Document:

SCHN-Ex10.36_8.31.2013

Exhibit 10.36
SCHNITZER STEEL INDUSTRIES, INC.
LONG-TERM INCENTIVE AWARD AGREEMENT
(FY 2014-2015 Performance Period)
On August 13, 2013, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Schnitzer Steel Industries, Inc. (the “Company”) authorized and granted a performance-based award to _________________ (“Recipient”) pursuant to Section 11 of the Company’s 1993 Stock Incentive Plan (the “Plan”).  Compensation paid pursuant to the award is intended to qualify as performance-based compensation under Section 162(m) of the Internal Revenue Code of 1986 (the “Code”).  By accepting this award, Recipient agrees to all of the terms and conditions of this Agreement.
1.    Award.  Subject to the terms and conditions of this Agreement, the Company shall issue to the Recipient the number of shares of Class A Common Stock of the Company (“Performance Shares”) determined under this Agreement based on (a) the performance of the Company during the two-year period from September 1, 2013 to August 31, 2015 (the “Performance Period”) as described in Section 2, (b) Recipient’s continued employment during the Performance Period as described in Section 3, and (c) Recipient’s not engaging in actions prohibited by Section 4.  Recipient’s “Target Share Amount” for purposes of this Agreement is _______ shares.
2.    Performance Conditions.
2.1    Payout Factor.  Subject to adjustment under Sections 3, 4, 5, 6 and 7, the number of Performance Shares to be issued to Recipient shall be determined by multiplying the Payout Factor by the Target Share Amount.  The “Payout Factor” shall be equal to the sum of (a) 50% of the EBITDA Payout Factor as determined under Section 2.2 below, plus (b) 50% of the ROE Payout Factor as determined under Section 2.3 below.
2.2    EBITDA Payout Factor.
2.2.1    The “EBITDA Payout Factor” shall be equal to the average of the Annual EBITDA Payout Factors determined for each of the two fiscal years of the Performance Period.  The “Annual EBITDA Payout Factor” for each fiscal year shall be determined under the table below based on the EBITDA Improvement for the fiscal year; provided, however, that if the Adjusted Operating Income for any fiscal year is less than $0, the “Annual EBITDA Payout Factor” for that fiscal year shall be 0%.
	
					
	Fiscal 2014
	 
	Fiscal 2015
	 
	Annual EBITDA

	EBITDA Improvement
	 
	EBITDA Improvement
	 
	Payout Factor

	Less than 0.0%
	 
	Less than 0.0%
	 
	0

	0.0%
	 
	0.0%
	 
	50%

	14.4%
	 
	2.7%
	 
	75%

	24.4%
	 
	5.3%
	 
	100%

	34.4%
	 
	8.0%
	 
	125%

	46% or more
	 
	10.6% or more
	 
	200%

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If the EBITDA Improvement for any fiscal year is between any two data points set forth in the applicable column of the above table for that fiscal year, the Annual EBITDA Payout Factor shall be determined by interpolation between the corresponding data points in the third column of the table as follows:  the difference between the EBITDA Improvement and the lower data point shall be divided by the difference between the higher data point and the lower data point, the resulting fraction shall be multiplied by the difference between the two corresponding data points in the third column of the table, and the resulting product shall be added to the lower corresponding data point in the third column of the table, with the resulting sum being the Annual EBITDA Payout Factor.
2.2.2    The “EBITDA Improvement” for any fiscal year shall be calculated by subtracting the Adjusted EBITDA for the immediately preceding fiscal year from the Adjusted EBITDA for that fiscal year, dividing the resulting amount by the Adjusted EBITDA for the immediately preceding fiscal year, and then expressing the quotient as a percentage and rounding to the nearest tenth of a percentage point.  “Adjusted EBITDA” for any fiscal year shall mean the sum of the Company’s operating income for that fiscal year and the Company’s depreciation and amortization for that fiscal year, in each case as set forth in the audited consolidated financial statements of the Company and its subsidiaries for that fiscal year, and as adjusted in accordance with Section 2.4 below.
2.2.3    The “Adjusted Operating Income” for any fiscal year shall mean the Company’s operating income for that fiscal year as set forth in the audited consolidated financial statements of the Company and its subsidiaries for that fiscal year, and as adjusted in accordance with Section 2.4 below.
2.3    ROE Payout Factor.
2.3.1    The “ROE Payout Factor” shall be equal to the average of the Annual ROE Payout Factors determined for each of the two fiscal years of the Performance Period.  The “Annual ROE Payout Factor” for each fiscal year shall be determined under the table below based on the ROE Improvement for the fiscal year; provided, however, that if the Adjusted ROE for any fiscal year is less than 0%, the “Annual ROE Payout Factor” for that fiscal year shall be 0%.
    
