Document:

EX-10.18.2

Exhibit 10.18.2

AVERY DENNISON CORPORATION

2005 DIRECTORS VARIABLE DEFERRED COMPENSATION PLAN

ARTICLE 1

PURPOSE

The 2005 Directors Variable Deferred Compensation Plan (“Plan”) adopted by Avery Dennison
Corporation, a Delaware corporation (the “Company”), originally effective as of December 1, 2004,
is hereby amended and restated effective as of January 1, 2008, to comply with Internal Revenue
Code Section 409A and applicable authorities promulgated thereunder. The Plan is a deferred
compensation plan for non-employee directors of the Company. All vested deferred compensation
balances as of November 30, 2004, grandfathered under the Code Section 409A transition rules, shall
be governed by prior deferred compensation Plan documents and no subsequent amendment shall apply
to such grandfathered amounts. All amounts deferred, contributed or which became vested on or
after December 1, 2004 shall be subject to the provisions of this amended and restated Plan. The
Plan is intended, and shall be interpreted in all respects, to comply with the provisions of Code
Section 409A.

ARTICLE 2

DEFINITIONS AND CERTAIN PROVISIONS

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

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

2.3 Annual Deferral. “Annual Deferral” means the amount of Director’s Fees that the
Participant elects to defer for a Calendar Year.

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

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

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

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

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

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

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

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

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

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

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

2.10 Deferral Account. “Deferral Account” means the notional account established for
record keeping purposes for a Participant pursuant to Section 4.4.

2.11 Director. “Director” means a member of the Board of Directors of the Company who
is not employed by the Company or any of its subsidiaries.

2.12 Director’s Fees. “Director’s Fees” means the retainers and meeting fees payable
to a Director for service as a Director, which may be deferred hereunder.

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

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

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

2.16 Early Termination Benefit. “Early Termination Benefit” means the lump sum amount
payable to a Participant pursuant to Section 7.3.

2.17 Enrollment Period. “Enrollment Period” means the period(s) designated from year
to year by the Administrator for enrollments.

2.18 Normal Retirement. “Normal Retirement” means the Termination of Service for
reasons other than death on or after the Participant attains age sixty (60).

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

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

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

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

2.23 Rabbi Trust. “Rabbi Trust” means the trust described in Section 12.7.

2.24 Settlement Date. “Settlement Date” means the date by which a lump-sum payment
shall be made or the date by which installment payments shall commence under the Plan. Unless
otherwise specified, the Settlement Date shall be as soon as practicable after, but in all events
no later than ninety (90) days following, the Valuation Date. In the case of a Participant’s
death, the Administrator shall be provided with the documentation reasonably necessary to establish
the fact of the Participant’s death. Notwithstanding the forgoing or any other provision of the
Plan, no distribution shall be made prior to the date such distribution is permissible under Coder
Section 409A and any distribution delayed by reason of the application of this prohibition shall be
paid as soon as such distribution is permissible under Code Section 409A.

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

2.26 Termination of Service. “Termination of Service” means the cessation of service
as a Director for any reason, whether voluntary or involuntary, including by reason of retirement,
Disability or death. For purpose of the preceding sentence, Termination of Service shall be
interpreted consistent with the requirements of Code Section 409A for “separation from service”.

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

ARTICLE 3

PARTICIPATION

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

3.2 Participation Election. A Director shall become a Participant in the Plan no
later than the first day of the Plan Year coincident with or next following the date the Director
has filed a Participant Election with the Administrator. To be effective, the Director must submit
the Participant Election during an Enrollment Period or any other such time as determined by the
Administrator. A Director who joins the Company after the first day of the Plan Year may become a
Participant provided such Director files a Participant Election with the Administrator within
thirty (30) days of commencement of service as a Director, to allow deferrals by such new Director
of Director’s Fees earned during the balance of such Plan Year.

3.3 Continuation of Participation. A Participant who has elected to participate in
the Plan by submitting a Participant Election shall continue as a Participant in the Plan until the
entire balance of the Participant’s Deferral Account has been distributed.

ARTICLE 4

PARTICIPANT DEFERRALS

4.1 Annual Deferral. On the Participation Election Form, and subject to the
restrictions set forth herein, a Director shall designate the amount of Director’s Fees to be
deferred thereby for the next following calendar year, provided that any deferral election shall be
made not later than the last day of the calendar year preceding the calendar year in which such
Director’s Fees are earned (or, in the case of a new Participant, the thirtieth (30th)
day following initial eligibility for the remaining portion of the Plan Year).

4.2 Minimum Deferral. The minimum amount of Annual Deferral that may be deferred
shall be ten percent (10%) of the Participant’s Director’s Fees.

4.3 Maximum Deferral. The standard maximum amount of Annual Deferral that may be
deferred shall be one hundred percent (100%) of the Participant’s Director’s Fees. Notwithstanding
the foregoing, the Committee may further limit the maximum or the minimum amount of deferrals by
any Participant or group of Participants in its sole discretion.

ARTICLE 5

DISCRETIONARY COMPANY CREDITS

The Company, in its sole discretion, may credit to selected Participants’ Deferral Accounts a
discretionary amount or match in an amount determined by the Company. These amounts and subsequent
earnings are subject to vesting schedules established by the Administrator.

ARTICLE 6

ACCOUNTS AND INVESTMENT OPTIONS

6.1 Accounts. Solely for record keeping purposes, the Company shall maintain a
Deferral Account under the Plan for each Participant. Annual Deferrals shall be credited by the
Employer to the Participant’s Deferral Account at the time such amounts would otherwise have been
paid to the Participant. Such Account shall be credited (and compounded daily) with a notional rate
of return (positive or negative) based on the Declared Rate(s) elected by the Participant under
Section 6.2. All Distributions shall be debited from the applicable Account on the Valuation Date.

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

6.3 Declared Rates. A Participant may select from Declared Rates which may from time
to time be established under the Plan and the number of which may be expanded by the Committee; it
being the intention that at all times Participants will have at least nine (9) core investment fund
choices comparable in focus, type and quality to those listed on Exhibit A. The Declared Rates
provide a rate of return (positive or negative) that are based on the actual net performance of the
Declared Rate(s) selected by the Participant. The Declared Rates credited to Participant Deferral
Accounts shall be the actual net performance of the Declared Rates, to which will be added a basis
point credit, which credit (when added to the actual net performance of the Declared Rates) will
together be approximately equivalent on average to crediting the actual gross performance of the
Declared Rates less twenty (20) basis points.

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

6.5 Vesting. A Participant shall be one hundred percent (100%) vested at all times in
amounts credited to the Participant’s Deferral Accounts.

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

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

ARTICLE 7

BENEFITS

7.1 Normal Retirement Benefit Distribution Election.

(a) Initial Election. At the time of entering the Plan or, if later, on or before
December 31, 2008, Participants shall designate the form of distributions of amounts credited to
their Deferral Account upon Normal Retirement, from among the distribution alternatives specified
herein. A Participant may only change a distribution election for the Deferral Account in
accordance with the change in elections provisions specified in Section 7.1(b).

