisable during the term of the Option, except as otherwise provided in this Agreement. 
  

	 	(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. 

  

	 	(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, under any condition, be exercisable after the tenth (10th) anniversary of the date the Option was granted. Such date
shall be the Option’s Expiration Date. 
  

	3.3	Exercise of Option after Termination 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: 
  

	 	(a)	If the Employee dies while the Option 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 or the Company may in its discretion extend the Expiration Date of the Option to accommodate such exercise.

  

 15 

	 	(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 limitations of Subsection 3.1(b), within thirty-six (36)
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 by delivery to the Secretary or his office of all of the following: 
  

	 	(a)	A written notice, complying with the applicable procedures established by the Committee or the Company, 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, or alternatively, if the option exercise is executed through the Company’s designated broker (including execution of stock option exercise electronically through
the Web site of the Company’s designated broker), then such notice shall not be required; and 

  

	 	(b)	Full payment for the shares with respect to which the option or portion thereof is exercised. Payment may be made (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 deliver 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 

  

 16 

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

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

  

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

  

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

  

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

  

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

  

	4.4	Rights as 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 or for 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 conflict between this Agreement and the Plan, the Plan shall control. 

 

	5.2	Administration 

  
 The Committee or the Company shall have the power to interpret the Plan and this Agreement and to adopt such procedures for the administration,
interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such procedures. 
  

	5.3	Option Not Transferable 

  
 Neither the Option nor any interest or right therein or part thereof may be sold, pledged, assigned 

  

 17 

 
or transferred in any manner other than by will or by the applicable laws of descent and distribution. The Option shall be exercised during the
Employee’s lifetime only by the Employee, or his guardian or legal representative. 
  

	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 that
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.

  

	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:	 	*	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 Optionee
	 	 	 	 	 	 	 	 Chairman and Chief Executive Officer

					
	 Address*:
	 	 	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 Secretary

	
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
	 	 	 	 	 	 

  

	*	Refer to attached Notice. 

  

 18 

 AVERY DENNISON CORPORATION EMPLOYEE STOCK OPTION AND INCENTIVE PLAN (as 
 amended effective April 24, 2003) - 2003 UK APPROVED RULES 
  

AWARD AGREEMENT (“THE AGREEMENT”) 
  
 THIS AGREEMENT, dated December 18, 2003, is made by and between Avery Dennison Corporation, a Delaware corporation, hereinafter referred to as the “Company,”
and * an employee of a Constituent Company, hereinafter referred to as “Employee.” 
  
 WHEREAS, the Company wishes to afford the Employee the opportunity to purchase shares of its $1.00 par value common stock under the terms of the Avery Dennison Corporation Employee Stock Option and Incentive Plan (as
amended and restated effective April 24, 2003) (“the Plan”) 2003 UK Approved Rules (“the Sub-Plan”); and 
  
 WHEREAS, the Compensation and Executive Personnel Committee of the Company’s Board of Directors (hereinafter referred to as the “Committee”), appointed to
administer 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 the Company or a Constituent
Company 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 the Committee has determined should be a Non-Qualified Stock Option grant, granted under the Sub-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. 
  

	1.1	Change of Control 

  
 “Change of Control” shall have the same meaning given in Article 10.2 of the Plan, as supplemented and amended by Rule 9 of the Sub-Plan.

  

	1.2	Constituent Company 

  
 “Constituent Company” shall have the meaning given in Rule 1.1 of the Sub-Plan (as defined in Schedule 4 paragraph 3(3) of the Income Tax
(Earnings and Pensions) Act 2003). 
  

	1.3	Option 

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

	1.5	Pronouns 

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

	*	Refer to attached Notice 

  

 19 

	1.6	Secretary 

  
 “Secretary” shall mean the Secretary of the Company. 
  

	1.7	Termination of Employment 

  
 “Termination of Employment” shall mean the time when the employee-employer relationship between the Employee and the Company or a Constituent
Company is terminated for any reason, including, but not limited to, a termination by resignation, discharge, death or retirement, but excluding terminations where there is a simultaneous reemployment or continuing employment by the Company a
Constituent Company or another company in the same group as the Company, and, at the discretion of the Committee or the Company, terminations which result in the severance of the employee-employer relationship that do not exceed one year. The
Committee or the Company 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 Sub-Plan and shall also be subject to the terms and conditions set forth in the Plan and the Sub-Plan. 
  

	2.2	Option Price 

  
 The option price of the shares of stock shall be fifty-five and 0000/1000 dollars (US$55.00) per share without commission or other charge, which was the
equivalent of £31.00. (For informational purposes, on December 18, 2003 the exchange rate of £ to US$, as reported by Bloomberg L.P., was £1.00 equals US$1.7738). 
  

	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 a Constituent
Company or another group company, with such duties and responsibilities as the Company shall from time to time prescribe, for a period of at least twelve months from the date this Option is granted. Nothing in this Agreement or in the Plan or
Sub-Plan shall confer upon the Employee any right to continue in the employment of the Company, a Constituent Company or another group company or shall interfere with or restrict in any way the rights of the Company, Constituent Company or another
group company, 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, Constituent Company or another group company. 
  

	2.4	Adjustments in Option 

  
 The Committee or the Company shall make an appropriate and equitable adjustment to the Option only in circumstances specified in Rule 6 of the Sub-Plan.
Such adjustment shall be made with the intent that after the change or exchange of shares, the Employee’s proportionate interest shall be maintained as before the occurrence of such event. Such adjustment in the Option may include a necessary
corresponding adjustment in the option price per share, but shall be made without change in the total price applicable to the unexercised portion of the Option (except for any change in the aggregate price resulting from rounding-off of share
quantities or prices). 

	*	Refer to attached Notice 

  

 20 

 ARTICLE III - PERIOD OF EXERCISABILITY 
  

	3.1	Commencement of Exercisability 

  

	 	(b)	The Option shall become exercisable as follows: 

  

	 	(i)	The first installment shall consist of twenty-five percent (25%) of the shares covered by the Option and shall become exercisable on the first anniversary of the date the Option was
granted. 