	
					
	Fiscal 2015
	 
	Fiscal 2015
	 
	Annual ROE

	ROE Improvement
	 
	EBITDA Improvement
	 
	Payout Factor

	Less than 0.0%
	 
	Less than 0.0%
	 
	0%

	0.0%
	 
	0.0%
	 
	50%

	0.7%
	 
	0.2%
	 
	75%

	1.4%
	 
	0.5%
	 
	100%

	2.0%
	 
	8.0%
	 
	125%

	2.7% or more
	 
	1.0% or more
	 
	200%

2

If the ROE Improvement for any fiscal year is between any two data points set forth in the applicable column of the above table for that fiscal year, the Annual ROE Payout Factor shall be determined by interpolation between the corresponding data points in the third column of the table as follows:  the difference between the ROE Improvement and the lower data point shall be divided by the difference between the higher data point and the lower data point, the resulting fraction shall be multiplied by the difference between the two corresponding data points in the third column of the table, and the resulting product shall be added to the lower corresponding data point in the third column of the table, with the resulting sum being the Annual ROE Payout Factor.
2.3.2    The “ROE Improvement” for any fiscal year shall be equal to the Adjusted ROE for that fiscal year minus the Adjusted ROE for the immediately preceding fiscal year.  “Adjusted ROE” for any fiscal year shall be equal to Adjusted Net Income for that fiscal year divided by Average Adjusted Shareholders’ Equity for that fiscal year, expressed as a percentage and rounded to the nearest hundredth of a percentage point.  “Adjusted Net Income” for any fiscal year shall mean the net income (loss) attributable to SSI for that fiscal year as set forth in the audited consolidated statement of operations of the Company and its subsidiaries for the fiscal year, and as adjusted in accordance with Section 2.4 below.  “Average Adjusted Shareholders’ Equity” for any fiscal year shall mean the average of five (5) numbers consisting of the Adjusted Shareholders’ Equity as of the last day of the fiscal year and as of the last day of the four preceding fiscal quarters.  “Adjusted Shareholders’ Equity” as of any date shall mean the total SSI shareholders’ equity as set forth in the consolidated balance sheet of the Company and its subsidiaries as of the applicable date, and as adjusted in accordance with Section 2.4 below.
2.4    Adjustments.
2.4.1    Change in Accounting Principle.  If the Company implements a change in accounting principle during the three-year period from September 1, 2012 to August 31, 2015 (the “the Measurement Period”) either as a result of issuance of new accounting standards or otherwise, and the effect of the accounting change was not reflected in the Company’s business plan at the time of approval of this award, then the Adjusted EBITDA, Adjusted Operating Income, Adjusted Net Income and Adjusted Shareholders’ Equity for each affected period shall be adjusted to eliminate the impact of the change in accounting principle.
2.4.2    Restructuring Charges.  Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income for each fiscal year during the Measurement Period shall be adjusted to eliminate the impact of any restructuring charges incurred by the Company during the Measurement Period.
2.4.3    Impairments.  Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income for each fiscal year during the Measurement Period, and Adjusted Shareholders’ Equity as of each quarter end during the Measurement Period, shall be adjusted to eliminate the impact of any charges taken by the Company during the Measurement Period for impairment of goodwill or other intangible assets.
2.4.4    Discontinued Operations.  Adjusted Net Income for each fiscal year during the Measurement Period shall be adjusted to eliminate any profit or loss reported in the Company’s financial statements as discontinued operations and any gain or loss from the disposition 

