<PAGE>

                                 EXHIBIT 10(a)
                                 -------------

                              EXCHANGE AGREEMENT
                              ------------------

THIS AGREEMENT (this "Agreement") is entered into as of October 12, 2000 between
Parker-Hannifin Corporation (the "Employer") and Thomas A. Piraino, Jr. (the
"Participant").

                                   Recitals
                                   --------
A.   The Employer has offered the Participant certain benefits under an
     Executive Estate Protection Plan in exchange for a portion of the
     Participant's future compensation.

B.   The Participant desires to surrender a portion of his future compensation
     in order to participate in the Executive Estate Protection Plan.

                                   Agreement
                                   ---------

     NOW THEREFORE, it is mutually agreed that:

1.   Reduction in Future Compensation.
     --------------------------------

     a.   Surrender. In consideration of the Employer's agreement to be bound by
          ---------
          the terms of the Executive Estate Protection Plan Document (defined
          below), the Participant agrees to the irrevocable surrender of future
          incentive pay as described in Exhibit A attached hereto and
          incorporated herein by reference (the "Surrendered Compensation")
          beginning on October 15, 2000 and ending on September 30, 2007 (the
          "Surrender Term"). The Participant acknowledges that he shall have no
          further rights or claims of any sort whatsoever to the Surrendered
          Compensation.

     b.   Shortfall. In the event the Participant's incentive pay on any
          ---------
          Surrender Date (as defined in Exhibit A), net of any amount which
          cannot be deferred under the Employer's Executive Deferral Plan, is
          less than the Surrendered Compensation scheduled for such Surrender
          Date, the Corporation shall be entitled to reduce any cash
          compensation (including base pay and incentive compensation) or non-
          qualified plan benefits payable to the Participant or his
          representatives, heirs or beneficiaries (including without limitation
          benefits payable under the Employer's Supplemental Executive
          Retirement Program, Savings Restoration Plan or Executive Deferral
          Plan) by an amount equal to any such shortfall plus interest on such
          shortfall between the scheduled Surrender Date and the actual date of
          surrender in the amount of 4.52% per annum.

     c.   Termination of Employment. In the event the employment of the
          -------------------------
          Participant is terminated prior to the end of the Surrender Term for
          any reason other than Termination for Cause or the death of the
          Participant (but only if the Participant is the Decedent), the
          Corporation shall be entitled to reduce any cash compensation or other
          non-qualified benefits payable to the Participant, or his
          representatives, heirs or beneficiaries (including without limitation
          benefits payable under the Employer's Supplemental Executive
          Retirement Program, Savings Restoration Plan or Executive Deferral
          Plan) by an amount equal to the sum of the Surrendered Compensation
          remaining in the Surrender Term (the "Mandatory Benefit Reduction");
          provided,
--------------------------------------------------------------------------------

                                       1
<PAGE>

          however, to the extent any Mandatory Benefit Reduction is imposed by
          the Employer on any payment earlier than the corresponding Surrendered
          Compensation would have been surrendered by the Participant, the
          amount of the Mandatory Benefit Reduction shall be reduced to the
          present value of such Surrendered Compensation calculated by using a
          4.52% discount rate.

2.   Executive Estate Protection. The Employer has provided the Participant with
     ---------------------------
     an Executive Estate Protection Plan, comprised of that certain Executive
     Estate Protection Plan Agreement attached hereto on Exhibit B by and
     between the Employer, the Participant and the Thomas A. Piraino, Jr. and
     Barbara C. McWilliams Irrevocable Trust dated September 1, 2000, and the
     "as sold" illustration of an Executive Estate Protection Plan Insurance
     Policy as issued by John Hancock Life Insurance Company, dated October 5,
     2000 (together, the "Executive Estate Protection Plan Document"). By his
     signature below, the Participant acknowledges that he has received a copy
     of the Executive Estate Protection Plan Document. The parties to this
     Agreement agree to and shall be bound by, and have the benefit of, each and
     every provision of the Executive Estate Protection Plan Document as set
     forth in the Executive Estate Protection Plan Agreement. This Agreement and
     the Executive Estate Protection Plan Document, collectively, shall be
     considered one complete contract between the parties.

