Document:

EX-10.04

 Exhibit 10.04 
 

 
 Restricted Stock Units Terms and Conditions 

1. Award of Restricted Stock Units. The Executive Organization & Compensation Committee (the “Committee”) of
the Board of Directors of Applied Industrial Technologies, Inc. (“Applied”) on the Grant Date awarded you a certain number of restricted stock units (the “RSUs”). Such award represents your right to receive an equal number of
shares of Applied common stock (“Shares”), issuable from Applied’s available treasury shares, upon the expiration of the Restriction Period (as defined in Section 3 hereof). The terms and conditions of the RSUs as set forth
herein (the “Terms”) together with the Applied Industrial Technologies, Inc. 2007 Long-Term Performance Plan (the “Plan”) govern your rights with respect to the RSUs. Notwithstanding the foregoing, however, in the event of any
conflict between the provisions of the Plan and the Terms, the provisions of the Plan shall govern. Moreover, it should be noted that unless otherwise provided herein, capitalized words in the Terms shall have the same meanings as set forth in the
Plan. 
 2. Rights during Restriction Period. You shall not have the right to sell, exchange, transfer, pledge,
hypothecate, or otherwise encumber or dispose of the RSUs until all conditions with respect to vesting and distribution have been met. Nevertheless, during the Restriction Period and so long as no forfeiture has occurred, you shall be entitled to
receive cash payments equal to the dividends and cash distributions paid on Shares underlying the RSUs (“Dividend Equivalents”) to the same extent and on the same date as if each RSU were a Share; provided, however, that no Dividend
Equivalents shall be payable to you with respect to dividends or distributions the record date for which occurs on or after (i) the date on which a forfeiture of the RSUs has occurred, (ii) the date on which the Restriction Period has
expired, or (iii) the date on which issuance of Shares to you has occurred. You shall not have voting rights with respect to the RSUs and, until the issuance of Shares in settlement of the RSUs, you shall not be treated as a shareholder with
respect to the Shares. 
 3. Restriction Period. The term “Restriction Period” means the
period from the Grant Date until the 3rd anniversary of
the Grant Date. 
 4. Vesting. Except as specifically provided otherwise in Sections 5 and 6, you will be 100% vested in
the RSUs as of the end of the Restriction Period; provided, however, that in the event you incur a Separation from Service during the Restriction Period after attaining age 55 and completing at least ten years of service with Applied, you will be
vested at the end of the Restriction Period in a pro rata portion of the RSUs equal to a fraction the numerator of which is the number of fiscal quarters (including a portion of a quarter) elapsed in the Restriction Period prior to the date of such
Separation from Service and the denominator of which is twelve. 
 5. Separation from Service. Notwithstanding the
provisions of Section 4, but subject to the provisions of paragraphs (a) and (b) hereunder, if, during the Restriction Period, you incur a Separation from Service (as defined in Section 409A) from Applied due to death or
Disability (as defined under Section 409A) then (i) you (or your beneficiary designated to Applied in writing) shall be vested in a pro rata portion of the RSUs equal to a fraction the numerator of which is the number of fiscal quarters
(including a portion of a quarter) elapsed in the Restriction Period prior to the date of such Separation 