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of a Company subsidiary, all or substantially all of the assets of a Company subsidiary or a division, or any material amount of assets of the Company or a Company subsidiary.
2.4.5    Portland Harbor Accruals and Expenses.  Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income for each fiscal year during the Measurement Period, and Adjusted Shareholders’ Equity as of each quarter end during the Measurement Period, shall be adjusted to eliminate the impact of any changes in environmental liabilities recorded during the Measurement Period in connection with the Portland Harbor Superfund Site investigation and remediation costs and natural resource damage claims (“Portland Harbor Accruals”).  Adjusted EBITDA, Adjusted Operating Income and Adjusted Net Income for each fiscal year during the Measurement Period shall also be adjusted to eliminate any fees, costs and expenses incurred in connection with the Portland Harbor Superfund Site (net of any insurance or other reimbursements thereof and excluding Portland Harbor Accruals).
2.4.6    Inventory Adjustments.  Adjusted EBITDA and Adjusted Operating Income for each fiscal year during the Measurement Period (but not Adjusted Net Income) shall be adjusted to eliminate the impact of any charges taken by the Company during the Measurement Period to reduce the recorded value of any inventories to net realizable value.
2.4.7    Tax Impacts.  All adjustments to Adjusted Net Income for the items listed in Sections 2.4.1 to 2.4.5 in any fiscal year shall be net of income taxes based on the Company’s consolidated effective tax rate for the fiscal year.
3.    Employment Condition.
3.1    Full Payout.  In order to receive the full number of Performance Shares determined under Section 2, Recipient must be employed by the Company on the October 31 immediately following the end of the Performance Period (the “Vesting Date”).  For purposes of Sections 3 and 4, all references to the “Company” shall include the Company and its subsidiaries.
3.2    Retirement; Termination Without Cause After 12 Months.  If Recipient’s employment with the Company is terminated at any time prior to the Vesting Date because of retirement (as defined in paragraph 6(a)(iv)(D) of the Plan), or if Recipient’s employment is terminated by the Company without Cause (as defined below) after the end of the 12th month of the Performance Period and prior to the Vesting Date, Recipient shall, subject to Section 4.1, be entitled to receive a pro-rated award to be paid following completion of the Performance Period.  The number of Performance Shares to be issued as a pro-rated award under this Section 3.2 shall be determined by multiplying the number of Performance Shares determined under Section 2 by a fraction, the numerator of which is the number of days Recipient was employed by the Company since the beginning of the Performance Period and the denominator of which is the number of days in the period from the beginning of the Performance Period to the Vesting Date.  Any obligation of the Company to issue a pro-rated award under this Section 3.2 shall be subject to and conditioned upon the execution and delivery by Recipient no later than the Vesting Date of a Release of Claims in such form as may be requested by the Company.  For purposes of this Section 3.2, “Cause” shall mean (a) the conviction (including a plea of guilty or nolo contendere) of Recipient of a felony involving theft or moral turpitude or relating to the business of the Company, other than a felony predicated on Recipient's vicarious liability, (b) Recipient’s continued failure or refusal to perform 

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with reasonable competence and in good faith any of the lawful duties assigned by (or any lawful directions of) the Company that are commensurate with Recipient’s position with the Company (not resulting from any illness, sickness or physical or mental incapacity), which continues after the Company has given notice thereof (and a reasonable opportunity to cure) to Recipient, (c) deception, fraud, misrepresentation or dishonesty by Recipient in connection with Recipient’s employment with the Company, (d) any incident materially compromising Recipient’s reputation or ability to represent the Company with the public, (e) any willful misconduct by Recipient that substantially impairs the Company’s business or reputation, or (f) any other willful misconduct by Recipient that is clearly inconsistent with Recipient’s position or responsibilities.
3.3    Death or Disability.  If Recipient’s employment with the Company is terminated at any time prior to the Vesting Date because of death or disability, Recipient shall be entitled to receive a pro-rated award to be paid as soon as reasonably practicable following such event.  The term “disability” means a medically determinable physical or mental condition of Recipient resulting from bodily injury, disease, or mental disorder which is likely to continue for the remainder of Recipient’s life and which renders Recipient incapable of performing the job assigned to Recipient by the Company or any substantially equivalent replacement job.  For purposes of calculating the pro-rated award under this Section 3.3, the EBITDA Payout Factor and the ROE Payout Factor shall both be calculated as if the Performance Period ended on the last day of the Company’s most recently completed fiscal quarter prior to the date of death or disability.  For this purpose, the Adjusted EBITDA and Adjusted Operating Income for any partial fiscal year shall both be annualized (e.g., multiplied by 4/3 if the partial period is three quarters) before determining the Annual EBITDA Payout Factor for that fiscal year, and the EBITDA Payout Factor shall be determined by averaging however many full and partial fiscal years for which an Annual EBITDA Payout Factor shall have been determined.  Also for this purpose, the Adjusted Net Income for any partial fiscal year shall be annualized and the Average Adjusted Shareholders’ Equity shall be determined based on the average of Adjusted Shareholders’ Equity as of the last day of only those quarters that have been completed, before determining the Annual ROE Payout Factor for that partial fiscal year, and the ROE Payout Factor shall be determined by averaging however many full and partial fiscal years for which an Annual ROE Payout Factor shall have been determined.  The number of Performance Shares to be issued as a pro-rated award under this Section 3.3 shall be determined by multiplying the number of Performance Shares determined after applying the modifications described in the preceding sentences by a fraction, the numerator of which is the number of days Recipient was employed by the Company since the beginning of the Performance Period and the denominator of which is the number of days in the period from the beginning of the Performance Period to the Vesting Date.