  

	 	(v)	The second installment shall consist of an additional twenty five percent (25%) of the shares covered by the Option and shall become exercisable on the second anniversary of the
date the Option was granted. 

  

	 	(vi)	The third installment shall consist of an additional twenty five percent (25%) of the shares covered by the Option and shall become exercisable on the third anniversary of the date
the Option was granted. 

  

	 	(vii)	The fourth installment shall consist of twenty five percent (25%) of the shares covered by the Option and shall become exercisable on the fourth anniversary of the date the Option
was granted. 

  
 The installments provided for in
this Subsection (a) are cumulative. Each installment which becomes exercisable shall remain exercisable during the term of the Option, except as otherwise provided in this Agreement. 
  

	 	(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. 

  

	 	(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, under any condition, be exercisable after the tenth 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, Constituent Company or another group company, subject to the
following exceptions: 
  

	 	(a)	Termination by Death – if the Employee dies while the Option is exercisable under the terms of this Agreement the Option may be exercised by the Employee’s
personal representatives, to the extent then exercisable, for a period of 12 months from the date of death or until the expiration of the stated term of the Option, whichever period is the shorter. 

  

	 	(b)	Termination by Reason of Disability - 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. 

  

 21 

	 	(c)	Termination by Reason of Retirement - If the Employee’s employment is terminated due to his retirement the Employee may exercise the Option, subject to the
limitations of Subsection 3.1(b), within thirty-six (36) months after Termination of Employment, but not later than the Option’s Expiration Date. 

  

	 	(d)	Other Termination - 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 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 

  

	 	(a)	A written notice, complying with the applicable procedures established by the Committee or the Company, 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, or alternatively, if the option exercise is executed through the Company’s designated broker (including execution of stock option exercise electronically through
the Web site of the Company’s designated broker), then such notice shall not be required; and 

  

	 	(b)	Full payment to the Company of the aggregate exercise price for the shares with respect to which the Option or portion thereof is exercised must be made in cash (or by certified or
bank cashier’s check). 

  

	 	(c)	An exercise shall not be valid unless, in addition to receipt of a valid notice of exercise and payment of the option price, the Company is satisfied that the Employee has entered
into arrangements which are satisfactory to the Company, to pay all or any part of the British Federal, State, local and foreign taxes for which the Employee is liable and which are required by law to be withheld by the Constituent Company or any
other member of the same group of companies as the Constituent Company on the exercise of the Option in accordance with Rule 7.4 of the Sub-Plan. 

  

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 must be provided. 
  

	4.3	Conditions to Issuance of Stock Certificates 

  
 The shares of stock deliverable upon the exercise of the Option, or any part thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired by the Company. Such shares shall be fully paid and non assessable and will be allotted to the Employee within 30 days from the effective date of exercise in accordance with Rule 7.2 of the Sub-Plan. The
Company shall not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of the Option or part thereof prior to fulfillment of all of the following conditions: 
  
 (a) The admission of such shares to listing on all stock exchanges on which
such class of stock is then listed; 
  

 22 

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

  

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

  

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

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

	4.4	Rights as 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 or for such holder. 
  
 ARTICLE V - MISCELLANEOUS 
  

	5.1	Option Subject to Plan 

  
 The Option is subject to the terms of the Plan as amended by the Sub-Plan, and in the event of any conflict between this Agreement, the Plan and the
Sub-Plan, the Sub-Plan shall prevail. 
  

	5.2	Administration 

  
 The Committee or the Company shall have the power to interpret the Plan, the Sub-Plan and this Agreement and to adopt such procedures for the
administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such procedures. 
  

	5.3	Option Not Transferable 

  
 Neither the Option nor any interest or right therein or part thereof may be sold, pledged, assigned or transferred. The Option shall be exercised during
the Employee’s lifetime only by the Employee, or his guardian or legal representative. 
  

	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 that
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.

  

	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. 
  

 23 

	5.6	Construction 

  
 This Agreement and the Plan and Sub-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:	 	*	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 Optionee
	 	 	 	 	 	 	 	 Chairman and Chief Executive Officer

					
	 Address*:
	 	 	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 Secretary

	
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
	 	 	 	 	 	 

  

	*	Refer to attached Notice. 

  

 24 

 AVERY DENNISON CORPORATION EMPLOYEE STOCK OPTION AND INCENTIVE PLAN (as 
 amended effective April 24, 2003) - 2003 UK APPROVED RULES 
  

AWARD AGREEMENT (“THE AGREEMENT”) 
  
 THIS AGREEMENT, dated December 18, 2003, is made by and between Avery Dennison Corporation, a Delaware corporation, hereinafter referred to as the “Company,”
and * an employee of a Constituent Company, hereinafter referred to as “Employee.” 
  
 WHEREAS, the Company wishes to afford the Employee the opportunity to purchase shares of its $1.00 par value common stock under the terms of the Avery Dennison Corporation Employee Stock Option and Incentive Plan (as
amended and restated effective April 24, 2003) (“the Plan”) 2003 UK Approved Rules (“the Sub-Plan”); and 
  
 WHEREAS, the Compensation and Executive Personnel Committee of the Company’s Board of Directors (hereinafter referred to as the “Committee”), appointed to
administer 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 the Company or a Constituent
Company 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 the Committee has determined should be a Non-Qualified Stock Option grant, granted under the Sub-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. 
  

	1.1	Change of Control 

  
 “Change of Control” shall have the same meaning given in Article 10.2 of the Plan, as supplemented and amended by Rule 9 of the Sub-Plan.

  

	1.3	Constituent Company 

  
 “Constituent Company” shall have the meaning given in Rule 1.1 of the Sub-Plan (as defined in Schedule 4 paragraph 3(3) of the Income Tax
(Earnings and Pensions) Act 2003). 
  

	1.3	Option 

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

	1.5	Pronouns 

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

	*	Refer to attached Notice 

  

 25 

	1.6	Secretary 

  
 “Secretary” shall mean the Secretary of the Company. 
  

