Indemnification Agreement



 
Exhibit 10a

 
INDEMNIFICATION AGREEMENT

 
THIS INDEMNIFICATION AGREEMENT
(“Agreement”) is made as of the 8th day of August, 2002 between Parker-Hannifin Corporation, an Ohio corporation (the “Corporation”), and Robert J. Kohlhepp (being referred to herein as the “Indemnified Representative”
and collectively with other individuals who may execute substantially similar agreements as the “Indemnified Representatives”), with reference to the following background: 
 
A.    The Indemnified Representative currently is serving as a director or officer of the
Corporation. 
 
B.    The
Corporation has purchased, at the Corporation’s sole expense, directors’ and officers’ liability insurance to protect directors and officers of the Corporation and its subsidiaries and other affiliates from certain liabilities. The
Corporation recognizes that obtaining such insurance for adequate levels of coverage at a reasonable cost has become increasingly difficult for corporations with outstanding securities held by the public. At the same time, directors and officers of
corporations are being increasingly subject to expensive and time-consuming litigation and other Proceedings (as hereafter defined), including matters that traditionally would be brought only against such corporations or their subsidiaries and other
affiliates. The Indemnified Representative has requested that he be offered the protection afforded by this Agreement from such Proceedings. 
 
C.    To induce the Indemnified Representative to continue to serve the Corporation and in consideration for such
continued service, and to assist in the recruitment of qualified directors and officers in the future, the Corporation agrees to indemnify, and to advance expenses to, the Indemnified Representative upon the terms set forth herein. 
 
NOW, THEREFORE, in consideration of the foregoing premises,
the Corporation and the Indemnified Representative agree as follows: 
 
1.    Scope of Agreement.    This Agreement shall not be deemed either an employment contract or a contract for continued services between the Corporation or any of its
affiliates and the Indemnified Representative. 
 
2.    Indemnification. 
 
(a)    Except as provided in Section 3, the Corporation shall indemnify the Indemnified Representative against any Liability (as hereafter defined) incurred by the Indemnified Representative in connection
with any Proceeding (as hereafter defined) in which the Indemnified Representative may be involved as a party or otherwise, by reason of the fact that the Indemnified Representative is or was serving in an Indemnified Capacity (as hereafter
defined), including, without limitation, any Liability resulting from actual or alleged breach or neglect of duty, error, misstatement or misleading statement, negligence, gross negligence, omission, act or failure to act or act giving rise to
strict or products liability, occurring on or after the date of this Agreement. If the Indemnified Representative is entitled to indemnification in 









respect of a portion, but not all, of any Liability, the Corporation shall indemnify the Indemnified Representative to the maximum extent for
such portion of any Liability. 
 
(b)    Notwithstanding the provisions of subsection (a), the Corporation shall not indemnify the Indemnified Representative under or pursuant to this Agreement for any Liability incurred in a Proceeding initiated
(which shall not be deemed to include counter-claims or affirmative defenses) or participated in as an intervenor or amicus curiae by the Indemnified Representative unless such initiation of or participation in the Proceeding by the
Indemnified Representative is authorized, either before or after commencement of the Proceeding, by the affirmative vote of a majority of the Board of Directors of the Corporation then in office. This subsection (b) does not apply to reimbursement
of expenses incurred in successfully prosecuting or defending the rights granted to the Indemnified Representative by or pursuant to this Agreement. 
 
(c)    As used in this Agreement: 
 
(i)    “Indemnified Capacity” means any and all past, present
or future service by an Indemnified Representative: (A) as a director or officer of the Corporation, or, at the request of the Corporation while serving as a director, officer, manager, member, employee, agent, fiduciary or trustee of another
corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other entity or enterprise; or (B) in the capacity of an agent of the Corporation if such capacity is designated as an “indemnified
capacity” for purposes of this Agreement by the Board of Directors of the Corporation; 
 
(ii)    “Liability” means any damage, judgment, amount paid in settlement, fine, penalty,
punitive damages, excise tax assessed with respect to an employee benefit plan, or cost or expense of any nature (including, without limitation, attorneys’ fees and disbursements); and, 
 
(iii)    “Proceeding” means any threatened, pending or completed action, suit, appeal, or other proceeding of any nature, whether civil, criminal, administrative or investigative, whether formal or
informal, and whether brought by or in the right of the Corporation, a class of its security holders, third parties or otherwise. 
 
