Exhibit (10)(b)* to Report
on Form 10-K for Fiscal
Year Ended June 30, 2001
by Parker-Hannifin Corporation

 

 

Parker-Hannifin Corporation Change in Control Severance Plan, as amended.

 

 

 

*Numbered in accordance with Item 601 of Regulation S-K.

PARKER-HANNIFIN CORPORATION
CHANGE IN CONTROL SEVERANCE PLAN

        The Board of Directors of Parker-Hannifin Corporation (the "Company")
has determined that it is in the best interests of the Company and its
stockholders to secure the continued services and dedication and objectivity of
its management employees in the event of any threat or occurrence of, or
negotiation or other action that could lead to, or create the possibility of, a
Change in Control (as defined in Section 1(d)) of the Company, without concern
as to whether such employees might be hindered or distracted by personal
uncertainties and risks created by any such possible Change in Control. To
encourage the full attention and dedication to the Company by such employees,
the Board has authorized the Company to adopt the Parker-Hannifin Corporation
Change in Control Severance Plan (the "Plan").

        1.      Definitions. As used in this Plan, the following terms shall
have the respective meanings set forth below:

        (a)         "Board" means the Board of Directors of the Company.

       (b)                "Bonus" means the annual bonuses payable pursuant to
the RONA Plan and the Target Incentive Program.

       (c)         "Cause" means (1) a material breach by a Participant (as
defined in Section 1(j)) of the duties and responsibilities of the Participant
(other than as a result of incapacity due to physical or mental illness) which
is demonstrably willful and deliberate on the Participant's part, which is
committed in bad faith or without reasonable belief that such breach is in the
best interests of the Company and which is not remedied in a reasonable period
of time after receipt of written notice from the Company specifying such breach
or (2) the commission by the Participant of a felony involving moral turpitude.
The determination of Cause shall be made by the Board unless expressly delegated
in writing by the Board to the Compensation Committee of the Board (the
"Committee"). Cause shall not exist unless and until the Company has delivered
to the Participant a copy of a resolution duly adopted by three-quarters (3/4)
of the Board (or a majority of the Committee) at a meeting of the Board (or the
Committee) called and held for such purpose (after reasonable notice to the
Participant and an opportunity for the Participant, together with the
Participant's counsel, to be heard before the Board or the Committee, as the
case may be), finding that in the good faith opinion of the Board (or the
Committee) the Participant was guilty of the conduct set forth in this Section
1(c) and specifying the particulars thereof in detail. The Company must notify
the Participant that it believes "Cause" has occurred within ninety (90) days of
its knowledge of the event or condition constituting Cause. For the purposes of
clause (1) above, any act, or failure to act, by the Participant based upon
authority given pursuant to a resolution duly adopted by the Board or based upon
the advice of counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, by the Participant in good faith and in the best
interests of the Company.

                (d) "Change in Control" means the occurrence of one of the
following events:               (i) any "person" (as such term is defined in
Section 3(a)(9) of the Securities Exchange Act of 1934 (the "Exchange Act") and
as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing 20% or more of the
combined voting power of the Company's then outstanding securities eligible to
vote for the election of the Board (the "Company Voting Securities"); provided,
however, that the event described in this paragraph shall not be deemed to be a
Change in Control by virtue of any of the following situations: (A) an
acquisition by the Company or any Subsidiary; (B) an acquisition by any employee
benefit plan sponsored or maintained by the Company or any Subsidiary; (C) an
acquisition by any underwriter temporarily holding securities pursuant to an
offering of such securities; (D) a Non-Control Transaction (as defined in
paragraph (iii)); (E) with respect to a Participant, any acquisition by the
Participant or any group of persons (within the meaning of Sections 13(d)(3) and
14(d)(2) of the Exchange Act) including the Participant (or any entity in which
the Participant or a group of persons including the Participant, directly or
indirectly, holds a majority of the voting power of such entity's outstanding
voting interests); or (F) the acquisition of Company Voting Securities from the
Company, if a majority of the Board approves a resolution providing expressly
that the acquisition pursuant to this clause (F) does not constitute a Change in
Control under this paragraph (i);               (ii) individuals who, at the
beginning of any period of twenty-four (24) consecutive months, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority thereof, provided that any person becoming a director subsequent to the
beginning of such twenty-four (24) month period, whose election, or nomination
for election, by the Company's shareholders was approved by a vote of at least
two-thirds of the directors comprising the Incumbent Board who are then on the
Board (either by a specific vote or by approval of the proxy statement of the
Company in which such person is named as a nominee for director, without
objection to such nomination) shall be, for purposes of this paragraph (ii),
considered as though such person were a member of the Incumbent Board; provided,
however, that no individual initially elected or nominated as a director of the
Company as a result of an actual or threatened election contest with respect to
directors or 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 a
member of the Incumbent Board;      