	1.7	Termination of Employment 

  
 “Termination of Employment” shall mean the time when the employee-employer relationship between the Employee and the Company or a Constituent
Company is terminated for any reason, including, but not limited to, a termination by resignation, discharge, death or retirement, but excluding terminations where there is a simultaneous reemployment or continuing employment by the Company a
Constituent Company or another company in the same group as the Company, and, at the discretion of the Committee or the Company, terminations which result in the severance of the employee-employer relationship that do not exceed one year. The
Committee or the Company 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 Sub-Plan and shall also be subject to the terms and conditions set forth in the Plan and the Sub-Plan. 
  

	2.2	Option Price 

  
 The option price of the shares of stock shall be fifty-five and 0000/10000 dollars (US$55.00) per share without commission or other charge, which was the
equivalent of £31.00. (For informational purposes, on December 18, 2003 the exchange rate of £ to US$, as reported by Bloomberg L.P., was £1.00 equals US$1.7738). 
  

	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 a Constituent
Company or another group company, with such duties and responsibilities as the Company shall from time to time prescribe, for a period of at least twelve months from the date this Option is granted. Nothing in this Agreement or in the Plan or
Sub-Plan shall confer upon the Employee any right to continue in the employment of the Company, a Constituent Company or another group company or shall interfere with or restrict in any way the rights of the Company, Constituent Company or another
group company, 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, Constituent Company or another group company. 
  

	2.4	Adjustments in Option 

  
 The Committee or the Company shall make an appropriate and equitable adjustment to the Option only in circumstances specified in Rule 6 of the Sub-Plan.
Such adjustment shall be made with the intent that after the change or exchange of shares, the Employee’s proportionate interest shall be maintained as before the occurrence of such event. Such adjustment in the Option may include a necessary
corresponding adjustment in the option price per share, but shall be made without change in the total price applicable to the unexercised portion of the Option (except for any change in the aggregate price resulting from rounding-off of share
quantities or prices). 

	*	Refer to attached Notice 

  

 26 

 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 2003 will be based on the return on total capital for 2006). 
  
 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 unexercisable under Subsection (a) above at Termination of Employment shall thereafter become exercisable, unless otherwise determined by the
Committee. 

  

	 	(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, under any condition, be exercisable after the tenth anniversary of the date the Option was granted. Such date shall
be the Option’s Expiration Date. 
  

 27 

	3.3	Exercise of Option after Termination of Employment 

  
 This Option is exercisable by the Employee only while he is employed by the Company, Constituent Company or another group company, subject to the
following exceptions: 
  

	 	(a)	Termination by Death – if the Employee dies while the Option is exercisable under the terms of this Agreement the Option may be exercised by the Employee’s
personal representatives, to the extent then exercisable, for a period of 12 months from the date of death or until the expiration of the stated term of the Option, whichever period is the shorter. 

  

	 	(b)	Termination by Reason of Disability - 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)	Termination by Reason of Retirement - If the Employee’s employment is terminated due to his retirement the Employee may exercise the Option, subject to the
limitations of Subsection 3.1(b), within thirty-six (36) months after Termination of Employment, but not later than the Option’s Expiration Date. 

  

	 	(e)	Other Termination - 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 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 

  

	 	(c)	A written notice, complying with the applicable procedures established by the Committee or the Company, 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, or alternatively, if the option exercise is executed through the Company’s designated broker (including execution of stock option exercise electronically through
the Web site of the Company’s designated broker), then such notice shall not be required; and 

  

	 	(d)	Full payment to the Company of the aggregate exercise price for the shares with respect to which the Option or portion thereof is exercised must be made in cash (or by certified or
bank cashier’s check). 

  

	 	(c)	 An exercise shall not be valid unless, in addition to receipt of a valid notice of exercise and payment of the option price, the Company is satisfied that the
Employee has entered into arrangements which are satisfactory to the Company, to pay all or any part of the British Federal, State, local and foreign taxes for which the Employee is liable and which are required by law to be withheld by the
Constituent Company or any other member of the 

  

 28 

	 	 
same group of companies as the Constituent Company on the exercise of the Option in accordance with Rule 7.4 of the Sub-Plan. 

 
 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 must be provided. 
  

	4.3	Conditions to Issuance of Stock Certificates 

  
 The shares of stock deliverable upon the exercise of the Option, or any part thereof, may be either previously authorized but unissued shares or issued
shares which have then been reacquired by the Company. Such shares shall be fully paid and non assessable and will be allotted to the Employee within 30 days from the effective date of exercise in accordance with Rule 7.2 of the Sub-Plan. The
Company shall not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of the Option or part thereof prior to fulfillment of all of the following conditions: 
  

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

  

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

  

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

  

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

  

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

  

	4.4	Rights as 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 or for such holder. 
  
 ARTICLE V - MISCELLANEOUS 
  

	5.1	Option Subject to Plan 

  
 The Option is subject to the terms of the Plan as amended by the Sub-Plan, and in the event of any conflict between this Agreement, the Plan and the
Sub-Plan, the Sub-Plan shall prevail. 
  

	5.2	Administration 

  
 The Committee or the Company shall have the power to interpret the Plan, the Sub-Plan and this Agreement and to adopt such procedures for the
administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such procedures. 
  

 29 

	5.3	Option Not Transferable 

  
 Neither the Option nor any interest or right therein or part thereof may be sold, pledged, assigned or transferred. The Option shall be exercised during
the Employee’s lifetime only by the Employee, or his guardian or legal representative. 
  

	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 that
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.

  

	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 Sub-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:	 	*	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 Optionee
	 	 	 	 	 	 	 	 Chairman and Chief Executive Officer

					
	 Address*:
	 	 	 	 	 	By:	 	*
	 	 	
	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 Secretary

	
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	
	 	 	 	 	 	 

  

	*	Refer to attached Notice. 

  

 30LTIP, amended and restated

 EXHIBIT 10.27.1 
  
 EXECUTIVE LONG-TERM INCENTIVE PLAN 
  

	1.	 	PURPOSE 

  
 The purpose of the Executive Long-Term Incentive Plan, as amended and restated, (the “Plan”) is to focus key executives of Avery Dennison Corporation (the “Company”) on factors that influence the
Company’s long-term growth and success. The Plan provides a means whereby Participants are given an opportunity to share financially in the future value they help to create for the Company and its stockholders. 
  