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

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

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

For purposes of application of the above change limitations, installment payments from a
Deferral Account shall be treated as a single payment. Changes complying with the requirements of
this Section 7.1(b) may be made any number of times with respect to the same Deferral Account but
in no event may any change delay the distribution of benefits payable from any Deferral Account
beyond the date the Participant attains (or a deceased Participant would have attained) age
ninety-two (92). Election changes made pursuant to this Section 7.1(b) shall be made in accordance
with rules established by the Committee, and shall comply with all applicable requirements of Code
Section 409A and applicable authorities.

7.2 Normal Retirement Benefit Distribution Alternatives. The Participant shall be
entitled to select the form of payment of Distributions from a Deferral Account from among the
following alternatives set forth below. Benefits shall be paid according to the Participant’s
distribution elections unless such distribution election is superseded by an alternative
distribution event such as death, Disability, or Change in Control, as specified in this Article
7.

(a) Form of Distribution. The available forms of payment from the
Participant’s Deferral Account upon Normal Retirement shall be as follows:

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

(ii) Installment Payments. Monthly installments of principal and interest
payable over a period of any number of years up to twenty (20), but in no event ending later
than the date on which the Participant shall attain age ninety-two (92). Installment
payments shall be calculated on an annual basis but paid during the Plan Year at
approximately monthly intervals as may be determined by the Committee, provided that such
intervals shall not be less frequent than quarterly, except in the final year of payments
when only one installment shall be made in January in such final Plan Year. Installment
payments shall be based on the Participant’s Deferral Account balance at the beginning of
the payment period and shall be recalculated annually by dividing the Participant’s Deferral
Account balance as of the last day of the Plan Year by the number of remaining years in the
payment period based on the Participant’s retirement payment election. Deferral Accounts
shall continue to be credited during the payment period based on the Participant’s choice
among Declared Rates as provided in Article 6. Notwithstanding the foregoing, an
installment payout election shall not be available prior to the date that the Participant
shall have qualified for Normal Retirement.

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

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

(b) Commencement of Payment of Benefits. The commencement date for payment of
benefits from a Participant’s Deferral Account on Normal Retirement shall be upon the Settlement
Date next following the Participant’s Normal Retirement.

7.3 Early Termination Benefit. In the event of a Participant’s Termination of Service
for any reason other than death, Disability, or Normal Retirement, the Participant shall receive an
Early Termination Benefit equal to the outstanding balance of the Participant’s Deferral Account,
credited with notional earnings as provided in Article 6, payable in the form of a single lump-sum
distribution on the Settlement Date next following such early Termination of Service. The
Participant shall be entitled to no further Benefits under this Plan.

7.4 Survivor Benefits. In the event of a Participant’s death prior to complete
distribution of all of the Participant’s Deferral Account, the Participant’s Beneficiary shall
receive a Survivor Benefit equal to the outstanding balance of the Participant’s Deferral Account,
credited with notional earnings as provided in Article 6, payable in the form of a single lump-sum
Distribution on the last day of the fifteenth (15th) month commencing after the month in
which the Participant’s death occurs, unless the Beneficiary makes a timely election during the
first three (3) months following the Participant’s death, which is in compliance with Code Section
409A, to delay commencement of the Deferral Account by a minimum of five (5) years and to receive
the benefits in January of a later Plan Year, in the form of a single lump-sum or over a period of
up to twenty (20) years.

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

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

ARTICLE 8

BENEFICIARY DESIGNATION

Each Participant and Beneficiary shall have the right, at any time, to designate any person or
persons as Beneficiary or Beneficiaries to whom payment under this Plan shall be made in the event
of death of the Participant or Beneficiary, as the case may be, prior to complete distribution of
the Participant’s Benefits due under the Plan. Each Beneficiary designation shall become effective
only when filed in writing with the Administrator during the Participant’s or Beneficiary’s
lifetime, as the case may be, on a form prescribed by the Administrator.

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

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

ARTICLE 9

ADMINISTRATION OF THE PLAN

A Committee consisting of three (3) or more members shall be appointed by the Company’s Chief
Executive Officer to administer the Plan, which shall have the exclusive right and full discretion
(i) to appoint agents and service providers to act on its behalf, (ii) to interpret the Plan, (iii)
to decide any and all matters arising hereunder (including the right to remedy possible
ambiguities, inconsistencies, or admissions), (iv) to make, amend and rescind such rules and
procedures as it deems necessary for the proper administration of the Plan and (v) to make all
other determinations and resolve all questions of fact necessary or advisable for the
administration of the Plan, including determinations regarding eligibility for benefits payable
under the Plan. All interpretations of the Committee with respect to any matter hereunder shall be
final, conclusive and binding on all persons affected thereby, subject to the provisions of this
Article 9. All decisions of the Committee shall be by vote of at least a majority of its members.
Members of the Committee shall be eligible to participate in the Plan while serving as members of
the Committee, but a member of the Committee shall not vote or act upon any matter that relates
solely to such member’s interest in the Plan as a Participant. The current members of the Committee
are the Chief Executive Officer; the Chief Financial Officer; the Senior Vice President, Human
Resources; the Senior Vice President and General Counsel; the Vice President and Treasurer; the
Vice President, Compensation and HRIS; the Vice President, Associate General Counsel and Assistant
Secretary; the Vice President, Global Finance; the Manager, Corporate Finance and Investments, and
the Director, Financial Reporting at the Company’s Miller Corporate Center. The Committee has
designated the Vice President, Compensation and HRIS as the Administrator to carry out the
day-to-day administration of the Plan. No member of the Committee or any other agent thereof
including the Administrator shall be liable for any determination, decision, or action made in good
faith with respect to the Plan. The Company shall indemnify and hold harmless the members of the
Committee and the Administrator from and against any and all liabilities, costs, and expenses
incurred by such persons as a result of any act, or omission, in connection with the performance of
such persons’ duties, responsibilities, and obligations under the Plan, other than such
liabilities, costs, and expenses as may result from the bad faith, willful misconduct, or criminal
acts of such persons.

ARTICLE 10

AMENDMENT OR TERMINATION OF PLAN

The Committee at the direction of the Chief Executive Officer or the Board of Directors of the
Company, may amend the Plan; provided, however, that (i) no such amendment shall be effective to
decrease the Benefits accrued by any Participant or Beneficiary of a deceased Participant
(including, but not limited to, the rate of earnings credited on Deferral Accounts); (ii) no such
amendment shall revise the substantive provisions of the Plan related to the calculation of
Benefits (including, without limitation, the provisions of Article 6), the minimum number of
Declared Rates or the manner or timing of payments to be made under the Plan so as to prejudice the
rights of any Participant or Beneficiary, except to the extent required by law, and (iii) no
amendment shall change the timing or form of Distributions or otherwise violate the provisions of
Code Section 409A so as to result in the imposition of excise taxes. Notwithstanding the
foregoing, the Plan shall be interpreted in all respects to comply with the provisions of Code
Section 409A and the Committee may amend the Plan at anytime as may be necessary to assure such
compliance.

The Company shall not terminate the Plan but may, in its complete and sole discretion, freeze
the Plan and allow no further deferrals into this Plan on a prospective basis. Notwithstanding the
foregoing, the Company or any Participating Subsidiary may accelerate distribution upon termination
of the Plan in the event of a Change in Control subject to compliance with all requirements of Code
Section 409A.