3.   Effect on Executive Deferral Plan.  The Participant hereby agrees that the
     ---------------------------------
     amount of any Surrendered Compensation hereunder shall reduce the maximum
     amount which the Participant is entitled to elect to defer under the
     Employer's Executive Deferral Plan.

4.   Effect on Bonus and Other Benefits.  The Employer hereby agrees that the
     ----------------------------------
     amount of any Surrendered Compensation hereunder shall be included in
     Participant's incentive pay for the purpose of determining the
     Participant's benefits under the Employer's Supplemental Executive
     Retirement Program. The Participant hereby agrees that the amount of any
     Surrendered Compensation hereunder shall not be included in incentive pay
     for the purpose of determining allowable deferrals under the Employer's
     Retirement Savings Plan, Savings Restoration Plan and Executive Deferral
     Plan nor for the purpose of determining benefits payable under the
     Employer's Retirement Plan.

5.   Acknowledgment. The Participant hereby acknowledges that he has read and
     --------------
     understands this Agreement and the Executive Estate Protection Plan
     Document.

6.   Successors and Assigns.  This Agreement shall inure to the benefit of, and
     ----------------------
     be binding upon, the Employer and its successors and assigns, and the
     Participant and his assignees, devisees and heirs.

7.   Governing Law.  This Agreement shall be governed by and construed under the
     -------------
     laws of the State of Ohio, as in effect at the time of the execution of
     this Agreement.

8.   Defined Terms.  Initially capitalized terms used but not defined herein
     -------------
     shall have the meaning ascribed to them in the Executive Estate Protection
     Plan Document.


     IN WITNESS WHEREOF, the Participant has signed and the Employer has
accepted this Agreement as of the date first written above.

--------------------------------------------------------------------------------

                                       2
<PAGE>

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


                                   PARKER-HANNIFIN CORPORATION


                                   By: /s/Duane E. Collins
                                          Duane E. Collins
                                          Chairman and Chief Executive Officer

--------------------------------------------------------------------------------

                                       3
<PAGE>

                                   EXHIBIT A
                                   ---------


Surrender Dates                            Executive Compensation     RONA
---------------                            ----------------------     ----

Each of  October 2000-01-02-03-04-05-06                              $ 3,350

Each of  January 2001-02-03-04-05-06-07                              $ 3,350

Each of  March 2001-02-03-04-05-06-07             $ 7,380

Each of  April 2001-02-03-04-05-06-07                                $ 3,350

Each of  June 2001-02-03-04-05-06-07              $ 7,380

Each of  August 2001-02-03-04-05-06-07            $ 7,380            $ 7,810
                                                  =======            =======
         Sub-Totals:                              $22,140            $17,860

     TOTAL SURRENDERED COMPENSATION/YR. = $40,000

--------------------------------------------------------------------------------

                                       4
<PAGE>

                     EXECUTIVE ESTATE PROTECTION AGREEMENT

     This Executive Estate Protection Agreement ("Agreement") is made as of
October 12, 2000, among Parker-Hannifin Corporation, an Ohio corporation, (the
"Corporation"), Thomas A. Piraino, Jr. (the "Participant") and the Thomas A.
Piraino, Jr. and Barbara C. McWilliams Irrevocable Trust dated September 1, 2000
( the "Owner").

                                    RECITALS
                                    --------

A.   The Participant desires to insure his life and his wife's life for the
     benefit and protection of the Participant's family or other beneficiary
     under the Policy (as defined below);

B.   The Corporation desires to help the Participant provide life insurance for
     the benefit and protection of  his family or beneficiary by providing funds
     from time to time to pay the premiums due on the Policy in accordance with
     this Agreement; and

C.   The Owner desires to assign certain rights and interests in the Policy to
     the Corporation, to the extent provided herein, as security for repayment
     of certain funds provided by the Corporation for the acquisition and/or
     maintenance of the Policy.

