
<PAGE>   1
                                                                   Exhibit 10(a)

















                 APPLIED INDUSTRIAL TECHNOLOGIES, INC.
            SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFITS PLAN
                      (JULY 1, 1997 RESTATEMENT)

























<PAGE>   2



                 APPLIED INDUSTRIAL TECHNOLOGIES, INC.
            SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFITS PLAN
                      (JULY 1, 1997 RESTATEMENT)

                           TABLE OF CONTENTS
                           -----------------
Section                                                                     Page
-------                                                                     ----

                                    ARTICLE I
                                   DEFINITIONS

1.1      Definitions.........................................................2
1.2      Construction........................................................4

                                   ARTICLE II
                                  PARTICIPATION

2.1      Participants........................................................5
2.2      Designation of Participants.........................................5

                                   ARTICLE III
                     SUPPLEMENTAL NORMAL RETIREMENT BENEFITS

3.1      Eligibility.........................................................6
3.2      Amount..............................................................6
3.3      Payment.............................................................6

                                   ARTICLE IV
                     SUPPLEMENTAL EARLY RETIREMENT BENEFITS

4.1      Eligibility.........................................................7
4.2      Amount..............................................................7
4.3      Payment.............................................................7

                                    ARTICLE V
                        SUPPLEMENTAL DISABILITY BENEFITS

5.1      Eligibility.........................................................8
5.2      Amount..............................................................8
5.3      Payment.............................................................8
5.4      Termination of Supplemental Disability Benefits.....................8
5.5      Medical Examinations................................................8

                                   ARTICLE VI
                               PAYMENT OF BENEFITS

6.1      Optional Methods of Payment........................................10
6.2      Effect of Various Circumstances Upon an Option.....................11
6.3      Payment Under an Option............................................12
6.4      Cessation of Payments Due to Competition...........................12
6.5      Competition........................................................12



                                      - i -



<PAGE>   3



                                   ARTICLE VII
                                CHANGE IN CONTROL

7.1      Eligibility for Supplemental Retirement Benefit....................14
7.2      Computation of Benefits Upon a Change of Control...................14
7.3      Payment of Benefits Upon a Change of Control.......................14

                                  ARTICLE VIII
                                 DEATH BENEFITS

8.1      Designation of Beneficiary.........................................15
8.2      Death Benefit......................................................15

                                   ARTICLE IX
                                 ADMINISTRATION

9.1      Authority of the Company...........................................16
9.2      Claims Procedure...................................................16

                                    ARTICLE X
                          AMENDMENT AND TERMINATION                         18

                                   ARTICLE XI
                                  MISCELLANEOUS

11.1     Non-Alienation of Benefits.........................................19
11.2     Payment of Benefits to Others......................................19
11.3     Plan Non-Contractual...............................................19
11.4     Trust..............................................................19
11.5     Interest of a Participant..........................................20
11.6     Claims of Other Persons............................................20
11.7     Actuarial Factors..................................................20
11.8     Severability.......................................................20
11.9     Governing Law......................................................20

                                     - ii -



<PAGE>   4



                      APPLIED INDUSTRIAL TECHNOLOGIES, INC.
                 SUPPLEMENTAL EXECUTIVE RETIREMENT BENEFITS PLAN
                           (JULY 1, 1997 RESTATEMENT)


         WHEREAS, the Bearings, Inc. Supplemental Executive Retirement Benefits
Plan (hereinafter referred to as the "Plan") was established by Bearings, Inc.
on January 21, 1988, for the benefit of certain officers and key executives; and

         WHEREAS, the Plan was restated as of July 1, 1993 and was subsequently
amended on one occasion; and

         WHEREAS, effective as of January 1, 1997, Bearings, Inc. changed its
name to Applied Industrial Technologies, Inc. (hereinafter referred to as the
"Company") and restructured certain of its operations; and 

        WHEREAS, the Board of Directors of the Company (hereinafter referred 
to as the "Board") has decided to revise certain benefits under the Plan; and 

         WHEREAS, the Board desires that the Plan be amended and restated to
reflect such name change, corporate restructuring, and benefit changes;

         NOW, THEREFORE, effective as of July 1, 1997, unless specifically
provided otherwise, the Bearings, Inc. Supplemental Executive Retirement
Benefits Plan is hereby renamed the Applied Industrial Technologies, Inc.
Supplemental Executive Retirement Benefits Plan and is amended and restated as
hereinafter set forth.



