Document:

EX-10.2 2005 EQUITY INCENTIVE PLAN

 

Exhibit 10.2

INTERCONTINENTALEXCHANGE, INC.

2005 EQUITY INCENTIVE PLAN

     1. Purpose. The purpose of the Plan is to provide an incentive to attract, retain and
reward individuals performing services for the Company and to motivate such individuals to
contribute to the growth and profitability of the Company.

     The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock
Appreciation Rights, Restricted Stock, and Restricted Stock Units.

     2. Administration.

     (a) Powers of the Administrator. The Plan shall be administered by the Administrator.
Subject to Applicable Laws and the provisions of the Plan, the Administrator shall have all powers
and discretion necessary or appropriate to administer the Plan, including, but not limited to, the
power to (i) select the persons to be granted Awards under this Plan, (ii) to determine the number
of shares subject to each Award, (iii) to determine the exercise price or purchase price of each
Award, (iv) to set the terms and conditions of each Award, (v) to determine whether Awards will be
settled in Shares, cash or in any combination thereof, (v) to adopt such rules and procedures as it
deems necessary or appropriate for the administration, interpretation and application of the Plan,
and (vi) to determine all other matters relating to administration and operation of the Plan. The
terms and conditions of each Option includes whether an Option should be an ISO or an NSO. All
questions of interpretation, implementation, and application of the Plan shall be determined by the
Administrator in its sole discretion. Such determinations shall be final and binding on all
persons, and shall be given the maximum deference permitted by law. All determinations of the
Administrator shall be made by a majority of its members either present in person or participating
by conference telephone at a meeting or by written consent. No member of the Board or the
Committee that acts as Administrator shall be liable for any act or omission on such member’s own
part, including but not limited to, the exercise of any power or discretion given to such member
under the Plan, except for those acts or omissions resulting from such member’s own gross
negligence or willful misconduct.

     (b) Section 409A of the Code. The Administrator may only grant those Awards that
either comply with the applicable requirements of Section 409A of the Code, or do not result in the
deferral of compensation within the meaning of Section 409A of the Code.

     3. Shares Subject to the Plan.

     (a) Number of Shares. The maximum number of Shares that may be issued under the Plan
is 2,125,000 (prior to November 21, 2005, 8,500,000), subject to limited re-issuance as indicated
below. This limit is subject to adjustment as provided in Section 3(c). The Shares may be
authorized, but unissued Shares, or reacquired Shares. Shares shall not be deemed to have been
issued pursuant to the Plan with respect to any portion of an Award that is settled in cash. Upon
payment in Shares pursuant to the exercise or settlement of an Award, the number of Shares
available for issuance under the Plan shall be reduced only by the number of Shares actually issued
in such payment.

 

 

     (b) Lapsed Awards. If an Option or SAR expires, is surrendered, or becomes
unexercisable without having been exercised in full, or if any unissued Shares are retained by the
Corporation upon exercise of an Option or SAR in order to satisfy the exercise price or any
withholding taxes due with respect to such exercise, the unissued or retained Shares shall become
available for future grant under the Plan (unless the Plan has terminated). If unvested Shares are
forfeited (repurchased by the Corporation at their original purchase price), such Shares shall also
become available for future grant under the Plan, but the total number of such forfeited Shares
that become available may not exceed twice the maximum number set forth above (subject to
adjustment as provided in Section 3(c)). Other Shares that actually have been issued under the
Plan pursuant to an Award shall not be returned to the Plan and shall not become available for
future grant under the Plan. Upon the exercise of any Award granted in tandem with any other
Award, such related Award shall be cancelled to the extent of the number of Shares as to which the
Award is exercised and, notwithstanding the foregoing, such number of Shares shall no longer be
available for Awards under the Plan.

     (c) Adjustments in Awards and Authorized Shares. In the event of any merger,
consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split,
separation, liquidation or other change in the corporate structure or capitalization affecting the
Shares, appropriate adjustment shall be made by the Administrator in the kind, exercise price (or
purchase price, as applicable), and number of Shares (including, but not limited to, the maximum
number of Shares reserved under the Plan) that are or may become subject to Awards granted or to be
granted under the Plan; provided, however, any adjustment to an outstanding Option or SAR shall
comply with Section 424 of the Code. The determination by the Administrator as to the terms of any
of the foregoing adjustments shall be conclusive and binding on all persons.

     (d) Limitations.

          (i) Subject to adjustment as provided in Section 3(c), not more than an aggregate of 2,125,000
(prior to November 21, 2005, 8,500,000) Shares may be issued under ISOs.

          (ii) Effective on or after the Listing Date, subject to adjustment as provided in Section 3(c)
above, the maximum number of Shares with respect to which Options or SARs, or a combination
thereof, may be granted during any calendar year to any individual Grantee shall be 250,000 (prior
to November 21, 2005, 1,000,000), and the maximum number of Shares with respect to which Restricted
Stock or RSUs, or a combination thereof, may be granted during any calendar year to any individual
Grantee shall be 125,000 (prior to November 21, 2005, 500,000). For persons hired on or after
adoption of the Plan by the Board, these limits can be increased to 500,000 (prior to November 21,
2005, 2,000,000) Shares with respect to which Options or SARs may be granted, and 250,000 (prior to
November 21, 2005, 1,000,000) Shares with respect to Restricted Stock or RSUs may be granted during
any calendar year. These limitations shall be applied and construed consistently with Section
162(m) of the Code.

     4. Eligibility. The Administrator may grant an Award to any natural person (or any
other person if the securities law requirements are met) who is an employee, consultant, or
director of the Company, as selected in the sole discretion of the Administrator.

-2-

 

     5. Stock Options.

     (a) Grant of Options. Subject to the terms and conditions of the Plan, the
Administrator, at any time and from time to time, may grant Options. Each Option granted under the
Plan shall be authorized by action of the Administrator and shall be evidenced by an Award
Agreement.

     (b) ISOs or NSOs. Options granted under the Plan shall be designated by the
Administrator as either ISOs or NSOs. The Company does not represent or warrant that an Option
intended to be an ISO qualifies as such. To the extent that the aggregate Fair Market Value
(determined as of the date the Option is granted) of the Shares with respect to which ISOs are
exercisable for the first time by any individual during any calendar year (under all plans of the
Company) exceeds one-hundred thousand dollars ($100,000), the Option shall be treated as an NSO.
If an ISO is exercised more than three (3) months after the date on which Grantee ceases to be an
employee (other than by reason of death or Disability), the Option will be treated as an NSO, and
not an ISO, as required by Section 422 of the Code.

     (c) Option Exercise Price. The exercise price for the Shares to be issued pursuant to
the exercise of an Option shall be determined by the Administrator; provided,
however, in the case of an ISO, and an NSO intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, the per Share exercise price shall
be not less than one hundred percent (100%) of the Fair Market Value of a Share on the date of
grant.

     (d) Time of Exercise. An Option shall become exercisable as specified in the Award
Agreement. An Option shall not be exercisable after the 10th anniversary of the date of
grant.

     (e) Vesting.

          (i) Shares shall become vested as specified in the Award Agreement. Vesting may be immediate
or deferred. Vesting may be time-based or performance-based. Shares acquired on exercise of an
Option shall first be attributable to vested Shares, then unvested Shares. Shares shall cease to
vest at the time of termination of Service.

