RETENTION AGREEMENT

This RETENTION AGREEMENT, dated March 31, 2005, is entered into by and between Avery Dennison Corporation, a Delaware corporation (the Company) and Daniel R. OBryant (the Executive).

The Board of Directors of the Company (the Board) has determined that it is in the best interests of the Company to enter into a Retention Agreement (Agreement) with Executive to assure that the Company will have the continued services and dedication of the Executive. Therefore, in order to accomplish these objectives, the Compensation and Executive Personnel Committee of the Board has caused the Company to enter into this Agreement.

This Agreement contains the entire agreement between the parties with respect to the matters specified herein.

NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

1. Definitions. Terms not defined in the Agreement shall have the meaning as set forth in Executives Employment Agreement with the Company dated January 2, 2001 (Employment Agreement), which agreement will remain in full effect with respect to the matters set forth therein.

2. Position. The Company hereby promotes Mr. OBryant from Senior Vice President, Finance and Chief Financial Officer to Executive Vice President, Finance and Chief Financial Officer, effective as of April 1, 2005.

3. In order to provide the Executive with additional incentive to remain in the employ of the Company in this position until age 55 (August 14, 2012) and to devote appropriate attention and time to the business and affairs of the Company and to use the Executives reasonable best efforts to perform faithfully and efficiently such responsibilities, the Company agrees to grant the Executive the following benefits and rights:

(i) The Company will contribute $1 million to Executives deferred compensation account by April 1, 2005, which contribution (and any earnings thereon) will vest at age 55 and be subject to the terms and conditions of the 2005 Executive Variable Deferred Retirement Plan. (ii) The Company will grant 30,000 shares of restricted stock to the Executive, which will vest in two equal installments on April 1, 2009 and August 14, 2012, respectively. This stock will be granted with an effective date of April 1, 2005 and the Executive will be entitled to receive the benefit of all dividends accrued or paid and any recapitalizations effective subsequent to that date regardless of the actual date of grant. (iii) The Company will grant to Mr. OBryant additional NQSO stock options each year during 2005 2011 equal to $180,000 divided by the Black-Scholes value of the Companys stock options used at the time of the annual grant, but no later than December 31^st of each calendar year through 2011 with such options to vest under the same terms as other annual options granted to senior executives generally and on terms no less favorable than those currently applicable to the Executives most recent NQSO grant. These options are an addition to annual grants to which the Executive is otherwise entitled. The forgoing benefits, once vested, shall not be forfeitable on account of the termination of Executives employment regardless of the reason for such termination.

4. Termination of Employment.

The Executives employment shall terminate automatically in the event of Executives death during the Term of Employment. If the Company determines in good faith that the Disability of the Executive has occurred during the Term of Employment (pursuant to the definition of Disability set forth below), it may give to the Executive written notice in accordance with paragraph 10(b) of this Agreement of the Companys intention to terminate the Executives employment. In such event, the Executives employment with the Company shall terminate effective on the 30th day after receipt of such notice by the Executive (the Disability Effective Date), provided that, within the 30 days after such receipt, the Executive shall not have returned to full-time performance of the Executives duties. For purposes of this Agreement, Disability shall mean the absence of the Executive from the Executives duties with the Company on a full-time basis for a period of (i) ninety (90) consecutive calendar days or (ii) an aggregate of one hundred fifty (150) calendar days in any fiscal year of the Company as a result of incapacity due to mental or physical illness which is determined to be total and permanent by a physician selected by the Company or its insurers and acceptable to the Executive or the Executives legal representative.

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