<PAGE>   5



                                    ARTICLE I

                                   DEFINITIONS
                                   -----------

                  1.1 DEFINITIONS. For purposes of the Plan, each of the
following words and phrases shall have the meaning hereinafter set forth unless
a different meaning is clearly required by the context:

                           (1) The term "ACCRUED PORTION" of a Participant's
         monthly supplemental normal retirement benefit determined as of any
         given date occurring prior to his Normal Retirement Date shall mean the
         amount of such Participant's monthly supplemental normal retirement
         benefit determined pursuant to the provisions of Section 3.2, based
         upon his Highest Monthly Final Average Compensation and years of
         Service on such date.

                           (2) The term "AFFILIATE" shall mean any member of a
         controlled group of corporations (as determined under Section 414(b) of
         the Code) of which the Company is a member; any member of a group of
         trades or businesses under common control (as determined under Section
         414(c) of the Code) with the Company; any member of an affiliated
         service group (as determined under Section 414(m) of the Code) of which
         the Company is a member; and any other entity which is required to be
         aggregated with the Company pursuant to the provisions of Section
         414(o) of the Code.

                           (3) The term "AFFILIATED GROUP" shall mean the group
         of entities which are Affiliates.

                           (4) The term "BENEFICIARY" shall mean the person or
         persons who is designated by a Participant to receive a death benefit
         under the Plan pursuant to the provisions of Article VIII.

                           (5) The term "BOARD" shall mean the Board of
         Directors of the Company.

                           (6) The term "CHANGE OF CONTROL" shall mean the
         occurrence of one of the following events:

                           (a)      The Company is merged, consolidated or
                                    reorganized into or with another entity and,
                                    immediately after such merger, consolidation
                                    or reorganization, the holders of Company
                                    voting stock immediately prior to the
                                    transaction hold, in the aggregate, less
                                    than a majority of the combined voting power
                                    of the then outstanding securities of the
                                    new entity;

                           (b)      The Company sells substantially all of its
                                    assets to another entity and, immediately
                                    after such sale, the holders of Company
                                    voting stock immediately prior to the sale
                                    hold, in the aggregate, less than a majority
                                    of the combined voting power of the then
                                    outstanding securities of the purchaser;

                                      -2-
<PAGE>   6

                           (c)      A report is filed, or is required to be
                                    filed, on Schedule 13D or Schedule 14D-1 (or
                                    any successor form) disclosing that
                                    any "person" has become a "beneficial owner"
                                    (as those terms are defined by the
                                    Securities Exchange Act of 1934) of Company
                                    securities representing 20% or more of the
                                    combined voting power of then outstanding
                                    securities of the Company;

                           (d)      The Company files, or is required to file, a
                                    report or proxy statement with the
                                    Securities and Exchange Commission
                                    disclosing in response to Form 8-K or
                                    Schedule 14A (or any successor form) that a
                                    change in control of the Company has or may
                                    have occurred, or will or may occur in the
                                    future, pursuant to a then-existing contract
                                    or transaction; or

                           (e)      If during any two-year period, the
                                    individuals who comprise all of the members
                                    of the Board cease, for any reason, to
                                    constitute at least three-fourths of the
                                    Board, except in the case in which the
                                    election of a director, or the nomination
                                    for election of a director by shareholders
                                    of the Company, was approved by a two-thirds
                                    vote of the directors then still in office
                                    who were directors at the beginning of such
                                    two-year period; provided, however, that no
                                    director shall be treated as being so
                                    approved, if such director was designated by
                                    an entity that has entered into an agreement
                                    with the Company to effectuate a merger,
                                    consolidation, reorganization, or sale of
                                    Company assets.

         Notwithstanding events set forth in subparagraphs (c) and (d) above,
         unless otherwise determined by a majority vote of the Board, a Change
         of Control shall not be deemed to have occurred solely because (i) the
         Company, (ii) an entity of which the Company directly or indirectly
         beneficially owns 50% or more of the entity's voting stock, or (iii)
         any employee stock ownership plan or any other employee benefit plan
         sponsored by the Company, either files or becomes obligated to file a
         report or proxy statement in response to Schedules 13D, 14D-1 or 14A,
         or Form 8-K (or any successor form), disclosing beneficial ownership by
         it of voting stock, whether in excess of 20% or otherwise, or because
         the Company reports that a change of control of the Company has or may
         have occurred, or will or may occur in the future, by reason of such
         beneficial ownership.