 
from Service and the denominator of which is twelve, and (ii) the remaining RSUs shall be deemed forfeited. In the event, however, that you, during the Restriction Period, incur a Separation
from Service from Applied for any reason other than (i) those specifically set forth above or in Section 6, or (ii) termination after attaining age 55 and completing at least ten years of service with Applied, then the entire award of
RSUs shall be forfeited and no amount shall be due or payable to you under the Terms. 
 Because awards of RSUs are intended to
create an incentive for recipients to act in Applied’s best interests, notwithstanding anything in the Terms to the contrary: 
 (a) Your award of RSUs may be terminated or rescinded, and if applicable, you may be required immediately to repay all Shares (and any dividends, distributions, and Dividend Equivalents thereon) issued
pursuant to the award of RSUs hereunder within the previous six months (or any proceeds thereof), if the Committee determines, in good faith, that during your employment with Applied or during the period ending six months following the your
Separation from Service, you committed an act inimical to Applied’s interests. Acts inimical to Applied’s interest shall include willful inattention to duty; willful violation of Applied’s published policies; acts of fraud or
dishonesty involving Applied’s business; solicitation of Applied’s employees, customers, or vendors to terminate or alter their relationship with Applied to Applied’s detriment; unauthorized use or disclosure of information regarding
Applied’s business, employees, customers, or vendors; and competition with Applied. All determinations by the Committee shall be effective as of the time of your act. 
 (b) The Committee may, in its sole discretion, require you immediately to repay all Shares (and any dividends, distributions, and Dividend Equivalents thereon) issued pursuant to the award of RSUs
hereunder within the previous 36 months (or any proceeds thereof) if (I) Applied restates its historical consolidated financial statements and (II) the Committee determines, in good faith, that (x) the restatement is a result of your, or
another executive officer’s, willful misconduct that is unethical or illegal, and (y) your earnings pursuant to the award were based on materially inaccurate financial statements or materially inaccurate performance metrics that were
invalidated by the restatement. 
 6. Change in Control. Notwithstanding the provisions of Sections 4 and 5, in the event
your employment with Applied is terminated during the Restriction Period and within the three-year period immediately following any Change in Control of Applied either by you for “Good Reason” or by Applied “Without Cause”, then
all of the RSUs awarded hereunder to you shall be 100% vested. 
 For purposes of the RSUs, “Cause” shall mean
(i) the willful and continued failure by you to perform substantially your duties with Applied or one of its affiliates (other than for disability or Good Reason), after a written demand for substantial performance is delivered to you by the
Board or the Chief Executive Officer of Applied which specifically identifies the manner in which the Board or Chief Executive Officer believes that you have not substantially performed your duties, or (ii) the willful engagement by you in
illegal conduct or gross misconduct involving moral turpitude that is materially and demonstrably injurious to Applied; provided, however, that no act or failure to act shall be considered “willful” unless it is done, or omitted to
be done, in bad faith or without your reasonable belief that such action or omission was in the best interests of Applied. Any act, or failure to act, based upon authority given you pursuant to a resolution duly adopted by the Board or upon the
instructions of the Chief Executive Officer or a senior officer of Applied or based upon the advice of counsel for Applied shall be conclusively presumed to be done, or omitted to be done, in good faith and in the best interests of Applied.
Termination of your employment with Applied shall not be deemed to be for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to you and you are given an opportunity, 

 
together with counsel, to be heard before the Board), finding that, in the good faith opinion of the Board, you are guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail. 
 For purposes of the RSUs, “Good Reason” shall mean a separation
from service that occurs no later than two years after (i) a material diminution in your authority, duties, or responsibilities, (ii) a material diminution in the authority, duties, or responsibilities of the person to whom you reported
immediately prior to a Change in Control, (iii) a material diminution by Applied of your annual base salary that was provided to you by Applied immediately prior to the Change in Control, (iv) a material change in the geographic location
where you provide service to Applied, or (v) any failure of any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Applied, by agreement in form
and substance satisfactory to you, to expressly assume and agree to comply with these Terms in the same manner and to the same extent that Applied would be required to perform it if no such succession had taken place; provided further, that,
Good Reason shall not have occurred unless you give Applied notice within 90 days of the initial existence of the condition claimed by you in good faith to constitute Good Reason and Applied has at least 30 days in which to remedy the
condition. 
 Notwithstanding the definition in the Plan, a “Change in Control” of Applied shall have occurred for
purposes of the RSUs (to the extent the RSUs do not constitute nonqualified deferred compensation within the meaning of Section 409A) when any of the following events shall occur: 

