Document:

AVT-Q2-2014 EX 10.2

Exhibit 10.2

AMENDED AND RESTATED
EMPLOYMENT AGREEMENT

This Amended and Restated Employment Agreement (“Agreement”) is made by and between PHILIP R. GALLAGHER (“Employee”), and AVNET, INC., a New York corporation, with its principal executive offices at 2211 South 47th Street, Phoenix, AZ  85034 (the “Employer”), effective as of this 1st day of December, 2013 (the “Effective Date”).
WHEREAS, Employee is now and has been employed by the Employer pursuant to a certain Employment Agreement effective as of June 29, 2008 (referred to herein as the “Prior Employment Agreement”); 
WHEREAS, the Employer and Employee desire to amend and restate the Prior Employment Agreement;
WHEREAS, the Employer wishes to provide for the continued employment of Employee in the role of Senior Vice President of the Employer and President of Avnet Technology Solutions, an operating group of the Company; and
WHEREAS, Employee wishes to accept such continued responsibilities and employment and to render services to the Employer in accordance with the provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, the parties agree as follows:
SECTION 1 
 
EMPLOYMENT, SALARY, BENEFITS
1.1    Employment.  Employer agrees to employ Employee and Employee agrees to accept employment upon the terms and conditions hereinafter set forth in this Agreement, which shall supercede and replace the Prior Employment Agreement.  
1.2    Term.  Employee’s employment shall continue as of the date hereof and, subject to earlier termination as provided herein in Section 2, shall continue until terminated by either party; provided, however, that the party desiring to terminate the employment under this Section 1 gives written notice thereof to the other on a date not later than one (1) year prior to the date of actual termination of employment (the “Notice Date”).  
1.3    Duties.  Employee is hereby engaged in an executive capacity and shall perform such duties for Employer, or Employer’s subsidiaries, divisions and operating units as may be assigned to him from time to time by the Chief Executive Officer or Chief Operating Officer of Employer.  Employee is currently engaged as Senior Vice President of Employer and as President, Avnet Technology Solutions, an operating group of Employer.  If Employee is elected or reelected an officer or a director of Employer or any subsidiary, division or affiliate thereof, he shall serve as such without additional compensation.

 

1.4    Compensation.  For all services to be rendered by Employee and for all covenants undertaken by him pursuant to the Agreement, Employer shall pay and Employee shall accept such compensation (including base salary and incentive compensation) as shall be agreed upon from time to time between Employer and Employee.  
		
	1.4.1
	Compensation During One-Year Notice Period.  In the event Employee’s employment hereunder is, or will be, terminated by providing the one- (1-) year notice under Section 1.2 above (the “Notice”) and, prior to providing the Notice, Employer and Employee fail to agree upon the amount of Employee’s compensation during all or any portion of the one year commencing on the Notice Date (“One-Year Notice Period”), then:  (A) Employee’s base salary for the One-Year Notice Period shall remain unchanged; and (B) Employee’s incentive compensation shall be determined as follows: if Employee’s incentive compensation arrangement for Employer’s fiscal year in progress when the Notice is given has been agreed upon:  (y) then such arrangement shall remain unchanged, it being understood that neither Employer nor Employee shall have any discretion in altering such arrangement in any form or manner and (z) for the portion of the One-Year Notice period for which Employer and Employee fail to agree upon Employee’s incentive compensation arrangement (the “Disputed Period”), Employee shall not be eligible to participate in any performance-based cash compensation arrangement during the Disputed Period and instead shall receive a one-time cash bonus (to be paid by the Employer upon the expiration date of the One Year Period) equal to the amount of the annual cash incentive target most recently agreed upon by Employee and Employer multiplied by a fraction, where the numerator is the number of days in the Disputed Period and the denominator is 365.  

		
	1.4.2
	Separation from Service of Specified Employee.  Notwithstanding anything to the contrary in this Agreement, but subject to the applicable provisions of Section 1.4.3 below, to the extent that Employee (i) incurs a “separation from service” (a “Separation from Service”) within the meaning of Section 409A (“Section 409A”) of the Internal Revenue Code of 1986, as amended (the “Code”) during the term specified in Section 1.2 (whether before, at the beginning of, or during the Notice Period), and (ii) is then a “specified employee” within the meaning of Section 409A and the Employer’s specified employee identification policy, if any (a “Specified Employee”), and (iii) to the extent that any payment, benefit, or reimbursement to be made to Employee hereunder is “nonqualified deferred compensation” within the meaning of Section 409A (and determined in accordance with the applicable provisions of Section 1.4.3.), the payment of which is triggered by the Separation from Service, no such payment, benefit, or reimbursement upon a Separation from Service will be made before the first day of the seventh month following the month of Employee’s Separation from Service (the “Six Month Delay Rule”).  Any installment payments, benefits, or reimbursements that are subject to the Six Month Delay Rule under Section 409A shall be accumulated and paid or reimbursed with any payment or reimbursement on the first day of the seventh month following the month of Employee’s Separation from Service, and thereafter all other such payments, if any, of base salary, incentive compensation, benefits, or reimbursements shall be made in the normal course when Employer makes similar payments to active employees.  