                           (7) The term "CODE" shall mean the Internal Revenue
         Code of 1986, as amended from time to time.

                           (8) The term "COMPANY" shall mean, for any period
         prior to January 1, 1997, Bearings, Inc., and for any period after
         December 31, 1996, Applied Industrial Technologies, Inc., its corporate
         successors, and the surviving corporation resulting from any merger of
         Applied Industrial Technologies, Inc. with any other corporation or
         corporations.

                           (9) The term "COMPENSATION" shall mean the total
         wages which are paid to or on behalf of a Participant during a calendar
         year by an Affiliate for services rendered as a common law employee,
         including base salary, incentive 


                                      -3-
<PAGE>   7

         compensation, commissions, bonuses, amounts deferred under any
         non-qualified deferred compensation program of an Affiliate, and any
         elective contributions that are made on behalf of such Participant
         under any plan maintained by an Affiliate and that are not includible
         in gross income under Section 125 or 402(e)(3) of the Code, but
         excluding moving or educational reimbursement expenses, amounts
         realized from the exercise of stock options, and imputed income
         attributable to any fringe benefit.

                           (10) The term "DISABILITY" shall mean the incapacity
         of a Participant due to any physical or mental condition which is
         incurred while an employee of an Affiliate and which results in the
         Participant being unable to perform the duties of his most recent
         position with the Affiliated Group and thereafter shall mean such
         continued incapacity so that the Participant is prevented from resuming
         the duties and responsibilities of his most recent position with the
         Affiliated Group or from obtaining a comparable position with another
         employer.

                           (11) The term "HIGHEST MONTHLY FINAL AVERAGE
         COMPENSATION" shall mean 1/12th of the average of the Compensation of a
         Participant for any three calendar years during the last ten calendar
         years of his employment with the Affiliated Group in which the
         Participant had the greatest Compensation; provided, however, that if a
         Participant did not receive Compensation for at least three calendar
         years, his Highest Monthly Final Average Compensation shall be
         determined by dividing his average Compensation for the calendar years
         in which he was employed by the Affiliated Group by 12.

                           (12) The term "NORMAL RETIREMENT DATE" shall mean the
         date on which a Participant attains 65 years of age.

                           (13) The term "PARTICIPANT" shall mean a key
         executive of the Company designated to participate in the Plan pursuant
         to the provisions of Article II of the Plan.

                           (14) The term "PLAN" shall mean the Applied
         Industrial Technologies, Inc. Supplemental Executive Retirement
         Benefits Plan (formerly known as the Bearings, Inc. Supplemental
         Executive Retirement Benefits Plan) as amended and restated herein
         effective as of July 1, 1997, with all amendments, modifications, and
         supplements hereafter made.

                           (15) The term "SERVICE" shall mean the aggregate
         period of time that a Participant is employed as an employee by any
         Affiliate or for which he is given credit pursuant to Section 2.2.

         1.2 CONSTRUCTION. Where necessary or appropriate to the meaning hereof,
the singular shall be deemed to include the plural, the plural to include the
singular, the masculine to include the feminine, and the feminine to include the
masculine.


                                      -4-
<PAGE>   8

                                   ARTICLE II

                                  PARTICIPATION
                                  -------------

                  2.1 PARTICIPANTS. The Participants in the Plan shall be such
officers and other key executives of the Company designated as Participants from
time to time pursuant to the provisions of Section 2.2.

                  2.2 DESIGNATION OF PARTICIPANTS. The designation of an
individual as a Participant shall be made by action of the Board or the
Executive Organization & Compensation Committee of the Board. In addition, the
Board or the Executive Organization & Compensation Committee of the Board may,
at the time of any such designation, award Service credit for prior employment,
not in excess of five years, to any individual who becomes a Participant after
July 1, 1997.


                                      -5-
<PAGE>   9



                                   ARTICLE III

                     SUPPLEMENTAL NORMAL RETIREMENT BENEFITS
                     ---------------------------------------

                  3.1 ELIGIBILITY. Any Participant who terminates his employment
with the Affiliated Group on or after his Normal Retirement Date shall be
eligible for a monthly supplemental normal retirement benefit determined in
accordance with the provisions of Section 3.2.

                  3.2 AMOUNT. The monthly supplemental normal retirement benefit
payable to an eligible Participant shall be equal to 45 percent of his Highest
Monthly Final Average Compensation reduced by 1/20th for each full year that his
years of Service are less than 20.