          (ii) Shares acquired under the Plan that have not vested may be repurchased by the Corporation
at the lesser of the original exercise price or the Shares’ Fair Market Value if the Grantee’s
Service with the Company is terminated for any reason or no reason, with or without Cause. The
Corporation may assign any unvested Share repurchase right it may have, whether or not then
exercisable, to such person or persons as may be selected by the Corporation. The Corporation may
require the Grantee to place certificates for any unvested Shares in escrow under reasonable terms
established by the Administrator.

          (iii) Upon the occurrence of a Change in Control, the unvested Share repurchase right shall
lapse to the same extent as Options become exercisable pursuant to Section 8.

          (iv) The unvested Share repurchase right may be exercised by written notice to Grantee within
90 days after termination of Grantee’s Service (or exercise of the Option, if later). If notice is
not given within such 90-day period, the repurchase option shall terminate unless the

-3-

 

parties have extended the time for its exercise. Cash payment (or cancellation of purchase
money indebtedness) must be made by the thirtieth (30th) day after the date of the
written notice to Grantee of the exercise of the repurchase right.

     (f) Special Rules for 10% Owners. The exercise price of an ISO granted to an
individual who owns stock possessing more than ten percent (10%) of the combined voting power of
all classes of stock of the Corporation shall not be less than one hundred ten percent (110%) of
the fair market value of a Share on the date of grant. No ISO granted to an individual who owns
stock possessing more than ten percent (10%) of the total combined voting power of all classes of
stock shall be exercisable after the expiration of five (5) years from the date of grant. For
purposes of determining whether an employee owns stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock, an employee shall be considered as owning
the stock owned, directly or indirectly, by or for his or her brothers and sisters (whether by the
whole or half blood), spouse, ancestors, and lineal descendants. Stock owned, directly or
indirectly, by or for a corporation, partnership, estate, or trust shall be considered as being
owned proportionately by or for its stockholders, partners, or beneficiaries. Stock with respect
to which the employee holds an Option shall not be counted.

     (g) Payment of Exercise Price. The exercise price for Shares purchased under an
Option shall be paid in full by delivery of consideration equal to the product of the Option
exercise price and the number of Shares purchased. Subject to Applicable Laws, in the sole
discretion of the Administrator, payment of any Option’s exercise price may be made in cash, by
check or cash equivalent, or as provided otherwise in this section, partly or wholly.

          (i) By Tender of Stock. If the exercise occurs on or after the Listing Date, payment
may be made by tender to the Corporation of Shares owned by Grantee or delivery of a properly
executed form of attestation of ownership of Shares as the Administrator may require (including
withholding of Shares otherwise deliverable upon exercise of the Option), which have a Fair Market
Value on the date of tender or attestation equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised. Unless otherwise allowed under the Award Agreement, an
Option may not be exercised by tender to the Corporation of Shares or attestation unless such
Shares (i) have been owned by Grantee for more than six (6) months (or any shorter period necessary
to avoid a charge to the Corporation’s earnings for financial reporting purposes), (ii) were not
acquired, directly or indirectly, from the Corporation or (iii) are to pay required taxes as
described in Section 11(n).

          (ii) By Cashless Exercise. If the exercise occurs on or after the Listing Date, and
to the extent not prohibited by Section 402 of the Sarbanes-Oxley Act of 2002, by delivery of a
properly executed exercise notice, together with irrevocable instructions, to

               (a) a brokerage firm designated by the Corporation to deliver promptly to the Corporation the
aggregate amount of sale or loan proceeds to pay the Option exercise price and any withholding tax
obligations that may arise in connection with the exercise and

               (b) the Corporation to deliver the certificates for such purchased shares directly to such
brokerage firm, all in accordance with the regulations of the Federal Reserve Board.

-4-

 

         (iii) Such other medium as the Administrator determines, in its sole discretion.

     (h) Exercise of Option. Any Option granted hereunder shall be exercisable according
to the terms of the Plan and at such times and under such conditions as determined by the
Administrator and set forth in the Award Agreement. An Option will be deemed exercised when the
Corporation receives: (i) written notice from the Grantee to the Corporation at the address
specified in the Award Agreement, and (ii) full payment for the Shares with respect to which the
Option is exercised (together with any applicable withholding taxes). After receiving proper
notice of exercise and payment, the Corporation shall issue Shares as evidenced by issuing a
certificate(s) for the Shares purchased or by the appropriate entry on the books of the Corporation
or of a duly authorized transfer agent of the Corporation. Until the Shares are issued (as
evidenced as described in preceding sentence), no right to vote or to receive dividends or any
other rights as a stockholder shall exist with respect to the awarded stock, notwithstanding the
exercise of the Option. The Corporation will issue such Shares as soon as practicable after
exercise.

     (i) Termination of Option.

         (1) Termination of Service. If a Grantee’s Service terminates, his or her rights to
exercise an Option then held shall be limited. Grantee’s Service shall not be deemed to have
terminated merely because of a change in the capacity in which Grantee renders Service or a change
in the Company, provided that there is no interruption or termination of Grantee’s employment or
service. Grantee’s Service with the Company shall be treated as continuing intact while the
Grantee is on military leave, sick leave, or other bona fide leave of absence (such as temporary
employment by the government) approved by the Company if the period of such leave does not exceed
three (3) months, or, if longer, so long as the Grantee’s right to reemployment with the
Corporation is provided either by statute or by contract. Where the period of leave exceeds three
(3) months and where the Grantee’s right to reemployment is not provided either by statute or by
contract, Service will be deemed to have terminated on the first day immediately following such
three-month period. Subject to the foregoing, the Administrator, in its sole discretion, shall
determine whether Grantee’s Service has terminated and the effective date thereof.

         (2) Regular Termination. Except as otherwise provided in paragraphs (3) through (5),
if a Grantee’s Service terminates, Grantee shall have the right for a period of three (3) months
after the date of termination to exercise the Option to the extent Grantee was entitled to exercise
the Option on that date; provided, however, that the date of exercise is in no event after the
expiration of the term of the Option. To the extent the Option is not exercised within this
period, the Option will terminate.

         (3) Termination by Disability. If a Grantee terminates Service by reason of
Disability, Grantee or his or her qualified representative shall have the right for a period of
twelve (12) months after the date on which Grantee’s Service ends to exercise the Option to the
extent Grantee was entitled to exercise the Option on that date, provided the date of exercise is
in no event after the expiration of the term of the Option. To the extent the Option is not
exercised within this period, the Option will terminate.

-5-

 

         (4) Termination Upon Death. If a Grantee dies while in Service, the person who
acquired the right to exercise the Option by bequest or inheritance or by reason of the death of
the Grantee shall have the right for a period of twelve (12) months after the date of death to
exercise the Option to the extent Grantee was entitled to exercise the Option on that date,
provided the date of exercise is in no event after the expiration of the term of the Option. To
the extent the Option is not exercised within this period, the Option will terminate.

         (5) Termination for Cause. If a Grantee’s Service is terminated by the Company for
Cause, Grantee shall have no right to exercise the Option, and the Option will terminate.

         (6) Award Agreement. The Award Agreement may provide rules different from those set
forth in subsections (1) through (5), provided that an Option may not be exercisable for more than
three (3) months after the termination of Service (12 months if Service terminated by Disability as
provided in Section 5(i)(3) or upon Death as provided in Section 5(i)(4)) unless the Committee
concludes that a longer exercise period would not make variable accounting mandatory.