 The Plan is also intended to enable the Company to provide that bonuses paid under the Plan
quality for the exemption for certain performance-based compensation from the limits on deductibility of executive compensation under Section 162(m) of the Internal Revenue Code of 1986. 
  

	2.	 	PARTICIPATION 

  
 Participation in the Plan is limited to key executives of the Company who, in the opinion of the Compensation and Executive Personnel Committee (“Committee”) of the Board of Directors, have the
responsibility to influence the Company’s long-range performance materially, and who have been recommended for participation by the Chief Executive Officer of the Company and designated as Participants by the Committee. 
  

	3.	 	DEFINITIONS 

  
 “Achievement Factor” means the percentage to be used in determining a Participant’s deferred cash incentive Award for achieving a specified percentage or percentile of the pre-established
Performance Objectives. 
  
 “Average Capital” means the numerical
average for a given year of ending Capital for the Company’s five most recently completed fiscal quarters, including the last quarter of that year. 
  
 “Average Shareholders’ Equity” means the numerical average for a given year of ending Shareholders’ Equity for the Company’s five most
recently completed fiscal quarters, including the last quarter of that year. 
  
 “Award” refers to a deferred cash incentive earned by a Participant based on the achievement of Company and, in some cases, Business Unit financial objectives. 
  
 “Base Salary” means the annual base salary rate in effect for a Participant as of the end of a Performance Cycle.

  
 “Business Unit” or “Unit” refers to a group,
division or subsidiary of the Company. 
  
 “Business Unit Cumulative
Economic Value Added” or “Business Unit CEVA” means the Cumulative Economic Value Added of a Business Unit. 
  
 “Business Unit Net Income” means net income of a Business Unit. 
  

 

 1 

 “Business Unit ROTC” means the return on total capital of a Business Unit. 
  
 “Capital” means the sum of the Company’s Shareholders’ Equity and
Long-Term Debt. 
  
 “Cash Flow from Operations” means the
Company’s net cash provided by operating activities. 
  
 “Cause” means (i) continued failure by a Participant to perform his or her duties (except as a direct result of the Participant’s incapacity due to physical or mental illness) after receiving notification by the Chief
Executive Officer or an individual designated by the Chief Executive Officer (or the Board of Directors in the case of the Chief Executive Officer) identifying the manner in which the Participant has failed to perform his or her duties, (ii)
engaging in conduct, which, in the opinion of a majority of the Board of Directors, is materially injurious to the Company, or (iii) conviction of the Participant of any felony involving moral turpitude. 
  
 “Change of Control” means the happening of any of the following events:

  
 (a) An acquisition by any individual, entity or group (within
the meaning of Article 13.4(a) or 14.4(b) 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 (i) the then outstanding shares of common
stock of the Company (the “Outstanding Company Common Stock”) or (ii) 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: (A) 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, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (D) any acquisition by any
corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection (c) of this definition; or 
  
 (b) 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 definition, 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 stockholders, 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 
  
 (c) The consummation of a reorganization, merger or consolidation or sale involving the Company or a disposition of all or substantially all of the assets of the Company (“Corporate Transaction”); excluding
however, such a Corporate Transaction pursuant to which (i) 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 
  

 2 

 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 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, (ii) 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 (iii) 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 
  
 (d) The approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. 
  
 “Code” means the Internal Revenue Code of 1986, as amended. 
  
 “Committee” refers to the Compensation and Executive Personnel Committee of
the Board of Directors of the Company. 
  
 “Company Cumulative Economic
Value Added” or “Company CEVA” means the Cumulative Economic Value Added of the Company. 
  
 “Company ROTC” means the return on total capital of the Company. 
  

“Cumulative Economic Value Added” or “CEVA” means the Economic Value Added over a defined period of time (for example, over the
Performance Cycle). 
  
 “Disability” refers to a physical or
mental condition that prevents a Participant from performing his or her normal duties of employment. If a Participant makes application for disability benefits under the Company’s long-term disability program and qualifies for such benefits,
the Participant shall be deemed to qualify as totally and permanently disabled under the Plan. 
  
 “Discretionary Pool” or “Pool” refers to the sum of cash payments made available by the Committee to Participants who have achieved exceptional performance and to other Company
employees who have made significant contributions to the achievement of Performance Objectives. 
  
 “Earnings Per Share” or “EPS” means the Company’s diluted earnings per share. 
  
 “Economic Value Added” means net operating profit after taxes on income minus a capital charge based upon the Company’s weighted average cost of
capital. 
  
 “Effective Date” means January 1, 2004. 

 
 “Long-Term Debt” means the Company’s long-term debt 
  

 3 

 “Net Income” means the Company’s after-tax net income. 
  
 “Net Sales” means the Company’s net sales. 
  
 “Participant” means an executive of the Company in a position designated by
the Committee to participate in the Plan. 
  
 “Performance Cycle”
or “Cycle” refers to a three-year period during which performance is measured for purposes of determining cash Awards under the Plan. The initial Performance Cycle will cover the Company’s 2004 through 2006 fiscal years.

  
 “Performance Objective” means one of the following
pre-established performance objectives for the Company or its Business Units for a Performance Cycle as determined by the Committee: ROTC, EPS, ROS, ROE, Net Income, Net Sales, Sales Growth, Cash Flow from Operations, Total Shareholder Return, and
Economic Value Added. 
  
 “Retirement” means a termination of
service in accordance with the retirement provisions of the Company sponsored tax qualified defined benefit retirement plan in which a Participant is participating immediately prior to the date of such termination of service. 
  
 “ROE” means the percentage determined by dividing Net Income by Average
Shareholders’ Equity. 
  
 “ROS” means the percentage
determined by dividing Net Income by Net Sales. 
  
 “ROTC” means
the Company’s return on total capital. 
  
 “Sales Growth”
means the Company’s increase in Net Sales from the prior measurement period as compared to the current measurement period. 
  
