Document:

Exhibit 10.02

EXHIBIT 10.02

STOCK APPRECIATION RIGHTS AWARD TERMS AND CONDITIONS

Your Stock Appreciation Rights Award (the “SARs” or the “Award”) is made by Applied Industrial
Technologies, Inc., an Ohio corporation (“Applied”). For purposes of these terms and conditions,
employment by a parent, subsidiary, or an affiliate of Applied shall be considered employment by
Applied.

1. Grant of SARs; Exercisability. The Award is governed by Applied’s 2007 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 these terms and
conditions. Upon valid exercise, the Award entitles you to receive such number of shares of
Applied common stock (“Shares”) that have a fair market value equal to the difference (if positive)
between the fair market value of (i) a Share on the date of exercise over (ii) the Base Price,
multiplied by (iii) the number of Shares with respect to which the Award is exercised, subject to
the following conditions:

(a) Except as otherwise provided in Sections 2 and 7, below, your Award will be exercisable only
if and after you have remained in Applied’s continuous employ from the Award’s grant date (the
“Grant Date”) to the vesting date of all or the specified portion of your Award. Your Award
vests with respect to only 25% of the aggregate number of Shares to which it relates after one
year of continuous employment from the Grant Date, which percentage increases to 50% after two
years, to 75% after three years, and to 100% after four years of continuous employment from the
Grant Date.

(b) Your Award shall expire at the end of the 10-year period commencing with the Grant Date (the
“Term”), or upon such earlier expiration or separation from service date as may be provided by
Sections 2 and 7 below. The SARs shall not be exercisable thereafter.

2. Termination of SARs. If, during the Term, you incur a separation from service from Applied for
any reason, you may exercise your SARs, to the extent you were entitled to exercise them
immediately prior to your separation from service, at any time within three months after your
separation from service (but only during the Term); provided, however, that (i) if you retire under
an Applied retirement plan, then the SARs shall become fully exercisable and, at any time within
three years after your retirement (but only during the Term), you may exercise the SARs; (ii) if
you incur a separation from service due to your permanent and total disability, then the SARs shall
become fully exercisable and, at any time within one year after your separation from service (but
only during the Term), you may exercise the SARs; and (iii) if you die while employed by Applied,
then the SARs shall become fully exercisable and, at any time within one year after your death (but
only during the Term), the person entitled by will or applicable law to exercise the SARs may do
so.

 

 

 

Awards are intended to create an incentive for recipients to act in Applied’s best interests.
Notwithstanding anything in these terms to the contrary,

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

(b) The committee may, in its sole discretion, require you immediately to repay Shares (and any
dividends and distributions thereon) issued pursuant to the Award within the previous 36 months
(or any proceeds thereof) if (I) Applied restates its historical consolidated financial
statements and (II) the Committee determines, in good faith, that (x) the restatement is a
result of your, or another executive officer’s, willful misconduct that is unethical or illegal,
and (y) your earnings pursuant to the Award were based on materially inaccurate financial
statements or materially inaccurate performance metrics that were invalidated by the
restatement.

The provisions of this section are a fundamental term of the Award.

3. Method of Exercise; Rights of Holder. During your life, your Award may be exercised only by
you, your guardian, or legal representative. Upon your death, your Award may be exercised by the
person entitled by will or by the laws of descent and distribution.

Your SARs may be exercised by delivering to Applied at its principal executive offices (directed to
the attention of the Chief Financial Officer or Corporate Secretary) a written notice (which may
include facsimile transmission or electronic mail), signed by you or such other person entitled to
exercise the SARs, of the election to exercise the SARs and stating the number of Shares as to
which the SARs are being exercised. The SARs shall be deemed exercised as of the date Applied
receives the notice. If the SARs are exercised, as provided herein, by any person other than you,
the notice shall be accompanied by appropriate evidence of that person’s right to exercise the
SARs. As a condition to your valid exercise of the SARs, you hereby consent to Applied withholding
from the Shares issuable upon exercise (if any), such number of Shares the fair market value of
which Applied determines to be equal to the amount required to be withheld pursuant to applicable
federal, state or local law, including tax withholding requirements. Promptly following the proper
exercise of the SARs, Applied shall issue in the name of the person exercising the SARs, a
certificate representing the Shares due hereunder. Your SARs may be exercised only with respect to
a whole number of Shares, and may not be exercised in fractional amounts.

Notwithstanding the foregoing and the restrictions on exercise contained in Section 2, if a Change
in Control of Applied occurs, then your SARs then outstanding shall become fully exercisable as of
the date of the Change in Control.