3.    Exclusions. 
 
(a)    The Corporation shall not be liable under Section 2 of this Agreement to make any indemnification payment in
connection with any Liability incurred by the Indemnified Representative and arising from acts or failures to act if it is proven by clear and convincing evidence in a court of competent jurisdiction or pursuant to Section 5(d) hereof that the
Indemnified Representative failed to act in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful. 
 
(b)    Any fact, act or omission pertaining to any other director, officer, employee or agent of the Corporation shall not be imputed to the Indemnified Representative hereunder for the purposes of determining the
applicability of any exclusion set forth herein. 
 

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(c)    The termination of a proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent shall not, of itself, create a presumption that the Indemnified
Representative is not entitled to indemnification under Section 2 of this Agreement. 
 
(d)     The Corporation shall not be liable under this Agreement to make any payment if the making of such payment is expressly prohibited by applicable law or has been finally
determined in a final adjudication pursuant to Section 5(d) or otherwise to be unlawful. 
 
4.    Mandatory Advancement of Expenses.    The Corporation shall pay any Liability incurred in good faith by the Indemnified Representative in advance of
the final disposition of a Proceeding upon receipt of an undertaking by or on behalf of the Indemnified Representative: (x) if the Indemnified Representative is a director of the Corporation (whether or not the Indemnified Representative is also an
officer or other agent of the Corporation) to repay all amounts so advanced if (but only if) it is proved by clear and convincing evidence in a court of competent jurisdiction that his omission or failure to act involved an act or omission
undertaken with deliberate intent to cause injury to the Corporation or undertaken with reckless disregard for the best interests of the Corporation; and (y) if the Indemnified Representative is an officer or other agent of the Corporation other
than a director, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such Indemnified Representative is not entitled to be indemnified under Section 2
of this Agreement or otherwise. The financial ability of the Indemnified Representative to repay an advance shall not be a prerequisite to the making of such advance. The advances to be made hereunder shall be paid by the Corporation to or for the
benefit of the Indemnified Representative within twenty (20) days following delivery of a written request therefor, accompanied by true and complete copies of invoices therefor, by the Indemnified Representative to the Corporation. 
 
5.    Indemnification Procedure.

 
(a)    The Indemnified
Representative shall use such Indemnified Representative’s best efforts promptly to notify the Secretary of the Corporation of the commencement of any Proceeding or the occurrence of any event which might give rise to a Liability under this
Agreement, but the failure so to notify the Corporation shall not relieve the Corporation of any liability which it may have to the Indemnified Representative under this Agreement or otherwise. 
 
(b)    The Corporation shall be entitled,
upon notice to the Indemnified Representative, to assume the defense of any such Proceeding with counsel reasonably satisfactory to the Indemnified Representative involved in such Proceeding, or a majority of the Indemnified Representatives involved
in such Proceeding if there be more than one. If the Corporation notifies the Indemnified Representative of its election to defend the Proceeding, the Corporation shall have no liability for the expenses (including attorneys’ fees) of the
Indemnified Representative incurred in connection with the defense of such Proceeding subsequent to such notice, unless: (i) such expenses (including attorneys’ fees) have been authorized by the Corporation; (ii) the Corporation shall not, in
fact, have employed counsel reasonably satisfactory to such Indemnified Representative or such majority of Indemnified Representatives 

 

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to assume the defense of such Proceeding; or (iii) it shall have been determined pursuant to Section 5(d) that the Indemnified Representative
was entitled to indemnification for such expenses under this Agreement or otherwise. Notwithstanding the foregoing, the Indemnified Representative may elect to retain counsel at the Indemnified Representative’s own cost and expense to
participate in the defense of such Proceeding. 
 