                  3.3 PAYMENT. Subject to the provisions of Articles VI and VII,
a monthly supplemental normal retirement benefit shall be paid to an eligible
Participant commencing with the month next following the month in which he
becomes eligible and applies for such benefit or, if later, the month he
designates and shall be payable monthly thereafter during his lifetime.


                                      -6-
<PAGE>   10



                                   ARTICLE IV

                     SUPPLEMENTAL EARLY RETIREMENT BENEFITS
                     --------------------------------------

                  4.1 ELIGIBILITY. Any Participant who terminates his employment
with the Affiliated Group after attainment of age 55 and the completion of 10
years of Service but prior to his Normal Retirement Date shall be eligible for a
monthly supplemental early retirement benefit determined in accordance with the
provisions of Section 4.2.

                  4.2 AMOUNT. The monthly supplemental early retirement benefit
payable to an eligible Participant shall be equal to the Accrued Portion of his
monthly supplemental normal retirement benefit on the date of his termination of
employment, reduced by .4166% for each full month that commencement of such
benefit precedes his Normal Retirement Date.

                  4.3 PAYMENT. Subject to the provisions of Articles VI and VII,
a monthly supplemental early retirement benefit shall be paid to an eligible
Participant commencing with the month next following the month in which he
becomes eligible and applies for such benefit or, if later, the month he
designates in writing, and shall be payable monthly thereafter during his
lifetime.


                                      -7-
<PAGE>   11



                                    ARTICLE V

                        SUPPLEMENTAL DISABILITY BENEFITS
                        --------------------------------

                  5.1 ELIGIBILITY. Any Participant whose employment with the
Affiliated Group is terminated due to Disability shall be eligible for a monthly
supplemental disability benefit determined in accordance with the provisions of
Section 5.2.

                  5.2 AMOUNT. The monthly supplemental disability benefit of an
eligible Participant shall be an amount which when added to any long term
disability benefits payable to such Participant under any other plan or program
maintained by an Affiliate (regardless of the source of contributions and
converted, if necessary, into a monthly benefit for purposes hereunder) equals
60% of a Participant's Highest Monthly Final Average Compensation.

                  5.3 PAYMENT. Subject to the provisions of Section 5.4 and
Articles VI and VII, a monthly supplemental disability benefit shall be paid to
an eligible Participant commencing 180 days after the onset of a Participant's
Disability and shall be payable monthly thereafter until the earlier of (i) the
Participant's Normal Retirement Date, or (ii) the Participant's death. Upon
attaining his Normal Retirement Date, any such Participant shall be entitled to
receive a monthly supplemental normal retirement benefit determined in
accordance with the provisions of Section 3.2, based upon his years of service
and Highest Monthly Final Average Compensation as of the time of the onset of
his Disability, and payable in accordance with the provisions of Section 3.3.

                  5.4 TERMINATION OF SUPPLEMENTAL DISABILITY BENEFITS. Monthly
supplemental disability benefit payments shall terminate if prior to a
Participant's Normal Retirement Date (i) he engages in any gainful employment or
occupation, other than for purposes of rehabilitation or purposes not
incompatible with the finding of Disability; or (ii) if it is determined that he
no longer has a Disability. 


                  5.5 MEDICAL EXAMINATIONS. The Company may, in its discretion,
require a Participant who is applying for a monthly supplemental disability
benefit or who is receiving a monthly supplemental disability benefit to submit
to such medical examinations as it may deem reasonably necessary; provided,
however, that no Participant shall be required to undergo such


                                      -8-
<PAGE>   12



examinations more than once a year. In the event a Participant refuses to submit
to any such examination, his monthly supplemental disability benefit may be
suspended by the Company.


                                      -9-
<PAGE>   13



                                   ARTICLE VI

                               PAYMENT OF BENEFITS
                               -------------------

                  6.1 OPTIONAL METHODS OF PAYMENT. Subject to the provisions of
Article VII, any Participant who becomes eligible under the Plan for a
supplemental normal or early retirement benefit may, in lieu of any benefits
otherwise payable under the Plan, elect to receive payment of such benefit in
accordance with any one of the following options:

                           OPTION A A reduced monthly supplemental retirement
                  benefit payable to such Participant for his lifetime following
                  his termination of employment with the continuance of a
                  monthly benefit equal to one-half of such reduced amount after
                  his death to his Contingent Annuitant during the lifetime of
                  the Contingent Annuitant, provided that such Contingent
                  Annuitant is living at the time such Participant's benefit
                  commences.