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	1.4.3
	The preceding delay provisions of Section 1.4.2. shall not apply to any installment of payments and benefits if and to the maximum extent that such installment is deemed to not constitute nonqualified deferred compensation under Section 409A by virtue of either:  (A) the Employee’s right to the payment was previously subject to a substantial risk of forfeiture under Section 409A and the payment is thereafter paid within the time periods prescribed under the short-term deferral exception under Treasury Regulation Section 1.409A-1(b)(4) (“Short-Term Deferral Exception”) or (B) the payment being made upon involuntary Separation from Service under a separation pay plan that meets the requirements of Treasury Regulation Section 1.409A-1(b)(9)(iii) (and any installments that qualify for the exception under Treasury Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day of the Employee’s second taxable year following the taxable year when the Employee incurred such involuntary Separation from Service) (“Separation Pay Plan Exception”).  The Separation Pay Plan Exception shall be applied, first, to any installments payable within six months after Separation from Service that do not otherwise qualify for the Short-Term Deferral Exception and, next, to the latest installments payable within the permitted payment period for this exception.  

1.5    Additional Benefits.  In addition to the compensation described in Section 1.4, Employee shall be entitled to vacation, insurance, retirement and other benefits as are afforded to personnel of Employer’s United States-based operating units generally (other than a severance plan or arrangement available to such personnel) and which are in effect from time to time.  It is understood that Employer does not by reason of this Agreement obligate itself to provide any such benefits to such personnel and that participation in such benefits are subject to the terms and conditions thereof and the requirements under applicable law (including those under the Code).  If Employer is advised by outside legal counsel that it must restrict Employee’s participation in retirement or savings type benefits under applicable law during the One-Year Notice Period, then, in lieu of participation in those benefits during such period, Employer shall pay Employee within 30 days upon the expiration of the One-Year Notice Period (or if later, after the period described in Section 1.4.2) an amount equal to the Employer-provided contributions or benefits Employee would have otherwise accumulated under those retirement or savings type benefits during such period (determined:  (a) without regard to any pre-tax or after-tax contributions that would have otherwise been made by Employee (but by including the maximum amount of matching contributions that Employee would have otherwise received) or any lost investment or future tax-deferral opportunities and (b) by assuming that distributions relating to retirement or savings type benefits would have been made to Employee at the end of the One-Year Notice Period) plus a gross-up for any federal, state or local income taxes imposed on Employee on such payment (as determined by Employer).  Employee also participates in the Employer’s Executive Officers’ Supplemental Life Insurance and Retirement Benefits Program (the “Program”) pursuant to the terms and conditions applicable to the Program.   Employee acknowledges and agrees that the Employer may amend the Program in any manner that it deems appropriate to comply with Section 409A (including, but not limited to, amending distribution provisions thereunder); provided, however, that the Employer may not decrease Employee’s benefits under the Program without the Employee’s written consent.  Notwithstanding any other provision of the benefit plans, the Program or any other policy of Employer providing for reimbursement of expenses incurred by Employee or the payment of in-kind benefits, in compliance with Section 409A, to the extent that such payments are not made under the Short-Term Deferral Exception: 
(i)    They will be made pursuant to an arrangement providing for an objectively determinable and non-discretionary definition of the expenses eligible for 