(i) Applied is merged, consolidated or reorganized into or with another corporation or other legal person, and immediately after such
merger, consolidation or reorganization less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such transaction are held in the aggregate by the holders of Voting Stock
(as that term is hereafter defined) of Applied immediately prior to such transaction; 
 (ii) Applied sells all or
substantially all of its assets to any other corporation or other legal person, and, immediately after such sale, less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after
such sale are held in the aggregate by the holders of Voting Stock of Applied immediately prior to such sale; 
 (iii) There
is a report filed or required to be filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
disclosing that any person (as the term “person” is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the term “beneficial owner” is defined under Rule 13d-3 or
any successor rule or regulation promulgated under the Exchange Act) of securities representing 30% or more of the combined voting power of the then-outstanding securities entitled to vote generally in the election of directors of Applied
(“Voting Stock”); 
 (iv) Applied files a report or proxy statement with the Securities and Exchange Commission
pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of Applied has occurred pursuant to any then-existing contract or transaction;
or 
 (v) If during any period of two consecutive years, individuals who at the beginning of any such period constitute the
directors of Applied cease for any reason to constitute at least a majority thereof, provided, however, that for purposes of this clause (v), each director 

 
who is first elected, or first nominated for election by Applied’s stockholders by a vote of at least two-thirds of the directors of Applied (or a committee thereof) then still in office who
were directors of Applied at the beginning of any such period will be deemed to have been a director of Applied at the beginning of such period. 
 Notwithstanding the foregoing provisions of (iii) or (iv) hereof, unless otherwise determined in a specific case by majority vote of the Board, a “Change in Control” shall not be
deemed to have occurred for purposes of this Award solely because (i) Applied, (ii) an entity in which Applied directly or indirectly beneficially owns 50% or more of the voting securities or interest, or (iii) any Applied-sponsored
employee stock ownership plan or any other employee benefit plan of Applied, either files or becomes obligated to file a report or a proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or
any successor schedule, form or report or item therein) under the Exchange Act, disclosing beneficial ownership by it of shares of Voting Stock, whether in excess of 30% or otherwise, or because Applied reports that a change in control of Applied
has occurred or will occur in the future by reason of such beneficial ownership. 
 In addition, following a Change in Control
of Applied, no provision hereof shall operate to reduce any time frame or to limit any economic benefit to which you are entitled with respect to the RSUs or under the Plan. 
 To the extent the RSUs constitute nonqualified deferred compensation within the meaning of Section 409A, a “Change in Control” of Applied shall mean a change in the ownership or effective
control of Applied or a change in the ownership of a substantial portion of the assets of Applied that constitutes a “change in control” under Section 409A. 
 In addition, to the extent the RSUs are subject to Section 409A, Shares will be issued and distributed to you within 90 calendar days after vesting; provided that if such 90-day period begins in one
calendar year and ends in another, you shall not have the right to designate the calendar year of payment. Notwithstanding the foregoing, if you are a Specified Employee, a distribution due to a separation from service may not be made until the
30-day period commencing with the first day of the seventh month following such Separation from Service or, if earlier, the date of your death, except in each case as may be otherwise permitted under Section 409A. 

7. Adjustment of RSUs for Certain Events. In the event of a stock split, stock dividend, combination, reclassification,
recapitalization, merger, consolidation, exchange, spin-off, spin-out, or other distribution of assets to shareholders, or other similar event or change in capitalization such that shares of Applied common stock are changed into or become
exchangeable for a different number of shares, thereafter the number of RSUs will be increased or decreased, as the case may be, in direct proportion to the increase or decrease in the number of shares of common stock by reason of such change in
corporate structure; provided, however, that the number of RSUs shall always be a whole number. If there occurs any other change in the number or kind of outstanding shares of common stock or other Applied securities, or of any shares of stock or
other securities into which such shares of common stock shall have been changed or for which they shall have been exchanged, then Applied may adjust the number or kind of RSUs or other securities into which the RSUs may be settled, as the Committee,
in its sole discretion, may determine is equitable, and such adjustment so made shall be effective and binding for all purposes. 
 8. Settlement of Award and Distribution of Shares. Your award of RSUs hereunder shall be settled in whole Shares. Fractional Shares shall not be issuable hereunder and any fractional Share shall be
disregarded. Except as specifically provided otherwise in this Section 8, Shares subject to an award of RSUs hereunder shall only be issued and distributed to you in a single sum of whole