                                   AGREEMENT
                                   ---------

NOW, THEREFORE, in consideration of the foregoing, and the mutual agreements and
covenants set forth below, the parties to this Agreement agree as follows:

     1.   Definitions.  For purposes of this Agreement, unless otherwise clearly
          -----------
apparent from the context, the following phrases or terms shall have the
following indicated meanings:

     (a)  "Aggregate Premiums Paid" shall mean, at any time, an amount equal to
          the cumulative premiums paid by the Corporation on the Policy.

     (b)  "Cash Surrender Value" shall mean an amount that equals, at any
          specified time, the cash surrender value as determined under the terms
          of the Policy.

     (c)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

     (d)  "Collateral Assignment" shall mean an assignment made by the Owner in
          favor of the Corporation in a form attached to this Agreement as
          Exhibit 1.

     (e)  "Collateral Interest" shall mean the Corporation's interest in the
          Policy, which shall equal, at any time, the lesser of Aggregate
          Premiums Paid or Cash Surrender Value, and which shall be repaid to
          the Corporation in accordance

     (f)  "Corporation's Death Benefit" shall mean the portion of the Policy's
          death benefit equal to Aggregate Premiums Paid plus an amount equal to
          the cumulative premiums paid by the Owner on the policy pursuant to
          Section 3(b) hereof.

--------------------------------------------------------------------------------
                                       1
<PAGE>

     (g)  "Decedent" shall mean the second to die of the Participant and his
          wife.

     (h)  "Designated Beneficiary" shall mean the beneficiary designated under
          the Policy.

     (i)  "Economic Income" shall mean an amount equal to the value of the
          "economic benefit" derived by the Participant from the Policy's life
          insurance protection, as determined for Federal income tax purposes
          under the Code. Economic Income shall include any increase in economic
          benefit attributable to the death of the first to die under the
          Policy.

     (j)  "Insurer(s)" shall mean John Hancock Life Insurance Company.

     (k)  "Investment Elections" shall mean any elections which the Owner has
          under the Policy to invest the Cash Surrender Value.

     (l)  "Owner" shall mean the Thomas A. Piraino, Jr. and Barbara C.
          McWilliams Irrevocable Trust dated September 1, 2000.

     (m)  "Owner's Death Benefit" shall mean the portion of the Policy's death
          benefit, if any, that exceeds the Corporation's Death Benefit. The
          ultimate amount of death benefit payable under the Policy is dependent
          upon the financial performance of the Policy.

     (n)  "Participant" shall mean Thomas A. Piraino, Jr.

     (o)  "Policy" shall mean the following joint life policy on the life of the
          Participant and his wife that is issued by the Insurer:


          Insurer                              Policy Number   Type of Policy
          -----------------------------------  --------------  -----------------
          John Hancock Life Insurance Company  20052957        Estate Protection
                                                               Life Insurance
          -----------------------------------  --------------  -----------------


     (p)  "Split Dollar Maturity Date" shall mean the date on which the first of
          any of the following events occurs:

          (i)   the fifteenth (15th) anniversary of the issuance of the Policy;
          (ii)  the death of  the Decedent; or
          (iii) Termination for Cause.

     (q)  "Termination for Cause" shall mean termination of the Participant's
          employment by the Corporation as a result of activity by the
          Participant detrimental to the interest of the Corporation, including
          without limitation:

          (i)   the rendering of services for an organization, or engaging in a
     business, that is in competition with the Corporation;

--------------------------------------------------------------------------------
                                       2
<PAGE>

          (ii)  the disclosure to anyone outside of the Corporation, or the use
     for any purpose other than the Corporation's business, of confidential
     information or material related to the Corporation;

          (iii) fraud, embezzlement, theft-in-office or other illegal activity;
     or

          (iv)  violation of  the Corporation's Code of  Ethics.


2.   Acquisition of Policy; Ownership of Insurance.  The parties to this
     ---------------------------------------------
     Agreement shall cooperate in applying for and obtaining the Policy. The
     Policy shall be issued to the Owner as the sole and exclusive owner of the
     Policy, subject to the rights and interests granted to the Corporation as
     provided in this Agreement and the Collateral Assignment. Concurrent with
     the signing of this Agreement, the Owner will collaterally assign the
     Policy to the Corporation, in the form of the Collateral Assignment, as
     security for the payment of the Collateral Interest, which assignment shall
     not be altered or changed without the mutual consent of the Corporation and
     the Owner.