ARTICLE 11

MAINTENANCE OF ACCOUNTS

The Company shall keep, or cause to be kept, all such books of account, records and other data
as may be necessary or advisable for the administration of this Plan, and to reflect properly the
affairs thereof, and to determine the nature and amount of the interests of the respective
Participants in each Deferral Account. Separate accounts or records for the respective
Participants’ Deferral Accounts shall be maintained for operational and accounting purposes, but no
such account or record shall be considered as creating a lien of any nature whatsoever on or as
segregating any of the assets with respect to the Deferral Accounts under this Plan from any other
funds or property of the Company.

ARTICLE 12

MISCELLANEOUS

12.1 Applicable Law. Except to the extent preempted by ERISA and applicable
substantive provisions of federal law, this Plan shall be governed and construed in accordance with
the laws of the State of California applicable to agreements made and to be performed entirely
therein.

12.2 Captions. The captions of the articles, sections, and paragraphs of this Plan
are for convenience only and shall not control or affect the meaning or construction of any of its
provisions.

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

12.4 Notice. Any notice or filing required or permitted to be given to the
Administrator under the Plan shall be sufficient if in writing and hand delivered, or sent by
registered or certified mail, to the principal office of the Company, directed to the attention of
the Administrator with a copy to the Senior Vice President and General Counsel of the Company. Such
notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the
date shown on the postmark on the receipt for registration or certification.

12.5 Limits on Transfer. Other than by will, the laws of descent and distribution, or
legal or judicial process related to dissolution of marriage, no right, title or interest of any
kind in the Plan shall be transferable or assignable by a Participant or the Participant’s
Beneficiary or be subject to alienation, anticipation, encumbrance, garnishment, attachment, levy,
execution or other legal or equitable process, nor subject to the debts, contracts, alimony,
liabilities or engagements, or torts of any Participant or Participant’s Beneficiary. Any attempt
to alienate, sell, transfer, assign, pledge, garnish, attach or take any other action subject to
legal or equitable process or encumber or dispose of any interest in the Plan shall be void.

12.6 Satisfaction of Claims. Payments to any Participant or Beneficiary in accordance
with the provisions of the Plan shall, to the extent thereof, be in full or partial satisfaction of
claims against the Company for the compensation or other amounts deferred and relating to the
Deferral Account to which the payments relate.

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

12.8 Unfunded Status of Plan; Creation of Rabbi Trust. The Plan is intended to
constitute an “unfunded” plan of deferred compensation and Participants shall rely solely on the
unsecured promise of the Company for payment hereunder. With respect to any payment not yet made
to a Participant under the Plan, nothing contained in the Plan shall give a Participant any rights
that are greater than those of a general unsecured creditor of the Company. The Company has
established the Avery Dennison Corporation Directors Compensation Trust (“Rabbi Trust”). The assets
of the Rabbi Trust shall be subject to the claims of the Company’s creditors. To the extent any
Benefits provided under the Plan are actually paid to a Participant or Beneficiary from the Rabbi
Trust, the Company shall have no further obligation with respect thereto, but to the extent not so
paid, such Benefits shall remain the obligation of, and shall be paid by, the Company. Participants
and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights,
interest, or claims in or to any specific property or assets of the Company, nor shall they be
beneficiaries of, or have any rights, claims, or interests in any life insurance policies, annuity
contracts, or the proceeds therefrom owned or which may be acquired by the Company (“Policies”).
Apart from the Rabbi Trust, such Policies or other assets of the Company shall not be held under
any trust for the benefit of Participants, their Beneficiaries, heirs, successors, or assigns, or
held in any way as collateral security for the fulfilling of the obligations of the Company under
this Plan. Any and all of the Company’s assets and Policies shall be, and shall remain, the
general, un-pledged, unrestricted assets of the Company. The Company’s obligations under the Plan
shall be merely an unfunded and unsecured promise of the Company to pay money in the future.

12.9 Waiver of Stay, Extension and Usury Laws. The Company covenants (to the extent
that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying all or any portion of the Benefits
due hereunder, wherever such laws may be enacted, now or at any time hereafter in force, or which
may affect the administration or performance of this Plan; and (to the extent that it may lawfully
do so) the Company hereby expressly waives all benefit or advantage of any such law, and covenants
that it will not hinder, delay or impede the realization of any Benefits to which the Participants
hereunder are entitled, but will suffer and permit the realization of all such Benefits as though
no such law had been enacted. The provisions of this Section 12.9 are not intended, however, to
prevent compliance of the Plan with the provisions of Code Section 409A.

12.10 Status. The establishment and maintenance of, or allocations and credits to,
the Deferral Account of any Participant shall not vest in any Participant any right, title or
interest in and to any Plan assets or Benefits except at the time or times and upon the terms and
conditions and to the extent expressly set forth in the Plan and in accordance with the terms of
the Rabbi Trust.

12.11 Validity. In the event any provision of this Plan is held invalid, void, or
unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other
provision of this Plan.

12.12 Waiver of Breach. The waiver by any party of any breach of any provision of the
Plan by any other party shall not operate or be construed as a waiver of any subsequent breach.

12.13 Gender, Singular and Plural. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may
require. As the context may require, the singular may be read as the plural and the plural as the
singular.EX-10.19.8

 AVERY DENNISON CORPORATION

EMPLOYEE STOCK OPTION AND INCENTIVE PLAN

Amended and Restated

The purposes of this Employee Stock Option and Incentive Plan (“Plan”) are as follows:

(1) To provide additional incentive for Employees to further the growth, development and financial
success of the Company by personally benefiting through the ownership of Company stock and/or
rights, which recognize such growth, development and financial success.

(2) To enable the Company to recruit and retain Employees considered essential to the long range
success of the Company by offering them an opportunity to own stock in the Company and/or rights,
which will reflect the growth, development and financial success of the Company.

ARTICLE 1 DEFINITIONS

Wherever the following terms are used in this Plan they shall have the meaning specified
below, unless the context clearly indicates otherwise.

1.1 Award

“Award” shall mean a Dividend Equivalent, Option, Performance Stock, Performance Unit,
Restricted Stock, Restricted Stock Unit, or Stock Appreciation Right granted under this Plan.

	 	 	 
	1.2	 	Award Agreement
	
 
	 	“Award Agreement” shall mean an agreement setting forth the terms and conditions of an Award.
	1.3

	 	Awardee

“Awardee” shall mean a person who has received an Award under the Plan.
	1.4

	 	Beneficiary

“Beneficiary” shall have the meaning given in Article 11.8.
	1.5

	 	Board

“Board” shall mean the Board of Directors of the Company.
	1.6

	 	Cause

“Cause” shall mean, with respect to any Awardee’s Termination of Employment, unless otherwise
provided by the Committee or the Company, (i) “Cause” as defined in any Individual Agreement or
Award Agreement to which the applicable Awardee is a party, or (ii) if there is no such Individual
Agreement or Award Agreement or if it does not define Cause: (A) conviction of the Awardee for
committing a felony under federal law or the law of the state in which such action occurred, (B)
willful and deliberate failure on the part of the Awardee to perform his employment duties in any
material respect, or (C) prior to a Change in Control, such other serious events as shall be
determined by the Committee or the Company. Prior to a Change of Control, the Committee or the
Company shall, unless otherwise provided in an Individual Agreement with a particular Awardee, have
the discretion to determine on a reasonable basis whether “Cause” exists, and its determination
shall be final.