3.4    Other Terminations.  If Recipient’s employment by the Company is terminated at any time prior to the Vesting Date and neither Section 3.2 nor Section 3.3 applies to such termination, Recipient shall not be entitled to receive any Performance Shares.
4.    Non-Competition.
4.1    Consequences of Violation.  If the Company determines that Recipient has engaged in an action prohibited by Section 4.2 below, then:

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4.1.1    Recipient shall immediately forfeit all rights under this Agreement to receive any unissued Performance Shares; and
4.1.2    If Performance Shares were issued to Recipient following completion of the Performance Period, and the Company’s determination of a violation occurs on or before the first anniversary of the Vesting Date, Recipient shall repay to the Company (a) the number of shares of Common Stock issued to Recipient under this Agreement (the “Forfeited Shares”), plus (b) the amount of cash equal to the withholding taxes paid by withholding shares of Common Stock from Recipient as provided in Section 7.  If any Forfeited Shares are sold by Recipient prior to the Company’s demand for repayment, Recipient shall repay to the Company 100% of the proceeds of such sale or sales.  The Company may, in its sole discretion, reduce the amount to be repaid by Recipient to take into account the tax consequences of such repayment for Recipient.
4.2    Prohibited Actions.  The consequences described in Section 4.1 shall apply if during Recipient’s employment with the Company, or at any time during the period of one year following termination of such employment, Recipient, directly or indirectly, owns, manages, controls, or participates in the ownership, management or control of, or is employed by, consults for, or is connected in any manner with:
4.2.1    if Recipient is, or was at the time of termination of employment, employed by the Company’s Steel Manufacturing Business (“SMB”), any business that (a) is engaged in the steel manufacturing business, (b) produces any of the same steel products as SMB, and (c) competes with SMB for sales to customers in California, Oregon, Washington, Nevada, British Columbia or Alberta;
4.2.2    if Recipient is, or was at the time of termination of employment, employed by the Company’s Metals Recycling Business (“MRB”), any business that (a) is engaged in the metals recycling business, and (b) operates a metal recycling collection or processing facility within 75 miles of any of MRB’s metal recycling facilities;
4.2.3    if Recipient is, or was at the time of termination of employment, employed by the Company’s Auto Parts Business (“APB”), any business that (a) is engaged in the self-service used auto parts business, and (b) operates a self-service used auto parts store within 75 miles of any of APB’s stores; or
4.2.4    if Recipient is, or was at the time of termination of employment, employed in the Company’s Corporate Shared Services Division, any business that is described in Section 4.2.1, Section 4.2.2 or Section 4.2.3.
5.    Company Sale.
5.1    If a Company Sale (as defined below) occurs before the Vesting Date, Recipient shall be entitled to receive an award payout no later than the earlier of fifteen (15) days following such event or the last day on which the Performance Shares could be issued so that Recipient may participate as a shareholder in receiving proceeds from the Company Sale.  The amount of the award payout under this Section 5.1 shall be the amount determined using a Payout Factor equal to the greater of (a) 100%, or (b) the Payout Factor calculated as if the Performance 

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Period ended on the last day of the Company’s most recently completed fiscal quarter prior to the date of the Company Sale.  For this purpose, the Adjusted EBITDA and Adjusted Operating Income for any partial fiscal year shall both be annualized (e.g., multiplied by 4/3 if the partial period is three quarters) before determining the Annual EBITDA Payout Factor for that fiscal year, and the EBITDA Payout Factor shall be determined by averaging however many full and partial fiscal years for which an Annual EBITDA Payout Factor shall have been determined.  Also for this purpose, the Adjusted Net Income for any partial fiscal year shall be annualized and the Average Adjusted Shareholders’ Equity shall be determined based on the average of Adjusted Shareholders’ Equity as of the last day of only those quarters that have been completed, before determining the Annual ROE Payout Factor for that partial fiscal year, and the ROE Payout Factor shall be determined by averaging however many full and partial fiscal years for which an Annual ROE Payout Factor shall have been determined.
5.2    For purposes of this Agreement, a “Company Sale” shall mean the occurrence of any of the following events:
5.2.1    any consolidation, merger or plan of share exchange involving the Company (a “Merger”) in which the Company is not the continuing or surviving corporation or pursuant to which outstanding shares of Class A Common Stock would be converted into cash, other securities or other property; or
5.2.2    any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, the assets of the Company.
6.    Certification and Payment.  As soon as practicable following the completion of the audit of the Company’s consolidated financial statements for the final fiscal year of the Performance Period, the Company shall calculate the Payout Factor and the corresponding number of Performance Shares issuable to Recipient.  This calculation shall be submitted to the Committee.  No later than the Vesting Date the Committee shall certify in writing (which may consist of approved minutes of a Committee meeting) the levels of EBITDA Improvement and ROE Improvement attained by the Company for the Performance Period and the number of Performance Shares issuable to Recipient based on such performance.  Subject to applicable tax withholding, the number of Performance Shares so certified shall be issued to Recipient as soon as practicable following the Vesting Date, but no Performance Shares shall be issued prior to certification.  No fractional shares shall be issued and the number of Performance Shares deliverable shall be rounded to the nearest whole share.  In the event of the death or disability of Recipient as described in Section 3.3 or a Company Sale as described in Section 5, each of which requires an award payout earlier than the Vesting Date, a similar calculation and certification process shall be followed within the time frames required by those sections.
7.    Tax Withholding.  Recipient acknowledges that, on the date the Performance Shares are issued to Recipient (the “Payment Date”), the Value (as defined below) on that date of the Performance Shares will be treated as ordinary compensation income for federal and state income and FICA tax purposes, and that the Company will be required to withhold taxes on these income amounts.  To satisfy the required minimum withholding amount, the Company shall withhold the number of Performance Shares having a Value equal to the minimum withholding amount.  For 