     (j) Modification, Extension, and Renewal. Within the limitations of the Plan, the
Administrator shall have the power to modify, extend, or renew outstanding Options and authorize
the grant of new Options in substitution therefor, provided that any such action may not have the
effect of significantly impairing any rights or obligations of any Option previously granted
without the consent of Grantee. The Administrator shall consider the impact of Section 409A of the
Code on any such modification, extension, renewal, or substitution grant.

     6. Stock Appreciation Rights.

     (a) Grant of SARs. Subject to the terms and conditions of the Plan, the
Administrator, at any time and from time to time, may grant SARs separately, or in tandem with any
Options that have been or are granted under the Plan.

     (b) Terms and Conditions. Each SAR granted under the Plan shall be subject to the
same terms and conditions that apply to Options pursuant to Section 5 herein, except as otherwise
provided in this Section 6 or by the Administrator. Each SAR granted under the Plan shall be
evidenced by an Award Agreement.

     (c) Exercise. An SAR shall be deemed exercised when the Corporation receives written
notice of the exercise from the Grantee to the Corporation at the address specified in the Award
Agreement.

     (d) Tandem SARs. An SAR granted in tandem with a related Option shall entitle the
holder of the related Option to surrender to the Corporation the unexercised portion of the related
Option and to receive from the Corporation in exchange therefor an amount equal to the excess of
the Fair Market Value of one Share on the date the right is exercised over the exercise price per
Share times the number of Shares covered by the portion of the Option that is surrendered. At the
discretion of the Administrator, the payment upon exercise may be in cash, in Shares, or in a
combination thereof. A tandem SAR shall have the same other terms and provisions as the related
Option. Any SAR granted in tandem with an ISO shall be designed to meet the

-6-

 

requirements of Section 422 of the Code. SARs shall be canceled to the extent the related
Options are exercised, and the related Options shall be canceled to the extent the SARs are
exercised.

     (e) Stand-Alone SARs. Upon exercise of a stand-alone SAR, a Grantee shall be entitled
to receive from the Corporation an amount equal to the excess of the Fair Market Value of one Share
on the date of exercise over the exercise price per Share times the number of Shares with respect
to which the SAR is exercised. At the discretion of the Administrator, the payment upon SAR
exercise may be in cash, in Shares, or in a combination thereof.

     7. Restricted Stock and Restricted Stock Units.

     (a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the
Administrator, at any time and from time to time, may grant Restricted Stock and Restricted Stock
Units in such amounts as the Administrator, in its sole discretion, shall determine. Each
Restricted Stock and Restricted Stock Unit Award shall be evidenced by an Award Agreement.

     (b) Consideration for Awards. Restricted Stock Awards may be for past services, for
future services, or for any other consideration, provided that at least the par value of each Share
transferred pursuant to such Awards must be for consideration other than future services.

     (c) Vesting and Forfeiture. The Award Agreement shall provide a vesting schedule.
Vesting may be immediate or deferred. Vesting may be time-based or performance-based (as
determined by the achievement of Performance Goals). If a Grantee’s Service terminates during the
applicable Restriction Period or portion thereof to which forfeiture conditions apply, any unvested
Shares of Restricted Stock and Restricted Stock Units shall be forfeited, and the Corporation shall
pay the Grantee $0.01 for each unvested Share of Restricted Stock, whether or not the Shares have
been issued. For this purpose, a Grantee shall be treated as continuing to provide Services while
the Grantee is on military leave, sick leave, or any other bona fide leave of absence (to be
determined in the sole and absolute discretion of the Administrator). Notwithstanding the
foregoing, the Administrator may provide, by rule or regulation or in any Award Agreement, or may
determine in any individual case, that restrictions or forfeiture conditions relating to Restricted
Stock and Restricted Stock Units shall be waived in whole or in part in the event of terminations
resulting from specified causes, and the Administrator may in other cases waive in whole or in part
the forfeiture of Restricted Stock and Restricted Stock Units.

     (d) Time of Issuance or Payment. Each Restricted Stock Award Agreement and Restricted
Stock Unit Award Agreement shall state the time that the Shares shall be issued, or amounts paid,
to the Grantee. The issuance or payment may be immediate (as soon as administratively feasible) or
deferred (at any later time, provided that the issuance may not be more than ten years after the
effective date of the Award), before or after vesting. Issuance or payment may be accelerated by
events such as a Change in Control, an initial public offering (IPO), sale of the Corporation or
all or substantially all of the Corporation’s assets, or termination of Services, but may not be
deferred for more than ten (10) years. Upon issuance of Shares, the Shares shall be fully paid and
nonassessable and shall be issued in the name of the Grantee; however, at the request of the
Grantee, the Shares may be issued in the names of the

-7-

 

Grantee and his or her spouse (i) as joint tenants with right of survivorship, (ii) as
community property, or (iii) as tenants in common without right of survivorship or may be issued in
the name of a child or a family trust. Until issuance, unless the Administrator determines
otherwise, Shares shall be held by the Corporation as escrow agent.

     (e) Other Restrictions. The Administrator, in it sole discretion, may impose such
other restrictions on Shares of Restricted Stock and Restricted Stock Units as it may deem
advisable or appropriate.

     (f) Modification, Extension, and Renewal of Restricted Stock and RSU Awards. Within
the limitations of the Plan, the Administrator may modify, extend, or renew outstanding Awards of
Restricted Stock and Restricted Stock Units or accept the cancellation of such outstanding Awards
(to the extent the Shares have not been issued) for the granting of new Awards in substitution
therefore. The foregoing notwithstanding, no modification of an Award shall, without the consent
of the Grantee, alter or impair any rights or obligations under any Award previously granted. The
Administrator shall consider the impact of Section 409A of the Code on any such modification,
extension, renewal, or substitution grant.

     8. Change in Control. An Award’s exercisability (or Restriction Period, as
applicable) and term may be affected by a Change in Control, as described in this section.

     (a) Optional Assumption or Substitution. At the time of a Change in Control, the
surviving, continuing, successor or purchasing corporation or parent corporation thereof, as the
case may be (the “Acquiror”), may either assume the Corporation’s rights and obligations with
respect to outstanding Awards or substitute for outstanding Awards substantially equivalent Awards
for the Acquiror’s stock. If the Acquiror is the same corporate entity as the Corporation, or its
successor by merger, a reaffirmation of the Award shall be treated as an assumption, and a failure
to reaffirm shall be treated as a failure to assume. Any assumption or substitution of an Option
or SAR shall be designed to meet the requirements of Section 424 of the Code.

     (b) No Assumption or Substitution – Options and SARs. Unless otherwise determined by
the Administrator, if the Acquiror does not assume or substitute for outstanding Options and SARs
in connection with a Change in Control, a Grantee’s outstanding Options and SARs shall become fully
vested and exercisable as of the date seven (7) days before the Effective Date of the Change in
Control. The Administrator shall notify the Grantee in writing or electronically that the Option
or SAR shall be exercisable. The vesting and exercise of any Option or SAR that was permissible
solely by reason of a Change in Control shall be conditioned upon consummation of the Change in
Control. Options and SARs that are neither assumed nor substituted for by the Acquiror in
connection with a Change in Control, nor exercised as of the time of the Change in Control, shall
terminate and cease to be outstanding.