	 	 	 
	1.7	 	Change in Control
	
 
	 	“Change in Control” has the meanings set forth in Article 9.2.
	1.8

	 	CEO

“CEO” shall mean the Chief Executive Officer of the Company.
	1.9

	 	Code

“Code” shall mean the Internal Revenue Code of 1986, as amended.
	1.10

	 	Committee

“Committee” shall mean committee of the Board designated to administer the Plan as
contemplated by Article 10.1.

	 	 	 
	1.11	 	Commission
	
 
	 	“Commission” shall mean the Securities and Exchange Commission or any successor agency.
	1.12

	 	Common Stock

“Common Stock” shall mean the common stock of the Company.
	1.13

	 	Company

“Company” shall mean Avery Dennison Corporation or any successor company.
	1.14

	 	COO

“COO” shall mean the Chief Operating Officer of the Company.
	1.15

	 	Covered Employee

“Covered Employee” shall mean an Awardee designated by the Committee in connection with any
Award as an individual who is or may be a “covered employee” within the meaning of Section
162(m)(3) of the Code in the year in which an Award is expected to be taxable to such Awardee.

	 	 	 
	1.16	 	Director
	
 
	 	“Director” shall mean a member of the Board.
	1.17

	 	Disability

“Disability” shall mean, with respect to any Awardee, unless otherwise provided by the
Committee, (i) “Disability” as defined in any Individual Agreement or Award Agreement to which the
Awardee is a party, or (ii) if there is no such Individual Agreement or it does not define
“Disability,” permanent and total disability as defined in Section 409A of the Code.

1.18 Disaffiliation

“Disaffiliation” shall mean, with respect to any Subsidiary, the Subsidiary’s ceasing to be a
Subsidiary for any reason (including, without limitation, as a result of a public offering, or a
spin-off or sale by the Company, of the majority of the stock of the Subsidiary).

1.19 Dividend Equivalent

“Dividend Equivalent” shall mean a right to receive a number of shares of Common Stock or an
amount of cash, determined as provided in Article 8.1 hereof.

1.20 Early Retirement

“Early Retirement” shall mean retirement from active employment with the Company, or a
Subsidiary, pursuant to which an Awardee is eligible and elects (i) to retire and (ii) to take a
retirement benefit promptly under the early retirement provisions of the applicable pension plan(s)
of such employer, or as otherwise determined by the Committee.

1.21 Employee

“Employee” shall mean any officer or other employee of the Company, or of any corporation,
which is then a Subsidiary.

	 	 	 
	1.22	 	Expiration Date
	
 
	 	“Expiration Date” shall have the meaning given in Article 4.3.
	1.23

	 	Exchange Act

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.
	1.24

	 	Fair Market Value

“Fair Market Value” of a share of Common Stock as of a given date shall be (i) the mean
between the highest and lowest selling price of a share of Common Stock during normal business
hours on the principal exchange on which shares of Common Stock are then trading, if any, on such
date, or if shares were not traded on such date, then the means between the highest and lowest
sales on the nearest date before and the nearest date after such valuation date; or (ii) if Common
Stock is not traded on an exchange, the mean between the closing representative bid and asked
prices for the Common Stock during normal business hours on such date as reported by NYSE or, if
NYSE is not then in existence, by its successor quotation system; or (iii) if Common Stock is not
publicly traded, the Fair Market Value of a share of Common Stock as established by the Committee
acting in good faith.

	 	 	 
	1.25

	 	[reserved]
	1.26

	 	including or includes

“including” or “includes” shall mean including without limitation, or includes, without limitation.
	1.27

	 	Individual Agreement

“Individual Agreement” shall mean an employment, severance or similar agreement between an
Awardee and the Company or one of its Subsidiaries.

1.28 Involuntary Termination

“Involuntary Termination” shall mean Termination of Employment other than for Cause, death,
Disability, Retirement or voluntary termination by the Awardee.

1.29 Non-Qualified Stock Option

“Non-Qualified Stock Option” shall mean an Option that either is not an incentive stock option
or is designated as a Non-Qualified Stock Option by the Committee or the Company.

1.30 Normal Retirement

“Normal Retirement” shall mean retirement from active employment with the Company, or a
Subsidiary at or after age 62 pursuant to which an Awardee is eligible and elects (i) to retire and
(ii) to take a retirement benefit promptly under the retirement provisions of the applicable
pension plan(s) of such employer, or as otherwise determined by the Committee.

	 	 	 
	1.31	 	Option
	
 
	 	“Option” shall mean a stock option granted pursuant to this Plan.
	1.32

	 	Optionee

“Optionee” shall mean an Employee granted an Option under this Plan.
	1.33

	 	Performance Goals

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

	 	 	 
	1.34	 	Plan
	
 
	 	“Plan” shall mean the Employee Stock Option and Incentive Plan, as amended and restated.
	1.35

	 	Qualified Performance-Based Award

“Qualified Performance-Based Award” shall mean an Award of Performance Stock, Performance
Unit, Restricted Stock or Restricted Stock Units designated as such by the Committee at the time of
grant, based upon a determination that (i) the Awardee is or may be a “covered employee” within the
meaning of Section 162(m)(3) of the Code in the year in which the Company would expect to be able
to claim a tax deduction with respect to such Restricted Stock and (ii) the Committee wishes such
Award to qualify for the Section 162(m) Exemption. Notwithstanding any other provision of the
Plan, no Award shall be considered a Qualified Performance-Based Award unless it is granted subject
to or after obtaining stockholder approval satisfying the requirements of Section 162(m)(4)(C)(ii)
of the Code and the Treasury Regulations thereunder.

	 	 	 
	1.36	 	Performance Stock
	
 
	 	“Performance Stock” shall mean a right to receive Common Stock pursuant to Article 7.
	1.37

	 	Performance Unit

“Performance Unit” shall mean a right to receive Common Stock pursuant to Article 7.
	1.38

	 	Restricted Stock

“Restricted Stock” shall mean Common Stock issued pursuant to Article 7.
	1.39

	 	Restricted Stock Unit

“Restricted Stock Unit” shall mean a right to receive Common Stock pursuant to Article 7.
	1.40

	 	Retirement

“Retirement” shall mean Normal or Early Retirement pursuant to which an Awardee is eligible
and elects (i) to retire and (ii) to take a retirement benefit promptly under the retirement
provisions of the applicable pension plan(s) of the Company or a Subsidiary.

1.41 Rule 16b-3

“Rule 16b-3” shall mean Rule 16b-3, as promulgated by the Commission under Section 16(b) of
the Exchange Act, as amended from time to time.

	 	 	 
	1.42	 	Secretary
	
 
	 	“Secretary” shall mean the Secretary of the Company.
	1.43

	 	Section 162(m) Exemption

“Section 162(m) Exemption” shall mean the exemption from the limitation on deductibility
imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.

	 	 	 
	1.44	 	Stock Appreciation Right
	
 
	 	“Stock Appreciation Right” shall mean a stock appreciation right granted under Article 6.
	1.45

	 	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% (50% for grants of Options or Stock Appreciation Rights as required to
avoid application of Code Section 409A) or more of the total combined voting power of all classes
of stock in one of the other corporations in such chain, as well as partnerships and limited
liability companies, in which the Company holds a 33% or more interest.

