EXHIBIT 10
Performance Grant Terms and Conditions
          Your Performance Grant (the “Award”) is made by Applied Industrial
Technologies, Inc., an Ohio corporation (“Applied”). The Award is governed by
Applied’s 1997 Long-Term Performance Plan (the “Plan”), including the policies
adopted by the Executive Organization & Compensation Committee of Applied’s
Board of Directors (the “Committee”) under the Plan, and is subject to the
following terms and conditions:
1.        Eligibility. Only key senior officers that have broad policy-making
functions that directly contribute to Applied’s long-term success and
profitability are eligible to receive Awards.
2.        Vesting; Payment. Your Award will vest, in whole or in part, three
years following the effective grant date of your Award (the “Performance
Period”) upon the achievement of the performance goals set forth in the
Performance Grant Summary enclosed with these Terms and Conditions. Your Award
will be payable, at the Committee’s discretion, in cash or shares (“Shares”) of
Applied’s common stock (or both). The Committee may determine the form of
payment of your Award at any time during or at the conclusion of the Performance
Period. Shares used in payment of the Award shall be valued at their Fair Market
Value (as defined in the Plan) as of the last day of the Performance Period.
Applied shall make payment of any amount due to you under the Award promptly
following the availability of audited financial statements for the final year of
the Performance Period. Applied may withhold from the amount payable to you
under your Award any amounts it deems necessary pursuant to federal, state or
local tax laws, including withholding requirements.
3.        Termination of Employment or Executive Officer Status. If, during the
Performance Period, you incur a separation from service from Applied due to
death, permanent and total disability, or retirement in accordance with an
established retirement policy of Applied, then, at the end of the Performance
Period, you (or your beneficiary whom you have designated to Applied in writing)
shall be entitled to receive a pro rata payment 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
your separation from service and the denominator of which is twelve, multiplied
by (ii) what would have been your actual Award based on the achievement of the
performance goals set forth in the Performance Grant Summary. If, 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 4 hereof,
then your Award will be forfeited and no amount shall be due or payable to you
pursuant to the Award. Also, if, during the Performance Period, you cease to be
a Board-elected executive officer of Applied (but remain an employee), then your
Award shall be forfeited and no amount shall be due or payable to you pursuant
to the Award.
          Notwithstanding anything in these terms and conditions, the Committee
may terminate the Award and no amount shall be due or payable to you pursuant to
the Award, if the Committee determines, in its sole discretion, that you have
committed an act inimical to Applied’s interests, including, without limitation,
your unauthorized disclosure of proprietary or confidential information of
Applied, your competition with Applied, or your solicitation of Applied
associates. The Committee’s determination shall be effective as of the time of
your act.
4.        Change in Control. Upon a Change in Control, your Award shall vest and
you shall be entitled to receive in full satisfaction of all amounts due or
which may become due under the Award, a pro rata

 

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payment 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.
5.        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 right to
continued employment with Applied (or its affiliates) or any rights as a
shareholder in respect of any of the Shares that may become issuable pursuant to
the Award until and unless Applied has issued a certificate or certificates for
the Shares.
6.        Restrictions on Shares. Applied may require, as a condition to its
issuance and delivery of certificates for Shares issuable under the Award, the
delivery to Applied of a commitment in writing by you that (i) at the time of
issuance, it is your intention to acquire the Shares for your own account for
investment only and not with a view to, or for resale in connection with, the
distribution thereof; (ii) you understand that the Shares may be “restricted
securities” as defined in Rule 144 issued under the Securities Act of 1933, as
amended (the “Act”); and (iii) any resale, transfer or other disposition of the
Shares will be accomplished only in compliance with Rule 144, the Act, or other
or subsequent rules and regulations thereunder. Applied may place on the
certificates a legend reflecting that commitment and Applied may refuse to
permit transfer of the certificates until it has been furnished evidence
satisfactory to it that no violation of the Act or the rules and regulations
thereunder would be involved in the transfer.
7.        Discretionary Adjustment Following Merger, Sale of Assets; Stock
Issuance, Etc. 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.
8.        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.
9.        Committee Authority. The Committee shall have authority, subject to
the Plan’s express provisions, to construe these Terms and Conditions 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 these Terms
and Conditions in the manner and to the extent it deems expedient to carry the
Plan into effect. All Committee action under this Section’s provisions shall be
conclusive for all purposes.
10.        Relationship to the Plan. In the event of any inconsistency between
these Terms and Conditions and the Plan or the Committee’s policies, the Plan or
the policies shall govern. Terms not otherwise defined in these Terms and
Conditions have the meaning ascribed them in the Plan. Notwithstanding any
provisions hereof, these terms and conditions 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.
(September 2007)