     (c) No Assumption or Substitution – Restricted Stock and RSUs. Unless otherwise
determined by the Administrator, if the Acquiror does not assume or substitute for a Grantee’s
outstanding Restricted Stock or Restricted Stock Units in connection with a Change in Control, the
Grantee’s outstanding Restricted Stock and Restricted Stock Units shall become fully vested as of
the Effective Date of the Change in Control. The vesting of any Restricted Stock and Restricted
Stock Unit that was permissible solely by reason of a Change in Control shall be

-8-

 

conditioned upon consummation of the Change in Control. Shares that have not previously been
issued under Restricted Stock or Restricted Stock Units, as applicable, that are neither assumed
nor substituted for by the Acquiror in connection with a Change in Control shall be issued.

     (d) Award Agreement. The Award Agreement may provide rules different from those set
forth in subsections (a) through (c).

     9. Securities Law Requirements. Shares shall not be issued pursuant to the exercise
or settlement of an Award unless the exercise or settlement of such Award and the issuance and
delivery of such Shares pursuant thereto shall comply with all Applicable Laws, and shall be
further subject to the approval of counsel for the Corporation with respect to such compliance. As
a condition to the exercise or receipt of an Award, the Company may require the person exercising
or receiving such Award to represent and warrant at the time of any such exercise or receipt that
the Shares are being purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Corporation, such a representation is
required by any Applicable Laws. The inability of the Corporation to obtain, from any regulatory
body having jurisdiction, the authority deemed by the Corporation’s counsel to be necessary for the
lawful issuance and sale of any Shares hereunder or the unavailability of an exemption from
registration for the issuance and sale of any Shares hereunder shall relieve the Corporation of any
liability in respect of the nonissuance or sale of such Shares as to which such requisite authority
shall not have been obtained.

     10. Restrictions on Shares Issued. The Corporation (or a representative of the
Corporation’s underwriter(s)) may, in connection with the first underwritten registration of the
offering of any securities of the Corporation, require that Grantee not sell, dispose of, transfer,
make any short sale of, grant any option for the purchase of, or enter into any hedging or similar
transaction with the same economic effect as a sale with respect to, any Shares or other securities
of the Corporation held by Grantee, for a period of time specified by the underwriter(s) (not to
exceed 12 months) following the Corporation’s effective date of registration. Grantee will execute
and deliver such other agreements that are reasonably requested by the Corporation or the
underwriter(s) that are consistent with the foregoing or that are necessary to give further effect
thereto, and the Corporation may impose stop-transfer instructions with respect to Grantee’s Shares
until the end of such specified period.

     11. Miscellaneous.

     (a) No Rights to Awards. Nothing in the Plan shall be construed to give any person
any right to be granted an Award.

     (b) No Employment Rights. Neither the Plan nor the granting of an Award nor any other
action taken pursuant to the Plan shall constitute or be evidence of any agreement or
understanding, express or implied, that the Company will utilize Grantee’s services for any period
of time, or in any position, or at any particular rate of compensation.

     (c) No Stockholders’ Rights. A Grantee, or a transferee of a Grantee, shall have no
rights as a stockholder with respect to any Shares covered by his or her Award until the Shares are
issued. No adjustment shall be made for dividends (ordinary or extraordinary, whether in

-9-

 

cash, securities, or other property), distributions, or other rights for which the record date
is prior to the date the Shares are issued.

     (d) Transferability. Unless otherwise provided in an Award Agreement, Awards may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner by the Grantee,
whether by operation of law or otherwise, other than by will or by the laws of descent and
distribution, and all Awards granted under the Plan shall be exercisable during the Grantee’s
lifetime only by the Grantee, or by the Grantee’s legal representative or guardian in the event of
the Grantee’s incapacity; provided, however, that an NSO may be transferred upon the approval of
the Administrator (in its sole discretion) by appropriate instrument to an inter vivos or
testamentary trust in which the Option is to be passed to the Grantee’s beneficiaries upon the
Grantee’s death or by gift to the Grantee’s immediate family (consisting of the Grantee’s child,
stepchild, grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and shall include
adoptive relationships). Any such purported assignment, sale, transfer, delegation, or other
disposition in violation of this Section 11(d) shall be null and void. If the Administrator makes
an Award transferable, such Award shall contain such additional terms and conditions as the
Administrator deems appropriate.

     (e) Claims. Any person who makes a claim for benefits under the Plan or under any
Award Agreement entered into pursuant to the Plan shall file the claim in writing with the
Administrator. Written notice of the disposition of the claim shall be delivered to the claimant
within 60 days after filing. If the claim is denied, the Administrator’s written decision shall
set forth (i) the specific reason or reasons for the denial, (ii) a specific reference to the
pertinent provisions of the Plan or Award Agreement on which the denial is based, and (iii) a
description of any additional material or information necessary for the claimant to perfect his or
her claim and an explanation of why such material or information is necessary. If the
Administrator describes additional material or information and such material or information is
available, the claimant may resubmit the claim within 60 days after the claim is denied. No
lawsuit may be filed by the claimant until a claim is made and denied pursuant to this subsection.
The claimant may not present additional material or information in connection with any lawsuit
unless the material or information has first been submitted to the Administrator in connection with
the original claim or in connection with a resubmission within 60 days after the claim was denied.

     (f) Attorneys’ Fees. In any legal action or other proceeding brought by either party
to enforce or interpret the terms of the Award Agreement, the prevailing party shall be entitled to
recover reasonable attorneys’ fees and costs.

     (g) Confidentiality. The terms and conditions of the Award Agreement, including
without limitation the number of Shares for which the Option is granted, are confidential. Grantee
shall not disclose the terms of the Option to any third party, except to Grantee’s financial or
legal advisors, tax preparer or family members, unless disclosure is required by law.

     (h) Corporation Free to Act. An Award grant shall not affect in any way the right or
power of the Corporation or its stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company’s capital structure or its
business, or any merger or consolidation of any member of the Company or any issue of bonds,

-10-

 

debentures, or preferred or preference stocks affecting the Shares or the rights thereof, or
of any rights, options, or warrants to purchase any capital stock of the Corporation, or the
dissolution or liquidation of the Corporation, any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceedings of the Corporation, whether of a
similar character or otherwise.

     (i) Acquired Company Awards. Notwithstanding anything in the Plan to the contrary,
the Administrator may grant Awards under the Plan in substitution for awards issued under other
plans, or assume under the Plan awards issued under other plans, if the other plans are or were
plans of other acquired entities (“Acquired Entities”) (or the parent of the Acquired Entity) and
the new Award is substituted, or the old award is assumed, by reason of a merger, consolidation,
acquisition of property or of stock, reorganization or liquidation (the “Acquisition Transaction”);
provided, however, any substitution or assumption of a stock option or a stock appreciation right
pursuant to an Acquisition Transaction shall meet the requirements of Section 424 of the Code. In
the event that a written agreement pursuant to which the Acquisition Transaction is completed is
approved by the Board and said agreement sets forth the terms and conditions of the substitution
for or assumption of outstanding awards of the Acquired Entity, said terms and conditions shall be
deemed to be the action of the Administrator without any further action by the Administrator,
except as may be required for compliance with Rule 16b-3 under the Exchange Act, and the persons
holding such Awards shall be deemed to be Grantees.

     (j) Severability. If any provision of the Plan or Award Agreement, or its application
to any person, place, or circumstance, is held by an arbitrator or a court of competent
jurisdiction to be invalid, unenforceable, or void, that provision shall be enforced to the
greatest extent permitted by law, and the remainder of this Plan and Award Agreement and of that
provision shall remain in full force and effect as applied to other persons, places, and
circumstances.