 
Shares within the 75-day period after the end of the Restriction Period. Notwithstanding the foregoing, in the event that your RSUs become vested due to death, Disability or a Change in Control,
the award of RSUs hereunder shall be settled in a single sum of whole Shares within the 75-day period after such vesting. In the event that any such 75-day period begins in one calendar year and ends in another, you (or your beneficiary as the case
may be) shall not have the right to designate the calendar year of payment. Moreover, notwithstanding the foregoing, if you are a Specified Employee, a distribution of Shares may not be made until within the 30-day period commencing with the first
day of the seventh month following the month of any Separation from Service for reasons other than Disability or a Change in Control, or, if earlier, your death, except as maybe otherwise permitted under Section 409A. 

9. Payment of Taxes. Upon the vesting of the RSUs, Applied shall withhold Shares from your award for any federal, state or local
taxes of any kind required by law to be withheld by Applied attributable to the award. 
 10. Section 409A
Compliance. To the extent applicable, it is intended the Terms and the award of RSUs shall comply with or be exempt from the provisions of Section 409A and any interpretations of these terms shall be consistent with such intent. 

11. Administration of the Plan. The Committee shall have conclusive authority, subject to the express provisions of the Plan as in
effect from time to time and the Terms, to construe the Terms and the Plan, and to establish, amend, and rescind rules and regulations for the Plan’s administration. The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Terms in the manner and to the extent it shall deem expedient to carry the Plan into effect, and it shall be the sole and final judge of such expediency. Applied’s Board of Directors (the “Board”) may from time to
time grant to the Committee such further powers and authority as the Board shall determine to be necessary or desirable. Notwithstanding any other provision of these terms, any amendment, construction, establishment, rescission or correction of the
type referred to above which is made or adopted following a Change in Control, and which amendment, construction, establishment or correction adversely affects your rights hereunder, shall be in writing and shall be effective only with your express
and prior written consent . 
 12. Relationship to the Plan. The Terms are subject to the provisions of the Plan and any
administrative policies adopted by the Committee. If there is any inconsistency between the Terms and the Plan or such policies, the Plan and the policies, in that order, shall govern. References in the Terms to Applied shall include Applied’s
subsidiaries. 
 13. Severability. The provisions of the Terms are severable and if any one or more provisions are
determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. 
 14. No Guarantee of Employment. The Terms and your award shall not confer upon you any rights whatsoever other than those expressly set forth herein, in the Plan or in policies adopted by the
Committee. Nothing in the Terms shall (i) interfere with or limit in any way Applied’s right to terminate your employment at any time, (ii) confer upon you any right to continued employment with Applied, or (iii) create any
contractual or other right to receive additional awards or other Plan benefits in the future. 
 15. Requirements of Law.
The granting of the RSUs hereunder shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agency, national securities exchange, or automated quotation system may be required. Notwithstanding any
other provision of the Plan or the Terms, Applied shall not be obligated to issue, deliver or transfer any Shares, make any distribution of benefits under the Plan or the Terms, or take any other action, unless such delivery, distribution, or
action, unless such delivery, distribution, or action is in compliance with all applicable laws, rules and regulations (including, but not limited to, the requirements of the Securities Act and Section 409A). 

 16. Successors. All obligations of Applied under the Terms with respect to the RSUs
shall be binding upon any successor to Applied, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all, or substantially all, of the business and/or assets of Applied.
Notwithstanding the provisions of Section 4, in the event any such successor does not agree to be bound by the Terms, the RSUs granted hereunder shall immediately become vested. 

17. Applicable Law. The validity, construction, interpretation and enforceability of these Terms shall be determined and governed
by the laws of the State of Ohio without giving effect to the principles of conflicts of law. 
 18. Tax Matters. Applied
has made no warranties or representations to you with respect to the tax consequences (including but not limited to income tax consequences) related to the RSUs or the issuance, transfer or disposition of Shares pursuant to the RSUs, and you have
been advised to consult with your attorney, accountant and/or tax advisor regarding the RSUs. Moreover, you acknowledge that Applied has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for you.