 “Service” means continuous and substantially full-time employment with the Company. 
  
 “Shareholders’ Equity” means the Company’s total shareholders’ equity. 
  
 “Success Factor Award” refers to the additional deferred cash incentive
Award earned for achieving greater than the Target Performance Objectives established for a Performance Cycle. 
  
 “Success Factor Performance Objective” means one of the pre-established Company Performance Objectives used to determine the Success Factor Award. 
  
 “Standard & Poor’s 500 Return Percentile Ranking” means the
Standard & Poor’s annual percentile total shareholder return ranking (not using a weighted average) of Standard & Poor’s 500 public companies, which total shareholder return calculation process is the same as the one described in
the definition of Total Shareholder Return. 
  
 “Target Award”
refers to the deferred cash incentive Award earned for achieving the Target Performance Objectives established for a Performance Cycle. 
  

 4 

 “Target Performance Objective” means one of the pre-established Performance Objectives used to determine
the Target Award. 
  
 “Termination of Service” means a
termination of Service from the Company for any reason, whether voluntary or involuntary, including death, Retirement and Disability. 
  
 “Total Shareholder Return” means the cumulative shareholder return on the Company’s common stock, including the reinvestment of dividends, as
measured by dividing (i) the sum of (A) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (B) the difference between (1) the average of the Company’s closing stock price for the three months
prior to the beginning of the measurement period and (2) the average of the Company’s closing stock price for the three months prior to the end of the measurement period, by (ii) the average of the Company’s closing stock price for the
three months prior to the beginning of the measurement period. 
  
 “Transfer” refers to the appointment of a Participant to a new position within the Company, which may either be within the same position classification under the Plan or in a different position classification under the
Plan. 
  
 “Weighting Factor” means the percentage of a
Participant’s Target Award or Success Factor Award, which will be calculated based on the achievement of a particular Performance Objective. 
  

	4.	 	GENERAL PLAN DESCRIPTION 

  

	A.	 	Overview 

  
 Commencing as of the Effective Date, the Plan provides for each Participant the opportunity to earn a deferred cash incentive Award based on the financial performance of the Company and, in some cases, its Business
Units. Within 90 days of the commencement of each Cycle, the Committee will establish (and the Committee has established for the 2004-2006 Cycle) one or more Performance Objectives; provided that such Performance Objectives may be adjusted by the
Committee within the first 90 days of the beginning of each Cycle. The definitions of the terms used to determine the Performance Objectives for a Cycle shall be based upon the definitions of such terms as set forth in Section 2 and as such terms
may be used in preparing the Company’s annual reports (including financial statements or reports) or other management reports or as such definitions may be adjusted by the Committee for the purpose of this Plan, all as the Committee shall
determine within the first 90 days of such Plan Year. 
  

	B.	 	Deferred Cash Incentive Awards 

  
 Each Participant will be provided with the opportunity to earn a deferred cash incentive Award after the end of a three-year Performance Cycle equal to the Target Award
plus the Success Factor Award. The maximum cash payment to a participant for a Performance Cycle is $4 million. 
  

	 	(1)	 	Performance Cycle 

  
 The initial Performance Cycle will cover the period beginning with the Company’s 2004 fiscal year and ending with the Company’s 2006 fiscal
year. Subsequent three-year Performance Cycles will begin every two years, starting with the Company’s 2006 fiscal year. 
  

 5 

	 	(2)	Range of Target and Success Factor Award Opportunities 

  
 The deferred cash incentive Target Award opportunity for each Participant during each Performance Cycle ranges from 20% to 100% of Base Salary depending
upon position classification as illustrated in Table 1 below. The deferred cash incentive Success Factor Award opportunity for each Participant during each Performance Cycle also ranges from 20% to 100%. Classification of Participants into the
categories listed in Table 1 will be recommended by the Chief Executive Officer of the Company and approved by the Committee. 
  
 Table 1 
 Deferred Cash Incentive
Award Range 
 By Position Classification 
  

									
	Category

	  	 Position Classification

	  	 Total Award
 Range as %
 of Base Salary

	 	 Target Award
as % of
 Base Salary

	 	 Success Factor
 Award as %
of Base Salary

	1	  	 Chief Executive Officer
	  	0% - 200%	 	100%	 	100%
	1	  	 Chief Operating Officer
	  	0% - 180%	 	90%	 	90%
	1	  	 Senior Executive Officers
	  	0% - 160%	 	80%	 	80%
	1	  	 Corporate & Staff Officers
	  	0% - 160%	 	20% - 80%	 	20% - 80%
	2	  	 Group and Sub-Group VP’s
	  	0% - 160%	 	40% - 80%	 	40% - 80%
	2	  	 Division VP/GM’s and Officers
	  	0% - 120%	 	30% - 60%	 	30% - 60%

  
 The actual total Award earned within
the above range will depend upon the level of achievement versus specific Performance Objectives established by the Committee under the Plan for each Performance Cycle within the first 90 days of such Performance Cycle. 
  

	 	(3)	Performance Measurement and Calculation of Target Awards 

  

	 	(a)	Calculation Formula 

  
 Target Awards will be determined based upon the Company’s, or in some cases, Business Unit’s achievement versus pre-established Target
Performance Objectives. The total Target Award will equal the sum of Awards for each Target Performance Objective. The Target Award for each Target Performance Objective will equal the product of the Base Salary times the Target Award as a percent
of Base Salary times the Weighting Factor (set forth in (4)(a) and (5)(a) below) times the Achievement Factor (set forth in (4)(b) and (5)(b) below) for that Target Performance Objective. 
  
 The foregoing formula can be expressed as the following mathematical
equation: 
  
 Total Target Award = [Target Award (Base Salary x
Target Award as % of Base Salary) x Weighting Factor x Achievement Factor for first Target Performance Objective] + [Target Award (Base Salary x Target Award as % of Base Salary) x Weighting Factor x Achievement Factor for second Target Performance
Objective] + [Target Award (Base Salary x Target Award as % of Base Salary) x Weighting Factor x Achievement Factor for third Target Performance Objective, if any] + [Target Award (Base Salary x Target 
  

 6 

 Award as % of Base Salary) x Weighting Factor x Achievement Factor for fourth Target Performance
Objective, if any]. 
  