In addition, following a Change in Control of Applied, no provision hereof shall operate to reduce
any time frame or to limit any economic benefit to which you are entitled under this Award or the
Plan, including the occurrence of any of the transactions described in Section 7(a) through (c)
below. In the event of the occurrence of any of the transactions described in Section 7(a) through
(c), the provisions in Section 7 purporting to terminate your SARS shall not apply and you shall
have the option either to exercise your rights under Section 7 or to deem the SARs assumed by the
successor within the meaning of Section 424(a) of the Internal Revenue Code, whichever is more
favorable to you.

As an SAR holder, you shall have absolutely no rights as a shareholder, whether before or after
vesting of all or any portion of your Award.

 

 

 

4. Limitations on Exercise. Your SARs shall not be exercisable if such exercise or the issuance of
Shares pursuant to your Award would violate:

(a) Any state securities law;

(b) Any registration or other requirements under the Securities Act of 1933, as amended (the
“Act”), the Securities Exchange Act of 1934, as amended, or any stock exchange’s listing
requirements; or

(c) Any other legal requirement of any governmental authority.

If your exercise of SARs is prevented by the terms of any of the foregoing subsections, and the
Term of the SARs expires, then you may, within 30 days after Applied notifies you that your
exercise is no longer prevented by this Section 4, exercise the SARs to the extent they would have
been exercisable but for the operation of this Section 4.

Furthermore, if a registration statement with respect to Shares issuable upon exercise of the SARs
is not in effect or if Applied’s counsel otherwise deems it necessary or desirable in order to
avoid possible violations of the Act, Applied may require, as a condition to its issuance and
delivery of certificates for the Shares, the delivery to Applied of a commitment in writing by the
person exercising the SARs that (i) at the time of the exercise it is his intention to acquire the
Shares for his own account for investment only and not with a view to, or for resale in connection
with, the distribution thereof; (ii) the person understands that the Shares may be “restricted
securities” as defined in Rule 144 issued under 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 representing
the Shares a legend reflecting that commitment and Applied may refuse to permit transfer of the
Shares 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.

5. No Guaranty of Employment. The Award is not a guaranty of employment or commitment by Applied
of continued employment. Nothing in the Award or these terms and conditions alters, limits or
restricts any right Applied would otherwise have to terminate or modify the terms of your
employment.

6. Nonassignability. The Award is 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 or
with the prior written consent of Applied.

7. Liquidation, Dissolution, Merger, Sale of Substantially All Assets. If (i) Applied is to be
merged, consolidated or reorganized into or with another entity so that Applied is not the
surviving corporation and, immediately after such event, the holders of Shares immediately prior to
the event hold, in the aggregate, less than a majority of the combined voting power of the then
outstanding securities of the new entity, (ii) Applied is to be dissolved or liquidated, or (iii)
substantially all of Applied’s assets are to be sold, then the Committee shall give you 30 days’
prior written notice. Upon the giving of that notice, if you are employed by Applied, then the
SARs shall become fully vested and exercisable. Within the 30-day period (but only during the
Term), you shall have the right to exercise your SARs. Thereafter, notwithstanding any other
provision of these terms and conditions, the SARs shall expire, unless “assumed” by another
corporation within the meaning of Section 424(a) of the Internal Revenue Code.

8. Adjustments. In the event (i) of a stock dividend or stock split or (ii) the Shares are changed
into or exchanged for a different number or kind of securities of Applied or another entity, then
the Shares purchasable or the Base Price hereunder shall be equitably adjusted so that the SARs
represent the right to
acquire Shares or the number and kind of other securities that are economically equivalent to what
the Shares would have represented had the SARs been fully exercised immediately preceding such
event.

 

 

 

In the event other changes or events relating to the Shares fundamentally change the value of the
Shares or securities for which the SARs are exercisable, then the Committee may make, in its sole
discretion, such adjustments in the terms of the SARs as the Committee may determine is equitably
required by the change or event.

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 shall be conclusive for all purposes.

10. Relationship to the Plan. In the event of any inconsistency between these terms and conditions
and any provision of the Plan or the Committee’s policies, the Plan or the policies shall govern.
Terms used but not otherwise defined in these terms and conditions shall have the meaning ascribed
them in the Plan. Notwithstanding any provisions hereof, these terms and conditions and the SARs
granted shall be subject to all of the Plan’s provisions in effect from time to time, which are
incorporated herein by reference.

11. Severability. The provisions of these terms and conditions are severable and if any one or
more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions shall nevertheless be binding and enforceable.