        (iii) the consummation of a merger, consolidation, share exchange or
similar form of corporate reorganization of the Company or any Subsidiary that
requires the approval of the Company's stockholders, whether for such
transaction or the issuance of securities in connection with the transaction or
otherwise (a "Business Combination"), unless (A) immediately following such
Business Combination: (1) more than 50% of the total voting power of the
corporation resulting from such Business Combination (the "Surviving
Corporation") or, if applicable, the ultimate

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  parent corporation which directly or indirectly has beneficial ownership of
100% of the voting securities) eligible to elect directors of the Surviving
Corporation (the "Parent Corporation"), is represented by Company Voting
Securities that were outstanding immediately prior to the Business Combination
(or, if applicable, shares into which such Company Voting Securities were
converted pursuant to such Business Combination), and such voting power among
the holders thereof is in substantially the same proportion as the voting power
of such Company Voting Securities among the holders thereof immediately prior to
the Business Combination, (2) no person (other than any employee benefit plan
sponsored or maintained by the Surviving Corporation or Parent Corporation) is
or becomes the beneficial owner, directly or indirectly, of 20% or more of the
total voting power of the outstanding voting securities eligible to elect
directors of the Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation), and (3) at least a majority of the members of the board
of directors of the Parent Corporation (or, if there is no Parent Corporation,
the Surviving Corporation), following the Business Combination, were members of
the Incumbent Board at the time of the Board's approval of the execution of the
initial agreement providing for such Business Combination (a "Non-Control
Transaction") or (B) the Business Combination is effected by means of the
acquisition of Company Voting Securities from the Company, and a majority of the
Board approves a resolution providing expressly that such Business Combination
does not constitute a Change in Control under this paragraph (iii); or      
        (iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or the sale or other disposition of
all or substantially all of the assets of the Company and its Subsidiaries.    
                Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any person acquires beneficial ownership of more
than 20% of the Company Voting Securities as a result of the acquisition of
Company Voting Securities by the Company which, by reducing the number of
Company Voting Securities outstanding, increases the percentage of shares
beneficially owned by such person; provided, that if a Change in Control would
occur as a result of such an acquisition by the Company (if not for the
operation of this sentence), and after the Company's acquisition such person
becomes the beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities beneficially
owned by such person, a Change in Control shall then occur.                 
   Notwithstanding anything in this Plan to the contrary, if the Participant's
employment is terminated prior to a Change in Control, and the Participant
reasonably demonstrates that such termination was at the request of a third
party who has indicated an intention or taken steps reasonably calculated to
effect a Change in Control (a "Third Party"), then for all purposes of this
Plan, the date immediately prior to the date of such termination of employment
shall be deemed to be the date of a Change in Control for such Participant.

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        (e)         "Company" means Parker-Hannifin Corporation, an Ohio
corporation.

        (f)         "Date of Termination" means the date on which a
Participant's employment by the Company terminates.

        (g)         "Effective Date" means March 1, 1996.

        (h)         "Good Reason" means, without a Participant's express written
consent, the occurrence of any of the following events after a Change in
Control:

                     (1) the assignment to the Participant of any duties
inconsistent in any adverse respect with the Participant's position(s), duties,
responsibilities or status with the Company immediately prior to such Change in
Control, (2) an adverse change in the Participant's reporting responsibilities,
titles or offices with the Company as in effect immediately prior to such Change
in Control; (3) any removal or involuntary termination of the Participant from
the Company otherwise than as expressly permitted by this Plan or any failure to
re-elect the Participant to any position with the Company held by the
Participant immediately prior to such Change in Control; (4) a reduction by the
Company in the Participant's rate of annual base salary as in effect immediately
prior to such Change in Control or as the same may be increased from time to
time thereafter; (5) any requirement of the Company that the Participant (A) be
based anywhere more than twenty-five (25) miles from the facility where the
Participant is located at the time of the Change in Control or (B) travel on
Company business to an extent substantially more burdensome than the travel
obligations of the Participant immediately prior to such Change in Control; (6)
the failure of the Company to (A) continue in effect any employee benefit plan
or compensation plan in which the Participant is participating immediately prior
to such Change in Control, or the taking of any action by the Company which
would adversely affect the Participant's participation in or reduce the
Participant's benefits under any such plan (including the failure to provide the
Participant with a level of discretionary incentive award grants consistent with
the Company's grants of such awards to the Participant during the three-Year
period immediately prior to the Change in Control), (B) provide the Participant
and the Participant's dependents with welfare benefits (including, without
limitation, medical, prescription, dental, disability, salary continuance,
employee life, group life, accidental death and travel accident insurance plans
and programs) in accordance with the most favorable plans, practices, programs
and policies of the Company and its affiliated companies in effect for the
Participant immediately prior to such Change in Control, (C) provide fringe
benefits in accordance with the most favorable plans, practices, programs and
policies of the Company and its affiliated companies in effect for the
Participant immediately prior to such Change in Control, or (D) provide the
Participant with paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Participant immediately prior to such Change in Control,
unless in the case of any violation of (A), (B) or (C) above, the Participant is
permitted to participate in other plans, programs or arrangements which provide
the Participant (and, if applicable, the Participant's dependents) with no less
favorable benefits at no greater cost to

the Participant; or (7) the failure of the Company to obtain the assumption
agreement from any successor as contemplated in Section 8(b).

        Any event or condition described in Sections 1(h)(1) through (6) which
occurs prior to a Change in Control, but was at the request of a Third Party,
shall constitute Good Reason following a Change in Control for purposes of this
Plan (as if a Change in Control had occurred immediately prior to the occurrence
of such event or condition) notwithstanding that it occurred prior to the Change
in Control. For purposes of this Plan, any good faith determination of Good
Reason made by a Participant shall be conclusive; provided, however, that an
isolated, insubstantial and inadvertent action taken in good faith and which is
remedied by the Company promptly after receipt of notice thereof given by a
Participant shall not constitute Good Reason. The Participant's right to
terminate employment for Good Reason shall not be affected by the Participant's
incapacitation due to mental or physical illness and the Participant's continued
employment shall not constitute consent to or a waiver of rights with respect to
any event or condition constituting Good Reason. The Participant must provide
notice of termination within ninety (90) days of his knowledge of an event or
condition constituting Good Reason hereunder. A transaction which results in the
Company no longer being a publicly traded entity shall not in and of itself be
treated as Good Reason unless and until one of the events or conditions set
forth in Sections 1(h)(1) through (7) occurs.

          Notwithstanding anything in this Section 1(h) to the contrary, if
during the 90-day period immediately following a Change in Control, a
Participant's employment terminates for any or no reason (other than for Cause)
such termination shall be treated as a termination for Good Reason hereunder.

          (i)           "Nonqualifying Termination" means a termination of a
Participant's employment (1) by the Company for Cause, (2) by the Participant
for any reason other than a Good Reason, (3) as a result of the Participant's
death, (4) by the Company due to the Participant's absence from his duties with
the Company on a full-time basis for at least one hundred eighty (180)
consecutive days as a result of the Participant's incapacity due to physical or
mental illness or (5) as a result of the Participant's Retirement.

          (j)           "Participant" means any employee of the Company or any
Subsidiary (other than employees who have entered into Change in Control
severance agreements with the Company) who is employed at or above Grade 15 (or
the equivalent level), not taking into account any reduction of employment level
following a Change in Control which would constitute Good Reason under this
Plan.

          (k)          "Plan" means the Parker-Hannifin Corporation Change in
Control Severance Plan.

          (l)           "Projected Bonus Amount" means, with respect to any
Year, the greater of (i) the Participant's Target Bonus Amount for such Year; or
(ii) to the extent calculable after at least one calendar quarter of the Year,
the Bonus the Participant would

have earned in the Year in which the Executive's Date of Termination occurs had
the Company's financial performance through the end of the fiscal quarter
immediately preceding the Date of Termination continued throughout said Year
(the "Earned Bonus Amount").

        (m)          "Retirement" means a Participant's mandatory retirement
(not including any mandatory early retirement) in accordance with the Company's
retirement policy generally applicable to its salaried employees, as in effect
immediately prior to the Change in Control, or in accordance with any retirement
arrangement established with respect to such Participant with the Participant's
written consent.

        (n)         "RONA Plan" means the Company's Return on Net Assets Plan,
or any successor thereto.