1.46 Termination of Employment

“Termination of Employment” of an Awardee shall mean the termination of the employee-employer
relationship between the Awardee and the Company or a Subsidiary for any reason, including a
termination by resignation, discharge, death, Disability or Retirement; but excluding (a)
terminations where there is a simultaneous reemployment or continuing employment by the Company or
a Subsidiary and (b) temporary absences from employment because of illness, vacation or leave of
absence and transfers among the Company and Subsidiaries. In addition, an Awardee employed by a
Subsidiary shall be deemed to incur a Termination of Employment upon a Disaffiliation of that
Subsidiary, unless the Awardee immediately thereafter becomes or remains an Employee of the Company
or one of its continuing Subsidiaries. The Committee or the Company shall determine the effect of
all other matters and questions relating to Termination of Employment.

1.47 Gender and Number

“Gender and Number” wherever the masculine gender is used it shall include the feminine and
neuter, and wherever a singular pronoun is used it shall include the plural, unless the context
clearly indicates otherwise.

	 	 	 
	ARTICLE 2 SHARES SUBJECT TO PLAN
	2.1

	 	Shares Subject to Plan

As of December 31, 2007, there were 2,763,719 shares available for future Awards under the
Plan. As of the Effective Date, as defined in Article 11.13 below and subject to stockholder
approval, the aggregate number of shares deliverable pursuant to Awards shall be increased by
4,800,000 for a total of 7,563,719 shares. Shares of Common Stock issued under the Plan may be
authorized and unissued shares, previously outstanding shares held as treasury shares, or treasury
shares that have been transferred to and held in a grantor trust of the Company.

2.2 Unexercised Options and Other Rights

If any Option, or other right to acquire shares of Common Stock under any other Award expires
or is cancelled or forfeited without having been fully exercised or issued, the number of shares
subject to such Option or other Award, but as to which such Option or other Award was not exercised
or issued prior to its expiration, cancellation, or forfeiture may again be optioned, granted or
awarded hereunder, subject to the limitations of Article 2.1.

	 	 	 
	ARTICLE 3 GRANTING OF OPTIONS
	3.1

	 	Eligibility

Options may be granted to Employees of the Company or of a Subsidiary.
	3.2

	 	Granting of Options

The Committee shall from time to time, in its discretion:

(i) Select the Employees who will be granted Options;

(ii) Determine the number of shares to be subject to such Options or Stock Appreciation
Rights granted to the selected Employees; provided, however, that no Employee shall be
granted Options or Stock Appreciation Rights covering in excess of an aggregate of 600,000
shares and rights during any calendar year; and

(iii) Determine the terms and conditions of such Options, consistent with this Plan and
all requirements of applicable law including Code Section 409A.

	 	 	 
	ARTICLE 4 TERMS OF OPTIONS
	4.1

	 	Option Agreement

Each Option and the terms and conditions thereof shall be evidenced by an Award Agreement,
which shall be executed by the Optionee and an authorized officer of the Company. Upon grant of an
Option, the Committee or the Company shall instruct the Secretary to issue an Award Agreement
evidencing such Option, and to deliver such Award Agreement to the Optionee.

4.2 Option Price

The exercise price per share of the shares subject to each Option shall be not less than 100%
of the Fair Market Value of a share of Common Stock on the date the Option is granted. Once
Options are granted, they may not be repriced, and this Article 4.2 may not be amended without the
consent of the stockholders.

4.3 Option Term

The term of an Option shall be set by the Committee in its discretion; provided that the term
shall not exceed 10 years. The last day of the term of the Option shall be the Option’s
“Expiration Date.”

4.4 Option Vesting

(a) The period during which the right to exercise an Option in whole or in part vests in the
Optionee shall be set by the Committee (and Option vesting shall be set forth in Award Agreements),
and the Committee may determine that an Option may not be exercised in whole or in part for a
specified period after it is granted. At any time after grant of an Option the Committee may, in
its sole discretion and subject to whatever terms and conditions it selects, accelerate the period
during which an Option vests or extend the period during which it may be exercised (but not beyond
the Expiration Date thereof).

(b) No portion of an Option, which is unexercisable at Termination of Employment, shall
thereafter become exercisable.

4.5 Exercise of Options after Termination of Employment

(a) Termination by Death. Unless otherwise determined by the Committee, if an Optionee has a
Termination of Employment by reason of the Optionee’s death, any Option held by such Optionee may
thereafter be exercised by the Optionee’s Beneficiaries, to the extent then exercisable, or on such
accelerated basis as the Committee may determine, for a period of 12 months (or such other period
as the Committee may specify in the applicable Award Agreement) from the date of such death or
until the Expiration Date thereof, whichever period is the shorter.

(b) Termination by Reason of Disability. Unless otherwise determined by the Committee, if an
Optionee has a Termination of Employment by reason of the Optionee’s Disability, any Option held by
such Optionee may thereafter be exercised by the Optionee, to the extent it was exercisable
immediately before the Termination of Employment, or on such accelerated basis as the Committee may
determine, for a period of three years (or such shorter period as the Committee may specify in the
applicable Award Agreement) from the date of such Termination of Employment or until the Expiration
Date thereof, whichever period is the shorter; provided, however, that if the Optionee dies within
such period, any unexercised Stock Option held by such Optionee shall, notwithstanding the
expiration of such period, continue to be exercisable to the extent to which it was exercisable at
the time of death for a period of 12 months from the date of such death or until the Expiration
Date thereof, whichever period is the shorter.

(c) Termination by Reason of Retirement. Unless otherwise determined by the Committee in an
Award Agreement, if an Optionee has a Termination of Employment by reason of the Optionee’s
Retirement, any Option held by such Optionee may thereafter be exercised by the Optionee, to the
extent it was exercisable at the time of such Retirement, or on such accelerated basis as the
Committee may determine, as follows: (i) if the Optionee has been before such Retirement, the CEO
or the COO, for the period ending on the Expiration Date of such Option; (ii) if the Optionee has
been before such Retirement, a participant in the Company’s Senior Executive Leadership
Compensation Plan or Executive Leadership Compensation Plan (the executive annual bonus plans) or
any successors thereto, other than the CEO or the COO, for the period ending on the earlier of the
fifth anniversary of such Retirement or the Expiration Date of such Option; and (iii) in all other
cases, for a period ending on the earlier of the third anniversary of such Retirement or the
Expiration Date of such Option.

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

(e) Transferability of Stock Options. No Option shall be transferable by the Optionee other
than (i) by designation of a Beneficiary, by will or by the laws of descent and distribution, or
(ii) as otherwise expressly permitted under the applicable Award Agreement including, if so
permitted, pursuant to a gift to such Optionee’s family, whether directly or indirectly or by means
of a trust or partnership or otherwise. All Options shall be exercisable, subject to the terms of
this Plan, only by the Optionee, by the guardian or legal representative of the Optionee if the
Optionee is incapacitated, by the Optionee’s Beneficiaries, legal representative or heirs after the
Optionee’s death, or any person to whom such option is transferred pursuant to clause (ii) of the
preceding sentence.

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

	 	 	 
	ARTICLE 5 EXERCISE OF OPTIONS
	5.1

	 	Partial Exercise

An Option may be exercised in whole or in part at any time after it has become vested and
exercisable and before its Expiration Date, subject to Article 4. However, an Option shall not be
exercisable with respect to fractional shares and the Committee or the Company may impose a minimum
number of shares for which a partial exercise will be permitted.