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reimbursement or of the in-kind benefits to be provided and during an objectively and specifically prescribed period;
(ii)    The amount of expenses eligible for reimbursement and the provision of in-kind benefits during any calendar year shall not affect the amount of expenses eligible for reimbursement or the provision of in-kind benefits in any other calendar year (other than medical benefits described in Section 105(b) of the Code); 
(iii)    The reimbursement of an eligible expense (e.g., medical expenses) shall be made on or before December 31 of the calendar year following the calendar year in which the expense was incurred; and
(iv)    The right to reimbursement or right to in-kind benefits shall not be subject to liquidation or exchange for another benefit.
1.6    Compensation on Termination.  Upon termination of this Agreement and Employee’s Separation from Service, if Employee’s compensation is not determined under Section 1.4.1 of this Agreement, Employee shall be entitled to receive only such compensation as had accrued and was unpaid to the effective date of his Separation of Service and, in the case of termination of employment due to death or disability, upon the termination of this Agreement.  If Employee’s  Separation from Service occurs other than at the end of a fiscal year of Employer, the compensation payable to Employee (including base salary and incentive compensation) shall bear the same ratio to a full fiscal year’s remuneration as the number of days for which Employee shall be entitled to remuneration (up to the day of his Separation from Service) bears to 365 days; provided, however, that incentive compensation shall only be paid after the end of the performance period, only to the extent that performance targets have been met; and provided further that if Employee is then a Specified Employee, to the extent that any payment (whether of accrued salary or incentive payment) to be made to Employee is “nonqualified deferred compensation” within the meaning of Section 409A (and determined in accordance with the applicable provisions of Section 1.4.3.) and is not subject to a deferral election under the Avnet Deferred Compensation Plan, as amended (“DCP”), the incentive payment, if any, upon a Separation from Service will be made in a lump sum on the latest of (i) the first day of the seventh month following the month of Employee’s Separation from Service if such payment is deemed to be triggered by the Separation from Service, (ii) the end of the performance period, or (iii) the effective date of Employee’s termination for Employer purposes.    
1.7    Section 409A.  It is intended that each installment of the payments and benefits provided under Sections 1.4, 1.5, and 1.6 shall be treated as a separate payment for purposes of Section 409A, and that neither the Employer nor Employee shall have the right to accelerate or defer the delivery of any such payments or benefits except to the extent specifically permitted or required by Section 409A.
SECTION 2     
 
OTHER TERMINATIONS  
2.1    Death or Disability.  Employee’s employment hereunder shall terminate on the date of Employee’s death or Date of Disability.  For purposes of this Agreement, “Disability” shall mean that Employee is unable, as a result of Employee suffering mental or physical injury, illness or incapacity, to perform his customary duties hereunder on a full-time basis for a period of three hundred sixty-five (365) substantially consecutive days; and “Date of Disability” means the 365th such day.  The opinion 

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of a medical doctor licensed to practice in the State of Arizona (or such other state where the Employee then resides) and having medical board certification in his or her field of specialization or the receipt or entitlement of Employee to disability benefits under any policy or insurance provided or made available by Employer or under the Federal Social Security Act shall be conclusive evidence of the Employee’s Disability.  To the extent Employee is a Specified Employee on the Date of Disability, payments to Employee of “nonqualified deferred compensation” (within the meaning of Section 409A and determined in accordance with the applicable provisions of Section 1.4.3.) must comply with the Six Month Delay Rule unless the employee has incurred a “disability” under Section 409A and such disability is the reason for Employee’s termination of employment with the Employer.   
2.2    Cause.  Employee’s employment hereunder may also be terminated by Employer at any time prior to the expiration of the term hereof without notice for cause, including, but not limited to, Employee’s gross misconduct, breach of any material term of this Agreement, willful breach, habitual neglect or wanton disregard of his duties, or conviction of any criminal act.  If Employee is terminated under this Section 2.2, payment during the One-Year Notice Period under Section 1.4.1 and any payment of annual incentive or related amounts under Section 1.6 shall not apply.   
2.3    Change of Control.  Upon a Change of Control as defined in the Change of Control Agreement (the “COC”) separately entered into between Employer and Employee during the term of this Agreement, the provisions of the COC shall apply.  If Employee terminates employment and receives payment under the COC, payment during the One-Year Notice Period under Section 1.4.1 and any payment of annual incentive or related amounts under Section 1.6 shall not apply. 
SECTION 3     
 
COMPETITIVE EMPLOYMENT
3.1    Full time.  Employee shall devote his full time, best efforts, attention and energies to the business and affairs of Employer and shall not, during the term of his employment, be engaged in any other activity which, in the sole judgment of Employer, will interfere with the performance of his duties hereunder.
3.2    Non-Competition.  While employed by Employer or any subsidiary, division or operating unit of Employer, Employee shall not, without the written consent of the Chief Executive Officer of Employer, directly or indirectly (whether through his spouse, child or parent, other legal entity or otherwise): own, manage, operate, join, control, participate in, invest in, or otherwise be connected with, in any manner, whether as an officer, director, employee, partner, investor, shareholder, consultant, lender or otherwise, any business entity which is engaged in, or is in any way related to or competitive with the business of Employer; provided, however, notwithstanding the foregoing Employee shall not be prohibited from owning, directly or indirectly, up to 5% of the outstanding equity interests of any company or entity the stock or other equity interests of which is publicly traded on a national securities exchange or on the NASDAQ over-the-counter market.
3.3    Non-Solicitation.  Employee further agrees that he will not, at any time while employed by Employer or any subsidiary, division or operating unit of Employer and for a period of one year after the termination of employment with Employer, without the written consent of an officer authorized to act in the matter by the Board of Directors of Employer, directly or indirectly, on Employee’s behalf or on behalf of any person or entity, induce or attempt to induce any employee of Employer or any subsidiary or affiliate of Employer (collectively the “Employer Group”) or any individual who was an employee of the Employer Group during the one (1) year prior to the date of such inducement, to leave the employ 

