Filed by Bowne Pure Compliance






EXHIBIT 10.4




Section 409A Amendment

to the

Applied Industrial Technologies, Inc.

1997 Long-Term Performance Plan

(As Amended April 18, 2007)




WHEREAS, the Applied Industrial Technologies, Inc. 1997 Long-Term Performance Plan (the
“Plan”) was established by Applied Industrial Technologies, Inc. (the “Company”) to foster and
promote the long-term growth and performance of the Company by providing long-term
performance-related incentives to key management employees and outside directors; and



WHEREAS, pursuant to the provisions of Section 11 of the Plan, the Board of Directors of the
Company (the “Board”) or the Executive Organization and Compensation Committee of the Board (the
“Committee”) may, subject to certain restrictions, amend the Plan to address any changes in the
law; and



WHEREAS, subject to the restrictions set forth in said Section 11, the Committee has deemed it
appropriate and necessary to amend the Plan in certain respects in order to comply with the
provisions of Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”);



NOW, THEREFORE, the Plan is hereby amended effective January 1, 2005 with respect to Awards
granted on and after said date, in the respects hereinafter set forth.



1. Section 2 of the Plan is hereby amended by the addition of the definitions of “Retirement”,
“Section 409A”, “Separation from Service” and “Specified Employee” as paragraphs (k), (l), (m), and
(n), respectively, at the end thereof to provide as follows:




(k) “Retirement” — Any Separation from Service at or after attainment of age
65, or after attainment of age 55 and the completion of at least 10 years of
employment with the Company.




(l) “Section 409A” — Section 409A of the Code as well as regulations and
guidance issued thereunder.




(m) “Separation from Service” — The termination of employment of an employee
with the Company; provided, however, that an approved leave of absence shall not be
considered a termination of employment if the leave does not exceed six months or,
if longer, so long as the employee’s right to reemployment is provided by statute or
by contract. Whether an employee has incurred a Separation from Service shall be
determined in accordance with Section 409A.




(n) “Specified Employee” — A “specified employee” within the meaning of
Section 409A.


 


 









 





2. Section 8 of the Plan is hereby amended to provide as follows:




8. Payment of Awards




Payment of Awards may be made in the form of cash, Common Shares or
combinations thereof and may include such restrictions as the Committee
shall determine, including in the case of Common Shares, restrictions on
transfer and forfeiture provisions. When transfer of shares is so
restricted or subject to forfeiture provisions, such shares are referred
herein as “Restricted Stock.” Further, with Committee approval, payments
may be deferred, either in the form of installments or a future lump sum
payment. The Committee may permit selected Participants to elect to defer
payments of some or all types of Awards (except Options and SARs) in
accordance with procedures established by the Committee to assure that any
such deferral complies with applicable requirements of the Code, in
particular, Section 409A, including, at the choice of Participants, the
capability to make further deferrals for payment after Retirement. Any
deferred payment, whether elected by the Participant or specified by the
Award Agreement or by the Committee, may require the payment to be forfeited
in accordance with the provisions of Section 13 of the Plan. Dividends or
dividend equivalent rights may be extended to and made part of any Award
denominated in shares or units of Common Shares, subject to such terms,
conditions and restrictions as the Committee may establish; provided
dividends or dividend equivalents shall not be extended to or made part of
Options or SARs, unless the right to such dividends or dividend equivalents
is not contingent, directly or indirectly, upon the exercise of the Option
or SAR. The Committee may also establish rules and procedures for the
crediting of interest on deferred cash payments and dividend equivalents for
deferred payments denominated in Common Shares or units of Common Shares.
At the discretion of the Committee which shall take into consideration the
requirements of Section 409A, a Participant may be offered an election to
substitute an Award for another Award or Awards of the same or different
type; provided that Awards may not be made to substitute for previously
granted Stock Options having higher exercise prices. Notwithstanding the
foregoing, (i) any Award that is not nonqualified deferred compensation
within the meaning of Section 409A shall not have any feature that would
allow for the deferral of compensation (within the meaning of Section 409A),
other than the deferral of recognition of income until the exercise of such
Award and (ii) any Award that is nonqualified deferred compensation within
the meaning of Section 409A shall permit the deferral thereof only in a
manner that meets the requirements of, and complies with, Section 409A. If,
at any time, it is determined that any Award is taxable to a Participant
under Section 409A, the Award, or portion thereof, which becomes so taxable
shall be distributed to such Participant.