     (k) Governing Law. This Plan and the Award Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia applicable to contracts wholly made
and performed in the State of Georgia, except to the extent superseded by Federal law.

     (l) Rules of Exchange. If the Shares are listed on any established stock exchange or
traded on the NASDAQ National Market or the NASDAQ SmallCap Market, the applicable requirements of
any such exchange or market shall be hereby incorporated by reference.

     (m) Competition. If the Award Agreement subjects the Award to this subsection, a
Grantee who has a contract of employment that defines Grantee’s obligations with respect to
competition violates such obligations or if a Grantee has no such contract either renders services
for any organization or business that is or becomes competitive with the Company or engages
directly or indirectly in any organization or business which is or becomes otherwise prejudicial to
or in conflict with the interests of the Company, as determined by the Administrator, prior to or
during a six-month period after any exercise of an Option or settlement of an Award, the exercise
or settlement shall be cancelled and rescinded. The Administrator shall notify the Grantee in
writing of any such cancellation and rescission within two years after such exercise or settlement.
Within ten days after receiving such notice from the Administrator, the Grantee shall pay to the
Corporation the amount of any gain realized or payment received as a result of the cancelled and
rescinded exercise of the Option or settlement of the Award.

-11-

 

     (n) Taxes and Withholding. Prior to the delivery of any Shares or cash pursuant to an
Award (or exercise thereof), the Corporation shall have the right to deduct from the Shares
issuable or the cash payable, or to require a Grantee to remit to the Corporation, an amount
sufficient to satisfy any federal, state, local and foreign taxes, if any, required by law to be
withheld by the Corporation with respect to such Award (or exercise thereof). Alternatively or in
addition, the Corporation, in its sole discretion, shall have the right to require a Grantee,
through payroll withholding, cash payment or otherwise, including by means of a cashless exercise
(as described in Section 5(g)(ii)), to make adequate provision for any such tax withholding
obligations of the Corporation arising in connection with an Award. The Corporation may also
accept from Grantee the tender of a number of whole Shares having a Fair Market Value equal to all
or any part of the federal, state, local and foreign taxes, if any, required by law to be withheld
by the Corporation with respect to an Option or the Shares acquired upon the exercise thereof.

     (o) Fractional Shares. The Corporation shall not be required to issue or deliver any
fractional Share upon the exercise of an Option or SAR, or the settlement of a Restricted Stock or
Restricted Stock Unit Award. The Administrator shall determine whether cash, other Awards, or
other property shall be issued or paid in lieu of such fractional Shares or whether such fractional
Shares or any rights thereto shall be forfeited or otherwise eliminated. Any action pursuant to
this Section 11(o) shall be consistent with Section 409A of the Code.

     (p) Bifurcation. Notwithstanding anything in the Plan to the contrary, the Board, in
its discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan to Grantee’s who are officers or directors subject to Section 16 of the
Exchange Act without so restricting, limiting or conditioning the Plan with respect to other
Grantees.

     12. Right of First Refusal. Any Shares received pursuant to the exercise of an Option
or SAR or upon settlement of an Award which are not readily tradable on an established market shall
be subject to a “right of first refusal.” The right of first refusal shall provide that, prior to
any subsequent transfer, the Shares must first be offered for purchase in writing to the
Corporation at the then fair market value, which, for this purpose, shall be the price specified in
a bona fide written offer from an independent prospective buyer. The Corporation will have a total
of thirty (30) business days to exercise the right of first refusal on the same terms offered by an
independent prospective buyer. The Corporation may assign any right of first refusal it may have,
whether or not then exercisable, to person(s) as may be selected by the Corporation. The right of
first refusal shall terminate upon the Listing Date.

     13. Effective Date of the Plan. The Plan will become effective upon adoption by the
Board, subject to approval by the Corporation’s stockholders within twelve (12) months of such
adoption. Such stockholder approval shall be obtained in the degree and manner required under
Applicable Laws. Awards may be granted under the Plan at any time after the Plan’s adoption and
before the termination of the Plan. The Plan shall terminate on the 10th anniversary of
its adoption. Any Option exercised or Award received before stockholder approval is obtained shall
be rescinded if stockholder approval is not obtained within the time prescribed, and Shares issued
on the exercise of any such Option or settlement of such Award shall not be counted in determining
whether stockholder approval is obtained.

-12-

 

     14. Amendment and Termination of the Plan. The Board may at any time suspend or
terminate the Plan or revise or amend it in any respect whatsoever. The Corporation shall obtain
stockholder approval of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws. No suspension, termination, revision or amendment of the Plan shall impair the
rights of any Grantee, unless mutually agreed otherwise between the Grantee and the Administrator,
which agreement must be in writing and signed by the Grantee and the Corporation. Termination of
the Plan shall not affect the Administrator’s ability to exercise the powers granted to it
hereunder with respect to Awards granted under the Plan prior to the date of such termination.

     15. Definitions. Whenever the following terms are used in the Plan, they shall have
the meaning indicated below, unless a different meaning is required by the context.

     “Administrator” means a committee consisting of two or more Board members, the composition of
which shall satisfy at all times on and after the Listing Date the requirements of Rule 16b-3 of
the Exchange Act, Section 162(m) of the Code, and the rules of any applicable stock exchange or
national market system or quotation system on which the Common Stock is listed or quoted.

     “Applicable Laws” means the legal requirements relating to the administration of equity
compensation plans, if any, under applicable provisions of federal securities laws, applicable
state corporate and securities laws, the Code, the rules of any applicable stock exchange or
national market system or quotation system on which the Common Stock is listed or quoted, and the
applicable laws and rules of any foreign country or jurisdiction where Awards are, or will be,
granted under the Plan.

     “Award” means, individually or collectively, a grant under the Plan of Options, SARs,
Restricted Stock, or Restricted Stock Units.

     “Award Agreement” means the written agreement evidencing the grant of an Award. The Award
Agreement shall be in such form as the Administrator shall from time to time approve, which shall
comply with and be subject to the terms and conditions of the Plan. Award Agreements need not be
the same for each Grantee.

     “Board” means the board of directors of the Corporation.

     “Cause” Unless the Award Agreement provides otherwise, for purposes of this Plan, “Cause”
means:

     (1) Grantee is convicted of, pleads guilty to, or confesses or otherwise admits to any
felony involving intentional conduct or any act of fraud, misappropriation or embezzlement;

     (2) Grantee knowingly engages in any act or course of conduct or knowingly fails to
engage in any act or course of conduct (a) which is reasonably likely to adversely affect
the Company’s right or qualification under applicable laws, rules or regulations to serve as
an exchange or other form of a marketplace for trading commodities or (b) which violates the
rules of any exchange or market on which the Company effects trades

-13-

 

(or at such time is actively contemplating effecting trades) and which could lead to a
denial of the Company’s right or qualification to effect trades on such exchange or market;

     (3) There is any act or omission by Grantee involving malfeasance or gross negligence
in the performance of Grantee’s duties and responsibilities to the material detriment of the
Company; or

     (4) Grantee breaches in any material respect any of the provisions of any applicable
employment agreement or violates any provision of any generally applicable code of conduct
which is distributed in writing to the Company’s employees; provided, however,

     (5) If Grantee’s employment contract contains a procedure for determining whether Cause
exists, that procedure shall apply under this Agreement.