        (o)         "Subsidiary" means any corporation or other entity in which
the Company has a direct or indirect ownership interest of 50% or more of the
total combined voting power of the then outstanding securities of such
corporation or other entity.

        (p)         "Termination Period" with respect to a Participant means the
period of time beginning with a Change in Control and ending on the earliest to
occur of (1) the Participant's death, and (2) two (2) years following such
Change in Control.

        (q)         "Target Bonus Amount" means, with respect to any Year, the
Participant's target Bonus for such Year based upon the Company's forecasted
Operational Plan.

        (r)         "Target Incentive Program" means the Company's Target
Incentive Program, or any successor thereto.

        (s)         "Year" means the fiscal year of the Company.

        2.          Payments Upon Termination of Employment.

        (a)  If during the Termination Period the employment of a Participant
shall terminate, other than by reason of a Nonqualifying Termination, then the
Company shall pay to the Participant (or the Participant's beneficiary or
estate) within five (5) days following the Date of Termination, as compensation
for services rendered to the Company:

        (1)         a lump-sum cash amount equal to the sum of (A) the
Participant's base salary from the Company and its Subsidiaries through the Date
of Termination and any outstanding annual Bonus or long-term bonus awards for
which payment is due and owing at such time, (B) any compensation previously
deferred by the Participant other than pursuant to a tax-qualified plan
(together with any interest and earnings thereon), (C) any accrued vacation pay,
and (D) to the extent not provided under the Company's Bonus plans, a pro-rata
portion of the Participant's Projected Bonus Amount for the Year in which the
Date of Termination occurs, in each case to the extent not theretofore paid;
plus

        (2)         a lump-sum cash amount equal to the product of (A) the
lesser of (1) one (1) and (2) the quotient resulting from dividing the number of
full and partial months from the Participant's Date of Termination until the
Participant would be subject to Retirement, by twelve (12) and (B) the sum of
(i) the Participant's highest annual rate of base salary during the 12-month
period immediately preceding the Date of Termination and (ii) the highest of (x)
the Participant's average Bonus (annualized for any partial Years of employment)
earned during the 3-Year period immediately preceding the Year in which the Date
of Termination occurs (or shorter annualized period if the Participant had not
been employed for the full three-Year period), (y) the Participant's Target
Bonus Amount for the Year in which the Change in Control occurs and (z) the
Participant's Target Bonus Amount for the Year in which the Date of Termination
occurs; provided, that any amount paid pursuant to this Section 2(a)(2) shall
offset an equal amount of any severance relating to salary or bonus continuation
to be received by the Participant upon termination of employment of the
Participant under any severance plan, policy, or arrangement or employment
agreement of the Company.

        (3)         For a period of one (1) year (or, if lesser, the period
ending on the date on which the Executive would be subject to Retirement)
commencing on the Date of Termination, the Company shall continue to keep in
full force and effect (or otherwise provide) all policies of medical, accident,
disability and life insurance with respect to the Participant and his dependents
with the same level of coverage, upon the same terms and otherwise to the same
extent as such policies shall have been in effect immediately prior to the Date
of Termination (or, if more favorable to the Participant, immediately prior to
the Change in Control), and the Company and the Participant shall share the
costs of the continuation of such insurance coverage in the same proportion as
such costs were shared immediately prior to the Date of Termination. Following
such one (1) year period of coverage, the Company shall offer the Participant
continued health coverage under Section 4980B of the Internal Revenue Code of
1986, as amended (the "Code"), for a period of twelve (12) additional months.

        (b)         If during the Termination Period the employment of a
Participant shall terminate by reason of a Nonqualifying Termination, then the
Company shall pay to the Participant within thirty (30) days following the Date
of Termination, a cash amount equal to the sum of (1) the Participant's base
salary from the Company and its Subsidiaries through the Date of Termination and
any outstanding Bonus or long-term bonus awards for which payment is due and
owing at such time, (2) any compensation previously deferred by the Participant
other than pursuant to a tax-qualified plan (together with any interest and
earnings thereon), (3) any accrued vacation pay, and (4) if the Nonqualifying
Termination is other than for Cause, to the extent not provided under the
Company's Bonus plans, a pro-rata portion of the Participant's Earned Bonus
Amount for the Year in which the Date of Termination occurs, in each case to the
extent not theretofore paid.

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        3.        Excise Tax Limitation.