	 	(4)	Category 1 Participants 

  

	 	(a)	Weighting Factors 

  
 For Participants classified in Category 1, Target Awards will be determined based upon the Company’s achievement versus pre-established Company
Target Performance Objectives. 
  
 For the initial Performance
Cycle, the Company Target Performance Objectives will be weighted as follows in determining the Target Award: 
  

			
	 Target Performance Objective

	  	 Weighting Factor

	 Company TSR
	  	33.3%
	 Company EPS
	  	33.3%
	 Company CEVA
	  	33.3%

  
  
 In subsequent Performance Cycles, the Committee will select one or more Performance Objectives and weightings to determine such Target Awards within the
first 90 days of such Performance Cycle. 
  

	 	(b)	Achievement Factor 

  
 The Achievement Factor for each Company Target Performance Objective will be between a threshold Achievement Factor of 70% (for achieving 80% of the
Target Performance Objective or 35th percentile Company TSR ranking as compared to the S&P 500 Return Percentile
Ranking) and a maximum Achievement Factor of 100% (for achieving the Target Performance Objective or 50th percentile
Company TSR ranking as compared to the S&P 500 Return Percentile Ranking) as illustrated in the table below. The Achievement Factors for performance between the threshold and 100% Achievement Factors will be linearly interpolated. For the
initial Performance Cycle, the Company Target Performance Objectives will be EPS, CEVA and TSR. 
  

					
	 Percent Achievement of
 Target
 Performance Objective for
 EPS and CEVA

	  	 Achievement
 Factor

	  	 Percentile Achievement of
 Company TSR as
 compared to S&P 500
 Return
 Percentile Rankings

	 Less than 80%
	  	0	  	Less than 35th percentile
	 80%
	  	70%	  	35th percentile
	 85%
	  	77.5%	  	38.8th percentile
	 90%
	  	85.0%	  	42.5th percentile
	 95%
	  	92.5%	  	46.3th percentile
	 100%
	  	100%	  	50th percentile

  

 7 

	 	(c)	Measurement Process 

  
 For the initial Performance Cycle, the measurement of Company Target Performance Objectives will be based upon performance during the final year of the
Cycle, except for CEVA which will be measured at the end of each year of the Cycle and totaled at the end of the Cycle, and for TSR which will be measured at the end of the Cycle. For subsequent Performance Cycles, performance measurement may be
based upon different criteria (e.g., average performance during the Cycle) at the discretion of the Committee as determined within the first 90 days of such Performance Cycle 
  

	 	(5)	Category 2 Participants 

  

	 	(a)	Weighting Factors 

  
 For Participants classified in Category 2, deferred cash incentive Target Awards will be determined based upon the performance of the Participant’s
Business Unit against pre-established Business Unit Target Performance Objectives. 
  
 For the initial Performance Cycle, the Business Unit Target Performance Objectives will have the following Weighting Factors: 
  

			
	 Target Performance Objective

	  	 Weighting Factor

	 Business Unit ROTC
	  	33.3%
	 Business Unit Net Income
	  	33.3%
	 Business Unit CEVA
	  	33.3%

  
 In subsequent
Performance Cycles, the Committee will select one or more Performance Objectives and weightings to determine such Target Awards within the first 90 days of such Performance Cycle. 
  

	 	(b)	Achievement Factor 

  
 The Achievement Factor for each Business Unit Target Performance Objective will be between a threshold Achievement Factor of 70% (for achieving 80% of the
Target Performance Objective) and a maximum Achievement Factor of 100% (for achieving the Target Performance Objective) as illustrated in the table below. The Achievement Factors for performance between the threshold and 100% Achievement Factors
will be linearly interpolated. For the initial Performance Cycle, the Business Unit Performance Objectives will be Business Unit ROTC, Business Unit Net Income and Business Unit CEVA. 
  

			
	 Percent Achievement of
 Target
 Performance Objective for
 Business Unit ROTC,
 Net Income and CEVA

	  	 Achievement
 Factor

	 Less than 80%
	  	0
	 80%
	  	70%
	 85%
	  	77.5%
	 90%
	  	85.0%
	 95%
	  	92.5%
	 100%
	  	100%

  

 8 

	 	(c)	Measurement Process 

  
 For the initial Performance Cycle, the measurement of Business Unit Target Performance Objectives will be based upon performance during the final year of
the Cycle, except for CEVA which will be measured at the end of each year of the Cycle and totaled at the end of the Cycle. For subsequent Performance Cycles, performance measurement may be based upon different criteria (e.g., average performance
during the Cycle) at the discretion of the Committee as determined within the first 90 days of such Performance Cycle 
  

	 	(d)	Performance Measurement and Calculation of Success Factor Awards 

  
 Participants in Category 2 are eligible for a Success Factor Award only if the percentage of achievement of each of their Business Unit Target Performance
Objectives equals or exceeds 80% and only if the average of the percentages of achievement of their Business Unit Target Performance Objectives equals or exceeds 100%. 
  
 Success Factor Awards will be determined based on the Company’s achievement versus pre-established Success Factor
Performance Objectives which exceed the Target Performance Objectives. The total Success Factor Award will equal the sum of the Success Factor Awards for each Success Factor Performance Objective. The Success Factor Award for each Success Factor
Performance Objective will equal the product of the Base Salary times the Success Factor Award as a percent of Base Salary times the Weighting Factor (set forth in (6)(a) below) times the Achievement Factor (set forth in (6)(b) below) for that
Success Factor Performance Objective. 
  
 The foregoing formula
can be expressed as the following mathematical equation: 
  
 Total
Success Factor Award = [Success Factor Award (Base Salary x Success Factor Award as % of Base Salary) x Weighting Factor x Achievement Factor for first Success Factor Performance Objective] + [Success Factor Award (Base Salary x Success Factor Award
as % of Base Salary) x Weighting Factor x Achievement Factor for second Success Factor Performance Objective] + [Success Factor Award (Base Salary x Success Factor Award as % of Base Salary) x Weighting Factor x Achievement Factor for third Success
Factor Performance Objective, if any] + [Success Factor Award (Base Salary x Success Factor Award as % of Base Salary) x Weighting Factor x Achievement Factor for fourth Success Factor Performance Objective, if any]. 
  