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of the Employer Group or to become employed by any person other than members of the Employer Group or offer or provide employment to any such employee.
SECTION 4     
 
DEFINITIONS
The words and phrases set forth below shall have the meanings as indicated:
“Confidential Information”.  That confidential business information of the Employer, whether or not discovered, developed, or known by Employee as a consequence of his employment with Employer.  Without limiting the generality of the foregoing, Confidential Information shall include information concerning customer identity, needs, buying practices and patterns, sales and management techniques, employee effectiveness and compensation information, supply and inventory techniques, manufacturing processes and techniques, product design and configuration, market strategies, profit and loss information, sources of supply, product cost, gross margins, credit and other sales terms and conditions.  Confidential Information shall also include, but not be limited to, information contained in Employer’s manuals, memoranda, price lists, computer programs (such as inventory control, billing, collection, etc.) and records, whether or not designated, legended or otherwise identified by Employer as Confidential Information.
“Developments”.  Those inventions, discoveries, improvements, advances, methods, practices and techniques, concepts and ideas, whether or not patentable, relating to Employer’s present and prospective activities and products.
SECTION 5     
 
DEVELOPMENTS, CONFIDENTIAL INFORMATION AND RELATED MATERIALS
5.1    Assignment of Developments.  Any and all Developments developed by Employee (acting alone or in conjunction with others) during the period of Employee’s employment hereunder shall be conclusively presumed to have been created for or on behalf of Employer (or Employer’s subsidiary or affiliate for which Employee is working) as part of Employee’s obligations to Employer hereunder.  Such Developments shall be the property of and belong to Employer (or Employer’s subsidiary or affiliate for which Employee is working) without the payment of consideration therefor in addition to Employee’s compensation hereunder, and Employee hereby transfers, assigns and conveys all of Employee’s right, title and interest in any such Developments to Employer (or Employer’s subsidiary or affiliate for which Employee is working) and agrees to execute and deliver any documents that Employer deems necessary to effect such transfer on the demand of Employer.
5.2    Restrictions on Use and Disclosure.  Employee agrees not to use or disclose at any time after the date hereof, except with the prior written consent of an officer authorized to act in the matter by the Board of Directors of Employer, any Confidential Information which is or was obtained or acquired by Employee while in the employ of Employer or any subsidiary or affiliate of Employer; provided, however, that this provision shall not preclude Employee from (i) the use or disclosure of such information which presently is known generally to the public or which subsequently comes into the public domain, other than by way of disclosure in violation of this Agreement or in any other unauthorized fashion, or (ii) disclosure of such information required by law or court order; provided that prior to such disclosure required by law or court order Employee will have given Employer three (3) business days’ written notice (or, if disclosure is required to be made in less than three (3) business days, then such 

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notice shall be given as promptly as practicable after determination that disclosure may be required) of the nature of the law or order requiring disclosure and the disclosure to be made in accordance therewith.
5.3    Return of Documents.  Upon termination of Employee’s employment with Employer, Employee shall forthwith deliver to the Chief Executive Officer of Employer all documents, customer lists and related documents, price and procedure manuals and guides, catalogs, records, notebooks and similar repositories of or containing Confidential Information and/or Developments, including all copies then in his possession or control whether prepared by him or others.
SECTION 6     
 