5.2 Manner of Exercise

All or a portion of an exercisable Option may be exercised upon delivery to the Secretary or
his office of all of the following:

(a) A written notice complying with the applicable rules established by the Committee or the
Company, stating that the Option, or a portion thereof, is being exercised, and signed by the
Optionee or other person then entitled to exercise the Option or such portion or an appropriate
notice from the Optionee’s stock broker;

(b) Full payment for the shares and taxes described in Article 11.7 with respect to which the
Option, or portion thereof, is exercised in whole or in part by (i) cash; (ii) certified or bank
check or such other instrument as the Company may accept; (iii) delivery (either by surrender of
the shares or by attestation) of shares unrestricted Common Stock already owned by the Optionee of
the same class as the Common Stock subject to the Stock Option (based on the Fair Market Value of
the Common Stock on the date the Stock Option is exercised); provided, however, that such
already-owned shares either were acquired by the Optionee in an open-market transaction or have
been held by the Optionee for at least six months at the time of exercise; (iv) if permitted by the
Committee or the Company, the surrender of shares of Common Stock then issuable upon exercise of
the Option; or (v) if permitted by the Committee, by delivering a properly executed exercise notice
to the Company, together with a copy of irrevocable instructions to a stock broker acceptable to
the Company to deliver promptly to the Company the amount of sale or loan proceeds necessary to pay
the option price, and, if requested, by the amount of any federal, state, local or foreign
withholding taxes; and

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

	 	 	 
	ARTICLE 6 STOCK APPRECIATION RIGHTS
	6.1

	 	Grant and Exercise

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

(b) A Stock Appreciation Right may be exercised by an Optionee in accordance with Article
6.2(b) by surrendering the applicable portion of the related Option in accordance with procedures
established by the Committee or the Company. Upon such exercise and surrender, the Optionee shall
be entitled to receive an amount determined in the manner prescribed in Article 6.2(b). Options
that have been so surrendered shall no longer be exercisable to the extent the related Stock
Appreciation Rights have been exercised.

6.2 Terms and Conditions

Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined
by the Committee, including the following:

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

(b) Upon the exercise of a Stock Appreciation Right, an Optionee shall be entitled to receive
an amount in cash, shares of Common Stock or both, in value equal to the excess of the Fair Market
Value of one share of Common Stock over the option price per share specified in the related Option
multiplied by the number of shares in respect of which the Stock Appreciation Right shall have been
exercised, with the Committee or the Company having the right to determine the form of payment. To
the extent that a Stock Appreciation Right is exercised and settled in Common Stock, the number of
shares available for future Awards under the Plan shall be reduced by the number of Stock
Appreciation Rights that are exercised (and not the number of shares actually issued upon
settlement of the Award).

(c) Stock Appreciation Rights shall be transferable only to permitted transferees of the
underlying Option in accordance with the provisions of the Plan.

ARTICLE 7 RESTRICTED STOCK AND RESTRICTED STOCK UNITS, PERFORMANCE STOCK AND PERFORMANCE
UNITS

7.1 Administration

Shares of Restricted Stock and Awards of Restricted Stock Units, Performance Stock or
Performance Units may be awarded either alone or in addition to other Awards granted under the
Plan. The Committee or the Company shall determine the Employees to whom and the time or times at
which grants of Restricted Stock, Restricted Stock Units, Performance Stock and/or Performance
Units will be awarded, the number of shares to be awarded to any Awardee, the conditions for
vesting, the time or times within which such Awards may be subject to forfeiture and any other
terms and conditions of the Awards, in addition to those contained in Article 7.3. The total
number of shares of (i) Restricted Stock and (ii) the total number of shares represented by
Restricted Stock Units, Performance Stock, Performance Units and Dividend Equivalents granted under
the Plan shall not exceed 2,800,000.

7.2 Awards and Certificates

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

“The transferability of this certificate and the shares of stock represented hereby are
subject to the terms and conditions (including forfeiture) of the Avery Dennison Corporation
Employee Stock Option and Incentive Plan and an Award Agreement. Copies of such Plan and
Agreement are on file at the offices of Avery Dennison Corporation, 150 North Orange Grove
Boulevard, Pasadena, California 91103.”

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

(b) Restricted Stock Units, Performance Stock and Performance Units shall represent the right,
subject to the terms and conditions of the Award, to receive, at a specified time or times, either
a specified number of shares of Common Stock, or a cash payment equal to the Fair Market Value of a
specified number of shares of Common Stock, as the Committee or the Company shall determine. The
terms of such Awards shall comply in all respects with the requirements of Code Section 409A.

7.3 Terms and Conditions

The terms and conditions of an Award of Restricted Stock or Restricted Stock Units,
Performance Stock or Performance Units as established by the Committee or the Company shall be set
forth in an Award Agreement, including the following:

(a) The Committee may, in connection with the grant, designate an Award of Restricted Stock,
Restricted Stock Units, Performance Stock or Performance Units as a Qualified Performance-Based
Award, in which event it shall condition the grant or vesting (generally, during a period of three
years), as applicable, of such Award upon the attainment of Performance Goals. If the Committee
does not designate an Award of Restricted Stock, Restricted Stock Units, Performance Stock or
Performance Units as a Qualified Performance-Based Award, it may also condition the grant or
vesting thereof upon the attainment of Performance Goals. Regardless of whether an Award of
Restricted Stock, Restricted Stock Units, Performance Stock or Performance Units is a Qualified
Performance-Based Award, the Committee may also condition the grant or vesting thereof upon the
continued service of the Awardee. The conditions for grant or vesting and the other provisions of
Awards of Restricted Stock, Restricted Stock Units, Performance Stock or Performance Units
(including any applicable Performance Goals) need not be the same with respect to each Awardee.
The Committee may at any time, in its sole discretion, accelerate or waive, in whole or in part,
any of the foregoing restrictions; provided, however, that in the case of an Award that is a
Qualified Performance-Based Award, the applicable Performance Goals have been satisfied. The total
number of shares represented by Qualified Performance Based Award granted under the Plan shall not
exceed 2,800,000.

(b) Subject to the provisions of the Plan and the applicable Award Agreement, during the
period, if any, set by the Committee, commencing with the date of such Award for which such
Awardee’s continued service is required (the “Restriction Period”), and until the later of (i) the
expiration of the Restriction Period and (ii) the date the applicable Performance Goals (if any)
are satisfied, the Awardee shall not be permitted to sell, assign, transfer, pledge or otherwise
encumber shares of Restricted Stock or an Award of Restricted Stock Units, Performance Stock or
Performance Units.

(c) Except as provided in this paragraph (c) and Articles 7.3(a) and 7.3(b) and the applicable
Award Agreement, the Awardee shall have, with respect to shares of Restricted Stock (but not
Restricted Stock Units), all of the rights of a stockholder of the Company holding the class or
series of Common Stock that is the subject of the Restricted Stock, including, if applicable, the
right to vote the shares and the right to receive any cash dividends. Unless otherwise determined
by the Committee and subject to the next sentence, (A) cash dividends on the class or series of
Common Stock that are the subject of the Award of Restricted Stock or Restricted Stock Units shall
be automatically deferred and reinvested in additional Restricted Stock or Restricted Stock Units,
as applicable, held subject to the vesting of the underlying Award, and (B) dividends payable in
Common Stock shall be paid in the form of additional Restricted Stock or Restricted Stock Units, as
applicable, held subject to the vesting of the underlying Award. Notwithstanding the foregoing or
any provision of an Award Agreement, reinvestment of dividends in additional Restricted Stock or
Restricted Stock Units shall only be permissible if sufficient shares of Common Stock are available
under the Plan for such reinvestment (taking into account then outstanding Awards).