3.   Premium Payments on Policy.
     --------------------------

     (a)  Payments and Reimbursements.  Prior to the occurrence of the Split
          ---------------------------
          Dollar Maturity Date, the Corporation shall pay to the Insurer, on or
          before each applicable premium due date, all applicable premiums for
          the Policy, less the amount payable by the Owner as described in
          subsection (b) below. The Corporation shall promptly notify Owner in
          writing of the amount and date of such premium payments. In the event
          that the Corporation fails to make any such payment, the Owner or the
          Participant may make (but is not required to make) any such payment,
          and the Corporation shall immediately reimburse the Owner or the
          Participant, as the case may be, for any amount so paid.

     (b)  Premium Payment by Owner.  Prior to the occurrence of the Split Dollar
          ------------------------
          Maturity Date, Owner shall pay to the Insurer, on or before each
          applicable premium due date, a premium payment equal to the Economic
          Income for such calendar year, as mutually determined by the
          Corporation and the Participant.

     (c)  Premium Reimbursement. At least sixty (60) days prior to each
          ---------------------
          applicable premium due date, the Corporation shall make a payment to
          the Participant equal to the premium payable by the Owner pursuant to
          subsection (b) above.

     (d)  Tax Reimbursement. On or before March 15 following each calendar year
          -----------------
          until the Split Dollar Maturity Date, the Corporation shall reimburse
          the Participant for the Participant's state, local and federal income
          tax liability attributable to (i) the Participant's Economic Income
          for such calendar year, if any; (ii) the payment by the Corporation to
          the Participant pursuant to subsection (c) above; and (iii) payments
          made pursuant to this subsection (d). The tax rates used by the
          Corporation in calculating the reimbursement under this Section 3(d)
          shall be the appropriate federal, state and local income tax rates in
          effect for the Participant at the time of payment, as determined by
          the Corporation.

--------------------------------------------------------------------------------
                                       3
<PAGE>

4.   Corporation's Rights.  The Corporation's rights and interests in and to the
     --------------------
     Policy shall be specifically limited to (i) the right to be paid its
     Collateral Interest and the Corporation's Death Benefit, if any, in
     accordance with Section 6 below, and (ii) the rights specified in the
     Collateral Assignment.

5.   Owner's Rights.  Subject to the terms of this Agreement and the Collateral
     --------------
     Assignment, the Owner of the Policy shall be entitled to exercise all
     rights in the Policy; provided, however, that while the Collateral
     Assignment is in effect, the following rights may be exercised only with
     the consent of the Corporation, which consent may be withheld at the sole
     discretion of the Corporation:

     (a) To borrow against or pledge the Policy;
     (b) To surrender or cancel the Policy;
     (c) To take a distribution or withdrawal from the Policy; or
     (d) To make Investment Elections.

     In particular, subject to the terms and conditions of the Policy, and the
     provisions of Section 6 below, the Owner may assign its rights under this
     Agreement and the Collateral Agreement, including but not limited to an
     assignment to an insurance trust of which the Participant is a settlor. In
     the event of an assignment of its rights, the Owner shall promptly notify
     the Corporation of the name and address of the new Owner or assignee,
     including the name and address of any trustee.