12. Applicable
Law. The validity, construction, interpretation and enforceability of these terms
and conditions shall be determined and governed by the laws of the State of Ohio without giving
effect to the principles of conflicts of law.Exhibit 10.03

EXHIBIT 10.03

RESTRICTED STOCK UNITS TERMS AND CONDITIONS

1. Award of Restricted Stock Units. The Executive Organization & Compensation Committee (the
“Committee”) of the Board of Directors of Applied Industrial Technologies, Inc. (“Applied”) on the
Grant Date awarded you a certain number of restricted stock units (the “RSUs”). Such award
represents your right to receive an equal number of shares of Applied common stock (“Shares”),
issuable from Applied’s available treasury shares, upon the expiration of the Restriction Period
(as defined in Section 3 hereof). The terms and conditions of the RSUs as set forth herein (the
“Terms”) together with the Applied Industrial Technologies, Inc. 2007 Long-Term Performance Plan
(the “Plan”) govern your rights with respect to the RSUs. Notwithstanding the foregoing, however,
in the event of any conflict between the provisions of the Plan and the Terms, the provisions of
the Plan shall govern. Moreover, it should be noted that unless otherwise provided herein,
capitalized words in the Terms shall have the same meanings as set forth in the Plan.

2. Rights during Restriction Period. You shall not have the right to sell, exchange,
transfer, pledge, hypothecate, or otherwise encumber or dispose of the RSUs until all conditions
with respect to vesting and distribution have been met. Nevertheless, during the Restriction
Period and so long as no forfeiture has occurred, you shall be entitled to receive cash payments
equal to the dividends and cash distributions paid on Shares underlying the RSUs (“Dividend
Equivalents”) to the same extent and on the same date as if each RSU were a Share; provided,
however, that no Dividend Equivalents shall be payable to you with respect to dividends or
distributions the record date for which occurs on or after (i) the date on which a forfeiture of
the RSUs has occurred, (ii) the date on which the Restriction Period has expired, or (iii) the date
on which issuance of Shares to you has occurred. You shall not have voting rights with respect to
the RSUs and, until the issuance of Shares in settlement of the RSUs, you shall not be treated as a
shareholder with respect to the Shares.

3. Restriction Period. The term “Restriction Period” means the period from the Grant Date
until the 3rd anniversary of the Grant Date.

4. Vesting. Except as specifically provided otherwise in Sections 5 and 6, you will be 100%
vested in the RSUs as of the end of the Restriction Period; provided, however, that in the event
you incur a Separation from Service during the Restriction Period after attaining age 55 and
completing at least ten years of service with Applied, you will be vested at the end of the
Restriction Period in a pro rata portion of the RSUs equal to a fraction the numerator of which is
the number of fiscal quarters (including a portion of a quarter) elapsed in the Restriction Period
prior to the date of such Separation from Service and the denominator of which is twelve.

5. Separation from Service. Notwithstanding the provisions of Section 4, but subject to the
provisions of paragraphs (a) and (b) hereunder, if, during the Restriction Period, you incur a
Separation from Service (as defined in Section 409A) from Applied due to death or Disability (as
defined under Section 409A) then (i) you (or your beneficiary designated to Applied in writing)
shall be vested in a pro rata portion of the RSUs equal to a fraction the numerator of which is the
number of fiscal quarters (including a portion of a quarter) elapsed in the Restriction Period
prior to the date of such Separation from Service and the denominator of which is twelve, and (ii)
the remaining RSUs shall be deemed forfeited. In the event, however, that you, during the
Restriction Period, incur a Separation from Service from Applied for any reason other than (i)
those specifically set forth above or in Section 6, or (ii) termination after attaining age 55 and
completing at least ten years of service with Applied, then the entire award of RSUs shall be
forfeited and no amount shall be due or payable to you under the Terms. Because
awards of RSUs are intended to create an incentive for recipients to act in Applied’s best
interests, notwithstanding anything in the Terms to the contrary:

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

 

 

 

(b) The Committee may, in its sole discretion, require you immediately to repay all Shares
(and any dividends, distributions, and Dividend Equivalents thereon) issued pursuant to the award
of RSUs hereunder within the previous 36 months (or any proceeds thereof) if (I) Applied restates
its historical consolidated financial statements and (II) the Committee determines, in good faith,
that (x) the restatement is a result of your, or another executive officer’s, willful misconduct
that is unethical or illegal, and (y) your earnings pursuant to the award were based on materially
inaccurate financial statements or materially inaccurate performance metrics that were invalidated
by the restatement.

6. Change in Control. Notwithstanding the provisions of Section 4, upon the occurrence of any
Change in Control (as defined under Section 409A) during the Restriction Period, all of the RSUs
awarded hereunder to you shall be 100% vested.