 (August 2011)EX-10.05

 Exhibit 10.05 
 

 
 Performance Shares Terms and Conditions 

1. Award of Performance Shares. The Executive Organization & Compensation Committee (the “Committee”) of the
Board of Directors of Applied Industrial Technologies, Inc. (“Applied”) may award Performance Shares (the “Award”) to key senior officers of Applied who have broad policy-making functions and who directly contribute to the
long-term success and profitability of Applied. The Committee has awarded you an Award with an Effective Date. The terms and conditions are set forth herein (the “Terms”) and together with the Applied Industrial Technologies, Inc. 2007
Long-Term Performance Plan (the “Plan”) govern your rights with respect to the Award. Notwithstanding the foregoing, however, in the event of any conflict between the provisions of the Plan and the Terms, the provisions of the Plan shall
govern. Moreover, it should be noted that unless otherwise provided herein, capitalized words in the Terms shall have the same meanings as set forth in the Plan. 
 2. Rights during Performance Period. You shall not have the right to sell, exchange, transfer, pledge, hypothecate, or otherwise encumber your Award until all conditions with respect to vesting and
distribution have been met. Until the issuance of shares of Applied common stock (“Shares”) to you in settlement of your Award has occurred, you shall not be treated as a shareholder with respect to the Shares. 

3. Performance Period. The term “Performance Period” shall mean, for purposes of the Terms, the period from the
Effective Date until the third year anniversary of the Effective Date. 
 4. Vesting. Subject to the provisions of
Section 6, your Award will be 100% vested at the end of the Performance Period, in whole or in part based upon the achievement of the performance goals set by the Committee. 

5. Separation from Service or Termination of Executive Officer Status. If, during the Performance Period, you incur a Separation
from Service (as defined in Section 409A) from Applied due to death or Disability (as defined in Section 409A) or termination after attaining age 55 and completing at least ten years of service with Applied, then, promptly following the
availability of audited financial statements for the final year of the Performance Period, you (or your beneficiary whom you have designated to Applied in writing) shall be entitled to vesting of a portion of the Award based on Applied’s actual
performance relative to the performance goals for the individual years (partial years shall be prorated by quarter, including a portion of a quarter) in the Performance Period that elapsed prior to your Separation from Service. In the event,
however, that during the Performance Period, you incur a Separation from Service from Applied for any reason other than those specifically set forth above or in Section 6 hereof, then your Award will be forfeited and no amount shall be due or
payable to you pursuant to the Award. In addition, if, during the Performance Period, you cease to be a Board-elected executive officer of Applied (but remain an employee of Applied), then your Award shall be forfeited and no amount shall be due or
payable to you pursuant to the Award. 
 Because Awards are intended to create an incentive for recipients to act in
Applied’s best interests, notwithstanding anything in the Terms to the contrary: 

 (a) Your Award may be terminated or rescinded, and if applicable, you may be required
immediately to repay all Shares (and any dividends and distributions thereon) issued pursuant to the Award within the previous six months (or any proceeds thereof), if the Committee determines, in good faith, that during your employment with Applied
or during the period ending six months following your Separation from Service, you have committed an act inimical to Applied’s interests. Acts inimical to Applied’s interest shall include willful inattention to duty; willful violation of
Applied’s published policies; acts of fraud or dishonesty involving Applied’s business; solicitation of Applied’s employees, customers or vendors to terminate or alter their relationship with Applied to Applied’s detriment;
unauthorized use or disclosure of information regarding Applied’s business, employees, customers, and vendors; and competition with Applied. All determinations by the Committee shall be effective at the time of your act. 