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purposes of this Section 7, the “Value” of a Performance Share shall be equal to the closing market price for Class A Common Stock on the last trading day preceding the Payment Date.
8.    Changes in Capital Structure.  If the outstanding Class A Common Stock of the Company is hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any stock split, combination of shares or dividend payable in shares, recapitalization or reclassification, appropriate adjustment shall be made by the Committee in the number and kind of shares subject to this Agreement so that the Recipient’s proportionate interest before and after the occurrence of the event is maintained.
9.    Approvals. The obligations of the Company under this Agreement are subject to the approval of state, federal or foreign authorities or agencies with jurisdiction in the matter.  The Company will use its reasonable best efforts to take steps required by state, federal or foreign law or applicable regulations, including rules and regulations of the Securities and Exchange Commission and any stock exchange on which the Company’s shares may then be listed, in connection with the award evidenced by this Agreement.  The foregoing notwithstanding, the Company shall not be obligated to deliver Class A Common Stock under this Agreement if such delivery would violate or result in a violation of applicable state or federal securities laws.
10.    No Right to Employment.  Nothing contained in this Agreement shall confer upon Recipient any right to be employed by the Company or to continue to provide services to the Company or to interfere in any way with the right of the Company to terminate Recipient’s services at any time for any reason, with or without cause.
11.    Miscellaneous.
11.1    Entire Agreement.  This Agreement constitutes the entire agreement of the parties with regard to the subjects hereof.
11.2    Notices.  Any notice required or permitted under this Agreement shall be in writing and shall be deemed sufficient when delivered personally to the party to whom it is addressed or when deposited into the United States Mail as registered or certified mail, return receipt requested, postage prepaid, addressed to the Company, Attention: Corporate Secretary, at its principal executive offices or to Recipient at the address of Recipient in the Company’s records, or at such other address as such party may designate by ten (10) days’ advance written notice to the other party.
11.3    Assignment; Rights and Benefits.  Recipient shall not assign this Agreement or any rights hereunder to any other party or parties without the prior written consent of the Company.  The rights and benefits of this Agreement shall inure to the benefit of and be enforceable by the Company’s successors and assigns and, subject to the foregoing restriction on assignment, be binding upon Recipient’s heirs, executors, administrators, successors and assigns.
11.4    Further Action.  The parties agree to execute such instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.
11.5    Applicable Law; Attorneys’ Fees.  The terms and conditions of this Agreement shall be governed by the laws of the State of Oregon.  In the event either party institutes 

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litigation hereunder, the prevailing party shall be entitled to reasonable attorneys’ fees to be set by the trial court and, upon any appeal, the appellate court.
11.6    Severability.  Each provision of this Agreement will be treated as a separate and independent clause and unenforceability of any one clause will in no way impact the enforceability of any other clause.  Should any of the provisions of this Agreement be found to be unreasonable or invalid by a court of competent jurisdiction, such provision will be enforceable to the maximum extent enforceable by the law of that jurisdiction.
	
			
	 
	SCHNITZER STEEL INDUSTRIES, INC.

	 
	 
	 

	 
	By:
	 

	 
	 
	Richard C. Josephson

	 
	 
	 

	 
	Title:
	Senior Vice President

9PLT 09.30.2013 EX 10.1

EMPLOYMENT AGREEMENT FOR AN INDEFINITE PERIOD

THE UNDERSIGNED:

PLANTRONICS B.V., having its offices at Southpoint, Building C, Scorpius 140 2132 LR in Hoofddorp, the Netherlands, hereinafter referred to as “the Employer”,

And

Mr Philip Vanhoutte, who resides at [                                                                                                 ], hereinafter referred to as “the Executive”;

WHEREAS:

		
	a)
	The Executive has been employed by Plantronics Limited as Managing Director (“statutair directeur”) as of 22 September 2003;

		
	b)
	The Executive has been appointed as Managing Director of the Employer by Shareholders’ resolution in accordance with the Articles of Association of the Employer effective as of 13 September 2013. The Executive has accepted this appointment;

		
	c)
	The Employer wishes to enter in a new employment agreement with the Executive as from 13 September 2013 in order to fully outline all current employment conditions;

		
	d)
	The earlier years of service with Plantronics Limited will be taken into account and the length of service will therefore remain the same.