        (a)   Notwithstanding anything contained in this Plan or any other
agreement or plan to the contrary, the payments and benefits provided to, or for
the benefit of, any Participant under this Plan or under any other plan or
agreement (the "Payments") shall be reduced (but not below zero) to the extent
necessary so that no payment to be made, or benefit to be provided, to the
Participant or for his benefit under this Plan or any other plan or agreement
shall be subject to the imposition of excise tax under Section 4999 of the Code
(such reduced amount is hereinafter referred to as the "Limited Payment
Amount"). Unless the Participant shall have given prior written notice
specifying a different order to the Company, the Company shall reduce or
eliminate the Payments to the Participant reducing first the payments under
Section 2(a)(2). Any notice given by a Participant pursuant to the preceding
sentence shall take precedence over the provisions of any other plan,
arrangement or agreement governing the Participant's rights and entitlement to
any benefits or compensation.

        (b)   All determinations required to be made under this Section 3 shall
be made by Mullin Consulting Inc. accounting firm (the "Accounting Firm"). The
Accounting Firm shall provide its calculations, together with detailed
supporting documentation, both to the Company and Participant within fifteen
(15) days after the receipt of notice from the Participant that there has been a
Payment (or at such earlier times as is requested by the Company) and, with
respect to the Limited Payment Amount, a reasonable opinion to the Participant
that he is not required to report any Excise Tax on his federal income tax
return with respect to the Limited Payment Amount (collectively, the
"Determination"). In the event that the Accounting Firm is serving as a
consultant for the individual, entity or group effecting the Change in Control,
the Company shall prior to the Change in Control appoint a nationally recognized
public accounting firm to make the determination required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees, costs and expenses (including, but not limited to, the costs of retaining
experts) of the Accounting Firm shall be borne by the Company. The Determination
by the Accounting Firm shall be binding upon the Company and the Participant
(except as provided in Subsection (c) below).

        (c)   If it is established pursuant to a final determination of a court
or an Internal Revenue Service (the "IRS") proceeding which has been finally and
conclusively resolved, that Payments have been made to, or provided for the
benefit of, a Participant by the Company, which are in excess of the limitations
provided in Section 3 (hereinafter referred to as an "Excess Payment"), such
Excess Payment shall be deemed for all purposes to be a loan to the Participant
made on the date the Participant received the Excess Payment and the Participant
shall repay the Excess Payment to the Company on demand, together with interest
on the Excess Payment at the applicable federal rate (as defined in Section
1274(d) of the Code) from the date of the Participant's receipt of such Excess
Payment until the date of such repayment. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the Determination, it is
possible that Payments which will not have been made by the Company should have
been made (an "Underpayment"), consistent with the calculations required to be
made under this Section 3. In the event that it is determined (1) by the
Accounting Firm, the Company (which shall include the position taken by the

Company, or together with its consolidated group, on its federal income tax
return) or the IRS or (2) pursuant to a determination by a court, that an
Underpayment has occurred, the Company shall pay an amount equal to such
Underpayment to the Participant within ten (10) days of such determination
together with interest on such amount at the applicable federal rate from the
date such amount would have been paid to the Participant until the date of
payment.

        4.        Withholding Taxes. The Company may withhold from all payments
due to a Participant (or his beneficiary or estate) hereunder all taxes which,
by applicable federal, state, local or other law, the Company is required to
withhold therefrom.

        5.        Reimbursement of Expenses. If any contest or dispute shall
arise under this Plan involving termination of a Participant's employment with
the Company or involving the failure or refusal of the Company to perform fully
in accordance with the terms hereof, the Company shall reimburse the
Participant, on a current basis, for all legal fees and expenses, if any,
incurred by the Participant in connection with such contest or dispute
(regardless of the result thereof), together with interest in an amount equal to
the prime rate of Key Bank from time to time in effect, but in no event higher
than the maximum legal rate permissible under applicable law, such interest to
accrue from the date the Company receives the Participant's statement for such
fees and expenses through the date of payment thereof.

        6.        Termination or Amendment of Plan.

        (a)   This Plan shall be in effect as of the Effective Date and shall
continue until terminated by the Company as provided in paragraph (b) of this
Section 6; provided, however, that a Participant's participation under this Plan
shall terminate in any event upon the first to occur of (1) the Participant's
death and (2) termination of the Participant's employment with the Company prior
to a Change in Control (except as otherwise provided herein).