(b) The Committee may, in its sole discretion, require you immediately to repay Shares (and any dividends and distributions thereon)
issued pursuant to the Award within the previous 36 months (or any proceeds thereof) if (I) Applied restates its historical consolidated financial statements and (II) the Committee determines, in good faith, that (x) the restatement is a
result of your, or another executive officer’s, willful misconduct that is unethical or illegal, and (y) your earnings pursuant to the Award were based on materially inaccurate financial statements or materially inaccurate performance
metrics that were invalidated by the restatement. 
 6. Change in Control. Notwithstanding the provisions of
Section 4, in the event your employment with Applied is terminated during the Performance Period and following any Change in Control of Applied either by you for “Good Reason” or by Applied “Without Cause,” then you shall be
100% vested and entitled to receive a pro rata amount of Shares under the Award equal to (i) a fraction the numerator of which is the number of fiscal quarters (including a portion of a quarter) elapsed in the Performance Period prior to the
date of the Change in Control and the denominator of which is twelve, multiplied by (ii) your target award amount. 
 For
purposes of this Award, “Cause” shall mean (i) the willful and continued failure by you to perform substantially your duties with Applied or one of its affiliates (other than for disability or Good Reason), after a written demand for
substantial performance is delivered to you by the Board or the Chief Executive Officer of Applied which specifically identifies the manner in which the Board or Chief Executive Officer believes that you have not substantially performed your duties,
or (ii) the willful engagement by you in illegal conduct or gross misconduct involving moral turpitude that is materially and demonstrably injurious to Applied; provided, however, that no act or failure to act shall be considered
“willful” unless it is done, or omitted to be done, in bad faith or without your reasonable belief that such action or omission was in the best interests of Applied. Any act, or failure to act, based upon authority given you pursuant to a
resolution duly adopted by the Board or upon the instructions of the Chief Executive Officer or a senior officer of Applied or based upon the advice of counsel for Applied shall be conclusively presumed to be done, or omitted to be done, in good
faith and in the best interests of Applied. Termination of your employment with Applied shall not be deemed to be for Cause unless and until there shall have been delivered to you a copy of a resolution duly adopted by the affirmative vote of not
less than three-quarters of the entire membership of the Board at a meeting of the Board called and held for such purpose (after reasonable notice is provided to you and you are given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, you are guilty of the conduct described in subparagraph (i) or (ii) above, and specifying the particulars thereof in detail. 

For purposes of this Award, “Good Reason” shall mean a separation from service that occurs no later than two years after
(i) a material diminution in your authority, duties, or responsibilities, (ii) a material diminution in the authority, duties, or responsibilities of the person to whom you reported immediately prior to a Change in Control, (iii) a
material diminution by Applied of your annual base 

 
salary that was provided to you by Applied immediately prior to the Change in Control, (iv) a material change in the geographic location where you provide service to Applied, or (v) any
failure of any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of Applied, by agreement in form and substance satisfactory to you, to expressly assume
and agree to comply with the terms of this award in the same manner and to the same extent that Applied would be required to perform it if no such succession had taken place; provided further, that, Good Reason shall not have occurred unless
you give Applied notice within 90 days of the initial existence of the condition claimed by you in good faith to constitute Good Reason and Applied has at least 30 days in which to remedy the condition. 