                           OPTION B A reduced monthly supplemental retirement
                  benefit payable to such Participant for his lifetime following
                  his termination of employment with the continuance of a
                  monthly benefit equal to three-quarters of such reduced amount
                  after his death to his Contingent Annuitant during the
                  lifetime of the Contingent Annuitant, provided such Contingent
                  Annuitant is living at the time such Participant's benefit
                  commences.

                           OPTION C A reduced monthly supplemental retirement
                  benefit payable to such Participant for his lifetime following
                  his termination of employment with the continuance of a
                  monthly benefit equal to such reduced amount after his death
                  to his Contingent Annuitant during the lifetime of the
                  Contingent Annuitant, provided such Contingent Annuitant is
                  living at the time such Participant's benefit commences.

                           OPTION D A reduced monthly supplemental retirement
                  benefit payable to such Participant for his lifetime following
                  his termination of employment with the continuance to the
                  person or persons designated by him as his Term-Certain
                  Beneficiary of such reduced amount after his death for the
                  remainder, if any, of the ten-year period commencing with the
                  date as of which the first payment of such monthly benefit is
                  made, and with any monthly benefits remaining unpaid upon the
                  death of the survivor of the Participant and his Term-Certain
                  Beneficiary to be made to the estate of such survivor.

                           OPTION E A commercial annuity in the form of a single
                  life annuity for the life of such Participant.

                           OPTION F A commercial annuity in the form of a cash
                  refund annuity.

                           OPTION G A commercial annuity for a term certain of
                  ten years and continuous for the life of the Participant if he
                  survives such term certain and with the continuance to the
                  persons designated by him of any benefits remaining unpaid
                  upon his death.

                           OPTION H A commercial annuity payable for the life of
                  such Participant with a survivor annuity for the life of his
                  Contingent Annuitant which shall be 


                                      -10-
<PAGE>   14



                  equal to 50%, 75%, or 100% of the annuity payable during the
                  joint lives of the Participant and his Contingent Annuitant.

                  The Contingent Annuitant of a Participant under Option A, B,
C, or H, or the Term-Certain Beneficiary under Option D or G shall be any person
so designated by such Participant. The monthly payments to be made under any
such option shall be in amounts the actuarial value of which, on the date of
commencement thereof or, if earlier, as of the Participant's Normal Retirement
Date, shall be the actuarial equivalent of the monthly benefits otherwise
payable to the Participant under the Plan, in lieu of which the option was
elected, taking into account the age of his Contingent Annuitant and determined
in accordance with the provisions of Section 11.7. A Participant may revoke or
elect to change any option made by him at any time prior to commencement of
benefit payments. In any case where a benefit payable under the Plan is to be
paid in the form of a commercial annuity, a commercial annuity contract shall be
purchased from an insurance company selected by the Participant and distributed
to such Participant. Upon the distribution of any amount used to purchase the
annuity contract, the insurance company issuing such contract shall be solely
responsible to the recipient of the contract for the annuity payments
thereunder. All certificates for commercial annuity benefits shall be
nontransferable, and no benefit thereunder may be sold, assigned, discounted, or
pledged. Any commercial annuity purchased under the Plan shall contain such
terms and provisions as may be necessary to satisfy the requirements under the
Plan.

                  6.2 EFFECT OF VARIOUS CIRCUMSTANCES UPON AN OPTION. The
election of an option under Section 6.1 shall become effective for all purposes
only upon the commencement of monthly payments to an eligible Participant
thereunder, as provided in Section 6.3. If such Participant dies before any
monthly benefit payment commences under such option, his election shall become
inoperative and ineffective, and no payment shall become due to his Contingent
Annuitant or Term-Certain Beneficiary under such option. If a Contingent
Annuitant or Term-Certain Beneficiary dies prior to the commencement of any
monthly benefit payment to such Participant under such option, his election
shall become inoperative and ineffective and benefit payments, if any, shall be
made under the Plan as if no such election had been made.


