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                                                                   EXHIBIT 10(b)

                     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 the 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 Performance Award grants.

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, your employment with Applied is terminated due to death,
permanent 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 termination 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 cease to be an
employee of 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 will 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.

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4.    CHANGE IN CONTROL. Upon a Change in Control (as defined in the Plan), 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 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 shall deem 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.

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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.

                                                                  (January 2002)