7. Adjustment of RSUs for Certain Events. In the event of a stock split, stock dividend,
combination, reclassification, recapitalization, merger, consolidation, exchange, spin-off,
spin-out, or other distribution of assets to shareholders, or other similar event or change in
capitalization such that shares of Applied common stock are changed into or become exchangeable for
a different number of shares, thereafter the number of RSUs will be increased or decreased, as the
case may be, in direct proportion to the increase or decrease in the number of shares of common
stock by reason of such change in corporate structure; provided, however, that the number of RSUs
shall always be a whole number. If there occurs any other change in the number or kind of
outstanding shares of common stock or other Applied securities, or of any shares of stock or other
securities into which such shares of common stock shall have been changed or for which they shall
have been exchanged, then Applied may adjust the number or kind of RSUs or other securities into
which the RSUs may be settled, as the Committee, in its sole discretion, may determine is
equitable, and such adjustment so made shall be effective and binding for all purposes.

8. Settlement of Award and Distribution of Shares. Your award of RSUs hereunder shall be
settled in whole Shares. Fractional Shares shall not be issuable hereunder and any fractional
Share shall be disregarded. Except as specifically provided otherwise in this Section 8, Shares
subject to an award of RSUs hereunder shall only be issued and distributed to you in a single sum
of whole Shares within the 75-day period after the end of the Restriction Period. Notwithstanding
the foregoing, in the event that your RSUs become vested due to death, Disability or a Change in
Control, the award of RSUs hereunder shall be settled in a single sum of whole Shares within the
75-day period after such vesting. In the event that any such 75-day period begins in one calendar
year and ends in another, you (or your beneficiary as the case may be) shall not have the right to
designate the calendar year of payment. Moreover, notwithstanding the foregoing, if you are a
Specified Employee, a distribution of Shares may not be made until within the 30-day period
commencing with the first day of the seventh month following the month of
any Separation from Service for reasons other than Disability or a Change in Control, or, if
earlier, your death, except as maybe otherwise permitted under Section 409A.

9. Payment of Taxes. Upon (or immediately prior to) the vesting of the RSUs, you will be
required to pay to Applied, or make arrangements satisfactory to the Committee regarding payment
of, any federal, state or local taxes of any kind required by law to be withheld by Applied
attributable to the award of the RSUs hereunder.

10. Section 409A Compliance. To the extent applicable, it is intended the Terms and the award
of RSUs shall comply with or be exempt from the provisions of Section 409A and any interpretations
of these terms shall be consistent with such intent.

 

 

 

11. Administration of the Plan. The Committee shall have conclusive authority, subject to the
express provisions of the Plan as in effect from time to time and the Terms, to construe the Terms
and the Plan, and to establish, amend, and rescind rules and regulations for the Plan’s
administration. The Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Terms in the manner and to the extent it shall deem expedient to carry the
Plan into effect, and it shall be the sole and final judge of such expediency. Applied’s Board of
Directors (the “Board”) may from time to time grant to the Committee such further powers and
authority as the Board shall determine to be necessary or desirable. Notwithstanding any other
provision of these terms, any amendment, construction, establishment, rescission or correction of
the type referred to above which is made or adopted following a Change in Control, and which
amendment, construction, establishment or correction adversely affects your rights hereunder, shall
be in writing and shall be effective only with your express and prior written consent .

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

13. Severability. The provisions of the Terms are severable and if any one or more provisions
are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining
provisions shall nevertheless be binding and enforceable.

14. No Guarantee of Employment. The Terms and your award shall not confer upon you any rights
whatsoever other than those expressly set forth herein, in the Plan or in policies adopted by the
Committee. Nothing in the Terms shall (i) interfere with or limit in any way Applied’s right to
terminate your employment at any time, (ii) confer upon you any right to continued employment with
Applied, or (iii) create any contractual or other right to receive additional awards or other Plan
benefits in the future.

15. Requirements of Law. The granting of the RSUs hereunder shall be subject to all
applicable laws, rules and regulations, and to such approvals by any governmental agency, national
securities exchange, or automated quotation system may be required. Notwithstanding any other
provision of the Plan or the Terms, Applied shall not be obligated to issue, deliver or transfer
any Shares, make any distribution of benefits under the Plan or the Terms, or take any other
action, unless such delivery, distribution, or action, unless such delivery, distribution, or
action is in compliance with all applicable laws, rules and regulations (including, but not limited
to, the requirements of the Securities Act and Section 409A).

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

17. Applicable Law. The validity, construction, interpretation and enforceability of these
Terms shall be determined and governed by the laws of the State of Ohio without giving effect to
the principles of conflicts of law.

(September 2009)

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