MISCELLANEOUS
6.1    Equitable Relief.  Employee acknowledges that any material breach of any of the provisions of Sections 3 and/or 5 would entail irreparable injury to Employer’s goodwill and jeopardize Employer’s competitive position in the marketplace or Confidential Information, or both, and that in addition to Employer’s other remedies, Employee consents and Employer shall be entitled, as a matter of right, to an injunction issued by any court of competent jurisdiction restraining any breach of Employee and/or those with whom Employee is acting in concert and to other equitable relief to prevent any such actual, intended or likely breach.
6.2    Survival.  The provisions of Sections 3.2, 3.3, 4, 5, and 6 shall survive the termination of Employee’s employment hereunder.
6.3    Interpretation.  If any court of competent jurisdiction shall refuse to enforce any or all of the provisions hereof because they are more extensive (whether as to geographic scope, duration, activity, subject or otherwise) than is reasonable, it is expressly understood and agreed that such provisions shall not be void, but that for the purpose of such proceedings and in such jurisdiction, the restrictions contained herein shall be deemed reduced or limited to the extent necessary to permit enforcement of such provisions.    
6.4    Succession.  This Agreement shall extend to and be binding upon Employee, his legal representatives, heirs and distributees and upon Employer, its successors and assigns.
6.5    Entire Agreement.  This Agreement contains the entire agreement of the parties with respect to their subject matter and no waiver, modification or change of any provisions hereof shall be valid unless in writing and signed by the parties against whom such claimed waiver, modification or change is sought to be enforced.  
6.6    Waiver of Breach.  The waiver of any breach of any term or condition of this Agreement shall not be deemed to constitute a waiver of any other term condition of this Agreement.
6.7    Notices.  All notices pursuant to this Agreement shall be in writing and shall be given by registered or certified mail, or the equivalent, return receipt requested, addressed to the parties hereto at the addresses set forth above, or to such address as may hereafter be specified by notice in writing in the same manner by any party or parties.
6.8    Headings.  Except for the headings in Section 4, the headings of the sections and subsections are inserted for convenience only and shall not be deemed to constitute a part hereof or to affect the meaning thereof.

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6.9    Governing Law.  This Agreement shall be construed, interpreted and governed by the laws of the State of Arizona, without giving effect to Arizona principles regarding conflict of laws and, where applicable, the Code.  Reference to any provision of the Code or any regulation issued thereunder shall be deemed to include any successor provision.
6.10    Section 409A Compliance.  The parties intend that any “nonqualified deferred compensation” within the meaning of Section 409A payable to Employee under this Agreement (or under any plan or program maintained by the Employer in which Employee participates) be paid in compliance with Section 409A such that there are no adverse tax consequences, interest, or penalties as a result of the payments.  To the extent permitted by law, the parties agree to modify this Agreement to the extent necessary to comply with Section 409A.
Anything in this Agreement to the contrary notwithstanding and except as set forth in this Section 6.10, if in connection with any payment or distribution by the Employer to or for the benefit of Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise) (a “Payment”), Employee is subject to, or is notified by the Internal Revenue Service that he is or will be subject to, penalty taxes imposed by Section 409A or if any interest or penalties are incurred by Employee with respect to such penalty taxes (such penalty taxes together with any such interest and penalties, are hereinafter collectively referred to as the “Section 409A Tax”), then Employee shall be entitled to receive an additional payment (a “Section 409A Gross-Up Payment”) in an amount such that after payment by Employee of all Section 409A Tax and all income taxes (and any interest and penalties imposed with respect thereto) imposed upon the Section 409A Gross-Up Payment, Employee retains an amount of the 409A Gross-Up Payment equal to the Section 409A Tax imposed upon the Payment; provided, however, that the Employer shall only be responsible to make a Section 409A Gross-Up Payment with respect to the Section 409A Tax if the Section 409A Tax relates to or results from (i) the Employer’s failure to operate a “nonqualified deferred compensation plan” (as such term is defined in Section 409A) (a “NQDC”) in compliance with Section 409A on and after January 1, 2005; or (ii) the lack of compliance of any Employer NQDC document or documentation with Section 409A; or (iii) the payment or distribution by the Employer (or by any Employer NQDC) of any NQDC amount if such payment or distribution is not in compliance with Section 409A.  For the avoidance of doubt, the Employer shall not be responsible to make any Section 409A Gross-Up Payment if, (1) after a timely notice or request by the Employer to Employee, Employee refuses or fails to make a timely election to alter the timing of payment or distribution or (2) Employee, in his capacity as an officer of the Employer, causes the Employer to take any action, or causes the Employer to fail to take any action, which causes Employee to be subject to a Section 409A Tax.
Determinations required to be made under this Section 6.10 regarding the amount of the Section 409A Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a certified public accounting firm selected by the Employer (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Employer and Employee within thirty (30) business days of the receipt of notice from Employee that he is subject to a Section 409A Tax, or such earlier time as is reasonably requested by the Employer.  All fees and expenses of the Accounting Firm shall be borne solely by the Employer.  Any Section 409A Gross-Up Payment, as determined pursuant to this Section 6.10, shall be paid by the Employer to Employee within thirty (30) days of the receipt of the Accounting Firm’s determination, but in no event later than the last day of the year following the year in which Employee remits the related taxes.  Any determination by the Accounting Firm shall be binding upon the Employer and Employee.
6.11    Forfeiture of Certain Parachute Payments.

