I.POSITION

P.O. Box 58039

Santa Clara, CA 95052-8039

    

You may be eligible to receive certain severance payments and benefits if Applied terminates your employment other than for “cause” and other than due to your death or disability, as described below. In addition, as CEO, you will be eligible to participate in any severance plans or programs that Applied may establish in the future and that apply to you as a senior executive of Applied.

(i)Cash Severance. If Applied terminates your employment for a reason other than “cause” and other than due to your death or disability, you will receive a lump sum cash payment

equal to 275% of your then-current annual base salary (the “Severance Benefits”), subject to the requirements under subsection (ii) below.

(ii)Release Agreement. In order to receive the Severance Benefits, you must sign and not revoke a release of claims, non-solicitation and non‑disparagement agreement in a form supplied by Applied (the “Release Agreement”) and the Release Agreement must become effective within 60 days after your employment termination date (the “Release Deadline Date”). You will not receive any of the Severance Benefits if the Release Agreement does not become effective by the Release Deadline Date. If you become entitled to receive the Severance Benefits, then subject to any further delay required under the Section 409A provisions below, the Severance Benefits will be provided to you on the 61^st day following your employment termination date.

(iii)Cause Definition. For purposes of this letter, “cause” means: (a) your continued willful failure to perform your duties to Applied (other than any such failure resulting from your incapacity due to physical or mental illness) after written notice thereof (specifying the particulars thereof in reasonable detail) and a reasonable opportunity to be heard and cure such failure are given to you by the Board or its committee; (b) the willful commission by you of a wrongful act that caused or was reasonably likely to cause substantial damage to Applied, or an act of fraud in the performance of your duties on behalf of Applied; (c) your conviction for the commission of a felony in connection with the performance of your duties on behalf of Applied; or (d) the order of a federal or state regulatory authority having jurisdiction over Applied or its operations or by a court of competent jurisdiction requiring the termination of your employment by Applied.

(i)General. It is the intent of the parties that all severance and other payments and benefits under this letter comply with or are exempt from Section 409A, and any ambiguities in this letter will be interpreted in that manner. For all purposes of this letter, to the extent required to be exempt from or comply with Section 409A, references to your “termination of employment” or similar phrases will be references to your “separation from service” within the meaning of Section 409A.

(ii)Required Delay. If and to the extent it is necessary to avoid subjecting you to an additional tax under Section 409A, payment of all or a portion of the termination-related payments or benefits described in this letter or otherwise will be delayed until the date that is six months and one day following your employment termination. However, in the event that your death occurs after your employment termination but prior to the six month anniversary of your employment termination, any payments and/or benefits delayed under the prior sentence will be payable to you in a lump sum as soon as administratively practicable after the date of your death and any other separation pay and/or benefits will be payable according to the payment schedule applicable to each payment. In addition, each payment and benefit payable under this letter is intended to be a separate payment for purposes of the Section 409A-related Treasury Regulations. You and Applied agree to work together in good faith to consider amendments to this letter and to take reasonable actions to avoid subjecting you to an additional tax or income recognition under Section 409A before actual payment of the payments and benefits under this letter, as applicable. In all cases, Applied will not reimburse you for any taxes that may be imposed on you as a result of Section 409A.

(iii)Section 409A Definition. For purposes of this letter, “Section 409A” will mean Section 409A of the Internal Revenue Code of 1986, as amended, and any regulations and other guidance promulgated thereunder and any applicable state law equivalent.

Applied has the right to withhold from any payments or benefits under this letter all applicable federal, state and local taxes required to be withheld and any other required payroll deductions.

You agree that, during the term of your employment with Applied, you will devote your full business efforts and time to Applied and you will not engage in any other employment, occupation, consulting or other business activity for any direct or indirect remuneration without the Board’s prior approval and you will not engage in any other activities that conflict with your obligations to Applied. If you serve on the board of directors of any other company or entity, please provide us with a list of such companies or entities; if the list you have previously provided remains accurate, there is no need for you to provide an updated list at this time. If the Board determines that such companies or entities are competitors, customers or suppliers of

Applied or your service on such board otherwise may represent a conflict of interest with your obligations to Applied, you will be required to resign your directorship with such companies or entities at the Board’s request.

Signature: /s/ Gary Dickerson