                                      -11-
<PAGE>   15

                  6.3 PAYMENT UNDER AN OPTION. A monthly benefit payment shall
be made to an eligible Participant who has elected under Section 6.1 an option
commencing at the same time as the monthly benefit payment otherwise payable to
him under the Plan would have commenced. Monthly benefit payments which become
payable to a Contingent Annuitant of a Participant under Option A, B, or C shall
commence with the month following the month in which the death of such
Participant occurs and shall be payable monthly thereafter during the life of
the Contingent Annuitant, the last payment being for the month in which the
death of the Contingent Annuitant occurs. Monthly payments which become payable
hereunder to a Term-Certain Beneficiary of a Participant under Option D shall
commence with the month following the month in which the death of such
Participant occurs, and the last such monthly payment shall be made for the last
month in the term certain; provided, however, that should any such monthly
payments become payable to the estate of any person or to a trust, a lump-sum
amount shall be paid to such estate or trust in lieu thereof. Such lump-sum
amount shall be equal to the present actuarial value of the aggregate monthly
payments otherwise payable to such estate or trust in accordance with the
provisions of Section 11.7.

                  6.4 CESSATION OF PAYMENTS DUE TO COMPETITION. Except in the
event of a Change of Control, each payment of monthly supplemental retirement
benefits under the Plan to a Participant shall be subject to the condition that
the Participant has not engaged in Competition with the Affiliated Group, as
defined in Section 6.5 below, at any time prior to the date of such payment.

                  6.5 COMPETITION. Competition for purposes of the Plan shall
mean assuming an ownership position or a position as an employee, consultant,
agent, or director with a business engaged in the manufacture, processing,
purchase, sale, design, or distribution of the same products manufactured, sold,
designed, or distributed by an Affiliate during the calendar year prior to the
date of termination of the Participant's employment; provided, however, that in
no event shall ownership of less than two percent of the outstanding capital
stock entitled to vote for the election of directors of a corporation with a
class of equity securities held of record by 


                                      -12-
<PAGE>   16

more than 500 persons in itself be deemed Competition; and provided further,
that all of the following events shall have taken place:

                           (i) The Board shall have given written notice to the
                  Participant that, in the opinion of the Board, the Participant
                  is engaged in Competition within the meaning of the foregoing
                  provisions of this Section 6.5, specifying the details
                  thereof;

                           (ii) The Participant shall have been given a
                  reasonable opportunity, upon receipt of such notice, to appear
                  before and to be heard by the Board with respect to his views
                  regarding the opinion of the Board that the Participant
                  engaged in competition;

                           (iii) The Board shall have given written notice to
                  the Participant that the Board determined that the Participant
                  is engaged in Competition; and

                           (iv) The Participant neither shall have ceased to
                  engage in such Competition within 30 days from his receipt of
                  notice of such determination nor shall have taken all
                  reasonable steps to that end during such 30-day period and
                  thereafter.


                                      -13-
<PAGE>   17



                                   ARTICLE VII

                                CHANGE IN CONTROL
                                -----------------

                  7.1 ELIGIBILITY FOR SUPPLEMENTAL RETIREMENT BENEFIT. In the
event of a Change of Control and regardless of Service or age, each Participant
who is employed by an Affiliate or who has incurred a Disability shall be
eligible to receive a monthly supplemental retirement benefit determined in
accordance with the provisions of Section 7.2 and paid pursuant to the
provisions of Section 7.3 in lieu of any other benefit under the Plan.

                  7.2 COMPUTATION OF BENEFITS UPON A CHANGE OF CONTROL. In the
event of a Change of Control, the monthly supplemental retirement benefit of an
eligible Participant shall be equal to the Accrued Portion of his monthly
supplemental normal retirement benefit; provided, however that for purposes of
calculating such benefit, each Participant who has not yet attained age 65 shall
be credited with additional years of Service and age equal to one-half of the
difference between 65 and his age on the date of such Change of Control, but not
in excess of 10.

                  7.3 PAYMENT OF BENEFITS UPON A CHANGE OF CONTROL. Any monthly
supplemental retirement benefit determined pursuant to the provisions of Section
7.2 shall not be paid monthly but instead shall be paid in a lump sum determined
using the actuarial factors and interest rate set forth in Section 11.7.
Moreover, in the event of a Change of Control, each Participant and each
Contingent Annuitant of a deceased Participant who is receiving monthly
supplemental retirement benefits under the Plan shall receive the actuarial
present value of future payments of such monthly benefits in a lump sum
determined pursuant to the provisions of Section 11.7. Any such lump sum payment
payable under this Section 7.3 shall be made to an eligible Participant or
eligible Contingent Annuitant as soon as reasonably practicable but in no event
later than 60 days of such Change of Control.