(c)    Except with respect to criminal matters and injunctive or other non-monetary relief, the Corporation shall not be required to obtain the consent of the Indemnified Representative to the settlement of any
Proceeding which the Corporation has undertaken to defend if the Corporation assumes full and sole responsibility for such settlement and the settlement grants the Indemnified Representative an unqualified release in respect of all Liabilities at
issue in the Proceeding. The Corporation shall not be liable for any amount paid by an Indemnified Representative in settlement of any Proceeding that is not defended by the Corporation, unless the Corporation has consented in writing to such
settlement (which consent shall not be unreasonably withheld or delayed). 
 
(d)    Any dispute related to the right to indemnification or advancement of expenses hereunder, except with respect to indemnification for Liabilities arising under the Securities Act of 1933 which the
Corporation has undertaken to submit to a court for adjudication, shall be enforceable only by arbitration in the City of Cleveland, Ohio, in accordance with the commercial arbitration rules then in effect of the American Arbitration Association,
before a panel of three (3) arbitrators, one of whom shall be selected by the Corporation, the second of whom shall be selected by the Indemnified Representative and the third of whom shall be selected by the other two (2) arbitrators. In the
absence of the American Arbitration Association or if for any reason arbitration under the arbitration rules of the American Arbitration Association cannot be initiated or if the arbitrators selected by the Corporation and the Indemnified
Representative cannot agree on the selection of the third arbitrator within thirty (30) days after such time as the Corporation and the Indemnified Representative have each been notified of the selection of the other’s arbitrator, the necessary
arbitrator or arbitrators shall be selected by the presiding judge of the court of general jurisdiction in the metropolitan area where arbitration under this subsection would otherwise have been conducted. Each arbitrator selected as provided herein
is required to be or have been a director of a corporation whose shares of common stock were listed during at least one year of such service on the New York Stock Exchange. The party or parties challenging the right of an Indemnified Representative
to the benefits of this Agreement shall have the burden of proof. The Corporation shall reimburse the Indemnified Representative for the expenses (including attorneys’ fees and disbursements) incurred in successfully prosecuting or defending
such arbitration. Any award entered by the arbitrators shall be final, binding and nonappealable and judgment may be entered thereon by either party in accordance with applicable law in any court of competent jurisdiction; provided, however,
that if the conduct giving rise to the Liability for which indemnification is being sought has been the subject of another proceeding not directly involving the Indemnified Representative’s right to indemnification under this Agreement or
otherwise, the Corporation shall be entitled to interpose, as a defense in any judicial enforcement proceeding on the arbitrators’ award, any prior final judicial determination adverse to the Indemnified Representative in such other proceeding.
This arbitration provision shall be specifically enforceable. 
 

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(e)    Upon a payment to the Indemnified Representative under this Agreement, the Corporation shall be subrogated to the extent of such payment to all of the rights of the Indemnified Representative to recover
against any person for such Liability, and the Indemnified Representative shall execute all documents and instruments required and shall take such other actions as may be necessary to secure such rights, including the execution of such documents as
may be necessary for the Corporation to bring suit to enforce such rights. 
 
6.    Discharge of Duty.    The Indemnified Representative shall be deemed to have discharged such person’s duty to the Corporation if he has relied
in good faith on information, opinions, reports or statements, including financial statements and other financial data, prepared by: 
 
(a)    one or more officers or employees of the Corporation whom the Indemnified Representative reasonably believes to
be reliable and competent with respect to the matter presented; 
 
(b)    legal counsel, public accountants or other persons as to matters that the Indemnified Representative reasonably believes are within the person’ s professional or expert competence; or 
 
(c)    a committee of the Board of
Directors of the Corporation upon which he does not serve as to matters within its area of designated authority, which committee he reasonably believes to merit confidence. 
 
7.    No Restriction of Other Indemnification Rights.    The
Corporation shall not adopt any amendment to, or restated or modify, its Articles of Incorporation or Regulations the effect of which amendment, restatement or modification would be to deny, diminish or encumber the Indemnitee’s rights to
indemnity pursuant to the Articles of Incorporation, the Regulations, the Ohio General Corporation Law or any other applicable law as applied to any act or failure to act occurring in whole or in part prior to the date (the “Effective
Date”) upon which the amendment shall apply only to acts or failure to act occurring entirely after the Effective Date thereof, unless the Indemnitee shall have voted in favor of the amendment as a director or holder of record of the
Corporation’s common stock, as the case may be. 
 