(d) Except to the extent otherwise provided in the applicable Award Agreement and Articles
7.3(a), 7.3(b), 7.3(e) and 9.1(b), upon an Awardee’s Termination of Employment for any reason
during the Restriction Period or before the applicable Performance Goals are satisfied, all shares
of Restricted Stock and all Restricted Stock Units, Performance Stock and Performance Units still
subject to restriction shall be forfeited by the Awardee.

(e) Except to the extent otherwise provided in Article 9.1(b), in the event an of an Awardee’s
Retirement or Termination of Employment other than for Cause, the Committee shall have the
discretion to waive, in whole or in part, any or all remaining restrictions (other than, in the
case of Restricted Stock with respect to which an Awardee is a Covered Employee, satisfaction of
the applicable Performance Goals unless the Termination of Employment was by reason of the
Awardee’s death, Disability or Involuntary Termination) with respect to any or all of such
Awardee’s shares of Restricted Stock, Restricted Stock Units, Performance Stock and Performance
Units.

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

	 	 	 
	ARTICLE 8 DIVIDEND EQUIVALENTS
	8.1

	 	Dividend Equivalents

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

	 	 	 	 	 
	ARTICLE 9	 	CHANGE IN CONTROL PROVISIONS
	9.1

	 	Impact of Event
	 	

Notwithstanding any other provision of the Plan to the contrary, in the event of a Change in
Control:

(a) Any Options and Stock Appreciation Rights outstanding as of the date such Change in
Control is determined to have occurred, and which are not then exercisable and vested, shall become
fully exercisable and vested, and shall remain exercisable until their Expiration Date
notwithstanding any Termination of Employment of the relevant Optionee other than a Termination of
Employment for Cause.

(b) The restrictions and deferral limitations applicable to any Restricted Stock, Restricted
Stock Units, Performance Stock, Performance Units and Dividend Equivalents shall lapse, and such
Restricted Stock, Restricted Stock Units, Performance Stock, Performance Units and Dividend
Equivalents shall become free of all restrictions and become fully vested and transferable at the
target amount.

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

9.2 Definition of Change in Control

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

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

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

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

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

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

	 	 	 	 	 
	ARTICLE 10	 	ADMINISTRATION
	10.1

	 	Committee
	 	

The Plan shall be administered by the Compensation and Executive Personnel Committee of the
Board or such other committee of the Board, as may from time to time be selected by the Board.

10.2 Powers of Committee

(a) The Committee shall have the authority to conduct the general administration of this Plan
in accordance with its provisions. The Committee shall have the power to make Awards and set the
terms and conditions for such Awards (including the option price, any vesting condition,
restriction or limitation (which may be related to the performance of the Awardee, the Company or
any Subsidiary) and any vesting acceleration or forfeiture waiver regarding any Award and the
shares of Common Stock relating thereto, based on such factors as the Committee shall determine; to
modify, amend or adjust the terms and conditions of any Award, at any time or from time to time,
including Performance Goals; provided, however, that the Committee may not adjust upwards the
amount payable with respect to a Qualified Performance-Based Award or waive or alter the
Performance Goals associated therewith except as specifically permitted by the Plan; to determine
to what extent and under what circumstances Common Stock and other amounts payable with respect to
an Award shall be deferred; and to determine under what circumstances an Award may be settled in
cash or Common Stock under Articles 4, 6, 7, 8 and 9, as applicable. The Committee shall have the
power to interpret this Plan and the Awards made hereunder, to adopt such rules and procedures for
the administration, interpretation, and application of this Plan as are consistent therewith, and
to interpret, amend or revoke any such rules and procedures. Any Award under this Plan need not be
the same with respect to each Awardee.

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

10.3 Action by Committee

(a) The Committee shall act by a majority of its members in office. The Committee may act
either by vote at a meeting, or by a memorandum, minutes or other written instrument signed by the
Chairman of the Committee or by a majority of the Committee. The Committee may delegate to (i) the
CEO the authority to make decisions pursuant to, and interpretations of, the Plan (provided that no
such delegation may be made that would cause Awards or other transactions under the Plan to cease
to be exempt from Section 16(b) of the Exchange Act or cause Qualified Performance-Based Awards to
fail to qualify for the Section 162(m) exemption), and the authority to grant Awards and establish
terms and conditions related to such Awards to any Employee, who is not an “officer” of the Company
(within the meaning of Rule 16a-1(f) promulgated under the Exchange Act, as amended), subject to
any limitations the Committee may impose, and (ii) the CEO or Secretary, or both, any or all of the
administrative and interpretive duties and authority of the Committee under the Plan. Based on such
delegation of authority from the Committee, the CEO may request Company representatives to take
actions related to the granting of Awards and to other Plan matters.

(b) Any authority granted to the Committee under this Plan may also be exercised by the full
Board, except to the extent that the grant or exercise of such authority would cause any Award
designated as a Qualified Performance-Based Award not to qualify for, or to cease to qualify for,
the Section 162(m) Exemption. To the extent that any permitted action taken by the Board conflicts
with action taken by the Committee, the Board action shall control.

10.4 Compensation; Professional Assistance; Good Faith Actions.

Expenses and liabilities that members of the Committee incur in connection with the
administration of this Plan shall be borne by the Company. The Committee may employ attorneys,
consultants, accountants, appraisers, brokers, or other persons. The Committee, the Company, and
its officers and Directors shall be entitled to rely upon the advice, opinions or valuations of any
such persons. All actions taken and all interpretations and determinations made by the Committee
in good faith shall be final and binding upon all Awardees and Beneficiaries, the Company, and all
other interested persons. No members of the Committee shall be personally liable for any action,
determination, or interpretation made in good faith with respect to this Plan or any Award, and all
members of the Committee shall be fully protected by the Company in respect of any such action,
determination or interpretation.

	 	 	 
	ARTICLE 11 MISCELLANEOUS PROVISIONS
	11.1

	 	Not Transferable

Except as specifically provided in the Plan with respect to Options and Stock Appreciation
Rights, as provided in Article 11.8 regarding designation of Beneficiaries, and as may be otherwise
provided in the applicable Award Agreement: (i) Awards may not be sold, pledged, assigned, or
transferred in any manner other than by will or the laws of descent and distribution; (ii) no Award
or interest or right therein shall be subject to the debts, contracts or engagements of the Awardee
or his Beneficiaries and successors in interest or shall be subject to disposition by transfer,
alienation, anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy); and (iii) any
attempted disposition of an Award shall be null and void and of no effect.

11.2 Unfunded Status of Plan

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

11.3 General Provisions

(a) The Committee or the Company may require each person purchasing or receiving shares of
Common Stock pursuant to an Award, as a condition to delivery of such shares, to represent to and
agree with the Company in writing that such person is acquiring the shares without a view to the
distribution thereof and to provide such other representations and such documents as the Committee
or the Company deems necessary or appropriate to effect compliance with all applicable laws. Such
shares may be delivered by book entry or in certificate form, with such legends or other notations
as the Committee or the Company deems appropriate to reflect any restrictions on transfer.