     “Change in Control” Unless the Award Agreement provides otherwise, for purposes of this Plan,
“Change in Control” means the occurrence of any of the following events:

     (1) Any “person” (as that term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934), is or becomes the beneficial owner (as defined in Rule 13d-3 under
such Act), directly or indirectly, of securities representing 30% or more of the combined
voting power of the then outstanding securities of the Corporation eligible to vote for the
election of the members of the Board unless (A) such person is the Corporation or a
subsidiary of the Corporation, (B) such person is an employee benefit plan (or a trust which
is a part of such a plan) which provides benefits exclusively to, or on behalf of, employees
or former employees of the Company, (C) such person is an underwriter temporarily holding
such securities pursuant to an offering of such securities, (D) such person is Grantee, an
entity controlled by Grantee or a group which includes Grantee or (E) such person acquired
such securities in a Non-Qualifying Transaction (as defined in (4) below);

     (2) During any period of two consecutive years or less beginning after the closing date
of the initial public offering of the common stock of the Corporation, individuals who at
the beginning of such period constitute the Board cease, for any reason, to constitute at
least a majority of the Board, unless the election or nomination for election of each new
director was approved by at least two-thirds of the directors then still in office who were
directors at the beginning of the period (either by a specific vote of such directors or by
the approval of the Corporation’s proxy statement in which each such individual is named as
a nominee for a director without written objection to such nomination by such directors);
provided, however, that no individual initially elected or nominated as a
director of the Corporation as a result of an actual or threatened election contest with
respect to directors or as a result of any other actual or threatened solicitation of
proxies or consents by or on behalf of any person other than the Board shall be deemed to be
approved;

-14-

 

         (3) Any dissolution or liquidation of the Corporation or any sale or the disposition of
50% or more of the assets or business of the Corporation, or

         (4) The consummation of any reorganization, merger, consolidation or share exchange or
similar form of corporate transaction involving the Corporation unless (A) the persons who
were the beneficial owners of the outstanding securities eligible to vote for the election
of the members of the Board immediately before the consummation of such transaction hold
more than 60% of the voting power of the securities eligible to vote for the members of the
board of directors of the successor or survivor corporation in such transaction immediately
following the consummation of such transaction and (B) the number of the securities of such
successor or survivor corporation representing the voting power described in (A) above held
by the persons described in (A) above immediately following the consummation of such
transaction is beneficially owned by each such person in substantially the same proportion
that each such person had beneficially owned the outstanding securities eligible to vote for
the election of the members of the Board immediately before the consummation of such
transaction, provided (C) the percentage described in (A) above of the securities of the
successor or survivor corporation and the number described in (B) above of the securities of
the successor or survivor corporation shall be determined exclusively by reference to the
securities of the successor or survivor corporation which result from the beneficial
ownership of shares of common stock of the Corporation by the persons described in (A) above
immediately before the consummation of such transaction (any transaction which satisfies all
of the criteria specified in (A), (B) and (C) above shall be deemed to be a “Non-Qualifying
Transaction”);

Notwithstanding the foregoing, the initial public offering of the common stock of the Corporation
shall in no event constitute a Change in Control.

     “Code” means the Internal Revenue Code of 1986, as amended.

     “Common Stock” means the Common Stock, par value $0.01 per Share, of the Corporation.

     “Company” means, collectively, the Corporation and any “parent corporation” or “subsidiary
corporation” of the Corporation as defined in Code §424(e) and §424(f), respectively.

     “Corporation” means IntercontinentalExchange, Inc., a Delaware corporation.

     “Disability” Unless the Award Agreement provides otherwise, for purposes of this Plan,
“Disability” means permanent and total disability as defined in Code §22(e)(3).

     “Effective Date of a Change in Control” Unless the Award Agreement provides otherwise, for
purposes of this Plan, “Effective Date of a Change in Control” means either the date which includes
the “closing” (as such term is commonly understood in the United States) of the transaction which
makes a Change in Control effective if the Change in Control is made effective through a
transaction which has such a “closing” or the earliest date a Change in Control is reported in
accordance with any applicable law, regulation, rule or common practice as effective to any
government or any agency of any government or to any exchange or market in

-15-

 

which the Corporation effects any trades if the Change in Control is made effective other than
through a transaction which has such a “closing.”

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

     (1) After the Listing Date, if the Shares are listed on any established stock exchange or
traded on the NASDAQ National Market or the NASDAQ SmallCap Market, the Fair Market Value of a
Share shall be the closing sales price for such stock (or the closing bid, if no sales were
reported) as quoted on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day of determination,
as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

     (2) On or before the Listing Date, the Fair Market Value shall be determined in good faith by
the Administrator using any reasonable valuation method.

     “Grantee” means a person who has been granted an Award under the Plan.

     “ISO” means an incentive stock option within the meaning of Code §422.

     “Listing Date” means the first date upon which any security of the Corporation is listed or
approved for listing upon notice of issuance on any securities exchange.

     “NSO” means an option that is not an ISO.

     “Option” means a stock option granted pursuant to the Plan.

     “Performance Goals” means the goals determined by the Administrator, in its discretion, to be
applicable to a Grantee with respect to an Award. As determined by the Administrator, the
Performance Goals applicable to an Award may provide for a targeted level or levels of achievement
using certain Company or individual performance measures. The Performance Goals may differ from
Grantee to Grantee and from Award to Award. Any criteria used may be measured in absolute terms or
relative to comparison companies. Such Performance Goals may include, but are not limited to,
earnings; earnings per share; earnings before interest, taxes, depreciation and amortization;
revenue; profits; profit growth; profit-related return ratios; cost management; dividend payout
ratios; market share; economic value added; cash flow; total shareholder return, or other measures
of performance selected by the Administrator. The Administrator shall have the authority to make
equitable adjustments to the Performance Goals in recognition of unusual or non-recurring events
affective the Company or the financial statements of the Company, in response to changes in
Applicable Laws, or to account for items of gain, loss or expense determined to be extraordinary or
unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business
or related to a change in accounting principles.

     “Plan” means this IntercontinentalExchange, Inc. 2005 Equity Incentive Plan.

-16-

 

     “Restricted Stock” means an Award of Shares that may be subject to certain restrictions and a
risk of forfeiture.

     “Restricted Stock Unit” or “RSU” means a right granted to a Grantee to receive Shares or cash
upon satisfaction of specified performance or other criteria, such as continuous Service.

     “Restriction Period” means the period during which the transfer of Shares of Restricted Stock
are subject to restrictions and therefore, the shares are subject to a substantial risk of
forfeiture. Such restrictions may be based on continuous Service, the achievement of Performance
Goals, and/or the occurrence of other events as determined by the Administrator.

     “Service” means the Grantee’s employment or service with the Company, whether in the capacity
of an employee, a director, or a consultant.

     “Share” means one share of Common Stock.

     “Stock Appreciation Right” or “SAR” means an Award that is designated as an SAR pursuant to
Section 6 of the Plan.

     IN WITNESS WHEREOF, the undersigned Secretary of the Corporation certifies that this Plan was
adopted by the Board on April 29, 2005, effective as of the same date.

Johnathan H. Short, Secretary

-17-EX-4(F)

 

EXHIBIT 4(f)

March 30, 2007

Applied Industrial Technologies, Inc.