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6.11.1    Notwithstanding any other provision of this Agreement, if paragraph 6.11.2, below, applies, Employee shall forfeit amounts payable to Employee under this Agreement only to the extent that a certified public accounting firm selected and paid by the Employer (the “Accounting Firm”) determines is necessary to ensure that Employee is not reasonably likely to receive a “parachute payment” within the meaning of Section 280G(b)(2) of the Code.  The Accounting Firm’s determination shall be conclusive and binding upon the Employer and Employee.
6.11.2    This paragraph 6.11.2 shall apply if (and only if) (A) any payment to be made under this Agreement is reasonably likely to result in Employee receiving a “parachute payment” (as defined in Section 280G(b)(2) of the Code), and (B) Employee’s forfeiture of payments due under this Agreement would result in the aggregate after-tax amount that Employee would receive being greater than the aggregate after-tax amount that Employee would receive if there were no such forfeiture. 
6.11.3    Neither the Employer nor Employee shall have any discretion to determine which payments are forfeited.  The forfeiture shall apply in reverse chronological order—e.g., the last payment in any series of payments shall be forfeited before any part of an earlier payment is forfeited.
6.12    Interest on Payments Subject to Six Month Delay Rule.  Any payment that is delayed to Employee under the Six Month Delay Rule shall accrue interest based on the prime rate of interest in effect at Bank of America, N.A. (or another bank designated by the Employer that is one of its principal banks) on the date when Employee has incurred a Separation From Service with the Employer.  Interest shall accrue daily on the unpaid amount due to Employee beginning with such date at the prime rate then in effect on a per annum basis, based on a 365 day year period with the actual number of days elapsed up through the day before the actual payment date.  Notwithstanding the foregoing, interest on payments delayed due to the Six Month Delay Rule under the Program shall be determined under the terms of the Program.

(Remainder of page intentionally left blank)

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the day and year first above written.

	
		
	EMPLOYEE
	AVNET, INC.

	 
	 

	_______________________________
Philip R. Gallagher

	By   _______________________________
        Richard Hamada
        Chief Executive Officer

102013 10K EX 10.7(c)

                 Exhibit 10.7(c)    

CLARCOR INC.
STOCK OPTION AGREEMENT
    

CLARCOR Inc., a Delaware corporation (the "Company"), hereby grants to ______________ (the "Optionee") as of _______________________ (the "Option Date"), pursuant to the provisions of the CLARCOR Inc. 2009 Incentive Plan (the "Plan"), a non-qualified option to purchase from the Company (the "Option") ______________ shares ("Option Stock") of its Common Stock, $1 par value ("Stock"), at the price of $_______________ per share upon and subject to the terms and conditions set forth below.  Capitalized terms not defined herein shall have the meanings specified in the Plan.

		
	1.
	Time and Manner of Exercise of Option.

		
	1.1.
	Maximum Term of Option.  In no event may the Option be exercised, in whole or in part after ____________ (the "Expiration Date").

		
	1.2.
	Exercise of Option.  (a)  Subject to Sections 1.2 (b), (c), (d) and (e) and Section 2.1 of this Agreement, this Option shall be exercisable in accordance with the following schedule:

Percentage of
Option Stock 

From Option Date to 1st Anniversary of Option Date    0%

From 1st Anniversary of Option Date to 2nd Anniversary of Option Date    up to 25%

From 2nd Anniversary of Option Date to 3rd Anniversary of Option Date    up to 50%

From 3rd Anniversary of Option Date to 4th Anniversary of Option Date    up to 75%

Thereafter through the Expiration Date    up to 100%

The foregoing subject to Sections 1.2(b), (c), (d), and (e) of this Agreement and Section 12 of the Plan.

(b)    If the Optionee's employment by the company terminates by reason of Disability or death, the Option shall become fully exercisable and may thereafter be exercised by the Optionee or the Optionee's Legal Representative for a period of 2 years after the effective date of the Optionee's termination of employment or until the Expiration Date, whichever period is shorter.

(c)    If the Optionee's employment by the Company terminates by reason of retirement on or after age 60 (or prior to such age with the consent of the Committee),  the Option shall become fully exercisable and may thereafter be exercised by the Optionee or the Optionee's Legal Representative for a period of 5 years after the effective date of the Optionee's termination of employment or until the Expiration Date, whichever period is shorter.