(b) Notwithstanding any other provision of the Plan or any Award Agreement, the Company shall
not be required to issue or deliver any shares of Common Stock under the Plan prior to fulfillment
of all of the following conditions:

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

(ii) Any registration or other qualification of such shares of the Company under any
state or federal law or regulation, or the maintaining in effect of any such registration or
other qualification that the Committee or the Company deems necessary or advisable;

(iii) Obtaining any other consent, approval, or permit from any state or federal
governmental agency that the Committee or the Company determines to be necessary or
advisable;

(iv) The lapse of such reasonable period of time following the exercise of an Option or
Stock Appreciation Right or the vesting or other event that results in the settlement of an
Award, as the Committee or the Company may establish from time to time for reasons of
administrative convenience; and

(v) The receipt by the Company of full payment (if any) for such shares and the
satisfaction of any tax withholding obligations relating thereto.

An Awardee shall not be, nor have any of the rights or privileges of, a stockholder of the
Company in respect of any shares of Common Stock that may become deliverable pursuant to an Award
unless and until such shares have been delivered to the Awardee.

(c) In the event an Award is granted to an Employee who is employed outside the United States
and who is not compensated from a payroll maintained in the United States, the Committee or the
Company may modify the provisions of the Plan as they pertain to such Award or Awardee to comply
with applicable foreign law, and/or related regulations or requirements.

(d) The Committee or the Company may (but need not) establish rules or terms and conditions in
an applicable Award Agreement, under which Awardees may be permitted to elect to defer receipt of
cash or shares in settlement of Restricted Stock Units, Performance Stock and Performance Units for
a specified period or until a specified event, either under an existing plan of the Company or
otherwise.

(e) The Plan, in form and operation, is intended to comply with Section 409A of the Code. To
the extent that the terms of the Plan are inconsistent with Section 409A, then the terms of the
Plan will be automatically deemed to be amended and construed so as to be in compliance. The
Committee or the Company may make any amendments to the Plan or to any outstanding Awards in order
to comply with the requirements of Section 409A.

11.4 Amendment, Suspension, or Termination of this Plan

The Board may amend, suspend or terminate the Plan at any time prior to a Change of Control,
but no such amendment, suspension or termination shall impair the rights of Awardees under Awards
previously granted without the Awardee’s consent, and provided further that no material amendments
will be made to the terms of the Plan without the approval of the Company’s stockholders.

The Committee may amend the terms of any Award after it is granted, prospectively or
retroactively, but no such amendment shall reprice an option, cause a Qualified Performance-Based
Award to cease to qualify for the Section 162(m) Exemption or impair the rights of the Awardee
without the Awardee’s consent.

Notwithstanding the forgoing, the Committee or the Company may unilaterally amend the Plan or
any Award as necessary to comply with the requirements of Code Section 409A.

11.5 Adjustments upon Changes in Common Stock

In the event of an equity restructuring involving a nonreciprocal transaction between the
Company and its stockholders, such as a stock dividend, stock split, reverse stock split, share
combination, recapitalization, merger, consolidation, acquisition of property or shares,
separation, spin-off, reorganization, stock rights offering, liquidation, Disaffiliation of a
Subsidiary or similar event that affects the number or kind of shares of Common Stock (or other
securities of the Company) or the share price of Common Stock (or other securities) and causes a
change in the per share value of the Common Stock underlying outstanding Awards, the Committee or
the Company shall make appropriate and equitable adjustments to the following:

	 	(a)	 	the aggregate number of shares of Common Stock available under Article 2 and
Article 7, and the limits on grants of Options under Article 3, grants of Stock
Appreciation Rights under Article 6, and grants of Qualifying Performance-Based Awards
under Articles 7 and 8;

(b) the number of shares of Common Stock covered by outstanding Awards;

(c) the option price of outstanding Options, and

(d) appropriate and equitable adjustments to other outstanding Awards.

Such adjustments may include, without limitation, (i) the cancellation of outstanding Awards
in exchange for payments of cash, property or a combination thereof having an aggregate value equal
to the value of such Awards, as determined by the Committee or the Company, (ii) the substitution
of other property (including, without limitation, other securities) for the Stock covered by
outstanding Awards, and (iii) in connection with any Disaffiliation of a Subsidiary, arranging for
the assumption, or replacement with new awards, of Awards held by Awardees employed by the affected
Subsidiary by the Subsidiary or an entity that controls the Subsidiary following the
Disaffiliation.

11.6 Approval of Plan by Stockholders

The Plan was approved by the Company’s stockholders at the annual meeting of stockholders on
April 24, 2008. The Plan, as amended and restated, was approved by the Board on December 4, 2008.

11.7 Tax Withholding

No later than the date as of which an amount first becomes includible in the gross income of
an Awardee for federal income tax purposes with respect to any Award under the Plan, such an
Awardee shall pay to the Company, or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld
with respect to such amount. Unless otherwise determined by the Company, withholding obligations
may be settled with Common Stock, including Common Stock that is part of the Award that gives rise
to the withholding requirement; provided, however, that not more than the legally required minimum
withholding may be settled with Common Stock. The obligations of the Company under the Plan shall
be conditional on such payment or arrangements, and the Company and its Subsidiaries shall, to the
extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to
such an Awardee. The Committee may establish such procedures as it deems appropriate, including
making irrevocable elections, for the settlement of withholding obligations with Common Stock. The
Awardee shall be responsible for the payment of all taxes applicable to Awards, vesting,
distributions or payments received from the Company. It is the intent of the Company that the
provisions of this Plan be interpreted to comply in all respects with Code Section 409A, however,
the Company shall have no liability to the Awardee, or any successor or beneficiary thereof, in the
event taxes, penalties or excise taxes may ultimately be determined to be applicable to any Award,
vesting, distribution or payment received by the Awardee or any successor or beneficiary thereof.

11.8 Beneficiaries

The Committee or the Company shall establish such procedures as it deems appropriate for
Awardees to designate one or more persons (each, a “Beneficiary”) to whom any amounts payable under
this Plan in the event of the applicable Awardee’s death are to be paid and/or by whom any rights
of the applicable Awardee’s, after the Awardee’s death, may be exercised. 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 Committee
or the Company.

11.9 Effect of Plan

The adoption of this Plan shall not affect any other compensation or incentive plans in effect
for the Company or any Subsidiary. Nothing in this Plan shall be construed to limit the right of
the Company (a) to establish any other forms of incentives or compensation for employees of the
Company or any Subsidiary, or (b) to grant or assume options or other rights otherwise than under
this Plan in connection with any proper corporate purpose, including the grant or assumption of
options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise,
of the business, stock or assets of any corporation, firm or association. Nothing in this Plan or
in any Award Agreement shall confer upon any Awardee any right to continue in the employ of the
Company or any Subsidiary or interfere with or restrict in any way the rights of the Company and
the Subsidiaries, which are hereby expressly reserved, to discharge any Awardee at any time for any
reason whatsoever, with or without Cause.

11.10 Titles

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

11.11 Governing Law

This Plan and any Award Agreements hereunder shall be administered, interpreted and enforced
under the laws of the State of Delaware, without reference to the principle of conflict of laws.

	 	 	 
	11.12	 	Effective Date
	
 
	 	This Plan, as amended and restated herein, is effective as of January 1, 2008.

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