	 	(6)	Success Factor Awards 

  

	 	(a)	Weighting Factors 

  
 For Participants in both Category 1 and Category 2, Success Factor Awards will be determined based upon the Company’s achievement
versus pre-established Company Performance Objectives which exceed the Target Performance Objectives. 
  

 9 

 For the initial Performance Cycle, the Success Factor Performance Objectives will be weighted as follows
in determining the Success Factor Award: 
  

			
	 Success Factor Performance Objective

	  	 Weighting Factor

	 Company TSR
	  	33.3%
	 Company EPS
	  	33.3%
	 Company CEVA
	  	33.3%

  
 In subsequent
Performance Cycles, the Committee will select one or more Performance Objectives and weightings to determine such Target Awards within the first 90 days of such Performance Cycle. 
  

	 	(b)	Achievement Factor 

  
 At the beginning of each Performance Cycle, the Committee will establish two levels of Success Factor Performance Objectives that are in excess of the
Target Performance Objectives. 
  
 If the Company’s
performance is between the Target Performance Objective and the first level Success Factor Performance Objective for Company EPS and Company CEVA, then the Achievement Factor for that Success Factor Performance Objective will be between 0% and 50%.
If the Company TSR is between the 50th and the 60th percentile as compared to the S&P 500 Return Percentile Ranking, then the Achievement Factor for that Success Factor Performance Objective will be between
0% and 50%. The Achievement Factor for performance between the Target Performance Objective and the first level Success Factor Performance Objective will be linearly interpolated. 
  
 If the Company’s performance is between the first level Success Factor Performance Objective and the second level
Success Factor Performance Objective for Company EPS and Company CEVA, then the Achievement Factor for that Success Factor Performance Objective will be between 50% and 100%. If the Company TSR is between the 60th and the 70th
percentile as compared to the S&P 500 Return Percentile Ranking, then the Achievement Factor for that Success Factor Performance Objective will be between 50% and 100%. The Achievement Factor for performance between the first level Success
Factor Performance Objective and the second level Success Factor Performance Objective will be linearly interpolated. 
  

	 	(c)	Measurement Process 

  
 For the initial Performance Cycle, the measurement of Company Success Factor Performance Objectives will be based upon performance during the final year
of the Performance Cycle, except for Company CEVA which will be measured at the end of each year of the Cycle and totaled at the end of the Cycle and the Company TSR which will be measured at the end of the Cycle. For subsequent Performance Cycles,
performance measurement may be based upon different criteria (e.g., average performance during the Cycle) at the discretion of the Committee within the first 90 days of such Performance Cycle. 
  

 10 

	 	(7)	Discretionary Pool Participation 

  
 A Discretionary Pool will be available for each Performance Cycle to provide the opportunity for Participants (other than those Participants whose Target
Award is 80% or more) who have achieved exceptional performance to earn more than the Target Award plus the Success Factor Award, or for individuals who are not selected to be Participants in the Plan but who have made significant contributions to
the achievement of Performance Objectives to earn cash payments. A “target” Discretionary Pool will be determined by the Committee prior to the beginning of each Performance Cycle. The actual Discretionary Pool made available will be
determined by the Committee at the end of the Performance Cycle and may exceed or fall below the “target” Pool based upon the Committee’s assessment of (i) overall Company performance during the Cycle and (ii) the performance of the
individual Business Units. 
  
 The actual Discretionary Pool
approved by the Committee will be allocated among individuals recommended by the Chief Executive Officer and approved by the Committee; provided, however, that Participants whose Target Award is 80% or more will not be eligible for participation in
the Discretionary Pool. No payments will be made from the Discretionary Pool unless at least one of the Company threshold Target Performance Objectives (i.e., 80% of the Target Performance Objective) for the Performance Cycle has been met.

  

	 	(8)	Deferral of Bonus 

  
 A Participant may elect to defer receipt of an Award under the deferred compensation plans offered by the Company, in accordance with the terms of such
plans. 
  

	5.	NEW PARTICIPANTS 

  
 New Participants may be added to the Plan at any time at the discretion of the Committee. The Award opportunity of a new Participant will be prorated for each Performance Cycle based on the number of months of
participation in the Plan divided by 36. Notwithstanding the above, an individual must participate in the Plan for at least 12 months during any Performance Cycle to be eligible to receive a deferred cash incentive Award for that Cycle. 

 

	6.	TERMINATION OF SERVICE 

  
 If a Participant terminates Service with the Company prior to the end of a Performance Cycle due to voluntary termination or termination for Cause, the Participant will
not receive any deferred cash incentive Award for that Performance Cycle. 
  
 Upon
a Termination of Service during a Performance Cycle due to death or Disability, a Participant’s deferred cash incentive Award opportunity for that Cycle will be prorated by dividing the number of full months of participation in the Cycle by
thirty-six (36). 
  

 11 

 If a Participant’s Service is terminated involuntarily without Cause prior to the completion of a Performance Cycle,
the Participant will be entitled to receive the following percentage of his or her earned deferred cash incentive Award for the Cycle: 
  

			
	 If Termination Occurs Between
 X Months From Start of Cycle

	  	 % of Earned
 Award to be Paid

	 0 - 27 Months
	  	0%
	 27 - 36 Months
	  	33 1/3%

  
 Upon a Termination of Service due to
Retirement prior to the completion of a Performance Cycle, the Participant will be entitled to receive the following percentage of his or her earned deferred cash incentive Award for the Cycle: 
  

			
	 If Termination Occurs Between
 X Months From Start of Cycle

	  	 % of Earned
 Award to be Paid

	 0 - Months
	  	0%
	 3 - 12 Months
	  	33 1/3%
	 12 - 8 Months
	  	50%
	 18 - 4 Months
	  	66 2/3%
	 24 - 6 Months
	  	Prorate to 100%

  

	7.	PAYMENT OF EARNED DEFERRED CASH INCENTIVE 

  
 Earned Awards under the Plan (net of any applicable taxes) will be paid in cash as soon as possible following the determination of Company and Business Unit performance
for the Performance Cycle. Upon the death of a Participant, the Committee may elect to provide early payment in order to facilitate the settlement of the Participant’s estate. 
  