                                      -14-
<PAGE>   18



                                  ARTICLE VIII

                                 DEATH BENEFITS
                                 --------------

                  8.1 DESIGNATION OF BENEFICIARY. Each Participant may designate
a Beneficiary to whom death benefits determined in accordance with the
provisions of Section 8.2 may be payable. In the event a Participant does not
designate a Beneficiary or the designated Beneficiary of a Participant does not
survive the Participant, then the Beneficiary of such Participant shall be the
estate of such Participant. If any Beneficiary designated hereunder dies after
becoming entitled to receive a distribution from the Plan and before such
distribution is made to him in full, and if no other person or persons have been
designated to receive such distribution upon the happening of such contingency,
the estate of such deceased Beneficiary shall become the Beneficiary as to such
distribution.

                  8.2 DEATH BENEFIT. Upon the death of a Participant to whom
supplemental normal or early retirement benefits under the Plan have not yet
commenced to be paid or upon the later of (i) the death of a Participant to whom
supplemental normal or early retirement benefits under the Plan have commenced
to be paid or (ii) the death of such a Participant's Contingent Annuitant or
Term Certain Beneficiary, if any, as the case may be, the Beneficiary of such
Participant shall receive the present actuarial equivalent of the Accrued
Portion of the Participant's supplemental normal retirement benefit as of the
earlier of the date benefits under the Plan commenced to be paid to the
Participant or his death minus the aggregate benefit payments, if any, made to
such Participant and, if applicable, his Contingent Annuitant or Term Certain
Beneficiary under the Plan. Notwithstanding the foregoing provisions of this
Article VIII, no death benefit shall be payable with respect to any deceased
Participant who elected to receive his supplemental normal or early retirement
benefit in the form of a commercial annuity and no death benefit shall be
reduced due to the payment of supplemental disability benefits under the Plan.


                                      -15-
<PAGE>   19



                                   ARTICLE IX

                                 ADMINISTRATION
                                 --------------

                  9.1 AUTHORITY OF THE COMPANY. The Company shall be responsible
for the general administration of the Plan, for carrying out the provisions
hereof, and for making, or causing a grantor trust to make, any required
supplemental benefit payments under the Plan. The Company shall have all such
powers as may be necessary to carry out the provisions of the Plan, including
the power to determine all questions relating to eligibility for and the amount
of any supplemental retirement benefit and all questions pertaining to claims
for benefits and procedures for claim review; to resolve all other questions
arising under the Plan, including any questions of construction; and to take
such further action as the Company shall deem advisable in the administration of
the Plan. The Company may delegate any of its powers, authorities, or
responsibilities for the operation and administration of the Plan to any person
or committee so designated in writing by it and may employ such attorneys,
agents, and accountants as it may deem necessary or advisable to assist it in
carrying out its duties hereunder. The actions taken and the decisions made by
the Company hereunder shall be final and binding upon all interested parties.

                  9.2 CLAIMS PROCEDURE. If a claim for benefits under the Plan
is denied in whole or in part by the Company, the claimant shall be notified in
writing within 90 days of filing of the claim with the Company of (i) the
specific reasons of such denial, (ii) the pertinent Plan provisions on which the
denial is based, (iii) any additional material or information necessary for the
claimant to perfect his claim (with an explanation as to the reason such
material or information is necessary), and (iv) further steps which the claimant
can take in order to have his claim reviewed (including a statement that the
claimant or his duly authorized representative may review Plan documents and
submit issues and comments regarding the claim to the Company). If the claimant
wishes further consideration of his position, he may request a review of his
claim by filing a written request with the Company within 90 days after receipt
of the written notification provided for in the preceding sentence. The
claimant's request for review 



                                      -16-
<PAGE>   20

may, but need not, include a request for a hearing on the claim by the Company.
If such a hearing is requested, it will be held within 30 days after the receipt
of such request for review. A final decision on the claim shall be made by the
Company and communicated to the claimant within 60 days after the receipt of the
request for review; provided, however, that if a hearing has been requested, the
Company may extend said 60 day period by up to 30 additional days. Written
notice of any such extension shall be furnished to the claimant prior to the
commencement of the extension. The final decision hereunder shall be
communicated in writing to the claimant with a statement of the specific reasons
for any denial and the pertinent Plan provisions on which any such denial is
based. If a final decision on review is not furnished to the claimant within the
required time period, the claim shall be deemed to be denied on review.