6.   Collateral Interest.  On the Split Dollar Maturity Date, the Collateral
     -------------------
     Interest (or, if applicable under Section 6(a) below, the Corporation's
     Death Benefit) shall be paid or repaid to the Corporation in the following
     manner:

     (a)  Notwithstanding any provision of this Agreement or the Policy that may
          be construed to the contrary, if the Split Dollar Maturity Date occurs
          due to the death of the Decedent, (i) the Corporation shall be
          entitled to that portion of the Policy's death proceeds that equals
          the Corporation's Death Benefit, if any, and (ii) the Owner or the
          Designated Beneficiary, as the case may be, shall be entitled to the
          Owner's Death Benefit; provided, however, if the Split Dollar Maturity
          Date occurs due to the suicide of the Decedent, and the proceeds from
          the Policy are limited by either a suicide or contestability provision
          under the Policy, the Corporation shall be entitled to that portion of
          the higher of the Policy's Cash Surrender Value or death proceeds that
          does not exceed the Aggregate Premiums Paid.  In either event,
          promptly following the Decedent's death, the Corporation and the Owner
          or the Designated Beneficiary shall take all steps necessary to
          collect the death proceeds of the Policy by submitting the proper
          claims forms to the Insurer.  The Corporation shall notify the Insurer
          of the amount of the Owner's Death Benefit (except when the Policy's
          proceeds are limited because of the Decedent's death by suicide) and
          the Corporation's Death Benefit.  Such amounts shall be paid,
          respectively, by the Insurer to the Owner or to the Designated
          Beneficiary, as the case may be, and the Corporation.

     (b)  If the Split Dollar Maturity Date is other than the date of the
          Decedent's death, the Corporation's Collateral Interest in the Policy
          shall be paid to the Corporation in one of the following ways, as
          elected by the Owner in writing within thirty (30)

--------------------------------------------------------------------------------
                                       4
<PAGE>

          days after the date the Corporation first notifies the Participant and
          Owner in writing of the occurrence of the Split Dollar Maturity Date:

          (i)   By the Owner authorizing the Insurer to make a loan against the
                Policy in an amount equal to the Corporation's Collateral
                Interest and to pay the proceeds to the Corporation, in which
                case the Owner shall be considered the borrower for all purposes
                under the loan;

          (ii)  By the Owner authorizing the Insurer to withdraw from the Cash
                Surrender Value of the Policy an amount equal to the
                Corporation's Collateral Interest and to pay the proceeds to the
                Corporation; or

          (iii) By the Owner paying to the Corporation, from the Owner's
                separate funds, an amount equal to the Corporation's Collateral
                Interest.

     (c)  If  the Owner fails to timely exercise any of the options under
          Section 6(b) above, the Corporation shall be entitled to instruct the
          Insurer to pay to the Corporation from the Cash Surrender Value of the
          Policy an amount equal to the Corporation's Collateral Interest.

     (d)  The Corporation agrees to keep records of its premium payments and to
          furnish the Owner and the Insurer with a statement of its Collateral
          Interest whenever either party requires such statement.

     (e)  Upon and after the Corporation's Collateral Interest in the Policy has
          been repaid pursuant to Section 6(b) above, the Corporation shall
          execute and file with the Insurer an appropriate release of the
          Corporation's interest in the Policy and shall have no further
          interest in the Policy. Further, the Participant and/or Owner hereby
          acknowledge, understand and agree that, upon the release of the
          Corporation's Collateral Interest, the Corporation shall continue not
          to have any responsibility for the future performance of the Policy
          and shall have no obligation to make any additional premium payments.

     (f)  Upon payment to the Corporation of its Collateral Interest or the
          Corporation's Death Benefit in accordance with this Section 6, this
          Agreement shall terminate and no party shall have any further rights
          or obligations under the Agreement with respect to any other party
          provided that the Corporation has complied with all provisions of this
          Agreement.

7.   Insurer.
     -------

     (a)  The Insurer is not a party to this Agreement, shall in no way be bound
          by or charged with notice of its terms, and is expressly authorized to
          act only in accordance with the terms of the Policy.  The Insurer
          shall be fully discharged from any and all liability under the Policy
          upon payment or other performance of its obligations in accordance
          with the terms of the Policy.

     (b)  The signature(s) required for the Insurer to recognize the exercise of
          a right under the Policy shall be specified in the Collateral
          Assignment.