Notwithstanding the definition in the Plan, a “Change in Control” of Applied shall have occurred for purposes of this Award
when any of the following events shall occur: 
 (i) Applied is merged, consolidated or reorganized into or with another
corporation or other legal person, and immediately after such merger, consolidation or reorganization less than a majority of the combined voting power of the then-outstanding securities of such corporation or person immediately after such
transaction are held in the aggregate by the holders of Voting Stock (as that term is hereafter defined) of Applied immediately prior to such transaction; 
 (ii) Applied sells all or substantially all of its assets to any other corporation or other legal person, less than a majority of the combined voting power of the then-outstanding securities of such
corporation or person immediately after such sale are held in the aggregate by the holders of Voting Stock of Applied immediately prior to such sale; 
 (iii) There is a report filed or required to be filed on Schedule 13D or Schedule 14D-1 (or any successor schedule, form or report), each as promulgated pursuant to the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), disclosing that any person (as the term “person” is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has become the beneficial owner (as the term
“beneficial owner” is defined under Rule 13d-3 or any successor rule or regulation promulgated under the Exchange Act) of securities representing 30% or more of the combined voting power of the then-outstanding securities entitled to
vote generally in the election of directors of Applied (“Voting Stock”); 
 (iv) Applied files a report or proxy
statement with the Securities and Exchange Commission pursuant to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) that a change in control of Applied has occurred
pursuant to any then-existing contract or transaction; or 
 (v) If during any period of two consecutive years, individuals
who at the beginning of any such period constitute the directors of Applied cease for any reason to constitute at least a majority thereof, provided, however, that for purposes of this clause (v), each director who is first elected, or first
nominated for election by Applied’s stockholders by a vote of at least two-thirds of the directors of Applied (or a committee thereof) then still in office who were directors of Applied at the beginning of any such period will be deemed to have
been a director of Applied at the beginning of such period. 
 Notwithstanding the foregoing provisions of Section (iii) or
(iv) hereof, unless otherwise determined in a specific case by majority vote of the Board, a “Change in Control” shall not be deemed to have occurred for purposes of this Award solely because (i) Applied, (ii) an entity in
which Applied directly or indirectly beneficially owns 50% or more of the voting securities or interest, or (iii) any Applied-sponsored employee stock ownership plan or any other employee benefit plan of Applied, either files or becomes
obligated to file a report or a proxy statement 

 
under or in response to Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any successor schedule, form or report or item therein) under the Exchange Act, disclosing
beneficial ownership by it of shares of Voting Stock, whether in excess of 30% or otherwise, or because Applied reports that a change in control of Applied has occurred or will occur in the future by reason of such beneficial ownership. 

In addition, following a Change in Control of Applied, no provision hereof shall operate to reduce any time frame or to limit any
economic benefit to which you are entitled under this Award or the Plan. 
 To the extent this Award constitutes nonqualified
deferred compensation within the meaning of Section 409A, a “Change in Control” of Applied shall mean a change in the ownership or effective control of Applied or a change in the ownership of a substantial portion of the assets of
Applied that constitutes a “change in control” under Section 409A. In addition, to the extent this Award is subject to Section 409A, if you are a Specified Employee, a distribution due to a Separation from Service may not be made
until the 30-day period commencing with the first day of the seventh month following such Separation from Service or, if earlier, the date of your death, except in each case as may be otherwise permitted under Section 409A. 

7. Settlement of Award. Your Award shall be settled, based upon achieved performance goals, in Shares. Except as specifically
provided otherwise in this Section 7, any Shares payable with respect to your Award shall be settled within the 75-day period after the end of the Performance Period. Notwithstanding the foregoing, in the event that your Award becomes vested
due to a Change in Control, your Award shall be settled in Shares within the 75-day period after such vesting. In the event that any such 75-day period begins in one calendar year and ends in another, you shall not have the right to designate the
calendar year of payment. Moreover, notwithstanding the foregoing, if you are a Specified Employee, a distribution of Shares, but only to the extent that such distribution is deemed to be deferred compensation under Section 409A, may not be
made until within the 30-day period commencing with the first day of the seventh month following the month of any Separation from Service for reasons other than Change in Control, or if earlier, your death, except as may be otherwise permitted under
Section 409A. 
 8. Payments of Taxes. Upon the vesting of the Award, Applied shall withhold Shares from your award
for any federal, state or local taxes of any kind required by law to be withheld by Applied attributable to the Award. 
 9.
Discretionary Adjustment Following Certain Events. In the event that, during the Performance Period, Applied merges, consolidates, sells or acquires a substantial amount of assets, issues a substantial amount of its capital stock, reorganizes,
or engages in any other transaction or series of transactions, the Committee, in its sole discretion, may change the performance goals upon which the vesting of your Award is conditioned, in order to prevent diminution or enlargement of the benefits
intended to be conferred by the Award in such manner as the Committee may determine is equitably required by the changes or events. In the event (a) of a stock dividend or stock split or (b) Shares are changed into or exchanged for a
different number or kind of securities of Applied or another entity, then the target Award opportunity shall be equitably adjusted. In the event other changes or events relating to the Shares fundamentally change the value of the Shares, then the
Committee may make, in its sole discretion, such adjustments in the terms of the Award as the Committee may determine is equitably required by the change or event. 
 10. Limitation on Rights. The Award shall not confer upon you any rights whatsoever other than those expressly set forth herein, in the Plan or in policies adopted by the Committee, including
without limitation any rights as a shareholder in respect of Shares that may become issuable pursuant to the Award until and unless Applied has issued a certificate or certificates for the Shares. Nothing in the Terms shall (i) interfere with
or limit in any way Applied’s right to terminate your employment at any 