	8.	TRANSFERS 

  
 Upon a Transfer prior to the completion of a Performance Cycle, the Participant will earn his or her deferred cash incentive Award for the Cycle based on his or her old and/or new positions, as follows: 
  

			
	 If Transfer Occurs Between
 X Months from Start of Cycle

	  	 Award Earned in Old/New Position

	 0 - 6 Months
	  	100% in new position
	 6 - 30 Months
	  	Prorated between old and new positions
	 30 - 36 Months
	  	100% in old position

  

	9.	PLAN ADMINISTRATION 

  

	A.	General Administration 

  
 The Committee will administer the Plan, and will interpret the provisions of the Plan. The interpretation and application of these terms by the Committee shall be binding
and conclusive. The Committee’s authority will include, but is not limited to: 
  

	 	•	Selecting the Participants; 

  

	 	•	Establishing and adjusting the Performance Objectives (including the definitions therefor), and weighting the Performance Objectives; and 

  

	 	•	Determining and certifying performance results and Awards based on achievement of Performance Objectives, subject to the Committee’s discretion to decrease the Awards.

  

 12 

	B.	Amendment, Suspension or Termination of the Plan 

  
 The Committee may amend, suspend or terminate the Plan, whole or in part, at any time, if, in the sole judgment of the Committee, such action is in the best interests of
the Company. Notwithstanding the above, any such amendment, suspension or termination must be prospective in that it may not deprive Participants of that which they otherwise would have received under the Plan for the current Performance Cycle(s)
had the Plan not been amended, suspended or terminated. 
  

	C.	Designation of Beneficiaries 

  
 Each Participant shall have the right at any time to designate any person or persons as beneficiary(ies) to whom any cash payments earned under the Plan shall be made in
the event of the Participant’s death prior to the distribution of all benefits due the Participant under the Plan. Each beneficiary designation shall be effective only when filed in writing with the Company during the Participant’s
lifetime. 
  
 The filing of a new Beneficiary Designation Form will cancel all
designations previously filed. Any finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary Designation Form shall revoke such designation unless: 
  
 In the case of divorce, the previous spouse was not designated as
beneficiary; and 
  
 In the case of marriage, the
Participant’s new spouse had previously been designated as beneficiary. 
  
 The spouse of a married Participant shall join in any designation of a beneficiary other than the spouse on a form prescribed by the Committee or the Company. 
  
 If a Participant fails to designate a beneficiary as provided for above, or if the beneficiary designation is revoked by marriage, divorce
or otherwise without execution of a new designation, then the Committee or the Company shall direct the distribution of Plan benefits to the Participant’s estate. 
  

	10.	CHANGE OF CONTROL 

  
 A. Immediately upon a Change of Control, each Participant shall receive a fixed cash payment equivalent to his or her Target Award (such term is defined for the purpose of this paragraph as the percentage of
his or her Base Salary targeted either (i) within 90 days of the beginning of the Performance Cycle by the Committee for officers who are or might be “covered employees” as that term is defined in Section 162(m) of the Code, or (ii) during
the Performance Cycle for other officers, at the annual base salary rate for each Participant in effect at the time of the Change of Control and without regard to the achievement of any of the Performance Objectives) for each Performance Cycle that
begins before the date of the Change of Control and ends after the date of the Change of Control. 
  
 B. Following a Change of Control, each Participant shall continue to be entitled to receive payments under the Plan for each Performance Cycle that begins on or before the date of the Change of Control and ends
after the date of the Change of Control, as earned in accordance with the terms of the Plan, to the extent such Participant has not already received such payment for that Performance Cycle pursuant to paragraph (A) of this Section 10. 
  

 13 

	11.	MISCELLANEOUS PROVISIONS 

  

	A.	Unsecured Status of Claim 

  
 Participants and their beneficiaries, heirs, successors and assigns shall have no legal or equitable rights, interests or claims in any specific property or assets of the
Company. No assets of the Company shall be held under any trust for the benefit of Participants, their beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfillment of the Company’s obligations under
the Plan. 
  
 Any and all of the Company’s assets shall be, and shall remain,
the general unpledged and unrestricted assets of the Company. The Company’s obligations under the Plan shall be merely that of an unfunded and unsecured promise of the Company to pay benefits in the future. 
  

	B.	Employment Not Guaranteed 

  
 Nothing contained in the Plan nor any action taken in the administration of the Plan shall be construed as a contract of employment or as giving a Participant any right
to be retained in the Service of the Company. 
  

	C.	Nonassignability 

  
 No person shall have any right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey, in advance of actual receipt, the benefits, if any, payable under the Plan,
or any part thereof, or any interest therein, which are, and all rights to which are, expressly declared to be unassignable and non-transferable. No portion of the amounts payable shall, prior to actual payment, be subject to seizure, attachment,
lien or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of the Participant’s or any other person’s
bankruptcy or insolvency. Any such transfer or attempted transfer in violation of the preceding provisions shall be null and void. 
  

	D.	Validity 

  
 In the event that any provision of the Plan is held to be invalid, void or unenforceable, the same shall not effect, in any respect whatsoever, the validity of any other provision of the Plan. 
  

	E.	Withholding-Tax 

  
 The Company shall withhold from all benefits due under the Plan an amount sufficient to satisfy any federal, state and local tax withholding requirements. 
  

	F.	Applicable Law 

  
 The Plan shall be governed in accordance with the laws of the State of California. 
  

	G.	Inurement of Rights and Obligations 

  
 The rights and obligations under the Plan shall inure to the benefit of, and shall be binding upon the Company, its successors and assigns, and the Participants and their
beneficiaries. 
  

 14

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00062-of-00352.parquet"}]]