One Applied Plaza

Cleveland, Ohio 44115

     Re: Amendment to Private Shelf Agreement

Ladies and Gentlemen:

     Reference is made to that certain Private Shelf Agreement dated as of November 27, 1996 (as
amended prior to the date hereof, the “Agreement”) between Applied Industrial Technologies, Inc.,
an Ohio corporation formerly known as Bearings, Inc. (the “Company”), and Prudential Investment
Management, Inc. (“Prudential”), pursuant to which the Company issued and sold and Prudential
purchased the Company’s 6.60% Series B Notes in the original aggregate principal amount of
$50,000,000, due December 8, 2007. Capitalized terms used herein and not otherwise defined herein
shall have the meanings assigned to such terms in the Agreement.

     Pursuant to the request of the Company and in accordance with the provisions of paragraph 11C
of the Agreement, the parties hereto agree as follows:

     SECTION 1. Amendment. From and after the date this letter becomes effective in
accordance with its terms, the Agreement is amended as follows:

     1.1 The first sentence of Paragraph 1 of the Agreement is amended by deleting the phrase “no
more than twelve (12) years after the issuance thereof, to have an average life, in the case of
each Note so issued, of no more than ten (10) years after the date of original issuance thereof,”
and substituting therefore the following:

	 	 	“no more than fifteen (15) years after the issuance thereof, to have an average life, in the
case of each Note so issued, of no more than twelve (12) years after the date of original
issuance thereof,”

     1.2 Paragraph 2B of the Agreement is amended to delete in its entirety clause (i) thereof and
to substitute therefor the following: “(i) March 30, 2010 and”.

 

 

     1.3 The Company and Prudential expressly agree and acknowledge that as of the date hereof the
Available Facility Amount is $100,000,000. NOTWITHSTANDING THE FOREGOING, THIS AMENDMENT AND THE
AGREEMENT HAVE BEEN ENTERED INTO ON THE EXPRESS UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY
PRUDENTIAL AFFILIATE SHALL BE OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE PRIVATE SHELF NOTES,
OR TO QUOTE RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF PRIVATE SHELF
NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY PRUDENTIAL OR ANY
PRUDENTIAL AFFILIATE.

     1.4 Paragraph 2E of the Agreement is amended to delete in its entirety the fifth sentence
thereof. For clarity, the fifth sentence hereby deleted begins with “In the event” and ends with
“determined by Prudential”.

     1.5 Paragraph 2H(2) of the Agreement is amended (i) to delete the first sentence thereof up to
but not including the equation “(BEY — MMY) X DTS/360 X Full Price” and substituting therefore the
following:

     “If the closing of the purchase and sale of any Accepted Note is delayed for
any reason beyond the original Private Shelf Closing Day for such Accepted Note, the
Company will pay to Prudential (a) on the Cancellation Date or actual closing date
of such purchase and sale and (b) if earlier, the next Business Day following 90
days after the Acceptance Day for such Accepted Note and on each Business Day
following 90 days after the prior payment hereunder, a fee (herein called the
“Delayed Delivery Fee”) calculated as follows:”

and (ii) to delete the reference in the definition of “DTS” to “the thirty-first day after the
Acceptance Day of” and substituting therefore the following:

     “the original Private Shelf Closing Day with respect to”

     1.6 Paragraph 5A(i) of the Agreement is amended to delete the proviso at the end thereof and
to substitute therefore the following:

     “provided, however, that delivery (which may be by delivery of
an electronic version or by providing notice and access to a version that may be
downloaded from the Company’s website) pursuant to clause (iii) below of copies of
the Quarterly Report on Form lO-Q of the Company for such quarterly period filed
with the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this clause (i);”

 

 

     1.7 Paragraph 5A(ii) of the Agreement is amended to delete the proviso at the end thereof and
to substitute therefore the following:

     “provided, however, that delivery (which may be by delivery of
an electronic version or by providing notice and access to a version that may be
downloaded from the Company’s website) pursuant to clause (iii) below of copies of
the Annual Report on Form 10-K of the Company for such fiscal year filed with the
Securities and Exchange Commission shall be deemed to satisfy the requirements of
this clause (ii);”

     1.8 Paragraph 5A(iii) of the Agreement is amended to add the following proviso at the end
thereof:

     “provided, however, that the delivery requirement with respect
to any such financial statements, proxy statements, notices and reports may be
satisfied by delivery of an electronic version or by providing notice and access to
a version that may be downloaded from the Company’s website;”

     1.9 Paragraphs 6A(1), 6A(2) and 6A(3) of the Agreement are deleted in their entirety.

     1.10 Paragraph 6B(2) of the Agreement is amended to delete the proviso at the end thereof and
to substitute therefore the following:

“provided, however, (x) that the aggregate principal amount of
consolidated Debt of the Company and its Subsidiaries shall not exceed at any time
an amount equal to 58% of Consolidated Capitalization and (y) Priority Debt shall
not exceed at any time an amount equal to 20% of Consolidated Net Worth.”

     1.11 Paragraph 6B(3) of the Agreement is amended by deleting “15% of Consolidated Tangible Net
Worth” in clause (vii) therein and substituting therefore “20% of Consolidated Net Worth”.

     1.12 Paragraph 6B(10) of the Agreement is deleted in its entirety and a new paragraph 6B(10)
is substituted therefore to read in its entirety as follows:

     “6B(10). Other Subsidiary Guaranties. The Company covenants that it will not
permit any Subsidiary organized under the laws of the United States or any state
thereof (a “U.S. Subsidiary”) to create, issue, incur, assume or become subject to
or liable under any guarantee with respect to any Material Indebtedness Agreement
unless such U.S. Subsidiary promptly executes and delivers to the holders of the
Notes a Guaranty of Payment of Debt substantially in the form of Exhibit I hereto.
Notwithstanding the foregoing, the Company covenants that it will not permit any
Subsidiary to create, issue, incur, assume or become subject to or liable under any
guarantee with respect to the Credit Agreement unless such 

 

 

Subsidiary promptly
executes and delivers to the holders of the Notes a Guaranty of Payment of Debt
substantially in the form of Exhibit I hereto; provided, however, that the
foregoing shall not apply to any guaranty created, issued, incurred or assumed by a
Subsidiary organized under the laws of a jurisdiction other than the United States
or any state thereof (a “Non-U.S. Subsidiary”) in respect of Debt incurred by any
other Non-U.S. Subsidiary pursuant to the Credit Agreement so long as such Non-U.S.
Subsidiary that creates, issues, incurs or assumes such guaranty has not also
created, issued, incurred or assumed a guaranty in respect of Debt incurred by the
Company or any U.S. Subsidiary pursuant to the Credit Agreement.”

     1.13 Paragraph 7A of the Agreement is amended (1) to delete the reference to “$5,000,000” in
clause (iii)(A) thereof and to substitute therefore a reference to “$20,000,000”, (2) to delete the
reference to “$10,000,000” in clause (iii)(B) thereof and to substitute therefore a reference to
“$20,000,000”, (3) to delete the reference to “$5,000,000” in clause (xii) thereof and to
substitute therefore a reference to “$10,000,000”, (4) to add “or” to the end of clause (xiv) and
(5) to add a new clause (xv) after clause (xiv) therein to read as follows:

     ”(xv) a Change in Control shall occur;”

     1.14 Paragraph 8A of the Agreement is deleted in its entirety and a new paragraph 8A is
substituted therefore to read in its entirety as follows:

     ““8A. Organization. The Company is a corporation duly organized and existing
in good standing under the laws of the State of Ohio, each Subsidiary is a
corporation or other legal entity existing and in good standing under the laws of
the jurisdiction in which it is incorporated or organized, and the Company has and
each Subsidiary has the corporate or other power to own its respective property and
to carry on its respective business as now being conducted. The names and
jurisdictions of incorporation of each Subsidiary are set forth on Exhibit F
attached hereto.”