AGREE AS FOLLOWS:

Article 1:    Commencement, Duration, and Termination

		
	1.
	The employment shall commence on 13 September 2013 for an indefinite period. However, previous period of employment with Plantronics Limited as of 22 September 2003, will count as continuous employment. 

		
	2.
	The employment agreement can be terminated by either party, with due observance of the statutory notice period, six months for the Executive (equalling twelve months for the Employer) effective as per the end of the calendar month.  Notice may be given in writing only. 

		
	3.
	The Employer and the Executive have agreed in advance that the Executive envisages having this employment agreement ended further to prior notice of termination being given by the Executive and effective on the first day of the month in which the Executive reaches the age of 65. In default of such notice by the Executive or other agreement between the parties, this employment agreement will in any case end without any prior notice of termination being required on the day that the Executive reaches the age on which on the basis of the General Old Age Pensions Act ("AOW") the right to Dutch state pension ("AOW-pensioen") rises and every change in legislation with regard to the Dutch state pension age extends to and is applicable to this provision.  

Article 2:    Position

		
	1. 
	Within the framework of this employment, the Executive will hold the position of Managing Director (“statutair directeur”) of the Employer in charge of, inter alia, Europe and Africa and he will provide Director Services to the Employer within Europe and Africa.

		
	2. 
	The Executive shall carry out his duties to the best of his ability and with due observance of the obligations  imposed by law, by the Articles of Association of the Employer and in any board regulation as such regulation will apply from time to time.

  
		
	3. 
	The aforementioned duties may be changed by the Employer upon kindly prior notice to the Executive. The Executive agrees to devote his best efforts, attention and abilities to the business and the affairs of the Employer. The Executive shall at all times, observe the best interests of the Employer and its affiliated group companies. 

		
	4. 
	The Executive covenants that he shall also perform duties other than the ones which are considered his usual duties if such performance may be reasonably expected from him.

		
	5. 
	Absent the Employer’s prior written consent, the Executive shall not perform any other work whether paid or unpaid during his employment term, nor shall he, alone or with others, directly or indirectly, establish or conduct a business which directly competes with the Employer’s business, whatever its form, or take any financial interest in or perform work gratuitously or for remuneration for such a business.

Article 3:    Working hours and work place

		
	1. 
	The Executive shall carry out the work during 40 hours a week, but is willing to carry out work beyond the number of working hours set if such is required on the basis of his duties.     

		
	2. 
	The Executive shall not be entitled to receive any additional remuneration for work outside the normal working hours and acknowledges that the salary is sufficient and full compensation for the performance of all his duties and activities. The salary and other allowances as mentioned in this employment agreement for that reason include all payments for the performance of the duties and activities of the Executive.

		
	3. 
	The Executive shall perform his work at the Employer's establishment in Hoofddorp.  The Employer shall be entitled to relocate the work place, if the Employer’s interest so require. The Parties recognise that the position of the Executive under this agreement requires working and/or (extensive) travelling abroad. 

Article 4:    Salary

		
	1
	The Executive shall receive a gross annual salary of €261.600,-

		
	2
	This is made up of annual base salary of €242.222,16,- paid in 12 monthly instalments of €20.185,18 and a holiday allowance of 8% €19.377,77] paid as one lump sum payment in the month of May

		
	3
	If the Executive performed work during only a part of the year, the holiday allowance shall be calculated and paid proportionately.

Article 5:    Holiday

		
	1
	The Executive shall be entitled to 25 days holiday a year, which the Executive shall take in consultation with and after approval by the Employer.

		
	2
	The right to holiday shall proportionally accrue to the duration of employment within the current year.

		
	3
	In principle, holidays must be taken in the same calendar year in which they accrue. 

Article 6:    Health insurance

		
	1.
	Plantronics has a Company Health Insurance currently administered by Avero. Executives are required to join the Company Health Insurance plan upon commencement of employment.  Further detail can be obtained from the HR department. 

		
	2.
	In the case of another health insurance, the inclusion date to join the collective health insurance shall be the earliest of the commencement of employment or the first expiration date of the own health insurance.  In that event, the Employer will reimburse the cost of insurance to the level of the collective health insurance.

		
	3.
	If the Executive will not join the Company Health Insurance he will get a refund for the basic insurance only up to the cost of €368.36,-/year.