(d)    Except as provided in Section 2.1, if the Optionee's employment by the Company terminates for any reason other than Disability, retirement on or after age 60 (or prior to such age with the consent of the Committee) or death, the Option shall terminate 90 days after the date of such termination of employment or until the Expiration Date, whichever period is shorter.  The Option shall be exercisable only to the extent the Option was exercisable on the date of Optionee's termination of employment.

(e)    If the Optionee dies during the respective periods specified and determined in accordance with Sections 1.2(b), (c) or (d) above, the Option shall be exercisable only to the extent the Option was exercisable on the 

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date of Optionee's death and may thereafter be exercised by Optionee's Legal Representative for a period of two years after the date of death or until the Expiration Date whichever period is shorter.

1.3.    Method of Exercise.  (a) Subject to the limitations set forth in this Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole shares of Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Committee's satisfaction) either (i) in cash, (ii) in previously owned whole shares of Stock (which the Optionee has held for at least six months prior to the delivery of such shares and for which the Optionee has good title free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant to the Option by reason of such exercise or (iii) a combination of (i) and (ii), and (2) by executing such documents as the Company may reasonably request.  The Committee shall have sole discretion to disapprove of an election pursuant to clauses (ii) and (iii).  No share of Stock shall be delivered until the full purchase price therefore has been paid.

		
	2.
	Additional Terms and Conditions of Option.

2.1    Special Forfeiture/Repayment Rules.  For so long as Optionee continues as an employee with the Company and for two years (or one year in the case of Triggering Conduct under Section 2.1(c)(3)) following Optionee’s termination of employment with the Company regardless of the reason (“Restricted Period”), Optionee agrees not to engage in Triggering Conduct.  If Optionee engages in Triggering Conduct during the Restricted Period, then:
(a)    the Option (or any part thereof that has not been exercised) shall immediately and automatically terminate, be forfeited, and shall cease to be exercisable at any time; and
(b)    Optionee shall, within 30 days following written notice from the Company, pay the Company an amount equal to (1) the gross option gain realized or obtained by Optionee or any transferee resulting from the exercise of such Option, measured by the greater of (i) the difference between the Fair Market Value of the Option Stock underlying the Option on the exercise date and the exercise price paid for such Option Stock and (ii) the positive difference, if any, between the Fair Market Value of the Option Stock underlying the Option on the date of disposition of such Option Stock and the exercise price paid for such Option Stock, with respect to any portion of the Option that had already been exercised at any time within two years prior to the Triggering Conduct (the “Look-Back Period”), less (2) $1.00.  Optionee may be released from Optionee’s obligations under this Section 2.1 only if the Company (or its duly appointed designee) determines, in writing and in its sole discretion, that such action is in the best interests of the Company.  Nothing in this Section 2.1 prohibits Optionee from engaging in Triggering Conduct.  Violation of this Section 2.1 shall, however, result in the economic forfeiture or repayment of the benefits granted by this Agreement, as provided above, under certain circumstances, including, but not limited to, Optionee’s acceptance of employment with an entity that is in competition with the business conducted by the Company or any of its subsidiaries or affiliates (a “Competitor”).  Optionee agrees to provide the Company with at least 10 days written notice prior to directly or indirectly accepting employment with or serving as a consultant or advisor or in any other capacity to a Competitor, and further agrees to inform any such Competitor, before accepting employment or other service engagement, of the terms of this Section 2.1 and Optionee’s continuing obligations contained herein.  No provision of this Agreement shall diminish, negate, modify or otherwise impact any separate restrictive covenant or other Agreement to which Optionee may be a party.  Optionee acknowledges and agrees that the restrictions contained in this Agreement are being made for the benefit of the Company in consideration of the Option grant hereunder and for exposing Optionee to the Company’s business operations and Confidential Information, and for other good and valuable consideration, the adequacy of which consideration is hereby expressly confirmed.  Optionee further acknowledges that the receipt of the Option and execution of this Agreement are voluntary actions on the part of Optionee and that the Company is unwilling to grant the Option to Optionee without including the restrictions and covenants of Optionee contained in this Agreement.  
(c)    Triggering Conduct.  As used in this Agreement, “Triggering Conduct” shall include:  (1) disclosing or using in any capacity other than as necessary in the performance of duties assigned by the Company any Confidential Information or trade secrets of the Company; (2) directly or indirectly employing, contacting concerning employment, or participating in any way in the recruitment for employment or other service-provider relationship of (whether as an employee, officer, director, agent, consultant or independent contractor) any person who 