 
time, (ii) confer upon you any right to continued employment with Applied, or (iii) create any contractual or other right to receive additional awards or other Plan benefits in the
future. 
 11. Nonassignability. The Award and the rights granted thereunder are not assignable or transferable, in whole
or in part, and may not be otherwise disposed of by you, other than by will or by the laws of descent and distribution. 

12. Section 409A Compliance. It is intended that payments under the Award are “short-term deferrals” (as is defined
under Section 409A) and, therefore, exempted from coverage under Section 409A, and any interpretations of these Terms shall be consistent with this intent. Notwithstanding such intention, in the event that the Terms, or any portion
thereof, and the Award, or any portion thereof, shall be deemed to be governed by Section 409A, such Terms and Award, or portion thereof, shall be interpreted, to the extent applicable, as complying with the provisions of Section 409A.

 13. Committee Authority. The Committee shall have conclusive authority, subject to the express provisions of the Plan
as in effect from time to time and the Terms, to construe the Terms and the Plan, to establish, amend and rescind rules and regulations relating to the Plan, and to make all other determinations in the Committee’s judgment necessary or
desirable for the Plan’s administration. The Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or the Terms in the manner and to the extent it deems expedient to carry the Plan into effect.
Notwithstanding any provisions hereof, the Terms and the Award shall be subject to all of the Plan’s provisions in effect from time to time, which are incorporated herein by reference. 

14. Relationship to the Plan. The Terms are subject to the provisions of the Plan and any administrative policies adopted by the
Committee. If there is any inconsistency between the Terms and the Plan or such policies, the Plan and the policies, in that order, shall govern. Reference in the Terms to Applied shall include Applied’s subsidiaries. 

15. Severability. The provisions of the Terms are severable and if any one or more provisions are determined to be illegal or
otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. 
 16.
Requirements of Law. The granting of the Award hereunder shall be subject to all applicable laws, rules and regulations, and to such approvals by any governmental agency, national securities exchange, or automated quotation system as may be
required. Notwithstanding any other provision of the Plan or the Terms, Applied shall not be obligated to issue, deliver or transfer any Shares, make any distribution of benefits under the Plan or the Terms, or take any other action, unless such
delivery, distribution, or action, unless such delivery, distribution, or action is in compliance with all applicable laws, rules and regulations (including, but not limited to, the requirements of the Securities Act and Section 409A).

 17. Successors. All obligations of Applied under the Terms with respect to the Award shall be binding upon any
successor to Applied, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all, or substantially all, of the business and/or assets of Applied. Notwithstanding the provisions
of Section 4, in the event any such successor does not agree to be bound by the Terms, the Award granted hereunder shall immediately become vested. 
 18. Applicable Law. The validity, construction, interpretation and enforceability of these terms and conditions shall be determined and governed by the laws of the State of Ohio without giving
effect to the principles of conflicts of law. 
 19. Tax Matters. Applied has made no warranties or representations to
you with respect to the tax consequences (including but not limited to income tax consequences) related to the Award or the 

 
issuance, transfer or disposition of Shares pursuant to the Award, and you have been advised to consult with your attorney, accountant and/or tax advisor regarding this Award. Moreover, you
acknowledge that Applied has no responsibility to take or refrain from taking any actions in order to achieve a certain tax result for you. 
 (August 2011)

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