        (b)   The Company shall have the right prior to a Change in Control, in
its sole discretion, pursuant to action by the Board, to approve the termination
or amendment of this Plan; provided, however, that no such action which would
adversely affect the rights or potential rights of Participants shall be taken
by the Board during any period of time when the Board has knowledge that any
person has taken steps reasonably calculated to effect a Change in Control
until, in the opinion of the Board, such person has abandoned or terminated its
efforts to effect a Change in Control; and provided, further, that in no event
shall this Plan be terminated or amended within the two-year period following a
Change in Control in any manner which would adversely affect the rights or
potential rights of Participants.

        7.        Scope of Plan. Nothing in this Plan shall be deemed to entitle
any Participant to continued employment with the Company or its Subsidiaries,
and if a

Participant's employment with the Company shall terminate prior to a Change in
Control, the Participant shall have no further rights under this Plan (except as
otherwise provided herein); provided, however, that any termination of a
Participant's employment during the two-year period following a Change in
Control shall be subject to all of the provisions of this Plan.

        8.        Successors Binding Obligation.

        (a)   This Plan shall not be terminated by any Business Combination or
transfer of assets. In the event of any Business Combination or transfer of
assets, the provisions of this Plan shall be binding upon the surviving or
resulting corporation or the person or entity to which such assets are
transferred.

        (b)   The Company agrees that concurrently with any Business Combination
or transfer of assets, it will cause any successor or transferee unconditionally
to assume all of the obligations of the Company hereunder. Failure of the
Company to obtain such assumption prior to the effectiveness of any such
Business Combination or transfer of assets constituting a Change in Control
shall constitute Good Reason hereunder and shall entitle each Participant to
compensation and other benefits from the Company in the same amount and on the
same terms as each such Participant would be entitled hereunder if the
Participant's employment were terminated following a Change in Control other
than by reason of a Nonqualifying Termination. For purposes of implementing the
foregoing, the date on which any such merger, consolidation or transfer becomes
effective shall be deemed the date Good Reason occurs, and the Participant may
terminate employment for Good Reason on or following such date.

        (c)   This Plan shall inure to the benefit of and be enforceable by each
Participant's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If a Participant shall
die while any amounts would be payable to the Participant hereunder had the
Participant continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Plan to such person
or persons appointed in writing by the Participant to receive such amounts or,
if no person is so appointed, to the Participant's estate.

        9.        Full Settlement; Resolution of Disputes. The Company's
obligation to make any payments provided for by this Plan to a Participant and
otherwise to perform its obligations hereunder shall not be affected by any
set-off, counterclaim, recoupment, defense or other claim, right or action which
the Company may have against the Participant or others. In no event shall a
Participant be obligated to seek other employment or take other action by way of
mitigation of the amounts payable to the Participant under any of the provisions
of this Plan and such amounts shall not be reduced whether or not the
Participant obtains other employment.

        10.         Employment with Subsidiaries. Employment with the Company
for purposes of this Plan shall include employment with any Subsidiary.

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        11.        Governing Law; Validity. To the extent not pre-empted by
ERISA, the interpretation, construction and performance of this Plan shall be
governed by and construed and enforced in accordance with the internal laws of
the State of Ohio without regard to the principle of conflicts of laws. The
invalidity or unenforceability of any provision of this Plan shall not affect
the validity or enforceability of any other provision of this Plan, which other
provisions shall remain in full force and effect.

        12.        Notice. For purposes of this Plan, all notices and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been duly given when delivered or five (5) days after deposit in
the United States mail, certified and return receipt requested, postage prepaid,
addressed as follows:

        If to the Participant: Residence address in Company records

        If to the Company:

        Parker-Hannifin Corporation
        6035 Parkland Boulevard
        Cleveland, Ohio 44124
        Attention: Secretary

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt. Alternatively, notice may be deemed to have been
delivered when sent by facsimile or telex to a location provided by the other
party hereto.

        A written notice of the Participant's Date of Termination by the Company
or the Participant, as the case may be, to the other, shall (i) indicate the
specific termination provision in this Plan relied upon, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of Participant's employment under the
provision so indicated and (iii) specify the termination date (which date shall
not be less than fifteen (15) nor more than sixty (60) days after the giving of
such notice). The failure by the Participant or the Company to set forth in such
notice any fact or circumstance which contributes to a showing of Good Reason or
Cause shall not waive any right of the Participant or the Company hereunder or
preclude the Participant or the Company from asserting such fact or circumstance
in enforcing the Participant's or the Company's rights hereunder.

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