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was or is an employee or director of the Company at any time within the 12 months prior to the termination of Optionee’s employment with the Company; or (3) accepting employment with or serving as a consultant or advisor or in any substantially similar capacity for any Competitor either during Optionee’s employment or within one year following Optionee’s termination of employment with the Company.  For purposes of this section, “Confidential Information” shall mean all information in documents or computer storage media which has been disclosed to or obtained by Employee during or as a consequence of employment with the Company and which concerns in any way:
(i)    the Company’s business, financial condition, results of operations, practices, strategies, forecasts or plans with respect to pricing, marketing, manufacturing, purchasing, research and development, and the purchase or sale of equipment, inventory, stock or other assets;
(ii)    persons or entities which purchase, or have been solicited or identified for solicitation to purchase, the Company’s products or services, including but not limited to information concerning the nature of their business, the identity of their purchasing agents, their purchasing and stocking requirements, purchasing and resale patterns and procedures, product applications, uses, preferences and needs, prices paid for particular products, and other information obtained by the Company through contacts with, or inquiries or research about, the customers;
(iii)    the engineering, performance, manufacturing and cost characteristics of the Company’s products and services;
(iv)    the identity of the Company’s suppliers and the production, distribution or pricing of their products or services;
(v)    the identity of other employees of the Company, and their responsibilities, background, training, competence, abilities or compensation; and
(vi)    any other information not available in the public domain which is useful or of value to the Company and which has been identified to or is understood by the Company as being confidential to the Company.
2.2.    Withholding Taxes.  (a) As a condition precedent to any exercise of the Option, the Optionee shall, upon request by the Company, pay to the Company in addition to the purchase price of the Option Stock, such amount of cash as may be determined, under all applicable federal, state, local or other laws or regulations, to withhold and pay over as income or other withholding taxes (the "Tax Payments") with respect to such exercise of the Option.  If the Optionee shall fail to advance the Tax Payments after request by the Company, the Company may, in its discretion, deduct any Tax Payments from any amount then or thereafter payable by the Company to the Optionee.

(b)    The Optionee may elect to satisfy his or her obligation to advance the Tax Payments by any of the following means:  (1) a cash payment to the Company pursuant to Section 2.1(a), (2) delivery to the Company of previously owned whole shares of Stock (which the Optionee has held for at least six months prior to the delivery of such shares and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value determined as of the date the obligation to withhold or pay taxes first arises in connection with the Option (the "Tax Date"), (3) authorizing the Company to withhold whole shares of Stock which would otherwise be delivered to the Optionee upon exercise of the Option having a Fair Market Value determined as of the Tax Date, (4) any combination of (1), (2) and (3).  The Committee shall have sole discretion to disapprove of an election pursuant to any of clauses (2) - (4).  Shares of Stock to be delivered or withheld may not have a Fair Market Value in excess of the minimum amount of the Tax Payments, but not in excess of the amount determined by applying the Optionee’s maximum marginal tax rate. 

2.3.    Compliance with Applicable Law.  The Option is subject to the condition that if the listing, registration or qualification of the shares subject to the Option upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the purchase or delivery of shares hereunder, the Option may not be exercised, in whole or in part, 

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unless such listing, registration, qualification, consent or approval shall have been effected or obtained, free of any conditions not acceptable to the Company.  The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent or approval.

2.4.    Option Confers No Rights as Stockholder.  The Optionee shall not be entitled to any privileges of ownership with respect to shares of Stock subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of record with respect to 
such delivered shares; and the Optionee shall not be considered a stockholder of the Company with respect to any such shares not so purchased and delivered.

2.5.    Option Confers No Rights to Continued Employment.  In no event shall the granting of the Option or its acceptance by the Optionee give or be deemed to give the Optionee any right to continued employment by the Company or any affiliate of the Company.

2.6.    Agreement Subject to the Plan.  All of the terms and conditions applicable to this Agreement and the Option are not set forth herein.  Reference is made to the Plan for a complete statement of such terms and conditions.  This Agreement is subject to the provisions of the Plan, and shall be interpreted in accordance therewith and in the event of any discrepancy, conflict or ambiguity between the terms of this Agreement and the terms of the Plan, the terms of the Plan shall control.  The Optionee hereby acknowledges receipt of a copy of the Plan.

2.7.    Meaning of “Legal Representative”.  As used herein, the term "Legal Representative" shall include an executor, administrator, guardian, legal representative or other person acting in a similar capacity.

2.8.    Successors.  This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan.

2.9.    Governing Law.  The Option, this Agreement, and all determinations made and legal actions taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Tennessee and construed in accordance therewith without regard to principles of conflicts of laws.
 

CLARCOR Inc.
	
		
	

	 

	By:__________________________
	 

	 
	 

                            
Accepted this ___________ day of

______________________, 20____ 

_____________________________                               

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