AVERY DENNISON CORPORATION
RESTRICTED STOCK UNIT AGREEMENT
THIS AGREEMENT,
dated *, is made by and between Avery Dennison Corporation, a
Delaware corporation, hereinafter referred to as the
“Company,” and *, an employee of the Company or a
Subsidiary of the Company, hereinafter referred to as
“Employee.”
WHEREAS, the
Company wishes to grant to Employee an Award of restricted stock
units (“RSUs”) under the terms of the Employee Stock
Option and Incentive Plan, as amended and restated
(“Plan”); and
WHEREAS, the
Compensation and Executive Personnel Committee of the
Company’s Board of Directors (hereinafter referred to as the
“Committee”), appointed to administer the Plan, or the
Company’s Chief Executive Officer (“CEO”) has
determined that it would be to the advantage and best interest of
the Company and its shareholders to grant the RSUs (the “RSU
Award”) to Employee as an inducement to remain in the service
of the Company or its Subsidiaries and as an incentive for
increased efforts during such service;
WHEREAS, the
Committee or the CEO has advised the Company of the RSU Award and
instructed that this RSU Award be issued;
NOW, THEREFORE,
the Company and Employee agree as follows:
Terms not defined
in this Agreement shall have the meaning given in the
Plan.
ARTICLE II
— TERMS OF AWARD
As of the date of
this Agreement, the Company grants to Employee a RSU Award
representing * shares of the Company’s Common Stock, subject
to the terms and conditions set forth in this Agreement, the Award
Notice and the Plan. Each RSU represents one hypothetical share of
Common Stock of the Company. The RSU Award shall be held in
book-entry form in the books and records of the Company (or its
designee) for the Employee’s RSU account. The RSU Award shall
vest as set forth in the Award Notice.
(a) No
portion of the RSU Award may be sold, transferred, assigned,
pledged or otherwise encumbered of by the Employee until all or a
portion of the RSU Award becomes vested and the shares are issued.
The period of time between the date hereof and the date all or a
portion of the RSU Award becomes vested (at which time Employee
must be employed by the Company or the RSUs will be forfeited,
except as provided in Sections 2.4 through 2.5) is referred to
herein as the “Restriction Period.” At the time all or
a portion of the RSU Award vests, all or a portion of the RSUs
vest, as applicable. Notwithstanding any other provision, the RSUs
must be vested before the Company is obligated to issue the shares
of Common Stock as described in Section 3.1(e).
(b) Subject
to the provisions of this Agreement, if the Employee’s
employment with the Company is terminated, the balance of the RSU
Award, which has not vested by the time of the Employee’s
Termination of Employment, shall be forfeited by the
Employee.
2.3 Lapse of
Restriction Period
The Restriction
Period shall lapse when the RSU Award vests as set forth in the
Award Notice (* ) or as otherwise set forth in this
Agreement.
1
In the event of a
Change in Control, the restrictions in this Agreement will lapse
and be removed, and the RSU Award granted to Employee pursuant to
this Agreement will vest as of the date of such Change in
Control.
If
Employee’s employment with the Company or its Subsidiaries
terminates by reason of Employee’s death or Disability, the
restrictions imposed upon the RSU Award granted to Employee
pursuant to this Agreement will lapse and be removed, and the RSU
Award will vest on a prorated time-based formula starting with
January 1, 2008, with each month of service representing
1/48th of the Award as of the last day of Employee’s
employment.
2.6 Adjustments
in RSU Award
In the event that
the outstanding shares of the Common Stock are changed into or
exchanged for a different number or kind of shares of the Company
or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up,
stock dividend, combination of shares, or other similar
restructuring, the Committee or the Company shall make an
appropriate and equitable adjustment in the number and kind of
shares represented by the RSU Award granted hereunder. Such
adjustment shall be made with the intent that after the change or
exchange of shares, the Employee’s proportionate equity
interest in the Company represented by the RSU Award shall be
maintained as it was before the occurrence of such
event.
ARTICLE III
– ISSUANCE OF COMMON STOCK
3.1 Conditions
to and Issuance of Common Stock
The shares of
Common Stock deliverable for the RSU Award, or any part thereof,
may be either previously authorized but unissued shares or issued
shares that have then been reacquired by the Company. Such shares
shall be fully paid and nonassessable. The Company shall not be
required to issue or deliver any shares of stock for any RSU Award
prior to fulfillment or satisfaction of all of the following
conditions:
(a) The
admission of such shares to listing on all stock exchanges on which
such class of stock is then listed;
(b) The
completion of any registration or other qualification of such
shares under any state or federal law, or under rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body which the Committee or the Company
shall, in its absolute discretion, deem necessary or
advisable;
(c) The
obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee or the Company
shall, in its absolute discretion, determine to be necessary or
advisable;
(d) The
receipt by the Company of full payment or withholding for all
related taxes. The Employee shall be liable for any and all taxes,
including withholding taxes, arising out of this RSU Award or the
vesting of the RSU Award hereunder. The Company shall satisfy such
withholding tax obligation by having the Company retain RSUs having
a fair market value equal to the Company’s withholding
obligations.
(e) Subject
to the conditions in this Section, the Company shall issue to the
Employee via electronic transfer to the Employee’s brokerage
account the number of net shares of Common Stock represented by the
number of vested RSUs less withholding taxes, as soon as practical
following the vesting of same, but in no event later than two and
one-half (2-1/2) months after the calendar year in which the RSUs
vest. Delivery of these shares of Common Stock shall satisfy the
Company’s obligations under this Agreement.
(f) The
Employee shall establish an equity account with a broker designated
by the Company (currently Charles Schwab) so that the net shares
from vested RSUs (after withholding applicable taxes) may be
electronically transferred to the Employee’s
account.
2
The Employee shall
not have the rights of a shareholder with respect to this RSU Award
until shares are transferred to the Employee.
ARTICLE IV
— MISCELLANEOUS
4.1 Agreement
Subject to Plan
The Agreement is
subject to the terms of the Plan, and in the event of any conflict
between this Agreement and the Plan, the Plan shall
control.
The Committee or
the Company shall have the power to interpret the Plan and this
Agreement and to adopt such procedures for the administration,
interpretation and application of the Plan as are consistent
therewith and to interpret, modify or revoke any such procedures.
Nothing in this Agreement or the Plan shall be construed to create
or imply any contract or right of continued employment between the
Employee and the Company (or any of its Subsidiaries).
Any notice to be
given under the terms of this Agreement to the Company shall be
addressed to the Company in care of its Secretary and any notice to
be given to the Employee shall be addressed to him at the address
given beneath his signature hereto. By a notice given pursuant to
this Section, either party may hereafter designate a different
address for notices to be given. Any notice that is required to
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