--------------------------------------------------------------------------------
                                       5
<PAGE>

8.   Claims Procedure.
     ----------------

     The following claims procedure shall be followed in handling any benefit
     claim under this Agreement:

     (a)  The Owner, Participant, or the Designated Beneficiary, as the case may
          be, (the "Claimant"), shall file a claim for benefits by notifying the
          Corporation in writing. If the claim is wholly or partially denied,
          the Corporation shall provide a written notice within ninety (90) days
          (unless special circumstances require an extension of time for
          processing the claim, in which case an extension not to exceed ninety
          (90) days shall be allowed) specifying the reasons for the denial, the
          provisions of this Agreement on which the denial is based, and
          additional material or information, if any, that is necessary for the
          Claimant to receive benefits. Such written notice shall also indicate
          the steps to be taken by the Claimant if a review of the denial is
          desired.

     (b)  If a claim is denied, and a review is desired, the Claimant shall
          notify the Corporation in writing within sixty (60) days after receipt
          of written notice of a denial of a claim. In requesting a review, the
          Claimant may submit any written issues and comments the Claimant feels
          are appropriate. The Corporation shall then review the claim and
          provide a written decision within sixty (60) days of receipt of a
          request for a review (unless special circumstances require an
          extension of time for processing the claim, in which case an extension
          not to exceed ninety (60) days shall be allowed). This decision shall
          state the specific reasons for the decision and shall include
          references to specific provisions of this Agreement, if any, upon
          which the decision is based.

     (c)  If no event shall the Corporation's liability under this Agreement
          exceed the amount of proceeds from the Policy.

9.   Amendment of Agreement.  This Agreement shall not be modified or amended
     ----------------------
     except by a writing signed by all the parties hereto.

10.  Binding Agreement.  This Agreement shall be binding upon the heirs,
     -----------------
     administrators, executors, successors and assigns of each party to this
     Agreement.

11.  State Law.  This Agreement shall be subject to and construed under the
     ---------
     internal laws of the State of Ohio, without regard to its conflicts of laws
     principles.

12.  Validity.  In case any provision of this Agreement shall be illegal or
     --------
     invalid for any reason, said illegality or invalidity shall not affect the
     remaining parts of this Agreement, but this Agreement shall be construed
     and enforced as if such illegal or invalid provision had never been
     inserted in this Agreement.

13.  Not a Contract of Employment.  The terms and conditions of this Agreement
     ----------------------------
     shall not be deemed to constitute a contract of employment between the
     Corporation and the Participant.  Nothing in this Agreement shall be deemed
     to give the Participant the right to be retained in the service of the
     Corporation or to interfere with the right of the Corporation to discipline
     or discharge the Participant at any time.

--------------------------------------------------------------------------------
                                       6
<PAGE>

14.  Notice.  Any notice or filing required or permitted to be given under this
     ------
     Agreement to the Owner, Participant or the Corporation shall be sufficient
     if in writing and hand-delivered, or sent by registered or certified mail,
     to the address below:


          To the Owner: Thomas A. Piraino, Jr. and Barbara C. McWilliams
                                 Irrevocable Trust dated September 1, 2000
                               c/o William Kobyljanec, Trustee Entrust, Inc.
                               24400 Highpoint Road
                               Suite 2
                               Beachwood, OH 44122

          To the Participant:  Thomas A. Piraino, Jr.
                               2357 Delamere Road
                               Cleveland Heights, OH 44106

          To the Corporation:  Parker-Hannifin Corporation
                               6035 Parkland Boulevard
                               Cleveland, OH 44124
                               Attn: Vice President, Human Resources

     or to such other address as may be furnished to the Owner, Participant or
     the Corporation in writing in accordance with this notice provision.  Such
     notice shall be deemed given as of the date of delivery or, if delivery is
     made by mail, as of the date shown on the postmark on the receipt for
     registration or certification.  Any notice or filing required or permitted
     to be given to the Owner and/or the Participant or the Designated
     Beneficiary under this Agreement shall be sufficient if in writing and
     hand-delivered, or sent by mail, to the last known address of the Owner
     and/or the Participant, as the case may be.