Article 7:    Illness and incapacity for work

		
	1
	If the Executive is ill or unable to perform work for any other reason, he shall be obliged to inform the Employer of illness before 9:30a.m on the first day of absence.

		
	2
	If the Executive is unable to perform his work as a result of illness, he shall remain entitled to 100% of his last earned salary during the first 52 weeks of the 104 week period referred to in Section 7:629 subsection Dutch Civil Code.  During the last 52 weeks of said period the Employer shall, in accordance with Section 7:629 subsection 1 DCC, continue to pay 70% of the Executive’s last earned gross monthly salary (up to 70% of the maximum daily wage), unless the illness was caused intentionally by him/her or ensued from an infirmity in respect of which he intentionally gave the Employer false information when he entered in the employment agreement, in the event he causes an obstruction of or delay in the recovery process, or if the Executive despite being able to do so - refuses to perform other suitable work for his own Employer or - with approval of the Social Security Institution - for another employer.

		
	3
	Paragraph 7.2, however, only applies if and to the extent that pursuant to the requirements of Section 7:629 paragraph 3 up to and including 7, and paragraph 9DCC, the Employer is under the obligation to continue payment of wages in accordance with Section 7:629 DCC. 

		
	4
	Any obligation of the Employer to continue payment of wages in accordance with Section 7:629 DCC shall cease if and when the illness exceeds 104 weeks or if and when this employment agreement is validly terminated, whichever comes first.

		
	5
	In the event of illness for a period, uninterrupted or otherwise, of more than one month, the Executive shall, until he resumes all or part of his work, lose his right to:

		
	•
	expense allowance

		
	•
	travel expense allowance 

		
	6
	The Executive shall strictly comply with the rules and guidelines which have been communicated to him by or on behalf of the Employer.

Article 8:    Pension scheme

		
	1. 
	The Executive is entitled to participate in the Employer’s collective pension plan.  This pension plan is currently administered by ZwitserLeven.  Full details of the plan can be obtained from the HR Department.

Article 9:    Disability Insurance and Director’s & Officer’s insurance

		
	1. 
	The Executive is entitled to participate in the Employer’s collective Disability plan.  This Disability plan is currently administered by Avero.  Full details of the plan can be obtained from the HR Department.

		
	2. 
	The Employer will maintain a Director’s and Officer’s insurance policy, which shall provide coverage for the Executive in his capacity as Managing Director.

Article 10:    Intellectual property

		
	1
	All intellectual property rights including but not limited to patent rights, design rights, copyrights and related rights, database rights and trademark rights, arising from the work performed by the Executive under his employment agreement shall be exclusively and immediately vested in the Employer. The Executive shall not be allowed to independently disclose, multiply, use, manufacture, bring on the market or sell, lease, deliver or otherwise trade, offer on behalf of any third party, or commission the registration of the results of this work.

		
	2
	Insofar as the rights specified hereinafter are not vested in the Employer by operation of law on the grounds of the employment relationship between the parties, the Executive covenants that he shall transfer and insofar as possible, hereby transfers to the Employer any intellectual property rights of any nature in or arising from work performed by the Executive in the discharge of his duties both in the Netherlands and abroad.

		
	3
	The Executive acknowledges that his salary includes reasonable compensation for this waiver of intellectual property rights.

Insofar as the intellectual property rights are not capable of being transferred and insofar permitted by law, the Executive hereby waives any intellectual property rights, including the personal rights that may be waived (such as the right to have one’s name stated).

Article 11:    Confidentiality

		
	1.
	Neither during his/her employment nor upon termination thereof shall the Executive inform any third party in any form, directly or indirectly, of any particulars concerning or related to the business conducted by the Employer or its affiliated companies including but not limited to technical, financial and business information and models, names of potential clients or partners, proposed transactions, reports, plans, market prognoses, computer software, databases, data, technical knowledge or other confidential proprietary information concerning the Employer’s business, which the Executive could reasonably have known were not intended for third parties, regardless of whether such information includes any reference to its confidential nature or ownership, and how the Executive learned of the particulars.

		
	2.
	In addition, the Executive shall not copy, compile, merge, assemble or process information (other than for the benefit of the Employer within the scope of the normal work), products or systems of the Employer or dissemble, reproduce or decompile the source code of the computer software embedded in those products or systems or attempt to deduce the source code of such software in any other manner.

		
	3.
	Any violation of the obligation to maintain confidentiality as set forth in paragraph 1 shall carry a penalty of EUR 25,000 immediately due and payable by the Executive to the Employer, without prejudice to the Employer’s right to claim full damages instead.