 


 









 





3. Section 11 of the Plan is hereby amended by the addition of a sentence at the end thereof
to provide as follows:




Notwithstanding the foregoing, the Board or the Committee shall consider the
requirements of Section 409A in making any such amendment.




4. Section 12 of the Plan is hereby amended to provide as follows:




12. Termination of Employment




If a Participant incurs a Separation from Service for any reason, all
unexercised, deferred and unpaid Awards shall be exercisable or paid in
accordance with the applicable Award Agreement, which may provide that the
Committee may authorize, as it deems appropriate, the acceleration and/or
continuation of all or any part of Awards granted prior to such Separation
from Service; provided that the Committee shall consider the requirements of
Section 409A when making any such authorization.




5. The second sentence of Section 13(a) is hereby amended to provide as follows:




For Participants who incur a Separation from Service, the decision of the
Chief Executive Officer shall be based on the Participant’s position and
responsibilities while employed by the Company, the Participant’s
post-employment responsibilities and position with the other organization or
business, the extent of past, current and potential competition or conflict
between the Company and the other organization or business, the effect on
the Company’s customers, suppliers and competitors of the Participant’s
assuming the post-employment position, and such other considerations as are
deemed relevant given the applicable facts and circumstances.



6. The introductory paragraph of Section 16 (b) of the Plan is hereby amended to provide as
follows:




(b) A “Change in Control” of the Company with respect to Awards that do
not constitute nonqualified deferred compensation within the meaning of
Section 409A shall have occurred when any of the following events shall
occur:



7. Section 16 of the Plan is hereby amended by the addition of paragraph (c) at the end
thereof to provide as follows:




(c) A “Change in Control” of the Company with respect to Awards that
constitute nonqualified deferred compensation within the meaning of Section
409A shall mean a change in the ownership or effective control of the
Company or a change in the ownership of a substantial portion of the assets
of the Company that constitutes a “change in control” under Section 409A.


 


 









 





8. Section 22 of the Plan is hereby renumbered as Section 23 and a new Section 22 of the Plan
is hereby added to provide as follows:




22. Section 409A




To the extent applicable, the Company intends that the Plan comply with
Section 409A and the Plan shall be construed in a manner to comply with
Section 409A with respect to Awards granted after December 31, 2004. Awards
granted prior to January 1, 2005, shall be governed by the terms of the Plan
in effect at the time of such grant. In the event that any provision be
found not in compliance with Section 409A, the Participant shall be
contractually obligated to execute any and all amendments to Awards deemed
necessary and required by legal counsel for the Company to achieve
compliance with Section 409A. By acceptance of an Award, Participants
irrevocably waive any objections they may have to the amendments required by
Section 409A. Participants also agree that in no event shall any payment
required to be made pursuant to the Plan that is considered “nonqualified
deferred compensation” within the meaning of Section 409A be accelerated in
violation of Section 409A. In the event that a Participant is a Specified
Employee, payments that are deemed to be nonqualified deferred compensation
shall not be distributed, or begin to be distributed, until the first day of
the seventh month following such Participant’s Separation from Service. The
amount of the first payment shall include the accumulated amount of the
payments, if any, that would otherwise have been made during the first six
months but for the fact that the Participant is a Specified Employee.
Although the Company shall use its best efforts to avoid the imposition of
taxation, penalties, and/or interest under Section 409A, tax treatment of
Awards is not warranted or guaranteed. The Company, the Board, any
Affiliate or any delegate shall not be held liable for any taxes, penalties,
interest or other monetary amounts owed by any Participant with respect to
any Award.



Approved by the Executive Organization and Compensation Committee on October 21, 2008.