15.  Creditworthiness of Insurer; Tax Consequences. The Participant and Owner
     ---------------------------------------------
     assume all risk of the creditworthiness of the Insurer and acknowledge that
     the Corporation makes no representation or guarantee of the
     creditworthiness of any Insurer. The Participant and Owner acknowledge
     responsibility for all federal, state and local income, estate or gift tax
     consequences imposed on the Participant and Owner as a result of this
     Agreement and further acknowledge that the Corporation has not made any
     representations or guarantees of present or future tax consequences.

16.  Entire Agreement.  This Agreement constitutes the entire agreement between
     ----------------
     the parties hereto with regard to the subject matter of this Agreement and
     supersedes all previous negotiations, agreements and commitments in respect
     thereto. No oral explanation or oral information by the parties to this
     Agreement shall alter the meaning or interpretation of this Agreement.

--------------------------------------------------------------------------------
                                       7
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
date first written above.


                                    PARKER-HANNIFIN CORORATION


                                    By: /s/ Duane E. Collins
                                            Duane E. Collins
                                            Chairman and Chief Executive Officer



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



                                    THOMAS A. PIRAINO, JR. AND
                                    BARBARA C. MCWILLIAMS
                                    IRREVOCABLE TRUST DATED
                                    SEPTEMBER 1, 2000


                                    By: /s/William Kobyljanec
                                           William Kobyljanec, Trustee

--------------------------------------------------------------------------------
                                       8
<PAGE>

                                   EXHIBIT 1
                                   ---------


                             COLLATERAL ASSIGNMENT
                             ---------------------

     This Collateral Assignment (this "Assignment") is made and entered into as
of October 12, 2000, by and between the Thomas A. Piraino, Jr. and Barbara C.
McWilliams Irrevocable Trust dated September 1, 2000 (the "Owner"), as the owner
of a life insurance policy, No. 20052957 (the "Policy"), issued by John Hancock
Life Insurance Company (the "Insurer"), on the lives of Thomas A. Piraino, Jr.
(the "Participant") and Barbara C. McWilliams, Participant's wife (the "Wife"),
and Parker-Hannifin Corporation, an Ohio corporation (the "Corporation").

                                   RECITALS
                                   --------

A.   The Corporation desires to help the Owner provide life insurance for the
     benefit and protection of the Participant's family or beneficiary by
     providing funds from time to time to pay the premiums due on the Policy as
     more specifically provided in the Executive Estate Protection Agreement
     entered into between the Participant, the Owner and the Corporation as of
     the date hereof (the "Agreement"); and

B.   In consideration of the Corporation agreeing to provide such funds in
     accordance with the terms and conditions of the Agreement, the Owner agrees
     to grant to the Corporation, as a security interest in the Policy, a
     collateral security interest for the payment of the Corporation's
     Collateral Interest (as defined in the Agreement).

                                   AGREEMENT
                                   ---------

NOW, THEREFORE, in consideration of the foregoing, and the mutual agreements and
covenants set forth below, the parties to this Assignment agree as follows:

1.   Assignment.  The Owner hereby assigns, transfers and sets over to the
     ----------
     Corporation, and its successors and assigns, those certain rights and
     interests described in the Agreement that are to be assigned to the
     Corporation in accordance with the Agreement. Furthermore, this Assignment
     is made, and the Policy is to be held as collateral security for, any and
     all liabilities of the Owner to the Corporation, either now existing, or
     that may hereafter arise, pursuant to the terms of the Agreement.

2.   Signatures.
     ----------

     (a)  To facilitate the operation of this Assignment, the parties agree that
          the Insurer is hereby notified that the following rights under the
          Policy may be exercised while the Assignment is in effect without the
          signature or consent of any other party:

          (i)  The Owner may sign a request to change the beneficiary under the
               Policy without the signature or consent of the Corporation.

--------------------------------------------------------------------------------
                                       1
<PAGE>

          (ii) The Corporation may sign an instruction to the Insurer to pay an
               amount equal to the Corporation's Collateral Interest from the
               Policy's Cash Surrender Value to the Corporation without the
               Participant's or the Owner's signature or consent; provided that
               the Corporation simultaneously delivers to the Insurer a
               notarized statement that the Corporation is exercising its rights
               in accordance with Section 6(c) of the Agreement.