     1.15 Paragraph 10B of the Agreement is amended by deleting the following definitions in their
entirety: “Consolidated Current Assets”, “Consolidated Current Liabilities” and “Consolidated
EBIT”.

     1.16 Paragraph 10B of the Agreement is further amended by adding the following defined terms
in alphabetical order:

     ““Change in Control” shall mean:

          (a) the acquisition of, or, if earlier, the shareholder or director approval of
the acquisition of, ownership or voting control, directly or indirectly,
beneficially or of record, by any Person or group (within the meaning of Rule 13d-3

 

 

of the Securities and
 Exchange Commission under the Securities Exchange Act of 1934, as then in
effect), of shares representing more than thirty-three percent (33%) of the
aggregate ordinary Voting Stock represented by the issued and outstanding capital
stock of the Company;

          (b) the occupation of a majority of the seats (other than vacant seats) on the
board of directors of the Company by Persons who were neither (i) nominated by the
board of directors of the Company nor (ii) appointed by directors so nominated; or

          (c) the occurrence of a change in control, or other similar provision, as
defined in the Credit Agreement or any Material Indebtedness Agreement.”

     ““Consolidated Depreciation and Amortization Charges” shall mean, for any
period, the aggregate of all depreciation and amortization charges for fixed assets,
leasehold improvements and general intangibles (specifically including goodwill) of
the Company for such period, as determined on a consolidated basis and in accordance
with generally accepted accounting principles.”

     ““Consolidated EBITDA” shall mean, for any period, Consolidated Net Income for
such period plus the aggregate amounts deducted in determining such Consolidated Net
Income in respect of (a) Consolidated Interest Expense, (b) Consolidated Income Tax
Expense, (c) Consolidated Depreciation and Amortization Charges, (d) stock option
expenses, up to an aggregate amount of Five Million Dollars ($5,000,000) per fiscal
year of the Company, and (d) (i) extraordinary or non-recurring charges, minus (ii)
extraordinary or non-recurring cash gains, determined on a consolidated basis in
accordance with generally accepted accounting principles.”

     ““Consolidated Net Worth” shall mean, at any time, the stockholders’ equity of
the Company determined as of such date on a consolidated basis and in accordance
with generally accepted accounting principals.”

     1.17 The definition of “Credit Agreement” in paragraph 10B of the Agreement is amended to read
in its entirety as follows:

     ““Credit Agreement” shall mean the Credit Agreement, dated as of June 3, 2005,
among the Company, the Canadian Borrowers, the Banks, Keybank National Association,
as Lead Arranger, Book Runner and Administrative Agent, and U.S. Bank National
Association, as Syndication Agent, as amended, modified, supplemented, restated,
replaced or refinanced from time to time.”

     1.18 The definition of “Interest Coverage Ratio” in paragraph 10B of the Agreement is amended
to read in its entirety as follows:

 

 

     ““Interest Coverage Ratio” shall mean, for the most recently completed four
fiscal quarters of the Company, on a consolidated basis and in accordance with
GAAP, the ratio of (a) Consolidated EBITDA to (b) Consolidated Interest Expense.”

     1.19 The definition of “Material Indebtedness Agreement” in paragraph 10B of the Agreement is
amended to read in its entirety as follows:

     ““Material Indebtedness Agreement” shall mean any debt instrument, lease
(capital, operating or otherwise), guaranty, contract, commitment, agreement or
other arrangement evidencing or entered into in connection with Funded Debt of the
Company or any Subsidiary equal to or in excess of the amount of Twenty Million
Dollars ($20,000,000).”

     SECTION 2. Representation and Warranty. The Company hereby represents and warrants
that no Default or Event of Default exists under the Agreement as of the date hereof.

     SECTION 3. Conditions Precedent. This letter shall be deemed effective as of the
date hereof upon (i) the return on or before April 16, 2007 by the Company to Prudential of a
counterpart hereof duly executed by the Company, Prudential and each holder of Notes. Upon
execution hereof by the Company, this letter should be returned to: Prudential Capital Group, Two
Prudential Plaza, Suite 5600, Chicago, Illinois 60601, Attention: Scott B. Barnett.

     SECTION 4. Reference to and Effect on Agreement. Upon the effectiveness of this
letter, each reference to the Agreement and the Notes in any other document, instrument or
agreement shall mean and be a reference to the Agreement and the Notes as modified by this letter.
Except as specifically set forth in Section 1 hereof, each of the Agreement and the Notes shall
remain in full force and effect and each is hereby ratified and confirmed in all respects.

     SECTION 5. Confirmation of Guarantees. By its signature below, each Subsidiary party
to a Guaranty of Payment of Debt agrees and consents to the terms and provisions of this Amendment
and agrees that its Guaranty of Payment of Debt shall remain in full force and effect and is hereby
ratified and confirmed in all respects after giving effect to this Amendment.

     SECTION 6. Governing Law. THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW OF THE STATE OF ILLINOIS
(EXCLUDING ANY CONFLICTS OF LAW RULES WHICH WOULD OTHERWISE CAUSE THIS LETTER TO BE CONSTRUED OR
ENFORCED IN ACCORDANCE WITH, OR THE RIGHTS OF THE PARTIES TO BE GOVERNED BY, THE LAWS OF ANY OTHER
JURISDICTION).

 

 

     SECTION 7. Counterparts; Section Titles. This letter may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all of which taken together shall
constitute but one
and the same instrument. The section titles contained in this letter are and shall be without
substance, meaning or content of any kind whatsoever and are not a part of the agreement between
the parties hereto.

	 	 	 	 	 
	 	Very truly yours,

PRUDENTIAL INVESTMENT MANAGEMENT, INC.

 	 
	 	By:  	/s/ Dianna D. Carr
 	 
	 	 	Vice President 	 
	 	 	 	 

 

 

Agreed and Accepted:

APPLIED INDUSTRIAL TECHNOLOGIES, INC.

	 	 	 	 	 
	By:

	 	/s/ Mark O. Eisele	 	 
	Name:

	 	 

Mark O. Eisele
	 	 
	Title:

	 	VP-CFO & Treasurer	 	 

Consented to:

APPLIED INDUSTRIAL TECHNOLOGIES-CA LLC

APPLIED INDUSTRIAL TECHNOLOGIES-DBB, INC.

APPLIED INDUSTRIAL TECHNOLOGIES-DIXIE, INC.

APPLIED INDUSTRIAL TECHNOLOGIES-INDIANA LLC

APPLIED INDUSTRIAL TECHNOLOGIES-MAINLINE, INC.

APPLIED INDUSTRIAL TECHNOLOGIES-TX LP

APPLIED INDUSTRIAL TECHNOLOGIES-PA LLC

AIR AND HYDRAULICS ENGINEERING, INCORPORATED

ESI ACQUISITION CORPORATION

THE OHIO BALL BEARING COMPANY

BEARINGS PAN AMERICAN, INC.

BEARINGS SALES AND SERVICES, INC.

AIR DRAULICS ENGINEERING CO.

APPLIED-MICHIGAN, LTD

APPLIED INDUSTRIAL TECHNOLOGIES-CAPITAL LLC

	 	 	 	 	 
	By:

	 	/s/ Mark O. Eisele	 	 
	Name:

	 	 

Mark O. Eisele
	 	 
	Title:

	 	VP-CFO & Treasurer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]