                                      -17-
<PAGE>   21


                                    ARTICLE X

                            AMENDMENT AND TERMINATION
                            -------------------------

                  The Company reserves the right to amend or terminate the Plan
at any time by action of the Board; provided, however, that no such action shall
adversely affect any Participant or Contingent Annuitant who is receiving
retirement benefits or supplemental disability benefits under the Plan or who
has accrued a supplemental retirement benefit under the Plan, unless an
equivalent benefit is provided under another plan sponsored by the Company.

                                      -18-
<PAGE>   22



                                   ARTICLE XI

                                  MISCELLANEOUS
                                  -------------

                  11.1 NON-ALIENATION OF BENEFITS. No benefit under the Plan
shall at any time be subject in any manner to alienation or encumbrance. If any
Participant, Contingent Annuitant, or Term-Certain Beneficiary shall attempt to,
or shall, alienate or in any way encumber his rights or benefits under the Plan,
or any part thereof, or if by reason of his bankruptcy or other event happening
at any time any such benefits would otherwise be received by anyone else or
would not be enjoyed by him, his interest in all such benefits shall
automatically terminate and the same shall be held or applied to or for the
benefit of such person, his spouse, children, or other dependents as the Company
may select.

                  11.2 PAYMENT OF BENEFITS TO OTHERS. If any Participant,
Contingent Annuitant, or Term-Certain Beneficiary to whom a benefit is payable
under the Plan is unable to care for his affairs because of illness or accident,
any payment due (unless prior claim therefor shall have been made by a duly
qualified guardian or other legal representative) may be paid to the spouse,
parent, brother, sister, adult child, or any other individual deemed by the
Company to be maintaining or responsible for the maintenance of such person. Any
payment made in accordance with the provisions of this Section 11.2 shall be a
complete discharge of any liability of the Plan with respect to the benefit so
paid.

                  11.3 PLAN NON-CONTRACTUAL. Nothing herein contained shall be
construed as a commitment or agreement on the part of any Participant to
continue his employment with the Company, and nothing herein contained shall be
construed as a commitment on the part of the Company to continue the employment
or the annual rate of compensation of any Participant for any period, and all
Participants shall remain subject to discharge to the same extent as if the Plan
had never been established.

                  11.4 TRUST. In order to provide a source of payment for its
obligations under the Plan, the Company may establish a grantor trust.


                                      -19-
<PAGE>   23

                  11.5 INTEREST OF A PARTICIPANT. The obligation of the Company
under the Plan to provide a Participant with supplemental retirement benefits
supplemental disability benefits constitutes the unsecured promise of the
Company to make payments as provided herein, and no person shall have any
interest in, or a lien or prior claim upon, any property of the Company.

                  11.6 CLAIMS OF OTHER PERSONS. The provisions of the Plan shall
in no event be construed as giving any person, firm or corporation any legal or
equitable right against the Company, its officers, employees, or directors,
except any such rights as are specifically provided for in the Plan or are
hereafter created in accordance with the terms and provisions of the Plan.

                  11.7 ACTUARIAL FACTORS. Supplemental retirement benefits of a
Participant that are payable in a single sum form pursuant to the provisions of
Sections 6.3, 7.3, or 8.2 shall be determined by using the interest rate on
30-year U.S. Treasury bonds for the January of the calendar year in which the
supplemental retirement benefit of a Participant under the Plan is to be paid in
a lump sum form and the 1983 Group Annuity Mortality Table (without projection
and a fixed blend of 50 percent of the male mortality and 50 percent of the
female mortality rates).

                  11.8 SEVERABILITY. The invalidity or unenforceability of any
particular provision of the Plan shall not affect any other provision hereof,
and the Plan shall be construed in all respects as if such invalid or
unenforceable provision were omitted herefrom.

                  11.9 GOVERNING LAW. The provisions of the Plan shall be
governed and construed in accordance with the laws of the State of Ohio.

                  Executed at Cleveland, Ohio, this 10th day of November, 1997.

                           APPLIED INDUSTRIAL TECHNOLOGIES, INC.

                           By: /s/ John C. Dannemiller
                               -------------------------------------------------
                                  Title: Chairman, Chief Executive Officer &
                                         President

                           And: /s/ Robert C. Stinson
                               -------------------------------------------------
                                   Title: Vice President-Chief Administrative
                                          Officer, General Counsel & Secretary


                                      -20-