     (b)  The exercise of any other right under the Policy not specifically set
          forth above shall be exercised with the signature of both the
          Corporation and the Owner.

3.   Policy Proceeds.  Any amount payable from the Policy during the
     ---------------
     Participant's or the Wife's lives or at the Decedent's (as defined in the
     Agreement) death shall first be paid to the Corporation to the extent of
     its Collateral Interest or the Corporation's Death Benefit (as defined in
     the Agreement), respectively. Any balance will be paid to the Owner during
     the Participant's or the Wife's lifetime or to the Designated Beneficiary
     (as defined in the Agreement) upon or after the Decedent's death. A
     settlement option may be elected by the recipient of the proceeds. For
     purposes of this Section, the amount of the Collateral Interest or
     Corporation's Death Benefit shall be determined for purposes of the Insurer
     by a written statement delivered to the Insurer and signed by the
     Corporation.

4.   Endorsement. The Corporation shall hold the Policy while this Assignment is
     -----------
     operative and, upon request, forward the Policy to the Insurer, without
     unreasonable delay, for endorsement of any designation or change of
     beneficiary, any election of optional mode of settlement, or the exercise
     of any other right reserved by the Owner in this Assignment.

5.   Insurer.  The Insurer is hereby authorized to recognize the Corporation's
     -------
     claims to rights hereunder without investigating the reason for any action
     taken by the Corporation, the validity or amount of any of the liabilities
     of the Owner to the Corporation under the Agreement, the existence of any
     default therein, the giving of any notice required herein, or the
     application to be made by the Corporation of any amounts to be paid to the
     Corporation. The Insurer shall not be responsible for the sufficiency or
     validity of this Assignment and is not a party to the Agreement (or any
     other similar executive life insurance agreement) between the Corporation
     and the Owner or the Participant.

6.   Release of Assignment.  Upon the full payment of the Corporation's
     ---------------------
     Collateral Interest in accordance with the terms and conditions of this
     Assignment and the Agreement, the Corporation shall release to the Owner,
     if the Owner retains the Policy in accordance with the Agreement, the
     Policy and all specific rights included in this Assignment.

7.   Amendment of Assignment.  This Assignment shall not be modified, amended or
     -----------------------
     terminated, except by a writing signed by all the parties hereto.

8.   No Restriction on Assignment . This Assignment does not limit the rights of
     -----------------------------
     the Owner to assign the rights it has retained under the Policy which
     rights may be assigned in accordance with Section 5 of the Agreement.

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<PAGE>

9.   Binding Agreement.  This Assignment shall be binding upon the heirs,
     -----------------
     administrators, executors and permitted successors and assigns of each
     party to this Assignment.

10.  State Law.  This Assignment shall be subject to and be construed under the
     ---------
     internal laws of the State of Ohio, without regard to its conflicts of law
     principles.

11.  Validity.  In case any provision of this Assignment shall be illegal or
     --------
     invalid for any reason, said illegality or invalidity shall not affect the
     remaining parts of this Assignment, but this Assignment shall be construed
     and enforced as if such illegal or invalid provision had never been
     inserted in this Assignment.

     IN WITNESS WHEREOF, the Owner and the Corporation have signed this
     Assignment as of the date first written above.


THOMAS A. PIRAINO, JR. AND                PARKER-HANNIFIN CORPORATION
BARBARA C. MCWILLIAMS
IRREVOCABLE TRUST DATED
SEPTEMBER 1, 2000

By: /s/ William Kobyljanec                By: /s/ Duane E. Collins
        William Kobyljanec, Trustee               Duane E. Collins
                                                  Chairman and Chief Executive
                                                  Officer



Filed with the Insurer:
-----------------------


___________________________               Date: _______________________________
Insurer



The John Hancock Variable Life Insurance Company without assuming any
responsibility for the validity or the sufficiency of this instrument, has on
this date, filed a duplicate thereof at it's Home Office.

                                 Date 10/26/00
                 JOHN HANCOCK VARIABLE LIFE INSURANCE COMPANY

         By  /s/ Peter Scavongelli
                 State Compliance Officer

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