8.    Merger or Consolidation.    In the event that the Company shall be a constituent corporation in a merger, consolidation or other reorganization, the Corporation, if it shall not be
the surviving, resulting or acquiring corporation therein, shall require, as a condition thereto, that the surviving, resulting, or acquiring corporation agree to indemnify the Indemnitee to the full extent provided in this Agreement and to adopt
and assume the Corporation’s obligations under this Agreement. Whether or not the Corporation is the surviving, resulting or acquiring corporation in any such transaction, the Indemnitee shall also stand in the same position under this
Agreement as he would have with respect to the Corporation if its separate existence had continued. 
 
9.    Non-Exclusivity.    The indemnification rights granted to the Indemnified
Representative pursuant to this Agreement: (a) shall not be deemed exclusive of any other right to which the Indemnified Representative may be entitled under any statute, by-law, certificate or 

 

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articles of incorporation, agreement, vote of shareholders or directors or otherwise, both as to action in an Indemnified Capacity and in any
other capacity; and (b) shall continue as to a person who has ceased to be an Indemnified Representative in respect of matters arising prior to such cessation. 
 
10.    Reliance on Provisions.    The Indemnified Representative shall be deemed to be
acting in such person’s respective official capacity or capacities in reliance upon the rights provided by this Agreement. 
 
11.    Severability and Reformation.    Any provision of this Agreement which is
adjudicated to be invalid or unenforceable in any jurisdiction or under any circumstance shall be ineffective to the extent of such invalidity or unenforceability only and shall be deemed reformed so as to continue to apply to the maximum extent and
to provide the maximum indemnification permissible under the applicable law of such jurisdiction. Any such adjudication shall not invalidate or render unenforceable the remaining provisions hereof and shall not invalidate or render unenforceable
such provision in any other jurisdiction or under any other circumstances. 
 
12.    Notices.    Any notice, claim, request or demand required or permitted hereunder shall be in writing and shall be deemed given if delivered
personally or sent by telegram or by registered or certified mail, postage prepaid: (a) if to the Corporation, to 6035 Parkland Boulevard, Cleveland, OH 44124-4141, or to such other address to which the executive offices of the Corporation may be
moved, Attention: Corporate Secretary; or (b) if to any Indemnified Representative to the address of such Indemnified Representative listed on the signature page hereof; or to such other address as either party hereto shall have specified in a
notice duly given in accordance with this Section. 
 
13.    Amendments and Binding Effect.    No amendment, modification, waiver, termination or cancellation of this Agreement shall be effective as to the Indemnified Representative unless
signed in writing by the Corporation and the Indemnified Representative. This Agreement shall be binding upon the Corporation and its successors and assigns and shall inure to the benefit of the heirs, executors, administrators and personal
representatives of the Indemnified Representative. 
 
14.    Governing Law.    This Agreement shall be governed by, interpreted and enforced in accordance with the internal substantive laws of the State of Ohio, without reference to the
principles governing the conflict of laws applicable in that or any other jurisdiction. 
 
15.    Gender and Number.    Words used herein, regardless of the gender or number specifically used, shall be deemed to include any other gender,
masculine, feminine or neuter, and any other number, singular or plural, as the context may require. 
 

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IN WITNESS
WHEREOF, the undersigned have executed this Agreement as of the day and year first set forth above signature page hereof; or to such other address as either party 
 

	 PARKER-HANNIFIN CORPORATION

	
	 By:
	 	 /s/    Thomas A. Piraino, Jr.        


	 	 	 Name: Thomas A. Piraino, Jr
 Title: Vice President, General
 Counsel and Secretary



 

	 INDEMNIFIED REPRESENTATIVE

	
	 	 	 /s/    Robert J. Kohlhepp         


	 Name:
	 	 Robert J. Kohlhepp

	
	 Address:
	 	 Cintas Corporation
 P.O. Box 625737
 Cincinnati, OH 45262



 

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