		
	Article 12:
	Anti competition clause 

		
	1.
	Within the Europe and Africa region and for a period of one (1) year after the termination of the employment agreement, the Executive shall not, without the prior written consent of the Employer, engage in any activities that compete, directly or indirectly, in any way whatsoever, with the Employer, its customers or a company affiliated to it and the Executive shall not establish, conduct (alone or with others) or cause the conduct of any competing business or take any interest in or be employed in any way whatsoever, whether or not for consideration by such business.

		
	2.
	For a period of 1 (one) year after the termination of the employment agreement, the Executive shall not, without the prior written consent of the Employer, induce employees of the Employer or of a company affiliated with it to terminate their employment agreements, in order to compete in any way whatsoever with the Employer or a company affiliated with it.

		
	3.
	For each violation of any of the prohibitions set forth above, the Executive shall forfeit to the Employer, immediately due and payable, a penalty of EUR 25,000 for each breach and 5,000 for each day that such breach continues, without prejudice to the Employer’s right to claim full damages. The Parties agree that such sums will be donated to a not-for-profit organisation.

		
	4.
	Upon each breach of any of the above prohibitions, the periods stated in paragraphs 1 and 2 will be extended by the duration of the breach.

		
	5. 
	Paragraphs 3, 4 and 5 of Section 7:650 of the Dutch Civil Code do not apply to this employment agreement.

Article 13: Telecommunications, E-mail, the Internet and Software

		
	1.
	In principle, the Executive is allowed to use the Employer’s telecommunication systems including e-mail for business purposes only. The Executive is also entitled to use the telecommunications system for purposes other than business, i.e., to send and receive personal messages both inside and outside the company, provided that such use does not negatively affect his/her daily activities and the applicable social standards are observed.

		
	2.
	The Executive must use the Internet in a sensible manner. He/she is prohibited from visiting, inter alia, pornographic or racist sites. In addition, the Executive may not upload or download unauthorized software from the Internet or other media.

		
	3.
	The Employer may conduct random checks on the Executives’ e-mail and use of the Internet in a proper manner.

		
	4.
	The Executive may not install and/or keep his own software on his personal computer. Computer programs may be installed by the Automation Department only with the approval of that Department.

		
	5.
	Employees who improperly use the e-mail system or the Internet, or who install and/or keep their own software on their personal computers, will be officially warned by the Employer. In the event of subsequent offences, the Employer will be entitled to take disciplinary measures against the employee or employees in question, including terminating the employment agreement.

Article 14: Policies and Procedures

		
	1.     
	Employees are expected to be aware of and comply with all Company policies and procedures.  Failure to do so could be subject to disciplinary procedures.

		
	2.
	In conjunction with this agreement employees are also bound by the terms and conditions contained in Plantronics Employees’ Handbook for the Netherlands.

		
	3.
	On termination of employment the Executive, by signatory of this agreement, hereby gives authorization for Plantronics to access his IT account.  Such access is required to enable Plantronics to continue any outstanding work or project that the terminated Executive may be working on at the time of leaving.

Article 15:  Property

		
	1.
	The Executive acknowledges that all files, customer records, lists, books, records, literature, products and work products developed by him in the course of his employment with the Employer, and other materials owned by the Employer or used by it in connection with the conduct of its business shall at all times remain the sole property of the Employer.

		
	2.
	Upon the termination of the Executive's employment (for whatever reason) the Executive will promptly and without unreasonable delay return to the Employer all documents (including copies or summaries and whether in eye readable or machine readable form), software, hardware, books, office equipment, keys, security passes, credit or charge cards, company car and any other property belonging to the Employer. In any event, the return of company property must take place by no later than any date specified to the Executive at the time by the Employer. The Executive also undertakes to return to the Employer forthwith any such property that may come into his possession or control after the termination of his employment.

		
	3.
	It is the Executive's responsibility to return company property by no later than any date specified by the Employer. The Executive hereby agrees that a failure to do so will entitle the Employer to withhold the whole or any part of any wages due from the Employer to the Executive up to the current market value of the property not returned, i.e. based on the value of the property at the time that it is not returned and not on a replacement cost basis. The Employer also reserves the right to issue civil proceedings against the Executive for breach of agreement and/or trespass to goods to the extent that any outstanding wages withheld do not cover the current market value of the property not returned.

		
	Article 16:
	Governing Law

		
	1.
	The law of the Netherlands shall govern this agreement and any associated appendices/schedules.

		
	2.
	If any Court or other competent authority holds or finds any provision of this Agreement to be void or unenforceable in whole or in part, this Agreement shall continue to be valid as to the other provisions or the unaffected parts.

This Agreement has been drawn up in duplicate originals and signed in Hoofddorp on the following date:

Date.................................................................Date.............................................................

EXECUTIVE......................................................EMPLOYER ..................................................
Philip Vanhoutte

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